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SELECT COMMITTEE ON TRANSPORT debate -
Wednesday, 14 Jan 2004

Aer Lingus Bill 2003: Committee Stage.

There are keys in all the doors. In case of fire, members will be able to turn the key and get out.

What happens if the key breaks?

Go to the next door. I welcome the Minister for Transport, Deputy Brennan, and his officials. The proposed times for the session today are 9.30 a.m. to 12.30 p.m. and 2.30 p.m. until the end of business. Is that agreed? Agreed.

We can now begin the Committee Stage of the Aer Lingus Bill 2003.

SECTION 1.

I move amendment No. 1:

In page 3, subsection (1), to delete lines 27 to 29.

Amendments Nos. 1 and 2 are related, so I will deal with the two together to simplify matters. Amendment No. 1 is an amendment to section 1, deleting lines 27 to 29 in subsection (1). Amendment No. 2 seeks, in page 4, subsection (2), to delete lines 1 to 12, that is, subsection (2) itself. The first amendment proposes the deletion of the definition of the Companies Acts. The Interpretation Act 2003, which came into force on 1 January 2004, will govern the interpretation of this Bill once enacted. I understand that the Act contains a definition of the Companies Acts which applies to all Bills enacted after 1 January this year. Therefore, it is a duplication of what is already in place through the Interpretation Act and I propose its deletion.

I understand that a form of words contained in subsection (2) has been included in Bills as a matter of course. Section 9 of the Interpretation Act 2003 deals with the very issue which subsection (2) of the Bill seeks to address. Since the enactment of the Interpretation Act 2003, this kind of provision has no longer been necessary in Bills, and accordingly I propose its deletion. I am moving amendments Nos. 1 and 2 because they are a duplication of what is already in place in the Interpretation Act 2003, which came into force on 1 January 2004. There is therefore no need to repeat it.

I will certainly not fight over these amendments. I compliment the Deputy on spotting the role of the Interpretation Act 2003 in this interpretation section. It is clear that in the drafting, the traditional approach has been taken, which is to avail of the opportunity in the interpretation section to lay out what is meant by different phrases and titles. It is a standard type of provision and is there to assist the reader's understanding of the legislation. It is there to provide more clarity for the reader regarding what is meant when references are made in the Bill to a section or a schedule or other enactments. That is the amendment regarding subsection (2). It is once again a standard type of provision to assist the reader's understanding. The Deputy is now saying that section 9 of the Interpretation Act 2003 covers his second amendment. If he is agreeable, I will consult with the drafter. In a sense, the Interpretation Act 2003 was meant to assist readers of legislation and prevent our having to repeat definitions ad nauseam in legislation. That was the Dáil’s intention in the Act. At the same time, there is no harm in, and nothing wrong with, continuing to repeat Acts, statements and phrases in the interpretation section. It does not take up much space and saves one having to deal with the Interpretation Act. However, the Deputy is right that the intention of the Interpretation Act 2003 was to prevent our having to rerun interpretations ad nauseam. I compliment him on that. However, if he does not mind, I would prefer to consult the drafters and see if we are missing something. If the drafters concur with the Deputy, I will certainly table an amendment on Report Stage to give effect to it.

Amendment, by leave, withdrawn.
Amendment No. 2 not moved.
Section 1 agreed to.
SECTION 2.

Amendment No. 3 stands in the name of Deputy Naughten. Amendments Nos. 13 and 24 are related. It is proposed to take amendments Nos. 3, 13 and 24, by agreement. Is that agreed? Agreed.

I move amendment No. 3:

In page 4, lines 15 to 19, to delete subsection (2).

My amendment to section 2 seeks the deletion of subsection (2). I propose to replace that provision by making an amendment to section 13 to address the commencement of repeals. My amendment No. 13 to section 6 reads:

In page 5, lines 34 and 35, to delete subsection (3).

The repeal commencements will be addressed in my proposed amendment to section 13(2) of the Bill as drafted. On that basis, the subsection in section 6 is unnecessary and should be deleted. Amendment No. 24 to section 13 reads:

In page 9, after line 46, to insert the following subsection:

"(3) An order under this section may as respects the repeal effected by section 2 and the Schedule to this Act fix different days for the repeal of different enactments in column (3) of that Schedule or for the repeal for different purposes of any such provisions.”.

The Bill, as drafted, deals with commencement in two different places. My amendments to sections 2, 6 and 13 effectively relocate the commencement provisions so that they are all dealt with in section 13. Basically my proposal is to simplify the procedure as it stands rather than having the commencement at two separate sections in the Bill. The Minister might respond to that.

Section 2 provides for the repeal of the legislative provisions that are listed in the Schedule at the end of the Bill in whole or in part and on different days as specified by the Minister. The date on which each of the provisions is to be repealed is to be specified as and when appropriate in an order by the Minister and also grouped with that are amendments Nos. 13 and 24. These amendments relate to the way the relevant Acts to be repealed are cited in the Bill. This is more a style and drafting issue than a substantive issue. Drafting legislation is not an exact science, and the same effect can be achieved in a number of ways, all of which are legal. There is no one way to say something. The Deputy made it clear that there is no disagreement on repealing the relevant Acts. The Deputy and I are both of the view that the relevant Acts must be repealed. The Deputy, however, suggests that the commencement orders should be ordered sequentially in one Part of the Bill rather than be spread through it. I will consult with the Parliamentary Counsel to see if they would have a difficulty with that, as I do not have a problem with it in principle. There is no substantive difference between us; it is purely a difference on drafting style. I will come back on Report Stage, having consulted with the Parliamentary Counsel and if no legal objections are raised, I will go along with the Deputy's suggestion.

When the Minister is raising this with the parliamentary draftsperson, perhaps he will raise with him the marginal note for section 13 which states "Short title and citation". I understand that it should probably state short title and commencement. On that basis, I will withdraw the amendments.

I will do that.

Amendment, by leave, withdrawn.
Section 2 agreed to.
NEW SECTION.

Amendment No 4 is related to Amendment No. 9, Amendments Nos. 5, 7 and 10 are a related cognisant group. Amendments Nos. 4, 5, 7, 9 and 10 are to be taken together by agreement. Is that agreed? Agreed.

I move amendment No. 4:

In page 4, before section 3, to insert the following new section:

3.--Before exercising any of the powers conferred on him or her by section 3(2), the Minister for Finance shall prepare and lay before both Houses of the Oireachtas a statement as to the principal features of any proposal to exercise those powers, and such powers may not be exercised unless each House of the Oireachtas has, by resolution, approved a statement so laid before it.”.

On Second Stage the future of Aer Lingus and its critical importance to tourism in an island nation was debated at length. Aer Lingus has played an historic strategic role in the general development of the country. Members were loath to give a completely free hand to the Ministers for Transport and Finance to do whatever they wish without reference to the Dáil. I for one was not prepared to do that. Aer Lingus has been extremely successful and, although it has had its up and down, it is doing very well at the moment. Some members would disagree with the Government's intent to sell off as many of the semi-State companies as possible without good reason other than an ideological view that the State sector is not a good idea. I am not sure on what it is based but there is faddish thinking on semi-State companies, which I reject as a short-sighted view. During the life of the Government, the semi-State sector is in real danger of long-term serious damage. We see a number of such companies lining up in direct confrontation with the Minister as a result of what could be described as his provocative actions in the past year or so. Serious industrial relations difficulties look set to arise.

