I have received an apology from the Chairman, Deputy Cowen, that he is unable to attend. I invite nominations for temporary Chairman.
Election of Temporary Chairman
Election of Temporary Chairman.
Clerk to Committee
I propose Deputy Carey.
Clerk
In the absence of any further nominations, I call on Deputy Carey to take the Chair.
Deputy Carey took the Chair.
NEW SECTIONS.
Debate resumed on amendment No. 147b.
In page 95, before section 112, to insert the following new section:
"112.—Section 285 of the Principal Act is hereby amended by the deletion of subsections (2) (a) (i) and (2) (a) (ii), by the insertion in the second line of subsection (2) (a) (iii) of the words "Value-Added Tax or" after "in respect of" and by the substitution of "4" for "12" in the sixth line of the said subsection (2) (a) (iii).".
—(Deputy J. Bruton.)
I propose that, as we have heard both sides of the question, in accordance with the relevant Standing Order No. 58, that the question be now put.
I have not finished my reply; I was half way through it. The matter has not been dealt with. I have not given a satisfactory response to the question that was put to me. I think it is only fair and right that I should respond to a very important issue.
With respect, the Minister has given a very full response and in fact, we prolonged the meeting in order that he could complete his response the last day. He did complete his response. There is nothing further to be said. I reaffirm my proposal that the question be now put.
I did not think we stopped at the point where a question was going to be put. We could have done that the last day. I have to go along with the Minister. We could have taken the vote the last day if we were ready to take it and if everything was finished. I take the view that we were not finished.
Just to put the record straight, I am quoting from the minutes, the rough draft, of the meeting. I stated, "I will come back at the next meeting because it is a lengthy reply and we will discuss the question then." The Chairman said that " as they are being discussed together perhaps the Minister will resume his reply in respect to. . ." I said I would come back to it at the next meeting because it is a lengthy reply. I am not finished with my reply.
I would request——
Chairman
As far as I can recall, the debate was closed the last day. There were lengthy submissions made by both sides. I am a bit puzzled at the note I have here becaused it says the debate is to resume on amendment No. 147b. I thought that that had been fully discussed the last day.
It was. The debate has resumed and I am proposing that it be terminated in accordance with Standing Order No. 58.
I am sorry, I must beg to differ. The draft of the meeting is here before me. I can quote from that draft. The draft states quite clearly, "I will come back at the next meeting because it is a lengthy reply". I have not finished my reply. I am now going to proceed with my reply. I think I am entitled to reply to this particular issue. I must insist on the right to reply. I think it is only right. I did not complete the reply. I adjourned my reply. I was resuming on the adjourned reply from the last meeting; I must insist that I can reply to the question.
That is not in accordance with the facts. The meeting was extended in order to allow the Minister to complete his reply the last day. He did so. It is clear he is not giving any ground; I suggest we put the question.
I want to quote from the document, if you want to read from it.
I am not interested.
I have the document here before me. I was only half way through my reply. Because of the time, it was decided that I would resume at the next meeting. I feel it would be totally inappropriate if I were not allowed to reply. The meeting was adjourned when I was half way through my reply. I am now proceeding to give the reply to the amendments before us. They are very crucial and important matters. I think it is only proper that the Members of the Committee should be aware of my views as the Minister responsible for this particular Bill at this point. I am sure the Chairman has available to him the document which I have available to me, stating exactly what the situation is. The meeting was adjourned until today on the basis of the completion by me of my reply to this Committee. I think it is very important that I should be given the opportunity to complete my reply. I do not understand what the urgency is in wrapping up this matter now.
Chairman
I have been very attentive at these meetings and you gave rather a long reply to this amendment. Indeed, Deputy Bruton and Deputy Barrett put it very ably. I have been requested by the movers of the amendment to put the question. I think it would be fair for me to put the question if the mover is satisfied that the debate has been concluded.
Fully.
Chairman
I propose to put the question.
I would welcome an opportunity to be able to make a contribution here. I do not expect to be cut off. The point is, I was at that meeting——
On a point of order, you have ruled that you are proceeding to vote on this matter and I suggest that you proceed to vote.
Chairman
I think a division has been called.
I must object. I request an adjournment. I cannot participate in this. I regard it as not being in accordance with Standing Orders. I have quoted the actual draft of the last meeting, where I stated I would come back at the next meeting because of the lengthy reply. I was in the middle of my reply. You can have all the pressure you wish from Deputy Bruton but I do not believe anyone should railroad this matter through today. I regard this as being totally unacceptable; I will have to consult advisers on this. I cannot accept a vote now when I am only replying to the question before this Committee. I think it is unacceptable; it is a breach of Standing Orders, I should be allowed to reply. I have not been given that opportunity at this meeting. I feel, in the circumstances it would not be in order to proceed with a vote on this issue at this point.
The debate was not over. You are now acting on behalf of all of us here, on both sides. I expect that the Minister will be entitled to complete the report which he was working through at the last meeting, which I distinctly remember. I was here and I heard it all and remained to the end. In fact, we overran by ten or 15 minutes. There were some calls from the other side——
On a point of order, the Standing Orders state quite clearly that if there is a motion, that the question be now put, it shall be put forthwith and decided without amendment or debate. I submit to you, Sir, that we are now engaging in debate on a question for which there is no provision for debate in Standing Order 58.
Does that include preventing the Minister from completing his response to the debate?
Chairman
I have accepted Deputy Bruton's motion, that the question be now put. I believe the matter has been debated fully and I have asked that a vote be taken on the matter.
Let us get the minutes, Chairman. I request that the minutes——
(Interruptions.)
Deputies are insisting on defying the Chair.
Chairman
I have asked that the question be put and I am now requesting the Clerk to call the names for the vote.
Votáil.
For the sake of the working of this Committee of the Oireachtas, I think you would be acting improperly if you proceed with the vote or be pressured by any Member of this Committee to proceed with a vote at this point. It is fundamentally important to this Committee and to this Bill that I be allowed to reply. In the circumstances, I would have to say that the three Members here could withdraw from this committee and leave it without a quorum to proceed——
On a point of Order, the suggestion now being made by the Minister is purely an attempt to ensure that a vote does not take place unless he, the Minister, decides that it should. It is an abuse of Standing Orders. Also, a precedent is now being set whereby a vote does not take place when the question has been put.
Chairman
I asked that the vote be taken. After all the meeting has been in progress for 25 minutes, since 4.15 p.m.
You are an acting chairman here today on the basis that the Chairman had some difficulty in coming to the meetings. I feel that this is a fundamental principle of this Bill and I feel that it would be improper for you as acting chairman at this point not to allow me to proceed with——
Proceed with the vote.
(Interruptions.)
Deputy Bruton cannot proceed in this manner to pressure this committee to take particular action at this time. I am entitled to quote again: "I will come back at the next meeting because it is a lengthy reply. When will the next meeting occur?" I am prepared to put forward my views here at this meeting. I am entitled to put forward my views as Minister. I am acting on behalf of the Department of Industry and Commerce. I am entitled——
This is appalling. Why did the Clerk not read out the names at the direction of the Chair?
The Chairman is an acting chairman for today. He is not under any pressure from any other Deputy here. Deputy Bruton is pressuring the Chairman to take a particular action here today.
