Amendments Nos. 1 and 13 are related and may be discussed together.
Air Navigation and Transport (Amendment) Bill, 1997: Committee Stage.
SECTION 1.
There is a new Department official here today, Ms Maeve Nic Lochlainn. The committee has already met Mr. Matt Benville.
I welcome you both to the meeting.
I move amendment No. 1:
In page 5, subsection (3), lines 27 to 31, to delete all words from and including "such" in line 27, down to and including "provisions" in line 31 and substitute "the 1st day of May, 1998".
As a Member of the House for 16 or 17 years I have seen many Acts where the operational date was not specified. This is unhelpful as the impetus is lost when there is no time schedule. I have proffered 1 May as a reasonable period within which to get the necessary procedures and data in order with Aer Rianta. There is no commencement date in the Bill and the matter could be allowed to drift. It is important that we focus on this issue.
The last legislation I dealt with as Opposition spokesperson on health was the Child Care Act. Some of its sections have still not been implemented. This is a matter of public concern and debate. Therefore, to avoid delays and maintain the impetus, we should specify a date. I am not suggesting that 1 May be set in concrete but a date should be specified.
I appreciate the Deputy's remarks. I introduced the Consumer Credit Bill which had a commencement date which was reviewed three times. One has to move an amendment if the commencement date is not met. There are pluses and minuses.
There is a difficulty with Aer Rianta concerning a rating decision with Fingal County Council. The payment of rates is implied and if there were a date Aer Rianta could be tied into paying those rates. I have given this some thought. I understand that proper expediency and ensuring the commencement of the Bill are the reasons behind Deputy Yates's amendment. We will need to see how long it takes to pass this Bill. It will go before the Seanad where it will be thoroughly scrutinised and Report Stage will be taken in the Dáil. At that stage we will have a better idea of a timetable. We should note this amendment and put it forward on Report Stage.
I withdraw amendments Nos. 1 and 13 with the right to resubmit them on Report Stage with a different date in mind. Notwithstanding the points the Minister has made about rates and the rateable account with Fingal County Council, I take it that it is intended that the vesting date would be before 31 December 1998. What is the Minister's proposed date subject to the vicissitudes of parliamentary and other difficulties?
I have not given this much thought. I believe Aer Rianta should move when this Bill is passed. I see no reason for, nor would I endorse, any delay. The vesting date of 31 December 1998 would fit into a timetable if I had one in my mind. I thank the Deputy for withdrawing the amendment until Report Stage.
Amendment, by leave, withdrawn.
Section 1 agreed to.
SECTION 2.
Amendments Nos. 2, 6 and 37 may be taken together.
I move amendment No. 2:
In page 6, subsection (1), lines 18 and 19, to delete "in conjunction with other persons" and substitute "jointly with another person".
These are drafting amendments suggested by the parliamentary draftsman to ensure that the new wording is consistent with more recent legislation.
Amendment agreed to.
Amendments Nos. 3 and 4 may be taken together.
I move amendment No. 3:
In page 6, subsection (1), line 25, to delete "or".
These amendments will extend the definition of airport charges to include those levied on cargo. Airport charges contribute to infrastructure - runways, taxiways and aprons. The Minister for Transport, Energy and Communications usually had a role in approving charges levied on passengers. This was an oversight as there are landing charges for cargo and airfreight which are becoming more important. The control of landing charges is now extended to the office of the Minister for Public Enterprise.
I have no difficulty with amendment No. 3. I would like clarification on paragraph (c) in amendment No. 4. If a plane carries cargo and passengers is there an aggregate charge for both? Is there a separate set of charges for an aircraft carrying freight only? Will this amendment give legal effect to the de facto situation or will it introduce a new tier of charges? Will the Minister confirm that we are not adding a new tier of charges? Will Aer Rianta be structured differently under this Bill or did the Department get bright ideas between different Stages of the Bill?
The ability of a Department to have bright ideas between Stages of a Bill is limitless. However, it legalises a de facto situation.
Amendment agreed to.
I move amendment No. 4:
In page 6, subsection (1), line 27, to delete "passengers," and substitute "passengers, or
(c) charges levied in respect of the transportation by air of cargo, to or from an airport.".
Amendment agreed to.
Amendment No. 74 is related to amendment No. 5 and both may be discussed together. Is that agreed? Agreed.
I move amendment No. 5:
In page 7, subsection (1), line 11, to delete "Companies Act, 1963," and substitute "Act of 1963".
It will be noted that those assisting me in the drafting of amendments take an approach similar to that of the parliamentary draftsman.
These are drafting amendments. I am happy to accept them. The Deputy is correct to note that the Companies Act, 1963 is defined under section 2 as "the Act of 1963". He is right to clarify that this phrase can be used in these sections.
Amendment agreed to.
I move amendment No. 6:
In page 8, subsection (1), line 8, to delete "in conjunction with other persons" and substitute "jointly with another person".
Amendment agreed to.
Question proposed: "That section 2, as amended, stand part of the Bill."
The definition of "airport" under section 2 states: ". . . the aggregate of the lands comprised within an aerodrome and all land owned or occupied by an airport authority. . .". In many cases adjoining lands are operated by other Departments. For example, the customs free zone at Shannon Airport is probably managed and operated by SFADCo. Presumably there are maps which set out the precise areas included under this section. Is there provision for expansion?
Is there any indication of land which may be vested in other authorities or agencies but which may be under the control of the Minister and may be vested in the new authority? Can we avoid situations where it may be necessary for one semi-State body to transfer to another?
Aer Rianta will not give my Department or the country property which it owns.
What about the Minister's lands?
Aer Rianta is concerned with the airports and surrounding lands. Departments which own lands are not considering vesting them in or giving them to Aer Rianta.
Presumably all lands under the control of the then Department of Transport, Energy and Communications are now under the control of the Minister's Department. However, will other lands, such as those controlled by semi-State bodies, including SFADCo, be transferred to Aer Rianta?
No, what they have they hold.
There are lands other than those being used at present in the vicinity of aerodromes. Can these be provided to Aer Rianta for expansion purposes, for example, the construction of new runways?
Who owns those lands?
Presumably the Minister.
Or Aer Rianta. What they have they hold. If the lands are within the remit of the airport ownership remains with Aer Rianta. However, if they are within the remit of another arm of Government——
I understand. However, in the case of Shannon Airport there are substantial lands in the ownership of the Minister which may not be used at present for the operation of the airport.
I know what the Deputy is referring to, but I will have to check the matter. The Deputy spoke earlier to me about this and others have brought it to my attention. However, neither of my public servants are fully aware of the matter. I will return to the Deputy on that.
I am anxious to ascertain sketches of what has been vested in whom.
Question put and agreed to.
SECTION 3.
Amendments Nos. 7 and 8 are related and both may be discussed together. Is that agreed? Agreed.
I move amendment No. 7:
In page 8, subsection (1), line 39, after "section 1(3)," to insert "section 10,".
The Bill inadvertently omitted a reference to orders laid down under section 10. Section 1(3) sets down the general procedure for the laying of most of the orders under the Bill. Section 10, which sets down the procedure for ordering a vesting day, should have been excluded from this general procedure. This amendment will correct that omission.
Amendment No. 8 provides that the Minister may not amend or revoke the vesting day order once this order has been made under section 10. This partly bolsters the matter referred to by Deputy Yates at the outset. I propose that both these technical amendments be accepted.
Amendment agreed to.
I move amendment No. 8:
In page 9, subsection (2)(a), line 3, after "section 1(3)" to insert "or section 10".
Amendment agreed to.
Section 3, as amended, agreed to.
SECTION 4.
Question proposed: "That section 4 stand part of the Bill."
The mechanism provided by this section is similar to that provided under most legislation where surpluses are transferred to the Minister for Finance. The Minister is aware of the very successful management of the airports by Aer Rianta. Last year it had a profit of approximately £40 million of which approximately £13 million was transferred to the Exchequer. Most of the airports need a huge amount of investment and EU funding is being sought. Could a precedent be set here whereby a fund would be established to channel profits of this magnitude into airport development?
Amendments Nos. 17 and 18 address those issues, including the matter of dividends. Some Deputies have expressed concern that Aer Rianta will be affected by these developments.
Aer Rianta at Shannon will be obliged to pay well in excess of £1 million to Clare County Council.
A similar arrangement applies in Dublin.
There is probably more involved there.
Also in Cork.
