Vol. 158 No. 20
I remind Senators that a Senator may speak only once on Report Stage except the proposer of an amendment who may reply to the discussion on the amendment. Also on Report Stage, each amendment must be seconded.
Amendment No. 1 is in the name of Senator Ross. Amendments Nos. 2 and 3 are related. Therefore, amendments Nos. 1, 2 and 3 may be discussed together by agreement. Is that agreed?
On a point of order, the relationship between amendments Nos. 2 and 3 is not close. I do not mind discussing them together because I will not press the second one. They are separate issues.
We will take them separately if you wish.
I am conscious of the fact that the Minister wants to leave.
It is not that I want to leave but that I must speak in the other House. There is nothing I can do about it.
Amendments Nos. 1 and 2 are related. Therefore, we may discuss them together. Is that agreed? Agreed.
I move amendment No. 1:
In page 3, line 32, to delete "paragraph" and substitute "paragraphs".
I will not play games with this. I will not press amendment No. 2 to a vote because the Minister answered the question already. There will be no share options granted to employees or directors at the floatation. That answers my question and fully satisfies me. There is no point in saying any more about it. I thank the Minister for giving us that important vital commitment for the future. It will do no end of good to the goodwill of the smaller shareholders in the Telecom Éireann floatation because if these options had been granted, it would have had the effect of diluting the smaller shareholders. People say it would not cost anybody anything but it would cost them something because it issues more shares and dilutes the whole issue. I congratulate the Minister and I thank her. I will not press this amendment.
Is amendment No. 1 seconded?
Yes.
I move amendment No. 3:
In page 4, between lines 4 and 5, to insert the following:
"(ac)That in any distribution of shares to the existing workforce of Telecom Éireann, a similar and equitable arrangement shall be made on a proportionate basis for pensioners and retired workers of the company.".
I will not be tedious about this. I made the argument on the section on Committee Stage. The Minister said that she cannot change the arrangement which has been agreed by the trade unions but I do not see why not. After all, this is legislation – we can legislate any way we like. We can say to the trade unions that they must look at this again. Perhaps I am wrong, but I still say it is inequitable and unjust. If the trade union representatives considered only those people directly and currently in employment, then they are letting down their pensioners and the other marginalised workers about whom I spoke and are in dereliction of their duty. We, as legislators, ought to do whatever we can. If there is the possibility of ministerial movement, then we should take action on this point. Senator Ross made some valuable points in an aside to me. I am not sure if he wants to put them on the record.
I second the amendment. I fully support the idea of equity in the distribution of these shares to pensioners, who obviously played as large, or a larger, part in the building up of Telecom Éireann. Some of them would have given 30 or 40 years service and would be out of the loop whereas other people who are just in the company for a year would be in the loop. That seems unfair because, as I said on Second Stage, these shares are an extraordinarily generous donation to the workforce. They are unprecedented and far too much from a company which has been inefficient and over-manned for too long.
I want to finish in time to allow the Minister to reply. The Minister may be able to answer the following question. I understand that the deal with the Telecom Éireann workers was made at a time when the valuation put on the company was £2 billion. The present valuation of the company is £5.5 billion. The deal was made on an assumption of a certain degree of generosity but that degree of generosity is now multiplied. Should it not be revised on that basis and on that basis alone?
I thank the Senator for withdrawing amendments Nos. 1 and 2. I can understand the feeling of a sense of equity because no doubt those who retired contributed in a major way to the build up of the company, but they have their pensions. It is right that they have them. The current employees gave up their pensions and an actuarial value was placed on their Civil Service pension. They will never receive it because they have given up their contribution to it.
Second, they borrowed £95 million, which will take between seven and ten years to pay back, so they cannot get any of the 9.9 per cent of the shares until they have paid it back. The pensioners did not borrow to purchase part of the 14.9 per cent. In addition, they have the pension, the annual bonus, etc.
The commercial arrangement was entered into and signed by Telecom Éireann and the trade union group. I cannot change that in any way, but last February I met the pensioners' group and I, like others here, was troubled about the sense of history, as it were. The advisers and the Depart ment of Finance and my Department are working on an arrangement whereby the current pensioners will be entitled as of right to purchase shares so that if the issue is over subscribed and people's shares are cut back or they do not get them, the pensioners right to purchase shares will not be curtailed by numbers, market forces or the fact that the previous shares have been purchased.
