Dún Laoghaire): In case of any misunderstanding the division shall take place at 10.30 p.m. Because of the urgency of the matter and because of the division a few moments ago it was difficult to discuss times, but it has been agreed that the Opposition opening speaker will have half an hour and that the Government speaker will be called on at 10 o'clock to close the debate and that he will have half an hour. Contributions by individual Members will be limited to 15 minutes in order to allow contributions by the Members who wish to get in.
Irish Shipping Limited: Motion.
We should clarify one matter. The Government will move an amendment. How long will that Government speaker have?
(Dún Laoghaire): In fairness to Deputies, the Government speaker moving the amendment will confine himself to 15 minutes.
In moving the motion I will take 15 minutes only, but some speaker on our side will take half an hour. I move:
That Dáil Éireann calls on the Government as the owners of Irish Shipping to take whatever action may be necessary immediately to reverse the decision to liquidate the company.
I want to point out first of all that Irish Shipping is a State company. Speaking from memory, the entire shareholding of the company is the property of the Minister for Finance on behalf of the Government and the people. It seems to me that even though the Government acted precipitously in rushing down to the courts this afternoon to have a liquidator appointed, it is still possible for the Government, or the Minister for Finance as the principal shareholder if not the sole shareholder of the company, to take whatever action is necessary to have that decision set aside and to enable the company to proceed.
At least the decision should be set aside until the Oireachtas Committee, established to investigate the affairs of State companies, and who are now investigating the affairs of Irish Shipping, have had an opportunity to conclude their deliberations and report to the House.
We find it extraordinary that in a major matter of this sort, probably one of the most far-reaching economic decisions taken by any government for a long time, this indecent haste should have been engaged in. Why was it necessary to rush down to the courts this afternoon, presumably after the normal court sitting time, and to move to have a liquidator appointed? That furtive action by the Government brings this whole process into disrepute, in our view. We are not dealing here with the closure of a dance-hall. We are dealing with a major State company of international significance and importance. We are dealing with many millions of taxpayers' money. Yet this Government decide to deal with it in that way.
My colleagues on this side will elaborate on different aspects of this. I will just outline in a general way our case and the factors which seem to us to be of significance. First of all, I would advert to the strategic importance of Irish Shipping Limited. Deputy Wilson indicated earlier the manner and the time at which it was brought into being. It is not an exaggeration to say that this company was formed to save the nation. During the war we would have suffered perhaps actual starvation, certainly deprivation and want, had it not been for the action of a gallant few sailors who manned Irish Shipping vessels to bring us desperately needed food and other supplies during the war years. Arising from the gallant efforts of the men in those little ships — I am probably one of the few people in the House who remember them — Fianna Fáil at the time, and this decision was supported by subsequent Governments, decided that never again would we be put in that position.
It was decided that if possible we would have available to us a strategic minimum of shipping to protect our best interests in times of war and emergency. That is what Irish Shipping is all about. It is not just another commercial venture. It was established to meet a strategic economic need, a safety valve, a precaution, a safeguard for the future against the hazards that some new war might bring.
There is also the contribution Irish Shipping makes to the Irish economy. In an economy such as ours, so much dependent on foreign trade both import and export, it is vital to have our own shipping line if for no other reason than to enable us to give a standard, a measurement to which other shipping and transport companies would have to adhere. The significance of Irish Shipping in our economic life could not be overestimated.
There is also the question of employment. Irish Shipping offered good careers to many young Irish people who for the first time were able to take up careers as seamen in the service of their own merchant navy. There has been considerable domestic employment. As Deputy Wilson pointed out today, our ships sailing around the world, doing good efficient business, brought commercial credit to the country. Of course we would all feel a certain emotional pride in having our own successful shipping line, but this company, because it is good and efficient and commercially successful, brought benefits to our commercial reputation as a nation. No matter what aspect of the picture you look at, economic, strategic and security matters, Irish Shipping was a vital part of the economy of the nation. There is also the aspect of our credibility, international standing and credit-worthiness. The most damning part of the Minister's statement was when he said:
The Government have therefore decided they cannot go further than the decision of February, 1984. The Government will, of course, discharge the State's responsibility in respect of those of the company's liabilities which are guaranteed by the Minister for Finance. These liabilities can be met while respecting the levels of public expenditure envisaged in the national plan Building on Reality.
His speech made it clear that as far as all other creditors of the company are concerned they will have to take their place in the queue. The Government will not accept responsibility for discharging those liabilities in full. That is the sort of thing which is unworthy of a shyster company director, to distinguish between liabilities specifically guaranteed by the Minister for Finance and other liabilities. They are all liabilities of this company.
This is a state company. Nobody would ever have any impression other than that the State was ultimately responsible and liable for every debt incurred by Irish Shipping. That is why we have State companies. They command the credit-worthiness of the Government and have the full backing of the Exchequer behind them. It is a shyster operation and a discreditable operation to try to say that the Government will only be responsible for discharging those liabilities which the Minister for Finance guaranteed. Perhaps that is not the most important aspect but it is one of them: what this precipitate, furtive action by the Government will do to the credit-worthiness of this nation. A State company must honour its obligations in full and the Government must stand behind all our State companies and be prepared to honour all their liabilities in full. That is what the public and financial institutions here and abroad have been led to expect.
Another aspect of the matter to which I draw the attention of the House is the responsibility of the Minister for Communications. We can all go back over the history of the company and point to its years of profitability and then to the mistakes which were made. I distinctly remember when we, as a Fianna Fáil Government, in the interests of the national economy insisted on Irish Shipping building a ship in Verolme, all the prudent executives of Irish Shipping did not hesitate to go public and berate the Government of the day for doing that. They knew so much about shipping and international markets, how dare any Government interfere with their commercial maritime decisions. We know now how marvellous their commercial maritime decisions were. That is what we were told at the time and that is what the commentators took up in their columns and financial pages. We had the audacity to overrule them on a matter of national importance of that kind. We were right.
Leaving the history of the company aside, how could the Minister for Communications come in here, put legislation before the House and make certain statements which led everyone to believe that, difficult though the decision was and hard though it was for the hard-pressed Exchequer to find the money to provide the guarantees necessary at that time, at least we were solving the problem and putting Irish Shipping on the right road. That is what the Minister told the House, implied and inferred to the House earlier this year. If he was right then, why was it necessary for him to come in today and engage in this furtive act of national sabotage and, without any debate or due consideration of the issues or giving the Oireachtas committee time to conclude their investigations, wind up, or as Deputy Wilson said, kill this important national commercial institution?
I deplore the action of the Government. They are, as someone called them, a national undertaker Government. In the minds of most people this is probably the final straw. Will they leave us with nothing? Will they wind up everything, close down everything and disband everything? As someone said, by the time this Government leave office they will have to turn around and say: "Will the last Irish citizen to leave the country please turn out the lights"?
I move amendment No. 1:
To delete all words after "Dáil Éireann" and substitute the following:
"regrets the developments that have led to the insolvency of Irish Shipping Ltd., but endorses the decision of the Government not to provide financial aid on the scale that would have been required to avoid the liquidation of the company."
I share with all Members a sense that we have arrived at a very sad moment in our history but I must recall to the House the contents of the statement made by the Minister for Communications a short time ago which set out the reasons and the factors which led us to this point. Deputy Haughey in moving the motion may regret that he used such intemperate language and should have characterised this action as being one of a "shyster company director". For the Leader of the Opposition to say that on a matter as serious as this is something that should give us cause to pause more than a little.
Pause away.
Deputy Haughey is suggesting there is in some way something wrong, dishonest or crooked about what has been done.
Why not pay your bills?
He knows perfectly well that is not the case. He spoke of precipitate furtive action. Let us take those words. "Precipitate": This action cannot be described by any stretch of the imagination as precipitate. Towards the end of 1983 the Government closely examined the financial position of Irish Shipping and informed the company at that time that no further funds could be made available to the company on the basis of the Government's judgment of what the future trading and financial position of the company would be.
In February, as the Minister pointed out earlier, the company, having reviewed their position, looked again at the action that might be taken in order to relieve or reduce the very onerous burden of a number of commitments into which they had entered. Following full consideration, the Government informed the company in February last that I, as Minister for Finance, would guarantee additional borrowings of £12.25 million to meet the company's projected cash deficit to the end of 1985 and that I would also provide an Exchequer guarantee of $12.5 million towards the cost of purchasing two vessels, the Slaney Venture and the Celtic Venture. The company proposed to purchase those two vessels as part of the arrangements which in their view were going to bring about a substantial improvement in their situation.
Since then the financial situation of the company has deteriorated and it now appears, as the Minister for Communications said earlier on, that the total cash deficit of the company between now and the end of 1985 would, on present trends and on the present judgment of how the market is likely to perform, be some £12.5 million greater than was forecast. That has been the subject of a further intensive review by the Government over the last number of weeks, during the course of which we took account of a report provided to the Minister for Communications by the chairman of the company. I cannot see how that procedure, which goes back over a year, can in any way be described as precipitate. The action that we have taken is anything but precipitate; it has been very carefully considered. Deputy Haughey used the word "furtive".
I used it advisedly.
There is nothing furtive about this. It is an action which could not but become a matter for public comment and debate in this House and I cannot see how Deputy Haughey can use the word "furtive" about this. The Minister for Communications has explained at some length and in some detail to the House all the circumstances that led to the position that we have today. There is nothing furtive about it.
Deputy Haughey and Deputy Wilson asked why, if the problems seem to have been solved this year, do we have this difficulty now? That is a fair question. The action which the Government took early on this year, which I have just recalled, was taken on the basis of what was then considered to be a reliable or the best available projection of what was likely to happen in the shipping market and to the finances of the company over the period in question. It included a certain view of what was likely to happen to shipping rates. That view has not been borne out and the company's financial position has deteriorated for that and other reasons to the point where their cash deficit to the end of 1985 would now be some £12.5 million greater than it was expected to be in February of this year. That obviously calls for substantial reconsideration of the position of the company. It also calls for substantial reconsideration by the Government of their intentions as to the future financing of the company. The action, therefore, was neither precipitate nor furtive and it was justified by the development of the market and the change in the company's financial position in the meantime.