On a point of order I have to point out that the usual procedure is that once the question has been put, a vote takes place. We are now departing from that precedent for reasons of expediency and for nothing else. We are setting a dangerous precedent. I will say that if this is the way the committee is to proceed votes will not take place in future after the question is put. Am I to believe that that is to be the story?
The point I wish to make is that we will have to be clear in future as to how we terminate meetings. We terminated the last meeting when the Minister was working to a report because we overran but queries had been raised on this side of the House and, if I recall correctly on the far side of the House, too. Therefore, we returned to hear the remainder of the Minister's report.
(Interruptions.)
Chairman
I asked the Clerk ten minutes ago to call the vote. That is the current situation.
Why did the Clerk on your direction not read out the names?
I am putting forward the point of view on behalf of the Department. I am still entitled to put forward that view.
A clear direction was given by the Chair to call the vote and the names were not called out. Why not?
It was not in order for you to put the vote at that stage. I feel I am entitled to reply on behalf of the Government. I still feel I am entitled to reply but if you rule now for a vote that is your business.
Chairman
I ruled over 12 minutes ago that the debate had closed and that the vote should be taken. We are still at the same position because there has been a filibuster on both sides and the thing has not been concluded.
Clerk
The question on amendment No. 147b is——
On a point of order why did the Clerk not read out the names when so instructed by the Chair originally? Whether we are working with a secretariat on this committee that works for the majority in the committee at a given time——
That is grossly unfair.
(Interruptions.)
The Clerk and indeed all of the staff of this committee operate for the committee. I took the trouble of phoning to say that I would be 15 minutes late. I do not know if my apologies were conveyed but if they were not I now reiterate them.
I do not know what the issue at stake is here and my sympathies are with you, Chairman. You seem to be getting it rather hot and heavy from both sides. It is extraordinary that Deputy Bruton who could not even turn up in time for the initial meeting of this committee to elect a Chairman should now be castigating people for being——
(Interruptions.)
In fairness to the Clerk of the committee I must protest. I feel that the Clerk is acting in a proper manner. I am responsible——
Chairman
You are behaving in a disorderly manner.
This meeting was adjourned the last day on the basis that I was replying to this debate. If it was in the Dáil itself in the main Chamber I would be entitled to go back to resume the debate. I feel the same rules apply here as apply in Dáil Éireann.
On a point of order, the Minister has the minutes of the last meeting, why has not every other member got copies of those minutes?
Chairman
I am afraid I cannot answer that.
This is just a charade and a farce. We got a lecture here one day from the Minister for Industry and Commerce that because we were asking too many questions we were delaying the passage of the Bill. I arrived here at 4.15 p.m. It is now 4.40 p.m. and we have not discussed one thing. Some of us were here until 6.20 p.m. to 6.25 p.m. the last day. The matter was debated and discussed. It was obvious that a filibuster went on here to avoid a vote and the people responsible have succeeded in doing that. If this is the way this committee is to be run we are just wasting our time sitting here. We get no co-operation from the Minister in respect of good argument put forward, our points are totally set aside, there is neither give nor take. We get no co-operation in terms of reasonable amendments. Now when it suits them they filibuster this thing for 25 minutes to avoid a vote. I would like to know why we do not have a copy of the minutes of the last meeting so that there could be no dispute about this? The Minister is reading from some document I have never seen.
Chairman
I am satisfied that the matter has been debated. So far as I am concerned, amendment No. 147b was put by me at least at 4.30 p.m. I now request the Clerk for the last time to read out the names for the vote, please.
Your memory is faulty. I have the documentation here which my Department sought. It is the first run of the minutes of the last meeting. Any other Deputy was entitled to go to the committee staff and seek that information as well. In fact the Chairman had discussed this matter at the meeting. I was here for that meeting and there was not a full discussion in relation to this particular amendment. I was half way through the reply. I am entitled to come back here as happens in the main Chamber of Dáil Éireann to reply to a question. I seek the same assistance from you as I would from the Ceann Comhairle of Dáil Éireann.
I raised a point of order to which I have not had a reply. I wish, with the permission of the Chairman of the Committee, to put that point of order again. As I understand it, what happened here recently was that the committee decided, as I proposed, that the question be put, that the Chairman ruled that the question be put and requested that the vote be called. I understand that the procedure for calling a vote involves the Clerk reading out the names. As I can see, the Clerk did not read out the names and I would like to know through you, Sir, why the Clerk did not read out the names on the instruction of the Chair? This affects the orderly function of the committee in future.
Chairman
The Clerk says she has not been able to get in because of the disorderly behaviour of the Deputies. That is precisely so. I am asking the Clerk to read out the names.
Again, I think it is grossly unfair of Deputy Bruton to cast aspersions on officials of this House. I am responsible for seeking my right to reply to a question and I will maintain my position on this if it goes on for the whole day. I will not have a member of this House cast aspersions on an official who is carrying out her responsibilities to the letter of the law. I am entitled to reply to this question. I still maintain that right. I maintain it under Standing Orders. I do not see why you should deprive me of any right that I would have in the main Chamber.
Chairman, I do not understand why, having assiduously attended the meetings of this committee, there was an attempt to prevent me hearing the remainder of the Minister's contribution which he was half way or partially through at the last meeting. I want to put it on record that I distinctly heard the Minister say at the time that he wished to complete his reply. He had not concluded and he held up a number of documents that he was working through. It is objectionable that an attempt was made at the start of the meeting to cut off discussion when those of us on this side of the House who are interested in this matter wish to hear fully from the Minister.
Is it the case that the Clerk was prevented from putting the vote by the continued insistence of the Minister on continuing to speak, in defiance of the ruling of the Chair? If that is so, could I ask the Chair for a ruling as to whether the Minister is in order to continue to participate in the debates in view of the disorder he caused?
Chairman
I decided I would put the vote. According to Standing Order 53, the Chair is the judge of the order in a committee of the Dáil and has authority to suppress this order and enforce prompt obedience to his ruling. I am proposing to proceed with the vote and I ask the Clerk to call the names.
Are we not going to hear the balance of the Minister's statement?
Chairman
The debate has been concluded on this amendment and I am proposing to put the vote.
I do not want to be disorderly, but my clear recollection was that as we left the last day the Minister — I was not here at the beginning so I do not know what went before on this — held up a number of lengthy documents and I was not the only Deputy who groaned and said we will never be out of here. The suggestion was made that the Minister should continue his contribution on the points today. I do not know if the Minister has had that opportunity. If that is your ruling I will accept that there should be a vote now. In fairness, my clear recollection is that the Minister indicated that he had to continue some contribution today. Obviously, your ruling on this matter will be accepted by me and by any other Deputy here.
The motion before the committee is that the question be now put. If that question had been put at the time, the committee could have decided whether they wanted to have a vote on the matter. It was entirely democratic. It was simply allowing the committee to decide whether they wanted to have a vote. What happened was, that the Minister kept on talking to the point and the Clerk has stated through the Chair, that she was unable to abide by the instructions of the Chairman to read out the names for the vote. In other words, we had deliberate obstruction of the work of the committee by the Minister, who prevented a vote, which was in order within Standing Order 58, from being put to the Committee by the Clerk. If the Clerk can be prevented from dong her work by misbehaviour on the part of the Minister, that brings the entire functioning of this committee into disrepute and causes considerable problems for us in continuing with the work of the committee.