In the case of Aer Lingus, Aer Rianta and CIE, the Minister has not set out clearly his intentions for the future of the company. I would be concerned about the temptation to sell off Aer Lingus for short-term gain. I am sure the Minister for Finance, Deputy McCreevy, would be interested in doing that to bolster the Government coffers. This is too serious a matter to hand over full responsibility to the Minister for Transport or the Minister for Finance. Given the national importance of Aer Lingus, it is only right that proposals on the future ownership of the company be debated in and subject to the approval of the Dáil. In the case of Eircom, the then Minister for Public Enterprise, Senator O'Rourke, agreed that such a proposal to sell off part or all of the company would be debated and subject to the approval of the Dáil. This was very successful. The Dáil had a very clear role in a major semi-State company. That is the intention of this amendment. I am requesting the Minister to agree to the same type of procedure for Aer Lingus. The Bill gives carte blanche to the Minister for Finance to do whatever he chooses. Irrespective of who is Minister, that is too strong a power to hand over. A critical semi-State company such as Aer Lingus is the concern of everybody and it is only right and proper that the detailed future arrangement in respect of the future ownership of the company should be given consideration in the Dáil with the representatives of the public who are the current owners.

The amendment is fair and I appeal to the Minister, in deference to those who have serious concerns about the potential damage to Aer Lingus in the future, to support this amendment.

My amendments are very similar to Deputy Shortall's amendments. The Minister has tabled an amendment to section 3. It is critically important that a mechanism is put in place to ensure this House is not only consulted but would give its formal approval for proposals to dispose of Aer Lingus. As I stated on Second Stage, this is critically important since many of the issues I have pointed out are of serious concern to the country and since Aer Lingus is a State asset with a critical role to play in its future economic development. One cannot give a blank cheque to either a Minister for Finance or a Minister for Transport to go ahead and approve the sale of the company without those issues being addressed. That is the reason I have tabled these amendments and several others.

My fear is that, at some future stage when the Government is under severe financial pressure, as it is today, a short-sighted decision will be taken to dispose of Aer Lingus purely to generate cash rather than as a strategic decision taken by the State regarding the future role of the airline. It is sad that I had requested on Second Stage - and hoped when the Minister came in here today - that he might throw some light on his plans. Under what conditions is he talking about the sale of Aer Lingus? Is he talking about an IPO or trade sale? What sort of timing are we talking about in this regard? The timing of the sale is critical, if such a sale is to take place. What is the strategic objective of the Government regarding the disposal or partial sale of Aer Lingus? This is critically important.

The Minister has to a certain extent addressed concerns regarding bringing the proposals back to the House for approval. However, he is ignoring two other issues. He is repeating the mistake that he is making on both Aer Rianta and competition in the bus market. He has made announcements on reform in various areas, yet he is not prepared to provide even one sheet of paper outlining the detail of his proposals, his thinking and his plans. The only way for unions or members of the Opposition to decide what his plans are is by his media comments. We do not even have the Minister making a speech to outline his strategic view. We have to gather together his media comments to try to decipher where he is going on a given issue. This is critically important for the stability of Aer Lingus from the point of view of management and unions.

Second, the considerable uncertainty regarding the company's future ownership is damaging it on an ongoing basis and will continue to do so, for example, regarding leases or arrangements with banks. They must know in the short, medium and long term who the major shareholder in the company will be. Will it still be the State? Will the State retain 50% or will it flog the company? Will the slots at Heathrow Airport be protected? That is of critical importance, not only economically but financially for the company. It concerns access to capital, which is critical for any airline, including the State airline, Aer Lingus. It is damaging to relations in the company, staff relations especially.

It is critical that the Minister call a halt to the speculation about the ownership of the company at a very early date and that we do not put the matter on the long finger. I urge the Minister once more to examine the possibility of publishing a White Paper on the aviation sector, not only regarding Aer Lingus and under what criteria he would dispose of the company or have a partial sale, but to throw some light on his plans for Aer Rianta. That would help resolve much of the current uncertainty and concern. The finer points can be debated here and we can decide whether we agree. It is very difficult to have a constructive debate when we are speaking in a void as at present.

Section 3(1) provides for the Minister for Finance, who is the main shareholder, to hold shares for as long as he thinks fit. That is a fairly standard provision. Subsection (2) effectively removes the prohibition on the disposal of shares in the airline by the Minister for Finance and provides that "the Minister for Finance may, at such time or times as appear to him or her appropriate, sell, transfer, exchange, surrender, redeem or dispose of all or any of the shares in the Company". Subsection (3) reads:

(3) Any funds received in respect of the sale, transfer, disposal, surrender or redemption of any share to which subsection (2) refers shall be paid into or disposed of for the benefit of the Exchequer.

That is also a standard provision. I know the Deputy has tabled another amendment on that, and we can discuss that in a moment. Of course, subsection (4) provides for consultation with the Minister for Transport, which is also a fairly standard type of provision. I listened very carefully on Second Stage to what Deputies Shortall and Naughten said, and I also listened to what Members on this side of the House said regarding the future of Aer Lingus. I got the message that it was very important that this House have a clear decision if the Government took the view that Aer Lingus should be sold or part of it transferred outside the State sector. I accept that it is far better that this House specifically approves any such decision of the Government. In that regard, I specifically approve any such decision of the Government. I have tabled amendment No. 9 to section 3 which reads:

In page 4, between lines 33 and 34, to insert the following subsections:

"(5) The Minister for Finance may not dispose of any shares in the Company without the general principles of the disposal being laid before and approved by Dáil Éireann.

(6) Subsection (5) shall not apply to the exercise of powers conferred on the Minister for Finance by section 7.”.

That refers to the employee shares. I have no real difficulty with the wording of Deputy Shortall's amendment other than to say that we have opted for this form of wording for no other reason than that it is precisely the kind of wording that we used in the case of Telecom Éireann. I will quote from the Postal and Telecommunications Services (Amendment) Act 1999.

The Minister may not dispose of any shares in the Company other than as provided for in subsection (3)(a) without the general principles of the sale being laid before and approved by Dáil Éireann.”.

I opted for the tried and tested version. I have no difficulty with any of the objectives laid out in Deputy Shortall's amendment. Deputy Naughten's amendment is much shorter and neater. It simply tags on the phrase "subject to the approval of Dáil Éireann". I have no difference of opinion with the Deputies opposite on this issue. It is entirely proper and appropriate and I should perhaps have included it in the original legislation. However, having listened to the debate on Second Stage, it became very clear that the right thing to do was bring any such decision by the Government back before this House for the general principles of the disposal, if that happens, to be laid before it and to be approved by Dáil Éireann. I ask the Deputies to agree to such a form of words on the basis that it is precisely what the House agreed to when we disposed of Telecom Éireann and ensures that the matter comes back before the House.

