Amendments Nos. 16 and 17 are related and may be taken together.
SECTION 15.
I move amendment No. 16:
In page 19, subsection (1) (a), line 3, after "land" to insert "for a period of over 21 years".
Section 15 (1) (a) states: "A company shall, at least 2 months before the date on which it proposes to enter into a contract for the sale, or grant of a lease, of any of its land, give notice in the prescribed form to the Minister of the proposed sale or grant of a lease."
This is a very serious and important section. It is incomprehensible that the Minister would require a company, at least two months before the date on which it proposed to enter into a contract for a sale of the grant of a lease of any of its land, to give notice in prescribed form to him of the proposed sale or grant of a lease.
The purpose of the Bill is to give commercial freedom and to make changes which will enhance the harbour authorities, now to become companies, in a way which will enable them to grow, to be more competitive, to have reduced rates and to cut out any of the nonsence that exists at present. However, the Bill will inflict an instrument of extraordinary intrusion into their operations. There are many leases in which any kind of company may be involved, for example, ice cream parlours and coffee shops. Leases may also be made to the Department of Defence. The Bill proposes the nonsense of having to go through the process, two months in advance, of informing the Minister of such leases.
Whatever the reasons for this provision, we must take a sensible approach to how we will make companies accountable, while giving them the freedom to be commercial. Short term leases are often required by companies. Where they have the experience, and have no problems with them, why would we wish to get involved in the day to day operations of companies in this way? It staggers me that in a world which every day cries out for less regulation, deregulation and competitiveness, we still want to impose restrictions in every area.
These kind of restrictions put a coach and four through the concept of commercial freedom. I do not suggest that the amendment is the real answer, but I know that concentrating the time of the Minister, his officials and companies in a matter like this is not something we should be doing. I recommend acceptance of the amendment.
We have gone over the top here and the amendment is necessary to put matters into perspective. I am chairman of the board of New Ross which considers leases for short periods from time to time. A decision could be made within a matter of days, perhaps not even that long, to take out a lease for any reason for a very short period in respect of, for example, an office, a warehouse or a small parcel of land.
The purpose of the Murphy report was to lessen ministerial control but it now appears we are dragging it in at every opportunity. This provision is ridiculous and will put much work on departmental officials that could and should be dealt with locally. If we are to establish a commercial basis, it must be done from top to bottom. I support the amendment.
Deputy Byrne is correct. I was a member of Foynes Harbour Board for ten years. Given the nature of shipping, requests are often made at short notice and a person may only need a warehouse for approximately one month. The objective of the Bill is to grant the freedom and autonomy, required, including freedom from the shackles and control of the Department of the Marine which operated in the past. With regard to seeking details of a lease, for example, of two months, does the Bill recognise the constraints under which ports operate and the short term leases in which they get involved?
I support the objections to the Minister's proposal. It is contrary to the intention of the Bill, which is to create independent harbour companies and to give them greater responsibilities to develop the commercial aspects of their habours. In the commercial world, one needs the freedom to make decisions. To require all leases to be submitted to the Department before a decision can be made on them is bureaucracy gone mad. The proposal appears to place a very restrictive clause on the management of the harbour companies.
I am not sure if the amendment is the best way to rectify this, or if the proposal should be removed. Section 15 (1) (a) states: "A company shall, at least 2 months before the date on which it proposes to enter into a contract for the sale, or the grant of a lease, of any of its land, give notice in the prescribed form to the Minister of the proposed sale or grant of a lease". There may be some semblance of sense in the proposal with regard to a substantial sale. However, it is much too excessive where a harbour board is considering a lease of property. It will not free harbour companies to allow them to operate in the commercial world, rather, it will place a severe restriction on them.
