Select Committee on Enterprise and Economic Strategy debate -
Wednesday, 16 Oct 1996

SECTION 4.

Mr. S. Brennan

I move amendment No. 1:

In page 5, between lines 10 and 11, to insert the following subsection:

"(3) Notwithstanding the provisions and instruments listed in the Second Schedule, the Minister shall, before transferring to the Director any functions relating to television retransmission services or matters connected therewith, introduce regulations providing for the continuance in operation of the deflector system of television retransmission.".

Section 4 deals with the matters the Director shall regulate. The Minister is aware of the technical and legal situation arising from the deflector system, particularly in Counties Cork, Mayo and Donegal. As a former communications Minister, I know the legal and technical difficulties. It is specifically written into the programme for Government that the deflector system operates in competition with the new MMDS system. That is specifically agreed by the three Government parties and written into the programme for Government. Where does that commitment stand now? Does the Minister reject the spirit of my amendment?

At a meeting last year in Carrigaline, County Cork, the Taoiseach told a packed hall that when he was in office, he would arrange for the deflector system to be allowed to operate legally.

Given both those commitments, one in the programme for Government and one from the Taoiseach, will the Minister of State accept, if not the wording of my amendment, the spirit of it and introduce his own?

Mr. Stagg

The Second Schedule lists regulatory functions which will be transferred from the Minister to the Director of Telecommunications Regulation. These include legislative provisions relating to the cable television sector. This proposed amendment would prejudice the outcome of the independent consultant's report to the Minister in the Carrigaline case. Any decisions regarding the long term future of deflector systems must await the outcome of this analysis.

The Minister's commitment to the High Court in the Carrigaline case will be honoured in full. Either the Minister or the Director will give full and fair consideration to the application for a licence by Carrigaline. Any implications which arise from that case for deflector systems elsewhere will be fully taken into account. The transfer of functions to the Director under this Bill need not give rise to any concern about the undertakings to the court because the functions transferred to the Director are defined in section 1 to include both powers and duties. If a decision on Carrigaline has not been taken by the time the Director assumes office, the Director will in effect stand in the Minister's shoes for the purpose of deciding the issue. The Director is no less liable than the Minister to exercise these functions in a reasonable manner. Therefore, I oppose the proposed amendment.

Mr. S. Brennan

Is the Minister saying that the defendant of this case could change from being the Minister to the Director and that the ultimate decision could be the Director's and not the Minister's? Is this an attempt to move a thorny political problem away from the Minister to the Director?

Mr. Stagg

If the Minister is a defendant in any case before the appointment of a Director, he will remain so. The implementation of powers to implement policy will be transferred to the Director.

Mr. S. Brennan

At the moment, I assume the present defendant is the Minister as regards court cases in relation to the deflector system and there is no question of him not being the defendant when the matter comes to court?

Mr. Stagg

If the Minister is the defendant now, he will remain so. However, I understand that case is not going forward. We will await the independent consultant's report to the Minister in the Carrigaline case before decisions are made.

Mr. S. Brennan

When will that report be submitted?

Mr. Stagg

I hope before the end of this year.

Mr. S. Brennan

Is the Minister of State confirming to the committee that the application from Carrigaline for a licence is being properly considered by the Minister?

Mr. Stagg

The application will be considered in light of the independent consultants' report to the Minister. We are awaiting the report. On foot of the commitment to the High Court the Minister will have to reconsider the Carrigaline case.

Mr. S. Brennan

Is it still Government policy to allow the community deflector to remain on the air?

Mr. Stagg

We will be bound by the legalities of the matter——

Mr. S. Brennan

Which was not the case when the programme for Government was drawn up.

Mr. Stagg

——and what we can legally do.

Mr. Molloy

Could the Minister of State outline the current legalities with regard to the deflector service?

Mr. Stagg

The High Court has instructed the Minister to invite a further application from Carrigaline. The Minister has appointed independent consultants to report to him on the implications of that. He is awaiting that report before he can act on the detail of the High Court instruction.

Mr. Molloy

What is the Department's interpretation of its international obligations with regard to deflecting a signal from, for example, the BBC?