Deputy Naughten asked about a paper. Fine Gael asked me to produce a position paper regarding the future of Aer Lingus. I have said publicly - and I repeat now - that I am committed to responding to that request from Fine Gael and producing a position paper at the appropriate time. It is no secret that the future of Aer Lingus is being examined by the Government. We have had some discussions with the company and I have met the unions on this and broader issues regarding Shannon and the future of the company generally. The company's future is under examination and I agree with Deputy Naughten that any uncertainty should not be around for too long. We should make clear decisions as soon as we can one way or the other so that the company can get on with its business and manage its future. I will produce a paper laying out the Government's position and the position of the company in good time to allow for discussion on it before finalisation of proposals for change of ownership, if that is to happen, are concluded. I recommend my amendment to the House on the basis that it is the precise form of words and I hope it encompasses what both the Deputies opposite want to achieve.

I welcome the Minister's amendment and I am happy to withdraw my amendment. Will the Minister indicate at this point his thinking on the future of Aer Lingus? During the Second Stage debate the Minister was very vague and was not in a position to indicate the most likely outcome. I wonder if there have been developments in the past few months and if he would share them with us. I welcome the fact that he has agreed to Deputy Naughten's proposal to set out in a paper his thinking on the future ownership of the company. Will the Minister indicate the timescale for that as we are all concerned about uncertainly and its impact on the viability of the company?

Following on from Deputy Shortall's comments, my question also relates to the timescale of the paper. The Minister said he would produce a position paper prior to the conclusion of any discussions. I would like to have the position paper prior to the commencement of discussions. We are all at one and I accept the Minister's amendment is in good faith but it is critically important that we set out in the short term the proposals for the future of the company. Long fingering this for another 12 or 18 months is damaging to the company. Aer Lingus is concentrating on European destination but say it decides to expand and provide additional services to North America as new opportunities arise in the single sky policy. If that were to happen, Aer Lingus would require a significant capital investment to either lease or purchase airlines to provide that level of service to North America. To do so, it would have to go cap in hand to banks or for a partial sale. If there is a question on the future ownership of the company, that will negate against getting a good deal either in leasing or financing from banks. Whatever our views on the sale of the company, it is critically important to set out the plan in the short and medium term so that Aer Lingus when seeking finance will be able to outline the Government position.

I do not have a definite timescale but I take Deputy Naughten's exhortation to bring certainty to it. It would not be appropriate to put a timescale on it, but I intend to have further discussions with the company and the unions on how they see the airline going forward. The company provided an assessment of its view of the way forward and it is no secret that in its view there is a case for outside investment given its investment needs. I am continuing to examine its assessment but I have not reached a conclusion. The Deputy is correct; uncertainty is not a good for the company. We will move expeditiously. We will have further discussions with the company and with colleagues. The Government will want to consider the possible content of a position paper. From that research and discussion we will come to a definite view on how to proceed and we will bring it before the House.

Deputy Naughten asked that the position paper be published prior to the commencement of negotiations and I will consider it. It is appropriate that any such paper be published in time to make a difference as opposed to it being published when the die is cast. However I resist putting a definite timescale on the way forward.

I accept where the Minister is coming from in resisting being pinned down to a specific timeframe. Will the Minister give a commitment that he will not do an "Aer Rianta" on it, where a Government decision was announced by the Minister without providing the supporting documentation? Will the Minister guarantee at least to provide a position paper when the Government decision is made outlining its thinking and the reasons for proceeding in that manner so that members will have an insight into Government thinking? It is in the economic interests of the country that we have connections into the country and that we protect key slots such as those at Heathrow.

I do not accept the Minister's view. We are looking for him as the Minister for Transport to set out his view on the future of the national airline in a position paper. This should happen long before individuals or companies are being considered. I think the Minister has to set out a strategy for the national airline and the reasons that part or all of the company should be sold. He should set the policy in the aviation area taking account of the company's views. It would have been preferable to have such a paper prior to the publication of this Bill. There is an absence of policy in many areas of transport. For that reason, people can be forgiven for thinking that policy is made up on the hoof, for example, in Dublin Bus, CIE and most notably Aer Rianta. It would appear that the Minister comes up with a notion and then announces it, causing all types of difficulties in industrial relations. When the Minister does not set out his position on an issue, people do not understand his thinking. That is what happened in the companies I mentioned.

On umpteen occasions, members on the Opposition benches have tried to tease out the Minister's thinking on issues which has been very difficult. It appears the Minister thinks of a good idea, but does not explain it or provide the rationale for it. This is seriously damaging public confidence in the companies and also its industrial relations. The Minister has got himself into difficulties in respect of the other companies. We are facing serious industrial action and the likelihood of major disruptions. All that is required is for him to set out his position, his thinking on the company, where he believes it should go and what kind of ownership structure would be in the best interests of the company, the travelling public and the Irish taxpayer. That is all that we want him to do. We are asking him to do the same regarding Aer Lingus rather than allow people to come to the conclusion that the Minister simply has an ideological hang-up and that he does not like semi-State companies. Rather than that, we are giving him an opportunity and appealing to him to set out his thinking to provide the reasoning and rationale for what he is proposing. That is reasonable and we Opposition members are entitled to that, as is the taxpayer.

The stakes are extremely high. The Minister is talking about seriously affecting the future ownership of very successful semi-State companies which are owned by the taxpayer. As in the case of Aer Rianta, the company's future is being seriously jeopardised. Its value is being seriously undermined by the course of action that he has embarked upon, and the taxpayer is entitled to know the Minister's views, if the value of his or her shares is decreasing because of such action and where he intends to bring that company. This should happen long before there are any specific interests involved or any Government decision has been taken regarding selling off part or all of the company. The Minister must set out his thinking. He needs a policy in this area and he must lay it out so that everyone knows it. If there is clear thinking on it and a clear rationale for what he proposes, he will have support for it. However, if he does not provide such reasoning, he cannot blame us for being suspicious of his intentions regarding the semi-State companies.

We invite him now to set out at an early stage - within the next month or two - his intentions regarding Aer Lingus, what he believes should be the ownership structure of that company, what kind of future he sees that company having and the role that it will be playing in the future regarding the tourist industry and the economy in general. I appeal to the Minister once again to consider doing that in the short term - certainly within a three month period. Thereafter, when decisions have been taken by the Cabinet and so on, he can come back to us with the details. However, at an early stage, he should indicate that to us. As Minister, it is his responsibility to set policy in the area; currently there is a huge policy vacuum. That is why so many of the transport companies seem to be in freefall. He is completely changing the goal posts for them without providing a rationale. We ask the Minister to do as I have outlined within a three month period. He should tell us his intentions and provide the supporting arguments.

There are important issues regarding Aer Lingus which Deputy Naughten laid out very well. They must be considered as part of any final decision on the part of the Government. I know that he has amendments tabled later regarding slots, minimum levels of service, branding, assurances on Shannon Airport and so on. I completely accept that there are very serious issues, including the future employment of those who work in Aer Lingus and who have given very good service and pulled it out of the fire on more than one occasion. There are serious issues, and it is my intention to address them in the position paper about which I am talking. I will produce it in good time for members to consider it and make a serious input into the process. We have already made the commitment that I will come back to the Dáil if the Government takes any decision.

