That Section 8 stand part?
Public Business. - Transport (No. 2) Bill, 1944—Committee (Resumed—Section 8).
On Section 8, Sir, last night we were dealing with the incorporation of the company under this section. We expressed our own views and stated our own position with regard to the financial structure of the company and the peculiar type of control set up under a board of directors, and the future financial success of the company has been very seriously questioned by a number of Deputies in this House. The Minister gave an assurance to the House that he had given very serious consideration to this aspect of the proposals and that he could satisfy the House that it would be possible, under this new reconstruction and reorganisation of the Transport Company, to make that company a financial success. I think that there are many Deputies in the House who are not convinced, so far as that is concerned, and I do not think the Minister has made any serious effort to convince Deputies that the company can be made a financial success, from our point of view, because we are taking into account not merely the financial success of the company itself, but its relation to industry and, particularly, to agricultural industry, in the country, and the sort of service that we expect a national transport company to give to our primary industry.
Our chief contention and alarm about this is the value of the old stock and the value of the substituted stock—the fact that the Minister proposes to give new stock on a £ per £ basis at par; new stock of a completely different type, equal in face value to the old stock, at a lower rate of income, it is true, or a lower rate of interest. That, however, is of little or no material value because the stock of the new company carries a State guarantee so far as the liability for capital and capital repayment is concerned, and the State now bears the responsibility of footing the bill for that. The Minister suggested that, notwithstanding the fact that in his detailed review of the condition of the company on the Second Reading of this Bill, emphasising the condition of the wasted physical assets and the obsolete state of the company's property at the present time, it is absolutely unreasonable to suggest that the value of the old stock should be taken at stock market quotations, and that a value of £4,500,000 for the old stock would be altogether undervaluing it. He went on to say that because some people were prepared to sell at a low price in a depressed period, it does not follow that all the shareholders were prepared to sell at that price. In any case, he made no real defence to the allegations that were made as to the obsolescent state of the company's property before he found it necessary to put in a manager under the direct control of the Government.
I think there is another way of looking at this question of the value of the old stock, and it is this: that under the old control and the old ownership and management we tried to bolster up and preserve the Great Southern Railways Company for many years by simply eliminating the normal, healthy competition that had been there. But for Government intervention the company would not be there at all, and just immediately before the war situation was precipitated upon us, so far as the company was concerned it had arrived at a financial crisis. As a result of that, the Minister had to put in a manager, in the person of Mr. Reynolds, and of course he has tried to clap himself and Mr. Reynolds on the back by saying that since the introduction of Mr. Reynolds as manager the company has achieved wonderful results in the way of earning capacity and all that sort of thing—pointing to the earnings of the company last year, and so on—but of course it must be remembered that that occurred in an emergency situation. In normal times, it would not be so. In these abnormal times, of course, the company did make earnings because there was no other means of transport for either passengers or goods, and the company charged what they liked. The Minister tries to show that there was no appreciation in the cost of transport. Will he tell the House that there was no appreciation in the charges for the carriage of passengers or of goods? Not merely were the public fleeced on the railway charges alone, but where there was delivery at the other end by lorry into an individual store, the charge was multiplied three and fourfold. The individual concerned had no choice; he was glad to get the goods anyway, and he passed on the extra charges to the consumer.
The Minister says that this company is going to be a financial success. Examining the whole organisation as it stands, I have no doubt that the Minister is right, but it has been seriously questioned by Deputies, and particularly by Deputy Norton, whether we are going to have a postmortem over this company again in a few years' time. I can say to Deputy Norton that it will be a financial success if you ignore the burdens that industry, and particularly our agricultural industry, will be faced with. The Minister, in the machinery that he proposes here and which he asks the House to approve of, has ensured that the company will be a financial success. Take one example. Take the case of the Railway Tribunal, whose principal function was to fix rates of charges. That was an independent body, giving judicial decision on the evidence submitted to it. Now this whole organisation is centred around the Minister. We have heard a lot of talk about a dictator, but so far as I can see, the dictator is the Minister himself. He can kick out the manager any time he likes. He has taken power to fix charges himself, and if he is responsible for the success of the company and for the fulfilling of its financial commitments to the State, he is going to ensure, while he is in office at any rate, that the charges and the conditions for the carriage of goods will be such that they will result in financial success so far as the company is concerned.
That is an aspect of the situation about which I am alarmed. We have precedents for it in the past. The Minister has a record of setting up monopoly institutions in this country. He has left the country at the mercy of these monopolies and permitted them to produce goods, sometimes in a very inefficient way, and to charge what they liked for them. Are we going to have that principle applied to the transport organisation in this country in future and have at the head of it, in an absolutely dictatorial position, a Minister who feels himself proud of the responsibility of commiting the country to a guarantee on £20,000,000, building around the transport organisations in which he has these dictatorial powers rates and charges which he will be in a position to influence? I think that that is not a position in which a politician should be put at all. We should not place in his hands powers of that sort to make a decision on rates for the carriage of commodities. Surely it is a body set apart from the Minister that ought to make decisions of that sort. However there is another section in the Bill dealing with that matter and we shall then get an opportunity of discussing it.
Our chief alarm arises from the fact that the Minister has not satisfied us that the valuation on a par basis of the old capital and the wasting assets of the company which is now going to be reorganised is justified. The holders of that stock are going to get on a par basis capital carrying a full State guarantee. There is no use talking about the difference between 3 and 4 per cent. All that stock carries a full State guarantee. I suggest that the Minister having created that situation is going to set himself up in a position in which he can determine freight charges so that he can ensure, what he contends, will be the financial success of this company. I suggest it can be a success only because it will throw a very big and almost impossible burden on industry and particularly on agriculture. These are the financial aspects of the company with which we are concerned and the Minister has not attempted to convince Deputies that their fears are unfounded. He has certainly given us no information that would help us to make up our minds that there is some hope of success and at the same time some hope of securing what he describes as cheap and efficient transport, so far as this company is concerned. He quotes the example of the Dublin Transport Company but it became a success only when competition was eliminated and passenger rates went up. It became a success when a monopoly organisation was established.
Coming to the constitution of the board of directors and bearing in mind the description that the Minister gave the House—the ignominious failure of the old directors to do their job and the fact that they were responsible to a very large extent for the complete financial collapse of the Great Southern Railways Company— one would expect that, having judged them in that manner, the Minister certainly would not trust them any further in the matter of control, so far as the new company was concerned. I do not think they have got very many new powers in the company, but the Minister described from the fullness of his own experience how this organisation should be controlled. First of all, he said that civil servants were not the proper people to place in control of such an organisation; they had no financial interest, they were dependent for re-nomination on the Minister, and not having any financial interest, they were not the best type to ensure the financial success of the undertaking. Further, he said that the directors elected by the common stockholders would have that financial interest that would stimulate their activity and ensure that they would be active in making the company a financial success. Of course a peculiar construction of the company is the fact that the debenture stock will be redeemed. The final position will be that the Transport Company will be owned by a group of common stockholders. That is an extraordinary position so far as a company of this sort is concerned.
The Minister apparently satisfied himself from his 12 years' experience that directors elected by the shareholders would be more useful and more effective to ensure financial success. He made no attempt to explain how they can exercise any control whatever, taking into account the peculiar constitution of the board and the extraordinarily strong position in which the chairman is being placed. He is a quorum in himself. The board can make no decision without his concurrence. The board cannot form a quorum or do any business when he is not present and whatever decisions are made are certainly decisions of the chairman. Taking all these aspects of the case into account, we feel that the House is entitled to be very dissatisfied with the Minister's attempt to defend his proposal. I submit that we are entitled to a more detailed explanation from the Minister, a more convincing effort on his part to satisfy this House that we should commit the people of the country to this very heavy financial undertaking.
I was endeavouring last night to show that the main burden of complaint against the Bill, and particularly against this section, is the fact that by giving a State guarantee of 3 per cent. per annum for redeemable stock until redemption, the Minister had provided a scale of compensation for the debenture holders in this company which was extravagant and which was unjustified by any reference either to the stock exchange quotations or to the assets of the company, as acknowledged by the chairman of the company and as ascertained by the tribunal which was set up in 1939, to investigate the whole question of transport in this country.
Nothing that the Minister, or anybody else, has said to the contrary would convince me that we are not tying up the public of this country to guarantee a rate of interest and a stock valuation to these debenture holders which is thoroughly unjustified by whatever assets they are putting into what has been described as this transport pool. If the Minister's story of the financial resurrection of the railways, as indicated by his attempt to justify these compensation provisions last night, has even a grain of truth in it, there should not be another bankruptcy in this country. The Bankruptcy Court could be closed down entirely; nobody could be compelled to go into compulsory liquidation: nobody need ever be in doubt so far as the Companies Acts are concerned of their ability to pay their way in future because the railway company has provided a simple recipe for every known financial difficulty that a company can possibly encounter. All you have to do, if you are running a company which has wasting assets, one that has seriously depleted stocks and no money to buy coal or provide for renewals or repairs, is to get hold of a Minister and get him to put in a chairman. The chairman then holds an annual meeting of the shareholders to denounce the company as being in a financially dilapidated condition. The moment you do that you then play the bogeyman to all the shareholders who have been carrying the baby for years. You frighten those people into getting rid of their stock. Having got them to throw their stock on the market the next thing is to get someone to buy the stock—in golf clubs or elsewhere— and then all the financial wiseacres will get to work. In a short time the assets and activities which were denounced by the chairman as being so unprofitable suddenly become valuable. The assets and the activities of the depleted stock which were down to zero on the stock exchange jump up very high, and immediately the company is rehabilitated financially, to such an extent that you can even get the Legislature to give the stockholders of the company twice the stock exchange value of the company's stocks five years ago, and £3,000,000 more than the stock was valued at in March of last year. It seems a very simple remedy.