Aer Rianta may have difficulty meeting those charges. This may necessitate increasing landing or other charges at the airports. While difficulties may arise in the early operation of the legislation, it is sensible to include a mechanism which would enable profits payable to the Minister for Finance to be channelled into the development of the airports and to meet some of these expenses.
Perhaps this debate can be reopened when we deal with amendments Nos. 17 and 18.
Question put and agreed to.
Sections 5 and 6 agreed to.
SECTION 7.
I move amendment No. 9:
In page 10, between lines 4 and 5, to insert the following subsection:
"(3) An order under subsection (2) shall not come into effect until the ordinary time for instituting an appeal against the conviction or order concerned has expired or where such an appeal is instituted, until it or any further appeal is finally decided or abandoned or the ordinary time for instituting any further appeal has expired.".
This amendment takes into account that people have a right of appeal against court decisions and it would not permit forfeiture or confiscation in the period between a court decision and the outcome of a possible appeal. A similar subsection was included in the original heads of legislation but it was subsequently removed. It is desirable to include this additional protection. Otherwise a court order could result in an aeroplane being sold, for example, despite a pending appeal. That would be an irretrievable situation even though the appeal might be successful. It would be preferable to await the outcome of an appeal before action is taken on the basis of a court direction.
The amendment has merit. I live near Dublin Airport and have heard a number of times about aeroplanes which had belonged to companies being abandoned on the apron. To prevent that type of situation it is important that the court process be allowed to take its course. If that is the intention of the amendment, I support it.
As Deputy Stagg pointed out, this provision was included in the scheme of the Bill. It was inadvertently omitted when the Bill was drafted for publication. I thank the Deputy for bringing it to my attention. I accept the amendment.
I am happy to be of assistance.
Amendment agreed to.
I move amendment No. 10:
In page 10, subsection (3), line 9, to delete "subsection (1)(a)" and substitute "subsection (1)(a)(i)".
This is a technical amendment to correct a typographical error.
Amendment agreed to.
Section 7, as amended, agreed to.
SECTION 8.
I move amendment No. 11:
In page 10, between lines 21 and 22, to insert the following subsection:
"(2) Summary proceedings for an offence under section 37 may be brought and prosecuted by the Minister.".
Summary proceedings for an offence under the Bill can be brought and prosecuted by the company and that is provided for in the section. However, depending on circumstances, it might be more appropriate that proceedings for such an offence would be brought by the Minister because an offence under section 37 would involve a director of the company failing to disclose a personal interest in a matter being discussed by the board of the company. I hope such an occurrence would never arise but should it occur, the amendment provides for summary proceedings to be brought and prosecuted by the Minister.
Amendment agreed to.
Question proposed: "That section 8, as amended, stand part of the Bill".
In amendment No. 99 I had proposed a new section to be inserted in section 8 but I am informed it is to be included in the Schedule. The amendment probably will not be accepted because it is drafted in layman's language. However, I draw the Minister's attention to it at this early stage because it relates to a matter of great concern. Could her Department draft the amendment in better terms for inclusion as a new section before section 8?
One hears reports from time to time of flights returning from football matches in Liverpool or Manchester——
Is the Deputy referring to rowdy behaviour?
Yes, and I am most concerned about the issue. This legislation offers an opportunity to examine the legal framework for dealing with people who are drunk and abusive on aeroplanes. Many people travelling by aeroplane find it a traumatic and anxious experience at best, and one can imagine their reaction when air hostesses are threatened and abused. The people responsible are usually burly and strong. Such behaviour terrifies other passengers. One also often hears stories of people fighting with each other on long transatlantic flights. I have heard horror stories about people being terrorised by such incidents.
Amendment No. 99 is probably not in order and the wording will be deemed inadequate, but will the Minister examine the possibility of including a provision for a tough, penalty related offence to deal with this problem?
I have noted the Deputy's comments and agree with his sentiments. When we reach amendment No. 99, the Deputy and I, with the parliamentary draftsmen, might be able to draft a proper wording which would articulate the spirit of the Deputy's comments.
Question put and agreed to.
SECTION 9.
Amendment No. 21 is related to amendment No. 12 so amendments Nos. 12 and 21 may be discussed together. Is that agreed? Agreed.
I move amendment No. 12:
In page 10, between lines 44 and 45, to insert the following subsections:
"(3) The company may, subject to subsection (4), issue shares from time to time as part of one or more employee profit sharing schemes subject to such terms and conditions as may be approved by the Minister with the consent of the Minister for Finance.
(4) The aggregate amount of shares of the company standing issued at any time as part of one or more profit sharing schemes shall not exceed 15 per cent of the total issued share capital of the company.".
On Second Stage I referred to Aer Lingus employees having a right to a shareholding in their company. Aer Rianta employees work side by side with Aer Lingus employees but, under this Bill, they have no such right. Given the present trend in the public sector towards according shareholding rights to the employees of the companies concerned, this Bill offers an opportunity to state that such a course of action would be permissible in this case. The Minister could proceed to issue such a shareholding without being required to introduce further legislation. That is currently the case with regard to other semi-State bodies.
This amendment might be too specific and the amendment put down by Deputy Yates, which is more general, might be more useful from the point of view of the Minister. If so, I am prepared to withdraw my amendment in favour of amendment No. 21.
I concur with Deputy Stagg. Both amendments have the same effect so I do not have a preference for either. Not only do Aer Lingus employees have shareholding rights but so do employees throughout the semi-State sector. The arrangement in Telecom Éireann is being fine tuned in terms of fair valuation while employee shareholdings were included when Irish Life and Greencore were sold. In this era of partnership, it is now an accepted principle that the fruits of the sacrifice and endeavour of the employees should be shared not only by shareholders but by the employees.
One could say this legislation provides a legal basis for the future sale of shares in Aer Rianta. At present, ownership of the company and its property is vested in the Minister and a sale would not be so easy. If shares in Aer Rianta are to be sold at a future date, it would be remiss of the Oireachtas not to make provision for an employee shareholding. The details of such a shareholding could be worked out through discussions with unions, management and Government. However, a specific provision for an employee shareholding would give the Bill a wider dimension and would give such a manoeuvre the imprimatur of the Oireachtas, leaving the details to be dealt with by the Government and Minister of the day. The Minister may argue there is provision for this under the general provisions, but there is no specific reference to it in the Bill. The acceptance of either this amendment or amendment No. 21 would meet that objective.
I am very happy these amendments were tabled. I referred to this point on Second Stage. Many Aer Rianta employees are deeply concerned about the future in relation to this and other issues such as pensions. Given that the Minister is on the record as praising the employees, they were puzzled by the lack of recognition in the Bill of the potential for employee shareholding. They would regard such a provision as tangible evidence of the recognition of their worth. As was mentioned before, industrial peace and fairness is a major issue and experience has shown it is very important to foster a sense of ownership and partnership. I support whichever amendment is most suitable.
I am wholly in favour of employee share ownership. At the end of June I picked up a Telecom scheme which had foundered for many reasons - I am not pointing the finger at anyone. It was almost September by the time we got around to it but I wondered at that time if we would be able to refloat it. We now just have to complete the finer details. When I read the files I could not understand why it foundered but, as the Deputy knows, it did.
I have a huge commitment to employee share ownership. It is the way forward for semi-State companies because, with increasing competitiveness and liberalisation, unless employees feel they have a stake in their company they will not be incentivised. Deputy Dukes laughed at me using the word "incentivised" in answer to an oral question about Telecom last October, but "self-incentivisation" leads to employees feeling they have a stake in the company.
I have already discussed the proposals which I brought to Cabinet in regard to Telecom and I hope that matter ends satisfactorily. Other Governments have implemented similar schemes such as the Aer Lingus restructuring and Telecom Éireann's strategic alliance.
I had a long meeting with the union representatives last week. They pressed this case and I explained my feelings on employee share ownership. However, I also explained that this Bill changes Aer Rianta from being in the personal fiefdom of the Minister to being a plc. That is a formality but, as the Deputy said, it provides a legal basis for further discussions between the unions and management on employee share ownership.
No two semi-State companies are the same. Reporters and members of the public tend to think every semi-State is frozen in time at exactly the same stage, waiting to move on or sideways. In fact, they have come through different stages of development or non-development. Aer Rianta is a very fine example of a company which has developed.