I reject Deputy Bruton's statement as to how this matter first arose. I certainly do not agree with his statement, reading it, as he is into the minutes of this meeting, that it was the Minister's fault. I acknowledge the fact that I protested vigorously that we were not going to hear the remainder of the Minister's contribution and that is why I came to this meeting, to hear the balance of the Minister's statement. If Deputy Bruton wants to criticise me for that he may do so, but it is grossly unfair that he would attack the Minister in the way that he has. It was not the Minister. Much of the contributions, where the difficulties arose, were coming from this side and not from the Minister.
I will accept the amendment that it was the Fianna Fáil members of the committee, including the Minister who were responsible for this.
I want to remind Deputy Bruton that he was quite——
Chairman
As far as the Members are concerned, when I was elected as acting chairman, I thought I was appointed to act as a judge in relation to order or disorder. From the time I said the debate had been concluded and asked for the vote, there has been totally disorderly behaviour. Deputy Flood has been as disorderly as the Minister.
And other Members.
Chairman
And other Members, but as far as I am concerned, if this committee want to proceed to the vote, I have asked a number of times that it be taken. The discussion has gone on ad nauseam.
On a point of order, I would protest that I am accused of being disorderly when I am seeking my rights as a member of this committee acting on behalf of the Government. I would like to know which amendment the Deputy is referring to as we are discussing three amendments. On a crucial issue like this every Deputy should be aware of the situation regarding this issue in this Bill. It is right and proper that I would have a right to reply. I still seek that right and I seek the same rights as I would expect in the Dáil Chamber. Those same rights apply to a committee of this House. I do not accept that I have been disorderly. I have been completely in order in seeking my rights.
On a point of information, as a new Member in the House I find it astounding that you made the decision 20 minutes ago to put a vote and we are still arguing about putting it. The Minister is talking about what would happen if he was in the Chamber. If he was in the Chamber at this stage he would have been asked to leave because you cannot be disorderly there for very long before being asked to leave. If the Chairman's authority has been taken from him, we are wasting our time in this committee.
The agenda shows that item No. 1 refers to the consideration of amendment 147b resumed.
You can move a motion under Standing Order 58.
Chairman
I am putting the question.
I think you should proceed.
Clerk to Committee
The question on amendment No. 147b, is "That the new section be there inserted."
On a point of order, the motion is under Standing Order 58 and it is "That the question be now put". Are you putting that or the actual question?
Chairman
As I understand it, the only person entitled to move for a closure of a debate in the committee is the Chairman and I have moved that.
Question put: "That the new section be there inserted".
The Special Committee divided: Tá, 5, Níl, 7.
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Tá |
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Barrett, Seán. |
Durkan, Bernard. |
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Bruton, John. |
Reynolds, Gerry. |
|
Carey, Donal. |
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Níl. |
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Cullimore, Séamus. |
O'Donoghue, John. |
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Flood, Chris. |
Rabbitte, Pat. |
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Kitt, Tom. |
Roche, Dick. |
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Leyden, Terry. |
Question declared lost.
I move amendment No. 148:
In page 95, before section 112, to insert the following new section:
"112.—Section 285 of the Principal Act is amended by the deletion of subsections (2) (a) (ii) and (2) (a) (iii).".
This amendment also concerns Revenue preference. The fact that when a company become insolvent——
On a point of Order, has this discussion not ended as requested by Deputy Bruton? I thought he insisted he had finished discussion on these amendments and that we were proceeding with the votes.
We have just decided on 147b.
All were decided on, by Deputy Bruton. He was insisting that this be concluded. I was not allowed to reply and now the rules have been changed again.
On a point of order, who is the Chairman?
Chairman
The Minister's point of order is correct. The discussion has already taken place. Deputy Bruton may move that the new section be there inserted.
May I justify my proposal, because amendment 148 is a different proposal from amendment 147b.
Chairman, we cannot——
I am not asking Deputy Roche. I am asking the Chairman.
Chairman
The agreement reached at the previous meeting was that amendments Nos. 147b, 148 and 149 be taken together.
The question that was put, Chairman, which I asked be put and which you agreed would be put in respect of amendment No. 147a. The others were simply associated questions.
I thought it was amendment No. 147b.
Yes, it was.
Chairman
Unfortunately the position is that we have to go on to amendment No. 148, that the new section be there inserted.
I take it that you are ruling so that I am not allowed to say anything about it? I will accept that ruling, unlike the Minister.
I object to that comment.
Chairman
Is the Deputy pressing his amendment?
Yes.
Question put: "That the new section be there inserted."
The Special Committee divided: Tá, 5; Níl, 7.
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Tá |
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Barrett, Sean. |
Durkan, Bernard. |
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Bruton, John. |
Reynolds, Gerry. |
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Carey, Donal. |
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Níl |
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Cullimore, Séamus. |
O'Dea, Willie. |
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Flood, Chris. |
Rabbitte, Pat. |
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Kitt, Tom. |
Roche, Dick. |
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Leyden, Terry. |
Question declared lost.
I move amendment No. 149:
In page 95, before section 112, to insert the following new section:
"113.—Section 285 (2) of the Companies Act, 1963, shall be amended by the addition of the following:
‘(h) the unpaid purchase price or any outstanding balance thereof for any goods supplied to the company, its servants or agents during the three months next before the relevant date.'.".
Chairman
The position then with amendment No. 149 is the same. It has already been discussed. Does Deputy Bruton wish to press his amendment?
If I may, I will withdraw that amendment with a view to reintroduction on Report Stage.
Amendment, by leave, withdrawn.
SECTION 112.
Question proposed: "That section 112 stand part of the Bill."
Could I ask the Minister please for an explanation in relation to the section.
Certainly. This section amends section 285 of the 1963 Act which deals with preferential payments in a winding-up. Section 285 provides that certain debts shall rank in priority to all other debts in a winding-up. Section 98 of the 1963 Act applies the provisions of section 285 to receiverships. There preferential debts are, therefore, paid after the holders of the fixed charges and before the holders of floating charges and unsecured creditors. The debts which are afforded preferential status under the 1963 Act and under a number of subsequent enactments are briefly: all assessed taxes, PAYE, PRSI, local rates and wages, etc. due to employees. All preferential debts rank pari passu and likewise abate in equal proportion if the assets of the company are insufficient to pay all preferential creditors.
The purpose of this new section is to deal with a problem which often arises in a liquidation i.e. a liquidator can make unduly long delays in proceeding with the liquidation on the grounds that the position in relation to preferential debts is uncertain and that he is afraid of a late claim. In order to speed up matters, this section provides for a procedure whereby the liquidator can exclude any creditors who do not come forward within a specified time. The time provided for in this section is six months. This time limit is considered to be reasonable, as every creditor should be able to calculate the extent of a company's indebtedness to it within that time. A longer period would result in a liquidation being dragged out unnecessarily, while a shorter period could be unfair to some creditors.