These are the methods which have been blatantly and nakedly attempted in our financial rehabilitation of the Great Southern Railways Company. I do not believe there is any rehabilitation there at all. I believe this is a dud company which is giving its stock a value it has not got. The best proof that the assets of the company are not worth £13,400,000 is that we are writing them down. Let the present directors and the present chairman go out on the public market to-morrow with an advertisement offering even the redeemable stock of 4 per cent, and see how much they will get if they offer, as an appendix to their advertisement, the minority report of the Transport Tribunal of 1939. That minority report shows beyond all doubt that by windfalls and compensation paid by the British Government in respect of damage to rolling stock on previous occasions as well as by refunds of overpaid income-tax and rates, the company managed to pay its debenture holders, but that it was only possible for the company to do that because it made no provision for renewals and repairs had been made on a scale comparable to the depreciation of the assets of the company, the company would never have been able to pay a dividend, even on its debenture stock. It is because the company cannot get £16,000,000 or £7,000,000, as the case may be, or even 3 per cent. redeemable stock on its own name and assets, that it is necessary for the State to come in and provide, at the expense of the community, a State guarantee under which the stock is redeemed at the rate of 3 per cent. per annum, so that the capital invested in the redeemable stock can never deteriorate. At the very worst, the debenture holders will get 3 per cent. per annum always, with the chance that there may be a prospect of selling the stock at a profit on the exchange if there is any unusual change in the money markets here.
I want to know why the ordinary citizens of the country should have their credit pledged to guarantee 3 per cent. per annum on the debenture stock when, in fact, we are writing that stock up to a value that it has not got now, and that it is not likely to have, although the management of the railway company is a private capitalist monopoly. I object to the financial provisions of this Bill and to the effort to copper-fasten them in Section 8. I think that the valuation that we are putting on the stock of the Great Southern Railways Company especially is extravagant and is not justified by anything that we have heard from the Minister or from the Transport Tribunal which reported in 1939. I venture to say that, having regard to the chairman's own view of the assets of the company, and the Minister's view when he described the position in May last, no tribunal, even one disposed to be generous to the shareholders, would possibly put on the assets of this company the valuation which we are putting on them in this Bill. I think the Minister ought to recognise, since there has been so much complaint about the over-valuation of the stock of the company, that he should pause and consider at this stage, that he should get expert advice as to whether he was not in fact pledging the public credit for an asset which is not worth what it is claimed to be in this Bill, and whether he is not pledging the public credit on behalf of an undertaking which will be run as a purely private monopoly. Whether it is run efficiently or inefficiently, it will carry for all time, so far as the debenture stock is concerned, a guarantee at the people's expense—a dividend of 3 per cent. per annum. Even when the stock itself is ultimately redeemed—if that position is reached and that, apparently, is the desideratum of the whole matter from the point of view of a judge of a good financial company—then the ordinary stockholder will walk into an asset which may be worth £20,000,000, with a stock holding of perhaps £3,500,000. I never heard of such financial proposals. I think it will not be long before the Minister, or his successor, will have to come to the House and confess that we have been unreasonably generous with the debenture holders.
The Minister, in making a case for the retention of this section, asserted again that the financial success of the Dublin United Transport Company in particular, and of the Great Southern Railways Company since February, 1942, was mainly, if not altogether, due to their efficient management under the control of the present chairman-director. I do not think that is so. I think there is plenty of evidence to disprove that statement. The Minister, for instance, talked at some length about the financial success of the Dublin United Transport Company and associated with that the improvement in the conditions of the workers in the company which is true. It was not correct for the Minister to say that the fares of the Dublin United Transport Company were reduced.
They were.
Everybody knows perfectly well that we have recent evidence to disprove that. When the trams to Terenure and Dalkey were replaced by buses, the Dublin United Transport Company was allowed to increase the fares by 50 per cent. That disproves the statement that the fares of the company were reduced while at the same time the revenue was increased and the conditions of the workers improved. The Minister knows perfectly well that the financial success of the Great Southern Railways Company since the emergency is mainly due to the fact that traffic was fired at them, that there was not sufficient petrol to enable the road services, carried on during the pre-emergency period, to be continued during the emergency. Is it not true that there is a priority list for the conveyance of traffic by the Great Southern Railways for some time—a priority list which, I understand, is approved by the Minister and which means that traders cannot have certain classes of traffic taken from them for conveyance by rail unless the company so decides? That is due to the fact that they have not sufficient wagons to take by rail the traffic tendered by traders.
I think that Deputy Hughes is somewhat misinformed when he suggests that the railway company has been bolstered up to an undue degree. If he listened to the replies given here a couple of years ago—information on the subject was given to the House by the late Deputy Flinn—he would have learned that turf traffic carried by road cost from 50 to 100 per cent. more than it would have cost if carried by rail. I do not know what the reason for that is but the Minister can give it to us and then we shall have a little more reliable information. Why recently was a large number of wagons withdrawn by the railway company from the carriage of turf——
The Deputy is outside the section.
This has something to do with the financial failure or success of the company——
It is a small matter of administration.
If the same policy is pursued under the terms of this Bill, there will be very little left for the railway company to carry. Apparently, road transport will get the preference so far as the conveyance of traffic under this Bill is concerned. I rose not to prolong discussion on this section, but to point out to the Minister that there is no foundation whatever for the suggestion made to this House that the Dublin Transport Company was able to improve its services and, at the same time, to improve the conditions of work of its employees. It was wrong for the Minister to state that the fares were reduced at the same time that conditions of work were being improved. I have referred to one very recent example. When the trams were withdrawn from the Dublin-Terenure and Dublin-Dalkey lines, the fares charged to passengers were increased by 50 per cent.
I have listened to the debate on this section of the Bill with great interest. One outstanding feature of the debate is that every criticism, so far, has been destructive. Not one constructive suggestion has been made up to the present, so far as I have heard. Deputy Norton suggested that shares in the company were boosted in golf clubs. Deputies received a report this morning which rather contradicts that suggestion. As a businessman, I have endeavoured to make myself acquainted with the provisions of the Bill and with what has been done by the Minister. The history of this company is well known to all of us. The Minister and I have not seen eye to eye for many years, but it seems to me that there were only two alternatives open to him. One was to set up a body like the Electricity Supply Board—in other words, to nationalise the railways—and the other was to do as is being done: to appoint Mr. Reynolds to take charge of the railways. Mr. Reynolds has an amazing reputation as a businessman in Dublin. I think that the Minister was quite correct in choosing Mr. Reynolds as chairman of this company, or as dictator, as he has been called. I assume that Mr. Reynolds has had a good deal to do with the framing of this Bill. I have very little respect for the late directors of the railway company, not from the point of view of their moral character, but in respect of their efficiency in running the railway. Mr. Reynolds has been running it for some time. Most of the directors are heads of big businesses and have a good deal of business experience, though they have failed in the case of the railway. Mr. Reynolds is prepared to work with them. My own experience is that it is a very good thing to have the head of a business and a lot of "dummy" directors. I am all for the "dummy" directors in this case. I think that the whole transport position is in a state of transition. The Minister assured us yesterday that we should get an opportunity in ten or 12 years to review the whole position if the present company was not successful in its work. I do not think that it is going to be as good as the Minister believes, and I do not believe it is going to be as bad as Deputy Norton and Deputy Hughes say it will be.
There is another viewpoint as regards the value of the company's shares. They have been valuing them on the stock exchange and, apparently, some astute "fly-boys"—I hope that expression is not unparliamentary— have made a lot of money recently. There are assets in the railway company which have not been mentioned here. There is its monopoly. There could not be another railway company. You could not bring in a foreign company to run another railway, though a number of traders might like to do that. Then you have the permanent way which you can hardly value. In the Irish Times, a few days ago, I noticed that the building of the Nelson Pillar cost £7,000. What would it cost to-day? You can hardly value the permanent way of the Great Southern Railways. I am sure the Minister took those matters into account when he was arranging the amount the shareholders were to receive. In addition, the railway company has 16,000 skilled workers. Those three things and the fact that the people put their money into the undertaking when it was being established do make the railway company an amazing asset. It would be almost impossible to get a valuation of the railway company. The stock exchange valuation is a very poor one. The Minister may have been too generous but, from another standpoint, he may not have been generous enough. I shall vote for the Bill and support it as far as possible. I do not know of any alternative to the appointment of Mr. Reynolds at present and I think he should get the freest hand possible in selecting his board. It should create a great feeling of confidence in us that we shall get a chance to discuss the whole position again. If we cannot be constructive, we should not be merely destructive.
