It is proposed to group amendments Nos. 1, 3 to 6, inclusive, 9, and 24 to 26, inclusive? Is that agreed?
State Airports Bill 2004: Committee Stage.
NEW SECTION.
Why is that? The amendments deal with different aspects of the Bill. What is the rationale for grouping them?
The Deputy proposes the insertion of a new section. In that regard, they are all related.
I am not sure that they are.
I move amendment No. 1:
In page 5, before section 1, to insert the following new section:
"1.--(1) This Act shall come into operation on such day or dates as may be prescribed by the Minister.
(2) Prior to the commencement of any provision of this Act the Minister shall prepare a detailed statement setting out the business case for the commencement of the relevant provision and such statement shall be approved by both Houses of the Oireachtas.".
This amendment is fundamental to the entire legislation. Concern has been expressed on the Opposition benches and, to some extent, the Government benches. As I understand it, it has also been expressed by bond holders, all of the consultants engaged by the Department, the staff and board of Aer Rianta, the Minister for Finance and commentators generally.
The fundamental problem with the Minister for Transport's proposals is that no business case has been made for them. He is putting the cart before the horse. He is proposing to break up the company and at a later date to look and see if this made sense and if a business case can be constructed. This is extremely imprudent and foolish on his part. He is acting on the basis of purely political and ideological motives. In any other jurisdiction this would be a resigning matter.
I cannot understand how there is support, either within the Cabinet or the Fianna Fáil Party, for a proposal which essentially will destroy a successful semi-State company. While it is not faultless, it is successful and will be broken up for no other reason than that the Minister woke up one morning and had a hunch. No business case has been made in favour of it. The expert advice he has received to date has counselled against it.
As others have said, a small business person looking for funding for a project from a bank must present a business case. In this instance, no business case whatsoever has been made. The purpose of the amendment is to ensure that before further action is taken, the Minister would be legally obliged to present a proper business case to the Houses of the Oireachtas for their consideration. This is an effort to put the breaks on the Minister in the wrecking operation he is about to undertake and I hope members will support it. It is both sensible and prudent and would ensure there would be some plan or rationale before a successful semi-State company was destroyed.
Amendments Nos. 24 to 26, inclusive, in my name deal with the same issue. The kernel of the problem for all Members across the House is that we are proposing to bring forward legislation to establish three independent companies without first establishing the basic financial criteria to be laid down. The Minister is asking us to accept legislation on a promise that we will receive the business case and financial plan at a future date. He does not require this legislation to allow the three interim boards to draft a business case and financial plan for presentation to the Minister for Finance. Legislation is not required for that to happen.
What we are saying in the amendments is that, prior to a decision being taken to establish three independent companies, we should be presented with the basic financial criteria in regard to their financial viability. There are serious concerns about both Cork and Shannon Airports. There is a huge debt at Cork Airport where we have the gold plating of a significant extension which is required for its development. However, we have no details on what will happen to the debt and what capital provision will be made for further development. The same issues arise at Shannon Airport where there are significant overheads which put additional pressure on its day-to-day running costs. We have been provided with no details in that regard. It is critical to the future of the airport that these issues are addressed. The suggestion is that the accumulated debts of the two airports, with the debt at Dublin Airport, will be transferred over to the new Dublin Airport Authority.
The Minister is proposing the provision of a new independent terminal at Dublin Airport where, because it is a very old building, there are in-built cost inefficiencies. On top of this, the new authority will have to deal with the debt not only at Dublin Airport but also at Cork and Shannon Airport. This will place a huge millstone around the neck of its board and exert serious pressure on the adequacy of capital at Dublin Airport.
The amendments would provide that, prior to the approval and establishment of the authorities, not only would we have a plan for the management, operation and development of Cork and Shannon Airports, we would also have a detailed financial plan to ensure their viability. It is critically important that we have this type of detail. The amendments are sensible. It is important, when talking about three independent companies, that there is financial certainty before adopting legislation. In the light of the commitments given to the trade unions in the partnership talks and in the light of his comments to date that he wants to place the three airports on a sound financial footing, I ask the Minister to accept the amendments.
I support the amendments. If an individual goes into his or her local credit union or bank to indicate that he or she wants to start a small business, he or she will have to prove that the business will be viable. He or she will have to have forecasts, the paperwork done and indicate the market being targeted and the possibilities of selling into it. Even for the smallest operation one has to provide a detailed financial breakdown and business case to receive even the smallest loan from a financial institution.
Obviously, this is a much bigger operation. We are talking about breaking up an existing organisation into three separate companies. Effectively, we are taking a leap in the dark. There is no indication of a proper business plan having been prepared, as the consultancies which have looked at the matter immediately indicated. Even the Department's working group has confirmed that the Department's working papers were not meant to constitute a business plan. Despite this, the Minister wishes to take this huge step. This may put the three airports - Cork, Shannon and Dublin - in a very difficult financial position, which is odd.
One of the stamps of the Government is that it is a book-keeper's government with decisions being taken on the basis of the financial implications of various proposals, yet here we have a significant proposal with no proven financial basis to it which will affect a significant number of employees of Aer Rianta, the various airports and associated downstream industries. I hope the Minister will take into account not only the difficulties the Opposition has with this proposal but also the problems many of his own backbenchers have with it, about which we have read and heard in recent days. I hope the Minister will accept the amendments.
Like previous speakers, I have great reservations about what is happening with regard to the break-up of Aer Rianta and granting of autonomy to the three airports concerned, particularly given the lack of a business plan. There was lots of time to put such a plan in place. The Minister seems to be ignoring the advice contained in the PricewaterhouseCoopers report which was commissioned by his own Department and others commissioned by the trade unions.
No analysis has been made. As previous speakers have said, there has been substantial investment in all three airports. I can only talk about Shannon Airport where there has been substantial investment in the runway. There is a case against Clare County Council with regard to the raw sewage being pumped by Aer Rianta into the River Fergus. This will involve an investment of €5 million. In addition to this investment, there is a need for various other developments to improve cargo facilities and infrastructure at the airport.
Anybody could put a business plan in place between now and the time the Minister decides to break up Aer Rianta but the proposed timescale is ludicrous. Each board member will have to become familiar with his or her brief, bringing his or her expertise to bear. Some do not even have aviation expertise as they come from the tourism sector. There is a substantial amount of work to be done. It is important, therefore, that a viable plan is put in place. This is a case of putting the cart before the horse.
I ask the Minister to give consideration to amendments Nos. 24 to 26, inclusive, in order that time and space can be given to the new boards to put in place a plan.
The fundamental point is that we must ensure in whatever direction we move that we improve on what is in place. I am very pleased with and welcome the proposal from the Minister to retain the three companies in public ownership. However, we are looking at a group which directly employs over 3,200 people. Given the value which the State has secured from Aer Rianta during the years, it is vitally important that whatever we do is in the best interests of the country and the employees of the company. That is why in the amendment we are saying clearly that before any legislation is drafted or enacted a business plan should be put in place.
This issue has been debated in the Dáil. I do not think anybody in the Houses would disagree with the logic behind the simple proposal that a business case should be made. I said in the Dáil that if someone was to go to a bank or other financial institution for a loan to extend his or her business, the first thing he or she would need, even before entering into detailed discussions, was a viability plan. Any community based organisation looking for a sports or other grant to provide a small, basic facility cannot approach a Department until it has such a plan.
We cannot get away from the fact that Aer Rianta owns and operates Dublin, Cork and Shannon Airports and has investments in other airports, whether it be Birmingham, Dusseldorf or Hamburg. What are the implications of these strategic decisions, not only for Dublin but also for Limerick, Shannon and Cork? Are Rianta is one of the five largest airport retailers in the world. In addition to the three Irish airports, it operates at over 15 other locations.
The Minister has a hunch that this legislation is in the best interest of the regions, the tourism industry and the workers concerned but the most senior Minister in the Government also has a hunch and has signalled that the legislation may not work. What would we do in that event? The Minister for Transport has gone on a solo run, at the behest of Michael O'Leary, which he is continuing, rather than step down or do what is logical. We then have Fianna Fáil backbenchers who after their meeting gave the impression that they were fighting the case indicating that they did not think the Minister was right. They are taking the Minister for Finance aside and asking him to hold back to allow the matter to be evaluated before the State incurs further expenditure but the Minister for Transport will not give way. It would be too much for him to promise to review the matter. As he must get his way, he has come along with this concoction of a Bill. In no civilised, democratic society would a Minister introduce a Bill, steer it through the various stages, set up boards and provide for additional costs only to have it reviewed later and possibly pull back altogether.
While we all have our political views and backbenchers probably have to support the Government, I do not think anybody could stand up, put his or her hand on his or her heart and say this is the proper way to enact legislation. It is not. What guarantee do we have that the Minister will still be in place after the Cabinet reshuffle? What guarantee do we have that the Minister for Finance will not be off to Europe with the Minister for Transport becoming Minister for Finance? The Minister for Transport need not smile. Let us consider what the situation would be if he became Minister for Finance. The Government may state there must be an open and objective examination of the matter. Consider the line the Minister has taken for the last year and a half, the battles he has fought in the Government to get this legislation through and what he allegedly had to go through with backbenchers looking for information from him. Is he telling me that if someone reported to him as Minister for Finance, he could look at that report objectively given his attitude? It is ridiculous, an utter joke.
We must look at the effect of this proposal on Dublin, Cork and Shannon Airports. Dublin Airport will take up the liabilities of Cork and Shannon Airports. The Minister said in the Dáil the other night that this would have to happen; that with the flow of passengers envisaged for the airport over the next 20 years it could well and truly carry this liability. However, let us look at the accounts of Aer Rianta for the last three years and the income of Aer Rianta International, from which over 60% of the profits of Aer Rianta came. I asked the Minister in the Dáil to identify where Aer Rianta International would finish up because it had a major bearing on the matter. On top of this, the new authority will be burdened with the liabilities of Cork and Shannon Airports.
This is not Dublin versus the provinces but part of the rational debate required on a strategic plan which indicates the benefits. This is important, given the scale of operations. Since 1995 Aer Rianta has invested €600 million in the three airports which have seen passenger numbers grow. An increase in throughput is projected in all three.
I want to nail a lie. The Labour Party has no difficulty and never has had in granting greater autonomy to the regions. Our manifesto prior to the general election took this direction. This can work within the strategic plan of Aer Rianta. As Deputy Naughten said, there would be nothing wrong with the Minister utilising the existing boards or setting up new ones to implement this plan.
The Minister who has a vested interested in the matter has said he has a hunch that this legislation will work for the regions and the 3,200 employees of Aer Rianta but there are many concerned individuals - workers or those involved in related industry and tourism - who depend on the proper operation of Aer Rianta in the regions. In the view of any reasonable Deputy and as far as the people I represent are concerned, it is not good enough that the Minister should move ahead with legislation based on a hunch. If it goes wrong, he will be moved from the Department with a big pension and probably given a big job in industry. However, there are plenty of unfortunate individuals whose livelihoods depend on the future viability of Aer Rianta, as does the development of the regions.
It is not good enough that the Minister, with the support of his Government colleagues in the Progressive Democrats, can push through this legislation. As politicians, we all know that the aviation industry in Europe is undergoing significant change. While we all have to change and move with the times - there is not the slightest doubt about this - why in God's name has the Minister decided to go down this route when all of the reports indicate that we need to review the position?
In 1999, at the request of the Department, Aer Rianta submitted a report on the future direction of the company which was endorsed by the Government appointed advisers, Walburg Dillon Reade, AIB Capital Markets and SH& E. It set out the emerging trends, challenges and opportunities in the aviation industry of particular relevance to the three airports. It also set out a major internal change programme, encompassing new technology, the restructuring of operations and jobs, the raising of significant capital to fund the investment programme in the three Irish airports and the placement of euro bonds.
If the Minister denudes Dublin Airport of the funding from Aer Rinata International and makes it liable for the debts of Shannon and Cork Airports, from where will we get the funding for the major infrastructural developments required to meet predicted growth at Dublin Airport? Can he honestly say that all of the proposed developments will happen? The reality is that the finance required will not be available. He might accept this but he will never see further infrastructural development at the airport on the basis of public enterprise. Everything will be privatised because the necessary capital will not be available.
We can talk later about the completion of Pier C and a terminal extension. However, I have highlighted the importance of the need to get it right. No fair minded person will accept that this is the right way to proceed, on the basis of a hunch, to ensure the future of one of our most successful public service companies which has received nothing from the State but which has provided major sums for the State's coffers during the years. It is not good enough that the future of Aer Rianta, its staff and the regions should have to depend on a plan based on a hunch. I, therefore, strongly support the amendments tabled by Deputy Shortall.
I am not in a position to accept amendment No. 1 which seeks to delay the coming into effect of the Bill. Amendments Nos. 3 to 6, inclusive, also run contrary to my policy in this area in that they refer to appointed days on which assets would be transferred.
Amendment No. 4 is totally unnecessary since section 17(3) of the Bill provides for the laying of the appointed draft orders for Cork and Shannon before each House of the Oireachtas. Such orders will not be made unless they are approved by resolution of both Houses. Amendment No. 9 seeks to delay the naming of Aer Rianta until "after the Cork and Shannon appointed days". This runs totally contrary to the intention of the legislation. I would not be in a position to accept that.
Amendments Nos. 24 to 26, inclusive, all deal with the business planning area, to which many Deputies have referred. Aer Rianta is a limited liability company, a public limited company, plc. As such it has had business plans in train for all airports under its jurisdiction. It would not be living up to the fiduciary responsibility of the directors and the board if a public limited company did not have business plans for its future operations. I know of no plc anywhere in this State that does not have forward business plans. I could not see any Aer Rianta director swearing in a court of law that there were no business plans for Cork, Shannon or Dublin.
What is the Minister's point?
Does the Deputy want me to respond or——
There is a business plan. The Minister received the ten-year Aer Rianta business plan. We are talking about a business plan for the break up.
I am explaining to the Deputy about the business plans. The first point I am making is that there are business plans, as with all plcs. I want to make that clear. I will challenge any director of Aer Rianta to state in a legal context that he or she sat around a board table for many years without business plans being in place for the future.
There is not a business plan for the break up. That is the point.
Deputy Shortall should allow the Minister to finish. If she wishes, she can come back.
The board of Aer Rianta would have been well aware for many years of the future business potential and costs for Shannon, the airlines likely to fly in there etc. All that would have been written down as part of its future planning. The same would have been done for Cork. Projections for the future of the airports in terms of costs, income, profitability, debt, etc. would be known under a business planning system which every plc has.
The PricewaterhouseCoopers report, which has been referred to many times, makes it quite clear that the information is generally available to the board. That report was put together in consultation with the management of Aer Rianta and supplied to the trade unions through their financial advisers. The PricewaterhouseCoopers report stated that the establishment of three independent entities would allow each of the issues to be addressed in a focused way, with fresh ideas, a clearly defined capital pool and an autonomous approach pertinent to the business priorities of each airport. There is nothing in the PricewaterhouseCoopers report-——
Will you read the full report for the committee?
The Deputy should address the Chair and he should allow the Minister to reply.
——which would not be fully available to the board of Aer Rianta in terms of business planning.
In recent weeks the board of Aer Rianta produced ten-year business plans, which I have seen. They confirm the broad projections of PricewaterhouseCoopers and matters that would have been known to the board of Aer Rianta itself over months and years. The company has produced ten-year business plans which are now fully available. Every director has them. I presume they will be supplied to the trade unions in the normal fashion, with the usual caveats attached as regards commercial confidentiality. Whether it is a matter of Aer Rianta's ordinary duties as a plc, the PricewaterhouseCoopers report or the ten-year business plans now produced by Aer Rianta, under those three headings there are——
The Minister is throwing out those-——
Deputy Ryan might allow the Minister to complete his response. He may than come back in if he wishes.
The main point is that under each of those three headings there is a business plan. I have made it clear many times in this discussion - and the legislation reflects this - that business plans may be done in isolation, or one can ask the people who will sit at the board table in Shannon and Cork in the future to produce real business plans. This will be done when they talk to airlines and the people who will be affected, to see what business and investment is available. Any student could do further business plans on top of those we already have. Anyone in this room could probably do a few more of them.
Is the Minister suggesting there are two sets of books?
Deputy Lynch will allow the Minister to finish.
The only real business plans for the future that make sense are those produced by the authorities themselves, because they will be in a position to know what business they can get from airlines and what arrangements can be made with the stakeholders generally. Those are the real business plans provided for in this legislation. In the period up to next April the three authorities will talk to the trade unions and the other stakeholders and finalise another set of business plans. This time, however, they will be based on the views the new authorities will hold of the future. Those business plans have to be laid before the appropriate Ministers who must sign off on them. An order has to go to the Dáil before they can be effected.
I want to make it clear that there will be no assets or staff transfer unless the Dáil agrees. That is a test and a lock on this system and I believe it is eminently suitable——
Will the Minister clarify "no staff transfer"?
The Deputy will allow——
I am seeking clarification.
Deputies must go through the Chair.
Staff do not transfer until such time as that procedure is gone through. In other words, the two Ministers have to agree to put their resolution to the House. Dáil Éireann has to positively adopt a resolution of the House before any assets or staff legally transfer. In the meantime people such as Mr. Pat Shanahan, chairman of the Shannon Airport Authority who is eminently respected, and his board-designate which has a range of different skills, are eminently suitable to work out a plan of action from their perspective between now and next April, taking on board the PricewaterhouseCoopers business plan and the one produced recently by Aer Rianta based on its business planning information etc. Such a plan of action can only be worked out if the appropriate people are in place. It does not make sense for me to tell Mr. Shanahan that I do not want him working on business plans over the next nine months, because that is exactly what he should be doing. The same is true of Mr. Joe Gantly, chairman of the Cork Airport Authority and Mr. Gary McGann, chairman of the Dublin Airport Authority. These are people with good boards who are well able to take the business plans that exist and develop them for the future in real live circumstances. They will speak comprehensively to the trade union movement while this is being done. They will negotiate their way and Dáil Éireann has to approve their initiatives.
I would therefore contend that any amount of safeguards are in place and that the concerns raised by the trade unions, with whom the Government has spoken at length about this, have been taken on board as best I can. The balance of the Bill is appropriate to allow time and space for these airports to be developed for the future on the basis of authorities and boards which can work towards independence.
Shannon and Cork airports have for a long time been playing second fiddle - and I say this without any criticism of Dublin. They deserve an opportunity, with strong regional leadership, to show what they can do. A very good example is Knock Airport, which has a magnificently strong board of directors and a strong chairperson and chief executive. They have turned that airport around and it is now making a profit. I want to afford to Cork and Shannon airports the opportunity to do likewise. Ultimately, it is hard to have a little bit of autonomy. One either gives the authority to management to develop the airports or one does not. When we get to the second part of the project, we can take a very close look at where we stand. We will then have the benefit of the advice of the Shannon and Cork boards. In particular, they will, having taken the existing business plans and talked to a number of airlines and two trade unions, be able to tell the two Ministers how to go forward. It is necessary that we allow them to get on with that work.
What if it does not stack up at that stage?
There is procedure whereby one speaks through the Chair and the Deputy is long enough in the House to understand it. I do not want to be regarded as awkward, but Deputy Lynch had intimated long before Deputy Shortall that she wished to speak.
I am glad to hear the Minister has such concern for Cork Airport. The reason that airport was not reaching its full potential was because it has been starved of worthwhile investment for the past 20 years. That was not the problem of the board of management or the fault of the staff. In fact, it was the Government's fault. It now appears that the airport is to receive investment it should have received ten years ago. I remember being at a meeting ten years ago at which people were looking for apron development, parking facilities, redevelopment of the terminal building and a new terminal. The promised investment amounts to €160 million while the works will cost €250 million. Management is very worried that it will not receive the additional investment necessary for it to do what the Minister insists it does, namely, stand alone.
It worries me that the Minister's contribution almost implies that people produced business plans that had no basis in reality. One would imagine that the company was not successful or living in a different world to the rest of us. It is an extremely successful company and it does produce worthwhile business plans. Is the Minister suggesting the business plans would have been different? What is he suggesting about the recently produced ten-year business plan? Deputies Shortall and Sean Ryan are correct that the ten year business plans now have no basis in reality because the circumstances have changed dramatically. The Minister does not know what the business plan would be in the new circumstances, despite the fact that he is rushing this legislation through the House. He mentioned the space and time available, but there will be space and time available after the Bill is passed. They are definitely not available at present which is very worrying.
I am amazed to hear the Minister state there will be no transfer of staff or assets. For him, it is not a question of what the staff on the ground believe. The staff believe very firmly that the legislation is being rushed through and that they have not been consulted. They find they will be cut adrift without the investment everyone agrees is necessary. They have not been given time to bring themselves up to speed and will not be operating on a level playing pitch. This is very worrying.
The Minster talks about all the different airports. If Cork goes under, it will affect the entire region. It is not as if we have a surplus of airports. More time is required in order that the proposals can be fully considered and so the necessary preparations can be made. Those concerned are not being allowed sufficient time to prepare and they are very worried. One of the capital investments necessary is to construct the bridge from one building to another. It is also necessary to invest in apron space, which the airport does not have at present. Consequently, it often has to send aeroplanes away to park overnight in other airports. In spite of the need for this investment, the airport is to be cut loose and told that it is being given freedom to operate on a level playing field. There is not a level playing field, nor has there been one for the past 20 years. Management is very concerned about this.
If the airport goes under, the whole region will suffer. I am not just referring to the effects on a mini-company in the middle of a region but to the effects on an entire region. We do not have in Cork the type of infrastructure that exists in Dublin. We are very dependent on Cork Airport and the people are very worried about it. They want to know if they will get the additional money.
The Minister mentioned a plan of action. He gives me the impression that he lacks confidence in the Aer Rianta management at Shannon Airport at present. He also gives the impression that airlines will be queuing up to get into Shannon Airport when it becomes autonomous. One must look at the history of the airport over recent years. SkyNet, which wound up in the area and for which there were great hopes, was to provide great services and link up with Moscow. It operated a service to Amsterdam. Consider what happened to JetMagic in Cork and the other small airlines. There was an announcement about two months ago that an English airline was to commence services from 1 June. It had its Internet site etc., but the plan fell through within a week of the announcement. Virgin Express pulled out of Shannon Airport. The commitment of Aer Lingus to Shannon Airport must be questioned in that it seems to be winding down services. Consider the recent staff cuts by Aer Lingus at Shannon Airport and the refusal to handle third party facilities for other airlines. The aviation sector has changed considerably and smaller airlines are being gobbled up. Delta Airlines has stated that if the bilateral arrangement were to fall through in the morning, it would only serve Dublin.
The issue is serious. There is talk of the transfer of staff but there will not be staff in Shannon if the Minister's plan is implemented. The resources of Aer Lingus have been cut in half and Aer Rianta has a ten-year plan to cut 250 staff at Shannon Airport, particularly catering staff.
I welcome Pat Shanahan who is a good man and has tremendous experience in industry. I wish him well in his task. However, the Minister should bear in mind that in the real world it is not that easy to attract business, even if an airport has been granted the promised autonomy. One is still dealing with a number of major carriers, such as Ryanair and Aer Lingus, and also other smaller airlines. Although there will be an independent board at Shannon, the airport will not become viable over night. The Minister has referred to elements of the PricewaterhouseCoopers report but there are other elements he has not outlined, such as the declaration that the airport will lose up to €100 million by 2008. These are the issues of concern to the people in Shannon.
Deputy Seán Ryan referred to Aer Rianta staff who number some 2,400. The company's staff are seriously concerned about what will happen in the event of the break-up of Aer Rianta. Families in counties Clare and Limerick depend on Shannon Airport for their incomes, as Deputy Peter Power would confirm. I urge the Minister to seriously consider these amendments in the interests and viability of Cork and Shannon Airports.
I find it difficult to figure out whether the Minister is engaging in woolly and foolish thinking or whether he is deliberately trying to obscure the issue. It has been clear in recent months in all the comment inside and outside this House and from members here that people are saying the Minister should not proceed with the break-up of a relatively successful semi-State company in the absence of a business plan. He went on with some auld ráiméis about the company having business plans, always having produced business plans and having a statutory obligation to produce the business plan. That is nonsense, as he well knows. We are not talking about the business plans Aer Rianta produces on a regular basis or a ten year plan which it only produced the other day. We are talking about the Deputy, as Minister for Transport and the main shareholder of the company, and the Minister for Finance, on behalf of the Government, producing a business plan or a business case for the break-up of a important semi-State company. The Minister has made no business case for what he proposes to do. That is the purpose of the various amendments we are discussing. It is the purpose of the public debate that has been taking place and the reason people have such concern about what the Minister is proposing to do. It is based on nothing other than a notion he happens to have, without any particular expertise in this area, that it might work and might be a good idea. He does not have a clue. A journalist asked the Minister why he was doing this and he suggested it would put a bit of jizz into the company. If the basis on which Government policy will be decided is that the Minister, on the basis of a hunch, wants to put a bit of jizz into a company, we may as well all give up. Is there any basis for this whatsoever?