This is an amendment to suit section 285. The text of section 285 is to the effect that it refers to the relevant date. The relevant date means that where a company is urged to be wound up compulsorily the date of first appointment of the provisional liquidator or, if no such appointment was made, the date of the winding-up order unless in either case the company has commenced to be wound up voluntarily before that date and, where sub-paragraph (i) does not apply, the date of the passing of the resolution for the winding up of the company. In a winding-up there shall be paid according to the section, in priority to all other debts the following: (a) the following rates and taxes: (i) all local rates due from the company at the relevant date and having become due and payable within 12 months next before that date; (ii) all assessed taxes, including income tax and corporation profits tax assessed to the company up to 5 April next before the relevant date and not exceeding the whole of one year's assessment; (iii) any amount due at the relevant date in respect of sums which an employer is liable, under the Finance (No. 2) Act of 1959 and in any regulations thereunder, to deduct from emoluments to which Part II of that Act applies, shall be paid to him during the period of 12 months next before the relevant date, reduced by any amount he was under that Act or any regulation thereunder liable to be paid during the said period with the addition of interest payable under section 8 of that Act.
Also, there is priority for wages or salaries whether or not earned wholly or in part by way of commission of any clerk or servant in respect of services rendered to the company during the four months next before the relevant date and further all wages, whether payable for time or piece work of any workman or labourer in respect of services rendered to the company during the four months next before the relevant date. Further, all accrued holiday remuneration becoming payable to any clerk, servant, workman or labourer or, in the case of his death, or any other person in his right on the termination of his employment before or by the effect of the winding-up order or resolution. Unless the company has been wound up voluntarily merely for the purpose of reconstruction or amalgamation with another company, all amounts due in respect of contributions payable during 12 months next before the relevant date by the company as the employer of any persons under the Insurance Act, 1942.
Also priority is given to, unless a company is being wound up voluntarily merely for the purposes of reconstruction or amalgamation with another company, all amounts including costs due in respect of compensation or liability for compensation under the Workmen's Compensation Acts to the extent that the company is not effectively indemnified by insurers against liability for such compensation. Finally, unless the company is being wound up voluntarily merely for the purposes of reconstruction or amalgamation with another company, all amounts due from the company in respect of damages or costs or liability for damages or costs payable to a person employed by it in the case of an accident which is not effectively indemnified by insurers against such an accident. These are, in summary, the preferences which are protected in the present situation.
There are a number of points which need to be made here as to whether, if we are going to continue, as it would appear we are, with a very extensive system of preferences such as what I have just outlined to the committee in some detail, other preferences should not also be given. For instance, there are many others who may be owed money by the company who would be equally deserving with the persons and entities which I have identified. For example, the Cork Committee who considered this matter recently noted that many suppliers of goods and services are constrained to extend credit facilities in accord with the custom of trade. In a practical sense they have no real choice in the matter and are sometimes unable to exercise credit control. This is a case where, for instance, a supplier is essentially able only to sell goods to one or two possible customers, a large supermarket chain would be an example. It would appear to me that in that situation the person in question has no real choice in the matter but to supply. The original preference was drawn up on the basis that the Oireachtas in 1963 decided that it would grant preference to those who were involuntary creditors of the company, such as the Revenue, workmen, those who were owed money in respect of an accident at work and so forth. With the evolution of trade and commerce since 1963, it would certainly appear to me that there is a significantly increased number of involuntary creditors now.
As the Cork Committee mentioned, there are also other cases of involuntary creditors who may readily be called to mind. For example, somebody who has taken the company to court and has won the action against the company and the court has made an order for costs in favour of the plaintiff, but the company goes into liquidation before the costs have been paid. In that situation, the person who was wronged by the company in the first place is in no way voluntarily a creditor of the company. In looking for compensation for the wrong, they had no choice but to deal with the company that wronged them. So, just as the Revenue do not chose to be owed money by a company, somebody who has been wronged by a company and who has obtained satisfaction through the courts is also an involuntary creditor of the company.
In that situation, I would argue that a litigant who has obtained an order for costs from the court in favour of a company should also get preference under this section. I would ask that that be done. I would also make a further proposal in respect of people who are the victims of a breach of contract by the company. The company may have agreed to supply goods to somebody and by failing to do so caused them immense loss. For instance, if they had a further contract with somebody else and found themselves at a severe financial disadvantage because the company from whom they bought did not meet the terms of the contract, they subsequently sue the company for this failure to comply with the terms of the contract, they win their case but then the company becomes insolvent. Again, they are involuntary creditors of the company. It is not their choice that the terms of the contract were not abided by. In that situation, I would argue, if the Revenue are entiled to preference, as the committee has just decided, so also should somebody who has been the victim of a breach of contract by a company be entitled to preference.
There is another example that I would put before the committee as a group that should be entitled to preference: those who have been the victim of a tort on the part of the company, where a company has actually either been responsible for the publication of a libel or a slander against them, for example, or the officers of which have been responsible for some form of assault on a person, where they are entitled to compensation for the damage that has been done to them by or on behalf of the company. In that situation, if they go to court and are successful in obtaining satisfaction in court, they are owed money by the company and they are, therefore, involuntary creditors of the company. In the winding-up of a company, if the Revenue Commissioners, as the committee has just decided, should have preference in that situation, I see no reason why the preference should not also be extended to a person who has been the victim of a tort committed by a company.
In many cases, as the Cork committee said, such creditors are deserving of much sympathy, yet their debts are sub-ordinated to the Revenue Commissioner's preferential claim to tax. Very frequently a person who is owed money by a company, having won the court case to that effect, has had to endure very considerable, unnecessary and lengthy legal delays and has to hazard very substantial legal fees, in order to obtain justice. Yet, if the company goes into liquidation, such succesful litigants do not get paid, even though the Revenue does get paid.
That, to my mind, is unfair and I feel we should incorporate such creditors in the preference provided in section 285 of the principal Act. This is a very important point. The alternative, of course, would be to set aside the whole concept of preference entirely and to make other arrangements to protect creditors. But it is clear that the Committee not only wants to preserve preference for employees — and there is probably a reasonable case for the preservation of preference for employees — but the committee has decided that it wants to preserve preference for the Revenue Commissioners, even for up to 12 months in respect of matters they could have ample powers for collecting in a much shorter period. It seems to me, therefore, that such persons should be entitled to preference.
The Minister makes the point in this section that the priority conferred by subsection (2) should apply only to those debts which, within the period of six months after the advertisement by the liquidator, have been advertised in at least two daily newspapers. I must confess I do not see the relevance of this. Clearly, the only people that have preference here are employees, basically, and the Revenue Commissioners. Does the Minister expect the Revenue Commissioners to read the newspapers to discover that they were owed money? Is he suggesting that employees in a company who are, presumably, more than fully familiar with the situation the company finds itself in if it does become insolvent, would need the protection of having matters advertised in a newspaper? What is the point of this? This is something that ought to be examined in greater detail before we proceed further with it.