I should like to say my last word on this section, although it is very hard to say the last word as the section covers so many aspects of the subject. When we were discussing the section last night, we were trying to find out why the Minister selected those different classes of people who are to be the directors of the company. We saw that his idea with regard to that shifted. From the information available up to this, and the newspaper reports of the evidence given at the stocks tribunal, I understood that the Minister's original idea was to provide the company with a capital of £10,000,000, and that it was going to buy out the Great Southern Railways Company. Apparently the idea was that the debenture holders were going to get the full value of their holding and what was left would give 65 per cent. of nominal value to other shareholders.
From the report that reached us this morning we find that the Minister's actual proposals for the £10,000,000 was to buy both the Great Southern Railways Company and the Dublin Transport Company. In page 61 of this report we get the information that throughout consideration of the proposals it was estimated that at least £2,000,000. would be required to purchase the shares and debentures of the tramway company, so that when £2,000,000 was taken from the £10,000,000, only £8,000,000 was left to buy out the Great Southern Railways. In fact, it was felt that there would be only £20 10s. 0d. left to pay for each £100 of nominal value to the shareholder, so that the Minister's valuation of all the interests of the preference and ordinary shareholders in the Great Southern Railways, pre-September, when he changed his mind, was rather small. We have no idea why he changed with regard to that value, or why he particularly selected people, in respect of whom he changed his mind, as owners of the company. We can get no further information from the Minister with regard to that. He seemed to suggest last evening that it was rather unnecessary and undesirable that we should be allowed to see somewhat what was at the back of the mind of the Minister, the Department, the railway company and the chairman in the development and formulation of these proposals. I think that is an entirely wrong view of the Minister's responsibility, and of the circumstances, if the House is to give him the greatest possible assistance in dealing with this problem. We should have some explanation as to why the change was brought about.
When we examine the interest that ordinary stockholders of the railway company had in the past, we see that they took substantial dividends that were not earned out of the company and took substantial dividends when there were substantial losses, leaving the necessary fabric of the railway unbuilt up. I feel that I am now entitled to ask the Minister with a view to getting a picture of what kind of plant it is, what its characteristics are, so that we may know what he expects these people to earn out of the company during the next ten or 15 years. Is their ownership of stocks that are being allotted to them in the Bill going to be worth anything inside the next ten or 15 years? There are very heavy financial proposals in the Bill and the House is asked to saddle the taxpayers with very substantial guarantees in respect of the greater part of the capital of the company. From part of the £3,500,000 or £4,000,000 we should like to know, in respect of those owners of the company, what income they may be expected to get yearly during the next ten or 15 years.
I am sure the Minister has not put these proposals before the House without very elaborate financial examination of the commercial possibilities of the scheme, the income and expenditure, what is going to be left for distribution, what is going to be put aside for reserves of one kind or another, and what will be expended on extending the system. These estimates must have been made. The Minister did not tell us. We did not expect him to do so, but we expected him to lift the veil a little, and to give us some idea of what ordinary shareholders in the new company are estimated to get out of it during the next ten years. If they are not going to get anything, we are building up a gigantic company, with very great responsibility on people who do not deserve much from past experience. Within the last 12 months personnel has changed probably to the extent of 10 per cent. or more, and for the next ten years they do not expect to get anything. If that is so it is a queer kind of basis. It would help us if we knew what the commitments of the company are likely to be, and what burden is likely to fall on the users of transport. I appreciate the approach of Deputy Dwyer to this matter. He thinks the chairman is exactly the right man for the job. We do not want to discuss personnel in any kind of way, but we are concerned with the approach and with the handling of things. Certainly, if the approach and the handling of the finances of the railway company in future are going to be anything like the approach and the handling of the finances of the Tramway Company, from the point of view of the users of transport in the City of Dublin, as we are beginning to see it now, the fears of Deputy Hughes are justified.
I draw the attention of the House to the fact that the Public Transport Tribunal Report of 1939 pointed out at page 108 that the Dublin United Transport Company at that time intended over a ten years' period to repay £1,100,000 of capital and debentures and they issued a warning to the Minister, and through the Government to the House and country that
"the company should not be empowered to charge such fares as may be necessary to earn a net revenue sufficiently large to enable this proposal to be carried out. In our opinion it is unreasonable to expect that for the next ten years the community residing in the areas served by the company should be obliged to pay, not only for the current cost of provision of the services placed at its disposal by the company ... but also to provide out of current revenue in such a short period so substantial a sum as £1,100,000...."
As far as we can see, from the date of that report until now, that £1,100,000 has been squeezed out of the users of transport in the City of Dublin. Anybody who looks at the report of that tribunal will see at page 105 that the capital of the Tramway Company was: ordinary stock £660,000, 6 per cent. preference stock £600,000; debentures £682,100; bank overdraft £268,832. This Bill provides for giving substitute stock in respect of the ordinary stock and the 6 per cent. preference stock. That money is going to be paid and the Dublin Transport Company, as far as we can see, is only going to gather stock worth £1,260,000 shown there.
It is to be compensated at the rate of £145 per £100 of stock. What has happened to the rest of the money? What has happened to the rest of the capital which the Dublin United Transport Company had, according to the report at this time. Paragraph 246 says:—
"The capital and the borrowings of the company on 31st December, 1938, were as follows: Total, £2,210,000."
£1,260,000 is being provided for here, and as it is being provided for at the rate of £145 for £100 of stock, it looks to be £1,800,000 in the Bill, but the tribunal consisting of Mr. Ingram, Mr. Beddy, Dr. Kennedy, Mr. O'Brien and Mr. Diarmuid O'Hegarty, which was set up to examine the transport situation at that time, warned the Minister and the Government that charges by the transport company in the City of Dublin which would take £1,100,000 more out of the people in ten years than the cost of running the service in an ordinary reasonable way would warrant, should not be allowed. That apparently has been taken out of them, and it is a magnificent business touch that the citizens of Dublin, through unnecessarily high rates on their travelling, have had to pay it.
These charges have been felt by the people who travel from Crumlin, Drumcondra and Cabra into the centre of the city, and so far as we are able to say, from the information gradually coming before us in our discussions here and from the documents we are getting into our hands here, the citizens of Dublin during the past ten years have paid back £1,100,000 of capital over and above what they ordinarily and reasonably ought to have been charged for their transport. That is to be applied to the rest of the country, but, as well as getting that dose for the last ten years, the transport users, the ordinary passenger traffic of the City of Dublin, are to be shifted over and to have scooped out of their pockets additional moneys by that system to help a transport undertaking throughout the country, built up on the magnificent direction of the type of directors which the Great Southern Railways had.
It is very hard, when discussing a section such as this, which bases the ownership of this company on a certain class of people, to know where to stop in turning up any particular aspect of the case; but we ought to be told, as some guide to us, as to where we stand with regard to the finances of this company and the effect there is likely to be on our people, in respect of the people who are to be made own this company—the owners of £3,500,000 of stock are to be made the owners of, perhaps, £16,000,000 or £20,000,000 worth of property—how much money the Minister expects they will be able to get out of their stock in the next ten years. If we knew that, it would be a base line from which we might examine some others of the financial proposals; but if the Minister is unwilling or unable to tell us what these stockholders who are to be made the owners of the company under this section are likely to get in the next ten years, Parliament is being treated with contempt.
Deputy Dwyer has suggested that there are only two alternatives with regard to the constitution of this company—either a company as envisaged in the section or a company on the lines of the Electricity Supply Board. If these were the only two alternatives before the House, and I do not admit they are, it would be far preferable to have directors nominated by the Minister. There is safety in numbers, and it is unlikely that four or five directors would, prior to the publication of the Government scheme, go around to a number of people and inform them of what the scheme was to be, as did happen in the case of one dictator. I hold that if it is decided to have one dictator in control of this company, it is far better in the public interest that he should stand alone rather than that he should be surrounded by what Deputy Dwyer has described as dummy directors. Standing alone, he at least would be exposed to criticism for any of his misdeeds, but, protected by a smokescreen of dummy directors, he can evade responsibility to a certain extent.
The safety of public money, the safety of this great transport industry, demand that the operation of such a colossal business should not be delegated to one individual. That is why I think that, in the constitution of this company, it is entirely undesirable that we should have, as is contemplated, a number of dummy directors, so that the chairman, as a pocket battleship, will be surrounded by a smokescreen of elected directors who have no power and no responsibility. There is, I believe, a great danger attaching to the form of company envisaged here—a concern of which ownership is vested in people who have no power and controlled by the State through its nominee. There is also a big danger in dragging civil servants into it, because this nominee of the Minister must be a civil servant since he is the paid nominee of the Government. It is bad to have that association between the nominee of the Government and a company such as this. We have seen and noted with alarm the fact that prominent members of the Civil Service have been dabbling to a very great extent in stocks and shares and the fact has caused grave misgiving amongst the ordinary citizens. It must cause Deputies approaching the consideration of this Bill and other measures of the kind, in which there is an association between State ownership and private ownership, to view the whole proposal with grave misgiving.
This is, I think, rather an original system of control of a public company. I think it is the worst possible system that could be envisaged. It would be even better if the State were to acquire ownership of half, or more than half, the shares, and thus secure a majority on the board of directors. That would be preferable to the present system. I think if we are to choose between the alternatives that Deputy Dwyer indicated, it would be far better to have the ownership in the hands of the State, in addition to control. The system is bad—it is rotten—and while any shrewd businessman might like, as Deputy Dwyer pointed out, to be surrounded by a number of dummy directors, it would not be in the public interest that such a smokescreen should be provided.
