I move:
That Seanad Éireann takes note of the Second Report of the Joint Committee on Commercial State-Sponsored Bodies — Irish Shipping Limited.
Second Report of Joint Committee on Commercial State-Sponsored Bodies — Irish Shipping: Motion.
I want to thank the Joint Committee on Commercial State-Sponsored Bodies for this report and the work which they put into its compilation. It is a very useful analysis of the conduct of the affairs of Irish Shipping Limited, the events which led to the liquidation of the company and the environment in which the disastrous decision which led eventually to the liquidation of the company were taken. It seems to me that the committee, like myself, found it well nigh incomprehensible that a company as successful as Irish Shipping Limited could conduct its affairs so recklessly as to destroy itself.
The committee has told us where it considers responsibility lay. It has made a number of useful recommendations which are aimed at ensuring that such a disaster could not occur again. Some of these reflect action already being taken by the Government and others have been taken on board by those Departments which deal with State bodies.
Nowhere does the report suggest that the liquidation of Irish Shipping Limited was avoidable or that the Government should have poured more money into the company to keep it going. That would only have added to the cost of the disaster. Indeed, developments in the shipping industry worldwide in the past year — the further decline in freight rates and the collapse of numerous shipping companies — have demonstrated the inevitability of the ISL liquidation. For me, personally, the demise of Irish Shipping Limited was a matter of the greatest regret. I fully appreciate the personal sense of loss and grievance which the employees of the company and their families feel. I appreciate the hardships involved. Given the facts of the situation, however, I believe that nobody in their sane senses could have recommended further financial assistance for the company. The Government had no choice but to allow the liquidation to proceed.
I think that it bears repeating here once again that, on the basis of advice from reputable international shipbrokers on the likely trend of freight rates over the period, the total cost to the Exchequer of keeping Irish Shipping Limited going for the five years to the end of 1989 would have been about £144.5 million. Furthermore, even if the Exchequer had met this enormous bill, the company would still have had debts of £59 million at the end of 1989 and there were little grounds for expecting that it would be in a position to service these debts from its own resources. So the estimated cost of not liquidating would have been £200 million. Put another way, it would have cost the Exchequer over £76,000 per job per year to maintain each job in Irish Shipping Limited until the end of 1989 with no real expectation that the company would be viable by that time. It would have been socially indefensible to keep Irish Shipping Limited in operation at such a cost.
I said that the figures which I have just quoted for the cost of keeping Irish Shipping going were based on advice from reputable international shipbrokers. That advice was obtained just over one year ago. Unfortunately, the world freight market has continued to decline and the view then expressed has since been shown to be on the optimistic side. It is now estimated that had Irish Shipping continued in operation its losses for the past year alone would have been of the order of £5 million more than the already unacceptable losses which were then anticipated. A continuation of this trend would have increased the losses for the period to the end of 1989 to over £170 million and on overall cost of not liquidating of £220 million.
Irish Shipping Limited is not the only company which has been affected by the world recession in shipping. Many others, equally reputable, have faced serious financial problems and, in several cases, bankruptcy. Low freight rates, the slump in the value of vessels and no prospect of market upturn have greatly increased the pressure on many shipowners worldwide.
I want now to take a little time to set the record straight about the cost to the State of the liquidation of Irish Shipping Limited. I want to do this in order to rescue those journalists who are floundering around in a mass of inaccurate and confused information. The Bishop of Ferns, Dr. Comiskey, who referred recently to a crisis in Irish journalism, could not but have his views confirmed by the unfounded speculation which has been a feature of some recent articles on this matter, notably in two of our Sunday newspapers. It would have been quite simple for the journalists concerned to have checked their facts but, apparently, they did not consider it necessary to do so.
The liabilities accruing to the Exchequer from the liquidation of Irish Shipping Limited are made up of approximately £36 million in respect of guarantees which the Minister for Finance had given in connection with loans raised by Irish Shipping Limited and, in addition, the Irish Shipping Limited liability in respect of the chartering of the Irish Spruce which fell to the Exchequer under a ministerial guarantee when the company was liquidated. Three-quarters of the cost was being carried by the State already. It is estimated that the total net cost of meeting the entire guarantee in respect of the Irish Spruce would be approximately £35 million of which about 25 per cent was Irish Shipping's liability. Under the financing arrangements for the construction of the vessel, half of the cost, which related to the financing of a subsidy to Verolme Cork Dockyard, was the responsibility of the Department of Industry, Trade, Commerce and Tourism. The remaining 25 per cent of the cost is the responsibility of my Department's Vote in respect of a subsidy to Irish Shipping Limited towards the cost of the vessel.