There was a time in Galway when we were pushing for a development and encouraging the county manager to be more active in acquiring land to facilitate the development of the city. After several months of failure he advised us that every time the purchase of land was negotiated for the corporation he had to get its permission, but by the time he received it at the following meeting the seller had sold the land at a higher price to somebody else. As he was being used to pump up the price of the land we gave him the authority to move immediately because we recognised that if we wished to be a development body and to use our powers to the fullest we had to empower the county manager acting on our behalf to act in a commercial fashion and make immediate decisions which we supported. Much of the development in Galway occurred because we adopted this attitude.
This legislation proposes to impose a severe restriction. There are many occasions where land is required for a very short period of time and the leases are, consequently, very short. Under the two year, 11 months system leases were regularly entered into by the harbour board of which I was a member. If the Minister's sanction is needed, the client will have gone elsewhere and met his or her needs by leasing property away from the harbour. I am opposed to it but I will reserve my final position on it until I hear the Minister's comments. There is often something completely different behind these things although I cannot say that I have seen it yet.
I was anxious to hear the Minister's views. This section is nonsense. It is the dead hand of the Department wanting to be involved. It wants to give the lie to commercial activity but also wants to retain an absolute right to veto decisions which might be taken for sound reasons by a commercial authority. I do not know on which precedent the Minister is operating or whether this applies to all semi-State companies. To my knowledge, it does not but there may be exceptional cases. I do not know why it would be inserted in this context.
As Deputy Smith said of his own amendment, I am not convinced whether that is the way to proceed. I might be convinced of the opinion to drop it altogether except, perhaps, for sales of lands where substantial funds are involved. In such cases, there may be a need for some reference back to the final arbiter in the Department.
The Minister will politicise the whole commercial viability of ports for no reason. It reminds me in reverse of the time the IDA was told, for political reasons, to sell all its land banks on a quota basis. A commercial criteria was not put to them. Then we found that land was required all over the country after the land had been sold on a quota basis against the wishes of the IDA. If the individual regions had been asked what they could sell and what they required, it might have made some sense. That is the reverse of this situation.
Real commercial decisions need to be taken in the commercial world. All sorts of factors come into play, as outlined by other speakers. Other operators may be involved with adjoining land and the Minister now wants to prevent expeditious decisions being taken by harbour authorities on a commercial basis. It is unthinkable and the Minister should withdraw the section.
Deputy Smith's amendment proposes that it is not necessary for the new port companies to give notice of two months to the Minister of leases with terms of under 21 years. Section 15 (1) (c) of the Bill empowers the Minister to exempt by order specified classes of leases and sales from prior notification. It is envisaged that transactions of a minor nature, such as short term leases, will be exempted. Before such an order is made, however, I intend to enter consultation with the harbours to ascertain the needs of the various harbours in this regard. I should add that any such exemption order will be laid before both Houses of the Oireachtas. It is not intended and I want to make it quite clear that——
That is what this section says.
The Deputy is reading paragraph (a) in isolation from ——
Read (b) in isolation.
— the rest of the section. If the Deputy reads (c), he will see that it is intended to empower the Minister to make orders exempting ——
It is totally subjective.
——certain classes of sale or leases. For example, in the kind of situations to which Deputy Finucane referred, it would be absurd if two months' notice of intention to enter into a lease had to be given to the Minister if somebody needed a warehouse for one or two months. It is intended to exempt those cases.
How will the Minister exempt the fact that one cannot foresee these things? Business is not done like that.
I wanted to refer to my own amendment which is being taken with this one. Section 15 (3) provides that in general a port company may only lease land at an amount equal to the open market rent obtainable for the land in question. The provision as framed means that a port company is prohibited from securing a rent in excess of the open market value. It has been put to me that there is no reason a port company should not seek to secure the best rent possible for any land which it proposes to lease. I agree this is a valid point and, therefore, I propose to substitute "not less than" for "equal to".
Before concluding on this amendment I should mention that a port company may lease land at below its open market rental value if a significant amount of business or trade is to be transacted at the land or the granting of the lease will have a positive impact on the level of trade or business to be transacted at the harbour. In addition, a port company may lease land at below its open market rental value provided the Minister's consent is obtained. It is likely, for example, that the Minister would authorise a port company to lease land at below its open market value or at a nominal rent where the the land was being leased for charitable, job creation or training purposes.