This new company, because of the huge financial commitment which is involved in its creation, presents a real danger and would be a menace to all other forms of transport which have not yet been taken over; it does constitute a real menace to all industries which depend upon transport— and that is practically 100 per cent. of our industries. It represents a particular menace to the agricultural industry, which must have cheap and efficient transport, because its very existence depends upon such.
I understand that before I came into the House certain amends were made in connection with language used last night.
Yes.
I was one of those brought within the scope of your criticism. I wish to withdraw anything objectionable that was said by me, but I would like to make this point, in order to get it on the records of the House, that I was very careful last night to use language which was sanctioned by you on an objection taken by me against the expression when the Taoiseach accused me of having spoken a "falsehood" in the House. As far as my memory goes, "falsehood" was then sanctioned as a Parliamentary term. I understand, under the present ruling, it disappears from Parliamentary language, and as such I regret having used it.
I take the Deputy's word that I did once sanction it, though I do not recollect the occasion.
Before the section is put, I should like to point out that it merely provides that the holders of the proposed substituted common stock will be made into a body corporate to be known as Córas Iompair Éireann. There is nothing in the section concerning the financial obligations or powers of the proposed corporation, the constitution of the board, or the powers of the chairman. Although Deputies spoke about those matters, they do not arise on this section, and the observations I have to make on these matters will be made on the appropriate sections. In so far as we have had a general discussion upon the main provisions of the Bill, there are some things that should be stated in order to put Deputies right and so avoid what might be a useless repetition of inaccuracies at a later stage, thus wasting time.
Deputy Norton frequently used the expression "compensation" in relation to the proposals for the substitution of stock in the new company for stock in the existing Great Southern Railways Company. We are not proposing compensation in any sense, nor did we determine the arrangements for exchange on any basis of assessing the market values of existing stocks or the value of the fixed assets of the company. It is proposed to set up a new corporation in which will be absorbed the existing Great Southern Railways and the Dublin United Transport Company. So far as the Great Southern Railways shareholders are concerned, they are getting in the new corporation shares of the same nominal value as their present holdings. There will be certain differences arising out of the fact that the new corporation will have only two kinds of shares, whereas the Great Southern Railways Company have four kinds.
Debenture holders with £100 in the existing company will get £100 debentures in the new company. The new debentures will carry interest at the rate of 3 per cent. instead of 4 per cent, as at present. In the case of the guaranteed shareholders who have got, although irregularly, the 4 per cent. guaranteed to them when their money was invested, they will get as to half of their holdings the new 3 per cent. debentures and, as to the other half, common stock. The ordinary shareholders will get pound for pound shares in the new company—common stock in the new company.
We have not attempted to assess the market value. I do not think the question arises. The decision was not to attempt a further reduction in the nominal value of the holdings of those shareholders. We did in 1933 reduce the nominal value of their holdings. We do not think a further reduction of the nominal value is necessary and, therefore, the proposal is to give shares £ for £ against the existing shares, the only difference being that, in so far as the debenture holders are concerned, they will get 3 per cent. instead of 4 per cent. and the ordinary shareholders will be limited to a maximum dividend of 6 per cent.
Why is it necessary to put in a State guarantee of 3 per cent.?
Because we think that the people who have 4 per cent. and who have agreed to accept a 25 per cent. reduction, should get something in return. There was no reason to assume they would not get 4 per cent. in the future. Deputies may make deductions as to the position of the company, based on the experience of individual years, but if we take the experience of last year the holders of Great Southern Railways debenture stock had the probability of receiving their debenture interest regularly. They could reasonably assume they would not lose it in the future. If we ask them to agree to accept a 25 per cent. reduction in the amount of interest due to them, we have to give them something in exchange, and we propose the security of a Government guarantee.
May I repeat what I said yesterday, that we regarded it as desirable in dealing with the debenture holders that we should proceed, if possible, by way of agreement with them? Conceivably, as Deputy Mulcahy suggested, we might have established a judicial tribunal to assess with greater accuracy the relationship between the value of the 3 per cent. Government guarantee and the existing Great Southern Railways 4 per cent. debentures, but we did not think it necessary to do so. We considered it was a fair arrangement which was proposed for the debenture holders, and the fact that it was accepted voluntarily by the debenture holders should, we feel, recommend it to the House.
I do not know on what basis one would assume the value of the fixed assets of the Great Southern Railways Company. I have asserted that the fixed assets of any transport organisation can give no indication of its earning power. Study the balance sheet of the Dublin United Transport Company. Deputy Mulcahy has referred to its capital liabilities. Look at the other side of the balance sheet. Does the Deputy contend that the capital liabilities are represented by fixed assets on the other side? They are not. Of the items on the credit side, goodwill represents 60 per cent.
What is the value of the managing director—is goodwill included in that figure?
It would be hard to assess that. There is no question of the ability of the company to earn a revenue capable of remunerating the capital invested in it. The same surely must apply in the case of the Great Southern Railways Company. It may be that the rolling stock is obsolescent. It may be that their system of working will require considerable organisation. It may be that a number of the branch lines and some of the stations upon which capital was expended in the past will not be capable of earning revenue in the future, but there are assets there of some kind, assets the replacement value of which would be difficult to determine. It is an open question whether, if some catastrophe abolished all those assets, we would attempt to replace them, but, assuming that we would consider it necessary to replace those fixed assets, in whole or in part, what would they cost now? I suggest that they would cost substantially more than the nominal value we have placed upon the capital of this company. That is a question of opinion, but I do not think it is necessary for us either to determine the current market price of the shares of the company or the replacement value of its fixed assets in deciding the basis on which we are going to give shares in the new company in substitution for shares in the old company. I am sorry that Deputy Norton thought it necessary, despite the very emphatic report of the tribunal of inquiry, to repeat his insinuations against the chairman of the Great Southern Railways Company.
I hope the Minister will not misrepresent me again this evening. I made no personal insinuation against the chairman of the Great Southern Railways Company in any discussion we have had here. If I expressed any criticism on a previous occasion it was about his attitude of mind in regard to railway trade unions, but I made no personal reference to the chairman. That is not my habit in this House.
The Deputy's interpretation of his remarks is somewhat different from that of any one who heard him. I also think it is foolish of Deputy Davin to try to contend that the very substantial improvement which took place in the financial position of the Dublin United Transport Company was not due to its managing director. It was due to its managing director. It was entirely due to the organising ability he brought to bear upon that company's problems, and to the changes he made both in its financial structure and in its operation.
I did not argue that.
Those changes have been sensational in their effect. In the case of that company there was, following his appointment, an all-round reduction of fares; there was repayment of certain capital liabilities, not the entire loan liability of the company, as Deputy Mulcahy has assumed, but some proportion of it; there was a substantial improvement in the wages of its employees; there was considerable development of the facilities given to the public; and despite the difficulties created by the war, higher costs of fuel and restrictions in operation, it is, so far as I can find out, the only municipal transport undertaking in Europe which has not increased its fares during the war.
What about the recent increase?
The Deputy says that, when buses were substituted for trams on certain routes, the fact that the bus fares differed from the tram fares indicated an increase.
Of 50 per cent.
If that is so, the replacement of the trams on 2nd October next will effect a reduction in fares, and I am sure Deputy Davin will hang out a flag to celebrate the fact.
Is that a promise?
Of course the normal tram fares will be restored. There was no change in bus fares. It just happened that the bus fares were higher than the tram fares.
By 50 per cent.
They were higher than the tram fares. It is undoubtedly correct that the substantial improvement in the financial position of the Great Southern Railways Company revealed at the annual meeting this year was attributable in part to emergency conditions, but only in part. I have already explained to the Dáil that the increases in freight charges which were sanctioned last year were in no way responsible for the ability of that company to pay dividends upon all its stocks. The total of the increase in revenue which could be attributable to the increases permitted in freight charges was £300,000. Last year, for the first time, the Great Southern Railways Company appropriated to depreciation the sum of £550,000. It will be seen, therefore, that the whole of the revenue which came from the increased charges was more than off-set by the making of an allocation to depreciation for the first time in many years, and that all the additional revenue which was available to the company, and which was used to pay dividends upon ordinary stocks and arrears of dividends upon guaranteed stocks, was due to the economies effected by better management.
It is quite true that the railway company had to fight less hard for traffic during the war than it had previously, but, if the Deputy is trying to assert that the new management had no responsibility for the improved conditions, how is he going to explain the fact that the new set-up was only created at the beginning of 1942, after the war had been two and a half years in existence, during which period the company, instead of finding itself in an improved position, was rapidly deteriorating into such a deplorable state that it could not be relied upon to meet even the essential transport needs of the community? It is quite obvious to every member of the public who has had to use the transport system of this country that, following 1942, despite the accentuation of emergency problems, there has been a substantial improvement in the management and operation of the Great Southern Railways Company's transport system.
It cannot handle all the traffic at the moment. Does not the Minister know that?
I am not denying that.
That is my case.
And it is a very poor case at that. The Deputy is merely concerned to ensure that no credit for the improved position of the company or of the Dublin United Transport Company should go to Mr. Reyonlds. On that, he convinces nobody but himself.
