Amendment No. 1 is out of order as it involves a potential charge upon the Revenue.
National Stud (Amendment) Bill, 1993: Committee and Final Stages.
Section 1 agreed to.
SECTION 2.
Amendment No. 1 not moved.
I move amendment No. 2:
In page 2, between lines 14 and 15, to insert the following new subsection:
"(2) Notwithstanding anything contained in the Principal Act (or the Act of 1976) shares may be subscribed for by any person, with the consent of the Minister for Finance.".
The reason for this amendment is that the Stud would need to raise a substantial amount of money for a more effective breeding programme. We all agree that the Stud has a responsibility to smaller breeders, the majority in the industry who do not have many mares and by standing stallions of reasonable merit at a reasonable cost they help the industry. However, I believe there are opportunities at the top end of the market.
The Stud is a flag-ship for the industry in Ireland. If people come from abroad to look at the bloodstock industry one of the places we should be proud to bring them is the National Stud. It has a very fine tradition. It had Lord Gayle, Ahanoora and other good stallions standing there which made a good deal of money. One good stallion would cost £7 million or £8 million. I agree with the Minister about asking the taxpayer to bear the burden in respect of charges to the Stud; that is the background to the amendment.
I am not suggesting that the Stud should be privatised; I made that clear at Second Stage, but I am suggesting there is an opportunity to invest in the Stud. My understanding of the management of the Stud is that they would welcome such a development. There is one stallion there at the moment called Dancing Dissident. There are 17 shares in it but the nomination to that stallion has fallen from £6,000 to £3,500 a year. That is a symptom of what is happening in the industry.
I agree with the Minister that the delay may be to the Stud's advantage because of the state of the industry, but it is a highly skilled job to buy a successful stallion. There are very few people in this country with the competence to consistently buy the best stallions. Such people, whether Irish or foreign, should be encouraged to participate in the work of the Stud, for two reasons, one, what it could do for the industry, generally, and the other, to enable us to buy the best stallions. We want to be able to say to visitors to the Stud that we are proud of it as a flagship for the industry. Those are the reasons I recommend the amendment to the House.
The Minister said he was concerned about the financial activities of State bodies and about to have recourse to the taxpayer to bail them out. The intention of the amendment is to ensure that it will not be the taxpayer who bears this cost but the equine industry.
People have enormous amounts of money to invest in this industry provided they see that it is run properly and that it allows for a genuine sense of participation. In Kildare we have seen Arab investors transform the industry and the countryside. They have provided an enormous number of jobs on an area of land which if used for ordinary farming would provide only a fraction of those jobs. That is the background to this amendment which I commend to the Minister.
I support this amendment which I signed along with Senators Dardis and Honan. Senator Dardis said correctly that the equine industry is going through a serious recession at the moment, not only in Ireland but all over the world. The requirements of the industry may change radically in a short period and I would like to point that out to the Minister. There must be scope to broaden the interest of the National Stud. Syndication has been normal practice for the last 25 years in the horse industry and in other industries as well. It has been rightly stated that a top class stallion may cost £6 million or £7 million. It is difficult to expect any organisation, even the National Stud, to pay that amount of money. If the Stud has that amount of money it would be well advised to invest a million pounds in each of seven stallions rather than £7 million in one stallion. The risk which the Minister has already referred to is thereby reduced. In order to allow the Stud this flexibility I appeal to the Minister to accept this amendment which does not interfere with any provision of the Bill. Overall, its adoption would be of benefit to the Stud.
I oppose this amendment. The most important consideraton is to put the National Stud on a sound financial footing. I have no difficulty with syndication or part ownership and I know the board do not envisage having the means to buy any stallion of international repute outright. In future the Stud expects to participate in the purchase of stallions through part ownership, syndication joint venture or other partnership possibilities. I do not see why a stallion in which the National Stud has no stake could not stand at the Stud if the owner wanted to house it there for some time. The possibility of investing in a stallion and investing in the share capital of the Stud are two different matters. Rightly or wrongly people would see the latter, on however small a scale, as a drift towards privatisation. This matter has not been considered by the Government and therefore I cannot accept this amendment which I appreciate was put down for the best motives. I repeat that I have no difficulty with the idea of shares in stallions.