Deputy Haughey and Deputy Wilson also raised the question of credit-worthiness. The terms in which they have done so seem to be rash and unjustified. The Government are saying clearly in this connection that they will live up to the penny to every guarantee they have given under the terms of legislation passed by this House, the State Guarantees Act. If there are creditors to whom that guarantee has been given, the Government will fulfill and live up to that guarantee.
The rest is a matter with the Deputies opposite believe should be taken up by the Government. I wonder if those Deputies would care to reflect on what would happen if the Government were to take that view and consider themselves legally liable for every debt of any kind incurred by a commercial State body. What would be the point of having commercial State bodies if that were the case? What would be the point of going to the trouble of incorporating a new body to carry out a particular business? There would be no point in it, the Minister in question or his Department might as well run the operation. Semi-State companies ——
The Minister is responsible to the taxpayers.
——are set up under a legal statute that sets out clearly the liability of the company. The State Guarantees Act provides for the Minister for Finance to guarantee borrowings by those companies and it means exactly what it says. It guarantees those borrowings which qualify under the terms of the Act and, in the event of a default or an inability of the company that holds the guarantee to make the payments on the loan, the Exchequer will provide the necessary resources.
This is a major departure.
This is what we are doing here and it cannot be described, by any stretch of the imagination, as the actions of a shyster company director, as Deputy Haughey chose to describe it.
Is that what happened in Irish Steel?
There should be no interruptions in a debate of this kind.
In relation to the question of credit-worthiness, I have absolutely no difficulty in defending the financial policies of the Government because those policies have been a very important part of what has improved our credit standing in the world since 1982. We have improved credit rating since 1982 because the Government are clearly seen to be paying attention to financial management, although Deputies opposite may not like to hear that.
We have been forced on to the dollar market.
I should like to debate that with the Deputy but we have other fish to fry. The answer to his remark has been given many times over the last few weeks. Our credit-worthiness has improved because lenders to sovereign borrowers clearly see that the Government are committed to financial policies that will restore the solidity of the Exchequer and will guarantee that we continue to have the ability to repay. That is part and parcel of the overall financial strategy being followed by the Government and it is something which the Deputies opposite cannot wipe out by the kind of intemperate language they have been using here this evening.
As the Minister for Communications said earlier on, a large part of the problem suffered by Irish Shipping arose from a number of charter contracts which they undertook between 1979-82 relating to nine vessels. Those contracts provided for the payment by Irish Shipping of charter rates which very quickly became rates substantially in excess of those which Irish Shipping could get on the market for the provision of their services. The revenue the company was getting from these ships was nowhere near adequate even to cover the charter costs it had to meet even before dealing with the ordinary day-to-day costs of running and crewing the ships. That was the main part of the problem that brought Irish Shipping into the financial difficulties it is experiencing now.
An attempt was made, partially successful, to change and to modify to some degree the weight of those charter commitments but in the end it proved not enough. As the Minister for Communications said earlier this evening, there is little reason to believe at this point that changes in the market situation over the period up to 1989 would be enough to get the company out of that situation, to get it out of that ferocious problem it has been meeting since those charters came on line. In that situation the company would not be able to meet its commitments over the period. It could not continue trading and there would be little prospect of the company being able to get back into a solvent or a profit-generating position in that period.
As has been said by the Minister for Communications, the cost of carrying on with the operations of the company over that period would amount to about £145 million, £108 million deficit on the financial side and a further obligation of £36½ million as the financing costs of providing that money, whether it was done directly by the company itself or by the Exchequer.
To use an old Dublin expression, the Minister would sell his mother.
I am sorry Deputy Haughey thinks he has to make abusive remarks like that. If the Deputy is now coming in expounding a new financial doctrine——
No, the Minister is doing that.
——it should be made clear that what he is saying is that it does not matter a damn about the taxpayers who have to provide the money. This Government will not do that. This Government believe that would not be the proper use for £145 million of taxpayers' money over the next four years and I am quite sure the majority of taxpayers agree with that.
I am amazed to hear the Minister for Finance say that there is a new financial doctrine being expounded from this side of the House when it is he who has come here with a new financial doctrine. That doctrine says that from now on the State will pay what they have technically and legally committed themselves to pay, no more and no less. I wonder if the Minister has thought deeply of the disastrous implications of that type of precipitous decision? Is the Minister now saying to the commerical banks and to others that local authorities are not credit-worthy? Is he saying to national and international bankers that every State company, whether it has a letter of comfort or not, is not credit-worthy? That is what he should have said before he gave the letters of comfort——
I did not say that.
I did not interrupt the Minister and I do not expect him to interrupt me. The same members of this Government came to this House a few months ago with a Bill for Irish Steel providing for £99 million. What was the excuse given to the taxpayers at that time? The view of the Minister then was that the money must be paid by the Government. However, four months later they come here with a different financial doctrine: they tell us that Irish Shipping is committed to paying X amount of money but the State will not pay it; the State is committed to a certain amount but they will pay only the amount they are caught for at this stage. Their attitude is that they will pay only that amount and to hell with the rest of the creditors.
This decision is disastrous. The first step on the road to sorting out the problems of Irish Shipping was to appoint a receiver, not a liquidator. A receiver would strengthen the board and the hand of the new chairman of Irish Shipping. I am not going into the history of the disastrous deals which all of us know about. In case any Member wants me to do that——
Yes.
There is a Deputy here, a member of one of the Government parties, who does not believe the Minister for Transport despite what he said when he introduced a Bill in 1983. Part of the disastrous deals was done in 1979 and part of 1980. The Minister put it on the record of the House and also this evening that it was done without the knowledge and consent of the Department officials, the Minister of the day and the Minister for Finance. Incidentally, the Minister for Finance, not the Minister for Transport, is the statutory Minister responsible for Irish Shipping even though the Minister for Transport deals with the company for administrative purposes. Deputy Taylor is trying to bring in a red herring into this business, trying to hold the Labour Party together. I sat with those members on the committee dealing with semi-State bodies and I know their feelings on this matter. The facts are there, admitted by the chairman, members of the board and executives of Irish Shipping at the meeting of the committee dealing with semi-State bodies.
In 1980, as Minister for Transport, I had meetings with the chairman and chief executive of Irish Shipping and when I asked them to honour their commitments given in the period 1977 to 1980 to build two ships at Verolme dockyard they were not interested. Their answer was they had too many ships. Nobody in the two Departments responsible knew about the situation and neither did I nor my predecessor. The present Minister has confirmed this and Deputy Taylor should not try to drag in any red herrings. Eventually Irish Shipping agreed to build at Verolme dockyard on the understanding that the Government would subsidise the difference between what was the then international tanker price for a Panamax carrier of 65,000 to 70,000 tonnes dead-weight. That is what they got to preserve the commerciality of Irish Shipping and I admire them for it. Everyone would have to admire their track record up to this disastrous period when they made bad judgments and bad decisions. With hindsight we can all make good decisions.
What I questioned at the meetings of the committee dealing with semi-State bodies and what I question in this House is the basis for those disastrous decisions. What were the projections then? The Minister flitted down to the Four Courts this afternoon to get this company into liquidation. Is there any reason for any Member of this House, for the taxpayers or for the employees of Irish Shipping to believe that the projections now presented to the Minister are any more valid than when the disastrous decisions which were made on the first day?
We were arriving at a very critical stage of investigations in the committee dealing with semi-State bodies in relation to getting to the heart of the problem when those negotiations were being carried out. We had written to the chairman to appear before the committee yesterday. We had sent the questions we wanted answered, questions that every Member of this House and the public is entitled to get but which we may never get now because the Government rushed out and put the company into liquidation. They should have appointed a receiver who would do the job we wanted him to do. If I am correct in my interpretation of what the chairman is saying, it would strengthen his hand in renegotiating those deals because, to say the least, they were dubious when they were drawn up. When I questioned the cargo manager, who I believe did the negotiation in this, at the semi-State bodies committee I asked him what was the basis for making such a major decision without the knowledge of the Government or the Minister of the day. He said it was based on an English consultant's report that said that in 1979 they were based on coal, lumber and steel for long haul traffic. I ask anybody who knows anything about business if the steel industry was not in the greatest crisis, and not alone in the EC where there was over 30 million tonnes of overcapacity, why would anybody want to buy ships to draw steel when no steel was to be bought anywhere? Lumber is the mainstay of the building and construction industry which was already in a serious decline not alone in America, one of the biggest customers for it, but all round the world. Who would want to buy ships to draw lumber? Coal I accept. We were in the 1979 oil crisis and coal was the in thing for every international Government to get into and thus get away from oil. Why make such a major commitment for the taxpayers and the Government of the day by entering into such a huge deal as was done here? There are unanswered questions which we were about to reach in the investigation carried out by the semi-State bodies committee and we have now been deprived of that opportunity.
At the meeting yesterday when I read the letter from the Chairman I said to my fellow-members, some of whom are here, that that was the end of the line as far as we were concerned. The decision had been made over our heads and we will never get the opportunity. The members wrote to the Minister yesterday and asked him to make no precipitate decision until he had an input from our committee.
This Government have sermonised about Dáil reform in this House——
Hear, hear.
——from the day they came in and on how to run our business properly and how to run the business of the State properly. I and my colleagues on that semi-State bodies committee gave hours and days trying to get to the root of the problem that created this disastrous situation in Irish Shipping. I said yesterday evening, and I hope that the Members are men enough to stand up to it, that if that happened we should resign en bloc and forget about the semi-State bodies committee for all time because they are being treated as a joke and a football by the Minister, by the media and by this Government. It is only a talking shop. If that is what it is going to be I have no intention, good bad or indifferent, of wasting my time any more about it. We put all our energies and commitment into that, we sat long hours and we were ready to present a report, but crucial questions remain unanswered and hang in mid-air. The Minister side-stepped and ran away down to the courts. Instead of putting in a receiver you would first of all do an assessment as to who really is going to lose money with the action the Government has taken. Have they done this assessment? The two people in Japan or Hong Kong or wherever they are now resident who sold the pup to the Irish taxpayers are probably laughing the whole way to the bank. How do we know that it is not international bankers——
On foot of what debenture do you put in a receiver?
It cannot be done; is that what the Deputy is trying to say?
I do not know.
We have the legal men in this House. Let them answer it.
Ask the board.
The board can ask for a receiver to be appointed any day of the week.