For a long time the Minister was talking about the various consultancies he had engaged in his Department. There was much talk about the PwC report which was leaked to my party leader, Deputy Rabbitte. We then realised that it was not exactly what the Minister was making it out to be. Then because of pressure from the unions, the Minister was obliged to make the papers available to the unions' consultants. Over the past few months two respected firms of financial consultants and legal advisers, Farrell Grant Sparks and Mazars, were given the opportunity to review the papers, which the Minister claimed constituted a business case. This report is not something to be taken lightly. This is the work of two well respected, well established firms of consultants who have put their names to this report that was commissioned. It is not something that was decided overnight nor was it a light-hearted exercise. It is a serious report. These firms of consultants have put their reputations on the line and are staking their reputations on this. On the basis of the material available in the Minister's Department, this is their judgment.
Farrell Grant Sparks and Mazars state that the PwC working papers do not, as might have been expected, constitute a report, nor do the authors, PwC, refer to them as such. They state they are presented as analysis and commentary only. They also state that no conclusion has been furnished in the working papers and - this is important - no due diligence or audit has been undertaken by PwC in presenting these papers. The consultants state they are not intended to present a business case, nor do they constitute an appraisal or a valuation of any of the securities, assets or businesses of Aer Rianta CPT. They further add that the PwC working papers state that it is not intended to express any opinion as to the financial viability of an independent Cork or Shannon Airport.
On the expert advice the Minister claimed to have, the reports he had arranged to have produced and that he claimed constitute a business case, we now know there is no case nor did PwC ever claim to have a case. Furthermore, PwC working papers acknowledge that they do not take into account the many potentially complex operational issues of a separation that need to be addressed. Nobody has examined the implications of the break-up of the company. Neither do the working papers constitute a business plan for the group or any individual division within the group.
In developing what the PwC working papers describe as scenarios, assumptions have been made which would require changes in the legal and regulatory environment. The PwC working papers have been extracted from documents prepared by Aer Rianta management for presentation to the international financial rating agency, Standard and Poors. I stress that these projections were not prepared in the context of the Government decision and the establishment of three stand-alone independent entities. PwC was examining projections which Aer Rianta was making, as it was required to do that by its credit rating advisers, Standard and Poors. This had nothing to do with the proposed break-up. It was examining a situation where Aer Rianta said that if the company is broken up, these are the projections. They were only projections for Aer Rianta, as we know it, as a complete company intact and what the projections were likely to be for the future. At no point was any analysis done of the implications of a break-up of the company.
I want to refer to what these two reputable firms of consultants state in italics in their report, and the Minister knows what that means from consultants, namely that they are putting their reputation on the line. Farrell Grant Sparks and Mazars state that in the context of the review being carried out by them, and based on confirmation received in discussions with PwC representative, no report has been prepared by PwC in this matter. They go on to state, again in italics, further based on discussions with Department officials, that they are advised that the PwC working papers are a fair representation of the totality of the financial information being relied upon by the Minister in presenting his case to Government for the restructuring of Aer Rianta. I cannot think of any more damning judgment from two firms of financial consultants in this country than those few lines. Basically they are saying they have seen all the papers, all the so-called reports that were supposed to exist within the Department of Transport, on which the Minister based his proposal for the break-up of Aer Rianta and on which he based his proposition to Government, and there is no case there. Not only is there no case but nobody has examined the financial and legal implications of what the Minister is proposing to do, namely to break up Aer Rianta.
I do not know what the Minister's colleagues have been doing; maybe they have been too busy trying to relocate civil servants to their constituencies and trying to set up local Fianna Fáil employment agencies in their constituencies. Clearly, none of the Minister's colleagues in the Cabinet has kept his or her eye on the ball in this regard, with the possible exception of the Minister for Finance, Deputy McCreevy, who has commissioned his own reports on the matter and already signalled his serious concerns about what the Minister for Transport proposes to do.
Sitting suspended at 1.35 p.m. and resumed at 2.30 p.m.
Before the break, we spoke of the fundamental problem of there being no business case for the break-up. The Minister stated that we will now be able to do real business plans. I am not sure what he meant by that. There is no reason the Minister could not have done real business plans already. It is generally accepted that taking the decision to go ahead with the break-up and then producing business plans to see if that decision stacks up is a little like putting the cart before the horse.
The Minister did not answer my question about what will happen if things do not stack up next year when the business plans are produced. Where will we go from there given the company will de facto have been broken up? It would be much more satisfactory if in our dealings with the Minister he was prepared to come clean on his intentions in respect of this Bill. The real agenda is where the action is and where the money is to be made - the provision of a second terminal in Dublin.
It is clear to me that the Minister intends essentially to destroy Aer Rianta as we know it and to ensure Cork and Shannon airports will be debt free. He will engage in all types of gymnastics to bring that about in order to comply with company law requirements. It is proposed that Dublin will continue to carry the debt for the foreseeable future. I take it that throughout the year we can expect fairly significant redundancies in Shannon and Dublin, something for which Dublin will be left to pick up the tab, though ultimately the taxpayer will do so. The company will be significantly devalued, given the exercise in which the Minister will have to engage to achieve the de-merger required in law. All of this will result in a greatly weakened operation at Dublin Airport.
I believe the Minister is specifically trying to achieve a weak Aer Rianta or Dublin Airport authority. He then intends to give control of a second terminal to a body not yet identified. Given the burden it will be expected to carry, Aer Rianta operations in Dublin will not be able to compete.
I am concerned about what will happen in the future. I ask members to consider the scenario of a private operator, whoever it might be, operating a second terminal and taking Ryanair from Aer Rianta. What happens then? At best, Aer Rianta will be left with Aer Lingus and some other carriers. It will then run into serious difficulties resulting in large-scale redundancies. What if the second main carrier shifts to the new terminal, as it will no doubt be attracted to do when offered preferential rates? What will happen if the two main carriers are removed from Aer Rianta operations at Dublin Airport? What are the implications in that regard for the State company? These are issues which we need to consider.
I am not sure if the Minister has given consideration to such issues or if that is what he is intent on doing because it serves the agenda of vested interests in the private sector. The description of this operation as an act of institutional vandalism is correct. It is quite accurate because the Minister is engaging in the vandalising of an important and successful semi-State company. We can look forward to that type of scenario in the not too distant future.
The issue of a second terminal is central to our discussions on this matter. The desire to establish a second terminal and gift it to somebody in the private sector is the Minister's motivating force in all of this. Whether or not there is deviousness involved, decisions cannot be taken on the future of Aer Rianta without adequate consideration being given to the impact of a second terminal whether privately or publicly owned. One would imagine that this critical issue would be given adequate consideration in the context of the future of Aer Rianta.
It is important to cite what Farrell Grant Sparks and Mazars had to say in that regard:
The development or otherwise of the second terminal at Dublin Airport is a question of enormous significance for the future of the airport. Any discussions of projections for the airport without reference to the second terminal is rendered partial at best and potentially lacks relevance.
It goes on to say - this is important from the point of view of political responsibility and what is happening in the Department of Transport - that based on its discussions with the departmental officials and the representatives of PwC it is not in a position to assess the impact of a second terminal. The Government is being highly irresponsible by proceeding with the break-up of Aer Rianta without considering the impact of a second terminal on Dublin Airport.
The amendments before the committee are an attempt to ensure that some kind of weight is given to the undertaking given to the unions in the week before last, during the famous all-night discussions. The unions were given the impression that nothing would happen in Aer Rianta until the end of April 2005, at least. They were led to believe that the Minister for Finance would have some kind of veto over the business plans which would be produced at that point. Many of the nervous Fianna Fail backbenchers had great faith that the Minister, Deputy McCreevy, would look after them. They were under the impression that the matter would not go anywhere if the plans did not cut muster with the Minister. That gave a certain comfort to workers at the three airports, who were given to understand that the matter was basically put on hold until next April. That is not the case, however.
The manner in which the legislation has been drafted makes it clear that the break-up will happen in a matter of weeks. We accept that the assets will not be transferred until a later date, when the business plans have been produced. I do not agree with the Minister for Transport's reading of the situation.
It seems clear from the legislation, particularly the section dealing with staff, that the other two companies will be able to employ staff from the appointed day, on terms set down by them. The Bill explicitly provides for the allocation of existing staff to Cork Airport or Shannon Airport, or to the entity known as the shared services. It is clear to me that nothing in the legislation prevents staff from being moved around at will.
The passing reference to consultation with unions is meaningless because although consultation can take place, it must be completed within six months of the establishment of the new company. It reminds me of the famous letter the Minister gave to TEAM Aer Lingus, giving workers guarantees which they thought were secure. However, they discovered that although they had guarantees on transfer to the new entity, the guarantees lasted for just six months. The Bill speaks of a requirement for consultation with the unions, but one can consult the unions by meeting them in a room in the Department for an hour, outlining what one is thinking of doing, asking the unions what they think, and then moving on and proceeding with one's plans regardless of what they think.
The reference to consultation is a particularly weak part of the legislation. It represents a complete about-turn, when compared to the impression that was given during the all-night negotiations. There are no guarantees and there is no security of terms of employment. There are certainly no guarantees in respect of the tenure of workers at any of the three airports.
We know that matters will move ahead quickly from now on. There will be a sham exercise some time next year, after the end of April, when business plans will be produced. I presume they will go through on the nod to facilitate the transfer of assets and the actual legal de-merger. The company will be broken up, to all intents and purposes, and the new companies will be established as operational companies. That was not made clear in the negotiations. New companies are undoubtedly operational companies. Dublin Airport will fund it, reach agreement with them and pick up the tab for whatever Cork and Shannon want to do. Some criteria should be set down for the business plans. The impression was given that the business plan provision constitutes a real safeguard because the plans will have to be sound. What criteria will the Minister for Finance apply to the business plans?
I advise the Deputy that she has repeated her last question five times since she started, which is not permissible under standing orders.
Does the Chair refer to my question about the criteria for business plans?
Yes. The Deputy has asked the question five times. She is being repetitive and preventing her colleagues from speaking.
I hope it will be answered once.
The Deputy's colleagues are trying to speak. She is not being fair to them.
I have no difficulty with allowing my colleagues to speak. They are welcome to speak for as long as they like. I assure the Chair that I will stay here for their contributions. I have no difficulty with that. This is an important Bill.
Of course.
It is important that members have an opportunity to express their views. I have asked the Minister to outline in the legislation the criteria which will apply to the business plans. I also ask him to consider giving the staff a real and meaningful role in drawing up the business plans. It is only fair that everybody should be involved in that process. Explicit legislative provision should be made, in a spirit of partnership, to allow the staff to be involved in developing business plans. We all want to see the three airports——
That is exactly what the Deputy said before lunch. She is repeating herself again.
I ask the Chair to allow me to finish.
Yes. I am just telling the Deputy that she is being disorderly. I appreciate that she does not intend to be disorderly.
I did not refer before lunch to the involvement of staff in the drawing up of the business plan.
The Deputy referred to it before lunch.
I did not make any reference to it. I am making an entirely new point. There are many points to be made, but this is an entirely new point.
The Deputy made a point about staff prior to lunch.
I would welcome it if the Chairman could point that out to me in the Official Report at a later date. On the basis of the proposal I have made, I hope the Minister will consider the amendments.
I thank my colleagues for facilitating me. While I am not a member of the committee, I have an active and ongoing interest in the future of Shannon Airport. I wish to ask the Minister a few questions for clarification purposes.
If Shannon Airport is to survive on its own, it seems obvious that it will need a subsidy of €9 million each year. When the Minister for Enterprise, Trade and Employment sent us a brief on 2 June last, she said one of the options being considered by the Government was a transfer of the assets of the Shannon free zone to the new airport authority. The assets are worth approximately €9 million at present. Using its rental income from the industrial zone, Shannon Development has given approximately €9 million to a technology park in Tralee and approximately €1.7 million to a business centre in Listowel. I am sure it has supported similar projects throughout the region. If the money is taken from Shannon Development to be used to subsidise the airport, it will not be available to continue to create a dynamic in the region's larger towns and urban centres. It is obvious that the rental moneys are also used to help staff and to pay for the ongoing maintenance of the centres. This has serious implications not only for the airport, but also the region.
Will the Minister explain from where this money will come? I understand that in a recent report submitted by the Minister's officials it is clear that the airport would need a subsidy of €9 million each year, following staff reductions and other cost-cutting exercises. For Shannon Airport to be efficient and to survive, it will have to charge higher landing charges which will immediately make it less competitive.
On Second Stage in the Dáil I pointed out that 30% of Shannon's business comes from transatlantic traffic. There is no doubt that the change in the bilateral agreement will mean that most of the traffic from America will come into Dublin. Throughout Europe the international traffic flow comes into the main cities. That is the case in respect of Paris, London and the other capital cities. Shannon is extremely vulnerable at this stage. If the Bill goes through in its current form, Shannon will become an independent entity, regardless of how it is dressed up.
If the business plan that will be presented to the Minister next April indicates clearly that Shannon is not viable on its own, will it remain part of the new Dublin Airport Authority? I am sure this question has been asked but could we have an independent Cork Airport, for example, with the Dublin Airport Authority retaining control over Shannon Airport? Is that a possibility because it appears that is the case?
I notice that while the Dublin Airport Authority can borrow funding of up to €700 million at any one time and that Cork Airport can borrow €100 million, Shannon Airport can only borrow €20 million. Surely that puts Shannon at an immediate disadvantage. The message that sends out is that there will be less activity in Shannon and less money for development. I understand it currently needs approximately €75 million to upgrade the runway and provide other facilities. This measure is not in the best interests of Shannon Airport. Shannon will not be sustainable as an independent airport, despite the good will and the commitments from business as regards usage.
I know somebody from America who was involved in the recent Skynet operation and who invested a sizeable amount of money in it. As the Minister is aware, that company has now gone into liquidation. Skynet was on what should have been a very profitable route between Shannon and Amsterdam, going on to Moscow, but it did not work. Skynet ran a very tight operation so how can somebody else come in and be successful? It was not the landing charges in Shannon that put Skynet out of business but a lack of business. The Minister is probably aware that there are more services out of Farranfore Airport to Dublin than out of Shannon because the services out of Shannon are not being supported. Will they be supported in the future? I do not believe so.
If a company is successful in the west it will be because of social need. Market forces will prevail but there is no doubt that Shannon, Knock and Farranfore Airports will not survive without subsidies or some redistribution of the wealth being created on the east coast. Dublin Airport is viable and it will be even more viable in the future. I understand it will handle 30 million passengers in the next ten years. It will be highly profitable but if that profit is not distributed between Cork and Shannon Airports, Shannon will not survive and that will do enormous damage to the western seaboard.
Comparisons have been made to Farranfore Airport but Aer Arann would not survive there without a PSO. There is no doubt that if that subsidy was withdrawn, Aer Arann would be gone from Kerry Airport. To give an example of the work practices there, staff come in at 6 a.m, do some work, go home and then come back at 9 a.m. The airport is run on a shoestring. The people who transport the luggage in the small tractor trailer have other responsibilities in the airport. Those practices will not prevail in Shannon, with its existing protocols and written agreements on work practices. A commitment has been given by both the Taoiseach and the Minister that there will be no redundancies.
I cannot see this measure working. I know the Minister is for change, and I support change, but the only way this will work is if there is an independent body in Shannon, representative of the region but with a connection to the new Dublin Airport Authority. If Cork Airport can sustain itself on its own, so be it, but Shannon will not be able to do so.
The Minister told us earlier that Aer Rianta had a business plan. We all knew that and I am not sure why the point was made. I would have thought it was to create some type of smokescreen. It is worth reiterating that there is no business plan dealing with the break up of Aer Rianta and all the indications are that such a business plan would prove very difficult to produce.
It is important to state also that we all support regional development and balance, but will this proposal enhance regional development and balance or will it be to the detriment of regional development? If such a major step is to be taken, we need to know in advance that it has a very good chance of success.
One of the criteria in evaluating any proposal should be that, on the basis of the best evidence available, is it reasonable to believe the proposal will be effective? Anybody sitting around this table or any other would have to agree that to embark on such a major proposal without a proper business plan is fraught with danger and very foolish. We are told that a business plan will be produced after the enactment of this legislation and that, on the basis of that plan, the Minister for Finance will make a decision. I agree with Deputy Shortall that we need distinct and clear criteria for any such business plan because I have no confidence in the Minister, Deputy Brennan, or in the Minister for Finance making a decision on the basis of the business plan. I fear a decision will be made on the basis of political ideology, which I believe is the basis for the Bill. Any such business plan would need to be benchmarked against very specific criteria, but all the indications suggest the whole thing is very woolly. There is no clear indication that the break up of Aer Rianta would be successful or effective.
A recent report carried out on behalf of ICTU and SIPTU, which had access to documentation and previous reports carried out on this matter, drew the clear conclusion that the proposal to regionalise and disaggregate Aer Rianta constitutes a significant policy shift for the company and may have profound implications for the current owners, management, airport users, regulators and employees. The report also concluded that the transition to a new way of operating would also present a unique set of risks and challenges.
In determining its view, it was particularly informed by the following matters. It was not presented with a coherent statement in regard to strategies and plans for new entities, capital expenditure and investment plans, management team and operational plans, the nature of ongoing relationships with existing Aer Rianta operations, financial projections, cash and debt management, pricing policies and interface with the regulator. The conclusion of this well known and respected firm of consultants was that these items should form the basis of an objective business analysis of the merits of the restructuring proposal. In its view, until such time as these issues were demonstrably addressed in an objectively verifiable manner, the proposed restructuring could not be seriously considered.
In his response, the Minister referred to the business plan. Members on this side have a completely different view of the interpretation of a business plan. I accept what he said regarding the business plan to which he referred, but the amendment relates to financial viability. When Members on this side refer to a business plan, the specific issue they raise is the financial viability of the three independent airports. Deputy Lynch put the case in a clear manner. Critical issues exist in regard to the operation of Cork Airport that need to be answered before one can put in place the type of business plan referred to by the Minister. Clear criteria need to be set down. Deputy Deenihan raised other points on the same matter. In response, the Minister referred to the PricewaterhouseCoopers report.
We have not yet had any detail in terms of a clearly defined capital pool. It has been said that the boards will put in place real business plans, based on reality rather than the projected reality on which Aer Rianta devised its ten year plan. The announcement was made 12 months ago and these boards have been in place for up to seven months. Why has that not happened in the intervening period? Why is the Minister not able to say what financial criteria are being laid down for the operation of the three airports and state the direction in which we are going with the supporting evidence to back it up? On behalf of the Fine Gael Party, I have called for this since October 2003 when Second Stage of the Aer Lingus Bill was before the House. I raised the specific key questions with the Minister, yet, to date, we have not received any response regarding this critically important area.
The Minister said the legislation before us is required for the boards to put real business plans in place. However, the members and chairmen of those boards are all articulate people and can find such information without this legislation being in place. The development and presentation of the real business plans to the Minister for Transport and the Minister for Finance does not require the legislation to be put in place. Once a clear direction is given by the Minister to the board of Aer Rianta to furnish all relevant information to the three relevant boards, they could easily provide the real business plans required by him.
The critical matter is the financial viability of the operation of the three airports independently of each other. However, no criteria have been laid down. Deputy Lynch raised a number of very important questions that have not been answered. It is pointless to ask the board of Cork Airport to draft a real business plan unless and until those questions are answered. The three boards which will operate the airports are themselves concerned that clear financial criteria have not been laid down and that they do not have the details on where they are going. For example, what will be the Government mandate and criteria for the airports? I presume they will not be asked to provide a State dividend as Aer Rianta currently does, but I am not sure if that will be the case. I presume they will have to try to reach a break even situation.
There is no doubt that, in the short term, Shannon will not be in a break even position. What level of subvention will be provided by the State to allow it to keep its head above water until it can improve on those efficiencies or bring the required extra business to the airport? We do not have any detail in that regard. Will it be possible under EU regulations to provide a subvention to Shannon Airport that is not provided also to Cork and Dublin Airports? Those questions have not been answered.
A key issue is how one intends to address the need for the high capital expenditure required at all three airports. Many experts within the industry project that Dublin Airport would require an average investment of €100 million per annum and that Cork and Shannon Airports would require €50 million per annum.
The Minister is going ahead with plans for a second terminal at Dublin Airport. As Deputy Shortall pointed out, a significant debt burden would give rise to question marks over the operation of Dublin Airport. We have no detail in that regard, but if Dublin Airport, which is an old airport, is to compete with an independent terminal, it will require significant capital investment. Significant structural changes would need to be made at the airport. To date, there has not been any information on where the money will come from or where the capital investment will be obtained for the development of the three airports. It is pointless to discuss bringing balanced regional development about through the independent operation of Cork and Shannon Airports unless they are given funding to carry out the required investment.
Amendments Nos. 24 to 26, inclusive, suggest that the financial viability of the airports be considered as part of the reporting structure. They are reasonable in nature but also critically important. I hope our colleagues on the Government side, who have indicated their support privately, will vote in favour of them. I ask the Minister to reconsider the position in respect of these amendments. All we are seeking is that the financial viability of the airports will also be considered in conjunction with their management, operation and development.
Financial viability is not what the Minister stated it is in respect of the development plan. It is fine to talk about bringing new airlines into Cork and Shannon but unless the money is available to carry out the capital works required at both airports, these airlines will not use them. Such airlines might express an interest in using the airports when business plans are being drawn up. These plans will consider where new business can be obtained and how such business can, from both an Irish and an international perspective, be attracted to the airports. However, this will not address the issue of the significant capital investment that will be required at all three airports in the coming years. It is critically important that the position be made clear before Cork, Shannon or Dublin go it alone. I, therefore, ask the Minister to accept amendments Nos. 24 to 26, inclusive.
I am not a member of the committee.
We are being kind to the Deputy.
Will I be allowed to ask the Minister a simple question?
It will be up to the Minister to decide whether he wishes to reply.
That is fine. My question relates to the terms of reference of the three boards which the Minister indicated would be responsible for developing the business plans.
That matter is not relevant to the amendments under discussion. The Deputy must speak to the amendments.
It is relevant to the amendments in the context of what I am asking.
It is not relevant to the amendments. The Deputy must speak to the amendments.
I am speaking to them. In his original reply, the Minister stated that he intended to allow the three boards to establish their structures. What terms of reference or guidelines will the boards be given in order that they might set about drawing up their plans? The answer to this question is relevant to what I intend to say later.
I was asked a series of questions by the Deputies.
Does the Minister wish to respond to Deputy Seán Ryan's question?
The legislation lays down the parameters relating to the boards designate. On taking office, the boards will, under the legislation, be statutorily required to set about compiling business plans. The airport authorities at Dublin, Shannon and Cork will be empowered to reach agreement with each other regarding any other matters in respect of which it might be practical to reach such agreement. These agreements will be made on a temporary basis pending the Dáil decision after April 2005. The boards will, therefore, have two duties: first, to prepare business plans; and, second, to enter into negotiations with each other to reach practical agreements in respect of any other matters with which they might each deal.
I thank the Minister for his reply. However, it has made me more concerned than ever about the necessity to bring forward the legislation without the core plans being before us. The Minister earlier stated clearly that Pat Shanahan, Gary McGann and Joe Gantly will be able, in conjunction with their boards, to utilise any other strategic plans which might be in existence. He referred to Aer Rianta's plan for the coming ten years and stated that there were a number of such plans. He also indicated that the boards could, on an individual basis, enter into negotiations with carriers, etc, to show the viability of the three airports.
I return to the point made by Deputy Shortall and others regarding the financial viability of this proposition. The Minister has not indicated that the legislation will provide for the three boards to draw up a plan relating to such viability. They may individually draw up plans for the next five or ten years. However, there will be no overall plan.
Let us consider the case of Dublin Airport, a major impact on which would be the development of Pier D. The Minister for Transport prevented Aer Rianta from proceeding with this development. In the context of a plan for the new Dublin Airport Authority, what will be the position as regards Pier D? Information on whether it is to be funded by the new company or on a private basis would have to be forthcoming under a viable plan. How will the development of Pier D be funded? Local politicians and the media criticised Aer Rianta with regard to the chaos that obtained at Dublin Airport two years ago. The position there, thankfully, has been ameliorated to some extent. It was projected in the past that Pier D would be required by 2004. However, this matter was taken off the agenda and we will be faced with a recurrence next year of the chaos to which I refer.
The other dimension of the development of a viability plan for Dublin Airport is the question of developing a second terminal. A decision will have to be made on whether to proceed with a second terminal. Information in that regard is necessary, particularly in terms of who will provide the terminal and how the project will be funded. It is critical that this matter be taken into consideration. What is the current position regarding the second terminal? If the Minister is asking the new board to bring forward a viability plan, it must be part of it because it needs to know where it is going in the next six months or so.