I have had direct experience of "cead an Aire". One would get an appropriate transaction through the board of the semi-State agency and it would then go to Dublin for "cead an Aire" which could be given in a week — in this case, the Minister does not provide for this — or it might take a year, depending on whether the Aire, or the Aire's agent, felt the transaction should go ahead and on what inquires they carried out.
Over the years I have become a great believer in setting time limits for the Minister or any agencies which might have to make decisions.
If it is not one of the exempted areas under section 15 (1) (c), no matter how trivial it is the company must give two months' notice. I would much rather see the situation reversed; the Minister should have to give an answer within two months. It is ridiculous that there must be a space of two months. Why two months? If the Minister can make up his mind in 24 hours on something simple, why must the issue lie around for 59 days. Perhaps I am missing something. One of the great banes of anybody's life is to think they have got the matter through only to find out the board passed it but that there are a number of steps to go. It leaves a person sitting around for a few months for a commercial transaction. It is not on.
I accept there must be some control but not in its present form. I cannot see why there is a minimum time of two months and why it should take that long in every case for the Department to make up its mind and give "cead an Aire".
The Minister has not given a response to the arguments put forward on the original amendment. He is trying to suggest that paragraphs (b) and (c) cover the issues which the Opposition raised. That is simply not the case.
Section 15 (1) (a) is explicit. Anything other than that becomes a subjective view within the Department. Who will define all the different areas that will have to be reported when urgent decisions will be required and Ministers are not available? It is nonsense to suggest in a commercial world that a company can operate under the Minister's constraints. This is anti-commercial and flies in the face of even the competition legislation. It contradicts it and is unacceptable.
The Minister's amendment takes my breath away. He gives me the impression that he has no idea about what is happening around developing ports. Is he not aware that ports have bought land, either on their own or in conjunction with others? There will be many occasions when they will do deals at far less than the going market rate on certain criteria to attract companies to the portal area to operate in the area, which will lead to the creation of jobs, the viability of the port and the enhancement of the area. To insert the Minister's amendment, which does not allow the lease to be less than that defined as the going rate, is nonsenical, ties the authorities' hands and prevents them from operating commercially. At times commercial viability does not involve getting the top price available in the marketplace.
Commercial factors depend on a range of issues, which can interlock with the other workings of the port authority and other companies already located there. This could be a requirement to locate there, on the basis that the deal being offered to a company to take a lease or to purchase land, erect a warehouse or create a company may have other considerations. These may lead owners of land, maybe the IDA in conjunction with the port authority or others, to lease land at what would be considered to be, in a specific and narrow focus, much less than its market value.
The Minister's amendment is nonsense and, instead of improving the situation, has made it substantially worse. I would remove "equal to" and, as proposed in our amendment, "not less than", because the section will simply not stand up. This will lead to all sorts of complications and difficulties and takes no account of the wider field of commercial activity. It is too narrowly focused in a financial sense and I ask the Minister to withdraw it as it is ill thought out and ill conceived.
Did the Minister say that he would discuss with the harbour authorities what classes might be exempted from this draconian clause? Have we reached the stage in commercial activities where the Minister will be required to sit down with 12 harbour companies and decide what kind of business could be excluded from this kind of provision? Neither the company nor the Minister — if we take all our experience of the last five years — can anticipate the future. Based on previous experience they would have some knowledge but, based on the future, their decisions would be guess work. We will legislate, in primary legislation, to require matters of that kind to be dealt with in that way. I presume the Minister is a busy man, as are his officials. He would be doing a service to this legislation — my amendment was a stab at change and not the most appropriate — if he deleted section 15, which would be the most appropriate action.