No.
Can they not? The Deputy is a lawyer and makes his money out of it. I do not, but I know that any board sitting can make a request for a receiver to be appointed as has happened 700 times in the High Court in the last 12 months, and then somebody comes in with the red herring of why could you not appoint a receiver. A board of any company can pass an extraordinary resolution to ask the High Court to put in a receiver.
You cannot do that.
The Deputy can worry about his own people and the day he walks through that barrier up there he is no longer a member of the Labour Party if he is going to allow a Government to take that precipitate action. Let us find out the problems and the answers, and if at the end of the day there is no alternative then let us come in and debate it before he goes behind anybody's back.
It is a joke. We have the Order Paper of legislation coming from this Government, and what do they do? They introduce legislation into this House to stop the fly-by-night fellows who run away, who will not meet their commitments, who leave Deputies carrying the can, who will not pay their workers. That is on the Order Paper of this House. The Government themselves are the biggest culprits. How can anybody respect the law when the Government are sermonising and preaching that the fly-by-nights are to be hauled in under legislation, and then the Government tonight run off to the Four Courts, get an order, get a liquidator appointed and leave somebody whoever that may be, carrying the can for the sake of £70 million or £80 million? I do not know who they are. If there is not a huge credibility gap for the Taoiseach, the Government, every Minister and everyone who supports them at this moment, then I am a Dutchman. Certainly there is a big credibility gap.
Let us look at the possible repercussions. Suppose it is not the two men who pulled the fast one, who sold a great pup. Suppose it happens to be a consortium of international bankers who decide that Ireland is no longer creditworthy, despite what the Minister for Finance said tonight. Suppose those people decide tomorrow morning when this huge rock hits them on the back of the neck that Ireland is no longer creditworthy. Where then are you going with your book-keeping? This precipitate decision could do untold damage to the economic development of this country if the international bankers decide that this is a real flit job by fly-by-nights who did not honour their responsibilities.
The Irish State has always honoured its responsibilities. We could well be on the brink of being a banana republic. There is ethics in international business. We sat yesterday evening at a committee meeting and were met with a huge debt because of two fellows who flitted by night. They left with approximately £140,000 to £150,000 debts. A man from a company called Realt Paper Limited said that business ethics exist, you stick by your good name; the best thing you have in business is your good name and you always honour your commitments. Those people, five altogether, in a small company have worked day and night to make sure that their commitments are honoured. They are asking the Government to make sure that they are not sold out when the Government sells out everybody down the line here this evening. They could have taken the intermediate step and did not do so.
The Minister for Finance said here this evening that our credit rating is excellent all over the world. I ask whatever Minister wants to tell this House if the Stationery Office in this country belonging to the Government and going by them under credit rating will get no credit from Brazil for the supply of stationery and paper. That evidence was given to us in the semi-State bodies committee yesterday evening. If that is true it is very serious, and I want to know the answer before the end of this debate. That will give an idea of the sort of double talk we get from Ministers in this House trying to brainwash the Irish people. I saw the handlers here today and I remarked to a colleague of mine this morning that big things would be happening today, the handlers were around, they were getting the story ready for dissemination. I was right. They were here today and they had a big job to do.
We may never know what caused the real problems of Irish Shipping Limited or the damage that could be done to our credit rating. If they moved our credit rating up 0.5 per cent we could be talking about £300 million a year extra on our national debt and repayments. That is the sort of figure involved here. That is the sort of serious decision we have taken. I want the Government in this debate tonight to tell us what the report of the board of Irish Shipping Limited was and what their recommendations were. Did they recommend liquidation or receivership? What did the board recommend? Are we sure that the people who sold Irish Shipping down the river have been flushed out? Has the responsibility been pinned on to those who made the disastrous mistakes or is it more than a disastrous mistake? The responsibility lies with somebody and the view as far as the Committee on State-Sponsored Bodies are concerned is that person has not been flushed out. A liquidator has now been appointed and we may never know the identity of that person. The Government's attitude, and how they have done their business in regard to this, has been disgraceful.
The House passed legislation giving authority to the Government to guarantee Irish Shipping up to £75 million. Any person doing business with Irish Shipping, bankers, creditors and others, were entitled to believe that when the Oireachtas voted that legislation through the risk they were taking in regard to Irish Shipping would at least be covered up to that amount. Up to tonight nobody had any doubt, internationally or nationally, that the Government always paid their bills. This is the first and historic milestone in the history of the State when the Government are not going to pay their bills. If it was the intention of the Government to pay their bills in full I suggest that the appointment of a receiver was the right way to go about it. At least he would have had the opportunity to go with the chairman of Irish Shipping to Hong Kong and explain to the people there that the shipping business had not lifted as everybody had expected. I have no doubt that the business people of Hong Kong, Japan and so on, would see the reality of the position and we could have Irish Shipping going on about their merry way having renegotiated their position.
A very important question raised by Deputy Wilson this evening needs to be answered. Did the Government carry out a renegotiation? If so, will the Government explain the results of the renegotiations? The Government paid Irish Shipping — I presume it was approved by the Minister — enough money to buy two ships for $42 million. The Government said at the time that this was crucial to the ongoing financial position of Irish Shipping. One of the ships is a panamax carrier, not a 65,000 to 75,000 tonne ship as built in Verolme dockyard and recently finished, the contract having been placed when I was in Government for £23.5 million. The ships were built at a time when international shipping was on the floor with ships tied up all over the world. With shipping in such a difficulty the Government, through Irish Shipping, bought a panamax carrier for $24 million — that figure was given to me by an official at a meeting of the Committee on State-Sponsored Bodies.
Irish Shipping berated the Government, and the Minister responsible, in 1980 and 1981, for making them buy a ship. We gave them the commercial rate for the ship and subsidised the difference at Verolme dockyard. However, at a time when ships can be got for half nothing they paid $24 million for one ship and approximately $80 million for another.
The Committee on State-Sponsored Bodies wanted to know the international value of those ships and what part that played in the renegotiations. I am convinced, as many Members of the committee were, that somebody sold us not alone one pup but a second one because those figures were totally inflated in relation to the market price of ships on the international market at that time. We should get answers to those questions but, apparently, we will not get them because henceforth we will be told that the liquidator will sort out this and that. In the meantime the Irish taxpayer who will have to foot the bill will not be told. We were elected to this House to be responsible to taxpayers for taxpayers' money. How can any Government say that they are doing the job they were elected to do? The Government took office on a great wave of honesty, openness and integrity but we saw the flit by night in regard to the food subsidies and now we see it again. The Government are shielding behind the smokescreen of a liquidator. They are not prepared to give the representatives of the taxpayers the facts in relation to this. Receivership would have got us that but a decision was made to go for liquidation.
We want the full story from the Government in regard to the damage that may be done. Do they know what bankers are involved in this liquidation? Who are the creditors? What about the kick in the teeth for the staff of Irish Shipping who for 15 years in succession produced a profit? It is ironic that today the so-called reforming Government produce a Bill to protect employees, and rightly so, from what has been happening in the last 18 months with businesses closing overnight and people flitting away leaving no money, not even holiday pay, for workers. On the same day that the Government are asking us to consider that, they throw the employees of Irish Shipping to the wolves.
I suspect, having read the Minister's statement, that he has in mind that B & I would buy Irish Continental Lines from Oceanbank. That is a bit of a web but the Minister should clarify that position. How can the liquidator know the strategic position in regard to ships that are available to this country in the case of an emergency? We could have such an emergency at any time. How can the liquidator say that we have sufficient ships to deal with an emergency? Where are they? Are we talking about a few ferry vessels that Irish Continental Lines operate? Are we talking about a few ferry vessel that B & I operate? Are we talking about people who have ships registered here under a flag of convenience? The Minister must remember that he does not have any say over the assets of Irish Shipping once the liquidator is appointed. If those ships are purchased by international people where is our strategic position? I am anxious to know if the Minister wants B & I to buy Irish Continental Lines. I am anxious to know where the international ships he says will replace our strategic fleet that we have had from the forties through to the eighties will come from. The Minister will be remembered as the man who sank the strategic vessels of this country unless he elaborates on his earlier statement. The approach to the problem has been disgraceful.
The problem in Irish Shipping is no different from that being faced by many businesses but the people who run those concerns are not doing what the Government are doing. Those people have integrity and ethics and believe that their word is their bond. They are not running away. They are facing up to major problems like those facing Irish Shipping today. Where there is a will there is a way. Management is about solving problems and negotiating a way out of problems. The Government ran away from this. They could have given Irish Shipping the strength to renegotiate their way out of their problems and to protect and preserve the good name and integrity of Ireland. If they had any integrity as Irish people they would never let it be said that the Irish Government reneged on paying their debts anywhere in the world. If any members of the Government were in business they would realise that the day they do not pay their debts is the day they should pack up and go. The message to the Government is that their time has come to go. They have discredited the nation and dragged our credibility into the mud. They are not fit to run a sweet-shop on a corner not to mention the economic affairs of the country.
It is time the Government took the message and went. If the Labour Party go along with this, all I can say is that we are then into a strange day in Irish politics, when the very thing that should constitute the corner stone of any Labour philosophy, or any social philosophy, the semi-state sector, is to be totally dismantled. I am always for good business management. I am not for showing the white feather, throwing in the towel when problems arise. I have faced problems in business in my time. I contend that this problem was not insurmountable, somebody having been given the right tools and instruments to do the job, showing the light at the end of the tunnel to the management of Irish Shipping Limited. If there are people there who are personally responsible for this, they should not be in employment today; they should be gone, they should be gone totally out of business and should never have been kept. The board of directors of Irish Shipping Limited abused the trust that the Minister of the day and successive Ministers and Governments placed in them in getting involved in deals like these without telling the Minister and the Government of the day. Politics do not enter into this, good, bad or indifferent, because that is what a board of directors are appointed to do.
The interesting question I would pose that has never been fully answered is this: how many of these disastrous decisions were taken and how many commitments entered into without the board of Irish Shipping Limited knowing? That is the answer I want but it has never been given. If the answer is in the affirmative then the people who abused the trust that the board of directors of Irish Shipping Limited placed in them should not be kept either for one hour. They would not last for one hour in the private sector and there is no reason that they should last one hour in Irish Shipping Limited either. They have destroyed the future of all of their fellow employees. They have destroyed a good operation built up through blood, sweat and tears, a company that constituted the flagship of the semi-State sector. The people responsible for that should not be in a job today. It is up to this Government to ensure that they are no longer there.