Deputy Dwyer, I think, was right in saying that very few constructive suggestions were offered, but I would advise Deputy Cogan not to pay too much attention to his reference to dummy directors. I think Deputy Dwyer is merely having a poke at a relative of his who is a member of the Great Southern Railways board.
Does the Minister know that for a fact?
There is a relative of his on the board.
Does the Minister know for a fact that the other part of his statement is correct?
I am only expressing a personal opinion.
I merely wanted to have on the record the grounds for some of the statements made here.
Deputy Muleahy got himself into a considerable mess, from which I cannot hope wholly to extricate him. We never proposed to buy out the shareholders of the Great Southern Railways Company. Although the Deputy has got information as to the tentative proposals considered at various stages during the preparation of this Bill, he must not misinterpret the changes in view which occurred during that preparatory period. The original scheme contemplated the establishment——
We know the changes in view which took place. What we are anxious to know is why they took place.
——of a statutory organisation to be known as Córas Iompair Eireann, with one class of stock. We considered giving stockholders of the Great Southern Railways Company and the Dublin United Transport Company fixed interest stock—to give them all the same kind of stock. We considered originally that the total nominal value should be £10,000,000. Later I decided that £10,000,000 could not do it without far too drastic a cut in the nominal value of the shares held by the existing Great Southern Railways shareholders, the nominal value of whose shares had been previously drastically cut under the 1933 Act. The nominal value of the stock which will be created on the establishment of this company will be £13,500,000, not £20,000,000. £20,000,000 is the limit fixed to the capital liabilities which this company can accept. The actual capital liabilities with which the company will start off will be £13,500,000, of which less than £10,000,000 will represent debenture liabilities, that is redeemable debentures in respect of which the obligation to repay will arise. In so far as the Dublin United Transport Company is concerned, it had, in addition to its ordinary share capital, preference share capital, loan capital. There are debentures to the nominal value of £300,000, redeemable in 1947, which will be transferred to this new company and become an obligation on the new company. It is not necessary to make special provision for that in the Bill. It is covered by the incorporation of the Railway Clauses Act, 1863. Those debentures could be redeemed now, but they could only be redeemed at 110 per cent. It is obviously better value to carry the debentures and redeem them at par in 1947, when they become due for repayment, than to exercise the right to buy them in at 110 per cent. now. Some part of the loan capital liabilities of the Dublin United Transport Company were redeemed since the Transport Tribunal was established, but they were redeemed without any increase in fares.
How much is left?
They were redeemed out of economies, by better financial management; and I have no hesitation in saying that, if the financial reorganisation of that company effected by Mr. Reynolds had not taken place, not merely would the Dublin citizens have poorer transport services now but they would be very much dearer.
What was the amount redeemed?
I cannot say offhand. The amount outstanding is £300,000.
What about the other £600,000?
I merely state these matters in order to try to make them clear. I think we could more conveniently discuss them in detail on the appropriate sections. I want Deputies to understand that we are not proposing to determine the stock market value of all the shares of the Great Southern Railways. The market quotation is no indication as to what would be a fair price for all the shares, nor is it any indication of the price at which you could buy all the shares. Deputies will see from the report of the Tribunal of Inquiry into the Great Southern Railways Stocks, that, in the whole of the period investigated by them, not more than 10 per cent. of the nominal value of all the shares of the Great Southern Railways ever appeared on the stock market. In respect of the other 90 per cent., there were no transactions at all. The price at which a small fraction of the shares may be bought or sold is no indication of the price at which you would buy up the bulk of the shares, the holders of which bought to hold and have no intention of selling. If you established an arbitration tribunal to try to assess a fair value, you would have to tell the arbitrator to proceed on the basis not merely of a willing buyer but also of a willing seller. It is obvious, on that basis, that a fair person would have to fix on the shares thus treated, a cash value substantially above the current market value or the average market value for several years past. However, we have made no attempt to determine the cash value and are merely proposing to give stock of the new company in replacement. New debenture stock at 3 per cent. will be issued instead of the old at 4 per cent., and the new common stock will earn what the revenue of the company entitles the shareholders to receive.
I could not attempt to forecast, as Deputy Mulcahy has asked, what dividends will be paid to the holders of this proposed common stock. It would be impossible to make any such forecast, although it is obvious that the reduction in debenture interest, apart altogether from other economies that result from the amalgamation, and the benefits of better management will make it easier for the new company to pay dividends on the common stock than it was possible for the Great Southern Railways in the past to pay dividends on its ordinary stock.
The holders of the common stock will be the present ordinary shareholders of the Great Southern Railways, plus the present preference shareholders and the guaranteed preference shareholders, who will be receiving for 50 per cent. of their holdings of guaranteed shares in common stock in the new company. Under the Great Southern Railways amalgamation scheme, which followed on the 1924 Act, the persons entitled to be present and vote at the annual meetings of the company will be the holders of all stocks of the company other than debenture stocks. The effect, therefore, would be that the persons entitled to be present at the annual meeting of the company and participate in the election of directors and other functions of the annual meeting will be the present holders of the ordinary stocks, preference stocks and guaranteed stocks of the Great Southern Railways.
Question put.
The Committee divided: Tá, 69; Níl, 38.
Tá
- Aiken, Frank.
- Allen, Denis.
- Beegan, Patrick.
- Blaney, Neal.
- Boland, Gerald.
- Boland, Patrick.
- Bourke, Dan.
- Brady, Brian.
- Brady, Seán.
- Breathnach, Cormac.
- Breen, Daniel.
- Brennan, Thomas.
- Breslin, Cormac.
- Briscoe, Robert.
- Buckley, Seán.
- Burke, Patrick (Co. Dublin).
- Butler, Bernard.
- Carter, Thomas.
- Childers, Erskine H.
- Colbert, Michael.
- Colley, Harry.
- Crowley, Fred H.
- Daly, Francis J.
- Derrig, Thomas.
- De Valera, Eamon.
- Flynn, Stephen.
- Fogarty, Andrew.
- Fogarty, Patrick J.
- Friel, John.
- Furlong, Walter.
- Gorry, Patrick J.
- Healy, John B.
- Hilliard, Michael.
- Kennedy, Michael J.
- Killilea, Mark.
- Kilroy, James.
- Kissane, Eamon.
- Lemass, Seán F.
- Little, Patrick J.
- Loughman, Frank.
- Lydon, Michael F.
- Lynch, James B.
- McCann, John.
- McCarthy, Seán.
- McEllistrim, Thomas.
- MacEntee, Seán.
- Moran, Michael.
- Morrissey, Michael.
- Moylan, Seán.
- O Briain, Donnchadh.
- O Ceallaigh, Seán T.
- O Cléirigh, Mícheál.
- O'Connor, John S.
- O'Grady, Seán.
- O'Loghlen, Peter J.
- O'Reilly, Matthew.
- O'Rourke, Daniel.
- O'Sullivan, Ted.
- Rice, Bridget M.
- Ruttledge, Patrick J.
- Ryan, Mary B.
- Ryan, Robert.
- Sheridan, Michael.
- Skinner, Leo B.
- Smith, Patrick.
- Traynor, Oscar.
- Walsh, Laurence.
- Walsh, Richard.
- Ward, Conn.
Níl
- Anthony, Richard S.
- Blowick, Joseph.
- Browne, Patrick.
- Coburn, James.
- Cogan, Patrick.
- Coogan, Eamonn.
- Corish, Richard.
- Cosgrave, Liam.
- Costello, John A.
- Davin, William.
- Dockrell, Henry M.
- Dockrell, Maurice E.
- Donnellan, Michael.
- Doyle, Peadar S.
- Everett, James.
- O'Higgins, Thomas F.
- O'Leary, John.
- O'Sullivan, Martin.
- Reidy, James.
- Flanagan, Oliver J.
- Giles, Patrick.
- Halliden, Patrick J.
- Hughes, James.
- Keating, John.
- Keyes, Michael.
- Larkin, James.
- Lynch, Finian.
- McFadden, Michael Og.
- McGilligan, Patrick.
- McMenamin, Daniel.
- Mongan, Joseph W.
- Mulcahy, Richard.
- Norton, William.
- O'Donnell, William F.
- Reynolds, Mary.
- Roddy, Martin.
- Sheldon, William A.W.
- Spring, Daniel.
Tellers:—Tá: Deputies Kissane and Kennedy; Níl: Deputies Doyle and Keyes.
Question declared carried.
SECTION 9.
I move amendment No. 9:—
In sub-section (1) (a), line 34, before the word "transport" to insert the word "public".
If this amendment is accepted it will make it clear that the intention is to operate a public transport service. One cannot imagine this company operating anything but a public transport service but as the section is drafted it seems to me to be capable of being used to enable the company to provide a fleet of private motor cars or a fleet of small buses or, perhaps, river or coast yachts and run them or hire them out to private people. I am sure that is not contemplated, but in order to make it clear that the company is tied down to operating a public transport service I suggest that the word "public" should be inserted before the word "transport" in line 34. That would make it clear beyond all doubt that the operation of a public transport service is intended. It may be that the Minister is satisfied that the insertion of this word is not necessary. If the Minister is fortified with legal advice along those lines, the amendment will not be necessary but, if I am correct, I think in another amendment the Minister acknowledges the necessity for putting in the word "public".