Section 285 goes on to refer in some detail to the way in which compensation under the Workmen's Compensation Act may be calculated for the purpose of obtaining the preference. It also refers to the need to retain such sums as may be necessary for the costs and expenses for the winding-up. I would be interested to know how costs and expenses of the winding-up may be calculated and what happens if an insufficient sum has been retained for that purpose under subsection (8) of the relevant section of the Principal Act. It further states, in respect of this matter of preference, that subject to subsection (10), in the event "of a landlord or other person distraining, or having distrained on any goods or effects of the company within three months next before the relevant date, the debts to which the priority is given by this section shall be a first charge on the goods or effects so distrained on or the proceeds of the sale thereon". Is there any requirement on the company to notify a landlord who may have rights to certain goods that, in fact, there is no point in him distraining against them, in the sense that these goods have already been spoken for, and that even if he does succeed in selling them, that he will not be entitled to keep the money? It would be very difficult to imagine landlords going to the expense — and it is an expensive process in these times — to sell goods of this kind. It would require some expenditure on the part of the landlord in that situation. Could I ask does it, in effect, mean that the landlord is deprived, by subsection (10) of the Principal Act, of his rights under the section?
It is worth recalling that this whole issue of preference is something that needs to be re-examined in the light of the advances that have been made in commercial practice over the years. We see now that the traditional form of society, where everybody in business was relatively equal in the sense that we were dealing with small units, is no longer the case. In fact, we have very large business entities dealing, on one hand, with a number of very, very small ones on very unequal credit terms, and we have very sophisticated information through computers of obtaining information about the credit status of particular companies. In other words, some who have access to that information about credit status, that is big companies dealing with other big companies, or the Revenue in dealing with companies, have privileged credit information. It seems they need less protection in this situation than does the small supplier.
I am, therefore, arguing that we should extend the protection of the section which, in their wisdom the committee decided should be quite extensive in terms of preference giving — I have already outlined, the innumerous categories that are granted protection — also to small creditors. Perhaps the appropriate sum would be to refer to those owed a figure of less than a particular amount, say £5,000, that they should have preference. This would obviously mean that people would know that if they extended credit in excess of £5,000, they were losing their preferential status. I would suggest that as a possible way of protecting small creditors.
I would further suggest that those who have obtained legal judgments against a company in court and such judgments have been registered, that those judgments should have preference. I would ask that that be done, given that the committee has decided to grant extensive preference to the Revenue Commissioners over small creditors. If the committee wants preferences essentially as a concept to be maintained in its present very large form, there are others who have not got preference who should get it. I would also suggest that preference should be granted to another category with whom we were concerned here earlier, that is those who have supplied goods for which they would expect virtually immediate payment. I instanced the example of cattle supplied to a cattle mart. I believe in that situation the protection that is being given to the Revenue Commissioners who, after all, have information about the status of the cattle dealer in question or the cattle mart in question and they should know whether he or it is paying its debts up to date, that protection should also be given to people who supply cattle to a cattle mart.
I would also make a similar suggestion in regard to small manufacturers of mushrooms, for example, or some perishable product, who are supplying it to a large supermarket chain. The Revenue Commissioners, who in the event of the dissolution or insolvency of the supermarket chain, have had every means of knowing whether or not that company was getting into difficulty because they would know whether the campany was paying its VAT and its PRSI on time and so forth but that information is not available, as we well know, to a small supplier. We recently saw an example of a supermarket chain which has refused to publish its accounts. It is a particular supermarket chain which is buying large quantities of goods from small suppliers but it has refused to publish its accounts. Therefore, those who are dealing with that supermarket chain have no means of knowing whether or not the company is in a good situation. That is not the case with the Revenue Commissioners. They know exactly whether or not the supermarket in question is paying its taxes.
Unlike anybody who goes down to the Companies Office to inquire whether Superquinn is doing well or not, and gets no information there, as we have been told is going to be the case, someone in the Revenue Commissioners can press the relevant number on their computer and they know exactly if Superquinn is even 24 hours out of date in regard to its payments. It seems that a small supplier of goods to Superquinn, Dunnes or Quinnsworth — I do not want to leave anyone out in case I would be accused of favouritism — Supervalue, Spar, Crazy Prices, should have just as much protection as the Committee was so willing to extend to the Revenue Commissioners and which the Minister was so willing to extend to the Revenue Commissioners.
I am surprised indeed that the Minister responsible for this legislation, the senior Deputy for Limerick East, Deputy Desmond O'Malley, Leader of the Progressive Democrats, whose party have advocated getting rid of revenue preference, has not been here to participate in this debate, which Deputy Leyden was so anxious to prolong on his behalf. He chose not to defend the Progressive Democrat policy in this matter, although he was quite willing to defend other aspects of their performance in the Dáil today. I am disappointed the Deputy is not here because I think the Committee, in deciding to reject the amendments which we put forward here in regard to preferences, made an unwise decision and I have given a number of examples of people who, to my mind, are equally entitled to consideration.
I think that it would be necessary to look again at the newsletter of the Confederation of Irish Industry of 26 October 1989 where in their submission to Deputy Albert Reynolds for the budget — and we hear a lot here in regard to the budget about the need for partnership and consultation, social partners, etc., and the Confederation of Irish Industry are one of these — they recommended quite clearly, and I quote:
The Confederation has on a number of occasions in the past expressed grave concern at the present system whereby the Revenue Commissioners and certain other public authorities are afforded preference in the collection of debts in the event of liquidation or bankruptcy.
That has already been decided by the Committee so I will not dwell on that. The next point that was made by the Confederation of Irish Industry is relevant to the section which is now under discussion, and I quote:
This system works to the detriment of unsecured trade creditors. The Revenue Commissioners and other public authorities should be required to exercise the same discipline in collecting debts as any other creditor. Under the preference system, any delay by the Revenue Commissioners or other public authorities collecting debts, places unsecured creditors at increased risk.
The Confederation went on to recommend the repeal of certain sections which we sought unsuccessfully to have repealed here; that is unfortunately recent history. I think it behoves the Committee now that we have so unwisely made this decision to look at the consequences of the decision. The decision is one which, in my view, requires us to return to the point that was made by the Confederation of Irish Industry in regard to how we can protect unsecured trade creditors. My suggestion in regard to this matter is that we should extend the same preference to the rest of the creditors.
I hate to interrupt Deputy Bruton. I have to hand it to him, but he is the most incorrigible character——
Chairman
Deputy, be orderly.
I will be very orderly and I will be a lot briefer than Deputy Bruton. I would point out, Chairman, first that the latter part of his contribution dealt with a debate which we already had and which you very wisely drew, under some contentious circumstances, to a halt. The Deputy was actually having a second go at a debate which is already over. He is entitled to do that if he wants. It strikes me that the latter end of his contribution displayed——
Is this a comment or a point of order?
I thought you had finished. You had only stopped for a breath? I am sorry. I will contribute later.
I appeal to the Committee now that we have decided we are going to maintain this position to have a serious look at the system of preference.
To conclude my remarks on this section — I will return to it when others have commented — the principle which should underlie preference should be access to information about credit status and that the degree of preference granted to a creditor should be in inverse proportion to that creditor's access to information about credit status, because a person who has ready access to credit status, information about a particular company, is in a position to initiate proceedings to protect his credit. On the other hand, a person who does not have that ready access to information is in a less favourable position. I would contend that employees in most companies certainly are entitled to the preference they currently enjoy, because they do not have ready access to the credit status of their employer and, indeed, even if they had they are not in a position to do very much about it because in the present labour market they do not have an easy alternative option of a place to work.