I have to condemn the Government decision. I say to them: rethink that decision as it was precipitate. They could have done a good job through the appointment of a receiver, ascertaining how they could renegotiate themselves out of these problems. I have no doubt, had I the opportunity of talking to the chairman, I would find that was what he had in mind, that what he wanted was strength in his elbow to allow him an opportunity to deal with the position in the Middle East, sorting out their problems and going about their business again.
Allowing for the duty of the Opposition to oppose this decision and discounting some of its history — and I say that with the deepest respect — what we say in this House is one thing but the reality recognised in the corridors of this House is even more fundamental.
I do not dispute a lot of what Deputy Reynolds has said from the opposite side of this House. As Chairman of the Joint Committee on Commercial State Sponsored Bodies, I was amazed that yesterday, when we were discussing the likely outcome of our report following two meetings with the directors of this company, a question could be asked in this House as to whether there was truth in the rumour that the company was going to be liquidated. I suggest that that question warrants honest answering on the part of somebody.
Hear, hear.
Well, Deputy Wilson was the person who asked was the rumour true. Perhaps I might invite him to tell the House the source of that rumour, how he knew that when the Joint Committee on Commercial State-Sponsored Bodies of these Houses were unaware of it, that it was a fait accompli when we heard it.
I did not know; I was seeking information.
I am not now speaking authoritatively from any deliberations of that Joint Committee because we did not arrive at any final conclusions. But, having assessed the available evidence given us, having invited Mr. Belton to come back, speak to the committee and answer what we regarded as pertinent questions, having been told by that gentleman that he could not do so because of possible legal implications, we are very concerned about what has been happening within this company.
I suggest it is about time that all of this was examined more stringently by this House and by the Joint Committee. I contend there is here nothing less than a haemorrhage of taxpayers' money, in a position, as was outlined by the Minister in his announcement of this evening, in which a decision was taken to enter into long-term chartering arrangements at a time when everybody — I am not here speaking merely about people in the shipping business — every intelligent 15 year old who would be familiar with current affairs, would know that the whole question of shipping, and transhipping in particular, worldwide, was in a state of flux. There is an EC document available to the people within the shipping industry here — certainly they were no mean performers up to a few years ago and must have known what their business was about — indicating that the whole world is in oversupply in the context of shipping and leasing shipping arrangements except Japan and South Korea. It defies all human understanding how so-called competent people and experts in this area could enter into absolutely lunatic, mad arrangements for long term leasing of ships at such a time. It begs the question: who was responsible for this? Where are they now? Are some of them outside this jurisdiction? Can some of them be brought back to answer before this jurisdiction for their actions? I am asking what were the arrangements between the people who conducted the negotiations on behalf of this company and the two gentlemen about whom we are speaking in the Far East, were there any commission arrangements in regard to that?
I shall come back to Deputy Reynolds's question — and I should say I am not a spokesman on behalf of the Government — when he asked: what was the position in relation to the $42 million paid in return for the two ships? I should like to pose this question: did those $42 million relate exclusively to the sale of those two ships, or did they also cover a portion of the expenditure related to deferred payment arrangements? Somebody must be brought before this House, this Government, and made to answer for that. I suspect that if this kind of black-guardism took place in other countries, not democracies, the people responsible would be executed or jailed for the rest of their natural lives. It is an absolute disgrace that we have here, the second time within a matter of months, a semi-State body — and to be fair to this company, I should say they were a successful operation but successful in an artificial and cosmetic way. The first question any decent company asks itself in a profit-making situation is: what is the quality of the profits? We understand that some of the money coming was from the sale of ships and not from actual business. Therefore this should have been obvious to anybody keeping a close eye on the situation, or else somebody was fooling the Department and the Minister as the representative of the taxpayer.
A much more stringent watch will have to be kept on the operations of semi-State bodies. That is not to suggest in any way, or to cast a reflection on the remainder of our semi-State bodies but here we are in a position in which, twice in a number of months, in companies investigated by the Joint Committee on Commercial State-Sponsored Bodies, which I have the honour to chair, we discover there has been a vast outpouring of money in lunatic ventures without any reference to the situation, or without any consultation with the Government or Minister ultimately answerable to the Irish taxpayer.
If I may revert to the situation emerging at the Joint Committee, I think — and nobody will ever put a muzzle on me in this House no matter on which side I stand — it was precipitate, though there may be very good reasons — to appoint a liquidator. It would have been much more advantageous to put in a receiver. The advantages of having done that would be that the question of the company's serious financial position would be put beyond doubt subsequently, by their being placed in a position to obtain substantial concessions from their unsecured creditors, thereby hopefully securing the future of the company. The Joint Committee would also have been aware of the concern that such action could create significant problems for the company in the market place. If there had been a receiver appointed, at least he or she could have been allocated the duty of endeavouring to bring back that company into a viable position. At the end of a given period, if manifestly it was seen that that could not be done, the Government side would have been on much more solid ground than that on which they find themselves at present.
It is very tragic that 1,300 people are being put out of their jobs a few weeks before Christmas. I am sure the Government are privy to the best brains in the country but I do not know if they considered the possibility of holding on to the company because when we weigh the potential losses against the advantages, it might have been better to have held on to the company for a given number of years. It might have cost us so many millions of pounds but we could have sold off some of the subsidiary interests of this company and we could have taken into account the net loss to the State in terms of revenue from taxation, social welfare, PAYE and PRSI. I again question the wisdom of that approach.
It is the duty of the Minister to bring before this House the people who negotiated the charter arrangements and the conditions under which those charter arrangements were entered into. If we do not get that information and accountability from the people concerned we will be betraying the Irish taxpayer.
Vote against it.
I regard the decision announced in the House today as highhanded. I consider it evidence of panic on the Minister's part. I have to join my colleagues in accusing the Minister of downright discourtesy to the committee of which many of us are members. This committee spent many months dealing with this issue. This move calls into question the point in having a committee system. We should scrap the committee system unless the Government are prepared to work it. It will not work without Government support.
If the Minister had given us two more weeks to finish our inquiries we could have handed him a report which would have got us out of this difficulty and stopped us becoming the laughing stock of the financial community in every banking boardroom all over the world tonight. The Minister took this decision without reference to the committee, without consulting this committee, knowing full well that we were about to report. Yet he chose to ignore the committee. We must reconsider whether this committee will continue. Those of us who are members of it must reconsider whether to remain on it because it is just a facade. I ask the Minister, as a minimum, to apologise to the committee.
The cost of closing Irish Shipping could be as high as £50 million, if not £100 million. The Minister first should have attempted to renegotiate the long-term charter agreements with the company's foreign creditors before taking this drastic and final step. In this way the company could have been kept alive without a loss to the State at this stage. This was the answer many of us on the committee were pushing hard, and I would like to believe that is the answer the committee would have come up with.
I want to know if the Minister got on an aeroplane to Hong Kong, sat down with the bankers and said that he represented a sovereign Irish Government. Did he say that we do not want to renege on our debts or to stick them for £60 million, but would they please sit down and renegotiate? Did he consider a Government to Government approach? Did the Taoiseach consider that one of his trips abroad should have been to Hong Kong to talk about the solvency of the Irish nation? That is what is at stake here, not just one company. Did the Minister get on an aeroplane and say to these people that we had been paying them $15,000 a day for nine ships but that if we liquidate this company they will have their ships back and all they will get for them on the international market is $6,000 a day? What would the man in Hong Kong have said? Of course he would have seen sense. He would have said that if we were going to liquidate the company he would settle for what he could get after liquidation, which would be about $6,000 a day.
The Minister might reply that he sent the board, the executives or the chartering staff to do that — and he may have done that — but you do not send the people who made the mess to get you out of the mess because they are part of the problem. This Minister should have taken an aeroplane to Hong Kong to renegotiate these charters. Would not any sensible person in the world, facing a loss of £60 million by a decision announced in this House, take the correct course of action and agree to take £10 million and settle for what they could get? The people in Hong Kong would have done that if the Minister had taken an aeroplane to Hong Kong to sort out this problem. I accuse the Minister of gross incompetence in not taking that course of action. This is a disgrace.
The Minister's failure to put together this high level negotiating team to have these charters renegotiated and his failure to await the report of a committee of this House — not a committee of consultants or outside advisers — is a case of bad judgment. In my view, and I do not make this comment lightly because I do not believe in this type of political talk, this is a case of bad judgment where the Minister should consider his continued presence in an Irish Cabinet.
I was acting as chairman of the committee inquiring into this semi-State body. That is why I am particularly angry to come in here at 5 o' clock and be faced with this decision without any prior consultation. I want to support what Deputy Prendergast said. I do not want to go into acres of detail or a plethora of statistics, but I want to tell the House, in support of what Deputy Prendergast said, that an inquiry into the affairs of this company is needed, not just a quiet liquidation and somebody signing a cheque. This was a case of gross and total mismanagement and should be investigated. I suggest that tomorrow the Minister might announce a tribunal of three or four top accountants to report within a month telling us exactly what went on in that company. I have acres of files and buckets of information and I can direct these experts to a lot of very useful information, as could most of the members of my committee. All the facts are there. What went on is a national disgrace and a simple liquidation and forgetting about it is not enough. I join Deputy Prendergast in calling for an official inquiry and I suggest a tribunal of three financial experts.
And a reversal of the decision.
Yes. I am not happy with these figures, not by a long shot. Something stinks here. This is only the tip of the iceberg. We have not yet begun to approach what is going on in this company. Let me give an example. Today the Minister said that £39.5 million was guaranteed by the State. I have a different sum. I am sorry the Minister is not here. In 1982 this House passed an Act guaranteeing £20 million of the debts of this company. In 1984 we increased their borrowing from £15 million to £45 million and we allowed them another £26 million. The Minister coyly says that the position in relation to the Irish Spruce requires special consideration. I will bet my life it requires special consideration. I want to know about the Irish Spruce. It is shown clearly here that there is a possible debt in regard to the Irish Spruce which is off balance sheet financing of a possible indebtedness of £30 million. Let us do our sums. There was £20 million in 1982, £26 million in 1984 and £30 million off the balance sheet for the Irish Spruce. I make that a total of £76 million but the Minister says coyly that the figure is £39.5 million. I am far from satisfied about those figures. I maintain that the State is in for £76 million because of pulling this plug today. There is a total contradiction in the figures and I wish to know precisely what the difference is?
