Skip to main content
Normal View

Seanad Éireann debate -
Wednesday, 10 May 1995

Vol. 143 No. 5

Adjournment Matters. - ESB Cost and Competitiveness Review.

I welcome the Minister to the House. I apologise for the mix up last week on the Adjournment. I was taken by surprise that the Seanad adjourned at 2 p.m. rather than 4 p.m. as scheduled.

It is envisaged that an additional number of approximately 3,000 people are to be laid off from the ESB, a move which will alter the image of the company. In 1980, approximately 13,500 people were employed by the ESB in this country. This figure has now been reduced to 9,500 and it is envisaged that the workforce will be cut by a further 3,000 under the new cost saving plan which will save the ESB approximately £18 million over a three year period, money which the company will then be able to give back to the consumer. It is also envisaged that the workforce will be cut by a further 3,000, which means that it will have been reduced from 13,500 in 1980 to approximately 3,000.

I take a poor view of this and the unions and Government will have to seriously consider the way in which the ESB is developing. The firm which undertook the report on the ESB, McKinsey and Associates, took a group of union officials and ESB management to the USA where they visited various power plants. However, they were only taken through the front doors of these plants and were shown how a few people could run a station very efficiently. They were not taken to the back of the plant and shown the "yellow pack" workers — those brought in on contract and so on. This was the same firm which, in its report some years ago on the restructuring of CIE and Iarnród Éireann, as it is now called, advised that the company could be made viable by cutting off the rural part of the country and putting direct lines from Dublin to Limerick, Cork and so on. Proposals of a similar kind appear to be made in the report on the ESB. It is a matter of concern, not only with regard to the reduction of the workforce within the ESB structure, but even more so in respect of the safety factor within the company.

The fact that the ESB wishes to reduce the workforce in the power stations raises the issue of safety. There is a power station in the constituency which I represent. It was commissioned in 1974-75, was built over a number of years and employs 260 to 270 people. It has created a lot of employment in the area. The workforce in the station has now been reduced to 174 because all those who retired or resigned, especially over the past four years, were not replaced.

The company is considering building a new peat power station in the midlands and advises that this will create at least 300 jobs. It is not known whether they will be full-time or part-time jobs or whether they will be at the construction or operational end of the plant. The ESB must clarify these points. At the same time it is advising that these jobs are required in the midlands, where there is huge unemployment with no prospects of any work, it advises that it will attempt to deprive a small community of 130 or 140 jobs in a rural area of north County Kerry. This power station is keeping five, six or seven parishes alive in an area where no factories or industries have been established in the past 30 years. At the same time the ESB proposes to replace this workforce by bringing in private contractors, or "yellow packers", comprising people who are not qualified, unskilled and who have not the proper training. Effectively, it is proposed that these people will be brought into a high tech industry like the ESB to run a power station.

In view of this I am concerned about the safety factor of the proposal. Some years ago an explosion blew out part of the Tarbert power station. Similar incidents could happen again. In five to ten years' time, when the skilled work force, with years of training, has been laid off, I do not want to be told by the then management that these power stations are unsafe and a danger to the public. We must ensure that the industries in the country are safe and that the power stations are properly manned and supervised. Given this, I fail to understand how, if over the last ten to 30 years 260 to 270 people were required to run a power station, we can now be told by McKinsey and Associates, or whoever has compiled this programme, that the same power station can be run by a greatly reduced workforce.

It is proposed to reduce the workforce of the Tarbert power station to 96. Part of the power station, comprising units one and two, has been closed down since 1981. It was recommissioned approximately four or five years ago, with £23 million spent on it by the ESB. To date, however, part of the power station has not been brought on stream. despite the company's assertion that there has been an increase in demand of 6 per cent per annum, that new power stations are required in the midlands and so on.

If it is suggested that the workforce of the ESB can be reduced to approximately 3,000, why are 800 people running the administration office in Fitzwilliam Square? At the same time as this situation exists, the company is proposing to eliminate badly needed jobs in high tech power stations because it says that it can run the stations more efficiently by bringing in "yellow pack" workers and contractors. In addition, it is contemplating bringing in contractors to replace the canteen workers, the cleaners, the security forces and the van drivers. The people making these proposals want to rip the heart and soul out of the ESB and bring in untrained people to overhaul power stations. While this is going on the workforce within the ESB has had to bail out these contractors. I have proof of a situation where contractors were brought into a special station in the country and where the work force had to bail out a contractor because he did not have the knowledge with regarding to doing the overhauls.

What is the Government's position on this issue and what is the extent of the Government's involvement in the ESB? What are its long-term plans? Does it intend to close down the ESB stations altogether and start importing electricity rather than exporting it over the Border, as envisaged by the ESB? What is the future for the ESB? I am extremely concerned, not alone about the 3,000 people whom it is proposed to take out of the ESB workforce, but about the safety factor in all the stations. I am particularly concerned about my own constituency, where 160 jobs will be lost. That will be a devastating blow to the entire economy of the area, not alone in the village of Tarbert, but in Moyvane, Astee, Ballybunion and all the way into Listowel. No factory or industry has been set up in that area for the last 30 years. If the Government was to announce 150 new jobs for the area in the morning, through IDA grants or whatever, a song and dance would be made about it and we would hear about it for the next five or six months. At the same time, they are contemplating taking 140 or 150 jobs out of a community which will have devastating effects on our schools, churches——

An Leas-Chathaoirleach

The Senator's time is up.

I have much more to say. Have I the right to come back in?

An Leas-Chathaoirleach

No.

Do I not have a right to reply?

An Leas-Chathaoirleach

The Senator's 15 minutes are up.