No. I think the Deputy is under a misunderstanding. The Great Southern Railways Company, in the halcyon days before the war, did operate a private bus service. They hired buses for private purposes for which no licence was required under the Road Transport Act. The insertion of this word here would also prevent them from operating a mail contract or from providing transport for their own staff and supplies. I do not think it is desirable that the company should be limited to public transport and I see no good reason why they should be prevented from entering into contracts with the Post Office for the carriage of mails or from operating a transport service for their own supplies or staff or even, as they have done to a limited extent in the past, operating taxi-cars.
Would the Minister think it desirable then that this public transport company, or what purports to be a public transport company, should in fact engage in the provision of private motor cars, for instance?
The company has a number of private motor cars which are used by members of the company's staff on inspectorial work or for conveying men to their work and so on. They also have a number of lorries for the conveyance of their own supplies, and, in addition, they provide for contract work, such as the mails contract. They also engage in the business of hiring private buses and taxi cabs for private purposes, and I see no reason why they should not be allowed to engage in these activities.
I see a definite objection to a public transport company operating services of a private character.
What is the objection?
The objection is that the company is either a public transport company or it is not a public company. If the Minister wants to have a public transport company, then that company should engage only in public transport activities and not in the provision of services which are not normally operated by a public transport system.
But I submit that such services are normally operated by the company. I have already given instances to the House.
The Minister mentioned the contract for the mails, but obviously public transport interests are involved there. I am referring to private transport.
I think the Deputy misunderstands the whole matter. The company have occasionally run private trains. For instance, they ran a private train for a number of years under contract with the daily newspapers—a train on which nobody could travel or no goods be carried except the property of the newspapers. They have run mail trains for very many years under contract with the Post Office Department, and they have also provided trains and buses for the exclusive use of the people who hired them. They are not public services in one sense; they are private services connected with the business in which the company is engaged, in the same way as such services are provided by other people engaged in a similar business.
Some of the services referred to by the Minister are not private services at all.
They are not public services.
Well, why not make an arrangement for services of that particular kind, such as the railway company provided in respect of its buses? I do not think it is desirable for a public transport company to operate in private ways to the extent that the Minister has suggested, such as providing private taxi cabs for hire.
This company will operate hotels, and these hotels will operate cars for the convenience of their guests staying in the hotels.
Yes, we understand that. If the chairman wants an umbrella, nobody wants to give him a nationalised umbrella, or if he wants a walking-stick, nobody wants to give him a nationalised walking-stick.
Or a red flag.
I suggest, however, that in a matter of this kind it is desirable to limit the functions of the transport company so far as public needs are required, and not allow it to be a public company one day and engage in private business the next day. The company should not engage in activities which do not indicate that it is a public transport company, or engage in activities which are normally the sphere of private undertakings.
I would not agree with the Deputy. I think there is no objection to the company carrying on this sort of private hiring in which it has been engaged in the past. For instance, the company provides taxis at various stations for the convenience of passengers.
Would the Minister tell us at what railway station, either in the city or in the country, the company have taxis?
In Dublin, certainly.
The railway company is running these taxis in competition with the private taxi owners.
They may not be taxis in the strict sense of the word. They are hackney vehicles which are available for hire.
Of what type?
The ordinary, private-car type.
For hire?
For hire, yes.
Does the Minister mean on the streets or from the station? Will he tell us something more about this?
It is quite possible to arrange with the railway company at, say, Dublin, to wire ahead to places such as Killarney, Parknasilla, Glengarriff, and other such resorts, to have a taxi or a bus meet the train at the particular destination concerned. These are not private buses or cars in the ordinary sense. For instance, in normal times, I can go to the Great Southern Railways Company and hire a bus to take my friends or my family to the seaside or on an excursion. That is not a public service, to the extent that anybody may travel on that bus or car. If what Deputy Norton suggests were to be agreed to, the company would be prevented from engaging in that type of business.
In the case of persons going from Dublin to Cork, let us say, or from Cork to Dublin, is it possible to ask the company to send a taxi to enable people to catch the Cork train?
Yes, that can be done.
Is it merely a question of the hotel manager in Parknasilla, Glengarriff, Killarney or other such places, arranging for a taxi?
These are hackney vehicles, owned by the company.
I know that it is quite true to state that the company runs buses for the purpose of catering for the requirements of people staying in their hotels in certain areas. These buses are under their own control, but this is the first time that I have heard that the company had registered, in the City of Dublin, buses, motor cars or taxis in competition with the private taxi owner. Is that a fact?
They have hackney vehicles.
Well, the public know nothing about it. Under what existing legislation or under what regulation are they carrying on that business without the knowledge of the public?
I am not aware that it is without the knowledge of the public.
Well, I have been at Kingsbridge station hundreds and hundreds of times and I never saw a company taxi there.
I may have been wrong in describing them as taxis. They are licensed hackney vehicles, not taxis.
At any rate, it seems to me that it is desirable to provide public transport vehicles in respect of public transport, and they should not be allowed to go into the realm of private business by providing taxis, buses, motor cars, or even river boats or yachts.
Why should this company be prohibited from doing so, when anybody else can do it?
Because, in so far as they are public transport services, there is at least a certain measure of control, but in respect of private services of this nature they cannot be subject to public control or regulation in any effective way, and no regard may be had to the public interest whatever.
But these are activities in which anybody can engage.
Yes, I know that, but in a public transport company of this kind, fortified by a State guarantee, the company ought to confine itself to the provision of public transport and not enter into a realm of business which is, or could be, catered for sufficiently well by private undertakings. My fear is that if the railway company is permitted to operate, in some respects, in the sphere of private activities, they will have no regard, in operating these activities, to the public interests.
I disagree that this company should be confined solely to public transport. I see no reason why they should not be allowed to engage in the hiring of buses in respect of contracts, or running hotels, or selling drinks in hotel bars, or engaging in a number of activities which are not strictly public services.
I should like to mention that this amendment was inserted only for the purpose of endeavouring properly to prescribe the activities of this national transport company. In putting down the amendment, there was no intention of depriving the company of their existing rights or privileges— whatever rights or privileges they already have under existing legislation. It is well known, of course, that the transport company had road transport services for the carrying of mails and so on, even before the 1933 Act, and that in different parts of the country they had small buses and cars for the convenience of passengers and guests staying in their hotels at Killarney, Glengarriff, and similar places, but I am wondering whether the Minister is quite definite on the point that a passenger coming from Cork can wire to the Great Southern Railway headquarters and arrange for a taxi to meet him here in the city— a taxi of the same type as those that are to be found at the Kingsbridge platform—for the purpose of taking him wherever he wants to go.
I must not be taken as describing the procedure of the company, but that they have hackney vehicles, licensed in their name, I know.
At Kingsbridge?
They are not taxis. As I have said, I was wrong in describing them as taxis. They are hackney vehicles.
Some time ago it would be quite correct to say that one of the company's buses would be waiting there to take groups of passengers from the station to the quayside when people were sailing to England. I know of no other kind of bus or taxi that plies for public hire at Kingsbridge Station.
The private hire of buses was one of the most lucrative businesses of the company before the war. Every Saturday and Sunday schools and clubs hired buses for excursions.
That is quite true and there was no intention on the part of the mover of the amendment to deprive them of that power. The object of the amendment is to describe properly the purposes of the company.
The effect of the amendment would be to deprive them of some of these powers.
Equally, if the amendment is not accepted, it means that the company can engage in any activity that can be described as a transport service.
Yes.
Such as motor cruises on the canal. They can do anything so long as it passes under the label of a transport service.
Unless there is any other law preventing them. There are laws which control the issue of hackney licences.
They can run all sorts of transport services.
And they do so.
We are now establishing a new company part of whose burden, as I foresee its future, is going to be borne by the taxpayer. It is going to be in a position to compete possibly with the ordinary taximan in Dublin or Cork.
I wonder is the Minister quite correct in giving the unrestricted view he has given, that under this Bill, when it becomes law, the new company will have power to do all the things he has mentioned?
They will have power to do all the things that are described as being for the purposes of the company.
This company will be restricted to the powers given under this Act and in Section 9 there are only two powers mentioned. One is to operate a transport service and the other is to carry on any ancillary or supplementary business. All, therefore, that can be carried on by the company is a transport service or a business which is ancillary or supplementary to the transport service. I think there might be very great difficulty in bringing within the scope of that definition some of the matters to which the Minister has referred, and I think he might perhaps take some advice on the matter. Personally, I think it desirable that the company should have the powers the Minister says he thinks they have. That is a personal view of my own but I am not quite sure that under the term "ancillary or supplementary" the company will have these powers. I doubt, for instance, whether a hotel would be ancillary to transport.
It has been held to be so.
But that was under a special enactment.
The point I wish to put to the Minister is, will the carrying on of a business such as he suggested, a taxi business or matters of that kind, be a business which would be ancillary or supplementary? Similarly, is the provision of a hotel supplementary or ancillary to transport? It is possible the Minister is right.
