It is a most extraordinary point of order I have ever come across, but nevertheless it is the first time I have ever known the Senator to be out of order, so we will let him go.
The ICC, as a bank, is unrecognisable from what it was in 1933 when it was set up. I was not around in 1933 and I do not remember why it was established, but I gather the purpose was to help the small, fledgling manufacturing industry of that time, which was very unprofitable and needed State assistance. That need has obviously gone and I am not sure whether the State bank at that time got directions from the Government about where it put its money or was under pressure from the Government about where it put its money or made investment decisions purely on the basis of commercial criteria, or whether it made decisions, rather like NADCORP with employment and fostering industry which is in a vulnerable state as well. In other words, was it taking risks and was it under State pressure to give employment in certain areas? Whatever it was doing then — the reasons it was set up are patently obvious — it has changed unrecognisably. It is now a bank which has been set up to attempt to compete with the private sector. It has changed its colour, its whole purpose. I would like the Minister to tell us whether he thinks it can properly compete with private banks — with the Bank of Ireland, with IBI, with the Investment Bank of Ireland, with AIIB, with the Ulster Investment Bank — in this very cut-throat business in the financial services sector.
Can it compete with foreign banks which are coming in here? We see the Financial Services Centre attracting some foreign banks. Some of them are coming here simply to conduct operations which are not in direct competition with the ICC, but some will be in direct competition with the ICC, and it seems that the ICC, because it is not governed by totally commercial criteria, has its hands tied. The ICC, despite all the praise which has been heaped upon it today and its performance, cannot actually compete on the same basis with these banks because for one reason, its borrowing limits are so small. These other banks can borrow thousands of millions without very much bother.
I would like to ask the Minister to look at the case of the Trustee Savings Bank, which we had here in last December's Bill. That is another anomaly in the banking system. What is happening in this Bill is lacking in drama, it is not a very dramatic change just to raise the borrowing powers of the ICC, but what we are going to have are different levels of banks competing at different levels. We are going to have the ICC doing a very good job within limitations, and we are going to have the Trustee Savings Bank doing a very good job within even more severe limitations. But the ICC may be at the most serious disadvantage when the multinationals, the really large German, Japanese and American banks come here — which the Government are encouraging with the incentives they are giving in the Financial Services Centre but with the opening of all barriers, and financial barriers as well, in 1992, big will be what matters and big is going to swamp small; the ICC will be small and will find if very difficult to compete.
I suggest that the Minister considers — this is no revolutionary idea — that one of the best ways to let the ICC compete is to let it float away into the sunset, that all Government restrictions are lifted and that this institution, which we all have been praising, is left to its own devices in the commercial world. I suggest that if it is left in its present state, like the ACC, it will not survive, it will not be able to compete and there will be certain areas where the foreign banks will come in and take over because they will be able to compete on more competitive terms. It is like the supermarket against the small grocer; it is exactly the same principle. I suspect the Minister will reply by saying he has called in consultants — which the Minister for Finance has done — to look at the ICC and make recommendations on the future of the ICC. I would like to ask him what the terms of reference of these consultants are, whether it includes the release of the ICC from all its bondage and the particular restrictions imposed on it by Government. I think there is a certain irony in the Minister calling in consultants.
I would like to say in passing, that, as a member of the Oireachtas Joint Committee on State-Sponsored Bodies, there have been, to my knowledge, several reports by that committee on the ICC. This particular body works relatively slowly, because things keep getting slipped in — that is not meant to be in any way a pejorative word — things keep taking priority, but the ICC is due to be reported on again by that joint committee very shortly. It seems to be a bad reflection on this Committee of the Oireachtas if, while that committee are sitting and has the power to look into the ICC — and will also probably call in consultants — the Minister is calling in consultants to look at the ICC. There seems to be an overlap there.
I have had a been in my bonnet about the Joint Committee on State-Sponsored Bodies for quite a long time because it is a committee which is sent away to do a certain amount of work, left to its own devices, writes reports and then just goes away. I ask the Minister if, in his consultations with consultants, he will first ensure that there is no overlap with the work of the joint committee and that he will also ensure that it does not simultaneously call in consultants, in which case we will get two consultants' reports on the ICC at the same time. There is a serious danger of going that. If that body is to do anything, and if it is to mean anything, it should be the instrument used by Members of the Oireachtas, to examine the ICC, and the Minister should not call in consultants. That is an important point.
Second, in his future plans for the ICC, has the Minister considered any of the work done by this joint committee in the past on the ICC? The reports that have been issued, the inquiries that have been held, and the holding of evidence, by this body — it is particularly relevant in the context of this particular Bill — seem to be totally ignored. I do not know, but I will wager with the Minister, that none of the reports of the Oireachtas Joint Committee on State-Sponsored Bodies on the ICC have ever been debated in either House, and I would guess that very few of its recommendations have been implemented by the ICC or the Government.
Instead of calling in consultants, which perhaps he has done already, the Minister might consider using that body to examine the ICC and to make recommendations about its future and about how he can improve its present performance. That is what it should be doing.
I would like to ask a question, Senator Doyle asked this also, why a State guarantee is necessary. If the ICC is performing so well — I think it is performing very well; it is aggressive, enterprising, and a tremendous body within the limitations in which it operates at the moment — why is it necessary that there should be any State guarantee? It seems to me that the State is taking a totally unnecessary risk, that it is now a company which makes decisions on a commercial basis and that if it was to borrow more money those who are going to lend it more money will consider those particular applications on their commercial merits alone.