I have no doubt that employee share ownership will be a matter of fact in all the semi-State companies, including Aer Rianta. As I told the unions last week, I intend to convey that view to them in a letter. As I said on Second Stage, my advice and my own commonsense tell me that this Bill is not the vehicle for such employee share ownership negotiations. However, I am now putting on the record that I am in favour of employee share ownership for Aer Rianta. It took Telecom Éireann two and a half years to reach this point but the case of Aer Rianta would be more straightforward.
I am not accepting the amendments. Obviously, members have a right to press the matter to a vote. It is not that I disapprove of employee share ownership but I do not think this Bill, which is a mechanism to enable the change of status from ministerial ownership to plc, is the correct vehicle for it.
I am very glad to hear the Minister saying she is strongly in favour of employee shareholding options in this and other companies. However, Ministers repeatedly take the position that while they are in favour of something they will not do anything about it.
That is not my position.
We have a golden opportunity in this Bill to give legislative expression to the Minister's very positive position. The Minister cannot have her cake and eat it. Letters from the Minister to unions are of little value when the she is no longer in office.
Everybody is saying that to me - one would think I was going out of office overnight. The unions told me that while they felt they could trust me I will be gone. Why will I be gone?
We are simply aware of the reality that Ministers have a very short existence and new Ministers, even if they are from the same party, can easily dismiss letters from their predecessors. I ask the Minister to reconsider this for Report Stage. There is an opportunity to signal in the Bill, even in a vague way, that this is a possibility.
Perhaps my amendment is too specific and might pre-empt the discussions which are likely to take place. However, if an enabling subsection were inserted into the Bill it would meet our case. It would also give rise to and accelerate discussions which would achieve the desirable result, which I accept the Minister supports. It is not enough to pay lip service to the issue and write letters about it. We are a legislative body which is legislating for this company now.
Did the Deputy legislate for an ESOP in the 1996 telecommunications Bill?
No. As the Minister said, every semi-State company is at a different stage. That matter was advanced before the legislation and was not similar to this. The Minister should not criticise me. She knows I am in favour of workers' shareholdings in companies, as she is. I am trying to give effect to that with this amendment. The Minister should consider what she can do, given the valid points she has made. If these amendments are withdrawn, will she consider this matter on Report Stage?
I have no problem dealing with this again on Report Stage, but this Bill has a specific purpose. We can move on later to Aer Rianta or other matters. I accept the credentials of Deputies Stagg and Yates and do not intend to be awkward in referring to the past, but I remember speaking on telecommunications legislation in 1996 and matters occurring outside the House were not legislated for.
Regarding the notion that I will disappear in a puff of smoke, which the unions appear to believe——
It could happen.
——it is not likely. I hope it will not happen although one never knows. It puzzles me that people think I will not be in the Department of Public Enterprise for very long, though I do not know whether officials or politicians are putting that story about. I will return to the matter on Report Stage if we can arrive at a solution for this issue.
I am not entirely convinced by the Minister, though I accept the principle that she is prepared to indicate her good faith by letter. That would not allow ambiguity. However, more detail would be helpful.
We should consider how the ESOP has developed in Aer Lingus. I recently spoke to someone who acted in a facilitatory role there, and it is a generally accepted principle now that a 5 per cent employee shareholding is almost standard; without a productivity deal there is 5 per cent. That practice has developed, although the Minister would not want it to apply uniformly. Regarding Telecom, it was in lieu of the transformation package that went to 14.9 per cent.
The 5 per cent in Telecom is for what is called transformation; the rest they are able to purchase at a fair price.
I would point out the difference between the 5 per cent and 14.9 per cent. Taking the example of Aer Lingus at the time of the Cahill plan, 5 per cent was given. The Minister is not giving anything away for nothing, but I would have been more impressed had she said there was already provision for shares to be given at any time if the Government decided. The Minister did not say this. Is she saying as a result, leaving aside the letters, that there would have to be separate legislation to provide for an ESOP? We would then be on thinner ice, because one would be saying the legislation relates to the commercial-legal framework in this company. If one looks at the Bill, there is quite a lot of Uncle Tom Cobbly regarding by-laws for airports, etc. I am also sure the Minister argued strongly in Opposition in 1996 that this should be put in as an ESOP in the Telecom provision——
That was another argument, relating to worker-directors.
——to make good her own intentions. I agree with Deputy Stagg that today may not be the day to force this to a vote, but it is important that a legal provision be made subject to the Minister or another person deciding the detail of its level or productivity link. Not to refer to the matter and to require separate legislation sets this matter back. It reminds one of the expression "Make me pure, Jesus, but not now".
St. Augustine.
The Minister should propose an amendment on this matter on Report Stage, or we will have to force a vote.
I thank the Minister for her commitment to examining what can be done between now and Report Stage.
In however vague a way I said so.
If my interpretation of section 10 is accurate, we do not need this amendment, because the Minister could get rid of all the shares at any time, without reference to any Member, including the Minister for Finance. I have tabled amendments to correct this.
I remembered the other amendment.
I do not see that situation envisaged in section 10 as being desirable. If that is the case, however, there would be no need for special legislation or amendments to allow shareholding option for employees of a company. Is that the case?
It would be a pity to divide on this issue because we all support the spirit of the amendment. I welcome the Minister's indication that she will examine this matter before Report Stage. It should be possible to insert an enabling section here to facilitate further discussion. Details could be worked out by way of a later Ministerial order. The Minister will be aware of the great co-operation between the staff and management of Aer Rianta and her Department. They have been very successful, and it may be opportune to apply this in legislation.
I welcome the Minister's goodwill towards the concept in these amendments. The employees may want something more tangible, and the legislation will be looked at closely to get a measure of the goodwill the Minister referred to. The employees have told me of the employee shareholding in Telecom of 15 per cent. They compare their fortunes with other companies even though they are all at different stages of development.
Amendment 31 refers to the Worker Participation (State Enterprises) Act, 1977. There is good reason to refer in the legislation to the goodwill about which the Minister spoke in relation to employee shareholding. I ask the Minister to take that on board. If those reading the legislation see that, it would look like an omission not to refer to employee shareholding.
Other speakers and I referred to Aer Lingus and Telecom Éireann. I will go over that ground again and come to the point, which I accept, that was put to me forcibly by the unions in Aer Rianta. Aer Lingus was facing massive restructuring. We all remember the Cahill days - indeed, he is still at Aer Lingus. Literally, the wolf was at the door in the case of Aer Lingus and dramatic reversals were required. As regards Telecom Éireann, the 5 per cent was for restructuring and was evaluated by outside evaluators. A conclusion has been reached on the 5 per cent and the transformation, which will be evaluated and monitored on an ongoing basis, is expected to yield millions of pounds per year.
On the point put to me by the unions, it struck me afterwards when reflecting on the meeting that they have done much of this work without any drama and transformations have occurred without much talk. I accept they have done so. The point lingered in my mind after it was made and it struck me as being relevant. In the case of Telecom Éireann, the remaining 9.9 per cent is, as we said in the election manifesto, at a fair price and the work on that is almost complete. The Deputy took me up on the point that the companies are all at different stages of development and are not prototypes or Dolly clones. The stage of development of a company shapes the thrust of employee share ownership at a time. Details of matters which Aer Rianta employees entered into with their employers are on the record, including details of what they have done so far and what they intend to do. There is a very fine relationship in this regard.
Sometimes one is inclined to take a fine relationship for granted without looking at the work which has gone into achieving it. I will reflect on the matter before Report Stage while bearing in mind that many details will have to be left for the ongoing discussions between unions and management which we could not predicate.
I will withdraw my amendment on foot of what the Minister said. I take it as a promise that she will examine this matter to see what can be done.
I cannot be definite because I must examine the matter. To take up the point which the Deputy made about a later section, we have asked the Department of Finance about it and it has said separate legislation is required.
That makes our case a little stronger.
The Department of Finance is sometimes wrong.
It is on many occasions. On the point about separate legislation, Telecom Éireann's strategic partner was the subject of legislation of which Deputy Stagg will be aware because he piloted it. We believe that will be the subject of legislation when the employee share ownership matter is finally resolved. I will have more facts on that on Report Stage.
Amendment, by leave, withdrawn.
Section 9 agreed to.
SECTION 10.
Amendment No. 13 not moved.
Amendments Nos. 14 and 15 are related and may be discussed together. Is that agreed? Agreed.
I move amendment No. 14:
In page 11, lines 20 to 24, to delete subsection (4).
I did not understand section 10(4), particularly the part which states: "there shall always be a minimum number of members in the company", which may be a common sense provision. When in doubt, leave it out was my motive for this amendment and that is the reason I propose the deletion of this subsection. However, if the Minister is able to give a satisfactory answer, I will be happy to consider it.