Nowhere in his reply to our original contributions did the Minister convince me in any shape or form that part and parcel of the overall strategy of three independent companies was the issue of funding. In his reply this afternoon, the Minister did not state that any of the three boards would have to take into consideration the funding requirements of the three companies - not only their own. The Minister led us to believe this afternoon that the chairman designate could draw up a plan and negotiate with carriers in respect of Dublin, Cork and Shannon. How has funding been provided in the past? Deputy Lynch welcomed the progress which has been made in infrastructure at Cork Airport. My understanding is that funding for all the infrastructural developments was funded by loans entered into by Aer Rianta. Part of the structure of any proposal should be to meet such requirements in the future.
The distribution of assets is another consideration which I have not seen identified in any shape or form in the legislation. This would be a major component of the distribution and break up of Aer Rianta as we know it at present. There is no use in the Minister simply stating that the airports can sit down and draw up plans of their own. The concern of people in Dublin is that Aer Rianta International will be taken away and given to Cork or Shannon. The Minister indicated in media reports some six months ago that in all probability Aer Rianta International will finish up in Shannon. Is that the Minister's assessment of the position in regard to Shannon? If Aer Rianta International is taken away from Dublin and located in Shannon, what are the implications? How will Dublin Airport deal with that situation, carry the liabilities of Cork and Shannon and also meet the requirements of infrastructural development into the future? In the interest of the company's progress, these issues need to be addressed. There must be a financial plan to ensure that we will not fall off the ship. It appears that Shannon Airport is more at risk in the short term. How will that issue be dealt with?
Michael O'Leary took out full page newspaper advertisements attacking the Government, in particular the Minister's predecessor and the Taoiseach, which was an unacceptable scandal. Michael O'Leary has supported this proposal and supports the Minister because the competition will reduce the charges. In the House last week, the Minister confirmed that in all probability this proposal will increase charges. His statement is available from the transcripts. He said the net effect of this proposal is that charges will increase. Michael O'Leary has stated that he is in favour of the proposal because its effect would be to reduce charges. Why did the Minister not have the guts to take on Michael O'Leary? Is he too close politically to the Minister that he will not tell him that the media attention he was given over the years is a disgrace? It is also a disgrace that the media has been prepared to listen to Michael O'Leary's comments without questioning them.
I point out to the Deputy that there is a protocol in regard to naming people outside the House.
Michael O'Leary has named politicians from all parties in this House and in Aer Rianta in respect of the operation of its mandate. The Minister and his Department know well that Aer Rianta airport charges are among the lowest in Europe. If they were really concerned about Aer Rianta and of having a fair assessment of where we are going, they would stand up to Michael O'Leary and tell him he is wrong. Why were they not prepared to do so? The reason is that it suited them to ensure that Aer Rianta was blackened and the perception would be given that the company was over-charging, was inefficient and ineffective and levied high landing charges. However, all the independent reports coming before us indicate clearly that this proposal will lead to extra landing charges. The cost of the extra landing charges will affect Cork, Shannon and Dublin.
Where and how will the capital be generated and to where will it be distributed? There is a lack of a clear plan. Some of my back bench Fianna Fáil colleagues, for whom I have great regard, have critically examined the legislation in terms of its viability. It is obvious to anyone with a business qualification that a financial and business plan is a prerequisite for proceeding. However, it seems they are now prepared to listen to the Minister. If they took him on or if the Minister did not get his way, it would not look good. All of the independent reports have stated clearly this is the incorrect way to go about it. One must consider the financial report and consider the impact of the proposals on the financial viability of the company beyond 2008. Using short-term solutions to meet ideological objectives is not the way to formulate aviation policy.
An aviation policy is very necessary for the regional development of the country. The general perception is that the Minister is taking the wrong course. Senior Cabinet members believe the Minister for Transport is not on the correct course, but do not wish to embarrass him by asking him to pull back. At the end of the day, the proposals must be reassessed.
I believe the Minister has not dealt adequately with the amendments that have been tabled. This is a sad day for aviation. I hope I am wrong. We must protect the jobs of our constituents and commerce in the regions. Not one Member of the Oireachtas wants to see the Minister make a bad decision on the future of Aer Rianta, as this will impact on tourism and the development of the regions. I believe if Members were honest, the Minister would realise he is in the minority in regard to the proposals he intends to push through. I fear the worst. On his departure from the Department of Transport, the Minister will leave a legacy of trouble.
I thank the Chairman for affording me the opportunity to participate. This morning in the course of the Order of Business I referred to the report presented by Farrell Grant Sparks and Mazars on behalf of the Irish Congress of Trade Unions and SIPTU which was distributed widely yesterday to all Members of the Oireachtas. I have no doubt, having taken the opportunity to read it and to take on board the covering letter from Mr. Jack O'Connor, the president of SIPTU, that the State Airports Bill 2004 is, as I correctly described it this morning, a wrecker's charter. I cannot pull back from that because I am incensed by the proposition before us. It is important to point out, as Deputy Seán Ryan has done, that this is not just an issue that directly affects people in close proximity to Dublin, Cork and Shannon, nor is it of relevance only to those working in the aviation industry. People throughout the length and breadth of the island of Ireland are aghast at what is proposed in the Bill. Of course, it is the work of those following an agenda, led by a particular but powerful faction in the Government. Sadly, the Minister, Deputy Brennan, is very much compliant in that view.
I am not privy to the contribution of all who have already spoken on this group of amendments. It is a major deficiency that no business plan has been produced on the restructuring process. The authors of the report commissioned by the Irish Congress of Trade Unions and SIPTU state that in their opinion it is highly unusual that such a proposition is to be proceeded with in the absence of a business plan. There clearly is no such plan. The proposition is going ahead on a half wing and a prayer. This creates untold anguish for people in the sector in a much wider way.
Dependence on the PricewaterhouseCoopers presentation must be questioned. These are working papers, as the report by ICTU demonstrates. They do not offer real informed opinion or judgments and there is no assessment of the financial viability of either an independent Cork or Shannon airport authority. The basis for the proposition must be questioned. The figures involved have been queried, a loss of asset value on distribution of approximately €110 million, which they attribute in the ratio of €65 million to Shannon and €45 million in Cork.
The ICTU report should stall any responsible Minister or Cabinet from moving ahead with this proposition. It is imperative for responsible, accountable and transparent government that it takes on board the critical views of a very credible consultancy firm, the representative organisations of all sections of the workforce in Aer Rianta and the collective voices of elected opinion of all shades in these Houses. Make no mistake, the opinions reflected by Deputies from the Opposition benches are held strongly by members of the major party in Government. Those opinions have been expressed within the confines of the party but it is important that they bring their concerns to bear on the issue we are considering.
The report prepared by Farrell Grants Sparks and Mazars indicates there are no long-term projections, and we know the projections do not go beyond 2008. The consultants have expressed their view authoritatively, so too have a wide range of informed financial commentators and correspondents in various daily and weekly media organs, who have indicated that this is a most imprudent way to proceed. The year 2008 is but a flash in our lives and to have no idea post-2008 on such a significant change in the configuration of the airport authority in the State is simply irresponsible. We must take on board that there is great uncertainly not only regarding the borrowing requirement but as to the availability of borrowings for Cork and Shannon airports. It cannot fail to strike a chord with those who are very anxious to ensure the viability of Cork Airport and Shannon Airport, as the Tánaiste was very keen to emphasise this morning that the only way that Shannon Airport could be protected and secured in the future was by the proposed break up of Aer Rianta. That is ballyhoo. It has nothing to do with protecting its future. This proposition is ideologically driven and there is neither sane argument nor sensible preparation in terms of the proposition before us. The questions on the borrowing requirements that are unquantified and in regard to availability, which is very important but which is neither tested nor commented on, must give rise to real and serious concerns.
Farrell Grant Sparks and Mazars, having given careful consideration to the Bill and all the elements involved in the proposition, indicate also that it cannot provide any comfort to the employees of Aer Rianta in terms of assurance of employment and in regard to the area of employees' rights, their future terms of employment and prospects. Those employees are very important stakeholders in Aer Rianta CPT, and we must make no mistake about that. It is unacceptable to treat in this way a workforce, a significant majority of which is clearly opposed to the proposition.
I want to reflect on another element rather than engage in repetition. I am not certain of the focus of the Deputies who have already spoken but there is another element in all of this that causes me concern and may or may not have been addressed. I note it is touched upon in terms of the series of amendments now before us, that is, the proposition on the name change regarding Aer Rianta into the future. We are looking at the substitution of the English language for the Irish language naming of the company heretofore. There is the prioritisation of the English language version into the future as against the very catching, easily identifiable and internationally recognisable "Aer Rianta", which runs off the tongue a little like Aer Lingus. Aer Rianta is easy and manageable but in regard to the alternatives now being presented, I can imagine someone trying to get their tongue around Údarás Bhaile Átha Cliath, cuideachta phoiblí theoranta. It takes second place to the English language version of the Dublin Airport Authority, plc.
I would like to see the Irish language prioritisation continue. It is within the gift and scope of the intelligence in Cabinet and Government to ensure that Aer Rianta, or some such title, would be the correct title of this company into the future. My preference is that the use of Aer Rianta continues but the alternatives being offered are prohibitive, and particularly so in the Irish language which demonstrates a complete lack of vision and a scape-goating of the first language in the first instance.
For those reasons and the arguments already presented I join with colleagues in recording my support for the relevant amendments tabled by members of the committee. As I said this morning, the Minister should withdraw this Bill. No other action is appropriate at this time. Much concern has been generated and many self-sustaining arguments against the proposition have been made by a variety of commentators, not only elected voices but those who are representative of critical interests within the whole equation. I speak particularly about the workforce whose interests and future must be of paramount concern. None of that is reflected in either the Bill or the commentary on it by the Minister and other spokespersons over the recent past. I urge the Minister to withdraw the Bill immediately.
I have already dealt with the issue of the business plans so I will just respond to a few points. First, I wish to confirm that when the Cabinet discussed this issue on three occasions, the Government had all the information before it that it required in regard to all the facts, figures, information and projections. Second, I could trade consultants' reports ad nauseam but neither side would win that argument. I have always said business plans would have to be prepared by the new boards and that is true.
Much mention has been made of Farrell Grant Sparks and Mazars. To demonstrate my point, PricewaterhouseCoopers has given me its observations on the Farrell Grant Sparks and Mazars report. I was not aware that the Farrell Grant Sparks and Mazars report had been circulated to Deputies until just a few hours ago. I understood it was being provided on a confidential basis but leaving that aside, and given that it has been circulated, it allows me to put on the record PricewaterhouseCoopers's response to the Farrell Grant Sparks and Mazars report.
I will give a number of statements from the report. PricewaterhouseCoopers states that it does not agree with the thrust of the Farrell Grant Sparks and Mazars report to the effect that the financial, legal and other preparatory work done does not provide a sufficient basis for the Government to proceed with the next steps in the restructuring of the State airports. It goes on to state that financial forecasts in respect of autonomous Shannon and Cork airports on a stand-alone basis were prepared, with input and assistance from the chairpersons designated for autonomous Cork and Shannon airports, and existing management at these airports. It states that all of the forecast information has been prepared with care and has used Aer Rianta's latest available financial forecast for the period to 2008 as base data. It goes on to state that the responsibility for the preparation of business plans for each of the airports can only happen in a real sense once there is a statutory basis for their work, which is now being provided in the legislation.
Why?
In regard to funding, the report goes on to state that a working group led by the chairperson designate for each of the airports developed stand-alone financial forecasts for each of the airports. It states that the financial forecasts were based on an outline proposed to individual business plans identified by the chairpersons designate of the airports.
The PricewaterhouseCoopers report concludes by stating that there are differing business priorities at each airport, that there are conflicting business and financial priorities between the airports and that there is evidence of inefficient allocation of capital as between the three airports under the existing corporate structure. It states that indicative financial forecasts have been prepared in respect of each of the three airports and it is the responsibility of the new boards to develop these indicative financial forecasts into fully-fledged business development plans.
It further states that the proposed legislation will enable the boards designate to formalise and complete this work, and it concludes by stating that the establishment of independent new entities will allow each of the issues to be addressed in a focused way, with fresh ideas and a clearly defined capital pool. It states also that an autonomous approach pertinent to the business priorities of each airport should enhance the respective companies.
I do not want to make an issue of that but given that the Farrell Grant Sparks and Mazars report has been circulated, I believe I am now free to put on the record of the House the response of PricewaterhouseCoopers to that report.
Can the Minister give us a copy of the report?
Can we have a copy of the report?
I will have to consider that because it contains some commercially-sensitive information. I do not have the luxury of throwing documents around but the quotes I have given members are totally accurate. I will consider what version I can give to members but I wish to put that on the record of the House. I am not in any way questioning the professionalism of Farrell Grant Sparks or Mazars. It does its job, as does PricewaterhouseCoopers.
How is that in conflict with anything the others said?
I have answered in respect of the discussion on business plans previously, therefore I will not delay the proceedings except to remind the committee that these companies will remain State companies. There is no proposal to privatise them. It is entirely appropriate that these three pieces of infrastructure would remain within the ownership of the State. This is a two stage Bill. The Dáil has the final say and there will not be any transfer of staff or assets until the Dáil decides that by an order of the House.
These are State companies. The terms and conditions of staff cannot be reduced, which is more protection than that enjoyed by most workers throughout the country. Such a provision will be inserted in the legislation at the request of the workers involved. There will be 12 worker directors, four in each airport - at present, there are only four - and they will have a direct regular day to day input.
I was taken by one point, which probably highlights the gulf in thinking between us, which I do not believe we will ever bridge. I took a careful note of what every person said during the past three hours and nobody mentioned the customers. Nobody mentioned consumers. Workers and unions were mentioned throughout the debate. I do not take from that. They are legitimate interests and have to be looked after. They are being legislated for. These will be State companies and the terms and conditions of the staff will have statutory backing. However, there are the customers who like to use airports and to travel on aeroplanes. We need only reflect on the way in which the aviation industry has grown here in the past decade.
(Interruptions).
What the Minister said is not correct.
I do not share in the depressing air of doom and gloom I heard expressed. I have great confidence in the new board of Shannon Airport and the workers there and that they will develop one of the finest airports in the world. I do not support the claim, underpinning the insult which has been thrown around for some time, that somehow this airport cannot make it on its own, that it needs constant subsidies from Dublin - shovels full of money from Dublin on a weekly basis to keep it going.
That is pathetic.
To claim that is an insult——
The Minister should not play that game.
——to that very fine airport and likewise in the case of Cork. Cork Airport is highly profitable and has a throughput of some 2.2 million passengers. Shannon has a throughput of more than two million passengers. If one removes the interest on debt, both those airports are profitable. That is a matter of a simple accountancy sum. I have noted that not on one occasion but on ten occasions in recent weeks from all the studies that have come before me. The depressing analysis in terms of the absence of belief that the passengers, who were not mentioned by anybody, have something to do with this——
That is untrue.
——probably represents the gap in thinking between us. That is all I wanted to say in respect of those points.
Is the amendment being pressed?
Can I comment on the Minister's response?
We have had some repetition, although not by the Deputy who has only recently come in. We have had an hour and 20 minutes of repetition of what was discussed before lunch. The Deputy has the right to speak again and he has not been repetitive. I note Deputy Shortall is offering.
I asked the Minister at the start of business to make a statement in regard in the views of the bond holders. Did he get an opportunity over the lunch break to check the correspondence?
I did. There is no great problem in that regard. There are ongoing discussions between the company, the Department and the bond holders who are being and have been kept informed of the entire process for a lengthy period since the first Cabinet decision almost a year ago. The Department and Aer Rianta are fairly confident the legislation, as it is going through the House, can be fully explained to the bond holders who have been fully aware of its contents for many months. There is no adverse or threatening communication in any form from the bond holders.
Specifically, I asked did the Minister or the Minister of Finance receive correspondence from the bond holders this week?
There was correspondence from the company which is part of a regular series of correspondence about this issue, but there is no adverse or threatening——
Are the views of the bond holders contained in that correspondence?
The only correspondence the Department has, according to my note, has come from the chief executive of Aer Rianta and not from the bond holders.
Were the views of the bond holders contained in that correspondence from the chief executive of Aer Rianta?
The chief executive indicated on a number of occasions throughout the past year or so that the bond holding situation is an issue——
It is a matter of concern.
——and it is being fully dealt with. Bond holders are being fully advised and kept up to date on the timetable, and they are being kept fully informed as we go through the entire process. I repeat there has been no adverse or threatening communications from bond holders who are fully aware of the situation and have been since July 2003.
Did the Minister check over lunch regarding any such communication received by the Minister for Finance?
I did not.
In his reply, the Minister relied in great measure on PricewaterhouseCoopers' response to the report prepared by Farrell, Grant Sparks and Mazars. What is the status of the PwC response? While Deputy Shortall rightly pointed out that nothing in that to which the Minister referred ran contrary to the arguments presented, they would say that, would they not? If we examine how the ICTU commissioned report analysed the PwC working papers, that they responded is no surprise to me. That is what they would do in their professional capacity, as they see a direct challenge. That is quite normal practice. What status has their commentary? All it is is commentary and nothing in it is any way earth-shattering.
On the point about nobody allegedly referring to consumers, I did not hear the earlier comments of colleagues, but I made the point that concern in this regard was not the preserve of only those who have worked within Aer Rianta, or in association with the Dublin, Cork and Shannon Airports, or any of the other stake holders. Concern is shared by people the length and breadth of the State and island. I am a stake holder in this company. That is the important point. As a citizen, I am a stake holder. This is a State owned company. It belongs to us. It is our concern and we are all consumers, customers and users. It is in that collective capacity that we are strongly expressing our views. This is an important and serious matter. I did not hear the earlier commentary of the Minister, but there is nothing in what he offered in his response to the contributions of members that would change my view. Not only is he not listening to the voices of the Opposition in this committee room, but I emphasise and underline that I know from speaking to members of his party in these Houses that they share the concerns expressed. The Minister is not even listening to many of his party colleagues on the Government benches. That is a serious matter.
This project is being pressed ahead by a cadre with a particular interest and agenda. We are offered the view that these airports will not go out of public ownership. Heaven forbid. However, we should not fool ourselves. This is unquestionably one step in a project to which the Minister is wedded and it must be stopped. It must be stopped here and now. This Bill should be withdrawn because it is anti-citizen and against the interests of the development of the airports network here. If it is allowed to go through, it is a serious development that will have far-reaching and serious negative consequences not only for Shannon but for many people currently within its employment and for those of us who have given loyalty and support to the Aer Rianta network in this jurisdiction over many decades.
As regards the Minister's comment about consumers, I will furnish him with a copy of my speech on Second Stage. If he was listening to it, he would have heard that I made that critical point concerning the Bill which he has still has not answered.
The Minister referred to the PricewaterhouseCoopers' response to the Farrell, Grant, Sparks and Mazars' report, that the business plan could only be drafted in the context of legislative back-up. Will the Minister elaborate on the reason for that? My understanding is that the business plans for the airports' financial viability could be drawn up without the need for legislative back-up. Perhaps the Minister could clarify that matter.
The Minister's silence has been deafening on the questions I have raised today, as well as those I raised on Second Stage and last October. He has yet to answer any of those questions. The kernel of the issue is that, in his contribution, the Minister has not been prepared to furnish us with any information setting out the financial viability of any of the three airport operations.
During my contribution I asked specific questions which the Minister did not answer.
Which questions?
On Second Stage, the Minister said he would respond to them. What is the situation regarding the second terminal and pier D? Where does the Minister envisage Aer Rianta International ending up, in the context of the overall restructuring of the three companies?
No decision has been taken with regard to the second terminal. The matter is still before the Government. With regard to ARI, under the legislation it will be a matter for the Dublin Airport Authority to decide in any transfer of assets which are transferred and at what pace.
I have a statutory prohibition on the construction of pier D as I am anxious to obtain the new authority's formal opinion on the future development of Dublin Airport.
Returning to the Minister's point about nobody having referred to the consumer in all this, the basic point is that the Minister has been advised that if he goes ahead with this plan, it will undoubtedly result in higher landing charges at all three airports. That has significant implications for the airlines operating from those airports and, ultimately, for the travelling public. The greatest bugbear for those travelling out of Dublin Airport in recent years, and increasingly so now, are the conditions and the fact that the airport is beyond capacity at peak times. People are faced with long queues and will continue to be throughout the summer months. If the Minister had not blocked pier D, the problem would largely have been solved for the moment. In the medium term, however, the lack of capacity at Dublin Airport is critical; it is a matter of public concern.
The Minister was asked questions by Deputy Seán Ryan and, in fairness to consumers, they deserve to be answered. When can the public expect the facilities and capacity at Dublin Airport to improve? What is the Minister's plan, given that he has blocked the pier D development? When can people expect to see a new facility there which would ease congestion?
I must acknowledge what the Minister said, in that we have a fine airport at Shannon. However, he said these airports will be profitable if proper business plans are in place. Bearing in mind the airlines that use the airport, Ryanair wants to land at all airports for nothing. They almost want airports to pay them to land there. The managing director of Aer Lingus, Mr. Willie Walsh, appeared before this committee recently and stated that landing charges at Shannon are much higher. From the way his 2004 timetable is structured, it looks like he will be reducing business from Shannon Airport. He says he has increased capacity there but that is not the case.
It looks as if there will be a change in the bilateral agreement. Aer Rianta's ten-year business plan has stated that Shannon needs €75 million over the next ten years. The same plan referred to 230 or 240 redundancies, especially in the catering sector at Shannon. It will cost in the region of €20 million to pay off those staff. The Minister proposes to break up another jewel in the crown, which is Shannon Development, and the new airport board to become property managers with a €6 million annual revenue income.
I am not preaching all doom and gloom but let us look at the real picture. Where is the business? What confidence does the Minister have in the existing managers at Shannon? They are doing their level best to get business for the airport but it is not working out.
If there are specific questions, I will deal with them.
I asked a specific question.
Deputy Shortall asked me about the capital expenditure for Dublin Airport. Aer Rianta and the incoming Dublin Airport Authority will have to get down to reviewing the airport's capital expenditure in the context of charges that can be sustained. That will happen quite quickly.
What was Deputy Naughten's question?
I had a number of questions, but the key one I want answered at this stage is the PricewaterhouseCoopers's report to which the Minister referred. He stated that in response to the Farrell Grant Sparks and Mazars' report, business plans could only be drafted in the context of legislative back-up. What is the reason for that?
In terms of doing some real work, a board-designate has little status. A board with some statutory backing from this House will be able to prepare an action plan. It will be able to engage in discussions with the stakeholders, namely, unions, workers, airlines and consumers. With that statutory backing, the board will be in a better position to present business plans which are required under statute once the legislation is enacted. It is important, therefore, that the board has statutory backing. That is the opinion of PricewaterhouseCoopers.
Is it not the case that if the Minister requested the boards-designate to draft those business plans, he would get them? The Minister said earlier that any third level student could draft a business plan, so legislative back-up is not required to provide the business plan if the Minister directs the board of Aer Rianta to furnish the required information. Is that not the factual situation?
The point is that if a board is statutorily required by law to produce a business plan, it is better for it to have some statutory backing.
The Minister is talking through his hat about this. He has a statutory responsibility——
The same could be said about many of us at various times.
We do not have the kind of responsibility the Minister has and we are not about to embark on a wrecking exercise of one of the most successful semi-State companies. What on earth is the Minister talking about? He has responsibility for ensuring that the commercial semi-State companies under his control are viable, successful and do their business properly. There has been nothing to stop the Minister from procuring any consultancies he wishes to work out a business plan for this hunch he has had about the break-up of Aer Rianta. Let us see if it stacks up. It would be obvious, sensible and responsible to do that first and then, if it makes sense from a business perspective, the legislation could have been drawn up.
Alternatively, it was within the Minister's power to request the current board of Aer Rianta to draw up such a business plan, based on his political desire to break up the company. What the Minister said about the legislation providing a statutory basis is absolute nonsense.
I am of the view that what the Deputy is saying is absolute nonsense. We are not going to agree on this matter.
The Minister read selective parts of the PwC report. He should place the report in the public arena so that people might read it for themselves. We already have access to the reports from the other consultants. Most of what he read was not at all in conflict with anything that was said in the quotes we provided earlier.
The Minister referred to there being a statutory basis. He has a statutory basis, as it stands, to do whatever he wishes in respect of Aer Rianta. He should stop hiding behind this rubbish about the need to draw up legislation.
The Minister referred to the consumer and stated on several occasions that "the consumer is king".
I did not say that.
The Minister has said it, though perhaps not today.
I did not use the word "king".
The Minister has said that umpteen times in the past. I will produce evidence for him that he has said it if he so wishes.
I did not say it today.
In any event, we should all state that the consumer is king. That is the important thing.