There was an answer to this problem and that answer was renegotiation, in other words, the Minister doing his job as Minister. I think he would have succeeded in that regard because he would have been dealing with hardheaded business people in the shipping business, people who might be described almost as the toughest political sharks in any business in the world. If they had been given to understand that the Minister meant business about liquidation, they would have renegotiated. However, supposing the worst happened and there was a failure to have renegotiation, would it not have been correct to put in a receiver who could renegotiate, do some deals on the assets, try to bring down the State's debts and to turn the company around. Instead, the Minister panicked. He did not wait for the committee of which I am chairman to report and now we have this very regrettable action.
The Minister speaks gently about the State paying the guaranteed amount. The company's liabilities amount to £117 million and their assets are estimated at £23 million. That gives a £94 million deficit. If that is adjusted for a figure of £16 million as explained in the text, one arrives at a defaulting figure of £78 million. Therefore, the Minister is telling us that the State owes £78 million abroad and is not prepared to pay it. The State owes a total of £8 billion abroad of which some £2 billion is the responsibility of State companies. That is why my committee should be listened to. We are trying to come to grips with that situation. For the first time in the history of the State we are saying that we are not prepared to pay our debts abroad although there was a way out in this case. This raises a question that must be answered.
There must be more action in the semi-State companies. There must be an overall study of them and some radical answers provided to their problems. A debt of £2 billion out of a total State debt of £8 billion is frightening. However, the answer is not merely to liquidate all those companies and to tell the people abroad that we cannot pay them. Because it has the muscle, the State can always renegotiate. How many times do the Department of Finance renegotiate their debts and how many times do they get away with it?
What we are dealing with here is a can of worms. There are a lot of unanswered questions. An inquiry is called for. If we take the Minister's figure of £39 million as the State cost of closing this company, though I say the figure is £78 million, if we take the £20 million loss on the Irish Spruce and if we buy out the charters for, say, £95 million, we could close the company and pay all the debts for about £140 million. Instead of taking that option and perhaps even renegotiating to bring about a decrease in that figure to perhaps £70 million or £80 million, the Government are defaulting on £78 million out of an international debt of £8 billion.
There are changes needed in the semi-State companies. Devlin must go and I say without apology to anyone that we must consider privatisation. Had I been listened to many years ago on that subject we might not find it necessary to be debating this motion this evening. I see nothing wrong with using private money in State ventures.
This is a sad day. I am calling for an inquiry into the affairs of this company. In a business that is cyclical one should not enter into long term charter agreements. Even the board of the company agree on that. Why, then, did the company not sign short term charters instead of locking us into ten year ones and bringing disgrace on the country?
This is indeed a sad occasion. We are talking about the death of a semi-State company who have served the State well for more than 40 years. The Government examined the matter very carefully and had to come to a decision based on the facts before them.
The first point I wish to make is one of a number of points of principle that need to be emphasised, that is, the enormity of the financial difficulties facing Irish Shipping Limited. If the Government were to continue to support the company between now and 1989 the cost to the Exchequer, to the Irish taxpayer, would be £144.5 million. At that stage there would remain on the books of the company a debt of £59 million, making a total exposure in excess of £200 million. I submit that that level of debt is not sustainable, that no Government in their right mind could sustain it. It is too heavy for the taxpayer to bear. Of itself that justifies the Government decision.
The second point is that the primary cause of the disaster was the action by the company in entering into nine long term speculative charter agreements with companies in Hong Kong and Japan during the period September 1979 to July 1981. They did this without the knowledge or consent either of the Minister for Transport, who is the Minister responsible for the company, or of the Minister for Finance. To my knowledge the board of directors of the company apparently did not give their approval for these chartering commitments.
It is amazing that the board of directors were not informed of the commitments the company were entering into. That is a matter that will have to be examined fully by the liquidator. It raises a number of questions in relation to semi-State bodies and the role of their directors. It is their responsibility to sanction major policy issues and decisions. It appears that in this case the proper procedure that would apply to any limited company was not adhered to. This is not acceptable. It is somewhat frightening but it should be a salutary lesson and reminder to directors of semi-State companies.
For the Government, of course, the experience is bad. It must be understood that semi-State bodies cannot operate outside the parameters of the State. In other words, the responsible Minister — always in financial matters the Minister for Finance — must be au fait with and consent to major policy decisions. Otherwise, State policy in any area, in this case shipping, could be subverted and of course that is not tolerable. It is the ultimate responsibility of the Minister to oversee policies in his area of responsibility.
If semi-State companies were to carry on their own policies without fully informing the Ministers responsible, of course budgetary policy would be impossible to implement. That also is not tolerable under our system of democracy. On both counts Irish Shipping failed: they failed to inform the Ministers responsible and they failed to have full regard to the requirements of budgetary policy and the overall borrowing policy of the Government.
It should be noted that, despite the renegotiation of the charter contract, in the circumstances of the market this renegotiation did not justify any other decision than the one taken. I should like to make it clear that the Government were prepared to give limited financial support to the company in accordance with the renegotiation package. It was too heavy a burden to bear in the circumstances of the market, and the figures the Minister gave with regard to the financial exposure of the State and the taxpayers indicate the enormity of the problem facing the company, a problem that properly could not be sustained by the Government.
Irish Shipping is a limited company and the debts which are guaranteed by the State will be paid by the State. The State does not have responsibility for the partly secured or unsecured creditors of the company. The company operated in the private enterprise sector and the State guaranteed certain moneys. The State is not burdened with the unsecured and the partly secured creditors in the direct sense.
Do not say that aloud.
I should like to refer to the comments of Deputy Wilson, the main Opposition spokesman. He said:
Without making any rash commitment in any way .... Fianna Fáil will reverse the decision when they return to office, and the sooner the better.
That statement saddens me. It was given in the Deputy's flamboyant, gesticulating manner. It reveals once more the reason why the country is in its present state of financial difficulty. That statement simply reiterates the irresponsible attitude of Fianna Fáil when it comes to the nation's finances. I doubt very much if the taxpayers want to bear a financial exposure in excess of £200 million during the next five years. It is irresponsible to make that statement in view of the facts and the information available. It does little for the credit of the party or for the system of democracy in which we survive. In funny terms, Deputy Wilson said:
Without making any rash commitment in any way or pinning our faith in any kind of any rash future commitment——
That is a false statement. It means, "We will do something but we will not do something if we have to do something". Of course that is impossible in Government.
That is what you have been doing in Government.
We take rational clear decisions and not in the terms of Deputy Wilson's statement. He spoke about the credit worthiness of the country. He repeatedly said:
In this House Ministers for Finance from various parties have stated that our credit-worthiness is something of which we could be proud. This action can only damage that credit-worthiness and indicates that there are times when the Government walks away from something to which they have been fully committed in the past.
I suggest to him and to Fianna Fáil that the sense of realism of this Government will add substantially to the credit-worthiness of the Government on international monetary markets and will redound to the credit of the nation. Of course Fianna Fáil can afford these things on the backs of the taxpayers. We are not prepared to do that. We have adopted a rational and responsible approach on behalf of the people whom we represent and on whose behalf we govern.
Deputy Wilson acknowledges that this was a result of a disastrous error of judgment. I am glad he does because it was and it has led to the downfall of a company which had been prosperous.
It is not possible to slim down the company and allow it to proceed because the financial exposure is far too great for that. It is not an option which the Government would adopt.
Deputy Wilson asked: "Are we going to be left unclothed in the shipping sense". No, we will not. We have shipping. We have the B&I company. There are more ships owned within the State than when the strategic question arose leading to the establishment of Irish Shipping. There are changed circumstances. The country is in a strategically sound position in relation to shipping. In case of emergency we would be able to move effectively to ensure that the shipping needs of the country would be fully secured and that we would be able to control the volume of shipping necessary for the security of the economy and of our people.
The Government acted responsibly. Fianna Fáil's position is unacceptable, untenable and downright irresponsible. It is a reflection of the lack of concern which they have always shown for the taxpayer and people. We have taken a harsh decision and a difficult one but it was one which was responsible and in the long term interest of the people.
I call Deputy Lyons.
On a point of order, would the Chair indicate when I am likely to be called as I have been waiting for some time.
I cannot do so at the moment. I have a list from the main Opposition party. There are three people offering following Deputy Lyons. The custom is that it alternates between the Government and Opposition benches. As the Deputy is an Independent he is regarded as a Member of the Opposition.
I would be happy to allow the Independent Member from Limerick to proceed after the Fianna Fáil speaker and then I would speak after that.
In place of the Deputy?
No. I am interested to hear his views. I am trying to be helpful.
That is of no help to me.
That is a very generous gesture on the part of the Minister.
He was offering to let the Deputy in but he also wants to speak himself.
Naturally.
If the Deputy would like, since I have only some short precise comments to make I am prepared to divide my time with him, if that is acceptable.
Is that acceptable?
I am very much obliged but I wish to put on the record that Independents have some rights to speak in the House and are not dependent on being granted time by the main Opposition party. I have rights independently of any party.
We do our best to allocate time to Independents and will continue to do so.
The Government's decision must be one of the saddest, if not the saddest, to come before us. The reasons for setting up Irish Shipping, the maintenance of it, the support given to it, the need for it as a shipping and strategic exercise for the country and as a way to support the people in the event of hostilities which might occur, have already been outlined by some of our speakers. There is a lot of nostalgia attached to this. Irrespective of the colouring Government speakers may put on this decision, they will forever be remembered by the people as the Government who put an end to Irish Shipping.
Our credibility abroad not only in the field of shipping but generally will come into question as a result of the Government's action. The Government had opportunities available to them which would have enabled them to avoid this decision. The Government decided to ride rough shod over the Joint Committee on Commercial State-Sponsored Bodies and their report and recommendations. I understand their report was to be presented to the House within two weeks. How can the Government countenance their action in the face of the fact that a committee set up with all-party agreement and which was much lauded by the Government was about to present its report? In one fell swoop they have undermined the activities of all committees set up to deal with various matters.