From what Deputy Stagg has said already, the issue of the sale of Aer Rianta shares arises here and I would like to set out my stall on this matter. Aer Rianta has a public monopoly in that somebody cannot land in Dublin, Cork or Shannon Airports without Aer Rianta getting money from them. A public monopoly made into a private one is bad because bad motives can be attributed to a monopoly. Competition cannot deal with this area because we will not have one section of Dublin Airport competing against it nor can another airport compete with Dublin Airport, which is the jewel in the crown and will be the most profitable.
I do not favour a quick sale of Aer Rianta shares. However, in terms of the history and evolution of the company in recent times, I notice that airport ownership has deregulated massively across Europe and I believe it has taken a minority stake in Birmingham Airport. On a minority or a 49 per cent basis, it may make sense to give to cross share holdings between an airport in Bonn, France or elsewhere in the world and Aer Rianta to strengthen its base.
One issue that has not been properly advanced by shareholders is the government of semi-States. If we look at CRH and food companies, for which I had responsibility as Minister for Agriculture and Food, all their growth is now abroad. With a consumer population of 3.5 million, what one can do in Ireland is very finite. If we want these public enterprises to grow - the ESB fits into this category - joint ventures and expansions, such as what Aer Rianta has done in Birmingham by taking a 20 per cent stake, will consolidate the employees, dividends, profits and turnover. I hold a totally pragmatic position on this matter and do not have a blanket opposition to it. I favour the Government of the day having a choice but I do not believe a public monopoly is made better by a private sector one, which will essentially bleed it for returns. I ask the Minister to clarify section 10(4). If there is a plausible explanation, I will be happy to withdraw my amendment.
Deputy Yates proposes to delete the option of the Minister for Finance to transfer some shares to others to meet the requirements of the Companies Act that there be more than one shareholder. We have been advised that this section is necessary for compliance with the Companies Acts. When the Deputy tabled his amendment I asked if that was the case and we were given an assurance that this was necessary for compliance with the Companies Act.
Practically speaking, what is required?
There must be at least two shareholders.
One shareholder will be the Minister for Finance. Who will be the other?
The Minister for Finance and a few other people. This is open Government.
I am sure it is simple. The Bill refers to a minimum of two members of the company. What is the definition of a member of a company? Does it mean a director of the company?
A shareholder of the company.
Who is the second member? It seems a contradiction in terms if there is exclusive ownership in one shareholder, namely the Minister for Finance. Who is the second member referred to under the companies legislation?
It could be a chairman, member of the board or an official. It will be a trusted person.
In that case I am happy to withdraw amendment No. 14. It is an obligation under the Companies Act.
That is correct.
Amendment, by leave, withdrawn.
Amendment No. 15 has already been discussed with amendment No. 14.
I move amendment No. 15:
In page 11, between lines 24 and 25, to insert the following subsection:
"(5) Save as authorised by subsection (4), the Minister shall not transfer or alienate any of his shares in the company.".
I tabled this amendment to ensure the legislation is similar for Aer Rianta as for other semi-State bodies and that the Minister would not be entitled, by virtue of this or any other section, to sell the shares of the company without reference to the Oireachtas. I outlined my philosophy on this matter on Second Stage. In certain circumstances I am strongly in favour of alienating the shares of the company, namely, where joint ventures are in the interest of the company and where employees should have a shareholding in the company. I do not have an ideological hang-up about the Minister owning the shares. When independent regulation is enacted, the shareholding by the Minister will have little value from a public interest point of view. It is essential to keep our focus on the public interest, which does not always coincide with the interests of the State, the Minister or even the employees. The interests of those who use the service provided by the company should be paramount. Everybody else should fit in with this interest.
It is not true to say this is a public monopoly. It is a natural monopoly in a given city. It is a matter for others who wish to provide competition as to whether it is desirable to have two airports in Dublin city, Shannon, Knock or Cork. This is allowed and encouraged by the directive. We have competition on the floor of the airports with two handling services, namely, Aer Rianta and a private sector handling company. Airlines can also provide their own handling services at airports. There is, therefore, a large measure of competition within the airport system which has led to benefits for the consumer, which I support.
I have taken legal advice on this matter and it is my interpretation that the Minister can alienate the shares without further reference to the Oireachtas. I do not believe the Minister should have this power. This Minister would not do anything wrong now, but perhaps a future Minister would. However, even this Minister might change and decide to sell the company without reference to the Dáil. It might be desirable in future to sell the company and I would not eliminate that possibility, but if that stage is reached the Minister should be required to get the authority of the Oireachtas to sell it. This is the essence of my amendment and is one of the most important points I will make today.
The amendment seeks to prevent the sale of shares in Aer Rianta. The Minister for Finance owns the shares in Aer Rianta and will continue to do so after the vesting day. Due to the nature of the controls imposed on the company already, the matter would have to come before the Oireachtas again in the event of any transfer or sale of the shares, in order to seek its approval, as in the case of KPM Telia, Telecom's strategic partner. The Deputy piloted that Bill through the Oireachtas.
Where does the legislation refer to what the Minister has outlined? The legal people I asked to examine the Bill could not find such a provision in it.
The matter would have to come before the Oireachtas in such circumstances. That is our legal advice.
That is not stated in the Bill.
That is our legal advice. The Deputy also has legal advice.
I do not doubt the Minister has legal advice but can she say where the Bill refers to this, chapter and verse?
I cannot do so, but I have been professionally advised that the matter would have to come before the Oireachtas in the event of any transfer or sale of shares in order to seek its approval.
I am pleased this is the case. This is important legislation and the Minister needs to demonstrate in the Bill the provision preventing the Minister from selling shares in the company. With the permission of the Chairman and the agreement of the Minister, I am prepared to return to this amendment at a later stage.
I do not mind returning to the amendment, but if we are to come back to every amendment, we will need a further Committee Stage.
I have no intention of doing that. The Minister cannot say, chapter and verse, where the Bill provides for what she is saying. She has legal advice regarding an interpretation of something in the Bill. I cannot find the provision.
The Deputy could press the matter to a vote.
That would defeat the purpose. If the Minister's advice is accurate, I will withdraw the amendment. However, I want the Minister to say where the Bill provides for preventing the sale of shares before referring the matter to the Oireachtas.
I will arrange for clarification of the matter. Deputy Stagg is correct to raise the matter, but I will not be able to return to this issue in the context of the Companies Act. However, I will provide the information regarding my advice on this matter to Deputy Stagg.
I am anxious that this matter be clarified before we proceed. If the Minister cannot agree to clarify the issue at a later stage in the debate——
We could do that.
——I suggest we adjourn until she gets clarification.
We cannot defer consideration of this section. The Minister has said she will provide clarification before Report Stage.
That is correct. I will provide clarification to Deputy Stagg. It is his right to pursue the issue to a vote at that point if he is not satisfied with the clarification.
It is unsatisfactory that we accept a section of the Bill when the Minister cannot give an indication, chapter and verse, where the Bill contains this provision.
The Minister will do so.
I cannot do so at the moment, but I will give the clarification.
It is unsatisfactory to proceed.
The Deputy has his rights. If he dislikes the clarification I provide he can press for a vote on Report Stage. The situation could not be clearer.
The last point made by the Minister is procedurally correct, and perhaps a more dramatic vote can be had in the Dáil than in the committee. All the rights are preserved for the Opposition. The Minister does not have a note on this serious matter among the copious notes in front of her.
I do not have such a note.
If I was Minister I would like to have such a note. It is a crucial question.
So would I.
Both Deputy Stagg and I have set out our stall regarding our view on this matter.
I accept that.
As this deals with the future of Aer Rianta, perhaps it would be opportune for the Minister to outline her view on where she sees the shareholding of Aer Rianta lying in the future. Does she take a status quo view that, for her period as Minister, 100 per cent of the shares will remain with the Minister for Finance or has she a pragmatic open attitude to this, or can she foresee the board coming back with a blueprint for change now that it has the legal opportunity to do so?
My view is very pragmatic. If we are going to proceed to employee share ownership it will not be 100 per cent owned if the fine opinions expressed by all around the table are to be implemented. Much of the business of Aer Rianta is in other lands. If it or any other company decides, in conjunction with its employees, that it needs to broaden its horizons, I await its recommendations. I have no hang ups about the matter but I stress again it can only occur with the concurrence of the workforce.