I would contend, on the other hand, that ordinary unsecured creditors, such as I have instanced already, are not in a position and have the least access to information about the credit status of a company and those people should have higher preference as a general rule than those who have ready access. I acknowledge that the Committee has decided on a particular form of amendment that we put down here in regard to Revenue preference and I do not want to return to that.
I contend that there are categories of involuntary creditor, and also unsecured creditor, who either do not have access to this information or, by nature of the fact that an injury has been done to them and they have to take legal action, that even if they had the information they are in no position to accelerate the maturity of their claim. For instance, somebody who has gone to court and obtained a judgment, as I have instanced already, is not in a position to accelerate the rate at which their case is heard by the court because the court does not allow that. Even if they obtained information to the effect that the credit status of the company from whom they were seeking compensation had deteriorated markedly, they would not be in a position to make use of that information. This is in contrast with the Revenue Commissioners who are virtually able to press a button and thereby place the company in a situation of having to pay its debts. I believe the principle here, underlying preferences, is one that is extremely important.
I would also draw the attention of the Committee to the fact that the Institute of Taxation, for example, has made similar recommendations to the ones that have been made by the Confederation of Irish Industry, as also has the Institute of Credit Management. There is a virtually universal view among those who are engaged in day-to-day work in the company law area that the present system of preference is quite simply unfair and anachronistic. It was with a view to having that changed that we put forward the series of amendments we have already put forward.
I wish to give notice that we will be putting forward other amendments now designed to achieve the same result. These amendments will be so framed as not to involve any repetition of issues that have already been decided, but we will be successful in framing those amendments so as to afford to others, such as the groups I have mentioned, the same protection that the Minister and his colleagues were so anxious to preserve for the Revenue Commissioners, even to the point, in this case, of obstructing the work of the committee, interrupting the Chairman and the taking of a division. However, that is something I am sure the Minister will come to reflect upon in due course.
There were a couple of good points in what Deputy Bruton had to say, although he took so long to say if I have almost forgotten what the points were. I think the general point he made about access to information regarding credit status is a very good principle if somehow or other we could incorporate it and take the idea on board. However, there is also a danger that if we go the route he was going and then we enumerate a whole series of other creditors who will become preferential, the whole point and purpose of preferential credit position would be wiped out quite clearly. These are preferential creditors only, a status that has value only as long as there are a very limited number of personages within that.
For example, to take just one case, the case of somebody who has suffered a tort by a company, I can see the point he is making there and it is worthy of consideration. But then to take the point of somebody who suffers when a company simply fails in a contract, that is simply a creditor who involuntarily became a creditor who subsequently became very angry at the way the company was operating and took the company to court, but it does not in any way mitigate against the point that he was originally a creditor in a voluntary capacity. So, while there is a certain logic in the basic point, that we should have a principle which establishes who should be preferential creditors, if we went the route Deputy Bruton suggested, we should bring in a whole group of people willy-nilly, we would damage the status of preferential creditors.
I believe the situation with regard to the Revenue Commissioners is rather different from how Deputy Bruton portrays it. When the Deputy was Minister for Industry and Commerce I do not think he would have made the points he has made now when he is no longer Minister for Industry and Commerce. I do not think there is much logic in the argument that is put forward against the Revenue Commissioners' situation. We have already been over it and no matter what any other political party say, no matter how much another political party protest that something is logical, it does not necessarily make it logical if it is illogical.
The point about preferential credit status for Revenue Commissioners is that they have it on behalf of the people of Ireland and it would be better — I think Deputy Bruton made the point last week and I agree with him — if the Revenue Commissioners were more successful and more efficient in ensuring that they did not allow themselves to become creditors to the tune of many hundreds of thousands of pounds, sometimes millions of pounds from companies which ultimately go out of business. I do not think it is a valid precedent for Deputy Bruton to cite in favour of the further extensions which he has in mind. I do not think any of us would take the view that workers in a company are anything other than involuntary creditors. The point he made about a person who has suffered a tort and has gone to the court and who has won a case against the company bears thinking about but I do not think that you can use the Revenue case in favour of the other cases he instanced.
Quite frankly, we have lost a glorious opportunity here of modernising company law to bring us into the 1990s and the 21st century. I have always held the view that money such as PAYE, PRSI or VAT which was collected on an agency basis should never form part of the assets of a company. That is indisputable. You are collecting money on behalf of somebody else. If I were in the fortunate position of the Minister I would be setting up arrangements whereby we would specify in legislation that such moneys do not form part of the assets of a company. We should have a system whereby these moneys should be lodged in a separate account, where you would need two signatories to remove the money from that account. One of those signatories would be the Revenue Commissioners. If money was to be taken out, it should be only taken out by the people for whom it was collected and the person who is paying it over.
There are precedents for this. If you refer to the Insurance Act which was put through the Dáil last year, moneys collected by insurance brokers have now to be lodged in a separate account on the basis that this money was collected on an agency basis on behalf of an insurance company. Why does not the same principle apply here? What we are doing here is dealing with emotive stuff. It sounds terrible to say that the Revenue Commissioners should not have priority in respect of moneys that have been collected on an agency basis on their behalf, it sounds bad to go against that principle. The reality is that we are doing nothing to correct the situation. For example, if I am trading with money that does not belong to me, that belongs to the employees I have collected it from or that I have collected through the VAT system, I am operating unfairly in respect of the creditors who are doing business with me. I am giving a false picture to those people.
What I am concerned about in company law is to see to it that as legislators we give everybody a fair crack of the whip. What happens to the unfortunate employees of the companies that will go into liquidation as a result of a company trading improperly, using moneys that were collected on an agency basis such as PAYE? How is a small trader to know that this is happening? How many jobs are lost on a regular basis as a result of people going into liquidation and other smaller companies falling as a result of it?
We are dong nothing here to restructure this whole area of company law. The only thing the Minister is suggesting is that we limit this to six months, provided that the notification is given to the liquidator within that period. I assume the liquidator has to have a full account of the total amount outstanding or the amount that is being sought? I assume that that is the case with the wording that the Minister has used in section 112.
There is no mention of amending the existing section 285 to deal with pension contributions which were collected or are in a fund on behalf of employees. We talk about wages and salaries, moneys that belong to employees. Pension contributions belong to employees. We had a case recently where one company went into liquidation and a large number of people have gone without their pension as a result of that liquidation. There is no attempt whatsoever to amend the legislation to take that into account. As far as I am aware, there is other legislation which protects wages and salaries and there is no need for mention of it here. You can correct me if I am wrong, but I think that that is the case. What is here is a bit irrelevant but, as far as I am aware, there is no protection whatsoever in relation to pension contributions. Again, that is a major failing.
I think what both Deputy Bruton and myself and the Fine Gael Party were attempting to do here was to bring the Revenue Commissioners, along with everybody else, into the 21st century. As Deputy Bruton rightly said in his contribution, the Revenue Commissioners have information at their fingertips about the operation of companies. They can smell a rat very quickly if something is going wrong. By virtue of the fact that they are forced to move quickly, they can help other companies survive I would suggest and perhaps protect jobs.