Mr. Stagg

We have appointed independent consultants to advise the Minister on that and we will be guided by their advice. Their report is relevant to a particular case but decisions on the long-term future of deflector systems must await the outcome of that analysis.

Mr. Molloy

I am surprised the Minister of State is not responding to my question about the Department's opinion. I have letters in my files covering a number of years and they state the Department's opinion that deflector systems are illegal. Is the Minister of State saying the Department has changed its mind and they are not illegal or is he saying it does not know and is awaiting an expert report or an Irish court decision? The Minister of State is raising many questions about the Department's long standing position on the deflection of television signals from England.

Mr. Stagg

The position of the Department has not changed.

Mr. Molloy

What is the Department's current opinion?

Mr. Stagg

It continues to be illegal. The Department's position has not changed since the Deputy was informed of it. On foot of a High Court decision consultants have been appointed to advise the Minister how to proceed. He is awaiting their report and he will proceed from there.

Mr. Molloy

Is the Minister of State saying the legal opinion available to the Department, presumably from the Office of the Attorney General, confirms that the use of deflection systems is illegal?

Mr. Stagg

I am not aware of advice from the Attorney General giving an opinion on that matter. I am aware of the High Court decision, the subsequent appointment of independent consultants to advise the Minister on how to proceed and the High Court instruction to the Minister to reconsider an application from Carrigaline.

Mr. S. Brennan

Is it not true that on successive occasions in recent years the Department has sought to put the deflector group off the air and it would not do that if it did not consider it illegal?

Mr. Stagg

The Department has done that consistently since the deflector system came into operation.

Mr. S. Brennan

Therefore it must be the Department's view that it is illegal.

Mr. Stagg

It was not just the Department's view, it was also the Minister's view. Such actions were taken during the Deputy's period in office and they were not successful. There was a court case in which that power was contested and a decision was made by the High Court. It is now at the stage I have described.

Mr. S. Brennan

MMDS licences have been awarded, particularly in the three areas I mentioned. There is considerable confusion about the length of time remaining in those contracts. What was the duration of the contracts given exclusively to certain companies?

Mr. Stagg

I do not have the details. I am sure we can get the information for the Deputy.

Mr. S. Brennan

Does the Minister of State know when the contracts finish?

Mr. Stagg

I do not have that information but I can get it for the Deputy.

Mr. S. Brennan

Have they seven years or seven months to run? Can the Minister of State give us an idea of the scale?

Mr. Stagg

I am advised that they vary but I do not have details. We can get them for the Deputy.

Mr. S. Brennan

It is a critical point. If they run out soon the Minister's legal problems are fewer than if they have another seven or ten years to run.

Mr. Stagg

I am not sure what that has to do with the Bill.

Mr. S. Brennan

The amendment proposes that the Minister make provision for the continuation of the deflector system. However, the Minister of State does not have the information.

Mr. Stagg

We will get it for the Deputy.

Mr. S. Brennan

Thank you. Will the Minister of State arrange for community groups in the counties I mentioned to meet with the consultants before they draw up their report?

Mr. Stagg

That is outside the scope of our business today. I am not in a position to give the Deputy a commitment on the matter but if consultation is that wide it will delay the advice for the Minister and delay a decision. I am not sure that is the right way to go. I will forward the Deputy's request to the Minister.

Mr. Molloy

Is it a political decision not to accept the amendment or is it because it would be illegal for the Minister to implement it?

Mr. Stagg

I have already stated why the Government is not accepting the amendment.

Mr. S. Brennan

Deputy Molloy recently demonstrated that the number of consultants employed by the Department is a record. Are these consultants included in that figure?

Chairman

Is the amendment being pressed?

Mr. S. Brennan

Yes.

Amendment put.

The Select Committee divided: Tá, 10; Níl, 12.

Tá
Brennan, Séamus.	Leonard, Jimmy.
Byrne, Hugh.	Molloy, Robert.
Fox, Mildred.	Nolan, M.J.
Keaveney, Cecilia.	O'Keeffe, Ned.
Kitt, Tom.	Power, Seán.