I support the request made that a full inquiry ought to have been held into the activities of Irish Shipping before this decision was taken. Government speakers have indicated that the people will thank them and compliment them for saving them, as it was put, from a further loss of money. If the Government believe that they are more naive than even I believed. Their credibility was much lauded by the national handlers with the assistance of the media, but how much credibility is there now in the Government after their short term in office? Today's decision must be the worst decision taken by them. This Government are abrogating their responsibility to the nation while they propound the idea that they are in support of the nation and the taxpayer.
We were issued some weeks ago with a massive document, Comprehensive Public Expenditure Programmes 1984. In it I read about the deficit of Irish Shipping for the year to 31 March 1984. It amounted to £34 million, over twice the loss for the previous year. It had been expected that the company would make a substantial loss but not one as big as that reported. The loss reflects the savings of the company, repayable and non-payable, accruing in 1983-84 as a result of negotiations with the owners of vessels on charter. The loss also reflects a provision of £9.5 million in respect of foreseeable losses on year end charter hire commitments. The report stated that the survival of Irish Shipping was at stake. How do the Government square what they did today with their own publication?
In his statement today the Minister twice mentioned this famous — other people might label it differently—Building on Reality. Nevertheless, in that document, there is not one reference to Irish Shipping. It is time the Government realised that they should not go any further with their public relations exercise to try to convince Members of the House and the public that their plan has something to offer. The Government should not have the gall to mention Building on Reality when they are presiding over the demise of Irish Shipping.
What is the answer to the problem? In view of all the information available, why was there not a renegotiation? Why was the company liquidated? Why did they not send in a receiver, which was done in other companies, in an effort to keep them going? It should be a priority of the Government to keep an Irish shipping company, not necessarily the present company but one set up on the same lines as this company was set up in 1941 and which performed effectively on our behalf until very recently. The solvency and credibility of the nation will suffer irreparable damage by the Government's action.
There are already 220,000 people unemployed. What are the Government going to offer them and to the young people I see in the Gallery when they leave school? What programmes, encouragement and incentive are there for them? The Government preside daily over the closure of firms. Unemployment is our biggest problem and the famous plan tells us that by the end of 1987 the same number will be out of work as at present. That is negative thinking by the Government, which is reflected by events day after day and week after week.
With the closure of Irish Shipping there will be about 800 jobs directly affected in supporting industries. It is a litany of failure and if that is what the Government calls building on reality, God help our future workforce. The sooner we have a change of Government the better and as we say in Irish "Más maith is mithid". The Government should do the honourable thing: resign and give Fianna Fáil some years to steer the ship of State on a course of developing the economy in order to restore confidence, to create incentives and, above all, to give credible leadership which is sadly lacking at present.
By agreement, the Minister for Communications Deputy Mitchell, has surrendered five of his 30 minutes. This will allow the Minister for Labour, Deputy Quinn, ten minutes and Deputy O'Malley will have ten minutes.
I regret that is the procedure being followed. There should be a better way. I am saddened by the contribution which emanated from the Fianna Fáil benches. It is not an election campaign——
(Interruptions.)
Irish Shipping is not at stake tonight. Irish Shipping Limited have been declared insolvent for very good reasons to which I will address myself in a few moments. Let us not confuse, as the Deputy opposite tried to do until he ran out of time, the two issues. In 1941, when Seán Lemass was Minister for Supplies, he established Irish Shipping and there was virtually no Irish tonnage in registered ownership available to the State of Éire as it was then in time of war. It was agreed at the end of the war that the strategic tonnage which was required to keep this country alive with basic necessities was 200,000 dead weight tons of shipping having regard to the speed and turn around time of the vessels available after the war.
That figure was reviewed in 1963 and the estimate of what we needed in terms of shipping capacity in strategic terms was measured as 120,000 dead weight tons. Today there are 60 Irish vessels registered in the ownership of Irish companies plying in and out of Ireland with a gross dead weight tonnage of 180,000 tons. Let me nail the first debating lie in the House tonight by the Opposition Deputies. Irish Shipping is not at stake. Our strategic requirements are not at stake. We are debating the issue of the insolvency of Irish Shipping Limited. That word "limited" is not there for decoration. There is no requirement that obliges us to stick the word "limited" on to the end of a company. What does the word "limited" mean and, by extension, what do the words "limited liability companies" mean? In this instance, it means it is not an open pit. It means that the Irish taxpayers, whom we represent, will not forever have to bail out companies who fail because of disastrous decisions.
The strategic requirements of this country are guaranteed and B & I, which is in State ownership, have six vessels servicing this island which can more than adequately cover our immediate strategic requirements.
It does not cover Cork.
Sometimes I wish we could forget about the parochialism into which we are all trapped on occasions, but we are talking about bigger things.
There should be no interruptions in a limited debate.
I am talking about Irish shipping, not Cork shipping.
We are interested in a ferry for Cork.
I want to make four basic points as to why the Government took this very difficult decision, which was not taken lightly but with heavy hearts. People's jobs will be at risk as a consequence of this decision. The first reason is that the Government who have the honour to be in office at the will of the people were not prepared to throw away approximately £155 million on an enterprise which, having spent money which we do not have, the company would still be in debt to the tune of £59 million with no apparent prospect of earning the revenue to service the debt and with assets of approximately between £20 million and £30 million. One cannot be more precise than that. We were not prepared to do that but Fianna Fáil should indicate if they are prepared to do it.
The second reason we were not prepared to do it was that the decisions which brought about this sorry state of affairs, the liabilities incurred in speculative overseas ventures, were undertaken without the express approval, knowledge or understanding of the Minister for Finance, the Minister for Transport and now the Minister for Communications. No sanction was sought or obtained. What does that actually mean? It means that people went into the money market and borrowed money on foot of a perceived credit the Irish Government would underwrite without the express approval, permission or consent of the people who would ultimately have to pick up the tab. That means all of us who work in this building and all the people in the Gallery. We are talking about £155 million on which we will get no return. It was done in the name of all of us but without our knowledge or approval. Nobody underwrites that kind of decision. That was the second reason we reluctantly took this decision.
My third point is that this has not been taken lightly or suddenly. On the first day I had the honour to become a member of the Cabinet, the matter of Irish Shipping was on the agenda in the form of a confidential memo. For the past 12 months we have been aware of and concerned about this problem, as have many people in Irish Shipping. The Minister was quoted by Deputy Wilson as having come to this House earlier with the Bill dealing with Irish Shipping. We have made money available. We thought there might be an upturn in shipping rates and we put up money in an attempt to avert what we did not want to happen; but we have, reluctantly, come to the decision it would be good money after bad. We have explored, painfully and extensively, all the possible less difficult options. There is no soft option in this case unless Fianna Fáil want to tell us where they will get £155 million.
We are an independent sovereign State and we have a reputation throughout the world. We have an obligation as a democracy to our citizens and to our creditors. We need to borrow money abroad and our people who are abroad, whether business people, ordinary tourists or members of State companies, need to have a credit-worthiness that does not immediately raise questions as to whether the name of Ireland can be trusted. I want to say clearly, and I know the Minister for Communications will affirm what he said in his statement earlier today in this House, that the State, exercising its sovereign functions and on behalf of the people, will meet in full and to the last penny every liability for which we are directly accountable and to which we have given our assent.
The Government have no other option.
Some of the statements made by Members on the opposite side have perhaps undermined that credibility. I want to undo some of the damage that, unwittingly perhaps, was done by Fianna Fáil in this regard.
The Minister could not.
I know that the damage is enormous.
What has the Labour Party done since they came into Government?
The State will meet in full every liability for which the State is directly accountable. This will be done in a manner that will be recognised by all the credit institutions throughout the world and it will be conveyed to them in very explicit language, directly and indirectly. However, it is tragic for the people who work in this enterprise, and particularly for those who were not parties to this decision and who will be the victims. They will be without jobs and we must see how they can find new work in the context of the policies of the Government. I have confined my speech to ten minutes in the interest of ensuring a full debate. I hope the House will accept the points I have made.
I should like to express my thanks to the Minister for Labour for the gentlemanly way he has facilitated me and also to the Minister for Communciations for the manner in which he has facilitated me.
What is absolutely deplorable about the way this matter has been dealt with is that we suddenly come to this situation tonight where the Irish Government solemnly pulls the plug on an Irish State company and leaves unpaid enormous debts owed by that company. In that respect they have damaged appallingly the credibility of the country and its credit-worthiness. The grounds on which it was done is that the company is hopelessly insolvent and that the State should not be expected to pick up the debts of £145 million plus £59 million.
I agree Irish Shipping is hopelessly insolvent, but so are CIE, NET, Irish Steel and many more State companies I could name. All of them are hopelessly insolvent and all of them are incurring enormous losses. Are they now, or more importantly their bankers, to expect that the Government will decide to pull the plug on them? We should remember this is not the first time the Government have reneged on their commercial obligations. They did it 12 months ago in October 1983 when they reneged on the obligations of Chipboard Products Limited in Scarriff. To this day the unsecured creditors remain unpaid. Some of them are in my constituency: they are very small people who are owed £500 or £1,000 they can ill-afford to do without. They are unpaid because they were innocent enough to deal with the Irish State through one of the State companies; but the Minister for Finance, who got a debenture signed five days before he put in a liquidator, has been paid in full. The Bank of Ireland has also been paid in full.
This is the second time in 12 months that the Government have reneged in a way that would bring down the wrath of the Labour Party and many others on private directors if they acted in a similar way. We are told by the Minister for Communications that there are assets of approximately £23 million available to meet estimated total liabilities of £117 million of which £39.5 million are guaranteed. They should liquidate to dispose of the assets of the company to the best advantage and settle with unsecured creditors. What possible chance have unsecured creditors of getting one single cent? The assets described as £23 million do not even cover the secured creditors or anything like it, but of course there will not be assets of £23 million because this is not an ordinary liquidation. This is a liquidation of a shipping company who have their assets spread all over the world. I do not know where Irish Shipping ships are tonight, but wherever they are I can guarantee the House that at this hour now, 8.40 p.m. Irish time, every one of those has an admiralty writ nailed to its mast. Whoever happens to be owed money in that country has taken proceedings and has had each of those ships arrested by the admiralty authorities of the country in which she happens to be lying at present. Nobody outside of that country and the creditors of that country will get anything. The liquidator in Ireland gets nothing because this liquidator does not exercise jurisdiction outside our own jurisdiction and very probably none of those ships is within our jurisdiction tonight. I believe most of them are trading in the Pacific between Japan and the west coast of the US and they are in the process of being arrested there now. Those not in port will be arrested as soon as they dock. What is to happen to the crews of those ships? They will be told to get off by the admiralty marshal and they can make their own way home from Yokohama or wherever they happen to find themselves. What do the Government care about that kind of situation? No more than they care about the unsecured creditors of this company or the unsecured creditors of Chipboard in Scarriff.