If the ICC has a State guarantee behind it, it is not going to have any difficulty, this Minister knows this, borrowing that money and nobody lending that money to the ICC in whatever form is going to look twice at it because they know that their money is guaranteed by the State. That, in itself, means that commercial pressure is taken off the ICC when it is borrowing money and it means that in this case it is operating with a great advantage over its competitors because those in the private sector obviously do not have Government guarantees. It is actually working on a completely different level from the private sector while it is trying to compete. It is unfair in some ways and it is working at an advantage in other ways.
It seems to me it is an extraordinary anomaly to have a bank which we do not really need — we need a Central Bank but we do not need a State bank of this sort. To have a bank operating on a different level from the private sector, at an advantage in one place and a disadvantage in another one, is utterly anomalous. I am disappointed that this Bill came forward to extend that anomaly, to say we accept this is an anomaly but we really have not the imagination to consider what to do with the ICC so just for the moment they need to increase their borrowing powers and let us do that. That is a pity and we must ask the fundamental question about whether a State guarantee is necessary.
Even if the State continues to hold shares in the company, of which I am very doubtful, is it necessary for the State to give such a guarantee? I ask the Minister to consider that as well and whether it is necessary for the State to put itself at risk, because the State is putting itself at risk here, totally unnecessarily, because I submit that the ICC could borrow this extra £200 million and a lot more, if its performance and its assets are anything like what we are led to believe. I did not look at the accounts before this debate but I believe the Minister and everybody has said this. It seems to me a healthy company will have no difficulty doing this and it will exert that sort of pressure on the company to keep healthy.
There is nothing worse for a company than to get a State guarantee. Look what happened to B & I over the years. It was a disaster for B & I that it got a State guarantee. I think it cost the State £106 million in share capital over a very short period. It is a very bad principle. Eventually, the State had to write off the £106 million. To extend that to what is now a healthy company is very dangerous. Healthy companies can become very, very unhealthy if commercial pressure is not continually exerted upon them.
The area of selling the shares in ICC is also something which should be touched upon in this debate. Senator Doyle mentioned it but I do not think the Minister mentioned it in his contribution. It is a very thorny subject to suggest privatising any of these State companies. It really boils down to ideology in the end and what your gut instinct tells you ought to do. If this company has done well as we are told it has, if its future is so rosy as is painted in the Minister's speech that shares in ICC are of an enormous value and that the State made an extraordinarily good investment in 1933 when it set up this company, it seems to me absolutely logical that the State should cash in. I cannot see what is wrong with the State having made a good investment taking the cash and investing it in something else. If it is a successful company there will be plenty of institutions, fund managers, merchant banks and individuals very happy to subscribe to shares in the ICC. The State can take many hundreds of millions out of it by privatising it and go and spend the money on something else which will fulfil the priorities of the Government at the time. It could, of course, be used — as could selling off the ACC and Irish Life — to reduce the national debt dramatically and, therefore, reduce our interest payments every year. It could also be used for any other purpose for which the Government think fit. The Government are always crying out for money.
I cannot understand why the socialists among us do not make more of this, why they do not say, "sell off Irish Life, sell off ICC, sell off ACC and put the money into education". The Department of Education are crying out for money. There have been education cuts on an unbelievable and unprecedented scale. The same applies to the Department of Health. We hear people screaming, and rightly so, about the health services where real hardship has been imposed on poor people as a result of Government health cuts. Yet, people scream when you say "Let us sell off Irish Life and ICC to rich, fat capatilists and put the money into the health services". It seems to me to be the most logical thing in the world to do. That is what Government investment is for. Every investment is made so that at some stage the Government either get a dividend or get a profit. At the moment for the sake of the public sector deficit the Government need a profit. I cannot understand why the Government has been so slow on the Irish Life business and in this case on cashing its chips and putting the money where it is really needed. It is really needed in the health services and in education. The sale of ICC, the sale of ACC and the sale of Irish Life could make a fundamental and dramatic difference to these particular areas where the Government have made cuts.
The Government should consider this and should tell those people who so strongly object to the selling off the State assets that the money is going into infrastructure for education and health and let us see what they say. They will say they do not want that money, they want money from somewhere else, they want to borrow money. It is the most extraordinary contradiction which the left makes all the time, where they do not actually want the cash from certain sources to help those whom they purport to represent. I would like to see the Government selling off all profitable State industry, provided they can get a good commercial value for it and putting that money either into the Departments of Health and Education and into infrastructure there or into serious venture capital projects where there is room for expansion, for employment and for improving the economy. I cannot understand why this is not done and why it is considered to be so difficult, especially from a Government of this sort or a Fine Gael-type who do not have ideological hang-ups about privatisation. I would expect those matters to be considered on their merits.
It also seems strange — and I am not opposing the Bill in case the Minister thinks I am — and there is a limit on borrowings. I would like to know where the Minister got this figure of £1,000 million. Why is it increased by £200 million? Did they have consultations with the ICC? Did the ICC ask for another £200 million and say that will keep them going for another three or four years? I would like to know exactly where this figure came from.