By virtue of an indemnity given to the owners of the vessel while its future was being considered by the Government the costs of the care and maintenance of the Irish Spruce while it has been berthed in Marseilles have been of the order of £125,000 per month. These costs include port charges, victualling, etc. in addition to crewing costs. The total amount expended by the Exchequer since the liquidation of the company, for the care and maintenance of the Irish Spruce and for Irish Shipping Limited's share of payments due, amounts in all to approximately £2 million.
The final picture will not emerge for some time yet but it is clear that the total Exchequer liability to be assumed as a result of the liquidation of Irish Shipping Limited will be of the order of just under £50 million. This represents a major additional burden for the Irish taxpayer but bears no resemblance to the figures quoted in the recent misleading articles and is, of course, a long way short of the liability which would have accured had we continued to support the company which is now estimated at a total of £200 to £220 million.
As regards the Irish Spruce I should explain that this vessel was never owned by Irish Shipping; it was leased by the company from its owners, Jura Shipping Limited, and the lease payments were guaranteed by the Minister for Finance. The liabilities arising from the lease are guaranteed by the Minister for Finance and these are included in the estimate of £50 million which I have given. The ultimate disposition of the Irish Spruce, is, I understand, being pursued urgently by its owners, Jura Shipping and its financiers.
Earlier this year the Government decided that ex gratia pension payments formerly fixed by Irish Shipping Limited would be met from the Exchequer in respect of those Irish Shipping Limited pensioners who had served aboard Irish ships during the Second World War. These payments have already commenced. I am glad to be able to tell you that after further consideration of the matter the Government have decided to extend this concession to all the Irish Shipping Limited pensioners who had been in receipt of ex gratia pension payments from the company. There are, in all, 25 additional pensioners involved and most of these are in the most deserving categories. Provision had not been included in this year's Vote for my Department for the payment of these pensions. It will, however, be provided in the 1986 Vote and payment will be made retrospectively.
I am also glad to be able to tell you that it has been agreed with the Youth Employment Agency that the agency will continue to sponsor, on the same basis as the present arrangements with the liquidator, the training of the deck and engineer cadets who were formerly employed by Irish Shipping Limited and whose training was put at risk by the liquidation of the company.
All of the former employees of Irish Shipping Limited who have made application for statutory redundancy payments have received their redundancy and other statutory entitlements from the Department of Labour. The cost of the statutory payments to date is approximately £0.5 million and I understand that this represents the bulk of the payments to be made. As regards the question of extra-statutory redundancy payments, the Government have re-examined the situation in great detail and with the utmost sympathy for those affected. Despite a great deal of heart-searching, it has not been found possible to overcome the legal and other constraints which stand in the way of extending such assistance. We have examined the matter from every possible aspect and no resolution of the problem has been thought of which does not have major adverse implications for the State. I am sorry to have to say that I do not see any way out of this unfortunate situation.
I have already referred to the recommendations of the joint committee which cover a wide range of concerns relating to the monitoring of the activities of State-sponsored bodies. The Government some time ago initiated a review of the procedures whereby commercial State-sponsored bodies are monitored. To improve the two-way process of information and appraisal, State sponsored companies are now required to submit to their parent Department rolling corporate five-year plans (including forecast profit and loss account, balance sheet, working capital, cash flow statements, source and uses of funds), with underlying assumptions specified together with analysis of sensitivity of assumptions to market change, etc. State bodies must also submit medium term capital investment plans and individual projects involving significant investment must be appraised according to set criteria. I have also instituted an arrangement for quarterly, and in some cases monthly, financial reports indicating how each body under my aegis is performing against target as regards revenue, expenditure, cash flow and balance sheet for each main business area. The trends emerging from these reports and the major policy issues facing the company are the subject of regular meetings between myself and the chairman and are the subject of meetings with the full board at least twice a year.
We must, of course, strike a balance between the need for State bodies to operate effectively in a commercial environment and the need for adequate reporting and monitoring arrangements to safeguard the public interest. It would be wrong to over-react to the Irish Shipping disaster. It would be equally wrong to ignore the painful lessons of that experience. I believe that I have got the balance about right.