I am disappointed the Minister is taking a narrow view on this issue. We are giving the Minister what he is asking for but he is putting a restriction on the amendment by saying he is not prepared to accept it as such. If this amendment is passed I presume it then has to go back for approval by the Dáil and could create a problem there. Even if it does, it is worth the waiting period of returning it to the Dáil if the amendment is accepted, ultimately.
I have spoken in this debate about privatisation but the word has been taken out of the context in which I used it. Privatisation here means syndication and partnership, which is normal practice for a national stud. I am not prepared to accept the privatisation of the National Stud under any circumstances.
I had intended an amendment similar to this one by Senator Dardis. I appeal to the Minister to reconsider it even if there is a waiting period involved in respect of getting it through the Dáil.
I think the Minister would agree that there is not a great deal of difference between his objective and that of this side of the House. All want to place the Stud on a sound financial footing. Nevertheless there should be a means by which private enterprise could have a stake in the Stud. We need not confine this debate to stallion purchase; the Japanese Gardens are part of the Stud, also and I am sure there are business people in Kildare who would be happy to help promote and develop that resource. The Minister could insert safeguards into the Bill to ensure that the fixed assets of the Stud could never fall into private ownership. This was done in respect of Greencore. I would go along with those safeguards as I believe it should remain a State stud. The Stud could become a flagship for the Irish horse industry, demonstrating our capacity to reach international equine standards.
On the syndication of expensive stallions, I am sure that indigenous companies in the agri-business sector if given the opportunity would participate in that type of activity. Greencore might consider buying a share in a stallion and having it stand at the National Stud since Greencore market horse feed. That aspect might be explored. Our argument here is about how best to achieve an objective we are all agreed upon.
There is no reason why an individual, company or organisation should not invest in a stallion along with the National Stud, in joint ownership, partnership or joint venture involving any number of shares or percentage of ownership. I would welcome that development as I know the board do not envisage being able to own any world class stallion outright again.
I have difficulty however, with the major question of part ownership of the share capital which is what the amendment suggests. This proposal would require the most careful consideration and the building in of safeguards as Senator Dardis said. I cannot accept this amendment but if that proposal is put forward at a future date it will be considered in detail by the Government and by the Departments of Finance and Agriculture. It is not a proposal I am prepared to accept today.
The Minister said he would object to part ownership of the Stud's share capital but not to part ownership of a stallion. They amount to the same thing moneywise, because the share capital is intended for the purchase of stallions as far as the Stud and the taxpayer are concerned. All we are asking is for a vehicle to be provided. I appeal to the Minister to reconsider. As Senator Dardis said there is very little difference between what we and the Minister are saying, but part ownership of the share capital is the same money as part ownership of the stallion. In fact, there is more risk in part ownership of the stallion because the share capital is used to purchase the stallion. That is the situation and it should be accepted at this stage.
The Minister has learned from experience how difficult it is to get legislation through the Dáil to the Seanad or even to get it on the agenda. It has taken six to eight years to get this legislation through both Houses. When I was in Government in 1984-86 this legislation was requested. It takes six to eight years to get legislation on the agenda. For that reason we are offering a vehicle which would be beneficial to the National Stud and to the horse breeding industry.
For the reasons I have stated I cannot accept this amendment.
Amendment put and declared lost.
Question proposed: "That section 2 stand part of the Bill."
I put down an amendment on section 2 which was ruled out of order and I do not question that decision. However, in putting down the amendment I took into consideration the safeguards needed. Under my amendment the share capital of the company shall be as determined from time to time by the Minister for Agriculture, Food and Forestry with the consent of the Minister for Finance.
It is difficult to run a stud by legislation. I was attempting here to remove the cap but build in a safeguard to ensure that any proposals made for moneys in respect of the National Stud would have to be approved by the Minister for Finance, not by the Minister for Agriculture, Food and Forestry.
During the debate on amendment No. 2 we argued about the same issue. The provisions the Minister is making now take into account a five year plan. If the horse industry improves as I hope over the next couple of years, the existing facilities will be used up within two years. The Minister will then be in a similar situation to that which occurred in the National Stud a few years ago when Ahonoora had to be sold to get money to run the Stud, which I said at the time was a great mistake. Without amending legislation it was not possible to approve further moneys for the National Stud. If the Stud wants to buy a stallion costing £2 million or £3 million, £1 million of the share capital will be used up and if it cannot get a partner in the syndicate to invest too, under the present legislation that stallion cannot be bought.