I am unhappy. I have tabled an amendment which would seek to prevent the Minister form transferring shares in the company. The Minister is saying that provision is already in the Bill without being able to say where. Could we adjourn for 15 minutes to allow the Minister to get the information?
We have started the section Deputy. I was going to put the position in this way, the Minister has set out what she is prepared to do. Is the Minister happy to adjourn?
I am not happy. We have collected the amount of information I need to give you. The controls as vested in me allow for that. If Deputy Stagg wants to table the amendment on Report Stage, so be it. I can be no fairer than that.
That is a long way down the road. The Bill will go from here to the Seanad, with all the consequent debates, without this information being on the record.
I will give the Deputy the clarification and if he is not satisfied with it then the matter of the amendment comes forward.
If the Minister tells me she has power in this regard, the least she ought to tell me is from where this power comes. It is not in this Bill. It is difficult to withdraw my amendment and proceed as if we have the information and it was acceptable.
The procedures allow the Deputy to proceed in the way suggested by the Minister. We have commenced the section and the Minister is not in favour of a 15 minute break to establish the information.
The reason I am not in favour is I want to carry out the investigation myself and I want to do it properly.
Surely this should have been done before today.
The Deputy is right, it should have been done before today. I am not blaming the Minister. A huge number of notes accompany a Bill with 64 sections, which are never read. The fundamental issue of share sale arises and we do not know the legal position.
The Minister is anxious to help.
I do not understand why the Deputy is worried about proceeding when the issue can be raised on Report Stage. Forget about clarification and table the amendment on Report Stage. That is the safest way to do it.
The clarification might determine attitudes.
The critical place for the examination and amendment of Bills is on Committee Stage. Report Stage is for a minor examination of the Bill. It is a tidying up stage. This is a major issue. I propose we adjourn until we have the appropriate information.
I am not allowed to do that under the procedures.
If the committee decided to adjourn can it not do so?
We have commenced the section, the Minister has outlined her position and I am now going to ask how the amendment stands. We shall vote on it if we cannot have a decision on it here.
It would be quite acceptable to proceed in the way the Chairman has proposed if the Minister said she disagreed with Deputy Stagg's amendment and called for a vote on it.
The Minister's position is that the amendment is redundant. Deputy Stagg was not opposed to the sale of shares in certain circumstances but he wanted separate legislation brought forward. The Minister's answer was the amendment was redundant as that would be the de facto situation. When elaboration was sought on this point she was unable to give it. It is not a point of disagreement on the substance of the issue, it is on the basis of whether it is redundant.
I would disagree with the amendment anyway. I am trying to be fair to Deputy Stagg. I will not be half as willing to clarify matters from now on. What I was trying to do was give the fullest information to Deputy Stagg in as far as it was available to me. I did this out of courtesy to the committee. If a vote is to be called I am happy enough.
Is the Minister bringing in the sweetness and light vote?
Not really.
We have new information from the Minister. There was nothing in the Minister's previous comments to indicate she was opposed to my amendment.
There was. Deputy Yates asked my opinion on future share sales.
The Minister made the case that my amendment was redundant because the powers it sought were already available to the Minister in some form she could not explain to us. There was no question of the Minister being opposed to my amendment, she simply said there was no need for it. That is very different. She is still saying the amendment is not necessary as she already has the powers the amendment would give her. She is now saying she is opposed to the amendment to arrive at a procedural point where there would be a vote getting rid of the issue. That is nonsense. She either has the powers this amendment would give her or she has not. If she has not, it is desirable to give them to her, if she says she has them already and is wrong, she should support this amendment.
I do not support the amendment. For instance if workers are to be given shares, the range of ministerial controls means the Oireachtas would have to be consulted in order to change these controls to satisfy outside shareholders, were there to be outside shareholders.
That is not mentioned in the Bill.
That is the practical reality. I am in favour of employee share ownership——
However, the Minister will not legislate for it.
——but it would have to be legislated for. I am not binding the hands of the Government, Committee or Dáil by saying there cannot be a dilution of shares.
Neither am I.
That is what the Deputy's amendment says.
On foot of what the Minister says and because of the difficult situation in which I find myself, I withdraw the amendment and look forward to the full information promised by the Minister between now and Report Stage.
Amendment, by leave, withdrawn.
Sections 10 and 11 agreed to.
NEW SECTION.
I move amendment No. 16:
In page 11, before section 12, to insert the following new section:
12.-The company shall not alienate a share in a subsidiary carrying on a principal object of the company within the meaning of section 23.".
This amendment seeks to ensure that, for example, if a Cork airport subsidiary of Aer Rianta is formed shares in that subsidiary cannot be sold by the subsidiary without reference to the Oireachtas.
The Bill will establish Aer Rianta as a State body with a clear commercial mandate to manage and operate the State airports. The proposed amendment would interfere with the commercial freedom of the company to plan and manage its core operations. There are no plans to delegate the company's core responsibilities to subsidiaries. I do not see a need for the amendment.
I will elaborate further. Under this section it would be possible for the various sections within Aer Rianta, namely, Dublin airport, Shannon airport, Cork airport and various other sections, to be brought under the direct control of subsidiaries of the company. My fear would be that without a core activity, as described in the Bill, Aer Rianta could decide to allow the subsidiaries to sell off Cork airport.
I do not see the possibility of that happening. The Deputy is saying they might sell Cork airport.
The point is that the company could decide to set up a subsidiary to run and own Cork airport. It could then sell the shares in the subsidiary which would effectively be selling off Cork airport without any further legislative authority to do so.
There are no plans to set up subsidiaries involving the core activities.
There is no core activity described in the Bill.
There is in the operational aspects of State airports. There are no plans for subsidiaries that would separate Cork airport from Shannon and Dublin airports.
The Bill would allow for the present core activities of running airports to be hived off by subsidiaries.
They would need ministerial approval to subdivide into subsidiaries of core activities.
If accepted, some of the amendments, including the Minister's amendments, would fortify the position of core activities but as of now it would be possible for this to occur. My amendment is a safeguard against such an occurrence.
I cannot accept the amendment because the commerciality of Aer Rianta should be allowed to assert itself. There are no plans to operate subsidiaries of the core activities of running State airports at Shannon, Cork and Dublin.
Amendment, by leave, withdrawn.
SECTION 12.
Amendments Nos. 17 and 18 are related and may be discussed together by agreement.
I move amendment No. 17:
In page 11, between lines 46 and 47, to insert the following subsection:
"(3) In the first financial year the dividend shall not exceed the value of the assets transferred under section 14 of this Act.".
For the purposes of grouping my amendment, No. 25 is part of an approach I have. I would prefer to group amendments Nos. 17 and 25 together but Deputy Stagg's amendment No. 24 is linked to Amendment No. 25. For the purposes of procedure I will refer to the amendment.
This is a crunch issue. This legislation enables the Minister to transfer the property to an Aer Rianta plc. It also enables the Minister to get a dividend in year one. It enables the Government to get rates and corporation tax and it enables the Minister to get money for the assets transferred under this legislation. There is a possibility that Aer Rianta could be pillaged by the Exchequer in year one. There is significant concern among management and the employees about this issue. Leaving aside rates and corporation tax, suppose the property is valued at £14 million and the Minister for Finance, Deputy McCreevy, issues a memo requesting £14 million on the vesting day, and then the Department of Finance decides that on year one the dividend is another £14 million, equivalent to what was paid by way of cash surrender, then the company must come up with £28 million. That double whammy should be prohibited by law.
I propose a valuation of the assets and that the dividend in year one could not exceed that asset value. In other words, there would be no double whammy. I am trying to prevent the Department of Finance getting their sticky mitts on the assets of the company at a time when there is the prospect of the end of duty free in mid-1999, when the company has other financial difficulties and is investing heavily in upgrading Dublin airport and investing in airports abroad. All of the assets of Aer Rianta over the past ten years have been borrowed and paid for by the company. It is not as if the State injected the money and is now entitled to withdraw it. The Minister simply gave Government guarantees that were never exercised.
The corporation tax and rates per annum as well as a dividend in the first year should be enough. However, under the legislation the Minister for Finance is entitled to an asset based cash surrender and a dividend as well as the tax yield. That would have a crippling effect on the cashflow of the company and would give it a difficult and inauspicious start in its first year of operation under this legislation. With regard to amendment No. 18, it is common sense in dividend policy that the level of the annual dividend would have due regard to the cash and borrowing position of the company.