The Deputy should be careful of that type of ideology because she could get pulled towards the right.
Consumers should be the priority in Government policy. I presume the Minister does not disagree with that.
It is a somewhat right-wing statement for my liking.
As the Minister stated yesterday, wit is not his strong point. We all agree that the interests of consumers should be paramount. Those interests are not being served at present by the Minister delaying the expansion of facilities at Dublin Airport. The least that consumers are entitled to is for him to explain why he has fiddled about for the past two years and taken no action whatsoever for them at Dublin Airport. It is not enough for the Minister to say that——
This is not relevant to the amendment.
It is. The Minister was asked a direct question by Deputy Seán Ryan regarding——
He answered it.
——when consumers can expect to have improved and overdue new facilities available to them at Dublin Airport and he was not able to answer it. He is responsible for ensuring that proper facilities are in place and it seems that not only did he block the planned facilities but also that he did not take any steps to provide the kind of facilities that are urgently required. Is the Minister in a position to indicate when those decisions might be taken?
I have dealt with that question.
Amendment put.
The Committee divided: Tá, 5; Níl, 7.
Tá
- Breen, Pat.
- Healy, Seamus.
- Naughten, Denis.
- Ó Caoláin, Caoimhghín.
- Shortall, Róisín.
Níl
- Ardagh, Seán.
- Brady, Martin.
- Brennan, Seamus
- Ellis, John.
- Glennon, Jim.
- O’Connor, Charlie.
- Power, Peter.
Amendment declared lost.
SECTION 1.
I move amendment No. 2:
In page 5, subsection (2), line 34, after "1998" to insert ", the Air Navigation and Transport (International Conventions) Act 2004".
This is a technical amendment. The aviation legislation passed earlier this year was rushed through and it was not included in the collective citation. The Minister stated he would correct that in the next aviation Bill but he has not done so. It should be inserted at the earliest opportunity.
I cannot do so in this section. The Air Navigation and Transport (International Conventions) Act 2004 gives effect to international conventions relating to international carriage by air, that is, it relates primarily to aircraft matters rather than to airports. Section 1(2) of this legislation is clear and accurate.
When does the Minister propose to correct the omission in the Act? He said he would do so at the next opportunity.
I will take further advice to see when that will be possible.
Will the Minister refer back to this on Report Stage?
I will respond more fully on Report Stage.
I will withdraw the amendment on that basis.
Amendment, by leave, withdrawn.
Section 1 agreed to.
Sections 2 to 4, inclusive, agreed to.
SECTION 5.
I move amendment No. 3:
In page 7, subsection (1), lines 31 and 32, to delete ", after the Dublin appointed day,".
Amendment, by leave, withdrawn.
I move amendment No. 4:
In page 7, subsection (1), line 32, after "with" to insert "the approval of each House of the Oireachtas and".
Amendment, by leave, withdrawn.
I move amendment No. 5:
In page 7, subsection (1), between lines 34 and 35, to insert the following:
"(a) Dublin Airport Authority (’Dublin appointed day’); and”.
Amendment, by leave, withdrawn.
I move amendment No. 6:
In page 7, subsection (2), line 38, after "2005" to insert "and shall be after the Dublin appointed day".
Amendment, by leave, withdrawn.
Amendments Nos. 7 and 8 are related and both may be discussed together.
I move amendment No. 7:
In page 7, subsection (3), line 41, after "readiness" to insert "and viability".
The amendment again relates to the issue of the viability of the proposals to break up the company, which is critically important. The Minister has failed to provide documentary evidence to support his case. This question has been raised consistently but we have not received a reply. The viability of the proposal is critical and it would be irresponsible of members of the committee to adopt legislation without a financial case being put forward. That is why the amendment has been tabled.
I support the amendments for the reason stated. We have discussed the issue at length. It would not be responsible of the Government or the Opposition to support a plan with such far-reaching implications without a requirement that the viability of the plans should be established and copperfastened before proceeding with the legislation. It is prudent to make these amendments. It should be standard practice on the part of all Ministers who propose legislation of this nature.
: I support the amendments. I refer to the absence of a business plan. A precise outline of a viable business plan for each of the three airports is needed. It is impossible to properly evaluate the potential viability of the three elements of Aer Rianta without a business plan. The PricewaterhouseCoopers working paper envisaged an upward revision of the price cap on airport charges arising from the break-up. That also needs to be factored into an assessment of viability. No long-term projections have been provided post-2008, apart from the arguments put forward on the sustainability of the three airports until then. This gives rise to serious concerns.
The viability issue is critical. Amendment No. 7 seeks to insert the word "viability" after the words "financial readiness". That would be a prudent step and one to which I hope the Minister will accede, although all the amendments in the world will not make the Bill any more palatable or acceptable to me. Despite the good intentions of the Deputies who tabled the amendments, no number of amendments will retrieve the situation or make it more acceptable to those of us who are fundamentally opposed to the proposition.
Amendment No. 8 seeks to include after the word "airports" in line 42 "and subject to the companies being able to meet the requirements of section 9(4)”. Section 9(4) includes all the critical points in regard to each company’s general duty. These are sensible requirements but the crucial point comes back to amendment No. 7 and viability. I question the core proposition and whether viability is sustainable in regard to three independent entities. I am not convinced it is and I support the amendments.
I support the two amendments. Notwithstanding what was said earlier, we are dealing with the same issue. In the context of what is proposed, I do not think a strategic or financial plan exists to analyse fully the proposal. Airports, whether Dublin, Cork or Shannon, are major parts of our transport infrastructure and airport development and are crucial to the development of the regions. They are vital elements of our national infrastructure and gateways to the regions, therefore, it is imperative that we have the necessary ability to provide the infrastructural requirements to bring us into the future. Under EU regulations, there will be no possibility of subventions to either of the airports, either individually or collectively, once the break-up takes place.
A recent Aer Rianta report referred to infrastructural requirements. It stated that Dublin Airport will require an additional terminal and pier facilities to enable Dublin to process 30 million passengers per annum. It will require internal road and rail services, public transport facilities and car park infrastructure, 20 new aircraft stands, cargo facilities, including land acquisition, aprons, taxiways, buildings access and infrastructure, complementary and necessary support of this infrastructure and other baseline services, including ground handling accommodation. Aer Rianta has been very successful over the years in acquiring land for the future development of the airport. This will also be a requirement in the future. These requirements are for Dublin Airport only and do not take into consideration a new parallel runway, to which many of my constituents in Swords, Portmarnock and Malahide are opposed. However, it is on Aer Rianta's agenda.
Shannon will require runway and airfield maintenance and replacement works, 2,000 additional car parking spaces, infrastructural works, service and fire safety works and terminal enhancement. There are views about a new terminal and pier facilities for Cork Airport. Air bridges will be required to process three million passengers per annum. Provision will be required for multi-storey and surface level car parks and road infrastructure, apron and taxiway development and fire safety works.
These are some of the major infrastructural developments necessary, of which Mr. Daly and his officials are aware, to bring us not just beyond 2008, but up to 2020. How is the financing for these developments to be provided? It cannot be obtained from the Exchequer or Europe. In the past Aer Rianta borrowed the money to provide these facilities.
Another aspect is airport charges, which was referred to earlier. Questions were asked about the aviation regulator in the context of airport charges. It is acknowledged that there will be a requirement for an increase in landing charges. Even if we take glibly the Minister's comments, there will be an increase in airport charges. What affect will this have? We are now talking about three independent airports, Shannon, Cork and Dublin, competing with each other and not being able to support each other, which happens at present. If, through necessity, Shannon and Cork must increase their charges, and given that the greatest growth in population will be in the general vicinity of Dublin Airport, there will be a major problem in the future unless we can put in place a support structure that will provide the type of infrastructural development necessary. If we are to attract tourists to Ireland, we must put in place the proper infrastructure.
In the context of the requirement for the new board the Minister outlined in his document, I am not convinced all these infrastructural requirements can be met independently. I fear that in future we will not be able to provide the infrastructural development necessary. I hope I am wrong, but it appears that an inevitable consequence of the implementation of this legislation will be the privatisation of Cork and Shannon Airports, which will mean airports will not be able to support each other. Many reports have recommended strongly greater support and autonomy for the three airports, particularly Cork and Shannon. The Labour Party's position - I thought it was Fianna Fáil's position prior to the general election - is that this autonomy should be provided for.
The Minister went before the people on the basis of a commitment to set up separate autonomous bodies to operate Shannon and Cork Airports. This is another commitment which the Minister has breached in the context of this legislation. Given the lack of a financial business plan, I am concerned that we will see the inability of these authorities to provide the required infrastructural development in the future. Therefore, I support the amendments.
I support amendments Nos. 7 and 8, particularly amendment No. 7. The report by Farrell Grant Sparks and Mazars commented on two matters which are key to viability. These are capital expenditure and funding. The report states: "The capital expenditure scenarios and projections set out in the PwC working papers are subject to such uncertainties and caveats as to limit their usefulness as a basis for realistic evaluation of either the appropriate level of capital expenditure or the funding requirements for Aer Rianta." The report also states that a key assumption of Aer Rianta's projections is that all funding requirements are to be met from borrowings. It goes on to state:
Given the level of uncertainty highlighted above with regard to Pier D, a second terminal and the level of capital expenditure it is not possible, based on the available information, to determine the likely level or availability of debt funding required. In addition, based on meetings with Department officials and Aer Rianta management, detailed discussions are yet to take place with the bond holders with regard to the proposed restructuring. In our opinion it would not be prudent to take any decision with regard to the future structure of Aer Rianta without having greater comfort on the level of funding required and the availability thereof and the potential impact on credit rating.
These are two important aspects of the viability debate and I support both amendments.
I am unable to accept these amendments.
May I ask a question, Chairman?
The Minister has replied.
It is in response to the Minister's reply.
Yes.
In the context of the requirement of Aer Rianta as it is at present, or of the three new companies——
That is repetition. The Minister has replied that he does not accept the amendment.
He is not accepting the amendment but I have a question for him as part of my contribution. He did not respond.
Is the question on the amendment?
Yes.
What is it? You may ask a straight question.
What will be the responsibility of the new companies? What will be the responsibility and legal obligation of the Dublin company to provide, for example, the necessary infrastructure to get in and out of Dublin Airport? Will it have a responsibility to provide a rail network or light rail system? Will the company have a responsibility to make a contribution to the provision of such a service?
Aer Rianta is responsible for developing capital projects at the airport. Under the legislation, that will transfer to the Dublin Airport Authority.
The new authorities will take on that liability under the proposed legislation and the amendment thereto. Is that correct?
Only when the legislation is sanctioned by the Dáil.
Is the Minister saying the chairman and members of the board will have regard to the provision, for example, of a DART or rail network to Dublin Airport as part of the management plan? They will have responsibility when the legislation has passed. The Minister has said that when the legislation is passed the authority will have the responsibility to make a contribution towards providing a transport network to Dublin Airport.
I did not say that. The board of the company will be required to propose and deal with items of capital expenditure but there is no requirement in legislation to provide a DART to Dublin Airport. That does not stop the board proposing any project it wishes to propose to Government.
Amendment, by leave, withdrawn.
I move amendment No. 8:
In page 7, subsection (3), line 42, after "airports" to insert "and subject to the companies being able to meet the requirements of section 9(4)”.
Amendment, by leave, withdrawn.
Question proposed: "That section 5 stand part of the Bill."
After attempting to amend the section and the Minister's refusal to accept amendments we are opposing the entire section. The legislation gives power to the Minister to go ahead and break up the company in the absence of a business plan. That power should not be provided. We are going about this in the wrong way. The plans should have been presented to be scrutinised. If they had stood up, all of us would have given consideration to a proposal to break up the company if that were in the interest of consumers and the various other aviation and tourism interests. In the absence of that, we have no option but to oppose the entire section.
I second that. I had hoped the Minister would have provided us with some shred of information which has been lacking during the past 12 months. This is not something we sought today or yesterday, we have been seeking this information for the past 12 months. There has been an appalling lack of information from the Minister on the proposals in the legislation.
The Minister is asking the Opposition to accept a pig in a poke. We are asked to accept legislation on the basis that at some time in the future a case will be made for the adoption of legislation which is already enacted. This is a joke and makes a farce of the House and the Legislature. We have been given no details of the financial implications of the legislation or of the capital adequacy of any of the three airports following implementation of this measure. The Minister speaks of the consumer issue but there are serious question marks over whether any of the three airports can handle the type of capital investment required without dramatically increasing its charges, which would directly impact on the consumer.
We are being asked to accept legislation that is similar to the Eircom legislation. We had some financial information before that legislation was enacted, but we have none on this occasion. It is disappointing for a Minister to come before the House with so little information and expect it to rubber-stamp legislation. That is why we are opposing section 5.
We should oppose this section, especially since the amendments to it were not accepted by the Minister. Under the legislation, it is the Minister for Finance and not the House who must be satisfied that the airports are financially ready for operation. The House will have no power to decide that or agree to it. A ministerial order will give effect to this section and to the break-up of the company on the appointed day.
As Deputies have pointed out, business plans must be prepared. This procedure is crazy unless another agenda lies behind it. The Minister stated earlier that this legislation does not prepare the road for privatisation. However, the only logical conclusion for the preparation and rushing through of legislation of this type without first preparing business plans and so on is that another agenda exists. I do not accept the Minister's earlier remarks in that regard.
Question put.
The Committee divided: Tá, 7; Níl, 5.
Tá
- Brady, Martin.
- Brennan, Seamus.
- Curran, John.
- Ellis, John.
- Glennon, Jim.
- O’Connor, Charlie.
- Power, Peter.
Níl
- Breen, Pat.
- Healy, Seamus.
- Ó Snodaigh, Aengus.
- Naughten, Denis.
- Shortall, Róisín.
Question declared carried.
SECTION 6.
I move amendment No. 9:
In page 8, subsection (1), lines 1 and 2, to delete "on the Dublin appointed day" and substitute "after the Cork and Shannon appointed days".
Amendment, by leave, withdrawn.
Amendment No. 10 not moved.
I move amendment No. 11:
In page 8, between lines 6 and 7, to insert the following subsections:
"(2) The Minister shall remain as the main principal shareholder of the Dublin Airport Authority and after their appointed days the Cork Airport Authority and the Shannon Airport Authority subject to the provision contained at section 10(4).
(3) Aer Rianta International and the Great Southern Hotels Limited shall remain as wholly owned subsidiaries of the Dublin Airport Authority.".
Throughout the debate on Aer Rianta the Minister and his Cabinet colleagues have claimed that there is no intention of selling the company off. Some of us doubt that. Nevertheless, the Minister has stated clearly that the three new airport companies are to remain in public ownership. This amendment merely seeks to confirm those assurances.
It is important that we are all straight about the intention of the Bill. It is good that we copperfasten the State ownership of the three companies and it is important that we specify that within the legislation. That is why I propose the new subsection (2).
There has been much speculation about Aer Rianta International and Great Southern Hotels. If the status of Aer Rianta is to change immediately, as is provided for in the legislation, and it becomes the Dublin Airport Authority, which will take it back to the situation which existed before Aer Rianta was established as a plc and it will be merely an agent of the Minister, the proposed new subsection (3) will ensure that the capital reserve and the income stream will remain to the Dublin Airport Authority. The Dublin Airport Authority cannot be expected to pick up the tab for the changed cost base of Shannon Airport and to take on the debt of Shannon Airport and of Cork Airport, in respect of the new terminal there, unless the Dublin Airport Authority has a reliable income. Until now, Cork and Shannon airports have been subsidised by the successful operation of the Great Southern Hotels group and the particularly successful operation of Aer Rianta International and its involvement in the management of a number of airports abroad. If Dublin is to continue to subsidise the other airports it must retain those sources of income. That is why I propose these amendments.
Deputy Shortall has raised very valid points. I return to the fact that we have been given no detail regarding the proposals we are supposed to consider today. Once the break-up occurs the capital value of Cork, Shannon and Dublin airports will drop. The Farrell Grant Sparks and Mazars report predicted that the combined value of Shannon and Cork airports will drop by €100 million following the break-up. The value of Aer Rianta International will also drop. I will refer to this in a later amendment.
Last year's accounts showed a significant fall-off in profit in the Aer Rianta group. I have no doubt part of that is caused by the huge uncertainty about the future of Aer Rianta and its subsidiaries. It is important that the Minister clarify the future role of the subsidiaries following the enactment of the legislation. The Minister has failed to give any detail regarding the future of either Aer Rianta International or the Great Southern Hotels group. Ambiguity remains regarding the security of employment of both sets of employees. That we are postponing part of this proposal for another 12 months will further damage those companies.
As Deputy Shortall has pointed out, Dublin Airport will be burdened with a significant debt, both from Shannon and Cork and from the debt it carries itself. The second terminal is critical to the future viability of Dublin Airport. Prior to the introduction of the legislation we should, at least, have done an evaluation of the implications of the second terminal on the operation of Dublin Airport. That will be critically important for the future of Dublin Airport and its ability to repay the debt with which it will be burdened.
We have been given no answers to these questions and we will probably not get answers from the Minister today. He is failing to provide any answers to the queries raised by Deputies here. This highlights the fallacy of this legislation.
The Bill will provide for the privatisation of Cork and Shannon airports and the sale of the Great Southern Hotels group, although we do not know the time scale of that development. Amendment No. 11 will copperfasten the principles outlined by the Minister and will ensure that the companies will not be privatised. It is also important that the protection of Aer Rianta International be incorporated in the amendment.
The Minister has stated that Aer Rianta International will initially remain with the Dublin Airport Authority and the allocation to the various airports will be decided subsequently. The 2003 Aer Rianta annual report showed the company made a profit of €29.5 million, of which €19 million came from Aer Rianta International. This shows the importance of Aer Rianta International now and in the future. We all have concerns about the direction in which Aer Rianta is going. There are still problems down the line for the company which will need to be addressed sooner or later. Its profits are decreasing and that must be dealt with. It would have a better opportunity to deal with these problems. The Minister did not respond to my query but I may not have been specific enough. In the context of the amendment and the finance for the infrastructure, the new airport authorities such as Dublin would have to ask for approval for any increase in charges. It is not as if they can increase charges to meet certain needs. This will not be possible. The Great Southern Hotels group will be sold. I predict the first action of the new board of the Dublin Airport Authority will be to examine its core operations, decide the hotels are surplus to requirements and a possible liability, and decide to sell them to bring in some finance to fund the infrastructure.
Commitments were made to the staff in the Great Southern Hotels group over the years. When the previous Government intended privatising the Great Southern Hotels group on the basis of pressure being applied, it pulled back and another structure was put in place. However, once this legislation is enacted, the staff of the hotel group will be transferred to Dublin and I predict that, within a year, the Great Southern Hotels group will be privatised. I have no doubt that will be a reality sooner rather than later. I am putting those concerns and predictions on the record. I support the amendment. I hope there will be no privatisation and that it will be kept in public ownership. I ask the Minister to accept the amendment.
I also support this reasonable amendment. Its acceptance would be one way for the Minister to assure the public that the other agenda to which I referred earlier was not in existence and that in perhaps a year's time there would not be privatisation of the country's three main airports. The amendment would assure the public and the workers that there is no intention or plan, that the Minister would remain the principal shareholder, the company would continue in public ownership and the structure and plans for the future would mirror those of the country rather than mirror private and business interests. This would be in line with the Minister's declaration earlier that there is no move to privatise. A simple amendment such as this would give effect to what he stated earlier.
Like previous speakers, I am concerned about what plan is being considered by the Minister for Aer Rianta International and the Great Southern Hotels group. Aer Rianta International has approximately 350 employees. The concept of duty-free shopping originated in Shannon Airport. Aer Rianta International has taken that concept abroad and manages duty-free shops and airports abroad. The profits are down this year but it has been a viable company and has made substantial profits in the past for Aer Rianta. The same applies to the Great Southern Hotels group which employs nearly 700 employees.
On the question of the new Shannon Airport Authority being given responsibility for the management of the Shannon Free Zone, which will bring in an annual revenue of €6 million, my understanding is that many of the buildings in the zone are in a very bad condition and will require significant investment and maintenance which will offset any revenue accruing to the new airport authority from the Free Zone and the industrial zone. The Aer Rianta ten-year plan involved restructuring and staff losses. I am concerned that to generate revenue for the airport in future, Aer Rianta International and the Great Southern Hotels group could be sold off to generate revenue.
Amendment No. 11 is unnecessary because the three State airports will continue to remain in State ownership and that is quite clear, particularly in section 10. It is also unnecessarily prescriptive in respect of the wholly-owned subsidiaries of Aer Rianta International and Great Southern Hotels group. There is no proposal to privatise any of our State airports.
It is all very well for the Minister stating here it is not his intention to privatise any of the airports——
Is the amendment being pressed?
May I make another contribution, please?
The Minister has replied.
I am entitled to respond to the Minister. It is all very well saying today that it is not the intention to privatise, but that is not specified in the legislation. What is the difficulty in confirming that assurance in the legislation by saying that the three companies will remain in public ownership? I do not understand why the Minister has a difficulty with that. In respect of the subsidiary companies, the Bill as constructed empowers the Minister to do whatever he wishes with any of the subsidiaries without reference to anybody else. I am not prepared to agree to the Minister having that kind of power.
The reason Aer Rianta has been successful is because it has built up its business abroad in managing duty-free shops and airports. That has enabled it to maintain its standing and provided sufficient capital reserves to enable it to invest in all three airports. That is the reason it has been successful and has not been a drain on the Exchequer. It has been able to return €40 million to the taxpayer over the past 20 years. It has been prudent in its operating methods. It has established these successful subsidiaries which provide an income stream for the company. Under the legislation, the Minister has the power to fritter away all that and to sell off part or all of the subsidiary companies. I do not think he should be given that power. The income from those subsidiaries is fundamental to the successful survival of Aer Rianta which should be copperfastened in legislation. If the Dublin Airport Authority is to become the Minister's agent and is to fund the operation of Cork and Shannon airports as well as continuing to fund the operation of its own terminal at Dublin Airport, it is essential that it has the income stream from these subsidiary companies.
While I had not intended to speak on this amendment, having heard the Minister's reply I record my support for the amendment. I fear that this process represents the first stage in privatisation. While it might not happen today or tomorrow, it may be not too far down the road. I do not want to see the Great Southern Hotel group privatised. In his reply, the Minister indicated that this amendment was unnecessarily prescriptive. I believe this is official speak for privatisation. I want to be recorded as being absolutely opposed to that and in favour of the amendment.
While I am disappointed with the Minister's response, we have been receiving such responses all afternoon. Deputy Shortall's proposal to insert subsection (2) is reasoned. It is not the plan of anyone around the table to see any of the three assets at Dublin, Cork or Shannon privatised. They are critical State assets, which should stay in State ownership. Subsection (2) clarifies that issue.
The proposed subsection (3) states that "Aer Rianta International and the Great Southern Hotels Limited shall remain as wholly owned subsidiaries of the Dublin Airport Authority." Deputy Shortall has articulated the genuine concerns over the capital adequacy of Dublin Airport and the huge burden of debt it will be obliged to carry after Shannon and Cork Airports are cut free. The same argument could be made about the capital investment needed at Cork Airport and Shannon Airport. The ambiguity of the Minister's proposals raises concerns on this matter. If the Minister were to decide that Aer Rianta International and the Great Southern Hotels Limited would be allocated to one particular airport, we could at least consider it and the reasoning behind it, but the Minister has given us no reasoning.
While without financial data to back this up, we have concerns in supporting subsection (3), we have no detail from the Minister and do not know whether Shannon Airport will be able to go it alone or have sufficient income to pay off the capital debt that will need to be generated. The same applies to Cork Airport. All we are saying today seems to be falling on deaf ears and the Minister does not seem to be prepared to clarify any issue.
I reiterate what Deputy Healy said. The Minister in saying that the insertion of a subsection on Aer Rianta International and the Great Southern Hotels was unnecessarily prescriptive did not reassure anybody. The public will not believe that plans are not already in train to privatise both of those entities.
We must remember the contribution of Aer Rianta International and Aer Rianta in general to the Exchequer. Especially during the lean years when all other State companies were a major drain on the Exchequer, Aer Rianta pumped in money. Those years have not gone away and I hope we will have a better future for Aer Rianta, which will only happen if it remains in public hands. It is vital for our economic well-being that the airports, at the very least, remain in public hands. While we are an island nation, we have got rid of our shipping to private interests, which was an absolute disgrace. At the very least we should hold on to our airports and the airline.
The Minister's answer has not reassured anybody that he or other members of the Cabinet have no plans to sell off Aer Rianta in the future. His reference to section 10 did nothing to reassure me that those plans are not afoot. It is reasonable for us to adopt this amendment. We should be prescriptive in saying these entities should remain in public hands for the foreseeable future and in my view for good. The Minister should accept this reasonable amendment so that we can put this aspect of the debate to bed.