Níl
Bhamjee, Moosajee.	Creed, Michael.
Bell, Michael.	Finucane, Michael.
Boylan, Andrew.	Nealon, Ted.
Broughan, Thomas.	Ring, Michael.
Costello, Joe.	Sheehan, P.J.
Crawford, Seymour.	Stagg, Emmet.

Amendment declared lost.

Chairman

Amendment No. 2 is related to amendment No. 3 and both may be discussed together. Is that agreed? Agreed.

Mr. Molloy

I move amendment No. 2:

In page 5, subsection (4), lines 16 and 17 after "plaintiff" to insert "or the defendant".

The principle intention of the Bill is the establishment of the office of director of telecommunications regulation. I am not sure if he is to known as the regulator or the director. My party is anxious to ensure that the regulator of the telecommunications industry would have the broadest possible remit. The Minister is making a distinction between legal proceedings under way before the commencement of the section. Where the Minister is the plaintiff or the prosecutor, the director would become the plaintiff and the prosecutor in the place of the Minister. In cases before the courts where the Minister is the defendant, he will continue to be so.

We must ensure the director is given the broadest possible role and I fail to understand why the Minister seeks to make this distinction. I propose that the words "or the defendant" be added to section 4(4) and that subsection (5) be deleted so all the actions in which the Minister is involved at the time of the transition would transfer to the director of telecommunications regulation.

Mr. Stagg

Section 4(4) substitutes the director for the Minister or adds the director as may be appropriate in any legal proceedings ongoing before the commencement of the section which relates to the functions transferred by it. It also provides that such proceedings will not abate because of such substitution. No such legal proceedings are currently underway. Subsection (5) provides that where the Minister is a defendant in legal proceedings which refer to functions transferred under this section the director will not be substituted for the Minister in such proceedings. The Minister may under section 3(3) require appropriate assistance such as technical information from the director in such cases. No such legal proceedings are currently underway.

Amendments Nos. 2 and 3 effectively transfer the responsibility to the director in respect of all legal proceedings to which the Minister is a party, not just proceedings in which the Minister is a plaintiff or the prosecutor. If accepted, these amendments could leave the director holding the can in respect of any of the Minister's actions prior to the establishment of the office of director.

The overriding principle governing the provisions in section 4(4) and (5) is that the position of the Minister and the director in respect of legal proceedings pending immediately before the commencement of section 4 should be determined by the locus of legal responsibility for regulatory decision-making before the commencement of section 4 in cases where the Minister is the defendant. In other words, if the Minister is the defendant, he should remain as such.

It is clearly inappropriate in the aftermath of the establishment of the office of the director to have the director effectively defend decisions made by the Minister pre-establishment since the Minister is the responsible legal authority in respect of the matter which is the subject of proceedings and best placed to make judgments in respect of the conduct of the defence and his or her own position in respect of such proceedings. Furthermore in the event of the amendments being adopted the Minister would be left open to the charge that they are hiving off to independent bodies responsibilities which properly remain theirs in respect of functions formerly vested in them. The contrary position where the director assumes the role of the plaintiff makes eminent sense because the proceedings must relate only to the functions transferred.

The section is not about the broadness or otherwise of the remit of the director. It is about the appropriate legality of the situation. The reason I cannot accept the amendments is based on advice from the Attorney General that this is the appropriate legal format to use.

Mr. Molloy

The person who holds the office of Minister at present is Deputy Lowry. When we refer to the Minister, we are talking about a legal entity. Where cases are brought against any of the Minister's predecessors, for instance, the Minister is being prosecuted, not the individual who holds that office. A case will continue in court despite the fact that another Minister may be appointed. I fail to understand why this distinction is being made in the case of functions being transferred to the director. Cases in which he is the defendant will not be transferred but those in which he is the plaintiff or the prosecutor will be.

There is a long-standing case against the Department, the Bula case, and persons who held that office were involved in it. The personalities who held that office changed numerous times in the years since the case was initiated. It did not make any difference that the Minister's predecessor would be defended on the Minister's behalf in the courts. In this case the same principle can be applied.