Recently, I received the report of the Committee on Strategic Shipping Requirements which I set up some time ago to investigate and report on our current and future strategic needs and how these should be secured. When I announced the setting up of the committee to Dáil Éireann last June, I put the strategic fleet question in the context of recent world developments in shipping, the present state of the Irish shipping industry and the country's present and anticipated economic requirements. I will shortly be submitting the report of the committee to the Government with my recommendations.
The demise of Irish Shipping Limited did not mean the end of the Irish merchant shipping industry. The other State-owned shipping company — the B & I — is in the throes of reorganisation and revitalisation with the aim of achieving profitable operation and providing a better service for the public. The private sector of the Irish merchant shipping industry has shown some resilience in the face of the serious problems faced by the industry generally. On another occasion I have suggested that we might get away from the idea that a national asset like a strategic merchant fleet must be solely in State ownership; that, perhaps apart from the future State role, we should look outside the strict ambit of the state sector for a contribution to the resuscitation of our national maritime status and well-being and that the State's role should perhaps include that of facilitator, creating the right environment for others.
I will shortly be publishing a Green Paper on transport policy generally including shipping policy. That Green Paper will include the principal conclusions and recommendations of the Committee on Strategic Shipping Requirements. In the meantime, I can say that subject to the constraints of public finance and other priorities it is a policy objective of the Government to maintain an efficient and effective Irish shipping industry appropriate to our island status and capable of meeting the needs of overseas trade and tourism.
I would like to begin my very brief contribution by paying tribute to the members of the committee for this very comprehensive report extending as it does to 102 pages. It is an area with which I am not very familiar. It deals in some cases with company matters in very great detail. I will deal with them in a very general sense in my contribution to this motion.
We are an island nation. It is generally conceded that historically we have found and learned the hard way that no other country will do our work for us; we can only depend on ourselves. Irish Shipping Limited were established in March 1981 to ensure the availability of vital supplies during the Second World War.
In 1941; the Senator said 1981.
I beg your pardon, in 1941. Under difficult war conditions they did an excellent job. My party are committed to having a commercially viable deep sea fleet. The Government made a mistake in appointing a liquidator to Irish Shipping Limited. In effect it meant the end of Irish Shipping Limited. It has been stated by those in a better position to know than I, that appointing a receiver or an administrator would have been a better proposition, as was done in the case of the PMPA. Nobody is denying that the situation was very serious. Never before were there such difficult trading conditions in the deep sea transport area. The charter rates were very low and had been low for some time.
The major criticism of Irish Shipping Limited is with regard to their charter arrangements. They got out of hand completely. There was no communication apparently with the Government. There is no evidence that there was a marketing analysis. The Minister said that recent publicity and reports in the media contain speculation that is unfounded but there is an article in the October edition of Irish Business which is very factual and very fair. It states, in regard to this particular area, under “Political Medley:”
But what about the role of the Government which was, after all, the shareholder in Irish Shipping? What authority did it exercise in the affairs of the company? It is sufficient to say that in the all-important area of chartering vessels, the management and board of Irish Shipping was left entirely to its own devices. The Government only exercised tight control on capital expenditure.
That is indefensible. In effect, it was something along the lines of what happened a few years ago when the price of land went our of control; farmers kept out-bidding one another until the price rose to £4,000 per acre. There was no looking to the future. Indeed, the banks encouraged them to do that. It was a similar situation with regard to Irish Shipping. There was nobody with the foresight to realise that such conditions would not continue and to make the necessary arrangements. Pages 7 and 8 of the report deal with these matters, page 7 specifically. The report on page 6, paragraph 9 states:
The Joint Committee was informed that the strategic fleet requirement established in 1963 had not been reviewed formally since that time. It questions the relevance of such a requirement in the absence of formal reviews. It believes that it was unreasonable to expect the company to operate to an objective which had not been reviewed over a 21 year period. In the light of this disclosure the Joint Committee recommends that every commercial State-sponsored body be obliged to carry out a review of its objectives every three years and that a statement of these objectives be incorporated in its annual report and accounts.