Regarding Aer Lingus, I am involved in a process that cannot be dragged out. It comprises examining the company to see where its future best lies. We will complete that examination as soon as possible. I will resist Deputy Shortall's kind invitations to debate ideology with me this morning. The industrial relations situation is obviously sensitive and I will resist the temptation to delve into those issues in any great depth this morning, except perhaps to make this comment.

I have explained and analysed in a paragraph what I am trying to do, for example, in removing the Road Transport Act 1932 governing buses in this country, which is now 72 years old. If, instead of explaining that in a paragraph now, I explained it in 20 pages and if I genuinely thought that the extra 19 pages of assessment and measurement would win the Deputy's support or that of people in the company, I would gladly do it. However, I am not certain it would do so. It is a simple enough concept. I am not given to enormous economic analyses. That tactic has clearly been used where it has been necessary to dodge a decision. In the Programme for Government, this side of the House committed itself to replacing the Road Transport Act 1932. I suspect that the other side of the House has no problem about replacing it either. Why do we not get on and do so? That is just one example.

Replace it with what?

I have laid that out in my address to the Transport Forum. I do not want to get into that this morning. However, when I addressed the Transport Forum over a year ago, in November 2002, in a substantial document running to 20 or 30 pages and in front of the union movement, I laid out my thinking in this entire area. In a substantive document and a formal address that I made to the Transport Forum, I laid it out in detail. I have referred to that document day in and day out for over a year. I reject the idea that somehow my thinking is now written down or laid out. In that area, it certainly is. I do not wish to get into the other point, which is very sensitive now. I am committed to continuing discussions with the unions in good faith on all these issues. I am still strongly of that view, and when the time comes for legislation to come before the House regarding the State airports, I will lay out in greater detail some of the analysis. I have undertaken to provide the Aer Rianta unions with further financial and strategic information at the appropriate time, and I will do that. I believe that Shannon Airport and Cork Airport deserve autonomy and an opportunity to develop their own futures. In the programme for Government, that commitment was given. I am acting on that. However, I am committed to discussing matters with the various groups of unions involved in both CIE and Aer Rianta. We have established that meetings will take place. I am responding to correspondence from SIPTU in particular regarding the airports and I hope to issue those responses very shortly and ask for the unions' consideration of my responses. I hope that the response I can give in that correspondence will lead to reconsideration of the planned industrial action.

I wish to make one or two brief comments. The Minister himself brought up the Road Transport Act 1932. There seems to be a considerable problem regarding the Road Transport Act 1932, Aer Lingus and Aer Rianta. People are missing the target. The consumers and people who use the service have a role to play. They should know what the Minister's plans are and where we are going. If one listens to the unions on the radio, one understands that all that seems to be happening currently is that they are focusing on their members, and of course that is in their interest. If one forgets about the consumer and the travelling public, there will be no jobs for the employees since no one will be using the services. It is all well and good that the Minister provides a 30 page document to the unions, but as far as the consumer is concerned, one critical issue has yet to be answered. Are we talking about 25% more buses or changing their colour? I will park that issue. Perhaps I might come back to the question at hand, the Aer Lingus Bill 2003. If the action now being taken on Aer Rianta were taken on Aer Lingus, no one would buy the company or invest in it. The company's credit with banks or leasing companies would be worthless. In regard to Aer Rianta there have been leaks about an economic analysis done by the Government which found there to be a serious question mark over the future and the break up of the three companies. There is huge turmoil in regard to industrial action within the organisation at the moment and we do not want to see a repeat of that with Aer Lingus. Aer Lingus would not survive that type of action if we are looking for an investor to come in.

I seek at least one commitment from the Minister - that he will ensure there will not be a void. Conditions must be laid down on the circumstances of the sale; it is critically important that they are laid down in the short term. Can the Minister at least give a commitment that if we are to get an open skies agreement, at a very minimum these criteria would be laid down clearly and concisely in a White Paper, policy statement or whatever one likes to call it so that at least the company will not have its hands tied behind its back when trying to capitalise on this? It is critically important that the Minister realises that if an open skies agreement is reached, and we can debate the issues in that regard, for Aer Lingus to be left in its current situation would seriously hamper it in capitalising on the opportunities that may be available to it.

To add to that, the Minister thinks this is about squaring matters with the unions but there are wider interests involved. The unions are quite entitled and right to be concerned about job security and so on but the taxpayer, like the travelling public, has every right to know what the Minister plans are for the company. I am talking about the whole policy area as distinct from the industrial relations area. As with Dublin Bus, for example, where the Minister is talking about privatising 25% of the company, people have a right to know why the Minister is doing so.

They want extra services but what the Minister is proposing will not result in extra services. The obvious move would be to bring in operators to provide new, additional services. That would improve things for the travelling public but the Minister does not seem to be going about it in that way. He is simply talking about privatising 25% of the services.

In respect of Aer Rianta, the taxpayer, who currently owns the company which is very valuable, has a right to know why, if the Minister is taking action which will reduce the value of his stakeholding in the company, he is doing so. It is the taxpayers' company and the Minister must explain to them what his intentions are in respect of Aer Rianta and Aer Lingus. This is not something that is sorted behind closed doors or simply by providing documents to the various worker interests. This is something the public, as shareholders and travellers, are entitled to know.

The Minister must set out a policy in this area. In respect of the future of Aer Lingus, it is not a matter of bringing a report here after the decisions are taken by Cabinet. This is not about the individual potential future owners and what the Cabinet choice in that regard is likely to be. It is about the Minister setting out his intentions now on the future of the national airline and the role he sees for it in respect of the slots at Heathrow and the American market. What critical routes need to be maintained to guarantee services to the public? What configuration of ownership does the Minister foresee and why? That is what needs to be done now. It is the public who needs to know this; it is not just a matter of sorting it out with the workers or giving them guarantees. The Minister has a responsibility to the public to outline his thinking in that regard and that is why we are looking for a position paper.

I ask the Minister to be brief.

I am delighted that this debate has started to focus on consumers. Maybe that aspect has been missing from the debate generally and I am pleased to hear now that we are talking about the general public and what the best form of transport structures are to provide for the 21st century. I have already said that the issues which Deputy Shortall is talking about can be laid out in the position paper. Everything I am doing is predicated on growth. I am only pursuing these policy directions in order to grow the airport business, the airline business, the bus business and train business, thereby taking some pressure off our roads and so on.

It is about growth, and the strategies I am pursuing are designed to bring about an environment that would bring innovation and growth. We have lots of examples, whether in television, airlines or wherever, of where new entrants produced growth. They did not cannibalise a static market. That is what I am about, and I will certainly seek to lay the strategy out more clearly as I go forward with these policies. We are not short of policies. If the Deputy is accusing me of not explaining them fully and properly, I will try harder.

Amendment, by leave, withdrawn.
SECTION 3.
Amendment No. 5 not moved.

I move amendment No. 6:

In page 4, subsection (2), line 26, to delete "referred to in subsection (1)”.