An Leas-Chathaoirleach
I have given the Senator enough scope. He can only deal with what is in section 2, not the amendment which was ruled out of order.
I am not dealing with the amendment but with what is in section 2.
If the Minister or the board of the National Stud has a good proposition but the money allowed under the legislation is spent, the Minister should be able to make an order, with the consent of the Minister for Finance, to remove the cap and allow further borrowing. This facility would benefit the board and the Minister who might have to wait four or five years to get legislation through. I envisage this £10 million being spent in two years and, for the next three years, the Minister arguing with the board, and probably the Taoiseach, to get further legislation through.
I know the amendment was ruled out of order but I would like to comment on the section.
In this Bill the share capital is increased from £5 million to £10 million. Perhaps it is my west Cork background, but I tend to be very prudent about financial matters. I invited a financial person to take over the chairmanship of the National Stud and said that the Stud had been losing an average, about £0.5 million per annum and I did not want that to continue. I asked him to turn it around.
Although we are increasing the share capital from £5 million to £10 million, I would not wish to give a wrong signal to the board. This does not mean that on any occasion the board wants a few million pounds all it has to do is get the permission of the Minister for Agriculture, Food and Forestry and the Minister for Finance. The State is being extremely helpful to the board by increasing the share capital from £5 million to £10 million. That should see the Stud through this millenium, and I know the chairman and the board are also viewing it in that light. If in the next millenium additional share capital is required, the amending legislation will have to go through both Houses.
It is no harm to have very strong financial guidelines because stud fee income has come down in the last couple of years from £1.5 million per annum to £0.25 million, and they still have more or less the same stock. I would like to see the Irish National Stud at Tully and its ancillary activities, go from strength to strength. If, for some reason, in a number of years' time, additional finance is needed, if we are still around we will seek to provide it. However, I would not wish to give a signal that we were making additional finance freely available.
Question put and agreed to.
SECTION 3.
Question proposed: "That section 3 stand part of the Bill."
I want the Minister to clarify a point. He mentioned the need to resource the Stud properly. There is the question of how much stallions are likely to cost; £5 million will not buy many stallions. Is it intended that the purchase price of the stallions will be funded out of the additional £5 million share capital or will it be funded out of borrowings? I am not clear about how the purchase of stallions will be funded. If stallions are to be purchased out of borrowings, is £5 million enough?
There is a cap on borrowing of £5 million. I ask the same question as Senator Dardis: with what will the stallions be purchased? Will it be with the share capital or the borrowings? Will the borrowings be used to develop other farming activities at the Stud? The Minister says that borrowing capacity will not exceed £5 million. On what calculation does he base that figure? Without additional information it is difficult for us to understand how the Minister arrived at that figure.
We are increasing the borrowing capacity from £0.5 million to £5 million and the share capital from £5 million to £10 million. It is for the Board to decide to use borrowings or share capital, or a combination of both, for whatever purpose they see fit. The £5 million ceiling on borrowing and the £10 million ceiling on share capital were agreed on the basis of a five-year programme put forward by the Stud. To restore the Stud to financial soundness and stability, this level of borrowing and share capital was considered adequate.
Could we see the text of the five-year programme? There is surely nothing secret about it since the Stud is a public body. It would have been useful to this debate if that programme had been made available to us. I would have liked to have seen it.
It is extraordinary when the Minister brings forward a Bill to facilitate the needs of the National Stud based on its programme of requirements, that the Opposition should seek to extend it all over the place. We are criticised daily for the insufficient amounts of money available to various departments. This Bill is a direct response to a request from the National Stud, yet the Opposition wishes to give the Stud a blank cheque with little accountability. The Minister's efforts to make the Stud economically viable seem to be turned on their head. Can we not show some common sense and let the matter proceed?
On the contrary, we do not want to give anybody a blank cheque and we have been making that point clear since——
That is what it sounded like——
We want to ensure that this commercial activity, which is a high spending and capital-intensive one, will be properly funded. That is the intention.
The purpose of this House is to tease out Bills with the Minister. I am not being irresponsible with regard to section 2 of this Bill; I am acting responsibly on behalf of an important industry.
Question put and agreed to.
Sections 4 and 5 agreed to.
Title agreed to.
Bill reported without amendment, received for final consideration and passed.
Sitting suspended at 11.55 a.m. and resumed at 12 noon.