I think that is sensible. What is described is something that could not have taken place in a private company or in interests outside the State. On page 7, paragraph 11 it is stated:
The Joint Committee deplores the fact that the Board of directors of Irish-Shipping did not inform the Department of Transport until September, 1982, of the details of the substantial chartered in contracts entered into by the company on its own behalf and in conjunction with Celtic Bulk Carriers between September, 1979, and July, 1981, notwithstanding the fact that two Bills to accommodate the purchase of the Irish Spruce (i.e. the Irish Shipping (Amendment) Act 1980 and The Irish Shipping Limited Act, 1982) had been enacted during that period. The Joint Committee concludes that—
(a) the absence of this information left the Minister and Members of the Houses at a severe disadvantage when enacting the legislation;
(b) failure to inform the Minister of the situation should have merited a request for the resignation of the Chairman and the Board of directors of the company,
(c) independent assessors should have been appointed to report on the financial situation of the company as a matter of urgency.
There is no question whatever that the major problems of the board arose through the chartering arrangements. Problems have arisen in the transport area with regard to coal, steel and timber in the world market. There is the position with regard to the Irish Spruce, which as the Minister stated, was not owned by the board but was leased by the Department of Finance. Could this ship not be used to bring coal to Moneypoint? Has the Minister considered this?
The nation was proud of Irish Shipping. It is most extraordinary that a developing country, such as Ireland an island country has no maritime fleet. Irish Shipping were one of the most successful of all the State-owned companies. The nation's pride, independence and self-confidence were put under threat as never before since the foundation of the State. There must have been considerable international embarrassment when Irish vessels flying the Irish flag, crewed by Irish people, were arrested abroad and impounded in foreign ports. Inevitably it must have resulted in a weakening of our commercial independence and an erosion of our international prestige and credibility abroad. Nobody will deny that the Minister was faced with a serious problem. But less extreme alternatives should have been considered before abandoing our national interest on the international stage.
The liquidation of Irish Shipping, which was owned by the Government, means, effectively, that the Government have reneged publicly on their debts and commitments. This must have very damaging implications for the creditworthiness of the State. The liquidation will have very serious effects on the commercial operations and the raising of finance abroad by major State companies, such as the ESB, B & I and Aer Lingus. They have earned a very high credit rating abroad. I understand that this is the first time since the foundation of the State that such a thing has happened. It marks a new low in the running of the nation's business.
Finally, I come to personnel and the problems that were encountered in that regard. The staff were stranded in foreign ports, left high and dry, and their employment prospects were brought to an end. I believe there was a considerable number serving apprenticeships. Their families were affected in very large numbers. The report, on page 42, pays tribute to the employees of Irish Shipping Limited and I quote:
The Joint Committee acknowledges the excellent industrial relations that existed in the company. It considers that (1) the Government should make resources available to former employees of the company to find alternative employment; that (2) ex gratia pension payments should be restored fully in all cases, and (3) that arrangements should be made to enable trainees to obtain the necessary sea-time experience.
The Minister referred to the decision of the Government to extend ex gratia payments formerly fixed by Irish Shipping Limited. These will be met by the Exchequer. There will be a further extension involving about 25 additional pensioners. I think this is inadequate. The committee asked that ex gratia pension payments be restored fully in all cases. I would ask the Minister if this is being done, or can it be done, or will it be done? Were resources made available to former employees of the company to find alternative employment? If not, will that be done? Is it the intention of the Government to do that?
In conclusion, I want to say that it was a sad day for this country when we had the liquidation of Irish Shipping Limited. Most people would agree that something had to be done, but perhaps more finance would have to be made available. I believe that some imaginative scheme could have been found to preserve our maritime fleet, to preserve our dignity and to put us in a position where, when things pick up on the international market, we could extend the fleet.
I believe that a major mistake was made in the liquidation of the company. It is a mistake from which it will be very difficult to recover. It will be difficult certainly for the employees, trusted personnel and skilled operators who were involved. They formed the team which the board had built up since 1941. It will be difficult from every conceivable point — from the employment point of view, from the point of view of depending on other nations in times of scarcity and, indeed, at all times. I must come to the conclusion — and commentators have come to this conclusion — that an alternative way could have been found to deal with this problem without the drastic one of liquidation.
I am very glad to have the opportunity of speaking on this report of the Joint Committee on Commercial Semi-State Bodies and to comment on the short time that the committee took to bring this report before us and the indepth discussions they have had on the entire problem. It is a good and thorough investigation of the problem. I am glad that the Minister in his speech, for which the House must surely be grateful, has told us that he is meeting most, if not all, of the recommendations of the joint committee, especially the ones dealing with pensions. I want to compliment the Government on their decision to continue the pensions of the people who have served that company through difficult periods, but through better periods for the company.