The term "company" is defined in section 1. The company referred to in this section is the company that is defined in section 1. They are one and the same. Therefore, my amendment proposes the deletion of unnecessary words as they are a duplication. It is a drafting amendment again, and I ask the Minister to look at it.

With the Deputy's agreement I will look at it between now and Report Stage and make the change if appropriate.

Amendment, by leave, withdrawn.
Amendment No. 7 not moved.

: I move amendment No. 8:

In page 4, subsection (3), line 30, after "Exchequer" to insert "Capital Budget".

I have tabled the amendment, as I am sure the Minister is well aware, because I am afraid that the sale of Aer Lingus will turn into another slush fund prior to the next general election and used to cosy up to the electorate and ensure that the Government is re-elected for a third term. Realistically I do not think that will happen. The electorate has now seen through this Government. However, we need to ensure that any dividend that would come back to the Exchequer from the sale or partial sale of Aer Lingus should be used for capital projects.

As the Minister is well aware, whether it is in the area of public transport, rail infrastructure, roads or schools, we have a huge problem and a deficit of available funding for many capital projects around the country. Public transport is an ideal example. The Minister has already said that he wants to see an expansion of services but that will cost more money. The Minister has not come to that realisation yet but maybe he should talk to some of his colleagues who have already visited London. They will tell him that he cannot get a cheaper service by providing franchising or competition. It will not happen.

If we are to have additional capacity, which we all want to see, it will cost money. If we want a decent rail infrastructure where we have capacity on state of the art rail lines it will cost money. It is critically important that public sector companies are not sold in the interests of relieving the financial pressures of the Government at a particular time. It is a tempting and lucrative way for the Government to get easy money but it is important that those funds are set aside for the future of the State and focused on the development of capital projects. We should not consider the possible sale of State enterprises on the basis of the amount of money we can earn from them. Had we not taken that approach Eircom would not have been sold as it was and we would have kept the infrastructure. We are now paying the price for not having kept it.

It is important that each semi-State company is examined on a case by case basis not according to the ideologies of sell or retain everything in State ownership. The same applies to parts of a company and whether some should stay in State ownership. Everyone here would agree that the rail network and infrastructure should always remain in State ownership. We see the mistake made in the United Kingdom in that respect. The funds that would be made available from this should not go into day-to-day funding for the Minister for Finance.

The Deputy's amendment presents some technical difficulties. He wants to insert the phrase "Capital Budget" in section 3(3) so that it will read:

Any funds received in respect of the sale, transfer, disposal, surrender or redemption of any shares to which subsection (2) refers shall be paid into or disposed of for the benefit of the Exchequer Capital Budget.

The national accounts do not work in that way. This is a capital receipt which is received by the Exchequer. The Minister for Finance of the day and the Government of the day, in their annual budgetary process and Estimates, decide and propose allocations under roads and under capital measures to the Dáil, that is the procedure. In the case of Eircom the Government took the view that the receipts should be substantially allocated to the national pension fund. One could argue that was a capital investment of a different sort, a social investment. By inserting the phrase "Capital Budget" the Deputy is trying to put into legislation a requirement that the Government would automatically allocate the funds received from a sale to another capital project. We cannot tie the hands of any Government or Minister for Finance in that area because this refers to the annual Estimates and budgetary procedure. It is very likely that capital funds received are used for the capital budget as almost always does happen. Sometimes it happened in the past to reduce the national debt which is a capital investment of a different sort.

The Deputy's phrasing of this amendment would be impossible to put into legislation. It would be the first time it ever happened that legislation dealing with receiving capital receipts would require their allocation. That may not be the Deputy's intention but he might consider that aspect. Perhaps he intends to exhort the Government and the Dáil to use the funds but it is not possible legislatively to require it in such a Bill because this seeks to predetermine capital allocations which can be made only in a budgetary and Estimates process.

There is a precedent for my amendment. Is it not the case that when the legislation on the dormant accounts was enacted, and before any money was received into that account, the legislation stipulated how the money was to be spent? The Minister knows my intentions. I am putting down a marker to indicate that I do not want to see these funds being used for current expenditure or abused on the run-in to a general election. They should be used for the investment of the taxpayers' money and to ensure that there is a long-term benefit to the public and that money is not spent for short-term gain.

Amendment, by leave, withdrawn.

I move amendment No. 9:

In page 4, between lines 33 and 34, to insert the following subsections:

"(5) The Minister for Finance may not dispose of any shares in the Company without the general principles of the disposals being laid before and approved by Dáil Éireann.

(6) Subsection (5) shall not apply to the exercise of power conferred on the Minister for Finance by section 7.”.

I want to give notice that I may bring forward an amendment to subsection (6) on Report Stage but otherwise I am in agreement.

Amendment agreed to.
Section 3, as amended, agreed to.
Section 4 agreed to.
SECTION 5.
Amendment No. 10 not moved.

I move amendment No. 11:

In page 5, between lines 22 and 23, to insert the following subsection:

"(4) Without prejudice to the generality of the foregoing an agreement referred to in subsection (1) or (2) shall include provisions relating to -

(a) Aer Lingus slots at airports which it services, and

(b) minimum levels of service.”.

This deals with the possible sale of Aer Lingus and the inclusion of conditions covering critical slots such as those at Heathrow Airport which are of vital economic importance. We can discuss the value to the company and the future saleability of Aer Lingus but I am interested in Ireland Inc. If we do not have those slots at Heathrow, as I explained on Second Stage, this will have a very detrimental effect on the State. This is why I have been asking the Minister to produce a White Paper. For example, if Air France, British Airways or Lufthansa were to buy Aer Lingus it would be only to avail of those slots which are a significant asset to any major player because they can be used for transatlantic routes. They are early morning slots and anyone travelling from here and connecting through Heathrow to another destination would have to travel the night before, stay over in London and then go to back out to Heathrow in the morning to make the connecting flight. Thankfully, as those slots have accumulated over many years, we can leave Dublin in the morning and fly into Heathrow in time for the connecting flight to most parts of the world without having to overnight in London. It is critically important that those slots are protected.

In regard to minimum levels of service, if another airline was to buy out Aer Lingus there is no guarantee that the company would not take some of the aircraft servicing Ireland and use them to provide services between Milan and Madrid, for example, which would diminish the frequency of services provided to the United Kingdom and to continental Europe. That is why I have been pressing the Minister to set out what this involves. Much of this could be addressed if the maximum sale were 49% where the Government retained control of the company and could dictate policy on areas such as this. I have concerns regarding the future abuse of the assets available to Aer Lingus if there were a complete trade sale to another operator.

In the case of a sale or amalgamation, I hope that the Minister sees Aer Lingus working with a similar type of airline in some other part of Europe and not amalgamating with an inefficient operator such as British Airways, Lufthansa or Air France. When this legislation was originally proposed, everyone looked at operators such as BA. Aer Lingus staff and some management were happy to have an amalgamation with an operator such as BA because it was a large player and would have ensured employment stability. However, that is not in the best interests of taxpayers, consumers or the economy. It is important that we hear the Minister's thinking on this issue and that he outlines it clearly.