It is a pleasure to attend this committee. It is my first opportunity to do so.
A maiden speech.
The Minister often reminds me of the English magician, Paul Daniels.
Another rabbit.
He comes forward, talks a lot, we do not see much action, there is a bit of sleight of hand and suddenly the deed is done. We end up getting the opposite of what we had expected him to do with what he held in his hands.
It is pure magic.
I agree it is a kind of magic, but unfortunately it will not be magical for the workers of Aer Rianta and in the long term it will not be magical for Shannon and the mid-west region or for Cork Airport and its region. I have always had a particular interest in regional development and in both those areas. As I have a strong personal connection with the Cork area in particular, I want to see that city and county, where nearly one in eight Irish people live, advancing on all fronts. I listened with great interest to the Deputies from the Cork region on Second Stage and I support their comments. In the past grievous mistakes, mostly by Fianna Fáil Governments, held back the Cork region and continues to do so in some important respects. I sympathise with some of the views expressed.
I also have consideration for the mid-west region. At times it has been a tremendous struggle to keep jobs in the area. While I understand these concerns, a highly successful Irish multinational semi-State body seems best equipped to give those areas their head and to best advance their airport facilities and surrounding districts. Many of the arguments we heard are to a large extent misplaced. I am struck by the absence of Fianna Fáil Deputies today to support the Minister. The general seems to have been left without an army to face the barrage on his own, which indicates the inner doubts of those in the other regions.
For those reasons, I strongly support Deputy Shortall's amendment. We should be prescriptive in defining that the Minister should remain as the principal shareholder of the Dublin Airport Authority as well as Cork Airport Authority and Shannon Airport Authority if they evolve. This should be the first requirement. My chief concern would be that consumers in particular should get the best value. In my region, the Dublin Airport region, encompassing the southern fringe of Fingal county and the northern fringe of Dublin city, our economic prospects should be protected. Our economic prospects will be seriously damaged if the symbol of Fingal county that is the airport is taken away or put under pressure, as the Minister's misplaced policy will do.
I have raised a grave problem with the Taoiseach on a number of occasions over the last two or three years. I refer to the large volume of redundancies in the industrial estates surrounding the airport in that time. The Government has failed to prevent the closure of many factories, some of which operated in sectors closely related to the airport. Much of the produce exported by the companies in question tended to be transported by air, which is not the case with most of our trade. There have been many closures at industrial estates such as Clonshaugh, Airways and others in the Swords district. The litany of disasters and empty factories includes Gateway 2000, Motorola and Seronics.
I ask the Deputy to address the amendment.
I am addressing the amendment.
I do not think the factories in Clonshaugh are part of the amendment.
The Chairman knows, as someone who has been involved in economic activity, that they are relevant. The Minister is placing in jeopardy a central aspect of the economic growth and stability of the airport region. Three Labour Party Deputies are proud to work for those who sent us here to represent the region. The Minister is placing in jeopardy the future of Dublin Airport at a time of job losses in the area. Of course it is a matter of concern. We do not think it is right to attack in a savage manner the company that is the linchpin - the core - of a successful region that has faced difficulties in the last three or four years, as I have mentioned. It is fair to mention the grievous concerns we have in respect of the Bill and to outline why we want the airport to stay in State ownership. Perhaps the Minister will get an opportunity to address the issues I am raising in another Department to which he may be moved in the Cabinet reshuffle in the autumn. It will be an important opportunity.
The second part of the amendment, which proposes to insert a new section 6(3), makes clear the well-placed and well-judged concerns we have about Aer Rianta International and Great Southern Hotels Limited. We have read about the spectacular achievements of ARI. Those of us who have represented this country abroad - I refer to people like the Chairman - have been to airports like those at Düsseldorf and the midlands of the UK. When the free zone was being run by Aer Rianta, we were not desperately proud of this country and the company's achievements. It seems logical that it would remain with the bulk of Aer Rianta and the organisation that created it. It is as important to air travel and the aviation industry as ESBI is to the ESB. It gives it a cutting edge and provides an important benchmark. We know we can do business in Düsseldorf or anywhere else. It is critical that the proposed amending subsections be stitched into the Bill, as Deputy Shortall is attempting to do.
There is a deep interest in my region in the future of the Great Southern Hotels group because one of the biggest hotels in the group is located there and is flourishing. Some right-wing journalists give us negative opinions about State industry each Sunday. The group's management has pursued a progressive and distinguished policy of developing its business in a competitive environment. The group has created an economic base for a series of airport developments in our district. We hope that some hotel companies such as Hilton will locate in the area, if the Minister does not wreck the place first, which is a grave concern. It is important to reiterate that.
We have called for legislation in the House many times. Last year's Road Traffic Act finally dealt with a number of issues. I give the Minister credit in that regard, to the extent that he was involved in it. The Bill was an attempt to address finally a number of road traffic issues which were not addressed for the last 30 or 40 years.
Is this relevant to the legislation before the committee in any way?
We have one Vice-Chairman.
Our Vice-Chairman is well able for it.
We understand that Deputy Broughan is taking wide sweeps at everything here.
He is talking about the Road Traffic Act.
It is relevant to the transport portfolio.
It is not relevant to the amendment before the committee. I must say that the Great Southern Hotels group, about which the Deputy spoke, is covered by the amendment.
It certainly is. It is essential that we should have the type of amendment that has been proposed by Deputy Shortall. I have given an example of legislation that has been brought forward by the Minister belatedly. The Act in question contains a few important provisions, which Opposition Deputies have been seeking without success for the last seven years. The Minister has brought forward some legislation in that regard, but we did not ask for this Bill. The country, workers and consumers are not asking for it.
I ask the Deputy to confine his remarks to the amendment.
In every area——
We had a general debate earlier.
Yes.
We are considering a specific amendment.
I did not get a chance to participate earlier, unfortunately. The Chair is aware that one of the features of the legislation - I speak as a Labour Party Whip - is that it has been railroaded and slammed through the House. We had just four and a half hours for discussion. Many Deputies from places around the country, including Cork, Shannon and north Dublin, did not get a chance to contribute.
What about the 38 Fianna Fáil backbenchers?
Some 38 Fianna Fáil backbenchers expressed concern at a meeting of Fianna Fáil's transport sub-committee, which I understand to be a sub-group of the Fianna Fáil Party.
I ask the Deputy to address the amendment.
They are very quiet now.
Yes, they are very quiet today.
I call Deputy Naughten.
Some of them are trying to——
I have called Deputy Naughten.
I ask the Chair to allow me to finish my point.
I have no problem with the Deputy addressing the committee as long as he speaks about the amendment.
I am talking about the amendment.
The amendment does not relate to Fianna Fáil backbenchers.
No.
It should.
It is a shame they are not here to engage in fruitful debate with us this evening. We are prepared to talk about and study the amendment at length. The legislation is unnecessary, as I have said. Deputy Shortall is attempting to install some level of sanity in an unnecessary Bill. As I said, the Minister seems to be the Paul Daniels of Irish politics.
Please address the amendment, Deputy.
I do not think this trick will work. If the Bill is passed, the consequences for the Dublin region could be catastrophic. Its objective is the privatisation of Cork and Shannon and the creation of a private second terminal at Dublin, where the Minister has held up capital development for three years.
Will the Deputy address the amendment, please?
I commend the amendment. I hope to get an opportunity to speak again later.
I confirm that section 10 of the Bill sets out clearly that the company is owned by the State. It is quite clear in the legislation that the three companies are State owned. It is not necessary to restate it in the fashion proposed in the amendment, therefore. I also confirm that legislation would be required to be passed by the Oireachtas if any future Government were to pursue the privatisation of the airports.
What about the Great Southern Hotels group? Would further legislation be needed?
Regarding the Dublin Airport Authority, all the projections I have seen indicate that Dublin Airport will be extremely profitable. Passenger numbers will rise from 15 million to 30 million over approximately 15 years.
The charges will be higher.
I dealt with the issue of higher charges earlier. Given the level of capital expenditure, it is entirely possible that charges will rise irrespective of this legislation. I made that point a few times earlier. I agree in particular with Deputy Broughan that Cork and Shannon airports and the regions are critically important which is why I have faith in them to manage their own affairs going forward rather than having to be managed from Dublin city. I am not in a position to accept amendment No. 11.
I have a brief question in response to the Minister's comments. He says the financial projections for Dublin Airport going forward are quite positive with an expected increase of 15 million passengers to 30 million. Is this projection made in the context of a second, independent terminal or without reference to any consideration of it? As I said earlier, this is the critical issue for Dublin Airport, but questions on it have not yet been answered.
The figures exclude consideration of a second terminal.
In other words, we do not know what the figures will be going forward.
Aer Rianta's business plan predicts an increase to 30 million passengers from the current 15 million passenger level.
The Minister, Deputy Brennan, said the business plan has gone out the window now. He did not use that exact phrase but that was his meaning. The Minister said we must now consider three business plans, one from each airport.
Amendment put.
The Committee divided: Tá, 5; Níl, 7.
Tá
- Crawford, Seymour.
- Healy, Seamus.
- Naughten, Denis.
- Ó Snodaigh, Aengus.
- Shortall, Róisín.
Níl
- Brady, Martin.
- Brennan, Seamus.
- Curran, John.
- Ellis, John.
- Ó Fearghaíl, Seán.
- O’Connor, Charlie.
- Power, Peter.
Amendment declared lost.
While we were waiting to take the vote, a question arose regarding suspending. I propose that we suspend for an hour on completion of this section.
Members and staff are entitled to a meal break and I propose we take one now given that we will be here for a further three and a half hours. I suggest, however, that before suspending we review the position, as agreed earlier, and decide for how long we will sit.
It has been suggested that we take a break for on hour on completing this section and then return to finish Committee Stage.
I propose we take a break now and sit until 8 p.m. when we return.
Deputy Peter Power informed me that, as Whip, he proposes that we complete Committee Stage when the select committee resumes after the break.
I formally propose that we adjourn at 8 p.m. and reconvene next Tuesday afternoon at 2.30 p.m. to complete the business.
I formally propose that we reconvene in an hour and complete Committee Stage.
Does Deputy Power propose to finish the section, as suggested, or suspend now and reconvene in an hour?
It would be reasonable to suspend now.
As we have two proposals, I will now put them. Is Deputy Shortall pressing her proposal?
Yes.
Question put: "That the committee suspends the sitting for one hour and reconvenes and sits until 8 p.m. at which point we will adjourn and reconvene on Tuesday next at 2.30 p.m. to complete Committee Stage of the Bill."
The Committee divided: Tá, 5; Níl, 6.
Tá
- Breen, Pat.
- Healy, Seamus.
- Naughten, Denis.
- Ó Snodaigh, Aengus.
- Shortall, Róisín.
Níl
- Brady, Martin.
- Curran, John.
- Ellis, John.
- Ó Fearghaíl, Seán.
- O’Connor, Charlie.
- Power, Peter.
Question declared lost.
Question put: "That the committee suspends its business and reconvenes at 7 p.m. to complete Committee Stage of the Bill."
The Committee divided: Tá, 6; Níl, 5.
Tá
- Brady, Martin.
- Curran, John.
- Ellis, John.
- Ó Fearghaíl, Seán.
- O’Connor, Charlie.
- Power, Peter.
Níl
- Breen, Pat.
- Healy, Seamus.
- Naughten, Denis.
- Ó Snodaigh, Aengus.
- Shortall, Róisín.
Question declared carried.
Sitting suspended at 6.05 p.m. and resumed at 7.05 p.m.
I move amendment No. 12:
In page 8, lines 7 to 28, to delete subsections (2) and (3).
Is it all right to speak to amendment No. 14 in conjunction with amendment No. 12?
Is that agreed? Agreed.
Amendment No. 12 proposes to delete subsections (2) and (3) of section 6. Amendment No. 14 proposes to delete subsection (5)(b). These amendments are related to the five that were disallowed. The reason behind the seven amendments is to establish an interim authority that would have overall ownership and control of the Aer Rianta group of companies, which would be known as the Irish Airports Authority. Three independent boards would manage the three airports and this would be in line with the original commitment by the Minister’s party prior to the last general election. These three companies would draft the business plans and would have the type of autonomy necessary to provide for balanced regional development. They would ensure that adequate capital existed for the operation of the three airports and at the same time have the security of the overall umbrella group, which would retain ownership of the three airports and their assets. Each authority would then be represented by the Irish Airports Authority, which would have overall control.
The amendments are reasonable and I ask the Minister to consider seriously my proposal and come back to it on Report Stage.
I second Deputy Naughten's amendments.
: I cannot accept amendment No. 12 because, given the way it is worded, it preserves the current airport group structure. It runs counter to the thrust of the Bill.
The effect of amendment No. 14, allowing that other related amendments have been ruled out of order, would be that any other enactment or instrument made regarding Aer Rianta would refer only to the Dublin Airport Authority. The amendment would delete references to Cork and Shannon airport authorities and therefore it would not be sensible for me to accept it.
I do not believe I will get anywhere with the Minister this evening so I will withdraw the amendments, but I may try to reword them and resubmit them on Report Stage.
Amendment, by leave, withdrawn.
Amendments No. 13 not moved.
I move amendment No. 14:
In page 8, subsection (5), lines 34 to 37, to delete all words from and including ", and" in line 34, down to and including "be" in line 37.
Amendment, by leave, withdrawn.
Section 6 agreed to.
SECTION 7.
We will proceed to amendment No. 15 in the name of Deputy Shortall. Amendments Nos. 16 to 19, inclusive, and 32 are related and they may all be discussed together.
I move amendment No. 15:
In page 8, subsection (1), lines 42 and 43, to delete "or by the Minister under subsection (2), or by a combination of both”.
All these amendments relate to the proposed restructuring and the manner in which it will be carried out. It is over-bureaucratic and the Minister will have undue power under the new arrangements. For too many years the semi-State bodies suffered from interference from the Government of the day and they were not allowed to carry out their mandates independently and perform as commercial semi-State entities. Under this legislation, the Dublin Airport Authority is already mandated by statute to carry out these functions. Including the requirement that all its actions must be sanctioned by the Minister again opens up the possibility of political interference and of the Minister possibly overruling the board of the Dublin Airport Authority. I also propose to delete sections 7(2) and 7(3) because the provisions give the Minister excessive powers when the board is already statutorily mandated to carry out these functions.
The amendment to section 7(6) seeks to delete the phrase "or in anticipation of [the restructuring]". It seems the Minister is seeking to remove all discretion from the board by proposing to dictate future events. The term "in anticipation of" can cover a multitude of possibilities and this section is already sufficiently wide-ranging. Therefore, to include that phrase gives freedom to justify any directives on the basis that it may relate to the restructuring. Commercial semi-State entities need a reasonable degree of autonomy in terms of carrying out their commercial mandate. Therefore, this provision is reverting back to the old situation in which there was scope for undue political interference and is unnecessary.
In regard to section 7(8), I propose we include the term "all" before "costs arising from the restructuring will be met by the Minister" to the extent that it is sanctioned by the Minister for Finance. This Bill is a Government proposal and a political one and, on that basis, the costs should be met by the Government. I also propose that we delete "may" and replace it with "shall" because this is the Minister's baby. He has decided he wants to break up the company and, therefore, it is only fair that he pick up the tab for it.
Amendment No. 31 proposes that, in section 8(15), we substitute the phrase "subsection (12)” with “subsection (14)”. If the proposal goes ahead, there must be a reasonable degree of freedom to operate commercially on the part of the new entity. In that context, I am nervous about the powers the Minister is providing for himself to cut across the activities of the board. The company has a mandate to operate commercially and should be given the freedom to do so. It would be a retrograde step if it were restricted from doing so as the Minister proposes in the legislation.
In regard to my amendment No. 17, we cannot use the phrase "in anticipation of the proposed restructuring" until we see the detail of these proposed business plans or the financial viability of the operations. To insert this phrase prior to our seeing the detail is not the way to proceed. We cannot pre-empt what will emerge from these business plans. For example, the board of Cork or Shannon airports could state that they do not want to go it alone. In the meantime, the Minister has the power under the phrase "in anticipation of" to direct the operators of the airports to go in a different direction than that in which the board wants to go. Therefore, I ask the Minister to accept amendment No. 17.
I cannot accept amendment No. 15 because it would remove an added element of flexibility to bring about what is a complex restructuring process. Amendment No. 16 would remove the power to provide for taking necessary actions to give effect to a successful restructuring process. The Bill is an enabling one and the provisions this amendment seeks to delete provide the tools for giving effect to the restructuring. Therefore, it would not be sensible for me to accept it.
Amendment No. 17 seeks to prevent the Minister from giving directions in anticipation of the restructuring. However, this is an important provision which provides flexibility for what is a complex restructuring process. We must ensure that it is successful from a legal and financial point of view.
Amendments Nos. 18 and 19 are linked to amendment No. 32. Together, these sections provide that the cost of the restructuring will be paid by Aer Rianta-the Dublin Airport Authority unless otherwise paid by the Minister. The Minister for Finance and I are in agreement that the Exchequer will not pay substantial sums in connection with the restructuring. Minor costs associated with the establishment of the Cork and Shannon airport authorities prior to their appointment days could be paid by the Exchequer. I oppose the amendments.
I do not accept the Minister's position on this. If the boards are being set up, they should be given the opportunity to operate with a reasonable degree of independence. The Minister used the term "flexibility" but my fear is this might turn into interference. The Minister has been quite prescriptive in this regard. It is a mistake to try to retain the right to interfere in the operation of the company. However, the Minister is obviously not going to give any ground on this issue and, therefore, I withdraw the amendments with leave to re-table them on Report Stage.
Amendment, by leave, withdrawn.
I move amendment No. 16:
In page 8, lines 44 to 48 and in page 9, lines 1 to 4, to delete subsections (2) and (3).
Amendment, by leave, withdrawn.
I move amendment No. 17:
In page 9, subsection (6), line 18, to delete "or in anticipation of".
Amendment, by leave, withdrawn.
I move amendment No. 18:
In page 9, subsection (8), line 22, to delete "Costs" and substitute "All costs"
Amendment, by leave, withdrawn.
I move amendment No. 19:
In page 9, subsection (8), line 22, to delete "may" and substitute "shall".
Amendment, by leave, withdrawn.
Section 7 agreed to.
SECTION 8.
Amendment Nos. 20 to 23, inclusive, are related and amendments Nos. 21 and 22 are alternatives to amendment No. 20. Amendments Nos. 20 to 23, inclusive, may be discussed together by agreement. Is that agreed? Agreed.
I move amendment No. 20:
In page 9, lines 42 to 50 and in page 10, lines 1 to 22, to delete subsections (1) to (4) inclusive.
This is one of the most important sections of the Bill, the terms of which have been significantly misrepresented following the negotiations with union representatives the week before last in the context of the national pay agreement. Those worker representatives who attended the negotiations were given to believe that the proposal was to be passed but that nothing would happen until at least the end of April next year, at which time business plans would be produced and, if they were acceptable to the Minister for Finance, the break-up would proceed. Surprisingly however, having seen the text of the Bill, it turns out to be a different matter.
Among other issues, section 8 allows the Dublin Airport Authority, following its appointment day, to enter into arrangements with the Cork and Shannon airport authorities to perform their functions, which are unspecified, on behalf of the Dublin authority. This is in clear breach of the agreement that was made between ICTU and the Government. It was the understanding of ICTU that the only function to be carried out by the Cork and Shannon airport authorities was to develop business plans for the consideration of the Minister for Finance and the Minister for Transport.
I propose that these subsections be deleted. ICTU was told clearly at the negotiations that nothing would happen in the immediate future, yet we see this provision for what is in effect the establishment of the three separate authorities which will be operating companies within a matter of weeks after the passage of this legislation. It is a deliberate breach of faith on the part of the Minister, acting for the Government, in respect of the commitments that were understood to have been given.
Amendment No. 21 proposes, in page 9, line 42, subsection (1), to delete "shall" and substitute "may if satisfied that it is in its corporate interest to do so". Section 8 requires, rather than permits, Dublin Airport Authority to enter into arrangements with Cork and Shannon - to arrange for local autonomy whether or not it is in its corporate interest to do so. This creates a clear conflict of interest, given the legal obligation of the board of the Dublin authority, under the Companies Acts, to act in the interests of the company. In effect, the Bill requires the authority to enter into agreements with Cork and Shannon irrespective of whether that is in the interests of the Dublin authority. I am proposing to amend this provision.
The action the Minister has taken, given the understanding that the Government and its representatives gave to ICTU, puts the entire partnership process in danger. This is not the first time the Minister has done this during his term of office; in fact, he has clashed with the social partners on a regular basis. The Minister has played this game throughout the last 18 months. He has met with the social partners and given undertakings that a partnership approach would be maintained, that there would be negotiation and that he would approach the management of change on the basis of learning from the experience in other countries and moving forward in an agreed manner. He makes all the right noises at the negotiating table and then the next day he issues a press release to say he is going ahead with something the following week or month.
The Minister has acted provocatively throughout his term of office. We have moved from a stable industrial relations environment to an extremely volatile one. The Minister has brought many of the transport unions to the brink of industrial action over the past year or so through his provocative statements and actions. It was only when matters were almost at the point of no return - high-level meetings took place and the Taoiseach was obliged to intervene, providing assurances and cutting across the Minister's meddling - that things settled down again. We can only do that so often. We are again facing into a summer with a high probability of serious industrial relations unrest in our airports and in public transport generally. This is no way to do business.
If anything, we should have learned from the experience of the last 15 to 20 years, in which, through a process of partnership and negotiation, industrial relations peace was achieved. The Minister is putting all of this in jeopardy through his actions, particularly in respect of the current pay agreement. At a point at which the Government desperately needed the unions to sign up to the agreement, verbal undertakings were given about the Government's proposals for Aer Rianta. It bought time by conveying the impression that nothing would happen until after April 2005. On that basis the unions accepted the current pay agreement. In this legislation the Minister has dispensed with these assurances. He is creating a situation in which there is little security for workers. After Government statements that no action would be taken, we now see that action can be taken straight away. The Minister is setting up the required companies and the break-up will effectively happen within a matter of weeks or months. This is a serious breach of faith. I propose that we accept these amendments.
My amendment, No. 22, provides that if, after the passing of a reasonable period of time, agreement under section 8(1) cannot be obtained, the Minister shall give directions to resolve the dispute. Section 8(1) provides that the Dublin Airport Authority shall enter into agreements with Cork and Shannon airport authorities, but this must be agreed by both parties. While the Dublin Airport Authority has a responsibility under company law to operate on behalf of the three airports before Cork and Shannon become independent, the reality is that the board will be appointed on the basis that its sole purpose is to develop Dublin Airport. That will be the objective for that board during its term of office. In the interim it will have to draw up a plan for the development of Dublin Airport. This concern has been raised not only by Opposition members but by many members of the Government parties, especially on the backbenches, because they are concerned about the fact that Dublin will essentially be the operator of Cork and Shannon for the next 12 months. The pace at which anything happens will be on the basis of Dublin taking the initiative. The Dublin authority essentially has a veto over the operations of the other two boards and to what extent they can become involved in these operations. Where there is a dispute - for example, when Shannon wants to take some initiative and the Dublin Airport Authority vetoes it - the Minister should step in and provide direction to obtain a resolution to the issue. On that basis, I ask the Minister to accept the amendment.
Amendment No. 20 would prevent the Cork and Shannon airport authorities from carrying out any delegated functions as agreed among the companies until their appointed day. That runs counter to the intention of the legislation and I cannot accept the amendment. Amendment No. 21 provides that it will be optional for Dublin Airport Authority to enter into arrangements with Cork and Shannon airport authorities in the matter of delegated functions. Again, this is contrary to the intention of this legislation. Dublin Airport Authority is asked to make arrangements with the other airports for them to carry out functions on its behalf. In a sense, they will be acting as agents.
Amendment No. 22 is concerned with the detailed mechanics of the arrangements between Dublin Airport Authority and the authorities of Cork and Shannon airports prior to their appointment day. I want to leave discussion and agreement on these arrangements to the airport authorities themselves and I am confident that the new authorities at the three airports understand what is expected of them. I do not anticipate any major difficulties in their agreeing satisfactory arrangements in this area.
Amendment No. 23 is not acceptable because until the respective appointed days, the Dublin Airport Authority will have ultimate responsibility for the management and operation of Cork and Shannon airports. As provided for in subsections (1) to (4), however, I expect Cork and Shannon, through devolved arrangements with Dublin, to undertake certain management and operational functions in their respective airports in the interim period and to prepare to assume responsibility on their appointed dates.
It is interesting that the Minister says he is not prepared to accept certain amendments because they would be contrary to the intention of the legislation. That is what we are trying to tease out.
There was an impression given in the negotiations with the social partners that the intention of the legislation was to allow the boards designate in Cork and Shannon to draw up business plans and that nothing else would happen. I am not alone in thinking that - it was reported in the media in that way and most members of the committee assumed that the agreement meant there would be no delegated functions until the business plans had been agreed. Will the Minister clarify that?