Senator Ross asked if we might revisit the valuation of the company as it appears to have increased considerably. I would also put the case of KPN-Telia. Although there is a clawback, they purchased at what would be seen now as highly favourable terms. What is sauce for the goose is sauce for the gander in this matter.
I have no ideological hang-up about worker participation. I welcome worker participation in an enterprise as it means motivation and interest. I wish people would recognise that 14.9 per cent was not handed out – 9.9 per cent was purchased and 5 per cent was for change.
As the Minister of State, Deputy Treacy, is waiting to take over, I pay tribute to this House for facilitating such an interesting debate. Giving people the chance to purchase share incentives is a huge issue. We have freely aired and debated the matter and made firm decisions. The debate was robust, interesting and related to the matter in hand. We are embarking on a big adventure, which is the first of many, not from an ideological point of view but from a practical one in the interests of competition and the consumer. We can no longer erect high walls around us.
Sean Lemass set up a factory in Athlone called General Textiles Limited to give people jobs in a highly protectionist environment. My father and mother, who was pregnant with me, and three children went to Athlone. For over 20 years 1,000 people were employed in the factory; we lived in a house in the middle of the factory – the hooters sounded every eight hours and everyone went to work. The work involved looms, bleaching, dyeing, finishing and spinning and provided good employment; it laid the basis for the industrial town Athlone is today. I grew up to the sound of hooters, playing among the looms, at one with the workers. The factory had high walls around it; it was a protected industry providing paid jobs.
However, tyrelene and synthetics arrived and cotton went out of fashion – if only it had lasted the pace because it is in fashion again. Seán Lemass began to take down the walls of protectionism and we learned a sharp lesson; one cannot live in a protected environment forever. I have experienced that and I can empathise with workers, with their concerns and their way of life. My father was a civil servant who was plucked from the Revenue Commissioners to go to Athlone; he never came back.
Protectionism does not work, which is why I introduced deregulation. It was a daft notion that telecommunications could be protected. However, it is difficult for people to move from a monopoly to a free market. It is difficult to change mind sets and to work with companies, workers, the market and the political reality and then combine all those with European directives, legislation, strategic partnership and possible privatisation. It is a monstrous task but I am not overawed.
I thank my officials who accompanied me here and in the other House. They have done tremendous work in this adventure – a good description by Senator O'Dowd which I will continue to use. A great deal more work remains to be done. I thank the Cathaoirleach and his colleagues for this good debate. Perhaps the Minister of State, Deputy Treacy, will come in now as I cannot talk from two places, no matter how bright I think I am.
I do not accept the Minister cannot change it; we can change what we like by legislating for it. This is legislation which takes superiority over any in-house agreement between unions. We can legislate in any way we please. I will press the amendment.
We already knew the facts the Minister put on the record. She has a right to do so and she did, clearly and firmly. However, there is another way of approaching these facts. For example, Senator Ross indicated that the value of these shares have increased by a factor of two and a half. The Minister may say that this has happened with other flotations, which it has. However, it negates the argument that pensioners are not being discriminated against; of course they are. An enormously more generous provision is made for the existing workers.
The Minister said the unions borrowed £95 million. They will apply that money to the purchase of shares, on which dividends will accrue. As Senator Ross, who is intimately acquainted with this matter, pointed out, it is quite likely this debt will be paid off from the dividends accruing. It will not necessarily cost them very much, if anything. It is a gift. The money borrowed will be applied to the purchase of shares – the shares yield dividends which are then applied to the repayments.
Of course.
Exactly. The Minister should not try to break my heart by saying they had to borrow this huge amount of money, as if they were paying interest. They are using the dividend yield to pay back the loan. Pensioners are still disadvantaged. I will press this amendment.
The Minister's presence in the House was a pleasure. She brightened up what is a bright and sunny day outside; however, inside it was showing signs of becoming a little overcast. It was a joy to be here with the Minister in such sprightly form.