I have listened carefully to what Deputy Naughten has said and will take it on board. This area of slots is complicated. Their availability is determined by runway capacity, terminal stands, traffic management and so forth. It is a grey area because slots do not legally and technically belong to a state nor do they appear to belong, in a tangible ownership sense, to a specific airline. This is a grey area that the EU is at the centre of attempting to resolve.

The allocation of slots at congested airports is governed by EU Regulation No. 95/93 which originated out of the system designed by the IATA. Congested airports such as Heathrow and Gatwick are governed by the regulation. It enshrines the IATA principle of the right of historical precedence. Under this principle, an airline that holds a slot in one operating season has first claim in the next equivalent season and indefinitely thereafter. These are known as grandfather rights. At Heathrow Airport, for example, the overwhelming majority of slots, including Aer Lingus's, are claimed on this ongoing basis of historic precedence each year.

The Deputy is correct in saying that the Heathrow route is critically important for Aer Lingus. It remains the largest element of Aer Lingus's short-haul operations and is strategically important for the future of Aer Lingus and Ireland. However, other destinations such as Frankfurt and Amsterdam are becoming strong hubs. Aer Lingus has 3.4% of the Heathrow Airport slots making it the fourth largest, after BA, BMI and Lufthansa. This equates to 46 to 50 slots per day. British Midland is the only other operator on the Dublin-Heathrow route with no other to Heathrow Airport from Cork or Shannon airports.

On 20 June, the European Commission adopted a proposal to revise Regulation No. 95/93 which focuses on a number of technical issues that needed to be addressed before structural changes were made in this slot allocation system. The Commission also plans a more fundamental proposal for change in this area known as the second phase.

The current regulation allows for the exchange of slots but is silent on the issue of their sale. However, this has not prevented the development of a grey market in slots which is alive and well. The current proposal will not address this issue but the revised regulation will. If it is adopted, it will specifically provide that, where an airline is taken over, its slots may be transferred to the new owner. As this has already happened in practice, it does not change the current situation with its grey market. Political agreement on the proposal was reached at the Transport Council of Ministers in Brussels on 5 December 2003.

We will closely monitor developments at EU level and in the context of any sale transaction, if that were to occur. All the options within the regulatory framework will be examined to ensure ongoing access to Heathrow Airport for Irish consumers. I share the Deputy's interest in this area given that Aer Lingus, at 3.4%, has the fourth largest number of slots at Heathrow Airport.

It would not be appropriate to include the type of provisions in legislation, but I take the import of the Deputy's amendments. Issues such as slots and a minimum level of service are matters that will have to be dealt with in the context of any sale transaction, if we go down that road. To ensure flexibility for negotiations on slots and minimum level service, it would not be appropriate to be prescriptive in legislation in advance of discussions about the future of the airline. This is especially true with the case of slots because the legal basis for them and their ownership is a grey area with the European Commission struggling to advance the rules in this area.

I will take an active interest in these issues. If there are to be discussions before the Bill comes back to the House, we will seek to ensure that national interests are protected in both cases. In the position paper which I will put forward and which is not a White Paper, I will rehearse the arguments about slots and discuss the European Commission's position. The paper will also include a discussion on the issue of minimum level of service at that time. The Deputy will have another bite at this if the Government goes down that road.

I want to give notice that I will table an amendment to section 4.

Amendment, by leave, withdrawn.
Section 5 agreed to.
SECTION 6.

Amendment No. 12 is an amendment in the names of the Minister for Transport and Deputy Shortall. Amendments Nos. 12, 15, 17 and 26 are cognate, amendment No. 14 is an alternative to amendment No. 15, and amendment No. 16 is an alternative to amendment No. 17. Amendments Nos. 12, 14 to 17, inclusive, and 26 can be taken together by agreement. Is that agreed? Agreed.

I move amendment No. 12:

In page 5, subsection (2), line 27, to delete "1993" and substitute "2001".

I wish to discuss amendments Nos. 14 and 16. However, there are difficulties because the grouping of amendments was not circulated beforehand. When one only receives the list of amendments at this stage, it is difficult to begin numbering them in the Chamber while dealing with other amendments. From a procedural point of view, it would make matters easier if we received the grouping of amendments in advance.

My amendment proposes the deletion of subsections (4) to (6). Subsection (4) effectively allows the Minister to amend the primary legislation by means of secondary legislation. This is widely recognised as being bad legislative practice and its use should be discouraged. In light of Article 15.2 of the Constitution, the constitutionality of provisions of this kind is in serious doubt. On that basis I urge the Minister to consider deleting subsections (4), (5) and (6).

: Regarding amendments Nos. 14 and 16 and the proposed deletion of subsections (4) to (6) of section 6, I would have some difficulty with them. These subsections relate to the fact that arising from the ESOT - the employee share option trust - deal, which is already agreed, or from a third party investor possibly coming into the company, in either circumstance - I repeat, the ESOT deal is agreed - the Minister would require the flexibility in these subsections to amend the number of worker directors. This section needs to stand. Its import is, by and large, consequential on the ESOT deal to award the employees of the company 14.9% of the company. That flexibility is required by the Minister to adjust the board so that ESOT directors can be appointed and if, for example, a sale were not to go ahead, the board could be topped up with two other worker directors to let the numbers stand at the same level. There is no agenda other than to facilitate ESOT in general and to be flexible.

Amendment agreed to.
Amendments Nos. 13 and 14 not moved.

: I move amendment No. 15:

In page 5, subsection (4), line 37, to delete "1993" and substitute "2001".

Amendment agreed to.
Amendment No. 16 not moved.

: I move amendment No. 17:

In page 6, subsection (6), line 4, to delete "1993" and substitute "2001".

Amendment agreed to.
Section 6, as amended, agreed to.
SECTION 7.

: I move amendment No. 18:

In page 6, between lines 12 and 18, to insert the following subsection:

"(2) An employee shareholding scheme referred to in subsection (1) shall include the establishment of a shareholding scheme in respect of former employees of the Company.".

This relates to the issue I raised on Second Stage about retired employees of Aer Lingus and Aer Rianta who seem to have got an extremely raw deal under their current pension scheme and they feel aggrieved. I know an amendment will be tabled later which will focus in greater detail on that issue so I will not dwell on it now.

The valuable assets we have today, the valuable slots Aer Lingus has at Heathrow Airport, are due to the work done by many of the retired staff of Aer Lingus. They built up the asset we now possess and they feel aggrieved that they should not have the same entitlement to share options as current employees. Consider an employee who has joined the company in the last couple of years and who perhaps has added very little to the value of the company. It is such people who will benefit from the proposed sale rather than those who have 29, 30, or 40 years' service and whose work may have contributed greatly to the value of the asset we have today. These people will get no return. I ask the Minister to consider the inclusion of amendment No. 18.

: I know this amendment is well intentioned but it is not practical and I am sure the Deputy is aware of that. In 1997 there were 8,308 staff in Aer Lingus; the most recernt figure I have is 4,200 or 4,300. This means staff numbers have been halved in five years. It took substantial investment for that to happen. There were no compulsory redundancies or anything like that. Everything was negotiated and a very substantial investment was made in getting that reduction in staff. Incidentally the passenger number in the same period went from 5 million to 6.5 million. This means that with half the staff the passenger numbers doubled. I am not sure what that says about modern aviation.