I hope the Minister accepts the spirit of amendment No. 17 and that she understands the convoluted logic with which I drafted it. She must ensure that the dividend does not exceed the cash value. Amendment No. 18 should be acceptable. All parties have participated in multi-party Governments and in drafting an annual budget. It is not unusual to find that a Minister might require an extra £4 million or £5 million——
They will not get it from me.
——and the money is not available. Somebody might propose that airport charges be increased to secure an extra dividend——
Yours must have been a funny Government.
No, we did not do any such thing. However, I have been observing Governments long enough to know that this happens. The attitude is, "we will raid Aer Rianta for £5 million as it is a painless exercise and it is having a good year". The annual dividend should have regard not to the Exchequer's political interests at a given time but to the financial position of the company. If we are interested in the progress and success of Aer Rianta, it is only fair that in determining dividend policy under section 12 the amendment should be included.
Many of the points made by Deputy Yates were made by me in discussions with the Minister for Finance, although the Deputy, as Opposition spokesman, probably made them with more vigour. I cannot see how legislating for control either with regard to dividend payments or to curtailing how much Aer Rianta would pay in the first year would be effective. I made the same points with regard to the rates which will be paid by the company to Fingal County Council and Clare County Council. However, that is an effect of the transfer and nothing can be done about it.
Having debated the matter, the Minister for Finance and I came to the conclusion that the operation would be kept under review. That is embodied in the Government decision. The developmental plans of Aer Rianta have been discussed at Cabinet and they are fine plans. Why should a Government of any hue pillage a good company, strip it and leave it unable to develop? None of us will do that.
There are precedents for that.
Aer Rianta has devised its developmental plan for the next four years or so. It must show how it will prudently pay for that plan year by year. The company has also set out in its plan how it will deal with other matters. The plan went to Government and was discussed at Cabinet. These issues came up for discussion when I brought this legislation to the Government. The first year of operation will demonstrate the impact of the matters we have discussed, particularly the rates imposition, and the Government's decision is that these will be kept under review.
I do not intend to legislate to tie the hands of the Minister for Finance or the Government. It would be incorrect of me to attempt such a procedure. We do not intend to strip Aer Rianta. After all, the country is currently enjoying a period of economic growth.
I do not object to the sentiments behind amendment No. 18 but many considerations are involved in determining annual dividends, including future capital programmes. Deputy Stagg, as Minister for State, went to Shannon Airport to launch its five year programme of capital investment. It is obviously incorrect to legislate for the determination of annual dividends.
No Government will strip a semi-State body of assets or so curtail it by way of stripping its assets that it cannot fulfil its develomental needs.
With regard to amendment No. 17, I must put the opposite case to the Minister. I am not accusing the Minister of asset stripping. Section 12 should be read in conjunction with section 14(5), which provides that on the vesting day "the company shall. . . . .pay to the Minister for Finance such amount as the Minister for Finance, with the consent of the Minister, may determine". There are, therefore, two obligations on the company. Even if the Minister for Finance assures the Minister that he has no intention of harming the company, there is still a legal obligation on the company to pay twice. It must pay a dividend in the first year, under section 12, and pay the cash value on vesting day. That is a double raid.
I am happy to retain section 14(5) even though the company paid for the assets and there is no basis on which the Minister can charge for them. The company borrowed money to pay for the assets, repaid the borrowed money and the assets have been developed. In fairness, the company owns the assets.
The collateral was underwritten by the Government.
It did not have to pay any money.
It was not drawn down.
It was not like the case of Aer Lingus where the Government had to inject £175 million and has a reasonable call on that money. There is no call on the money in this case because it has been a profitable company.
I have tried to construct the avoidance of a double whammy by providing that one should equate to the other. The dividend in the first year——
I am aware of the Deputy's point.
Am I wrong in construing from section 14(5) and section 12 that Aer Rianta will be legally obliged to pay twice in the first year or has the Government decided to give a credit in the first year? We are only discussing the first year, not dividend policy ad infinitum. Under section 14(5) the company must pay an amount which, I believe, should be independently valued. However, that is another matter. Surely the dividend in the first year should be in lieu of that. I am not saying the Government is intent on crucifying the company but we must deal with legislation as it is presented and enacted.
The Deputy said a Government would pillage the company.
I called it pillaging. I used that term because, in effect, it would be pillage. Is it the intention of the Minister and the Minister for Finance to seek a dividend in addition to what is provided for under section 14(5)?
I did not refer to pillage or asset stripping. When the final draft of the Bill came before Government, I brought this matter to the attention of the Cabinet. I am not sure if I should say so much about this in view of the requirements regarding Cabint confidentiality. The Cabinet, in its wisdom, recognised in its decision that there would be, to put it colloquially, a double whammy in year one. The matter was then to be discussed by the Minister for Finance and me, bearing in mind the discussion I had at Cabinet. There was a recognition in the Government decision that the double payment in year one can be revisited. I cannot be any plainer than that.
I appreciate the Minister's frankness. However, I need some level of legal certainty. I submit there are different ways in which the Minister could insert a new section 12(3) which would give effect to what she is saying. For example, a credit could be given in the first year of operations in lieu of the asset value. My amendment attempts to avoid a double whammy.
I am asking the Minister to consider inserting a subsection (3) which would give legal effect to a year one provision. It is possible that a Minister for Finance could say that dividend policy in semi-State companies is X per cent of profits. While one section in the Minister's Department could say the dividend for Aer Rianta was not unreasonable, another could say the assets should not have been charged for. Deputy Stagg has tabled an amendment to delete section 14(5), which is another way to deal with the matter.
Without wishing to in any way do down Aer Rianta, it could happen that the Department of Finance would say it was obliged by law to take that money twice. As a compromise, I ask the Minister to consider inserting a subsection (3) which would deal with the double whammy.
I am in somewhat of a quandary in that I have tabled an amendment which I am not entitled to discuss at this stage. However, if the sections remain as they are the law will require two "smash-and-grabs" that year.
I presume dividends are paid on the basis of the dividend available and that there is a method of calculating that. Heretofore, the Minister simply arrived at a figure which he thought the traffic could bear and demanded that level of payment without any reference to the realities of the companies. Sometimes there were agreements over a number of years where no dividend was paid, for example, in Bord Gais.
That was a developmental phase.
That is true, but that is not the case here. There is a legal requirement to take the dividend as calculated and also to take the smash-and-grab under section 14.
I do not see how it is forced to that. Under section 14(5) the Minister for Finance will determine the amount, which could be a penny or £100 million, with the consent of the Minister. The Deputy is implying it will be forced——
Knowing the Department I know what it will take.
The Deputy is implying it will practically destroy the company because it is legally obliged to do so. That is not the case. The Deputy is stretching the point. It is not forced by law to destroy the company. Section 14(5) clearly states that the company shall "pay to the Minister for Finance such amount as the Minister for Finance, with the consent of the Minister, may determine". That seems fairly simple to me.
Heretofore, we have had a cash surrender in lieu of a dividend. It would not be unreasonable for the Department of Finance to say the dividend should mirror the cash surrender over recent years. Over the past few years the dividend has been between £10 million and £14 million. However, the double effect can readily apply because of the simultaneous application of a dividend and the asset transfer under section 14(5), on which it has no real financial or moral claim in my opinion. If the Minister were to say the Government has made a decision that there will not be a dividend in year one I would accept that. However, that is not quite what she said.
The Deputy is correct to say I did not say that.
How much is the Minister going to grab?
We are talking about a semi-State company, Aer Rianta, which is successful and thriving thanks to the work of the employees, good management and good boards. We are not talking about an alien entity. It has put forward fine developmental plans on a five year basis which were passed by the previous Government. I have accepted all of the plans it put forward in its annual general report to me and they have been discussed at Cabinet. Aer Rianta's development path has been set out. I also concurred with the recent Dusseldorf acquisition and other plans, which I brought to Government where they were accepted. Its developmental needs have been recognised and provided for.
The idea that any Government, of whatever hue, would decide to take so much money from Aer Rianta that it would suddenly collapse is incomprehensible. That could not happen in a modern democracy. It is necessary for us to acknowledge what we are dealing with before we get caught up in our high flown rhetoric.
When I brought the Bill to Cabinet I said the first year would be difficult. I was mainly talking about the rates at that time because Fingal County Council had just announced it was going to do its own smash-and-grab on Aer Rianta. County councils are always looking for extra money, which is quite right. We discussed the matter at Cabinet and it was written into the Government decision that regard would be taken of the position of Aer Rianta in year one. In answer to Deputy Yates' question, the amount was not defined. I cannot be any more explicit than that. Obviously, the vesting day would have a bearing on the dividend payment date and perhaps on the rating valuation. Members are entitled to vote on the amendments but I will not be accepting them.