I still believe that moneys collected such as PAYE should not be in and form part of the assets of a company. It is not the company's money. It is money belonging to somebody else, collected by somebody on their behalf. One could talk about maybe paying the Commissioners for collecting that money but that is a different argument. It certainly should not be allowed to be used for normal trading purposes if we are going to modernise Irish industry as I suggested.
There is another thing I feel strongly about that has to be said and put on the record, the Minister for Industry and Commerce has failed to appear at this Committee on a number of occasions. I know he is a busy Minister but he was in the House when I was leaving. It is quite obvious to me that the only reason he is not here today, and was not here the last day, is because this is an embarrassment to him. I think that this is an abuse of democracy when the leader of a party puts into a policy document and goes to the electorate and seeks support and votes on issues such as this and when it comes to the point where he, as Minister, has the power to do something about the policies he went to the electorate with, not alone does he not do anything about it but he has not the guts to turn up at the Committee and defend why he has had a change of mind.
We spoke earlier about a filibuster and all the rest of it. I think this is one of the greatest abuses of democracy and it is no wonder the public are cynical about politicians saying things at election time, getting into Government and doing absolutely nothing about them. In fact, not alone is he doing nothing about them, he is doing the direct opposite to what he said when he was campaigning. We had this great emotive talk from his substitute here about these moneys belonging to the State. Of course, they belong to the State but this is not the way to deal with it. This is unfair to other small creditors.
I ask the Minister to consider the proposal that money collected through PAYE, PRSI or VAT should not form part of the assets of a company because it does not belong to them. It gets back to the principle we debated some weeks ago as to whether goods handed to a company and not being paid for would remain the property of the company in the event of a liquidation. It is the same principle. I hope the Minister would avail of the opportunity, in dealing with this legislation, to show some leadership, to bring us all into the 21st century and to produce legislation that is going to face up to the realities of today's world and the trading conditions which apply today.
I think it is rather pathetic the only amendment being suggested in this new Bill to that section, which is a very important section of the 1963 Act, is some sort of a notional thing that if you give notice within six months then you are in for the kill, but if you do not then you are lost. If that is all we can think of to amend the Companies Act, 1963, in relation to section 285, it is a pretty pathetic exercise on our part. Rather than use the voting strength the Government have to defeat parties like ourselves, if people put forward positive proposals they should be treated seriously. We may not get away at the end of the day, that is democracy, but the proposals should be treated seriously.
There should be positive arguments given as to why our proposal is not being accepted, or there should be a willingness to take up suggestions such as, as I have suggested, a separate account. In other countries, as far as I know, moneys have to be lodged in a separate account. I think it is in Belgium that moneys have to be lodged in a separate account; somebody may correct me if I am wrong. It is a very good idea. It is also something we should also look at in terms of total integration within the European Communities as to what laws will apply in other countries. We have many directives about other things and I cannot see why we cannot have some sort of common policy in relation to this whole principle of priority in the event of a company going into liquidation.
There is one matter about which I want to put Deputy Bruton's mind at rest. He was in some doubt as to whether Deputy O'Malley is the senior Deputy for Limerick East. I can tell Deputy Bruton he is senior in terms of service and is junior in terms of votes.
(Interruptions.)
I notice there is only one Fianna Fáil Deputy and two Progressive Democrats.
That is another day's work. That is because of your transfers, Deputy. I have listened to Deputy Bruton's lengthy contribution and I have some sympathy with some of the points he makes. I want to emphasise — in case Deputy Barrett thinks otherwise — that I am not saying that in a throwaway manner, or crying crocodile tears, or saying it just for the purpose of getting on the record. I genuinely mean that, but I think there could be some slight misapprehension in Deputy Bruton's mind about what exactly we are at here. He mentioned various people, such as people who get court judgments, or whatever, unpaid suppliers, who have a good moral right to get their money from the company. Morally they should be paid. I can think of many other people I could put into the same category and there would be no moral distinction between the people Deputy Bruton mentioned and other categories of people whom I could come up with. But we are not talking about one person's moral right versus another person's moral right. We are talking about the whole issue of preferentiality.
As Deputy Roche said — and I agree with him — the more preferentiality you give, the more people you put into the category of preferential creditors, the more you dilute the value of the notion of preference itself. That is the reality. I have often argued in the Chamber and, indeed, here, against following blindly what they do in the United Kingdom, but some things they have done in the United Kingdom, particularly in the area of commercial law, are very good and very logical and Deputy Bruton is not afraid to quote them when it suits his case.
If we look at what they have done in the United Kingdom in relation to the question of preference, what they have done in the Insolvency Act, 1986, they have actually cut down the number of preferential creditors. I would point out that much of the meat of this Bill relates to making officers and directors of a company more accountable and everybody on all sides of the House agrees with that principle. It is good that officers and directors, etc., be made more accountable for their actions. One of the effects of the approach they have taken in the United Kingdom of reducing the number of preferential creditors has been that creditors were prepared to authorise the use of funds in the liquidation to pursue those people. I think that is good and that has ensured, to a very large extent, that the sections of the UK legislation dealing with misfeasance of officers and directors works in practice.
We are talking about the Revenue Commissioners. I have heard the Revenue Commissioners referred to here in the Committee, and in the House, as if they were a bunch of desperados riding in from Dead Man's Gulch to rip off this, that, and the other. The reality is that the Revenue Commissioners are agents for the taxpayers of Ireland. It is our money we are talking about. I am aware of the report of the Cox Committee. I have read it. I am aware of various things that have been done in the UK. But we must remember that the Cox Committee reported in 1962 or 1963. The fact is that we were in a very different budgetary situation in 1963 or whenever the Cox Committee reported——
The Cork Committee.
The Cork Committee. The UK is in a very different budgetary situation from what we are. We cannot come into this Committee this evening and debate this Companies Bill in some sort of sanitised isolation, as if there was nothing going on outside. The fact is that in the vast majority of liquidations, over 90 per cent of liquidations, the Revenue Commission is the largest single creditor. Here we are talking about diluting the Revenue's preference; we are talking about obstructing the Revenue's rights to recover tax due to them while, at the same time, we go into the Chamber looking for more money for legal aid, more money for the Land Registry, for lower taxation, higher social welfare, more money for the health services. The reality is that this Bill must be considered in the context of the economic situation as a whole. That is the approach we should be taking.
The comments on this section have been very interesting. My sympathy would lie with the small creditor. But what is a small creditor? When do you become a small creditor? Is it at the time the winding-up starts? If you are a creditor to a company which owes you £5,000, then you come within that category. However, if you are a big supplier who would normally have a big amount outstanding from one particular company but you happen at that time to come under the £5,000, are you then termed a small creditor by virtue of the fact that what is owed to you by a certain company is less than £5,000? There can be something of a dilemma there, and that would have to be clarified.
Keeping preferential creditors as tight as possible will help companies because, to my mind, the Revenue Commissioners, as has been pointed out by Deputy O'Dea, need to be protected. Anyone who studies commercial reality in Ireland today will know that invariably it has been the money that is due to the Revenue Commissioners that has been used much more freely than it should be by a company in a difficult financial situation. They use tax revenue to pay suppliers. That is what is frequently found when investigations are carried out into companies. Consequently, we must spell it out clearly to suppliers that the onus is on the suppliers to ensure that they are satisfied, if they decide to sell goods and services, that they can get payment for them.