He says that if he accepts some of these amendments, it would prevent functions being delegated to those boards but the understanding was that the only job the boards would undertake before April 2005 would be to draw up business plans. What is the Minister's intention for the boards now? I have a certain interpretation, given the wording of the legislation, but the impression was given to the unions and the public that nothing would happen until April.
The trade unions have nothing to fear from section 8. In the discussions it emerged that the final part of the legislation would not come into play until after it had been approved by the Dáil at the end of April 2005. Apart from technical company law reasons for that, it was also agreed that such an arrangement will give the workers and unions some space. The concerns of the unions were taken on board by agreeing to a later date.
Another area of assistance to the unions was the agreement that these business plans would have to be produced and the unions would have to be consulted over a six month period on their preparation, something they can do through the worker directors. Also of particular assistance to them is the Government's agreement to include in the legislation the fact that terms and conditions will not be brought to a lower level in the airports than before any restructuring.
The unions did a good job for their members in ensuring the Government took on board these concerns and made these changes. They have nothing to fear from discussions between three authorities in which 12 worker directors will be involved and, in the absence of agreement, no duties can be carried out by one on behalf of another. These are all sensible people, including the 12 worker directors, and they will make sensible arrangements to help each other in the process over the next nine months.
The Minister did not answer my question. His sympathetic words will be of cold comfort to people who have trusted him in the past and then discovered that he has done something entirely different from what he had agreed to do. Will the Minister tell me why it is necessary to provide for delegated functions to the two boards designate prior to next April if their sole requirement is to draw up business plans?
We mentioned the very talented people who have been appointed to Shannon, including representatives of SFADCo and senior international aviation experts. If Dublin Airport wants to use that talent over the next nine months, it makes sense that it should be available. It is reasonable, therefore, that these fine people who have agreed to serve on the Shannon Airport Authority, for example, should be able to make their talent available to the Dublin Airport Authority to help it through the process. It would be a pity not to use that ability and that is why the legislation provides for agreement between a sensible Dublin Airport authority and sensible authorities in Shannon and Cork. It is unrealistic to ask the board in Shannon Airport not to be available to be of assistance on issues that can be agreed on a day to day basis. It is a pragmatic arrangement that should hold no fears for the trade unions.
We seem to have been talking about trade unions all day, and I appreciate that they are important, but I also think we should keep an eye out for users, taxpayers and other stakeholders about whom we do not talk as much. Trade unions have an important role to play and we must negotiate our positions with them, as happens on a regular basis, but there are other stakeholders, such as taxpayers and consumers, and I want to ensure we keep a broader view that includes the interests of passengers and the growth of airlines.
The unions have nothing to fear from section 8 and I reject any suggestion of a breach of faith with the trade union movement on my part or the part of the Government. The Bill is finely balanced, the union's concerns have been taken on board to a substantial degree and the legislation gives Dáil Éireann a final say over this in nine months time.
The Minister stated that he would hopefully have a sensible Dublin Airport Authority. What happens if that is not the case? While it is important to look at the interests of Dublin Airport - and that is the sole long-term responsibility of the Dublin Airport authority - we must look at this from the other angle as well. The interests of Cork and Shannon are also an issue. What happens if there is not a sensible airport authority which solely looks at its own future plans but sees that by providing either Shannon or Cork with flexibility of operation, it will be detrimental to the long-term viability of Dublin Airport? The initiative at present must come from Dublin Airport and that is a limiting factor in the legislation. This is not a two way operation where Dublin Airport shall enter into agreement with Cork and Shannon Airports. Under this legislation, however, Shannon and Cork airports cannot take the initiative in the intervening period. Will the Minister clarify that? If they can take the initiative, as should be the case, the Dublin Airport Authority can veto it because there must be agreement on both sides. This is of critical concern to every Member of the Oireachtas from outside the greater Dublin region. Dublin can veto a good board taking the initiative, for example, on marketing or the introduction of new services. That needs to be reconsidered in the context of section 8.
The theory behind establishing these boards ahead of April 2005 was to enable them draw up the business plans due on that date as their sole function. The Minister's comments, however, make it clear they will have other functions. I object to the Minister putting in place as much as possible of this legislation because, regardless of the business plans, so much will have been done that there will be no turning back.
I wish it to be clear that I do not refer to the trade unions, but to the Minister and the impression he gave during the course of the national pay agreement talks. I and everyone else on this side understood it was agreed that night that nothing would happen beyond drawing up business plans. The legislation makes clear that the Minister is providing for functions to be delegated to the two boards so that in effect if, next month, he wishes the break-up to proceed it will happen. Unlike Deputy Naughten I believe the Minister will ensure the new Dublin authority will do his bidding and enter into agreements with the boards of Cork and Shannon airports. In this way the break-up can occur next month under the legislation as drafted. The only difficulty is the transfer of the assets, which the Minister faced last year but has not surmounted. He hopes a formula can be found, as presumably one will but it will require more consultants. Meanwhile, he intends to establish the three boards and the break-up of Aer Rianta will happen next month.
The Minister clarified this when I suggested an amendment to prevent it happening before the Minister for Finance agrees the business plans next April. He says if that happened it would restrict the ability of the Dublin Airport Authority to delegate functions. Clearly, he wants those functions to be delegated as early as possible and the legislation enables him to do that. This is in direct breach of the undertaking he gave in negotiations on the national pay agreement where he conveyed the impression that nothing would happen beyond the drawing up of business plans over the next nine months. My amendment is intended to uphold the understanding the unions thought they had, namely, no functions would be delegated prior to agreement of the business plans. If my interpretation is wrong the Minister should tell me so.
I have already rejected the unions' allegation and said the break-up cannot take place soon because the legislation makes clear that neither staff nor assets can transfer until after April 2005, and then only with the agreement of the Dáil. There is no question of the break-up being affected until those procedures have been cleared. The boards designate, however, can commence their business planning and carry out, on behalf of Dublin Airport, whatever functions they can agree on a day-to-day basis. If the people available start to help Shannon and Cork airports in every way possible, with the agreement of Dublin Airport, they will encourage the attempt to grow those airports. Shannon and Cork airports should avail of any assistance they can get, and the legislation makes the board designate available to Dublin Airport to help the growth of Shannon.
Will the boards designate run the airports?
It is not right to say the break-up can take place now or at any time before April 2005.
If all these talented people are available, as the Minister says, we should avail of their help.
We should also avail of their advice.
If they wish to take over the running of each of the airports, and Dublin agrees, what is to stop them doing so under this legislation?
Corporate governance and the legislation make clear that Dublin holds the legal responsibility. Any help available to Shannon and Cork airports will be exercised on behalf of Dublin. If the help is available why not accept it?
That applies only if Dublin is agreeable, then it can delegate almost all of the functions to the two new boards.
They cannot transfer staff.
Why not?
The legislation states they cannot do so.
Can the Minister furnish the reference for that?
The Bill states that on the appointed day staff and assets can transfer after April 2005. Assets here includes staff. I can furnish the actual reference later.
What about shared services?
The three authorities can work those matters out. I will not tell them about shared services.
I differ somewhat from Deputy Shortall but the Minister said that Cork and Shannon can avail of any assistance they can get from Dublin. That is not the case. It is a one-way system, from Dublin down, not from Cork or Shannon up. The Minister has not clarified this aspect of the legislation. Dublin decides what it will allow Cork and Shannon to do and if they are agreeable they may go ahead but the initiative cannot come from Cork or Shannon because the Bill states that the Dublin Airport Authority "shall", etc.
If the boards designate of Shannon and Cork want to put a proposal to Dublin Airport they can take the initiative and do that. There is nothing to stop them coming up with initiatives and proposing them for clearance by Dublin. That is not a problem.
If Cork or Shannon airports can devise a radical initiative to their benefit, it must go before the Dublin authority. However, what happens if the authority decides that a 12 month run-in of such a plan will make the other airports a more competitive threat? As the Dublin authority is appointed for the long-term operation of Dublin Airport, it may well decide it is not in its long-term interest to approve such business plans for the other airports.
As it stands, the Dublin authority can veto every proposal.
Under this Bill, that will continue to happen for the next 12 months.
Is the Deputy asking for more power for Shannon Airport?
No. However, if the Cork or Shannon boards put a well-thought out proposal to the Dublin Airport Authority——
It can be vetoed as it can be today.
I accept that but the difficulty is that Dublin has the veto. However, the Bill's purpose is to get rid of it. That was the principle behind the initiative taken before the previous general election and the reason the people of Cork and Shannon have accepted this.
That is what will happen after April 2005 if the Dáil agrees. I ask Deputy Naughten to support this. I believe that the Fine Gael Party is for the independence of Cork and Shannon airports, which is commendable. I am putting a two-step approach that will achieve that in an orderly way.
The Fine Gael Party has always sought the independent operation of both airports. However, there is no representative from either airport on this interim Dublin board responsible for their operation. For the next 12 months, Cork and Shannon airports will be managed by the Dublin Airport Authority. It is hard to explain to people in Cork and Shannon that it is in their best interests to have a board appointed with its responsibility to develop Dublin Airport while managing the other airports. Any sensible proposal put forward by Cork or Shannon airports can be vetoed by that board. As the Bill stands, that veto remains for the next 12 months as it has for the past 30 years. This reasonable amendment will allow the Minister to intervene in such an instance.
I am confused because I believed Deputy Naughten was opposing giving Shannon Airport its independence. Now he is asking me to give it independence sooner rather than later.
I never said I was opposed to giving Shannon Airport its independence.
It is on the record.
The Minister can check the record. If Cork or Shannon airports produce a proposal, the veto remains with the Dublin Airport Authority. The Bill will copperfasten it.
It will for a nine month period.
Has the Minister any proposals for the interim of nine months? What role will Mr. Pat Shanahan or his counterpart at Cork Airport have with the Dublin Airport Authority board? In the long term, I know the Minister intends to appoint Mr. Shanahan to the board. Is it correct that in the interim there will be no Cork or Shannon airport representatives on the board?
That is correct
In theory, a Dublin area authority appointed by the Minister for Transport with the interests of Dublin Airport at heart could scuttle the other two airports. Is that a fair assessment?
Absolutely. However, it could also happen at the moment.
The problem with the moment is there are no voices from Cork or Shannon airports on the Aer Rianta board.
It is for a temporary period.
It will take some time for the new boards of management at Cork and Shannon airports to get their feet on the ground. Some representatives will be interested only in tourism and others in other sectors. In the meantime, a Dublin airport authority could in theory scuttle their chances of survival.
I am with the Deputies on this.
If that occurred, the board would be in breach of its obligations under company law.
Deputy Power's point on corporate governance is correct. I am with the Deputies in not wanting the Cork and Shannon boards' proposals to be vetoed by the Dublin authority. I presume Dublin will behave sensibly as required by law. It will be a better situation than the present one where Cork and Shannon airports cannot do anything without the Dublin board's agreement or a board to speak up for them. The proposed system is not perfect but it is the sensible first step in a two-step process.
It is still an experiment.
Shannon Airport will benefit from the board-designate that has been nominated. I know the board has been in the wings and kept a close eye on matters and will be ready to help Shannon Airport.
It still would have no friends on the Dublin board.
Is there any provision for the chairman-designate to be on the board?
No. I am opposed to that because it would run counter to the policy I am pursuing. It is much better for Cork and Shannon airports to devise initiatives and business plans rather than mix and match approaches.
Amendment put.
The Committee divided: Tá, 5; Níl, 7.
Tá
- Breen, Pat.
- Healy, Seamus.
- Naughten, Denis.
- Ó Caoláin, Caoimhghín.
- Shortall, Róisín.
Níl
- Brady, Martin.
- Brennan, Seamus.
- Curran, John.
- Ellis, John.
- Glennon, Jim.
- Power, Peter.
- Ó Fearghaíl, Seán.
Amendment declared lost.
I move amendment No. 21:
In page 9, line 42, subsection (1), to delete "shall" and substitute "may if satisfied that it is in its corporate interest to do so".
Amendment, by leave, withdrawn.
I move amendment No. 22:
In page 10, between lines 2 and 3, to insert the following subsection:
"(2) Where after the passing of a reasonable period of time, agreement under subsection (1) cannot be obtained, the Minister shall give directions to resolve the dispute.”.
Amendment, by leave, withdrawn.
I move amendment No. 23:
In page 10, subsection (5), lines 25 to 28, to delete all words from and including ", and" in line 25 down to and including "Airport" in line 28.
Amendment, by leave, withdrawn.
I move amendment No. 24:
In page 10, subsection (8)(a), line 38, to delete “and development” and substitute “, development and financial viability”.
Amendment, by leave, withdrawn.
I move amendment No. 25:
In page 10, subsection (8)(b), lines 41 and 42, to delete “and development” and substitute “, development and financial viability”.
Amendment, by leave, withdrawn.
I move amendment No. 26:
In page 11, subsection (9), line 13, to delete "and development" and substitute ", development and financial viability".
Amendment, by leave, withdrawn.
Amendments Nos. 27 to 29, inclusive, are related and may be discussed together.
I move amendment No. 27:
In page 11, subsection (12), line 11, after "shall" to insert ", subject to the approval of the Dublin Airport Authority, prior to the appointed days for Cork and Shannon,".
This amendment relates to the same issue of what is to happen before the plans are agreed. It seems likely that all of the debts will be incurred by Dublin Airport and in that context it is only right that a Dublin Airport Authority should have the right to approve the expenditure of the other airports prior to their respective days of appointment. If they are appointed, that is fine and then they are up and running. Prior to the appointed day we cannot have a situation where Cork and Shannon airports do what they wish and spend what they wish, with Dublin Airport having to pick up the tab. Whatever action is taken by the two boards designate should be subject to the approval of the Dublin Airport Authority prior to the appointed days for Cork and Shannon.
Amendment No. 27 relates to the Cork and Shannon airport authorities performing functions on behalf of Dublin Airport before their respective appointed days under section 8(1). The performance by these authorities of such functions will already be subject to the terms of an arrangement in place between Dublin Airport Authority and the other relevant authorities under that subsection.
As regards amendment No. 28, where an airport authority wishes to establish a new airport or become an owner or manager of an existing airport, this should only require ministerial consent. No ministerial consent is required for the performance of delegate functions of Dublin Airport under subsection (1) but this is a matter for agreement between Dublin Airport and Cork and Shannon as the case may be.
As regards amendment No. 33, the relevant text in subsection (13) is considered appropriate. The exercise of the power to establish a new airport either within or outside the state is subject to the consent of the Minister for Transport and the Minister for Finance.
We are not considering amendment No. 33.
I understand. I am opposed to those amendments on the basis that the agreement of the Dublin Airport Authority would already be required for any expenditure by Shannon and Cork.
The purpose of my amendment No. 29, which is an amendment to section 8(13), is that if the power is given to the three airports to establish or manage a new airport outside the State, that airport would be competing directly with Aer Rianta International. If this power were provided to the three airports that would significantly devalue Aer Rianta International in a number of ways. It would devalue it because one would have four Irish companies competing directly for such business. Second, at present Aer Rianta International can call on expertise from each of the three airports to manage operations outside the country or establish new airports there, whereas if they were competing directly with Aer Rianta International, they would not be able to second such staff to that organisation. It would be a huge blow to Aer Rianta International, which has a very strong reputation internationally. It is a recognised brand name outside this country.
It would be wrong and irresponsible of us to take such an organisation and set up other operations competing against it. That is not a sensible approach to take. We have three State agencies under this legislation whose responsibility will be to manage three airports in the country. We will have a further State-owned agency in the shape of Aer Rianta International, which is involved in managing the operations of airports outside the country. We should not develop further State agencies that would compete directly with Aer Rianta International outside the State. I ask the Minister to accept the amendment on that basis.
I do not see any difficulty in different Irish companies competing outside the State. The world is big, and one might wish to buy an airport in China and another in the European Union - perhaps in Lithuania. It would be wrong to tie their hands and say that they cannot compete in the outside world. I cannot see the sense in that.
I disagree with the Minister. We have set up State agencies in this country for specific purposes. We do not want to establish a company such as Bord na Móna to manage the peat reserves and then set up another to compete against it directly. That is why the EU has introduced such competition regulations - to allow that to happen. There is enough regulation in place, and it would be detrimental to Aer Rianta International if one had three other Irish State companies competing for the same business. There is nothing to stop a private Irish-based company competing for that business, but we should not have four arms of the State competing for it. We have seen what that has done in the beef sector outside this country, where everyone is trying to undercut each other in their operations. It will not ensure a sound financial footing for Aer Rianta International. It could also be seriously detrimental from the point of view of the value of that asset for the reasons that I have outlined. I ask the Minister to re-examine the wording of subsection (13) and come back on Report Stage in that regard.
The member has a point in that it would be silly for them to be competing for the same business. However, I suspect that they would be sensible. At the moment, if the ESB wishes to compete with Bord na Móna for the same contract in China, there is nothing to stop it doing that. However, it would be sensible not to get into a head-to-head situation on a foreign contract, and I would expect the airports to have the same commonsense approach and hunt different business.
There is a big difference between the ESB and Bord na Móna in terms of expertise.
I take the member's broad point. However, I believe that they would be sensible enough not to lock horns abroad on a specific contract. That would be silly.
Amendment, by leave, withdrawn.
I move amendment No. 28:
In page 11, subsection (13), line 19, after "may," to insert "subject to the approval of Dublin Airport Authority,".
Amendment, by leave withdrawn.
I move amendment No. 29:
In page 11, subsection (13), line 22, to delete "(whether within or outside the State)" and substitute "within the State".
Amendment, by leave, withdrawn.
I move amendment No. 30:
In page 11, subsection (14), line 28, after "services" to insert "subject to the transfer by the Irish Aviation Authority of the necessary expertise and assets".
I am not sure what this subsection means regarding the Irish Aviation Authority. It could be read that it is unreasonable to expect the airports to offer services normally offered by the IAA without having the necessary expertise. Further consideration might be given to maintaining the separate function of the company and the IAA - that is, if it were proposed that there could be circumstances where the IAA is not carrying out those functions. Is my interpretation right, or is there some possibility of making way for a new European authority, as we discussed with the IAA itself? Perhaps the Minister might clarify the purpose of that subsection.
Sections 14 and 15 restate the provisions of sections 16(4) and 16(5) of the 1998 Act. It is, of course, envisaged that the Irish Aviation Authority will continue to provide terminal services at the three airports in the short to medium term. However, should any of the airport authorities wish to secure those services from an alternative source in future, the airport authority concerned must secure the consent of the Irish Aviation Authority. It would not be a requirement in such circumstances that the new provider of air traffic control services take over the expertise and assets of the Irish Aviation Authority at the airport. The new supplier will be free to provide its own staff and equipment if it so wishes.
I will let Deputy Shortall respond, since it is a broader issue.
Regarding the role of the Irish Aviation Authority, does the Minister foresee a situation where there might be competition in that market? That would seem extraordinary, given all the safety issues.
I do not foresee that.
If the Minister does not foresee that, why does he make this provision for services to be bought in from some other agency? I wonder what the purpose is.
The Air Navigation and Transport (Amendment) Act 1998 provides that, "Where the Authority ceases to provide terminal services at a State airport the company shall, with the consent of the Authority, ensure the provision of those services at such airport." That means that they shall be provided from an external source in a fall-back situation. That was envisaged in the Act. It goes on to say provide that, "The Authority shall not unreasonably withhold its consent under subsection (4)." We are simply restating provisions that are in the Air Navigation and Transport (Amendment) Act 1998. Nothing more is envisaged; it is a fall-back provision if required.
The Minister is implying that it is legal and acceptable for an airport to operate without the services of the authority.
No, it would not be legal for safety reasons for an airport to operate without the agreement of the Irish Aviation Authority.
However, the Minister is making provision for them to do so in this Bill. That does not add up.
Should any of the airport authorities wish to secure these services from an alternative source in the future, the airport authority must secure the consent of the Irish Aviation Authority.
I have a related point, and rather than speaking on the section I will raise it here, since we are on the issue of the Irish Aviation Authority. Currently regional airports, though they provide air traffic control on the run-in and departure of flights, cannot charge or get a percentage of the charge collected by the Irish Aviation Authority - even though they provide part of the service. At present the Irish Aviation Authority provides the total air traffic control service from when one enters Irish airspace until one lands in Dublin, Cork or Shannon. In the case of the regional airports, including Galway and Knock, the flight path into the airport is taken over by air traffic control in the regional airport. It provides that service for flights landing and taking off. However, none of the regional airports may collect part of that fee, which could help to offset part of the cost of providing those services.
I would ask the Minister, either in this Bill or in some other aviation legislation, to allow the regional airports to get a percentage based on the overall cost of providing the service in line with the level of air traffic control they actually provide. As the Minister knows, the regional airports work on tight margins. It is a significant cost for regional airports and the Irish Aviation Authority is a successful organisation. Hopefully, if we see the centralising of air traffic control throughout the country it will become even more successful. I do not see that it should be making additional moneys on the backs of the regional airports. I ask the Minister to have a look at that issue.
I certainly will do everything I can to help regional airports. I am a strong supporter of them and want to see them flourish and prosper. I understand that the cost to regional airports of providing services has been an issue of concern for some time. I am aware of the issue and am sympathetic. I will take a look at it and ask the Minister of State to discuss it with the Irish Aviation Authority, which looks after that area.
Amendment, by leave, withdrawn.
I move amendment No. 31:
In page 11, subsection (15), line 31, to delete "subsection (12)” and substitute “subsection (14)”.
This is a technical and legal amendment to correct a wrong reference and substitute subsection (14) for subsection (12).
Amendment agreed to.
I move amendment No. 32:
In page 11, lines 34 to 40, to delete subsection (17).
Amendment, by leave, withdrawn.
Section 8, as amended, agreed to.
SECTION 9.
Amendment No. 33 is in the name of Deputy Shortall. Amendment No. 34 is related. Amendments Nos. 33 and 34 will be taken together. Is that agreed? Agreed.
I move amendment No. 33:
In page 12, subsection (5), line 39, after "restructuring" to insert "and following consultation with the Dublin Airport Authority".
The Dublin Airport Authority would require consultation because its opinion, presumably, would be essential as it is charged with the responsibility of restructuring. It appears sensible that any change to the memorandum and articles of association to that effect should be discussed with the Dublin Airport Authority.
In respect of amendment No. 34 there is an inconsistency. On the one hand the aim is to give autonomy and freedom to Cork and Shannon airports, yet under subsection (7) we are providing that on the formation of Cork and Shannon, "they shall, with the consent of the Minister for Finance" draw up memoranda and articles of association. They should surely go ahead and do that. That would then be submitted to the Minister for his or her approval. It seems unduly restrictive if the intention is to provide greater freedom.
I endorse what Deputy Shortall has said.
Those discussions will certainly take place in any event, without this being required under statute. The proposed amendment is not really in keeping with the sequence of events envisaged under the Bill, which would make it difficult for me to accept it. Following enactment of this Bill, which will authorise the restructuring, Aer Rianta's constitutional documents will need to be amended if it is involved in preparing for the restructuring. In reality, such a change may not be required as it is expected that the Dublin appointed day will take place at a future date. The Dublin appointed day will see Dublin Airport Authority having included in its principal objects the giving effect to restructuring, in accordance with the Bill, and the amendments to its constitutional documents to reflect such change.
The proposed amendment is not in keeping with the sequence of events, although I understand the point the Deputy is making. However, I believe those discussions will certainly take place in any case.
Amendment, by leave, withdrawn.
I move amendment No. 34:
In page 13, lines 1 to 6, to delete subsection (7) and substitute the following:
"(7) On formation of Cork Airport Authority and Shannon Airport Authority, the respective Authorities will draw up memoranda and articles of association and submit to the Minister for approval setting out the financial objectives of each authority and functions as are necessary to give effect to such objects.".
Amendment, by leave, withdrawn.
Amendment No. 35 is in the names of Deputies Shortall and Naughten. Amendments Nos. 36, 37, 53 and 54 are related. Amendments Nos. 36 and 37 are cognate. Amendments Nos. 35 to 37, inclusive, and amendments Nos. 53 and 54 will be taken together. Is that agreed? Agreed.
I move amendment No. 35:
In page 13, subsection (8), line 8, after "shall," to insert "following consultation with regional and local development associations and Chamber of Commerce and".
This amendment is basically self-explanatory. The objective is to ensure the Minister takes account of the views of local representatives and business groups. It is critically important as I believe the kernel of the reason this legislation is before us is to promote regional development. Business associations and chambers of commerce are two critical elements as regards the development of regional policies. It is important that consultation should take place with those types of organizations prior to the decisions being taken. That is the reasoning behind the amendment.
In respect of amendments Nos. 36 and 37 it is proposed to delete "Prior to" and replace the word "Following" on the basis that if financial viability is not proven then individuals will be in positions that are not sustainable. It makes sense that the business plan should be examined and following that the appointments should be made.