I do not wish to appear awkward or difficult but this is a substantive issue. It was discussed in the constructive participation between unions and management in Aer Rianta. They feel there is a prospect of double payment here. It is not imagined but is almost inevitable under the terms of the legislation. I disagree with the Minister on the vesting day. It does not matter when that is. If it is any time on the vesting day the assets will have to be paid for and a dividend will have to be paid within a year. There will be a double blow within 12 months.
It may affect the rating day.
That would not affect the double blow I have mentioned. The owner will pay the owner for the assets and will also pay a dividend. I do not see why the Minister cannot accept a provision that would state in section 12 that due credit would be given for the provisions of section 14 in the detail of a dividend in the first year. I will withdraw my amendment because the Minister may have had a bruising encounter with the Minister for Finance who would, as usual, have won.
I got my reservation into the Government provision.
That is a rearguard action. I am unhappy with section 12 because of the first year. The Minister does not seem to have given any attention to my other proposal on the cash and borrowing position other than vague assurances that something like that would not be done. This is law for the long-term, and I am disappointed, because if we vote now on this matter it cannot be raised on Report Stage. I can only fire once on this matter, so I will withdraw the amendment now and resubmit it on Report Stage.
Amendment, by leave, withdrawn.
Amendment No. 18 not moved.
Question proposed: "That section 12, as amended, stand part of the Bill".
I do not agree with the section as it is currently framed.
Question put and declared carried.
SECTION 13.
Amendment No. 19 is related to amendment No. 20 and they are to be taken together by agreement.
I move amendment No. 19:
In page 12, subsection (5), line 21, to delete "£250 million" and substitute "£350 million".
These are commonsense provisions the Minister will have no difficulty accepting. They relate to the part of the section which states that the aggregate at any one time of moneys borrowed under this section shall not exceed £250 million. Given the development spoken about in relation to Dusseldorf, Birmingham and other plans, I am advised that £350 million would be more prudent and give more flexibility. I am very conscious that these bills, whether they relate to ICC or Aer Lingus, must be prepared, which involves the rigmarole of going to a Department if a figure is to be changed. It is better, therefore, to give head room for the foreseeable future, and £350 million might be more appropriate. This cap should not restrict the future expansion of the company or the possibilities of a strategic partner. While I accept there should not be unlimited borrowings - we do not want to bankrupt the company - the level chosen does not meet the company's requirements for investment. I am therefore also providing, in amendment No. 20, for a reviewable clause. Then the cap could be reviewed from time to time with the consent of the board and the Minister of the day. It would not remove the Minister's powers but would allow a less bureaucratic procedure for borrowing ceilings. I hope the Minister, who has accepted none of my amendments——
I have.
——except for some of those involving legalese, will have a change of heart.
I am all for incentives. The amount of £250 million was arrived at by the company meeting with departmental officials. If they want an increase at any time because the amount of development required it, they could discuss it. Given prevailing circumstances I am sure it would be granted.
Amendment No. 20 is helpful, because it is what I propose to do. I will prepare wording based on a review mechanism for the amount specified in the Bill. The thrust of the amendment is that the borrowing ceiling may be reviewed in light of the company's investment requirements, as requested by the board of the company in conjunction with the Minister. I agree with the spirit of that proposal without putting a figure to it or couching it in legal language.
I appreciate the Minister's comments. Is it the case under the Bill as it stands that if the Minister did not accept amendment No. 20, new legislation would be required if more than £250 million was sought? That would reinforce my point. The Minister knows that one would want to introduce legislation once a decade for instance, given the slowness of the procedure. It would not be a good way to do business if the company while negotiating with other investors had to tell them that a decision required an Act of the Oireachtas. I feel people will act prudently.
It could still happen that one line would lead to an amendment.
Not necessarily.
I do not know, but I see no difficulty with this.
I am happy to withdraw amendment No. 19 if amendment No. 20 is broadly accepted.
I presume Aer Rianta has fairly substantial borrowings. Is this £250 million separate from existing borrowings?
We discussed it with the company and this is the figure at which we arrived. The figure of £250 million is what it would need.
What are its borrowings to date?
About £60 million.
Is there a ceiling in existing legislation?
This is the only legislation relating to Aer Rianta.
I presume the Department of Finance was involved.
Yes, in conjunction with this Department. I imagine it has added up all its likely projections and developments. This came about with company recognition.
Amendment, by leave, withdrawn.
Amendment No. 20 not moved.
Section 13 agreed to.
SECTION 14.
Amendment No. 21 not moved.
I move amendment No. 22:
In page 12, subsection (1)(a)(ii), line 30, to delete "a State airport" and substitute "an airport".
There are two amendments to this section, one technical and one substantive. This amendment arose from a recommendation from the parliamentary draftsman. Amendment No. 23 proposes to insert the phrase "which lands comprise the airports known as Dublin Airport, Cork Airport and Shannon Airport" to provide clarification. This is intended to make it clear - it has a bearing on an earlier point on the core business which led to some friction - that the key or core assets of the company are the three State airports. When taken in the context of section 16, this amendment will make it clear that the company is to be responsible for the management and development of Dublin, Cork and Shannon Airports. In locations outside this country, such as Du1sseldorf, Birmingham or elsewhere, it is subject to the laws there, in other words, our writ does not extend to that.
Amendment agreed to.
I move amendment No. 23:
In page 12, subsection (1), line 33, before "and all right," to insert "(which lands comprise the airports known as Dublin Airport, Cork Airport and Shannon Airport)".
Amendment agreed to.
Amendments No. 24 is related to amendment No. 25 and both may be discussed together. Is that agreed? Agreed.
I move amendment No. 24:
In page 13, lines 12 to 15, to delete subsection (5).
This case has been made already. Given that the Minister has indicated what generally occurred at Cabinet and that there is at least a rider in there, the situation is not as stark as we feared. However, the company will be required to pay dividends, rates and corporation tax and will be immediately moving into situation where the loss of duty free is likely to be a reality. We do not need to discuss that matter in any detail as we have done so on previous occasions. The possible loss of duty free is in the order of £20 million. We should be realistic about it and be aware it is likely to occur.
If we add to that what I described earlier as a smash and grab raid without any justification whatever of something in the order of £20 to £30 million, it could be damaging to the company. I would like to hear some justification for this take of written down value of assets, which is the terminology used, in the knowledge that the company has paid £207 million to the Exchequer, £137 million of that has been paid since 1987 and that only a minimal investment was made in the company by the Exchequer at the beginning. Since then the company has funded its own investment which has amounted to £224 million. The only obligation the State, Government or Minister had was to underwrite the loans acquired by the company. For that it will be punished severely even though that underwriting was not called into effect by the fact that the company was not able to pay the loans it had raised.
I propose to delete this subsection. There is no need for it given that we will be receiving dividends, the local authority will be getting rates, corporation tax will be paid at a lower rate than was intended at the time the Bill was drafted and the company will face the duty free issue at that stage. It may be necessary, if this is included, for charges to be substantially increased to meet the new costs the company will face. The company can do that but there will be knock on effects in the economy in terms of tourism, employment, etc., if that occurs. The Government needs to pitch the take from the company at a level which will not have a negative knock on effect.
I already dealt with that issue in an earlier amendment.
As regards the amount, subsection (5) states: "such amount the Minister for Finance, with the consent of the Minister, may determine." It is not only a matter for the Minister for Finance. How is it proposed to value those assets? An argument put forward by Deputy Stagg and me is that these assets have been well paid for in cash payments to the Exchequer without any input from it. Leaving that aside, is it intended that the Minister for Finance will think of a number and double or halve it? What is the Minister's view on this? Is it the case that after the Minister's severe friction at Cabinet with the Minister for Finance on this issue——
That is a fairy tale.
The Minister likes the word "friction" and that is the reason I chose it. After the severe altercation with the Minister for Finance——
That is a total fib.
I am trying to interpret what happened. After the Minister dealt with him——
The Deputy must have been part of a woeful Government because everything he has said today——
The Minister gave the impression of being robust on this issue but now we are hearing that she is not so robust.
I heard the Deputy's party when in Government would sit until 4 p.m. or5 p.m. because they could not reconcile matters.