It is interesting that something of a battle has been waged over the last number of months, particularly with some of our large supermarkets, on this issue, and one in particular. It is further interesting to note that one supplier, at least, has decided to say to the particular supermarket I have referred to that they are not going to supply goods because that supermarket is demanding credit terms that are not acceptable to the supplying company. In other words, what the supplier is saying is that he is going to put the onus on the buyer, that is the supermarket, to meet its credit terms rather than be dictated to by the big buyer. We should be, through this legislation, attempting to say to suppliers that the onus is on them to ensure that they will not supply unless the terms from the buyer are correct.
That is not possible.
It is possible, and it is already happening. I have referred to one case in recent times, where a supplier has said to a large supermarket, "We are not going to supply you unless you meet our particular terms." The difficulty is that not enough suppliers are saying that. I would like to tell Deputy Bruton that frequently I have come across individual suppliers who say to buyers, "We are sorry, we will not supply you because your terms are not correct, you will not pay us in time". This is called a stop-list. It frequently arises in the commercial sector. The problem is that the Revenue Commissioners have been the fall guys too frequently in this. The money due to the Revenue Commissioners has been used to pay suppliers because suppliers have said to buyers, "We will not supply you unless you pay us in time." That is where the difficulty can happen with regard to broadening the preferential treatment in the context of this section.
Credit status is worth nothing as far as I am concerned. I have seen it operating at first hand and it is not worth a great deal at all. Credit status can be devised. I have seen it happening in the commercial sector where a good credit rating can be contrived but it does not really mean anything. I do not believe that a large company is necessarily at an advantage because it feels it has got credit ratings and credit status. The vast majority of medium-sized companies can, in my opinion, contrive a satisfactory credit status if they are still in business and can carry that particular contrived situation right to the very end to where the sheriff is knocking on the door. I do not think it is as clear and as simple as appears to have been made out.
The onus is on the supplier to decide if the terms available from the buyer are acceptable. If more suppliers were prepared to stand up, as appears to have begun, to the large buyers in this country, then the commercial situation would change dramatically. We would not have so many companies going to the wall to some extent because they have been dragged into situations where they have had to give so much extended credit as to weaken them. Through all of this, we have to try to create the climate in this country where people and companies will make a conscious decision that credit terms are there to be adhered to. The problem is that for too long the decision has always been taken: well, you take as long as you can get and the bigger the buyer you are the more muscle you have. We have got to reverse that and by keeping the preferential list as tight as possible, we can help to change it around.
It is interesting to note that in Germany, for example, according to my information a payment date is a payment date and the commercial reality in that country is that if a debt is due on a particular day, the debt is paid on that day in the commercial sector and that is the end of it. They are consistently amazed at the loose arrangements we seem to have here which invariably means, of course, that companies themselves get into financial trouble because of the loose credit arrangements based largely on the attitude, "Well, if we get into a bit of trouble we can always use the Revenue's money anyway.". I think we would keep the preferential list as tight as possible. I do not see how you can make a case to treat the suppliers of cattle to a cattle mart any differently than you can — if that is what Deputy Bruton was suggesting; maybe I have not picked him up correctly——
It is an example.
It is no different from a manufacturer supplying 100 desks. Therefore, you are really broadening out the preferential list where, as Deputy O'Dea has said, you are diluting the whole thing and it is meaningless to any particular preferential credit.
One difference; you can recover the desks, you cannot recover the perishables.
If you are lucky. Unfortunately, the value changes dramatically once they become second-hand.
There is a distinction.
It is a very thin distinction. To broaden the list is fraught with a great deal of doubt and difficulty and I do not think, quite frankly, would make sense.
Deputy Bruton seemed to have been suggesting that if a particular creditor had gone into court and got a judgment in his favour, he would enjoy a preferential status. To some extent, that would be unfair. It would mean that in the case of a particular company who decided, "We will go in, we will get preferential status by going into court and get a judgment registered against a buying company," that then would become a loophole to some extent. I do not think that would make sense. It is either all or nothing in that area, as far as I would be concerned.
I agree with Deputy Barrett that the absence of the Minister for Industry and Commerce is becoming a pattern. The Fine Gael Deputies may very well be correct in presuming why this is the case. However, if it takes Deputies Bruton and Barrett so long to make a case for their amendment as it did today, if I were in the Minister's position I would continue to stay away because I can only presume that he has something more useful to do. It may well be that the purpose is to tighten the preferential list but at one stage Deputy Bruton was bringing us down a road that would effectively negate the very principle of preferentiality.
Not to repeat the points that have been made, in my personal experience if you were to ask any group of workers, for example, who had their PAYE deducted from their salaries, what their view was on whether the Revenue should be classed as having preferential status in that situation, I think they would say yes. I am dealing currently with situations of people whose PRSI was not paid over and who, as a result, have no entitlement to unemployment benefit. It seems a handy yardstick to say that preference would be on the basis of access to information on credit status but I am not sure that would benefit employees very much. As I understand it, employees in respect of their wages have preferential status as the law stands at the moment and, therefore, there would not be any improvement in that situation.
I would like to hear the Minister reply to the point made by Deputy Barrett about why a separate account is not obligatory in respect of the deduction of such moneys. I imagine that sometimes a balance must be operated between the rigid application of the requirement of those moneys to be passed on to the Exchequer and a situation where the effect of doing so would be to pull down the shutters. I am not saying that a company should be maintained on the backs of PAYE deductions but, presumably, there is a balance that must be applied in certain cases. It does not seem to make a great deal of sense that in the past anyway, although there is a Bill before the House at the moment on the winding up of An Fóir Teoranta, you could have a situation where as a result of the Revenue going in for its share, a company is shut down and bailed out by the taxpayer through An Fóir Teoranta.
On the main thrust here of giving the Revenue Commissioners on behalf of the people of Ireland, and on behalf of the taxpayers of Ireland, preferential status, I would like to see it being capable of being done to give them priority over some of the major financial institutions. They, of course, make their own arrangements at the time of loans being contracted which does not give the company a great deal of latitude in that matter. We must take the view that the Revenue Commissioners are merely implementing the law as passed by Dáil Éireann and that, as such, they are acting on behalf of the people of Ireland. For that reason, I could not see myself voting against the status being accorded them here.
May I contribute to this section——
It is 6 p.m. We either arrange meetings from 4.15 p.m. to 6 p.m. or we arrange them for different times.
Chairman
I understood that we were to adjourn at 6 p.m.
I had hoped we could have made a bit more progress and had the section at least completed. I have very little to contribute to it and I think it would be very beneficial. This is the second day on this particular section.
If the Minister would behave in an orderly fashion——
I will not respond to provocative comments.
Chairman
The date of the next meeting——
May I come back to what I want to refer to on this section?
Chairman
The section has not been agreed.
I am very anxious to get on with this Bill. Perhaps the next meeting could be longer to get through more sections.
Progress reported; Committee to sit again.
The Special Committee adjourned at 6.10 p.m. until 4.15 p.m. on Tuesday, 6 March 1990.