The Government took a very courageous step in this whole affair. One thing that makes me think deeply is that the employees of semi-State companies and the boards of semi-State companies for the last 60 years have considered themselves as being untouchable. The vast majority of them have been living on backs of the taxpayer, very happily, year in and year out. It took a disaster of the magnitude of the Irish Shipping fiasco to force any Government to tackle the problem realistically. No one in his right senses, having regard to the level of taxation in this country, can stand up and clearly say that the Government, or any Government of the day, in the situation of our economy, can contemplate or even think of subsidising jobs in any sector of the community to the extent of £76,000 per year. Not only that, but I feel that the management that allowed a situation to sink to those depths certainly should not be getting pensions. They should be at the State's pleasure in Mountjoy or some such situation. There are people in jail for embezzling. I am not suggesting that any of the Irish Shipping people embezzled anything, but mismanagement must be looked upon as an offence.
It is all right to say that there was a downward turn in international shipping and in the trade itself, but surely a big company such as the one we are discussing pay somebody to do projections into the future to look at the market, to be able to evaluate the direction in which the international market is going. I would expect that that would be so.
I know everybody in the country regrets that we have, as a nation, suffered a severe blow to our pride in saying that one of our semi-State organisations of the size and magnitude of Irish Shipping should have had to go under. Nevertheless, we must be realistic. If we cannot afford it, there is certainly no reason why we should have it. I believe that the Government took a courageous step on behalf of the taxpayer and for that we must be grateful. At the same time the plight of the unfortunate people who have given the best years of their lives in the service of Irish Shipping and, indirectly, in the service of the State and who have lost their jobs, is something that we genuinely regret. It should be possible in a survey or an investigation to be able to pin down the responsibility on the people who made the decisions that have proved to be so disastrous. I would hope, at the very least, while we accept that it has been an expensive and costly lesson in the end for the taxpayer, that the Government will learn from that decision.
The Minister touched on the problem with the B & I. There is no doubt that we must have some links with the outside world over which we have control. During the number of years in the seventies in which I was President of the Transport Commission I availed of the opportunity to travel on every one of the services within the Community of Nine, as it was then. I looked on the B & I as being — and even last month when I had occasion to use the service a number of times — one which certainly gives a top class service. I was speaking to the Master of the M. V. Connacht on the last trip which I made, and he told me that they were full to capacity right throughout the season that has just passed. Even if there is a problem in B & I, I think they give a good service.
From speaking to European tourists, such as Germans and French people, I feel that it more than favourably compares with anything in other regions in Europe. From my point of view, any deficiency is no fault of the people who are actually working on the ferries. The problem must be with management and with administration. Whatever steps the Government and the company are taking now to rectify the situation should be urgently taken so that the company can be restructured if it needs to be. We certainly must have a service. That part of transport is very important to the economy of the State.
I should also like to mention to the Minister the weakness of the transport policy within the Community. If one looks at the Treaty of Rome — and it is very relevant to this debate — one will notice that in the original Treaty there is the aspiration of a transport policy. If we think of the regional policy, the idea is that there should be an equalisation between the richer regions of Europe and the poorer regions. That is not possible unless there is an equalisation in the costings of transporting the produce from the peripheral regions into the central, valuable market places in Europe. For 20 years now we have not had sufficient momentum in the evolution of a transport policy. This is one of the areas that would greatly enhance, support and facilitate the producers in this country, and not just agricultural producers but the producers of manufactured consumer products.
We have possibly the most expensive stretches of channel between this country and Europe, no matter which way one turns. There should be a policy which would put our producers on a footing with those in Central Europe. That is what the Treaty of Rome sets down very clearly. Nothing has been done about that. I hope that, having regard to the problems he has experienced this year, when the Minister goes as a member of the Council of Ministers, he will see the value of giving our country a fair crack of the whip through the medium of a transport policy. People have been talking about that for 25 or 26 years and yet there is very, very little progress on the entire problem. It is nonsense to expect huge improvements in the economy of the poorer regions, if going hand in hand with the regional policy there is not an input, having regard to the difficulties both timewise and cost-wise to transporting the produce from the less prosperous regions.