The passenger number went from 5 million to 6.5 million?

Sorry, the numbers did not double. The figure went from 5.1 million to 6.5 million, a 25% increase.

: I would be worried if the Minister were going on those types of calculations.

: My sums were not good. It is interesting showing how aviation is proceeding. It also shows that one can make changes in State companies in a way that increases the service to the public and does not leave employees high and dry. That kind of change can happen, and has happened in Aer Lingus.

The amendment would not be appropriate. There is a substantial number of former employees and it would be wrong to hold out that prospect to them. The future of the company is up to the staff, the board, the present owners and any possible future owners. Former staff will presumably have pensions and it would not be appropriate to take them in a formal sense into the equation. If, however, the company were to be listed on the Stock Exchange, there is nothing to stop anyone buying a few shares.

: Remembering the way everyone was burned with Eircom, I do not think there will be a rush for shares. The Minister says that the Aer Lingus staff "presumably" have pensions. He knows the pensions are paltry. That is one of the big issues raised by Members on both sides of the House during the Second Stage debate. We will shortly get the opportunithy to debate that. To say that staff "presumably" have pensions is a bit of a joke. As I said, the pensions are paltry.

There is an issue which may be worth considering in the future. We have had ESOT with regard to Eircom and will have it for Aer Lingus once this legislation is enacted. I know similar legislation relating to An Post has been published. If there is an indication that following the downscaling of staff numbers there will be an ESOT down the road, this will be a disincentive for semi-State employees to take certain steps. For people near retirement the same incentive will not be there for them to take the redundancy package if they think that by holding out an extra couple of years they will get a bite of the cherry. I ask the Minister to keep that in mind, to think long and hard about it and see if there is some structure that might be put in place with regard even to recently retired employees or to employees retired since the publication of the legislation. I know that at this stage there are employees who probably want to get out of the company; the company could therefore reduce its staff numbers once again but it will not do so until legislation is enacted. I ask the Minister to think about that.

Amendment, by leave, withdrawn.
Section 7 agreed to.
Section 8 agreed to.

Amendment No. 19 is ruled out of order as it is potentially a charge on the Revenue.

I must challenge that ruling. I want to know who made that decision. I am asking for the Minister to provide a report to the House and I do not see how that results in a charge to the Revenue.

It is out of order because the new section 9 requires the Minister to report to the Oireachtas on the implication of improving the superannuation of former employees of Aer Lingus to the same level as that of current employees and of index linking the payment. If the Minister did top up the funds he would be in breach of EU regulations and may be fined in such circumstances. Therefore the amendment must be ruled out of order.

The situation is that if the Minister——

If the Minister tops up the funds he would be in breach of EU regulations and may be fined in such circumstances. Therefore the amendment must be ruled out of order.

I am asking the Minister to report. What avenues are open to me to challenge that ruling? Providing a report is not a charge on the Exchequer.

Does the Minister want to comment?

I understand where the Deputy is coming from. There are people out there who genuinely should be in a better position. If that was possible I think everyone in this House would like to see it. The difficulty is that if a later scheme is better it is hard to get back into that better scheme if one has left. The Deputy is asking me to make a statement to the House on it, and I can certainly find an opportunity to lay out the Government's thinking on this area, either by way of an Adjournment debate, parliamentary question or some other device in the House.

It is also substantially for Aer Lingus to decide what to do in this area if it has options, but I can certainly take a fresh look at it before Report Stage if the Deputy wishes. I am sympathetic to the idea but it is not practical to go down this route in legislation. It is largely a matter for the company and it does pose very substantial precedent issues in trying to improve the superannuated position of former employees. To do that in the way suggested would create a substantial precedent. I am sympathetic to the plight that many people find themselves in, and if the Deputy wishes I can have a look at the whole area between now and Report Stage to see how we can advance it.

These are grand words but I wonder what "sympathetic" actually means. The Retired Aviation Staff Association has been frozen out over many years. The chief executive has never even met with them to discuss their issues of concern and there is a serious problem of the pension scheme being very under-funded. They have been trying to address this issue over a long period. I put down a parliamentary question to the Minister before Christmas and I think he said he would ask the chief executive or somebody in the company to meet with the association. I do not know whether that meeting took place.

It is not enough for the Minister to say he is very sympathetic and that hopefully something can be done. He is in a position to do something about it——

If it helps, I inform the Deputy that RASA, the association involved, is meeting with the chief executive, Willie Walsh, next week. That might resolve——

It is good that this is happening at last but we do not know what the outcome will be. The point is that the Minister is now in a position to do something about that. The retired staff are concerned that in the future, if this Bill is passed and the company is sold off, they will have no mechanism whereby they can address these issues. It is at this point that the Minister, as the main shareholder, is in a position to do something about it. I do not see why we cannot have a report on it——

The amendment is still out of order.

I will take that up separately, but the Minister is in a position to do something to improve their conditions. They are in an extremely weak position at the moment and will be in an even weaker position if the company is sold. What they want is an ear, and I am glad they are meeting with Mr. Walsh. I will come back to this on Report Stage when we know the outcome of that meeting.

Amendment No. 19 not moved.
SECTION 9.

Amendments Nos. 20 and 21 are related and may be taken together by agreement.

I move amendment No. 20:

In page 6, subsection (1), line 45, to delete "or former employees".

The basis of these amendments relates to the former employees of Aer Lingus, as Deputy Shortall has outlined. It is provided that Aer Lingus shall establish a scheme for the granting of superanuation benefits to former employees and that this scheme should be carried out by Aer Lingus in accordance with its terms. The new scheme shall fix the superanuation payments under such a scheme in line with national wage agreements.

There are a number of difficulties in regard to the scheme in place. First, it only rises in line with the consumer price index. There is no guarantee of that benefit to the employees. It has happened on a voluntary basis over the last number of years but I am led to believed that there is no written guarantee within the scheme. Also, actuaries have looked at the pension fund in place and the funds at present and in the future will not be adequate to meet the demands that will be placed on it. As a consequence, in the future the fund will not be able to meet increases in the consumer price index and may in fact not be able to meet the defined benefits as set out in the pension fund.

That is the first point I want to make because there is a significant deficit in the pension fund going forward. The second difficulty is that the total funding going into the scheme is 12.5%, half of which is coming from the employees and half from Aer Lingus. Every fund manager would agree that the minimum that would be required to ensure that there are enough funds available to pay the defined benefits would be 20%. There is a clear deficit in the funds available for pensions and there is a need for an injection of funds.

Only one opportunity will ever arise to put in the funds to ensure that every pensioner from Aer Lingus is guaranteed their defined pensions, and I am leaving aside the consumer price index or national wage agreements for a minute. The opportunity to guarantee them getting the pension they were promised when they joined the company arises when the potential sale or partial sale of Aer Lingus at some future date takes place. Some of the equity that will make available should be invested in the pension fund. It is critically important that this happens. There is not much point in having a pension fund in place with defined benefits if they cannot be met.