Is this not the greatest example we have ever seen of uncommercial people dabbling in commerce with the most appalling consequences for this nation, not just financial consequences for the company and the taxpayer in the short term but appalling long term consequences? What are the bankers of these other insolvent State boards doing tonight? Are they not on the telephone saying that they will not accept letters of comfort any more, that they will not accept assurances from officials or Ministers, that they want no guarantees in writing from the Minister for Finance and if they do not get them they are going to close the company down? In the case of Irish Shipping Limited it is only the written guarantees of the Minister for Finance that are being honoured and everything else that is being dishonoured, and Ireland's name and honour are being dishonoured.
What would commercial people in this situation have done? They would have gone out a year or 18 months ago as soon as it was known that these charter parties were a disaster and they would have negotiated out of them to the best possible extent. They would have explained to the people concerned that Irish Shipping Limited were insolvent and that the question of liquidating them would have to be taken into consideration. Commercial people being what they are, those who were entitled to these enormous bonanzas at the expense of the Irish taxpayer, would have done what they would have done with a normal commercial company. They would have cut their losses and they would have enabled the bankrupt shipping company to cut its losses also and avoid damaging the name, credibility and credit-worthiness of Ireland.
What would sensible men of business who know how to deal with these things have done originally if they had to charter nine ships between 1979 and 1981? God only knows why they had to do it, but if they had to do it what would a normal, properly run shipping line do? They would form a separate company for each single ship that they chartered. That is the practice universally throughout the world. How many of the most enormous companies would be gone insolvent and in liquidation today were it not for the fact that each of their charter parties was with a separate company and when one of the charters went wrong it did not bring down the whole lot? What did our marvellous men, who are not men of enterprise but can still spend hundreds of millions of pounds of the Irish taxpayers' money, do? They signed all the charter parties in the name of a semi-State body because it is easier to do it and up to then no Irish Government had ever reneged on its commercial obligations. Now every one of those charters goes down and brings down the whole lot. If separate companies had been formed for each of them Irish Shipping Limited would still be solvent and in existence, the 1,300 people would still be in employment and we would not be in this dreadful situation.
Apart from the loss of a company, the most serious thing is now that no banker can be sure, after this having happened twice in two years, once in a small national company and secondly in a large international company, that the Irish Government in future will ever respect their operations. Since it became clear 12 to 18 months ago that this was the situation, it could have been negotiated and the damage to the good name of this country could have been avoided. That is what the Minister for Communications, the Minister for Finance and the Government stand indicated on tonight.
A Cheann Comhairle——
Deputy Flynn and he has 15 minutes. I have to go to that side of the House and then I will come back to the other side. It is a little difficult to understand.
That is another speaker on that side of the House.
Deputy O'Malley was speaking in Government time.
I suppose the House and the country are becoming accustomed to the introduction of emergency legislation by this Government to deal with their little problems, and the country is getting used to the number of liquidations and closures that have taken place in this economy since the Government took office. When we consider that some 700 businesses were liquidated last year and the same number to date this year, people might be bludgeoned into expecting that it is quite normal for a Government to take the action that this Government took. However, we must place this liquidation in perspective. For the first time by a deliberate decision of Government a major semi-State operation, working satisfactorily in the Irish economic interest since 1941, has been put to the wall. When one of the Ministers of State this evening referred to the death of this company, Irish Shipping Limited, he could have said that it was the shortest death notice ever to come about in the bereavement columns for any kind of business — eight short words condemned this company to the ashes of liquidation for all time. Who would have thought that a day would ever come for a maritime country that they would pull the plug on what can only be termed a lifeline for the economic survival of this country?
There has always been a policy of commercial freedom in shipping in this country. Ships of every nation were free to trade in and out of the ports of Ireland. That freedom was based on the sure policy that seaborne trade plays a dominant role in Irish economic affairs. We are not landlocked. There must be two sea journeys before our exports reach the mainland of Europe, those exports depending on seaborne traffic to get to their destination. What are we saying to some of those exporters, people dependent on sea routes for the £12 billion worth of exports that had to be carried last year, most of them by seaborne traffic, to their destination? The answer that the Government have to that necessity for Irish economic life is that they are not interested in maintaining its continuation.
This company were set up in 1941 when there was then a wartime need for a national shipping facility to be made available. I ask the Government and the Minister if there is any greater stability in the world of politics in 1984 than there was 43 years ago. I put it to them that there is a greater strategic need for Irish Shipping Limited to be kept alive today than at any time in the last 43 years. The mandate that was there to provide 155,000 dead weight tonnes was the minimum. It was stated in the Acts that set up this company, the Acts from 1947 to 1959, that 155,000 tonnes was the minimum dead weight requirement to keep a strategic sea traffic fleet available for our commercial interest to survive. They were mostly engaged in deep sea voyages and time-charter business. That point is being missed this evening. I am saying to the Minister that there is no substitute tonnage available to cater for the dead weight required for deep sea voyages.
Almost all of the money Irish Shipping earned was made in hard currencies, mostly in dollars. It is not true to say, therefore, that the exchange rate for the dollar has had as big a bearing on the need for this liquidation as the Minister would like to convince people. They made their money on the time-charter business in the dollar currency and for that reason there was no need to pull the plug at this time.
The annual profit made by Irish Shipping Limited in the five years 1974 to 1979 was £1.988 million and in 1978-79 the company profit before tax was £3.027 million. If the company in hard trading terms, and difficult recessionary times, was capable of accumulating that kind of profit margin over a long number of years there was no reason why it could not have been restructured in modern terms to continue to make money in the national interest over the next number of years. Irish Shipping has shares in other businesses, but they were not referred to by the Minister. The company has minority shareholdings in stevedoring, offshore servicing and coastal shipping and I should like to know what will happen to those interests. Is the Minister saying that the liquidator is to pull the plug on all those interests thereby creating a bigger dilemma downstream than the Minister referred to this evening?
In all his statement the Minister devoted only two lines to the fate of the 950 people who will be dispossessed of their jobs because of this action. It is not just a question of 950 people because we have to take their families into consideration. We can take that as resulting in 5,000 people being disadvantaged because of this move. They are not just ordinary labouring class people but highly skilled technicians, people who hold international certificates in shipping who will be exported now on the emigrant ship, probably in one of their own carriers, to the benefit of other economies. Irish Shipping had probably the most advanced training scheme for its personnel of any shipping operation in Europe. We have been told that there is no hope whatever of taking up the slack for these highly skilled people. Did the Minister consider it worth his while to offer these people some alternative prospects of getting some satisfaction from the disastrous and dastardly blow he has struck them this evening?
The economic strategy of the Government as outlined in the national plan is now clearly viable. We know now what the reality is: the reality is to auction off pieces of beloved Ireland in small lots and the auctioneering started today. The Minister will make a very bad auctioneer if he is going to sell out Irish interests in the fashion he adopted this evening. Is this the way the Government propose to balance the books next year? Is it their intention to sell off our interests and create as much liquid cash as possible so that they can balance their books and meet their targets in the plan? That is not what the Irish people expected from Building on Reality.
The Minister said that the State will not be liable for all the money due by the company, only those guaranteed by the famous letters of comfort. I must put it to the Minister that it is common knowledge in the streets that when the memorandum to shut down Irish Shipping went to the Department of Finance the officials there advised against it. I challenge the Minister to tell the House if following his private memorandum to the Department of Finance the advice was against it on the basis that this would harm our international credit rating. The position is that the Government are acting against the advice of their own strategists in the Department of Finance who knew well that this action would have a detrimental effect not just on our credit abroad but on our credibility in the world of economics.
It is now coming home to a lot of us why Deputy Cluskey left the Government. It was not the Dublin Gas deal that sent him out. He knew what was being planned down the road for all these companies and all the liquidations and emergency legislation that would have to be put through the House to accommodate the monetarist policies of the Fine Gael Party. Are we to see in the near future a succession of emergency legislation and liquidations to accommodate the Minister? What about Irish Steel and NET? I presume Údarás na Gaeltachta is next because that is rumoured around the corridors of power. I presume B&I will get short shrift before too long. What about Aer Lingus, a company that is up to its neck in debt? There was a public relations compaign in Buswells Hotel recently when we were told that they would have to borrow over the next ten years to get new planes in the region of £500 million. How are they going to get that money? They will have to borrow it on the world market. The way they can do that now will not be with a letter of comfort but by a direct cash grant from the Government. There is not a financial agency in the world that would give a semi-State company so much money when they see the treatment the Government are dishing out to this one for the sake of a few miserable paltry pounds.
Will the Government close down the ESB generating stations? That company has borrowed £1 billion and a lot of it is unsecured and not covered by letters of comfort. I suppose that in due course when the heat runs out of the Government they will put through the usual legislation and put them into liquidation. Is it not extraordinary what the Labour Party can do? Is it not extraordinary the amount of punishment they can take. They are really the political punchbag of the Coalition. There has not been a word concerning the fate of the workers from the Labour Party, the group who were sent in here as the pseudo-socialists to protect the living standards and the interests of the workforce. However, they are sitting meekly by and have the cheek to come here to try to defend what can only be regarded as an ultra right wing Tory monetarist attitude to the financial gearing and structuring of a semi-State company.