I should like to compliment the Minister on his very forthright and revealing speech. He has set out the problems of the sector very clearly to the House this afternoon. As far as I am concerned, I would be very supportive of the Minister taking whatever measures are necessary in order to ensure that, first of all, justice is done to the pensioners of Irish Shipping. I compliment the Minister and the Government on the decision they have taken, but on the problem of the B & I company I would hope that the Government would take whatever steps are necessary to ensure the continuation of this service.
If the ferries are working to full capacity on the service, then there is something wrong if they are losing so much money. If one looks at the ferries going from the south of England to Belgium or, indeed, any of the ferries operating on the straits in other regions of the community, as far as I can see none of them is in the category of losing as much money as this service. Therefore, I would ask the Minister to look urgently at the management structure of the B & I company. I would even go as far as to suggest that he should talk to the masters and the pursers of the ferries who are putting their backs into the job. These are the senior people on the ships. There must be some way of tackling the problem because the people who are giving dedicated service are giving very courteous and efficient service and it is possible that they would have a very worthwhile input to point to the solution of this mysterious problem.
I should like to join with Members of the House in congratulating the Oireachtas joint committee on the production of this report. I want to put it on record that it is a sad day when a Minister has to come into this House to defend and justify the action taken by the Government with regard to Irish Shipping. The Minister puts it in a nutshell when he says:
It seems to me that the committee, like myself, found it well nigh incomprehensible that a company as successful as Irish Shipping Limited could conduct its affairs so recklessly as to destroy itself.
The kernel of the problem is here, especially with regard to the chartering of certain ships. There is a lesson to be learned there, a lesson for all time. We have had major blunders in recent times, such as the Bula Mines saga. The lessons to be learnt from both Bula and Irish Shipping should be taken note of. Irish Shipping Limited were formed during the war years, in 1941 to ensure for the people of Ireland that the vital supplies, so badly needed at that time for our survival, were delivered by the fleet. Perhaps enough tribute was not paid to Irish Shipping and to our shipping fleet at that time and after the war. It can be recorded at this late stage. They were formed in a time of war, in a time of great danger to ships and to crews. Surely as a major shareholder in a company who, as the Minister stated, conducted their affairs so recklessly, the blame rests on the Government and on the Minister, as much as on Irish Shipping Limited.
Does the Senator know which Government were in power at the time?
I do. I am blaming all Governments. It is the duty of the Government and the Minister to see that they are kept informed of any major decisions, the capital involved, and the value for money. The liquidation of Irish Shipping has left a sour taste in many people's mouths. The sudden decision taken by the Government shocked the nation. Ships were impounded in foreign ports and crews domiciled in foreign countries apparently without clear regard for the crews or their families. It was a poor reward for services rendered to the country. Major decisions such as these can have repercussions in years to come.
When I was young I saw the railway stations in Clones and Oldcastle, which were terminals, closed down by a Fianna Fáil Government. Many people objected at that time. The railway lines were lifted and the stations sold off for practically nothing. Those towns were turned into ghost towns. They have never recovered since. Having regard to the state of the roads in the country, the heavy traffic, and the amount of money now needed to bring them into a proper state of repair to carry the traffic, it was a wrong decision to close the railway lines at that time. Maybe now if the money was available those lines could be re-opened, but they are gone. The decision to close the railway lines was wrong. Such a decision saps the life blood of any area. Any decision like that should not be taken lightly and should not be taken as a shortsighted measure. No matter what justification there seems to be for immediate liquidation of Irish Shipping, events have proved since that the cost of liquidation was very heavy on the taxpayers.
I agree with Senator McDonald. I would have to say to Senator Lynch that I am in agreement with him about the railway lines. Irish Shipping were the responsibility of the Government and the Minister, but what the Senator did not say was that Fianna Fáil were the party in power at the time. If the Senator wants to blame anybody, the blame lies with his own party.
As regards the railway lines the Fianna Fáil party were the greatest offenders. The railway line from Listowel to Ballybunion was closed under a Fianna Fáil Government. If that was there today, it would be a very valuable asset to tourism. The railway line in South Kerry from Tralee to Cahirciveen was closed down by the late Erskine Childers, who was then Minister for Transport and Power. The Minister was in Killarney opening the second phase of the Torc Hotel at the weekend and, on the following Monday, he closed the line from Tralee to Cahirciveen. He gave guarantees at the time that Cahirciveen people would still have the service of transport through the bus services from Cahirciveen to Tralee at a reasonable rate and would have a frequent service. They had it for a short time at a reasonable rate, but they then finished up with one bus a day from Cahirciveen to Tralee. Subsequent to that — I do not know if it was an EC regulation but it was brought in when Deputy Peter Barry was Minister — when a railway station is closed down the lines have to remain for ten years.