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Connor, John.Costello, Joe.Doyle, Avril.Gallagher, Pat.Jackman, Mary. |
Norris, David.O'Dowd, Fergus.Ridge, Thérèse.Ross, Shane.Taylor-Quinn, Madeleine. |
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Bonner, Enda.Chambers, Frank.Cox, Margaret.Fitzgerald, Liam.Fitzgerald, Tom.Fitzpatrick, Dermot.Gibbons, Jim.Glynn, Camillus.Keogh, Helen. |
Kett, Tony.Kiely, Rory.Lydon, Don.Moylan, Pat.O'Brien, Francis.O'Donovan, Denis.Ó Murchú, Labhrás.Ormonde, Ann.Walsh, Jim. |
This has been a very good wide ranging debate. It has been a very thorough analytical debate of very complex, ground breaking legislation. Many Senators participated in the debate which reflects its significance. I compliment them all. I pay tribute to the Minister who remained with us to the end. As Senator Norris said, there is no doubt that with the bright day outside it could have been so dull in here but the Minister's warmth, openness and accommodating mind set transformed that. She was very receptive to all ideas and views, though she could not respond to all of them positively.
I wish to be associated with Senator Fitzgerald's comments. We have had a very useful and important debate. It has set the ground rules for the future. I welcome Minister of State, Deputy Treacy, to the House and wish him well in the European elections.
My saying I am sorry we have not seen more of Deputy Treacy during the debate does not reflect on the Minister. I echo the sentiments expressed by Senators Fitzgerald and O'Dowd. We had an extremely useful exchange of views. There was very little political partisanship. It was particularly useful to have the Labour Party's views on this issue. I do not agree with them but it is useful to have a different point of view from what is now the consensus – that privatisation should go ahead. While for once I agree with that consensus, it is invaluable that those who disagree with it should table amendments to it. This is generally a constructive and non-combative Chamber and what we have seen is the Seanad working at its best.
I pay tribute to the Minister whose performance was classic. She is a Minister who, right or wrong about her views on the legislation she is putting through, is always on top of it and understands it. That is not necessarily true of all her colleagues. Nowhere was this more apparent than when particular subjects or detailed points were raised and she grasped them immediately. I pay tribute to everyone involved in this debate. It has been a historic occasion for this House.
I, too, would like to be associated with the remarks made about the manner in which the Minister dealt with the Committee Stage debate. I welcome Minister of State, Deputy Treacy. It is not often he is able to arrive when most of the work has been done.
Senator Ross raised a point about share options for managers and directors and the Minister indicated that measures will be put in place to limit that abuse. She also indicated positively to Senator Norris that she will ring-fence a certain amount of shares for purchase by pensioners. Perhaps they could be offered at a reduced rate which would give them a proportionate input into this legislation.
The Labour Party holds a different view. We do not believe in the wholesale privatisation of State and semi-State companies. We believe there is a social dividend and character to be attended to; that some companies like Irish Steel can be privatised entirely, some can only be privatised in part and others are sufficiently valuable and well structured to take on competition. We must look at each company individually. Our view is different from that of all other parties.
The Minister treated everyone with courtesy and was very forthright and on top of her brief in responding to all of the questions raised. I thank her for doing so.
On behalf of the Minister for Public Enterprise, Deputy O'Rourke, I sincerely thank all who contributed to what I know the Minister felt was a very interesting debate.
Not all the contributions were in agreement with the Bill as proposed or with the Minister's views on the sale of shares in Telecom Éireann. That is to be expected in any good debate. However, all the contributions displayed an extraordinary depth of understanding of the issues at hand. The debate showed a broad understanding and appreciation of the importance of the proposed flotation of Telecom Éireann shares and of the importance of the need to ensure the development of the telecommunications sector in Ireland which is vitally important to our future economic wellbeing.
The Bill and the resulting flotation of shares is an important step in the Government's strategy in this regard. That Ireland should have an open and competitive telecom sector is an absolute necessity for our economic future and for our competitiveness in the international arena.
On behalf of the Minister, I extend our deep appreciation to Members of the Seanad for the excellent contributions they made yesterday and today. Today is a historic occasion – Seanad Éireann has made a unique contribution to very important legislation. Today's legislation symbolises the current standard of economic growth in Ireland and our future potential. We can face the new millennium with tremendous optimism based on the structures which we have now put in place. Thank you.
When is it proposed to sit again?
We are adjourning sine die.