Amendment No. 54 is to ensure that some type of structures are put in place as regards the appointments of boards. In fairness to the former Minister, the Minister for Public Enterprise, Deputy O'Rourke, when she brought forward legislation appointing boards, she laid out quite specifically what type of individuals she wanted. In this legislation we are returning to the bad old days where board appointments were made purely as political sinecures. I know that is not the Minister's objective.
I believe it is important to have expertise from a wide range of views on the boards of the three airports. These people should have both international and local expertise as well as experience within the aviation sector. That will be critically important for the future of all three airports. It is important that criteria are laid down so that a membership card of a particular political party should not be the sole qualification for becoming a member of any board.
I could not care less what the party affiliation of any board member is provided he or she is capable of doing a job. There are plenty of instances, however, where people have been put on boards without having a clue as to what is going on. I ask the Minister to ensure that appropriate criteria are set down.
Amendment No. 54 provides that approval would have to be sought from the Joint Committee on Transport prior to the appointment of the board members. I know that in the past many Ministers have steered clear of such a situation. For various reasons they felt that this was not the appropriate way for it to be done. I am open-minded on this. I am ready to withdraw that amendment if the Minister is prepared to put forward a proposal on Report Stage which would set out the criteria for eligibility for membership of boards.
For the railway procurement agency, RPA, the type of expertise required was specifically laid down. The same method was followed in a number of other pieces of legislation. It is critically important that such an amendment should be included.
It is critically important to have capable people on the boards of the three companies.
I empathise with the Deputy on the need to explore the issue in the broader context of reform in the area. A broader discussion is needed in particular in regard to the role of the committee. For my part, amendment No. 35 requires consultation with the list of groups mentioned. We have certainly taken that into account in the appointments to the boards of Shannon and Dublin airport authorities, where the persons appointed represent expertise in a range of areas. I agree that nobody should be appointed to a State board unless he or she has expertise in a particular area that is required by the board. I have sought to follow that in making appointments to the boards in Dublin and Shannon and will do so shortly in Cork.
I must decline to accept amendments Nos. 36 and 37, because they would have the effect of preventing the appointment of the chairpersons of the board before the appointed dates. Section 9(10) and 9(11) allow the appointments to be made prior to the respective appointed days and the thinking is that the business planning can be done and the board can prepare to receive the responsibility for the airport.
Government amendment No. 53 seeks to tidy up the section. I must decline amendment No. 54 because it attempts to oblige appointments to the Dublin Airport Authority to be approved by the joint committee. While some reforms are needed in the area, a broader discussion would be useful in proposing reforms.
The Minister is not prepared to accept amendment No. 54, which I think is a retrograde step. I had hoped he would table an amendment on Report Stage, laying down criteria for appointment to the board. In fairness a number of Ministers accept that criteria, other than party affiliation, must apply to become a member of a State board. This is a retrograde step. I am disappointed the Minister is not prepared to bring forward a Report Stage amendment, setting down the criteria. There is a structure to do this, and it was included in the initial legislation emanating from his former Department, where the skills of those to be appointed to State boards were laid down.
In this instance, more than ever, it is critically important that that is done. The boards designate are in place in Cork and Shannon Airports, and the flexibility is not there, but if at some future stage there is an issue on the open skies policy at Shannon Airport, keeping a person quiet by his or her appointment to the board is wrong. That should not be a criterion for eligibility for appointment to a State board. It is the wrong system to have in place. We had come to an understanding that the criteria for appointment to State boards would be laid down in legislation when the appropriate Bills came before the Oireachtas. This is a retrograde step. Will the Minister reconsider the arguments and agree to table a reasoned amendment laying down the criteria for the types of individuals we need on the State boards?
I strongly support the comments made by Deputy Naughten. For too long, party hacks were appointed to State boards. I have no difficulty with people having a particular party affiliation as that is the nature of political appointments. However, I have a difficulty with the appointment of somebody solely on the basis of party affiliation, with no particular expertise in his or her field of responsibility as a board member.
It is good practice to establish a system whereby the appointments of the board would be approved by the relevant committee of the Dáil, in this case the Transport Committee. At a minimum the criteria should be drawn up for the appointment of people to such boards. I appeal to the Minister to give this matter consideration and table an amendment to it on Report Stage.
As Deputy Naughten stated, appointments are largely made in these areas subject to the appointment being made at a later stage. I agree entirely with the Deputies opposite on this issue. The three chairpersons were selected by Government and I have no idea what their political affiliations are. Mr. Gary McGann was appointed as chairman to Dublin Airport and I have no idea of his politics, and the same applies to Mr. Pat Shanahan and Mr. Joe Gantly, chairpersons of the other airports. They are high fliers in the commercial world and I asked them to serve on the basis of their leadership qualities. We could go through the entire boards and I would make the same comment about virtually all of them. I take the point.
I did not ask the Minister to go through the boards.
I accept the Deputy's point. This is an area that could usefully be the subject of all-party agreement on how to make reforms. For my part, I have searched to find totally competent expert people, such as Sir Michael Hodgkinson, a former chief executive of Heathrow Airport who has agreed to serve on the Dublin Airport Authority. He might be one of yours, but he is not one of mine.
Is the amendment being withdrawn?
The Minister did not go into this in detail. I find it hard to understand the reason that he would not allow for consultation with the regional and local development associations and the chambers of commerce. If we are genuine about integrated regional development, what is the difficulty with it?
I have nothing further to add.
Amendment, by leave, withdrawn.
Amendments Nos. 36 and 37 not moved.
Section 9 agreed to.
SECTION 10.
I move amendment No. 38:
In page 13, subsection (1), line 30, to delete "The" and substitute "After the respective appointed days the".
We are assured under the legislation that assets will not be transferred before the appointed days but in the case of any doubt arising, it is important to clarify that it is not intended to create any share capital.
In respect of subsection (3) Cork Airport Authority and Shannon Airport Authority shall each issue 38,100 shares. Will the Minister clarify how he reached that figure?
Does Deputy Naughten wish to add anything further?
I think Deputy Shortall has said it all.
I am also intrigued as to where the figure of 38,100 shares came from. I have been advised that it is the figure required under company law. It would not make sense for me to accept the amendment to section 10 because the phrase it seeks to insert would run counter to the intention of the Bill.
Surely it is not the intention to create share capital.
The Bill is clear on that issue. It states the authorised share capital of Cork Airport Authority and Shannon Airport Authority shall be such an amount as may be determined from time to time by the Minister for Finance, divided into shares of €1 each. It is intended, therefore, that there will be share capital.
But not until after the appointed day.
No. For the companies to be established, they have to have share capital. They are State owned companies.
They will be doing much more than drawing up business plans.
Under company law we have to register the companies as plcs. However, the share capital is 100% vested in the State. Companies must have shares.
That confirms my suspicions.
Amendment, by leave, withdrawn.
Question proposed: "That section 10 stand part of the Bill."
I oppose section 10 which deals with the distribution of the share capital to Cork and Shannon Airports. We have no financial criteria, nor an idea of the financial viability of the two operations. It seems pointless to be discussing the distribution of assets when we do not know whether either of the two airports can be financially sound on an independent basis. It goes back to the fact that the Minister has consistently remained silent on this issue which is a huge cause for concern. However, there may be positive benefits with which the Minister has been very weak in coming forward. There are huge benefits for regional development. However, no financial case has yet been made. It is pointless, therefore, to discuss the distribution of assets.
Section 10 is not about the distribution of assets but a standard provision on the share capital of State companies. It is standard to have share capital in this fashion. The various subsections all state the same thing, that is, that companies are required to have share capital owned by the State. It all comes back to this point.
The point is still the same.
Question put and declared carried.
Section 11 agreed to.
SECTION 12.
Amendments Nos. 39 to 51, inclusive, are related and may be discussed together. Amendment No. 44 is an alternative to amendment No. 42 while amendments Nos. 45 to 47, inclusive, are alternatives to amendment No. 44.
I move amendment No. 39:
In page 14, subsection (1), line 30, to delete "Each" and substitute "After the relevant appointed days each".
It is virtually impossible to keep track of amendments and have them numbered properly at such short notice.
I agree with the Deputy.
We received the list of amendments this morning. There was no time allowed for preparation on Committee Stage. This is not the right way to do business.
On a point of information, the list was circulated by the Bills Office as soon as it became available. However, I agree with the point made by the Deputy.
The grouping list makes matters very difficult. It was only presented when we arrived for the meeting.
The amendments list was not circulated until this morning.
The list was circulated yesterday by the Bills Office.
Yes but the order of the amendments was not.
I agree.
Amendment No. 39 would require that after the relevant appointed days each company would appoint such members of staff as the company saw fit. Amendment No. 40 would require that a member of staff appointed under subsection (1) would hold his or her office of employment on such terms and conditions as the company determined. I accept that subsections (1) and (2) are standard provisions for companies. However, it is important that we clarify that it is after the relevant appointed days that the companies would appoint staff. The Minister has stated staff will be employed by the new companies. If that is the case, we need to clarify that it will be after the respective companies are appointed that they will be able to appoint staff.
Amendment No. 48 is self-explanatory. Until the appointed days, the trade unions will not know what staff they are talking about. It seems to be a pointless exercise until that provision is in place. Amendment No. 50 is related.
I also want to speak to amendment No. 51. When the legislation was being drafted, it seems the issue about the current CEO, Margaret Sweeney, was ignored. This amendment considers the CEO as a member of staff of Aer Rianta who can transfer to the Dublin Airport Authority. She seems to have been left out in this legislation. I also want to know if the Minister can bring us up to speed on what is happening with superannuation benefits. We discussed the issue of retired aviation staff at length during the debate on the Aer Lingus Bill. It is as relevant to the staff of Aer Rianta as it was to Aer Lingus staff.
This section covers the terms of employment which were the subject of negotiations leading up to the national pay agreement. When I read the Bill following publication, I found this section extremely disappointing in the light of the undertakings given. Under subsection (7), the normal protections that apply to any employee are merely restated. Among other matters, the section allows the Dublin Airport Authority, following its appointment, to enter into arrangements with the Cork and Shannon Airport authorities to perform unspecified functions.
In regard to employment, section 12(6) states: "Where any dispute arises in relation to whether a person or group of persons is working wholly or mainly in connection with Cork Airport or Shannon Airport or where it cannot be determined whether a person or group of persons works wholly or mainly in connection with one or other of the State airports or in shared services....". This wording is vague. Somebody who might have a role in Cork Airport, for example, could be designated to work in shared services in one of the other airports. While the Bill provides for consultation, this is not enough. We saw that consultation meant little in other contexts. If a person's place of employment is to be decided by the company, the least he or she should be entitled to is that agreement will be reached with his or her trade union. The decision should follow agreement, not just consultation.
Section 12(9) is also of concern. It states: "Save in accordance with a collective agreement negotiated with any recognised trade union or staff association concerned...", the person "shall not, while in the service of the company, be brought to less beneficial conditions of service or of remuneration than the conditions of service or of remuneration to which he or she was subject...". Amendment No. 42 proposes that this be changed to read: "Save in accordance with a collective agreement negotiated with any recognised trade union or staff association concerned, a person in the employment of Aer Rianta, before the Dublin appointed day or who is transferred to the Shannon or Cork Airport Authorities on the relevant appointed day, shall be brought to no less beneficial conditions of service or remuneration (including conditions in relation to tenure of office)...".
The undertakings understood to have been given which related to tenure of office need to be spelled out in this section. No lesser conditions than those previously enjoyed in regard to service or remuneration should be included. It should be clear that this includes "conditions in relation to tenure of office". It is all very well to say the conditions enjoyed by a person up to a change in the structure of the company will continue providing that the person remains employed by the company. However, there is a difference if the person does not remain employed. Tenure of employment is an issue not covered by the Bill which needs to be specifically included.
I am also concerned about section 12(11). The previous sections give the impression it is guaranteed that staff will retain whatever conditions they enjoyed. However, the Bill states nothing about new staff, either in respect of the right to trade union recognition or the terms and conditions under which they would be employed. My fear is that over the coming year large-scale redundancy packages will be introduced and that when staff with long service are removed from the system, their jobs will be replaced with yellow pack jobs. That would be a retrograde step in regard to the three regions served by and in part dependent on the airports. While the three airports provide secure and reasonably good employment, I fear that in time this will be replaced by poor employment such as yellow pack, short-term contract work which would represent a real loss to the local economies.
Section 12(11) gives rise to a further concern. It states: "Without prejudice to subsections (9) and (10), the form of any new collective agreements and the bargaining structures through which they are arrived at and developed, following the Cork appointed day and the Shannon appointed day, shall be the subject of discussions with the recognised trade union or staff association concerned for the period of not more than 6 months from the passing of this Act.”. While the staff have certain guarantees, it seems they will not last any length of time. If the new companies want to enter into new agreements with staff representatives, discussions on the new agreements can only take place over a six month period by which time the companies can introduce new agreements. It seems the guarantees given in earlier sections will not be worth anything beyond the initial six month period, which is certainly not what worker representatives understood was agreed with the Government. This area needs to be strengthened.
It is arguable that section 12(10) is a divisory lead being used purely to allow the new airport authorities to worsen pay and conditions, which is undesirable. I understand section 12(11) is a provision introduced at the request of the Irish Congress of Trade Unions to ensure it will have an opportunity to develop collective bargaining structures in the long term, that these will obviously protect wages and conditions of employment and prevent that about which much of the labour movement is concerned, namely, that the aviation industry will develop into a race to the bottom. Obviously, there are concerns among workers in the public transport sector that this is what the Minister is setting up.
Section 12(11) seems to provide for this because of the imposition of the six month timescale on discussions and reaching agreement. However, it does not even refer to agreement but to "discussions with the recognised trade union...". Six months is an exceptionally short period to retain the guarantee of conditions in the context of the setting up of a new company and the allocation of new staff. I argue strongly that this should be removed from the Bill and that we follow the normal procedures in regard to collective bargaining and representative structures within the body of workers in the three companies. In line with normal industrial relations practice, we should seek to reach agreement, not merely have so-called consultations. There should be agreement with workers' representatives on any new pay agreement applying within the companies.
As it stands, the legislation is exceptionally weak. It contains little to provide comfort or assurance for the workers who will be affected. It needs radical amendment to comply with the undertakings given and ensure conditions will not dramatically worsen for workers in the new structure.
Amendments Nos. 39 and 40 relate to enabling provisions of subsections (1) to (3), inclusive, of section 12 which give Dublin, Cork and Shannon Airport aurthorities the power to appoint such staff as they see fit. The effect of the proposed amendments would be that the authorities could not appoint staff in their own right until after the relevant appointment date. In the case of Dublin, this is unnecessary as the Dublin Airport Authority will only be established on the Dublin appointed day. Therefore, the provision will be effective only from that date.
In the case of Cork and Shannon Airport authorities, it is appropriate that these companies have the power to take on a small number of staff during the transition period. It is expected that in considering the terms and conditions of such appointments they will have careful regard to their specific remit during this period. The agreement of the Dublin Airport Authority would be required were Cork and Shannon Airport authorities to embark on any large-scale recruitment of staff. I refer to the recruitment of new staff as opposed to the transfer of existing staff, which is a separate matter.
Regarding amendment No. 41, section 12(6) is designed to provide a workable mechanism for addressing any disputes that may arise about the allocation of staff. The subsection allows for consultation with recognised trade unions and staff associations. It is envisaged that this consultation would have a bearing on the final decisions made by the Dublin Airport Authority. The subsection also allows for the Minister to set criteria to be applied in resolving disputes. This is a practical mechanism for dispute resolution but it is the Dublin Airport Authority which will have the final say if agreement cannot be reached through negotiation. I must, therefore, reject the amendment because its provision that the agreement of the trade unions and staff associations would be required before any staff could be designated could be difficult to operate and might lead to protracted and open-ended disputes. The existing stipulation that the final decision should rest with the Dublin Airport Authority represents a sensible approach.
On amendment No. 42, section 12(9) is designed to protect employees transferring to Cork and Shannon Airports by specifying that they cannot be granted less beneficial terms and conditions unless by way of a collective agreement negotiated with a recognised trade union. Deputy Shortall was anxious that Dublin Airport employees be included in this provision. I would like to reflect on this before Report Stage. Concerns expressed by trade union interests are being taken on board through the provisions of amendments Nos. 43 and 45 to 47, inclusive, which will remove references to negotiation with individual staff members in subsections (9) and (10).
The new subsection proposed in amendment No. 42 which would extend the provision to all employees of Aer Rianta before the Dublin appointed day and include a reference to being brought to no less beneficial terms and conditions, including conditions relating to tenure of office, would be inappropriate. Existing collective agreements will continue to apply to employees remaining in Dublin. It is unnecessary to refer specifically to those employees in the section. However, I undertake to reflect on this matter.
Regarding the proposed reference to tenure, the subsection provides that employees transferring to Cork and Shannon Airports will not be brought to less beneficial terms and conditions other than by collective agreement. References to tenure in other legislation have generally been related to the transfer of office holders, for example, civil servants, who are in a different category.
Amendment No. 44 proposes the deletion of section 12(10). Concerns have been expressed that this subsection may not be subject to the protection set out in subsection (9). Amendment No. 47 in my name addresses this concern by explicitly stating no variations can operate to worsen scales of pay or conditions of service.
Regarding amendments Nos. 48 to 50, inclusive, section 12(11) makes provision for discussion with recognised trade unions and staff associations on the form of any new collective agreements and the bargaining structures through which they are developed following the appointed days for Cork and Shannon Airport authorities. What is envisaged under the subsection is discussions in advance of any appointed day order regarding the principles that will apply following the appointed day. The period of six months is a reasonable timeframe for the conclusion of discussions.
Amendment No. 51 proposes to change the definition in section 12(12) of "superannuation benefits". There are separate provisions under the 1998 Act regarding the office of chief executive officer. Therefore, it is inappropriate to include that position in any definition of "staff". The definition of "superannuation benefits" does not need to be qualified by the words ", save where the context otherwise requires". The definition in the subsection is as set out and there is no other context or use of such terms in the section.
The objective of ministerial amendments Nos. 43 and 45 to 47, inclusive, is to clarify that the protections provided in subsections (9) and (10) refer to those afforded to individuals covered by collective agreements. Amendment No. 47 ensures the protection afforded by subsection (9) will apply where terms and conditions are varied by a company.
I refer to the Minister's response to amendment No. 51 and ask him what the status of the chief executive officer of Aer Rianta will be after this legislation is enacted. The chief executive officer is not a member of a trade union but she has a job like anybody else. I have asked this question twice but have not received an answer. Perhaps the Minister will also update us on the pension entitlements and benefits of retired aviation staff at both Aer Lingus and Aer Rianta.
Section 13(8) provides that the chief executive officer of the Dublin Airport Authority shall, following selection for appointment at an open public competition held by or on behalf of the authority, be appointed by the directors who are appointed under subsection (4). Section 29, as amended, stipulates that the Bill applies to such appointments. Ms Margaret Sweeney is an excellent chief executive officer and does a fine job on behalf of Aer Rianta but the provision of section 13(8) is clear in that the Dublin Airport Authority will be responsible for the appointment of its chief executive officer.
I understand the board of Aer Rianta can dismiss the chief executive officer. What will happen to Ms Sweeney if she does not secure the position of chief executive officer of the Dublin Airport Authority? She is an employee of Aer Rianta and can be dismissed by the board, although I acknowledge this is unlikely in the current climate.
It would be a matter for discussion between the board and the chief executive officer if she were unsuccessful in attaining that position in the new authority. It is her own professional decision whether she will contest the appointment under section 13(8).
Ms Sweeney is appointed and employed by Aer Rianta plc which will be subsumed into the Dublin Airport Authority. Does it not represent a loophole in the legislation that no provision is made regarding the chief executive officer of Aer Rianta? Ms Sweeney's position will be gone as soon as this legislation is signed by the President and the appointed day arrives. Every other staff member is protected under this legislation and the lack of such protection for the chief executive officer seems to be an anomaly. Neither of us is comfortable talking about that particular individual. The airport authority must be free to appoint its chief executive officer.
I accept that. It is the authority's responsibility to make the appointment and I have no doubt it will select the best person. It is my wish that the person in question will be treated properly. I have no desire to undermine him or her. However, the new authority must be able to make its own appointment. It is possible that further negotiation will be needed. I will reflect on the points made to see how I can be of assistance.
I accept that and bow to the Minister's better judgment. However, it would be a pity if, as a result of this legislation being pushed through quickly, the committee omitted a provision. I, therefore, ask the Minister to consider the matter before Report Stage.
Amendment, by leave, withdrawn.
I move amendment No. 40:
In page 14, subsection (2), line 32, after "staff" to insert ", appointed under subsection (1),”.
Amendment, by leave, withdrawn.
I move amendment No. 41:
In page 15, lines 5 to 14, to delete subsection (6) and substitute the following:
"(6) Where any dispute arises in relation to whether a person or a group of persons is working wholly or mainly in connection with Cork Airport or Shannon Airport or where it cannot be determined whether a person or group of persons works wholly or mainly in connection with one or other of the state airports or in shared services, Dublin Airport Authority, following agreement with the appropriate recognised trade union or staff association shall designate the appropriate employer for the person or group of persons concerned.".
Amendment put and declared lost.
I move amendment No. 42:
In page 15, lines 35 to 42, to delete subsection (9) and substitute the following:
"(9) Save in accordance with a collective agreement negotiated with any recognised trade union or staff association concerned, a person in the employment of Aer Rianta, before the Dublin appointed day or who is transferred to the Shannon or Cork Airport Authorities on the relevant appointed day, shall be brought to no less beneficial conditions of service or remuneration (including conditions in relation to tenure of office) than the conditions of service or remuneration (including conditions in relation to tenure of office) to which he or she was subject immediately before the relevant appointed day.".
Amendment put and declared lost.
I move amendment No. 43:
In page 15, subsection (9), lines 36 and 37, to delete "or an agreement negotiated with the person concerned".
Amendment agreed to.
I move amendment No. 44:
In page 15, lines 43 to 49 and in page 16, lines 1 and 2, to delete subsection (10).
Amendment, by leave, withdrawn.
I move amendment No. 45:
In page 15, subsection (10), lines 46 and 47, to delete "one or more of the said persons".
Amendment agreed to.
I move amendment No. 46:
In page 15, subsection (10), line 47, to delete "the said" and substitute "those".
Amendment agreed to.
I move amendment No.47:
In page 16, subsection (10), line 2, after "service." to insert the following:
"As provided in subsection (9), no such variation shall operate to worsen the scales of pay and conditions of service applicable to such persons immediately before the relevant appointed day, save in accordance with a collective agreement negotiated with any recognised trade union or staff association concerned.”.
Amendment agreed to.
I move amendment No. 48:
In page 16, subsection (11), line 7, after "discussions" to insert "and agreement".
Amendment put and declared lost.
I move amendment No. 49:
In page 16, subsection (11), lines 8 and 9, to delete "for the period of not more than 6 months from the passing of this Act".
Amendment put.
The Committee divided: Tá, 5; Níl, 7.
Tá
- Breen, Pat.
- Healy, Seamus.
- Naughten, Denis.
- Ó Caoláin, Caoimghín.
- Shortall, Róisín.
Níl
- Brady, Martin.
- Brennan, Séamus.
- Curran, John.
- Ellis, John.
- Glennon, Jim.
- Power, Peter.
- Ó Fearghaíl, Seán.
Amendment declared lost.
I move amendment No. 50
In page 16, subsection (11), lines 8 and 9, to delete "passing of this Act" and substitute "appointed days".
Amendment, by leave, withdrawn.
I move amendment No. 51:
In page 16, subsection (12), line 10, to delete " "superannuation benefits" " and substitute the following:
", save where the context otherwise requires——
(a) ’staff’ includes the Chief Executive of Aer Rianta;
(b) ’superannuation benefits’ ”.
Amendment, by leave, withdrawn.
Section 12, as amended, agreed to.
SECTION 13.
I move amendment No. 52:
In page 16, subsection (2), line 19, to delete "1998," and substitute "1998".
This is a technical and legal amendment.
Amendment agreed to.
I move amendment No. 53:
In page 16, subsection (2), lines 23 and 24, to delete "vacancies on the boards are filled" and substitute "appointments on the boards are taken up".
I have a query in respect of worker directors. This legislation provides for boards of 13 members. The 1977 Act which covers representation on boards requires that no less than one third of directors be worker directors. Four is less than one third of 13. Therefore, the legislation is in conflict with the 1977 Act.
Is the Deputy talking about the chief executive officer? There are eight directors plus four worker directors. The view was that in making the chief executive officer an ex officio director the legislation did not contravene the 1977 Act and as such require a revision of the numbers because the chief executive officer is an ex officio as opposed to an ordinary director. The view was that a board of that size, 13, was sufficiently unwieldy without increasing it to 14 or even 15 members. That was the impression we got.