Most Cabinet meetings were over in an hour and a half. The Minister is thinking of the FitzGerald administration and not on the last one.
It was all the Deputy's lot anyway.
We had programme managers.
God preserve me from that.
To get back to the substantive issue, the Minister either did or did not make a General Custer type last stand on this issue with the Minister for Finance. I thought from her earlier contribution that she had taken a valiant stand. It seems the legislation requires the consent of the Minister for Public Enterprise. What figures does she have in mind to which to consent? This is specific and is not like dividend policy in that it can fluctuate. It is a straightforward issue. We know what the assets are and where they exist. We also know, roughly, the value of the assets. Deputy Stagg outlined the cost of the investment in putting them together. Will the Minister tell us where we stand on this issue and how these assets will be valued?
Section 14(5) states:
On the vesting day the company shall, in respect of the lands and other property vested in the company under this section, pay to the Minister for Finance such amount as the Minister for Finance, with the consent of the Minister, may determine.
This is flexible. The reference is to "the vesting day". I do not know when that will be.
Hopefully it will be soon.
Yes, if we progress.
This requires the Minister's consent. What is the Minister likely to consent to in terms of the valuation of these assets?
We will deal with that issue on the day.
We are expected to accept a pig in a poke.
No, it is quite clear. It says——
I understand what it says.
The Deputy cannot have it every way.
I am trying to have it one way.
The section speaks about the vesting day.
I understand, but that could be some day in 1998 or 1999.
Exactly.
The assets will not change hugely in value. The Minister has previously made great play in response to this issue, saying that the Government would not do anything to harm Aer Rianta. She also made the point that her consent has to be obtained and that the Department of Finance cannot, therefore, do a "smash and grab". We are asking the Minister to put some meat on those bones of commitment. What position will the Minister adopt regarding how the assets will be valued? Amendment No. 25 specifically concerns this issue. The assets should be independently valued. To what level of value will the Minister consent?
I will not be fobbed off by reference to the vesting day. The process of valuation is most unclear.
I propose to stick with the law which is the vesting day.
How will the value be calculated? The advice from the Minister's Department - and I thank the Minister for making the advice available - was that the written down value of the company's assets will be the determining factor. I have asked many people what was meant by this but they were unable to tell me. Does it imply the present day value multiplied by five or divided by ten? I do not know. I presume the assets are present now and that everybody knows their current value. Will the Minister indicate the current written down value of the assets? We can then make an educated guess as to what the value will be next August or this time next year. I am sure the vesting day will fall before or between these two dates.
The amount to be paid will be broadly based on the written historic cost of Exchequer funded assets at the airport. There is flexibility between the Minister for Finance and me on the vesting day in this context. I cannot be more explicit on the matter, nor do I intend to be.
What is the value? I do not know why there is any secret about it. Perhaps the reason is the calculation has not been made. What is the present day value of the written down assets?
I do not have that information but I will provide it for the Deputy.
That will give a clear indication of the amount.
It will not alter my non acceptance of the amendments. However, the Deputy is entitled to that information.
Is the exact figure contained in the latest annual accounts of Aer Rianta?
I will clarify that for the Deputy. I am not altering my consideration of the amendments but Deputies are entitled to receive full information.
No matter how good, considerate or understanding we are towards the Minister she is determined to go ahead with this "smash and grab" despite the fact that she is going to take the dividend, the rates from the local authorities and corporation tax in the same year. The Taoiseach's duty free avalanche is also heading straight for the company. Given this she is determined to carry out a "smash and grab" on the day by grabbing assets to which she has no right. It is an extraordinary situation for the Minister to be taking assets in this manner.
Tautology becomes nobody. We have had an amount of tautology from the Deputy today.
I do not know what the Minister is talking about. It is a load of rubbish.
Every Deputy has the right to call a vote.
We know we have a right to call a vote without the Minister lecturing us on the issue. We will call votes when we feel like it.
Deputy Stagg spoke about being so nice and kind.
We know when and how to call votes. We do not need lectures on the matter.
Exactly. It is hilarious. We have had a very good debate and I have enjoyed it. Deputy Stagg talked about being nice and kind. I do not require nice or kind treatment. I do my own business in a proper way and I do not require to be treated nicely and kindly. That is not my intention in bringing forward any Bill. The Deputy has the right to call a vote.
"Friendly" might have been a better word.
I do not mind whether the Minister is testy, fractious or friendly. It makes no difference to me. There is a substantive issue involved. There are typographical and printing changes and policy issues, but this issue is of most concern to the company. The Minister's Department and the Department of Finance are involved. I look forward to seeing the written down value. This is the most substantive issue in terms of the cash call in year one in toto. Our job is to preserve the best possible result for the company and this is what we are trying to do.
I accept that. I do not fear votes and do not need nice or kind treatment from anybody. I would prefer to do business in a business like manner. I do not like to be talked down to about being nice and kind.
The last thing I would attempt to do with the Minister is to talk down to her. She is a very experienced Minister and is well able to deal with all situations. I am not being nice and kind in saying that.
The Minister came before the committee ill-prepared for the debate. On two occasions she has been unable to give the critical information required by the committee to allow it make a proper decision on amendments. This is another example where the Minister should have had information about the present day written down value of the assets of the company. The Minister has to defer giving us that information. She should also have had the chapter and verse information we looked for earlier. The Minister was ill-prepared regarding these two issues which gave rise to serious debate in the committee. I ask that the committee defers making a decision on this amendment until we resume and have the information from the Minister regarding the money value in January 1998. We will then be able to make a decision in a more informed manner.
The decision about the amendment has already been taken. I resent the remarks of Deputy Stagg. I could have made many political comments at the beginning of the debate. This is the Deputy's Bill.
The Minister has butchered it.
Let me be clear. This is the Bill the previous Government brought to Cabinet in its full shape.
If it is not a good Bill why was it not changed?
I will produce Government decisions about the Bill which show exactly who introduced it.
The Minister is making a political speech and ignoring the amendment we are dealing with.
The Minister is entitled to be heard.
I am entitled to be heard, Deputy Stagg.
We made a decision to finish at4.30 p.m.
Let me finish my sentence. I came in genuinely wanting debate on a Bill. I encourage debate on the Bill. I go to and fro taking opinions. In many cases I do not do what other Ministers usually do. I am not ill-prepared. I have spent hours on this Bill. If we are going to proceed in this way I would prefer that I say my piece, the Deputy says his piece and we call a vote. I want to accept amendments. I remember previous Governments that never accepted amendments on any Bill. I seek genuine debate. There is always another way to do business. I think it is the wrong way.
I appreciate the lecture from the Minister.
There is a way to do it and I have learnt my lesson today.
What is the standing of the amendment?
We are not finished debating it.
I do not want anyone to move the adjournment at 4.30 p.m. I am happy to sit until 6 p.m.
The standard procedure is that amendment No. 24 in the name of Deputy Stagg is related to amendment No. 25 which is part of section 15. It would be proper that we would conclude having dealt with section 15 even though it will be a little after 4.30 p.m.
Can a committee adjourn in the middle of an amendment?
It is highly desirable, given the Minister's undertaking to bring more specific information relative to amendment No. 24 at the beginning of our next meeting, that we conclude the matter concerning amendment No. 24 at that time.
If the Minister came back and said she had checked the accounts and a historic cash value of £14 million was written down, that would have a bearing on the reality of the situation. There is a reasonable point at which the adjournment can be moved. When it comes to Private Members' business at 6.59 p.m. whatever stage one is at on Report Stage, the adjournment can be moved. That is the stage we are at now. Hopefully by the next day we will have further information. Either way we did agree to conclude at 4.30 p.m.
The Deputy is not withdrawing the amendment?
We have not completed the debate on it.
In that case the Deputy is asking that we adjourn. He will have to put down a motion to adjourn. I ask the Deputy to propose such a motion.
We agreed to adjourn at 4.30 p.m.
There is another amendment which is taken with amendment No. 24 in section 15. Normally the section is completed. The two amendments will be dealt with. I am ruling on that. If the committee agrees to adjourn, I will adjourn.
It does not seem to make sense.
The committee has decided to adjourn.
I have explained the circumstances in which such a decision has to take account of the fact we have unfinished business.
If we talked until 6 p.m., would that still pertain?
It could.
Did we not make a decision that we would finish our business at 4.30 today?
That would not happen in the Dáil.
Is it agreed that the committee adjourn? Agreed.
The Select Committee adjourned at 4.35 p.m.