Just in case there is any doubt as to whether the phraseology in paragraph (b) covers hotels and similar purposes, I shall have the Parliamentary draftsman examine that. I think myself that the phraseology used here is that used previously and it was held to cover a hotel business which the railway company had carried on previously. There is no question in my mind that, in addition to public transport services, they should be empowered to operate the type of transport business in which they engaged previously.
I quite agree with the Minister that they are entitled to run buses for private parties. He quotes the case of the railway company ordering a taxi for a person who might want it, but the taxi still remains the property of the taxi owner and is not a service run by the railway company.
I am aware of the fact that the railway company have registered in their own name a number of hackney vehicles.
I think this definition should be extended so as to clarify the company's powers in the matter.
Does the Minister realise the door he is opening for the railway company by permitting them to engage to such an extent as they so desire, in the provision of private transport services? I gathered from what the Minister said that it is possible for the new transport company to put a fleet of taxis on the street and operate them. It is possible for them in a provincial town to put out hackney cars there and to compete against local people for such traffic as is available. If they can do that under the Bill, because of the fact that they are entitled to operate any type of transport service under Section 9, I think what you are doing is that you are throwing a highly capitalised company of this character, fortified by a State guarantee, into competition with private services which might be left to the small private taximan or car-owner who cannot be expected to compete with a gigantic private monopoly of this kind. I think it is highly undesirable to give the company that power. One might understand a nationalised scheme of transport for the whole country, but if the Minister says that the company has power to operate for private transport, then you have a situation where you have on the one hand a mammoth privately-owned monopoly going into competition with the small taximan in the City of Dublin or hackney car-owners in provincial towns.
I think the Deputy is exaggerating what I said.
The Minister has said they can do that.
If the Deputy's amendment were accepted, they could not supply a car to go round with an inspector. They would have to hire a car every time they sent out an inspector.
Has the Minister taken any legal opinion on that?
Certainly.
It is the daftest legal opinion I ever heard of.
Are taxis not public service vehicles?
They are available for private hire.
Does the Minister remember being asked a question as to the quantity of petrol allocated to the railway company for bus services? Is it correct to state that he said on that occasion that they had six cars and that they were made available only for the management—the chairman, the general manager, the traffic manager, etc.?
In addition to these cars, which were allowed for the purposes of the company, they had vehicles licensed as hackney cars and they got petrol allocations in respect of the hackney vehicles although they could not increase the number of such hackney vehicles at present. I think there was only a limited number of these hackney vehicles available but there were some.
The Minister said that if the amendment were accepted the company would have to hire cars for their inspectors, but surely it is ancillary to a transport service to send inspectors round the country? I think the Minister ought to reconsider the powers which are conferred on the company by paragraph (b).
This section does not empower the company to do anything. It states the purposes of the company. The powers which the company has, or should have, will be given in a statute.
This section does not empower them?
This section sets out the purposes for which the company is incorporated.
It does not give them any statutory powers?
This, of itself, does not give them any statutory powers.
It is to be noted that the Transport Tribunal in 1939 reported that the company stated that 196 buses were required for the operation of normal services, 55 for the Cork City service, and that there were 75 of a reserve fleet available for private hiring and general contingencies.
Amendment put and declared lost.
I move amendment No. 10 :—
In sub-section (1) (b) line 37, to insert after the word "vehicles" the following "(including engines)".
Amendment agreed to.
I move amendment No. 11:—
In sub-section (2), line 39, to insert before the word "acquire" the words "by agreement".
It was suggested, during the course of the Second Reading debate, that these words should be inserted to make it clear that the company could only acquire other transport undertakings by agreement. I am moving the amendment to put the meaning of the sub-section beyond doubt.
I take it that means agreement with the undertakings they propose to take over.
Agreement with the owners of the undertakings.
Amendment agreed to.
I move amendment No. 12:—
In sub-section (2), line 43, after the word "undertaking" to add the words "provided that nothing contained in this section shall authorise the company to acquire by purchase or otherwise any transport undertaking owned or operated by the State".
The company is empowered under the section to acquire the whole or any part of a transport undertaking. The object of the amendment is to ensure that nothing contained in the section shall authorise the company "to acquire by purchase or otherwise any transport undertaking owned or operated by the State". It is quite possible, under the section as it stands, that this private monopoly might desire, and might be permitted, to acquire, for instance, the air services, the State airports or any State motor service in existence at the moment. I do not think it is desirable that State services of that character should be transferred to a privately-owned monopoly such as this company will be. I think the Minister should accept a limitation to ensure that, whatever the company's rights are in respect of the acquisition of private transport undertakings, the State ought not put itself in the position of selling State assets to a privately-owned company of this kind.
If the Deputy is concerned about the air companies or the airports, I would refer him to the provisions in the statutes under which these companies were set up. I have not the exact terms of these statutes before me, but I am certain that they make ample provision for the circumstances in which a change in the constitution of the companies can take place. I did not know what object the Deputy had in mind when he put down the amendment. It never occurred to me that he had in mind the air companies which are established under statutes that are equally binding in law with this measure.
Sub-section (3) of the section provides that "any person carrying on a transport undertaking may, notwithstanding any enactment or agreement, sell the whole or any part of ... to the company".
I do not think this amendment is the way to provide against that. It is highly improbable that the Government would decide to effect a change in the air services. If they did so decide, I think that new legislation would be necessary. In any event, I think the insertion of the words in the amendment would be of no importance.
Would not the words in the amendment, if inserted, be of importance in view of what is provided in sub-section (3)?
No. Suppose it was decided to make a change, that would require new legislation, and that legislation would provide for the deletion of the words in the sub-section.
What legislation?
I am pointing out that no change in the constitution of the air companies could be made without fresh legislation.
Let us get away from the air companies and take the case of the Post Office, which operates a service of about 100 motor vehicles. There is nothing in the world to prevent the Post Office from saying——
I do not see why the Post Office should not be free, for example, to enter into an agreement with the company for the transport of mails.
Is it desirable that State assets, in the form of the capital that is invested in State services, whether these be air services or motor vehicles services, should be sold out to a private monopoly of this kind?
I am not going to express an opinion as to whether it is desirable or not, but if it is desirable I do not see any reason why the Minister for Posts and Telegraphs should not be free to enter into contracts with the new company for the transportation of mails. He has such contracts at the present time with the Great Southern Railways Company, and if he wants to extend that contract system I do not see any reason why he should not be permitted to do so. The Minister's activities are subject to review in the Dáil.
Is it not possible, under the section, that the air services, air ports and the post office motor vehicle service could be taken over by this new transport company?
If the Deputy wants to limit the powers of this company and to prevent it from engaging in the operation of transport services by air, then he can move to delete the word "air" in sub-section (4).
And as long as there is no objection at law to the existing company engaging in air transport services?
They could not do it now under the provisions of the Air Transport Acts.
Under the Railways Act of 1933?
Since then there has been another Act which has superseded the 1933 Act.
Sub-section (3) would cover air transport services, so that any person carrying on such could "notwithstanding any enactment or agreement" sell to the company. That overrides, I submit, the enactment which, according to the Minister's statement, would prevent the new company engaging in air transport.
I agree fully that there should be no change in the existing arrangement for the operation of air services without the Dáil having an opportunity of expressing its opinion. If that is the point which Deputy Norton has in mind, I am prepared to consider whether an amendment is not necessary to ensure that such a change cannot take place without fresh legislation.
My attitude is that I do not want to see this privately controlled monopoly operating any services which are at present being operated by the State. I believe that the whole transport system should be a State enterprise.
If the Deputy has in mind the idea of the new company carrying mails under contract for the Department of Posts and Telegraphs, I am not going to impose any restrictions on the power of the company to enter into arrangements with the Minister for Posts and Telegraphs. If, however, the Deputy has in mind that the arrangements already made under existing legislation for the operation of air services should not be changed without fresh legislation—that they should not be changed under the omnibus provision in sub-section (3) or this Section—then I am prepared to amend the Bill to see that that will not happen.
Amendment withdrawn?
I am prepared to withdraw the amendment, but I reserve to myself the right to move it on Report if I am not satisfied with the Minister's amendment.
Amendment, by leave, withdrawn.
I move amendment No. 13:—
In sub-section (4), line 51, to insert before the word. "transport" the word "public".
This amendment was suggested by the merchant lorry owners, who feared that the company's power of compulsory acquisition might extend to private vehicles operated by traders for the purpose of their own business. I do not think that that fear could possibly be justified but, in order entirely to remove it, I agreed to this amendment.
From that angle— the point of view of the lorry owners— has not acceptance of the two amendments, Nos. 11 and 13, more or less cancelled each other out? Amendment No. 11 provides that acquisition of any other transport undertaking may be only by agreement. That ties it to the acquisition of a "transport undertaking" and that, by the new definition, means an undertaking "operating any public transport service", so that you are back again where you were. If there was necessity for an amendment before——
There is less now.
What is the situation as between this Act and the earlier Acts under which the ordinary motor haulier could be put out of business? Does the present Act override those Acts?
No. The other Act remains unchanged.
Therefore, the putting in of this amendment leaves the position of the ordinary lorry owner exactly as it was—that the old Act can be operated against him, so that it is still possible, under the old legislation, save in so far as it is changed by this Bill, to drive all the private lorries off the roads.
It is possible for the company to acquire licensed public hauliers only. They have no power of compulsory acquisition in respect of privately-owned lorries.