The Minister has six or seven nominations at present to these boards. We do not have the confidence in the harbour authorities to lease anything other other than that which the Minister calls minor properties. We should do one of two things: abolish all the harbour companies, saying they were a disaster, and do something new or not interfere with their work. We should then discuss with them every kind of situation that we could possibly exclude. If an opportunity arises at 10 p.m. on a Saturday, the unfortuante executive of a harbour company will not know whether he can attend a meeting at that time and do a deal or whether he will have to seek permission a couple of months later to do it. He will not be sure if it is not classified or mentioned under the provisions of the Bill.
We are now dealing with the nuts and bolts of this legislation. Either we are serious about commercial freedom or we are not. If we do not have confidence in the companies, let us say so. I believe that the majority of people work better with a little sense of freedom, autonomy and power than they do if they have to depend on somebody else to decide whether a deal is in or out. In most people's experience, when that happens, one takes the soft option, not the risk. Ireland needs risk takers. There will be mistakes, but the country needs people who are prepared to grapple with an issue, take it and go. There are harbours where individuals make decisions without even going to the members of their board. Decisions had to be taken overnight and they have benefited from them enormously. There may be only one chance, and one has to take it.
In withdrawing my amendment and apologising to the Chairman for bothering him with it, I realise I should have had a more simple one, which would be the removal of this provision, unless the Minister can come up with more convincing answers than we have heard from him up to now.
We have to terminate the discussion at 5 p.m., out of courtesy to the Minister.
I want to help the Minister to make up his mind.
I am sure he will be pleased if you can.
I do not want to suggest that I know more than anyone else here. Many commissioners will know, as I do from being chairman of New Ross Harbour Commissioners, that shipping is seasonal. For parts of the year, there are several pieces that might be in use. Decisions are often made, as Deputy Smith said, on the basis of an hour's discussion. My chief executive might give me a call and ask me if I know a particular warehouse on the Fethard Road that might not be in use for the following two months. He could have had a bid for it and might want to know what to do. Do I have to tell him that he must wait for two months for approval? I am not being facetious, but practical. That is the way business operates at port level. I am appealing to the Minister — I know him well enough to know that he is a person of common sense.
It is unlikely that I will succeed in doing in two or three minutes what I have not succeeded in doing for the last 20 or 30. I want to respond to a number of the points raised, and we will probably resume on this issue when we meet again in September.
I am glad Deputy Smith is withdrawing his amendment, because it is perhaps not the way to address this issue, which he acknowledges. However, it would still mean that a company could enter a lease for any amount of its land for a period of up to 20 years. What we are attempting to do in this section is to protect the public assets, the harbours, and prevent a situation whereby large parts of harbours could be sold overnight or long term leases could be entered into which prejudiced a harbour's future development or where, for short term trading difficulties, a company would take a short term view of some of its property. We recently had a case made to us in relation to a harbour which wanted to purchase property. When we inquired into it, we discovered that some years previously, the same property which the harbour authority now wished to purchase, for which it required certain guarantees from the State for borrowings, had been owned by the harbour and it had sold it.
Local authorities do that regularly.
Of course, but we want to prevent allowing the assets of the harbour to be disposed of while at the same time, we do not want every tittle tattle of a deal having to be approved by the Minister.
Mr. Smith
I withdraw my amendment because I knew it was a stab at but not a suitable vehicle to solve the problem. The Minister should say the same about his provisions and tell us we will be looking at something entirely different when we come back in September.
Amendment, by leave, withdrawn.
We have had a long and constructive debate and I thank Members. We will resume with amendment No. 17 at 3 p.m. on 6 September, when the Minister will have an opportunity to reply in more detail.
I sincerely thank all Members for their co-operation, not only today, but during our sessions over the past few months. I look forward to resuming this Bill on 6 September. I have made provisions that we will meet each Wednesday and Thursday in September because I am anxious to see this Bill completed and enacted before the end of the year. I am sure the Minister agrees with those sentiments. I intend to stay with this Bill until it is completed.
I wish all Members a pleasant holiday.
The Select Committee adjourned until 3 p.m. on Wednesday, 6 September 1995.