I acknowledge the very constructive attitude being shown by the ESB management and trade unions in the CCR. The changes which are needed in the ESB require some very difficult issues to be addressed. It is a measure of the trade unions' recognition of the urgent need to revitalise the ESB in the interest of its customers and in the long-term interest of the company that the unions are attempting to complete the negotiations by the end of May. I do not intend to upset these discussions by commenting in detail at this time.

It is, of course, well known that the Minister and the Government have been pressing for a speedy and successful outcome of the review. The Minister's private letter of 28 February 1995 to the chairman of the ESB, encouraging early tangible results from the process, eventually prompted a meeting by the Minister with the unions, in the course of which the Minister explained his concerns. He acknowledged that difficult issues needed to be negotiated and that the exact level of savings would be determined by them. For their part, the union representatives confirmed their commitment to completing the negotiations by 31 May 1995.

Given the views expressed by the Opposition in March about the need to allow delicate negotiators within the CCR to continue undisturbed by comments by the Minister, it is surprising that Senator Dan Kiely should attempt to probe into the CCR now that negotiations at an even more delicate stage and when the 31 May target is so close.

As Senator Dan Kiely is aware, the CCR is overseen by a steering committee representing my Department, ESB management and unions. The tripartite nature of the steering group has enabled my Department to see at first hand the issues faced by the ESB, to review the work of the consultants engaged to compare the ESB's performance with best practice in other countries and to monitor progress on negotiation between management and unions on desirable changes. However, my Department has no direct role in the negotiations of changes within the ESB designed to realise the savings identified. My Department's responsibility is to promote the cause of the consumer and to represent the shareholder. In so doing the Department will encourage the new climate in the ESB and, where appropriate, set out certain policy parameters to facilitate the conduct of negotiations.

As the Senator is no doubt aware, all parties in the CCR look forward to a positive outcome of the process which they have entered, conscious that the ESB faces enormous challenges in the years ahead. Developments in the EU, the pace of technological change, the pressures of a new competitive environment and demands by a whole range of consumer interests oblige us to pursue the modernisation of the Irish electricity market. Successive reports on the Irish economy have underlined the need to secure competitive advantage and have pinpointed the contribution which our State enterprises can make to industrial growth and job creation and a vibrant market place responsive to consumer needs. The CCR represents the best opportunity to equip and prepare the ESB for a new, more competitive electricity market and to deliver significant benefits to consumers.

The policy agreement between the current partners in Government highlighted the need to revitalise public enterprise and to enhance their performance in the best interests of employees, taxpayers and consumers. The CCR is a novel approach to invigorating the ESB, drawing upon the most enlightened modern thinking on social partnership and engendering trust and co-operation between management and employees. Instead of the sterile path of confrontation, the objective is to foster understanding of the challenges which the ESB faces.

There has been extensive media attention given to the McKinsey & Co. recommendations in the initial fact finding phase of the CCR. The consultants to the CCR identified a significant gap between the ESB and the best practice in electricity utilities elsewhere. The Government is anxious that this gap should be closed as soon as possible. However, we recognise that important pressing negotiations are necessary to facilitate changes required. At this juncture I do not wish to comment on the negotiations themselves or their rate of progress. Difficult and complex negotiations are under way affecting the employment and conditions of ESB staff and for the present the appropriate channel for communication of Government views is the steering group, on which my Department is represented.

I should add that I generally welcome public debate on the future of our State enterprises. I think that it is essential that best modern thinking should be brought to bear on the regulation and management of our State enterprises and utilities. Without open, constructive debate on the challenges which they face and the strategies on offer to enable them to grow and develop in tune with the needs of their customers, the necessity for the type and scope of change to be adopted may not be generally appreciated.

Unfortunately, not all the public debate in the ESB's case has been positive. Alarmist stories have appeared concerning the ESB's future operations in the regions on which, regrettably, the Opposition has endeavoured to capitalise. However, attempts by the Opposition to raise the political temperature by drawing attention to potential job losses arising from the McKinsey & Co. evaluation of what should be done, or leaks of alleged management proposals, reflect little credit on the Opposition's commitment to necessary reform in the consumer interest. I do not intend to become embroiled in commenting on various media stories speculating on possible job losses in the regions. Changes in the ESB should properly be left to the intensive negotiations which are continuing.

Let me repeat my appreciation of the maturity and foresight being shown by the ESB management and employees in going through this process. If we are to be realistic, the gap in performance which has been exposed by McKinsey & Co. cannot be closed without a programme of rationalisation, which in some respects may be unpalatable in the short term. This will call for management resourcefulness and employee understanding. However, the objective is to create a new invigorated ESB which will shed excess costs while maintaining security and improving the quality of supply to the consumer. It will also provide rewarding and more secure employment than would be the case if the ESB were to continue to be uncompetitive.

Indeed, mention of supply, quality and security leads me to conclude with a practical illustration of the potential benefits of the CCR which Senator Dan Kiely may find instructive. An unfortunate side effect of the ESB's problems in recent years has been the postponement of much needed capital investment in the rural networks, because the overriding need to preserve competitive pricing has placed funding constraints on the board. This has been a source of justified complaint by some rural customers. When the CCR enables the ESB's costs to be trimmed to close the competitive gap, resources will then be available to correct deficiencies in rural supplies while avoiding an excessive price burden on the consumer. In my view, the sooner the ESB's costs are tackled the better and I suggest that Senator Dan Kiely let management and unions continue the task of negotiation rather than entering the fray at this crucial time.

I wish to ask the Minister a brief question.

It should be left to the management and the unions to sort out these difficulties. I ask the Minister and the Government to take a hands off approach in these delicate negotiations that are currently taking place. I also resent the ESB conducting a propaganda campaign against the consumer.

An Leas-Chathaoirleach

I allowed you a brief question, Senator, not a Second Stage speech.

Top
Share