It is either in compliance with the law or it is not. I just want to flag the issue which only came to my attention late last night. I reserve the right to table an amendment on Report Stage.
Amendment agreed to.
I move amendment No. 54:
In page 16, subsection (4), lines 29 and 30, to delete "as he or she thinks appropriate" and substitute "", following the approval of the Joint Oireachtas Committee on Transport".
Is the Deputy pressing the amendment?
I will not press it if the Minister agrees to consider the matter again between now and Report Stage. There is a precedent in the RPA legislation, not in respect of a committee but in terms of setting down criteria.
While I cannot promise an amendment, I will reflect on the arguments the Deputy has made between now and Report Stage.
I reserve the right to reintroduce the amendment on Report Stage.
Amendment, by leave, withdrawn.
Section 13, as amended, agreed to.
SECTION 14.
Amendment No. 55 is in the name of Deputy Shortall. Amendment No. 56 is related. It is proposed, therefore, to discuss amendments Nos. 55 and 56 together.
I move amendment No. 55:
In page 17, subsection (1), lines 11 and 12, to delete all words from and including "with" in line 11 down to and including "Ministers" in line 12 and substitute "in accordance with its objectives".
This amendment relates to the formation of subsidiaries and the requirement to get the consent of the Minister for Finance prior to entering into any arrangements with subsidiary companies. This is overly bureaucratic. If we are expecting a semi-State company to operate commercially, it should have the freedom to do this, reach agreement, strike deals and so on which are in the interests of the company. There is concern that if they have to go through a lengthy approval process in the Department, given the time delays in regard to other approvals, it could jeopardise the finalisation of a deal with another commercial entity. This is unnecessary. I suggest we delete the words "with the consent of the Minister and the Minister for Finance". If a deal is on the table, the company cannot close it without going through the procedure of getting the consent of the Minister for Transport and the Minister for Finance. We should instead insert the words "in accordance with its objectives" which are already set by the Minister.
It is standard practice in such circumstances to require ministerial approval. This provision is contained in most semi-State legislation.
Amendment, by leave, withdrawn.
I move amendment No. 56:
In page 17, between lines 20 and 21, to insert the following subsection:
"(4) Notwithstanding subsection (3) or section 23 of the Act of 1998 (as amended by paragraph 11 of the Schedule) a subsidiary of a company may, for not more than the period of 12 months from it becoming a subsidiary of the company or such further period as the Minister may approve, carry on any activity which would otherwise be inconsistent with those provisions. The subsidiary shall, after that period, divest itself of and cease such activity.”.
The principal objectives of a subsidiary of an authority are those set out in section 23(1) of the Air Navigation and Transport Act 1998, as amended by paragraph 11 of the Schedule to the Bill, which extends such principal objectives to also allow it deal in land as part of its business activities. The effect of this amendment will be that if Shannon Airport Authority, for example, acquires a subsidiary at a later stage which in part carries on other business outside of its principal objects, that subsidiary will nonetheless for a period of one year or such extended period as the Minister may allow be permitted to carry on such additional non-core activities pending the transfer of such activities elsewhere. This amendment follows on from discussions with the Department of Enterprise, Trade and Employment on a possible future link with SFADCo.
Amendment agreed to.
Section 14, as amended, agreed to.
SECTION 15.
Amendment No. 57 is in the name of the Minister. Amendments Nos. 58 to 60, inclusive, are related. It is proposed, therefore, to discuss amendments Nos. 57 to 60, inclusive, together.
I move amendment No. 57:
In page 17, subsection (1), line 25, to delete ", with the consent of the Minister,".
Amendment agreed to.
I move amendment No. 58:
In page 19, between lines 46 and 47, to insert the following subsections:
"(6) A company shall on, or as soon as may be after, the publication of a notice under subsection (5), send a copy of the notice together with a copy of the draft bye-laws to the Minister. The company shall, before making the bye-laws, have regard to any observations made by the Minister on the draft bye-laws, made within the period of 30 days from the date of publication of the notice.
(7) A company may, where it proposes to make bye-laws which it considers for reasons of urgency should be in operation immediately or are of a minor or technical nature, with the consent of the Minister, dispense with the requirements of subsections (5) and (6) in relation to the making of the bye-laws.
(8) The Minister may, where he or she proposes to make bye-laws which he or she considers for reasons of urgency should be in operation immediately, dispense with the requirements of subsection (5) in relation to the making of the bye-laws.”.
Amendment agreed to.
I move amendment No. 59:
In page 20, between lines 11 and 12, to insert the following subsection:
"(9) A company in the case of bye-laws made by it and the Minister in the case of bye-laws made by him or her shall give a copy of the bye-laws to any person applying for them on payment of such reasonable sum, if any, being a sum (not exceeding the reasonable cost of making the copy) as fixed by the company or the Minister, as the case may be.".
We only received these amendments this morning. It would be a courtesy to those of us on this side if the Minister outlined what is contained in the amendments rather than expect us to speed read them in advance of being moved. Will he outline the basis of amendments Nos. 58 and 59 in order that we can agree to them? There is no need for him to read the full briefing note but——
That is reasonable.
The Bill, as published, provides for the concept that the Minister is required to make by-laws. For operational reasons, Aer Rianta has requested that the reference to ministerial consent be removed. I have by way of a deletion in section 15(1) agreed to do this. However, to ensure there is an appropriate degree of general departmental supervision, I propose to amend section 15 by providing in a new subsection (6) that the Department will be given a draft of any proposed by-laws and that during the period of public consultation on such by-laws, my Department will have an opportunity to make observations on them.
In the case of by-laws for airports, either urgent or minor in nature, I propose new subsections (7) and (8) which will allow for the making of such by-laws immediately without the requirement for public consultation. To ensure by-laws for airports are easily accessible, I also propose a new subsection (9) which ensures the public can obtain them on payment of a reasonable sum where a charge is imposed. The Department will be responsible for overseeing and dealing with by-laws which will cover operational matters at State and non-State airports. We do not believe there is a need for a copy of such by-laws to be laid before the Houses of the Oireachtas. Therefore, the suggested amendment to section 17 is not necessary.
Amendment agreed to.
Question proposed: "That section 15, as amended, stand part of the Bill."
I wish to raise a matter about which I spoke to the Minister of State last week. I asked him to consider it before Report Stage. In our State airports we have airport police officers who can detain an individual until the civil authorities arrive. However, in our regional airports we do not have such a provision. This is an anomaly in the legislation. Addressing it is critical to safety, especially in the light of concerns throughout the world in regard to security.
I understand this summer there will be charter flights from the United States to Knock Airport. The lack of such a provision could cause problems for flights departing from Knock Airport to the United States. We are familiar with incidents in the United Kingdom and France. When the Minister is making provision for by-laws under the legislation, it is imperative that provision also be made to allow the Minister appoint individuals within the regional airports who would have the authority to detain an individual until the civil authorities arrived.
I gave an undertaking to the Deputy that I would consider this matter and will consider it further. While I am not sure whether we can include such a provision in the legislation, I will examine the matter. I suspect the issue is that police officers based in our State airports are State employees whereas in the regional airports they are, in effect, private employees. As I am not certain about this, I will need to examine the matter. However, I am sympathetic to the Deputy's point.
It is critical that this anomaly is addressed. I do not know how we can address it but it could cause problems for the regional airports. An incident happened but luckily gardaí were close to the airport in question at the time. However, security staff do not have the power to detain an individual until gardaí arrive. Addressing this anomaly cannot be delayed much longer. I ask the Minister to table an amendment on Report Stage. I give notice that I will also try to do so.
Question put and agreed to.
Section 16 agreed to.
SECTION 17.
I move amendment No. 60:
In page 21, subsection (1), line 14, after "order" to insert "or bye-law".
Amendment, by leave, withdrawn.
Section 17 agreed to.
Sections 18 to 20, inclusive, agreed to.
SECTION 21.
As amendments Nos. 62 to 66, inclusive, are related to amendment No. 61, they may all be discussed together.
I move amendment No. 61:
In page 23, subsection (2), line 8, to delete "section) is" and substitute "section). The determination is".
Under the Bill, as initiated, it is proposed to change certain provisions in the Aviation Regulation Act. The broad thrust of these changes is to reflect the policy of restructuring and review the mandate of the Commission for Aviation Regulation in that context. Areas of change include the objectives of the commission in making a determination in relation to maximum airport charges, the duration of such a determination and, significantly, the removal of Cork and Shannon Airports from the scope of the price cap regulation. Under the restructuring, it will no longer be appropriate to price regulate Cork and Shannon Airports because they will not have market domination in the way that Dublin Airport has and will continue to have.
In changing the commission's remit, the intention is that it will balance economic efficiency, the reasonable interests of users and the need to ensure the airports' financial sustainability in a way that will promote the long-term development of Dublin Airport, having regard to its contribution to the economy. The commission will be required to conclude a new price determination for Dublin Airport within 12 months of the enactment of the Bill. It will be a matter for the commission, as the independent regulator, to make an appropriate determination based on its new mandate.
The objective of the changes to the regulatory framework is to strike an appropriate balance between the interests of the various stakeholders in Dublin Airport. This forms a key part of the strategy designed to assist the airport authorities to meet future challenges. All of the amendments proposed under this section are being brought forward by the Minister. This amendment, with amendments Nos. 62, 63 and 66, are technical and legal.
I also propose a number of further amendments on foot of concerns raised by the commission in regard to whether the restructuring can be taken into account in the initial determination. This determination should be made within 12 months of the passing of the Bill. I consider that the commission has valid concerns in this regard and amendments Nos. 64 and 65 are intended to address the timing issue. The effect of these amendments will be that the commission will not have to have regard for the restructuring in that initial determination but will subsequently have to consider the restructuring and amended determination if considered appropriate. Amendment No. 64 clarifies that if, say, Shannon Airport is vested before the first determination, any interim review to take account of the vesting of assets will take place six months after the first determination. On the other hand, if the vesting of Shannon Airport occurs after the first determination, the interim review will be completed by the commission six months after the vesting of assets, that is, six months after the particular appointed day.
Amendment agreed to.
I moved amendment No. 62:
In page 23, subsection (2), line 9, to delete "amended)," and substitute "amended)".
Amendment agreed to.
I move amendment No. 63:
In page 23, lines 29 and 30, to delete "(within the meaning of the State Airports Act 2004)”.
Amendment agreed to.
I move amendment No. 64:
In page 24, between lines 13 and 14, to insert the following:
"(3) Subsection (2)(a) does not apply in relation to the first determination made after the passing of the State Airports Act 2004, having regard to section 5(2) of that Act.
(4) The Commission shall not later than 6 months——
(a) after the making of the first determination, where it is made after the Cork or Shannon appointed day (within the meaning of the State Airports Act 2004), and
(b) where the first determination is made before either of those appointed days, after that day, have due regard to the restructuring, including the modified functions of Dublin Airport Authority. Where it considers it appropriate it may amend the determination.”.
Amendment agreed to.
I move amendment No. 65:
In page 24, between lines 14 and 15, to insert the following:
" 'restructuring' is to be construed in accordance with the State Airports Act 2004;”.
Amendment agreed to.
I move amendment No. 66:
In page 24, line 19, to delete "operating from" and substitute "provided at".
Amendment agreed to.
Question proposed: "That section 21, as amended, stand part of the Bill."
I note that Deputy Shortall is opposing this section. I also have a query in regard to it, to which the Minister might respond. Subsection (1)(b) states a determination shall be in force for a period of not less than four years. Is this an excessive period? In normal circumstances it probably is not but there will be dramatic changes in Dublin Airport in the next four years given the possible provision of an independent terminal and the debt the airport will face.
As regards the airport's debt, there could be serious changes concerning repayments. There could be a significant change, especially within the first or second four year period. Can a mechanism be put in place, either through the Department or the board at Dublin Airport, whereby it can seek a review of the determination within the four year period?
We know that the taxpayer lost a significant amount of money, running to €6 million or €7 million, in a legal case taken between the existing board of Aer Rianta and the regulator. It was a pointless exercise. The Minister should have been in a position to arbitrate on the issue, rather than having to go through the courts with the taxpayer having to foot the bill. This is crazy and should not be tolerated.
Some mechanism should be put in place to allow such a review to be undertaken during an interim period, especially within the first four to eight years of this legislation being enacted which could be a turbulent time. There could be a massive downturn in the aviation sector. Therefore, there should be some mechanism in place to allow such a review to be undertaken. Four years can be a long time in this context.
In the event that section 21 remains part of the Bill, I indicate my intention to table an amendment on Report Stage as time did not allow us to consider the matter thoroughly. I am concerned that there is no reference in the section to the need to maintain internationally recognised standards at Dublin Airport. Obviously, this is something to which we should aspire and which the Commission for Aviation Regulation should be obliged to take into consideration. As I did not have enough time to draft an amendment, I give notice that I will table an amendment on Report Stage.
Essentially, the section provides for the increase in charges that will inevitably occur with the break-up of Aer Rianta. Throughout the debate during the past 12 to 18 months Opposition Members have tried to find out the reason the Minister is proposing the break-up of the company. All he will say, however, is that it is to achieve competition which, per se, is good in the context of what happened with Ryanair. Other than this, there is no rationale for doing so. As we know, no business case has been made. If one draws the argument to its conclusion, the purpose is to create competition which, we generally understand, drives down prices, or that is what the Minister claims. However, we know that in this case competition will inevitably lead to increased charges. There is no other way it can happen.
The Minister is proposing to write off over €100 million of the value of the company. We know, therefore, that the only way the three airport companies can survive independently is by increasing charges. If the intention is to attract more low-fare airlines, charges should be reduced, yet the Minister's plan will inevitably lead to increases. He has recognised this fact because the section provides for the cap on charges to be lifted. This shows the fundamental flaws in his thinking and policy. For that reason I am completely opposed to the section.
Deputy Shortall's point highlights the fact that the legislation is premature. No financial basis has been proposed for it. The Minister has been questioned repeatedly about this but his face remains blank and we have received no answers. It is disappointing that he has not been prepared to make any financial case for the legislation before us.
Deputy Shortall has made an extremely valid point about airport charges. There is no doubt that, as they stand, Cork and Shannon Airports will not be able to maintain the current preferential charges regime under the Minister's proposals. This highlights the fact that the legislation is premature.
Question put and declared carried.
Section 22 agreed to.
SECTION 23.
Question proposed: "That section 23 stand part of the Bill."
I give notice of my intention to table an amendment on Report Stage concerning the current provision whereby the Commission for Aviation Regulation has power to appoint authorised officers who are entitled to enter any premises, remove or copy any information belonging to the entity related to the provision of airport or aviation services. This area needs to be amended. I, therefore, intend to table a relevant amendment on Report Stage.
Question put and declared carried.
SECTION 24.
Question proposed: "That section 24 stand part of the Bill."
I give notice of my intention to table amendments on Report Stage to this section in Part IV, miscellaneous amendments. Time did not allow me to table amendments on Committee Stage but there are serious issues concerning regulation about which I intend to table amendments on Report Stage.
Question put and declared carried.
Sections 25 to 27, inclusive, agreed to.
SCHEDULE.
I move amendment No. 67:
In page 29, line 41, to delete "€20" and substitute "€100".
The cap on borrowing for Dublin Airport is €700 million. The corresponding figure for Cork Airport is €100 million and for Shannon Airport, a paltry €20 million. There is a need for capital investment in all three airports. In the not too distant future there will be a need for significant capital investment in the runway at Shannon Airport as well as an immediate need for capital investment in car parking facilities. However, such a limited cap will tie the hands of the new Shannon Airport Authority which will have responsibility for repaying its debts. While we need a properly evaluated cap on borrowing, I do not consider that the specified figure of €20 million will allow the authority the flexibility it requires.
The limit of €20 million can be increased, if necessary. Section 13(6) of the 1998 Act allows the Minister, with the consent of the Minister for Finance, to increase the borrowing limits as the case may be. The subsection states the Minister may, with the consent of the Minister for Finance, and after consultation with the company, by order, vary the amount.
Why is Shannon Airport being discriminated against? The throughput of passengers at Cork and Shannon Airports is similar. There will be massive development at Cork Airport and the debt will be carried by the Dublin Airport Authority. Meanwhile Shannon Airport will not even have the ability to raise capital because of the cap being placed on it. Does it not seem reasonable that, based on the throughput of passengers, the cap relating to Shannon should be similar to that which will apply to Cork?
I support Deputy Naughten's amendment. Putting in place a cap of €20 million does not appear to be a vote of confidence for Shannon Airport. Why is the cap being put in place? The Minister stated that approximately two million passengers use Shannon and that, with the new terminal, this will increase to 5.5 million. He stated earlier that he would like the number of passengers using the airport each year to reach four million, which would make its throughput greater than that of Cork. As Deputy Naughten pointed out, major infrastructural development must be carried out on the runways at Shannon. If, as he stated, the Minister is intent on allowing the airport to proceed down the low cost route, there is work to be done, particularly if a cargo business is to be developed. I understand money is being spent on an impact study relating to running a railway line into Shannon.
As is the position with Cork Airport, where a new terminal is to be built, a cap of €100 million should be put in place for Shannon. Money must be spent at Shannon Airport and I urge the Minister to accept Deputy Naughten's amendment to change the cap to €100 million.
I agree with the comments made by Deputies Naughten and Pat Breen. There does not appear to be any reason for the disparity in the levels of borrowing allowed. I would like the Minister to explain from where he obtained the figures and on what they are based.
Out of a brown envelope.
It sounds like it.
It is envisaged that Cork and Shannon would make sufficient profits from their activities to prevent them having to engage in heavy borrowing. It would not be the intention of the authority at Shannon Airport to make extensive borrowings at this stage. However, if it was required to borrow more than the amount set down in the legislation, this can be accommodated. All that is required, under the relevant section of the 1998 Act, is the agreement of the Ministers for Finance and Transport. This can be done by order.
There must be some reason that a cap of €20 million was included in the legislation. Why is there not a similar cap for Cork?
The cap of €20 million was based on an assessment of the kind of limit that would be appropriate. As matters stand, there is no need for Shannon to borrow €20 million or any amount of that order. It is considered a sensible figure. There is no big deal and it can be amended, particularly if plans come forward and the airport authority wants, for good reason, to borrow money. The Government of the day and the Department will have an opportunity to consider the major investments above a value of €20 million in which the authority wants to engage.
We must also take account of the aspect of vulnerability which applies here. I do not believe it would be a good idea for Shannon to engage in large scale borrowing at present. Deputy Pat Breen is aware that there are some major issues which must be resolved. I do not believe major borrowing will provide the answer.
I presume the Minister is saying the scale being put in place is based on the vulnerability of the three airports. When we raised concerns about Shannon earlier, he informed us that we were being irresponsible. However, it appears the Department of Finance, in terms of the scale that will be put in place, is highlighting those concerns. The Minister stated there is no need for a borrowing requirement of more than €20 million for Shannon. Perhaps he would allow us to see copies of the relevant business plan because it is obvious that such a plan has been developed. If Cork Airport, which has a similar throughput of passengers, will have a limit of €100 million, a similar cap should be put in place for Shannon. The latter requires significant investment, particularly in respect of infrastructure leading into the airport. Based on what the Minister has stated in respect of the provisions relating to SFADCo, there will be a significant capital bank available and the debt should be quite secure.
I am not making a particular point of this but it is worth reflecting on the fact that while both airports have the same throughput, one is substantially more profitable than the other. That point is worth pondering in terms of considering the structures of the airports.
Which is more profitable?
Cork Airport is substantially more profitable and what we are talking about here is the ability to repay. If the Deputy's argument is that Shannon Airport should be allowed to borrow €100 million, I must inform him that it would not have the ability to repay. It would be unnecessary and irresponsible to allow it to do so under legislation.
That is not a vote of confidence in the airport.
Allowing it to engage in large scale borrowing would not be a vote of confidence. My vote of confidence in Shannon is that it will not need to borrow because it will do well.
The Minister's comments do not add up. He accused us earlier of having a doom and gloom attitude in respect of Shannon. The setting of the limit at €20 million indicates either his view or the content of the advice available to him on what is likely to happen. There just does not seem to be any logic to this. As he stated, the level of business at both airports is similar. However, there are massive debts of more than €200 million at Cork Airport as a result of the investments that have taken place and the convoluted arrangement reached in respect of Dublin Airport remaining as the landlord and Cork leasing the terminal. I accept there are other problems at Shannon but it does not have debts such as those which obtain at Cork. An explanation has not been provided in respect of these figures and it is difficult to come to any conclusion other than that they have been plucked out of the sky.
I am surprised the argument is that we should seek to permit the airports to borrow more money, particularly before expansion plans are put forward by the boards.
The Minister should listen to what he is saying.
How much does the Deputy want Shannon to borrow and for what purpose?
I thought that was the purpose of these business plans.
I am opposed to saddling Shannon Airport with enormous debts.
Is that due to the fact that the Minister is afraid it will not be able to repay loans because the business is not there?
The new authority, the staff, the manager, etc., will generate the business going forward and they will commence their work in that regard in the near future. I hope there will be no need for the airport to borrow. If major plans to borrow are drawn up, these can be assessed and if it is decided to proceed with them, they can be facilitated on foot of an order from both Ministers. It is no big deal.
The Minister does not harbour such concerns about Cork, despite the fact that it already has massive existing debts.
Cork is doing far better than Shannon.
How will Cork clear its debt?
I could provide figures but the Deputy has already admitted that Cork, with the same volume of passengers as Shannon, is doing far better.
Yes but it has existing substantial debts.
It is in a better position to clear that debt.
And borrow more.
This is a simple matter. I do not know which part the Deputy cannot grasp.
It is somewhat hypocritical of the Minister to make that point at this stage when he was so critical of us earlier when we raised it. He was critical of our raising the concerns that exist in respect of this matter and he pointed out that the staff at Shannon are capable and competent. No one disputes that.
Shannon will do very well and may not need to borrow.
In the event of changes in the bilateral agreement, Shannon could become a hub. The Minister must understand that it is the main transatlantic airport into the west. He stated in the past that he supports the idea of Shannon becoming a hub and, in that event, it will need major investment, particularly in respect of the terminal building and upgrading runways - there is a possibility that, depending on the level of traffic, a cross-runway may be needed. The Minister does not appear to be giving the airport a vote of confidence, nor does he seem to believe in the potential business it could attract.
My confidence is based on the fact that it will not be required to borrow large sums because it will do well.
Or it will be restricted.
Amendment put.
The Committee divided: Tá, 5; Níl, 7.
Tá
- Breen, Pat.
- Healy, Seamus.
- Naughten, Denis.
- Ó Caoláin, Caoimhghín.
- Shortall, Róisín.
Níl
- Brady, Martin.
- Brennan, Seamas.
- Curran, John.
- Ellis, John.
- Glennon, Jim.
- Ó Fearghaíl, Seán.
- Power, Peter.
Amendment declared lost.
Amendments Nos. 68 to 70, inclusive, will be taken together.
I move amendment No. 68:
In page 30, to delete line 7.
Amendments Nos. 68 and 70 are technical, legal amendments, while amendment No. 69 contains a provision to amend section 23 of the 1998 Act, which deals with the principal objects of Aer Rianta and the successor airport authorities on their appointed day. The amendment will allow the airport authority to engage in property development on the airport zone in the interest of general airport development.
: Is that inside or outside the red zone?
That is a simple question.
On Second Stage, I referred to the major review of the State's industrial policy that is underway. It would be premature to make decisions in this regard prior to the publication and analysis of the review and agreement on it with the usual agencies. A decision to make transfers such as this would be premature.
No decisions in this regard have been taken yet. I take on board the Deputy's comment.
Amendment agreed to.
I move amendment No. 69:
In page 30, between lines 17 and 18, to insert the following:
"11. In section 23(1), by inserting after paragraph (d) the following:
'(dd) to acquire or take a transfer of or otherwise deal with any property, to construct and maintain buildings and all other works of any description whatsoever either upon lands acquired by or transferred to the company or upon other lands and to hold, retain as investments or to sell, dispose of, let, alienate, mortgage, charge or deal with all or any of the same on such terms as the company thinks fit and generally to alter, develop and improve the lands, and other property of the company,’.”.
Amendment agreed to.
I move amendment No. 70:
In page 30, to delete lines 18 and 19 and substitute the following:
"12. In section 26(1)——
(a) by deleting 'by section 14', and
(b) by substituting 'section 8 of the State Airports Act 2004' for 'section 16'.".
Amendment agreed to.
I move amendment No. 71:
In page 32, line 28, to delete "subsection (3)" and substitute "subsection (2)".
This is a technical legal amendment.
Amendment agreed to.
Schedule, as amended, agreed to.
TITLE.
Amendments Nos. 72 to 74, inclusive, not moved.
Title agreed to.
Bill reported with amendments.