If we are to establish a director of telecommunications regulation and if we are to transfer to him the regulatory functions of the Minister for Transport, Energy and Communications, we should proceed in doing so and not seek to make exceptions. This is not logical or necessary. It portrays, rightly or wrongly, a reluctance to proceed down this road and a holding back on certain issues. We should be full blooded in this regard and have a director who would be seen to be independent and to have full regulatory powers. We should not establish the office of telecommunications regulator, while seeking to limit his function, to neutralise him and to leave him with limited powers.

There has been widespread criticism of the inadequacies of the proposals as regards the powers and functions which the Minister proposes to transfer and is prepared to give the director under the terms of the Bill. It does not augur well for the future independence of the individual appointed to this post and his capacity to undertake his obligations on behalf of the State fully and independently. It is a limited office compared to those set up in other countries. However, they are broad comments. This is the first function where a distinction is being made. The Minister's explanation so far as to why a distinction is being made is not logical. We are excluding instances where the Minister might be a defendant as opposed to the plaintiff or the prosecutor.

Mr. Stagg

This not about the broadness of the remit of the director.

Mr. Molloy

It is about the principle.

Mr. Stagg

It is about the legal framework within which this section will operate. We are only dealing with cases which are current and referring to the area of powers to be transferred to the director. If, in the next few months, a case is taken against the Minister within the area of powers to be transferred to the director, it is appropriate, according to advice from the Attorney General, that the Minister should continue as defendant in that case.

Mr. Molloy

Why?

Mr. Stagg

We are advised that is the best way.

Mr. Molloy

What is the thinking behind the decision?

Mr. Stagg

I do not believe it will add in any way to the independence of the director to land him with continuing a defence of an action which was taken before he was appointed. It certainly does not add any powers to the director to also make him liable for a case which is currently before the courts where the Minister is a defendant.

The discussion we are having is largely academic. There is no such case. As soon as the director is appointed, he will automatically be the defendant in any such case. Therefore, we are talking about a very short time span and the best advice we have from the Attorney General is that if that should occur between now and the director's vesting day, the Minister should continue to be the defendant in the case. It does not limit the director in any way.

Mr. Molloy

It is making a very clear distinction which, in my mind and those of all the people I consulted about the Bill, is absolutely unnecessary. In the case of the legal entity which I mentioned, the director's office will be the defendant. It has nothing to do with the individual who holds the office. The Department seems reluctant to hand over all the functions and this is the start of whittling down some of them. I do not see that it would make any difference. If we are to transfer functions to a director, then we should do so whether he is on one side or the other of cases. The Minister's role no longer exists. It has been transferred to the new office under this Bill.

To say the matter is academic makes a farce of this whole discussion because the committee is making law, not just having a debate. Once this Bill goes through the Oireachtas, it will be interpreted by judges and it could prove very serious in the event of the emergence of an important case. Whether or not there is a case at present is not a factor. It did not influence me. The Minister says there is no case at present but that is irrelevant to my comments on the matter. I am interested in the principle and I do not see the necessity to make the distinction to withhold one aspect of legal action from the director's office and hand over the other functions. It just does not make sense. If the Attorney General gave advice he would do so on the basis of legal argument, but we have not heard any of the legal arguments which led him to come to that conclusion.

Mr. Stagg

The Minister should defend his decisions as long as he is responsible for them. If, in the process, there is an overlap between his defending of his decision and the appointment of the director, he should continue to defend that particular decision. Likewise, the director should defend his decisions and he will be doing so from the time of his appointment. It would not be entirely fair to ask the director to defend decisions for which he was not responsible in any real sense. He should start with a clear slate. That makes good sense. I am fortified in that view by the Attorney General's advice to my Department, which is that this is the appropriate way to proceed.

There is no great principle, transfer of power or broadening of remit involved. It is not about that. We are simply dealing in the Bill with the transfer of existing regulatory functions from one corporate person to another.

Mr. Molloy

There is a very important principle involved. If we are serious about the intent of establishing an office which will have wide functions, then we should not be seeking to restrict those functions.

Mr. Stagg

We are not seeking to do so.

Mr. Molloy

The Minister is. This may not be the most important function which is being restricted.

Mr. Stagg

This makes the director free to act.