Another difficulty arises with the pension fund as it currently stands in regard to staff who will retire from the company in the future. Employees from 1970 on do not have the benefit of a full State pension. Whatever they receive by way of the contributory old age pension will be deducted from the payments they receive out of the Aer Lingus pension fund. Once they retire from the company, once they reach 65 and their contributory old age pension kicks in, the value of the contributory old age pension will be deducted from the annual pensions they receive from Aer Lingus. While this has not impacted too much to date as very few are involved, over the coming years it will have a major impact on employees of Aer Lingus who joined the company after 1970. If the funds are not available for the pension fund to pay for the defined benefits the Minister cannot ensure that those who joined after 1970 will get the promised pension per annum of £10,000 or £20,000 or whatever. They are now being told that their old age contributory pensions will be deducted from that amount. The fund will not be able to meet the defined benefits for those people, leaving aside the issue of arrears, which has been of concern to the company, in addition to the future cost if funds are injected into the company tomorrow morning.

The crucial issue from the point of view of the pensions and of existing employees is what happens from hereon. It is worthless having a pension that is not index linked. Its value will be eaten away over time. Through the Minister for Finance's lack of management in recent years we have seen that were pensions not index linked they would have been dramatically reduced by the rate of inflation. The employees are lucky to have the increases tied to the national wage agreement. It is important that we try to put that in place. The funds will be available only when the company is sold. If the Minister does not give former employees options on shares - and I can understand the logistical problem that entails - he should ensure that they have a good pension. If staff have worked over a long time and developed the company, this should at least be recognised by a decent pension. The pension defined when they joined the company should be guaranteed. Aer Lingus has already tried to opt out of the defined entitlements because it knows that in future the funds will not be there to meet them.

It is also important that the pension be in line with the consumer price index and national wage agreements. While pensioners have been lobbying for national wage agreements to be tied in to their salaries, it will be even more serious from now on. We have an opportunity in this legislation to provide for that and I ask the Minister to ensure that we do not end up with negative equity in that pension fund.

The Deputy is aware that the main purpose of section 9 is to provide that Aer Lingus can establish its own pension scheme at some stage. It is a long and complex section running to 17 subsections which reflects the complicated nature of pension schemes generally, and their provisions. It also covers the need to ensure that if and when Aer Lingus establishes its own pension scheme the rights, entitlements and obligations of Aer Lingus employees, or former employees under the existing scheme, can be preserved under any new scheme. There are problems and it is not feasible for Aer Lingus to establish pension schemes specifically for former employees which would require benefits to be paid out in line with national wage agreements. Pension payments are made in accordance with the rules of the scheme which also determine the rate of contribution to that scheme and that raises the question of where in the absence of those funds the contributions might be found for such a scheme.

The scheme being suggested would probably result in former employees being in a somewhat better position than current employees paying into the existing pension scheme. I understand the Deputy's thinking on this and, as I said to Deputy Shortall, the meeting between the Retired Aviation Staff Association members and the chief executive of Aer Lingus is due to go ahead shortly. I will draw the Deputy's comments in regard to pensions to the attention of the chief executive before that meeting so that he can consider those comments in the light of the complex area he is discussing with the staff association. Deputy Shortall referred to considering the issue on Report Stage but that is as far as I can go now.

I would like to clarify some points. The current rights of retired employees or future employees retiring from the company would be preserved under any new scheme. The difficulty is that existing rights cannot be preserved. It is not possible to abide by the rules of the scheme as laid down. This issue is even more serious than that about which the retired staff have been lobbying. It is a serious problem that there is not enough money to meet the rules of the scheme. Already Aer Lingus has realised this and has tried to abdicate its responsibility. The problem cannot be allowed to continue especially if we dilute the State ownership of the company and it must be addressed.

In his speech on Second Stage the Minister stated that the scheme will be discussed with the trade unions. That is not mentioned in the legislation. It is important that the Minister give that commitment and that it is discussed with the trade unions. He also implied that he had requested the company to resolve the issue. Has he received any communication from the company or the chief executive reporting progress in this matter? I had hoped that the Minister would have told us this afternoon that he had made some progress on it and that he can at least guarantee that the company will abide by the defined scheme and its rules. Sadly, it seems that cannot happen with the equity available within the scheme at present. Apart from superannuation and the consumer price index or national wage agreements, it cannot meet the rules of the scheme.

The retired aviation staff have a very valid point in that they have been given a raw deal. First in the late 1960s they received a directive from the then Minister for Finance stating this was how the pension schemes would operate in future. Aer Lingus and Aer Rianta and some of the other semi-State companies took it up. Many of them later changed in line with Civil Service pensions and the aviation staff were left high and dry. Another scheme which has not come into force, provided that for staff who came in after 1970 the value of their contributory pensions would be deducted from the value of their Aer Lingus or Aer Rianta pensions. Before the last general election the then Minister for Public Enterprise met with the retired aviation staff. She talked the talk and she made similar remarks when this Bill was before the Seanad some years ago. Various members of Government have tipped their hats in the direction of the retired aviation staff and said they would address the issue when the Aer Lingus Bill came up.

It is about time something was done about this. It is more critical than many people realise and must be addressed. I ask the Minister to look at this issue in light of the forthcoming meeting and give us some details prior to Report Stage outlining to me and Deputy Shortall exactly what the position is and how these issues can be addressed. If the Minister will do that I will withdraw this amendment with leave to reintroduce it on Report Stage. We will await the outcome of the meeting with the chief executive if the Minister gives us a commitment today to update us as Opposition spokespersons on that meeting and on the particular points I have raised.

I am happy to give the commitment that I will return on Report Stage following the meeting between the association and chief executive and report progress.

Amendment, by leave, withdrawn.
Amendment No. 21 not moved.
Section 9 agreed to.
Section 10 agreed to.
SECTION 11.

Amendment No. 22 is ruled out of order.

Amendment No. 22 not moved.
Section 11 agreed to.
NEW SECTION.

Amendments Nos. 23 and 25 are related and can be taken together by agreement.

I move amendment No. 23:

In page 9, before section 12, to insert the following new section:

"12. - With effect from the coming into operation of this section, each enactment specified in the Second Schedule ceases to apply to the Company to the extent specified in column (3) of that Schedule.”.

The amendment proposes to replace the existing section 12 and is designed to simplify it. It is consistent with the manner in which repeals in section 2 were dealt with. It does so by introducing a new Schedule and I propose the deletion of subsection (4) as the issue of different commencement dates has been addressed in my proposed amendment of section 13 of the Bill, as drafted, which was discussed earlier. I ask the Minister to put this to the Parliamentary Counsel in conjunction with the other amendments and bring forward amendments on Report Stage on these matters.

There is no difference in substance here. It is a drafting and a style difference and I will examine it between now and Report Stage.

Amendment, by leave, withdrawn.
Section 12 agreed to.
Amendment No. 24 not moved.
Section 13 agreed to.
Amendment No. 25 not moved.
Schedule agreed to.
TITLE.
Amendment No. 26 not moved.
Question proposed: "That the Title be the Title to the Bill."

I disagree on the basis that we have no idea of what the Minister's intentions are for the future of the company. I am not prepared to give him a free hand and I oppose the Bill.

Question put and agreed to.
Bill reported with amendments.
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