Take the case of the licensed haulier. The licensed hauliers could, one by one, be lifted off the roads.
They could be but I think it is unlikely that they will be.
So far as the private lorry owner is concerned, the fact that this company is allowed to operate transport services of all types may mean that, having the taxpayer behind it, it may succeed by cut-throat competition in driving those other people off the road.
What "other people"?
The people who haul their own goods.
So far as people using their own lorries for the conveyance of their own goods are concerned, I hope that this company will provide them with cheaper transport than they could provide for themselves.
It is possible to lose money in a big undertaking in order to drive the chap who is carrying his own goods off the road and then raise the rates.
If they raise the rates, the private man can buy a new lorry and start in again. So far as the private individual using motor transport to carry his own goods is concerned, there is, in normal times, no restriction upon him. It is not proposed by this Bill to impose any restriction on him. The person who carries goods for hire was subjected to a licensing system by the 1933 Act and his undertaking could be acquired by the Great Southern Railways or the Great Northern Railway or any of the other statutory undertakings. A number of them were compulsorily acquired. A number of them were not acquired because of the type of business they undertook or because the area they served was not one in which the railway company was prepared to give a reasonable service. The power of compulsory acquisition is there, and has been there since 1933. That applies only to persons licensed to carry on the business of hauling for hire.
The situation is the same as it was previously with regard to the person carrying his own goods. He can be driven off the roads by competition. Whether this company earns certain dividends or not, the taxpayer is going to come to its rescue. It can afford to run a certain amount of competition against the private man and drive him off the road. The Minister says that, if the rates go up, that man can come back into the business. Has the Minister investigated the outlook of those people who, prior to 1939, were carrying their own goods by road and who, by various devices, have been driven off the road? Any of them I have been in contact with are looking to the buying of new vehicles of their own. They did put aside their vehicles at one time, because they could not get parts or because the screw was put on as regards petrol. The screw can be put on again by competition. When they are put off the roads, the Minister says that, if the rates go up, they can always get back into road transport.
In fact, I do not know how the company could compete with a person using his own lorry to carry his own goods any more than it could compete with a person using his own car for his own purposes. Assuming I were a person requiring a great deal of transport—if I were, for instance, a commercial traveller—I should buy a car for my own use only if it were cheaper to use it than to use public transport. If public transport were cheaper, I would use it. The trader using his own lorry is in the same position. He will use the public transport service if it is cheaper than his own would be. There is no intention of preventing him from using his own lorry.
Surely the position was entirely different when rates and fares were under the control of a tribunal. Now that they are to be under a Department, there can be up-and-down fluctuations so as to help the company to operate competition in a way in which it was never done before.
Does the Minister seriously suggest that private lorries will be superseded by this company— that the new company will be able to give a cheaper service than a private owner could provide for himself?
That may not be true in respect of a number of trades. A builder, for example, doing work in one place to-day and in another place tomorrow will require his own transport. Certain other trades will find it convenient to have transport facilities at their own command, but so far as a large volume of traffic carried by private lorries before the war is concerned, I believe it will be possible to give better and cheaper facilities than these lorries will be able to provide when public transport is properly organised.
I cannot see the Minister's viewpoint in the case of a man who may have to shift manure at one time and do some other job at another time.
Cheapness may not be the consideration in every case.
In the pre-war period, traders could operate their own lorries more cheaply than any railway company could.
It is not necessary to argue about it. It is a matter of opinion, and there is nothing about it in the Bill.
Amendment put and agreed to.
Question proposed: "That Section 9, as amended, stand part of the Bill."
I understand that something extra will have to be done in connection with this amendment, and amendment No. 14. I suggest the effect will be somewhat lost by the insertion previously of amendment No. 11. Sub-section 3 contains considerable danger:
"Any person carrying on a transport undertaking may, notwithstanding any enactment or agreement, sell the whole or any part of, or share in, that undertaking to the company."
Take the case of an ordinary company. Any proposal to get rid of the property would have ordinarily to go before the shareholders at a general meeting. It would appear to be possible here for a board of directors to effect a snap sort of sale to a new company, because they would not be controlled by enactment or agreement. The situation has been discussed already with regard to air transport services. The company is precluded by special Act from getting rid of property, but that special Act will not prevent them getting rid of property in future if that is the meaning I read into these words. I do not know even if the words mean a shareholder or property owner in the company or the board. In any event, shareholders of a statutory company may off-load the whole concern without the Dáil knowing anything about it.
Sub-section (2) says that the company may acquire by purchase or by exchange property. So far, there has been one approach to this by way of anticipation. The Minister apparently gave sanction, or something in the nature of sanction, to the dissolution of the Dublin United Transport Company and to its amalgamation with the company now proposed. We are still at a loss to know on what basis the dissolution of the Dublin United Transport Company was arranged. I take it from the Minister's remarks in connection with the Great Southern Railways Company that no real valuation was put on the property of the Dublin United Transport Company, that no attempt was made to assess what its revenue-raising capacity was but that someone hit on the bright idea of giving debenture stock to all who held any common stock in the Dublin United Transport Company. The peculiar thing in the end is that the property in this whole concern, which is going to take over the railway and the tramway system, is going to vest in those who held common stock in the railway company. There were common stockholders in the Great Southern Railways and common stockholders in the Dublin United Transport Company. The common stock in the Dublin Transport Company is being wiped out, but the common stock in the least successful of the two concerns is being kept, and the owners will, eventually, emerge as proprietors. Why that distinction between common stockholders was made, I do not know. In any event, what it probably means is that something amounting to the Minister's sanction was given. I want to find out what is intended by the phrase "with the sanction of the Minister". The sub-section says that the company may, with the sanction of the Minister, acquire the whole or any part of any transport undertaking and the property and assets. What is in the Minister's mind with regard to sanction? What would he contemplate? Is it that he would be looking to see some sort of provision, as in this Bill, for the substitution of one class of stock for another, and if so, on what basis will the calculation be made? What is the distinction operating in his mind in discriminating in such a peculiar way adversely to the common stockholders of the successful concern?
So far as the arrangement for the acquisition of the Dublin United Transport Company is concerned, it was the result of negotiations. I can quite easily understand the attitude of ordinary shareholders in the Dublin United Transport Company in deciding that they would not be satisfied with common stock in the new company. They had a profitable undertaking which paid dividends with regularity. There was only one year in which it did not do so, and that year there was a strike lasting six months. Naturally they had also in mind the rather unfortunate history of the ordinary shares of the Great Southern Railways. The ordinary shareholders of the Dublin United Transport Company wanted some assurance that they would get not merely stock of equal value on the market as the stock they were parting with, but something else. They elected to have Government guaranteed debentures for their common stock. The determination to effect the substitution of £145 for every £100 of stock was the result of negotiations. It was a decision which, I think, the directors were prepared to recommend.
That is putting it mildly. It was such as no arbitrator would give them.
There was a difference of opinion about that. As I stated in the Seanad on a motion introduced there by Deputy Mulcahy, who was then Senator Mulcahy, the proposal was such I felt that I could defend it. That was the only basis. The intention behind sub-sections (2) and (3) is that in certain circumstances it might be possible to contemplate—and I would contemplate it—the transfer of some of the road services in the metropolitan area from the Great Northern Railway Company to Córas Iompair Eireann. I do not know if the Great Northern Railway Company are prepared to agree to transfer some of their metropolitan services to the new company, but, if they proposed to do so, I would sanction it. I told the directors of the Great Northern Railway Company that I would regard it as a more desirable arrangement that the metropolitan services should be under one company. We are not proposing compulsorily to acquire these services, but we want to facilitate an arrangement of that kind if it can be made. There may be similar services, such as the road transport services of the Grand Canal Company, and others operated by the Great Northern Railway Company in areas adjoining those in which the Great Southern Railways operated services in the past. An adjustment of services of that kind may be possible by agreement, and, if agreed to, may be desirable. The purpose here is to provide for the transfer being effected if such agreement appeals to the parties concerned.
Inside the £20,000,000?
I desire to call attention to a provision in sub-section (3) which, I think, wants some clarification. I direct the Minister's attention to the phrase "or agreement". These words strike me as being capable of having an effect, perhaps, that is not intended. I might put a hypothetical case to explain the point which I wish to make. If "A" operates a transport service and proceeds to sell to "B", if "A" thinks he can get a better price for that service, then "B" is crushed out. "B" is left high and dry, as it might be contended that the agreement was broken by the wording of sub-section (3). Probably that point would not arise, but the wording could operate to invalidate an agreement that would, otherwise, be valid between two parties, and enable one party to break it with impunity.
I can have that examined. The intention is to empower one to sell and the other to buy.
I want to know what effect it is desired to give the words "or agreement". That is to say, notwithstanding any agreement, a road transport company may sell to a new company?
I am not quite sure.
Would it enable the board to sell behind the backs of shareholders?
No. It is a company which would have to sell and not a board.
Ordinarily, it would be a matter for shareholders. That would be a matter either of statute or agreement.
The Deputy will agree that the term "person" means the company.
How, then, do they operate?
I am not quite clear why the words "or agreement" are necessary. I cannot see how there could be an agreement which would prevent the sale of such an undertaking, but I will have the point examined.
Progress reported; Committee to sit again.