Select Committee on Enterprise and Economic Strategy debate -
Tuesday, 13 Jul 1993

SECTION 23.

Mr. O'Malley

I move amendment No. 16a:

In page 19, lines 6 to 8, to delete subsection (2).

It is unreasonable to prevent the Minister for Finance, who is the principal, if not the only shareholder, from transferring or alienating his shares. Indeed, the section seems to be in conflict with section 22, which has been discussed briefly, in which the Minister is given all the rights and powers that the holder of such shares has subject to the provisions of the Bill and the right to exercise them. If one holds shares in a company one has the right to transfer or alienate these shares. It is wrong therefore to have a blanket prohibition.

The argument will be made — this is suggested in the explanatory memorandum — that because this is a regulatory body, among other things, and because some of its activities relate to safety, it should always remain in public ownership. While it should remain in public control it does not have to remain in public ownership all the time. Some of its various commercial activities could be carried out by subsidiaries which the Minister of State has been at pains to tell us will be run on a commercial basis. If they are run on a commercial basis and are successful I do not see why they should or could not be sold.

It is wrong to have this unusual provision that no sale can take place in any circumstances. That is too broad and unnecessary. For that reason subsection (2) should be deleted. A person would not be compelled to sell but at least they would be given the opportunity at some time in the future, which is not foreseeable now, to take that course of action if considered appropriate at that time.

Mr. N. Treacy

Section 23 deals with the shares in a company held by the Minister for Finance. Subsection (2) provides that the Minister for Finance may not transfer his shares other than to a member of the company as required by the Companies Act. The significance of the proposed amendment is that it would leave the Minister for Finance free to dispose of his shares in any manner approved by the Government. This, in effect, would permit the privatisation of the company. Given the importance which it attaches to the safety matters for which the company will be responsible, the Government is not disposed to consider the possibility of privatising this company.

As I indicated to the House last week, there is no question of the Irish Aviation Authority being some kind of half way house to privatisation. In this connection I must reiterate what I said in my opening speech. If in the future any of the core functions of the new Authority were to be privatised the question would have to be brought back to the Oireachtas for debate and decision. Consequently, I am not in a position to accept this amendment. Given the safety matters for which this company will be responsible, and the key role it will play in the Irish aviation industry, it is vital that absolute control is retained by the Government. Ultimately, the sanction of the Oireachtas would be required before any part of the company could be disposed of.

Mr. Dukes

May I suggest to the Minister of State that he should reflect on the idea that it is unwise in legislation such as this to place oneself in a straitjacket forever? The Minister of State mentioned earlier that if certain things were to happen which some of us fear then the matter would have to be brought back to the Oireachtas. Yet, he has also said that some things should not be done without first coming back obligatorily to the Oireachtas. The Minister of State is now saying that, like some other things in the past, the provision of air traffic control services and the assurance of safety peculiarly require the matter to be left in the hands of a State company rather than anybody else. The Minister of State has no basis for saying that; there is no inevitability about this. Surely the lesson of the last few years is that we should not tie ourselves in a straitjacket. It is going to be immensely more difficult than it should be to rescue one semi-State company because of the fact that the State is the only shareholder and that company has no assets on which to engage in a joint venture with anybody else. The Minister should realise that that is going to be a huge obstacle in doing anything worth while for Aer Lingus. Therefore, it would be a mistake to replicate that situation unnecessarily in relation to any other company we may set up.

Mr. O'Malley

The Minister of State gave no compelling reason for refusing to accept the amendment. If it is considered desirable to retain this function in public control that can be done, but the company does not have to remain in public ownership. It is not significant that the matter would have to be brought back to the Oireachtas when one bears in mind that both Irish Life and the Sugar Company were privatised after the Oireachtas had passed legislation to enable that to happen. It is unnatural to have a total blank prohibition on the alienation of shares. For example, if it became public policy in five or ten years time that the Minister for Finance should not hold shares in State companies, that the line Minister should hold them, in other words, in other words, the Minister for Transport, Energy and Communicatins — it often struck me that this would be perfectly sensible; the dead hand of the Department of Finance wants to hold the shares in every company — it would be impossible to transfer them to the Minister for Transport, Energy and Communications because of this provision, even if the question of sale never arose.

It should be open to us to avail of the opportunity, as is the case in about every country on both sides of the Berlin Wall, to dispose of State assets whenever there is a reasonable opportunity to do so. I make no apology for holding that view which is widely held throughout the world. I do not see why this country should swim against the tide in that respect. It is unnecessary and inappropriate to have such a blanket provision whereby the Minister for Finance will not be able to transfer the shares to the Minister for Transport, Energy and Communications.

Mr. N. Treacy

I have listened with great interest to both Deputies. This morning on two sections it was mentioned that there was a need to bring regulations and other matters before the Dáil. I gave a commitment that I would review the matter before Report Stage to see what could be done. On the important issue of privatisation of the company I have been consistent. On Second Stage I said that if the Government recommends that part or all the company should be privatised, the Oireachtas would be given an opportunity to discuss the matter again and take a decision. Like many semi-State companies this company will be like no ordinary private sector company. While it will have a commercial brief, and many similarities, there will be one great difference: it will have the power to make orders which will have the force of law. Given the need to ensure that safety matters are taken fully into account I cannot accept this amendment. I have outlined the position clearly as is proper at this time.

Chairman

Is the amendment being pressed?

Mr. O'Malley

Yes.

Chairman

As there are fewer than 31 Members present under Standing Orders we are obliged to wait eight minutes until full membership is present before proceeding to take the division.

Amendment put.

The Select Committee divided: Tá, 7; Níl, 17.

Tá
Crawford, Seymour.	Flaherty, Mary.
Creed, Michael.	McCormack, Pádraic.
Deasy, Austin	Molloy, Robert.
Dukes, Alan.

Níl
Ahern, Noel.	Lawlor, Liam.
Broughan, Tommy.	O'Keeffe, Ned.
Byrne, Hugh.	O'Sullivan, Toddy.
Doherty, Seán.	Ryan, Eoin.
Fitzgerald, Brian.	Ryan, John.
Fitzgerald, Liam.	Smith, Brendan.
Flood, Chris.	Treacy, Noel.
Kemmy, Jim.	Walsh, Eamonn.
Kirk, Seamus.

Question declared lost.

Mr. Lawlor

Will the Chair clarify whether we will sit tomorrow?

Chairman

Deputy Creed, a convenor on behalf of the Opposition parties, has asked for a five minute sos to contact the spokesperson. It is suggested that we should meet tomorrow from 10 a.m. until 1 p.m., subject to agreement. Is that agreed?

Deputies

No.

Chairman

We will meet again on Wednesday next at 2. 30 p.m.

Progress reported: Committee to sit again.

The Select Committee adjourned at 4.30 p.m. until 2.30 p.m. on Wednesday, 21 July 1993.