Will the Senator get back to the item under discussion?
I am replying to Senator Lynch who raised this point.
Acting Chairman
I am giving you a bit of latitude and you have replied.
I have no more to say. Thank you.
I want to thank Senators for contributing to the debate and briefly deal with some of the points raised. The points made by Senator Fitzsimons and Senator Lynch that we should have avoided liquidation does not bear thinking about. The Government made every possible effort to avoid liquidation. We looked at every other possibility before liquidation, but there was no alternative.
In my opening speech I have given the figures. The estimated figures a year ago to keep Irish Shipping going showed that it would have cost, over five years, £200 million. We can now revise that upwards to about £220 million because of the further decline in deep sea trans-shipping rates. That would have been the cost of keeping the company going. There have been in this House, and in the other House, ill-advised, baseless suggestions about appointing receivers or administrators. That illustrates how unresearched the contributions from the Opposition have been. The circumstances in which a receiver can be appointed to a company are well known in company law and in company practice. A receiver can be appointed only by a debenture holder. There were no debenture holders in the case of Irish Shipping.
What happened was that a provisional liquidator was appointed not by the Government but by the High Court, at the initiative of the board of Irish Shipping. The Government did not decide on liquidation. It was decided by Irish Shipping. The Government decided that they could not make any further financial commitment to Irish Shipping. The provisional liquidator had the same status and powers as a receiver. If there was any possibility of re-negotiating the charters or coming up with a package to salvage Irish Shipping it could have been done at the time of the provisional liquidation. That was impossible once the provisional liquidation was made official. I want to dispel once and for all this idea that we could have appointed a receiver and that somehow there might have been a way out of the problem. That is not the case. The provisional liquidator could have done anything a receiver could have done to salvage but as we fully expected that was not possible.
I want to comment on the point made by Senator Fitzsimons that Fianna Fáil are committed to recreating a commercial deep sea shipping fleet. What does he mean by that? This has been stated in the other House as well. The Government are committed to having a deep-sea shipping fleet but we are not committed to spending millions and millions of taxpayers' money on something that we were able to have for years and years without involving the taxpayer. The taxpayer is already far too heavily taxed in Ireland. It should be possible in the years to come to recreate a deep sea shipping fleet. It does not have to be necessarily a State owned shipping fleet or a fleet set up with the State's money although that is always a possibility. It is a possibility that it would be done that way or that it would be done partly that way. I do not exclude it but the circumstances would have to be right and the call on the taxpayer would have to be nil or minimum. I believe we can have a deep sea shipping fleet again, we should have a deep sea shipping fleet again but it should not necessarily involve a call on the taxpayer. Senator Fitzsimons also referred to criticism of the Government in Irish Business in that they had no control of chartering. That is an accurate criticism. The only difficulty I have about what Senator Fitzsimons said is that he implied that the article in Irish Business was a criticism of this Government and of me whereas the criticism applies to the Government of the day which was his own Government back in 1979/81. That applies equally to what Senator Lynch said and to which Senator Daly referred. I have taken a lot of abuse over this whole episode because I did my duty. I do not mind doing that. I have avoided making political capital out of it, I have avoided bringing party politics into it but if the members of the Opposition are determined to blame the Government so be it, but I have to remind them that it was their Government who were in power in 1979 to 1981 when all this happened. I would make a further point that this awful development in Irish Shipping's otherwise very praiseworthy history took place during that very period in Irish politics 1979/81 when this country was ruined economically with the whole spend, spend, spend environment which has us in the economic mess we are in today. This whole problem also arose at that awful time in Irish political history.