Mr. Molloy

If the Minister's opposition to the amendment was based on clear legal argument, I would be happier. The only argument he has made is that the Attorney General advised him and I find that unsatisfactory. The principle is the Minister's reluctance to establish a proper director's office with wide-ranging powers and full independence, as we will see as we go through the Bill. It is a clear indication of the Government's approach.

I have said my piece. I am sorry the Minister does not have more logical arguments to sustain his opposition.

Mr. Stagg

I do not accept I have not made logical arguments and that I do not have a logical and sound position. In fairness to the Deputy who tabled the amendments, I gave a very detailed response which contains the arguments which are correct according to our legal adviser, the Attorney General. I did not simply skim over the case being made by the Deputy. I regret I cannot accept the amendment.

Mr. Molloy

If regulatory functions are being transferred to a new office, it is that office which will be responsible for implementing them and all that has to do with them in the future. If the office of the Minister is no longer charged with responsibility for these regulations under the various Acts as it has been transferred, then they should all be transferred. There should not be an unusual distinction between one and another.

Mr. Stagg

How will transferring this onerous task of defending an action by another corporate person make the director any more independent?

Mr. Molloy

No. I am saying——

Mr. Stagg

The Deputy is criticising the fact that he is not independent enough and claiming that this makes him less independent in some way. It is not so.

Mr. Molloy

——that the general approach throughout the Bill is to restrict the independence of the director. That is my impression. It is also the impression of IBEC which studied the matter carefully. We will hear from others when there is wider realisation among the general public and business community of the extent of the functions being transferred. This is the start of the reluctance to give the broad functions.

I have made my arguments and I do not think the response is satisfactory.

Mr. Stagg

We have had sight of IBEC's representations and it seems to be entirely biased against one of its principal members. It seems to have taken one small slice of its membership, made a case on its behalf and ignored Telecom Éireann which is a major member of IBEC. IBEC has made no case whatever in support of that large corporate member which pays the piper for IBEC.

Mr. Molloy

The Minister is now coming out in his true colours as a die-hard socialist. God help Irish industry.

Mr. Stagg

I should hope my colours were very apparent all the time.

Amendment put.

The Select Committee divided: Tá, 10; Níl, 12.

Tá
Brennan, Séamus.	Leonard, Jimmy.
Byrne, Hugh.	Molloy, Robert.
Fox, Mildred.	Nolan, M. J.
Keaveney, Cecilia.	O'Hanlon, Rory.
Kitt, Tom.	Power, Séan.

Níl
Bell, Michael.	Finucane, Michael
Bhamjee, Moosajee.	McGrath, Paul.
Boylan, Andrew.	O'Keeffe, Jim.
Broughan, Thomas.	Ring, Michael.
Costello, Joe.	Sheehan, P. J.
Crawford, Seymour.	Stagg, Emmet.

Amendment declared lost.

Amendment No. 3 not moved.

Mr. Stagg

I move amendment No. 4:

In page 5, subsection (7), line 34, after "Minister" to insert", other than in subsection (6) of section 7,".

Section 7 provides for the making of price cap orders initially by the Minister and subsequently by the director. The intention is that section 7 will be commenced before section 4, which relates to the transfer of functions to the director so the Minister will make the initial price cap order under section 7(2). On commencement of section 4 the functions of the Minister specified in the Second Schedule will be transferred to the director. These functions include all section 7 other than subsection (5).

Subsection (5) provides that two years after the making of a price cap order the Minister may direct the director to review the order and the director may modify the order. However, subsection (6) provides that the director may not modify a price cap order made by the Minister until five years after it was made unless the Minister has directed that it be reviewed by the director.

Section 4(7) provides that references to the Minister in an Act relating to a function transferred shall be construed after the transfer as a reference to the director. After the transfer of functions to the director, the sense of section 7(6) becomes distorted in that it could be interpreted as prohibiting the director from modifying an order made by himself or herself unless he or she has been directed to review the order by himself or herself. The proposed amendment to section 4(7) is aimed at eliminating this effect by excluding the application of that subsection to section 7(6).

Amendment agreed to.

Section 4, as amended, agreed to.

Sections 5 and 6 agreed to.