Senator Fitzsimons asked why the resignation of the chairman and the board was not requested. In relation to the board there was little point in asking the board to resign when it was a new board. Almost all of the board at the time of the disastrous decisions had already left the board so there was little point in asking a new board to resign. It is true that the chairman was still there having been chief executive at the relevant time; he is now chairman. That was considered but it was felt that the first thing we had to do when the extent of the problem became evident was to try to rescue the situation and that we would not change captains in the middle of the storm but consider the situation as soon as we got it somewhat under control. Ultimately the chairman's resignation was requested. As is known a settlement was made with him. I can tell the House that I was dragged screaming and roaring to the table of that settlement but the legal advice was that that course was the least disadvantageous one available to us to avoid all sorts of litigation in the courts in the midst of this awful problem of Irish Shipping. I was most reluctantly drawn into that agreement. We did it because it was the least disadvantageous course and we did it in the belief that there was still some hope of retrieving the Irish Shipping situation but sadly it quickly became evident that that was not to be.
Senator Fitzsimons also asked could Irish Shipping not be used to carry coal to Moneypoint and whether this has been considered? Every aspect of this matter has been considered. It should be repeated that the Irish Spruce is not our property. It belongs to Jura Shipping Limited and its financiers. Its ultimate fate depends on those. There are all sorts of other legal and operational problems involving our continued ownership and operating of the Irish Spruce because of the background. I hope that before too long now the future of the Irish Spruce will be clarified.
Is it not leased by the Department?
The less extreme alternative should have been considered by the Minister, Senator Fitzsimons suggested. Does anyone in this House seriously think that less extreme measures or alternatives were not considered. Of course every possible alternative was considered, high up and low down from top to bottom in the greatest of detail, morning noon and night, Sunday and Monday, to try to avoid this awful decision but in the end it was clear that there was no alternative. As every day goes by it is clearer that there was no alternative because the costs are mounting as deep sea shipping rates continue to decline to lower and lower figures. Since Irish Shipping several other very reputable and big shipping companies have gone in the same way, for example Reardon Smith in Wales, Sanko, a very big shipping company in Japan and also a Portuguese national shipping company. There was simply no alternative. If anyone thinks that we would have been wise spending £220 million to maintain a shipping fleet which in the main consisted of ageing ships which would have had to be replaced anyway I honestly do not know how they could account for that.
But there must have been other options?
Every other option was considered. I can assure the Senator that no other option was feasible or possible. The cost in this case made it prohibitive. There was no alternative. I want to emphasise that. Because there was no alternative we were forced to this decision and to face the enormity of it and to face all the terrible sadness that has been inflicted on the workforce of that company who deserved a better fate. It is my sadness that legal and other constraints have prevented us from being of any assistance to them.
Senator Fitzsimons also said the liquidation means that the Government have reneged on its commitments, and that this will affect its creditworthiness and so on. The Government have not reneged on their commitments, and never will renege on their commitments. The Government will always meet their debts. They will always meet debts incurred by them and with their authority. I would hate to think that Members of this House would advocate the principle that the Government of Ireland should be forced to pick up the tab for any reckless or unauthorised decision taken by executives, never mind boards of any of our State companies. If you think of the potential indications of that, that any executive of any State company, could commit their company without authority to all sorts of liability and in the end the Exchequer or the taxpayer would have to pick up the tab, that is not what democratic control means and it is not what responsibility means.
Senator Fitzsimons was not absolutely clear on the announcement on pensions. The fact is that all pensioners, all people who were on pension from Irish Shipping on the day of liquidation who were in receipt of ex gratia payments will now have those ex gratia payments restored to them by the Exchequer and they will be restored retrospectively. A provision will be made in the 1986 Estimates so that payment hopefully can be made early in 1986, the previous level of pensions being restored and the retrospection paid. This has already been done in the case of those with service during the World War.
There was one final point made by Senator Lynch and that was the suddenness of the decision. He said that having crew members stranded abroad was not good enough and so on. A liquidation is not something that is broadcast in advance because if it were there would be the very severe danger, indeed the likelihood, of a stampede of creditors to pre-empt the equitable distribution of the assets. That is usually what happens if strong speculation about liquidation takes place. Of course if liquidation is to take place it has to be done quickly and immediately to prevent that. If we had taken any pre-emptive steps to relocate the fleet or bring the fleet home etc. that in itself could have been adduced as evidence in the courts of our acting improperly and acting pre-emptively to the potential disadvantage of some of the creditors and that would be called fraudulent preference and could have brought us into liability for all the liabilities of the company and these are all very sensitive areas of bankruptcy law which influence the timing and nature of the decision.
This episode is a cause of great sadness to the Government and of great sadness to me personally but I have to repeat that this was a decision to which there was absolutely no alternative.
Question put and agreed to.