We must consider the cost in unemployment and pay-related benefits to the 950 people being thrown on to the dole queue. What will be the loss of personal taxation to the Revenue? When those things are put into perspective it will not be too much short of the money necessary to keep the company alive. I should like to take the Minister to task about some of the points raised in his speech. It is obvious that it was a hastily compiled document, an eight page notice of death to a semi-State company. Some of the assumptions in it remind one of the false and dubious assumptions that exist in the national plan we put to rest recently. The Minister told us that there may be assets of £23 million while the estimated total liability was £117 million. That is some statement from the Minister pulling the plug on 1,000 people. The Minister's speech is full of estimates and no positive figures. One would have thought that when a decision of this magnitude was being taken it would be possible to set down for the House precisely the figured involved.
The Minister also told us that it is hoped that Irish Continental Line will be able to continue to give a service. Let us see the impact that will have if there is no guarantee or commitment. Remember the liquidator has the right to sell off the 75 per cent share in Irish Continental Line Limited. If he does that, if that share is picked up by somebody who wishes to close down that service — affecting the services from Rosslare and Belfast — we will end up in a position in which there will be literally no tourist traffic of any significance coming into this economy in the next ten years. There is no guarantee given in this, except the hope expressed that it will be able to remain profitable. Of course, in that kind of terminology, we can take it that, if it is not found to be profitable, it will be the next to go.
The Minister talks about a strategic fleet being available to deal with what we regard as necessary to service our exports. The Minister for Labour comes into the House and tells us about the 60 ships registered in Ireland with a certain amount of tonnage. I want the Minister to know that, of the 60 ships registered in this country, 90 per cent are under 3,000 tonnes dead-weight. They are the kinds of ships that he says are capable of international sea voyages on the high seas around the world, capable of carrying the £12 billion worth of exports from this country. What kind of capacity at all does he think he has? Then he says he regrets the loss of jobs and talks about current strategic needs. I will tell him what are the current strategic needs. The needs of this country are the same as they were in 1941 when this company was first established. If anything, perhaps they are greater because we must maintain a presence to keep our share of the economic market of the world.
I labelled this Coalition Government in the course of the national plan debate here as the national undertakers. All I can say is that we see them in action again here this evening. They have put in the grave diggers to dig the grave for Mother Ireland; the auction is on, we condemn it and we are not going to allow it on behalf of the electorate.
If this Government are described as the undertakers and grave diggers, perhaps we might consider that the Fianna Fáil Government, who were instrumental in bringing about the situation in 1980, were those who injected the lethal dose because the precipitate action quite clearly that put Irish Shipping Limited in their present situation was triggered off by disastrous commitment to take on nine ships from Hong Kong brokers — ships that would employ not Irish but foreign crews, that would give Irish taxpayers a commitment into the future through an Irish company, to pay out £145 million over that period. Deputy Reynolds who was the Minister at the time, and his colleague, Deputy Flynn, waxed loud and lyrical here on this subject but it was they and the Government of which they were members who presided over that contract——
That is not so.
——which triggered off that situation. Deputy Reynolds came in here and said that he did not know that the board of Irish Shipping Limited were taking this step. As a fellow Member of this House, of course I accept his word but perhaps he should have known; after all, he was the then Minister. He could call in any member of that board, go into Irish Shipping Limited, or send his numerous officials in there to check out what was what and ascertain exactly what was going on.
To those of us who are backbenchers, who are not familiar with the detailed workings of Ministers, their staff, handlers and so on we are at somewhat of a disadvantage. This happening is a debacle; nobody can deny that. But we, as backbenchers on both sides of the House, require that if some lesson is to be learned from the position obtaining, we must find out what went on there. It must come out with no cover-up at any level, whether it be Deputy Reynolds, as Minister, his predecessor, or his successor, if such be the case, and I do not mind whoever or all it may be; or the civil servants in that Department at any level, or the officials, directors, chairmen or whoever of Irish Shipping Limited, any of them. Let us have it all out and see what went on there.
I find the whole situation rather mystifying. There is a cloud, a haze surrounding it. By no means have we had it all out yet. I am certain of that, if of nothing else.
There is no haze about what the Government are doing. They are closing Irish Shipping Limited.
(Interruptions.)
Deputies should remember that this is a limited debate, each speaker being limited to 15 minutes.
We know it has been suggested that there was one member of the board of Irish Shipping Limited who went in head first into this transaction. I do not know whether that is right but, if it is, surely the position is that the board of Irish Shipping Limited had to approve of that, otherwise they would not be bound by it. Or is it the situation that they gave authority to one single man to undertake commitments of this nature without the prior or subsequent authority of the board? That would seem to be incredible but let us have it out, what was it?
Is it the position that the board of Irish Shipping Limited have unlimited authority without reference to the representatives of the taxpayers? Had the Ministers of the day and this House unlimited authority to undertake any commitment without the authority of the Minister? Is that the position? I do not know but, if so, let us have it out. Is it not the position that any Government, at the time that Deputy Reynolds was Minister, or that of his predecessors or successors; is there nothing that they could bring onto the Statute Book that would ensure that any commitment over and above a certain amount would be subjected to the prior authority of the Minister and of the Government? Would that not be written into the Act, making it ultra vires that commitments over a certain amount required prior authority? For example, in the banking system, there is a hierarchical situation. One can go into one's bank manager and he can grant one an overdraft up to X£s; that is his authority. But if he wants approval for a higher amount then he must telephone upstairs. There is a sensible, basic arrangement obtaining.
What is going on in this situation? Is there unlimited power vested in these boards to undertake any commitment to any extent whatever? Irish Shipping Limited was a very fine company, did magnificent work and I pay them a tribute over many years for having done so for this country. They did the task allotted to them of running ships and operating them. There was little or no problem with the company until they changed from being a shipping company and set off into the realm of speculation, speculation of fluctuating shipping rates. That was the situation that triggered this off. I want to know who was involved in that. Were they board members, civil servants or whoever? If it was a civil servant situation, then I would say the Minister of the day was responsible for those civil servants because that is the system we operate.
Quite clearly there have been problems with the company for quite some time. We are now in a liquidation situation. Was that not apparent earlier this year? What of the £4 million extra poured down the drain earlier this year? What is the explanation of that?
Deputy Reynolds suggested that liquidation was inappropriate. He posed the question: why was a receiver not put into this company instead? As I understand the position, the only person or company who can put a receiver into a company is the holder of a debenture, that it is a debenture who puts in a receiver. Therefore the question must be posed: was there a debenture over the assets of Irish Shipping Limited? Can somebody tell us that? Did the Minister take the debenture when funds were secured to this company? Where is that debenture? Was it taken and, if it was not taken, why not? Why was it that, when taxpayers' money was provided for this company, the normal commercial practice of taking a debenture to secure it was not engaged in?
We are now in a most appalling situation in which the country is faced with taking a decision as to what should now be done, faced with continuing debts amounting to some £145 million which in effect would be drawn off the Irish taxpayer in the four of five years ahead, to be siphoned off for the Hong Kong shipbrokers who quite clearly knew a great deal more about the market prospects than did the advisers at the disposal of Irish Shipping Limited. Is that what is to be done? Are we to raise £145 million of taxpayers' money to be siphoned off to Hong Kong? Or is it the situation that those £145 million could be put to better use providing employment here on ships that would be manned by Irish people on other ventures? Remember that the Government must be expected not just to liquidate Irish Shipping Limited, full stop. There is £145 million which will be saved if that goes through. That £145 million must be seen to be redirected towards the creation of Irish employment on Irish ships and in Irish industries that will be of lasting and permanent productive benefit for this country. I want to know what that strategy will mean. There is no reason why this country may not and will not in the future have a shipping company. That must be done and that can still be now, and I will be looking to see what proposals come forward in this respect.
One wonders what the reaction would have been if the French had been faced with the situation of siphoning off £150 million. Would they have been reluctant about taking steps to secure their own national interests? The Germans, hard nosed business people, how would they have reacted? How would the Italians or the Dutch have reacted? Our problem is that over the years we have been the gentlemen of Europe. We kept all the rules. We never transgressed any import/export regulations laid down by the EC. The French, no problem; the British, no problem; the Germans, no problem; but not us. We were the gentlemen and we suffered for it. That is one of the reasons why we have the second highest unemployment rate in Europe and why our rate of inflation is so high. We kept the rules while the other countries did not. We entered into a bargain with these countries and we were the gentlemen.
Maybe this will show that more than one can play that game. We are going to show them that Irish interests and jobs are paramount. Let us proceed on that basis and not just say that this story ends with the liquidation of Irish Shipping Limited. This country will have shipping in the future, and the sooner we get this organised in a proper manner the sooner we will have those ships going again, and I am optimistic that they will go again.
The Deputy must be joking.
This time let us ensure that successive Governments of whatever hue will take steps to ensure that those controls are exercised——
We will send Arthur Scargill after you——
——that those jobs are provided and that they are Irish jobs, not ships operated with foreign crews which happened in this case.
There will be nobody left in the country when this Government are finished with us.
I am calling Deputy Lenihan.
On a point of order, do you propose to allow me to speak on this subject?
You are not on my list.
May I request that you put me on your list?
In a confined debate Independents and very small parties usually fare badly.
We should not fare so badly that we do not get in at all.
You should see the Whips of the other parties.
I do not wish to eat into Deputy Lenihan's time, but I understand you have a say as to whether a person speaks, not the Whips.
I have to see that it is a fair balance. I am not excellent at mathematics but if I were to work it out mathematically, the Deputy would not be very high on the list. I am calling Deputy Lenihan.
A Cheann Comhairle——
You must not obstruct the House.
I appreciate that your mathematics may be fairly poor, but in terms of a human being one is indivisible.
I am calling Deputy Brian Lenihan. He has 15 minutes.
We have just heard from Deputy Taylor an amazing exposition of right wing Tory philosophy. I was astounded to hear this type of monetarist view expressed by a Labour Party member which is at variance with the principle of State intervention to lift our economy, to provide essential services and to ensure that there is the fullest employment possible in the country.
In the thirties and forties Fianna Fáil were backed by a decent Labour Party and we established State-sponsored bodies like Bord na Móna, Irish Shipping Limited and Aer Lingus. To ensure success in a commercially orientated State-sponsored body we gave them a degree of commercial freedom. As Minister for Transport and Power I presided over the affairs of Irish Shipping Limited in the seventies when they were making a big profit. They were able to make that profit because I and previous Fianna Fáil Governments gave them this commercial freedom. Time after time during that period we heard nothing but compliments from all sides of this House about how successfully this company was operating. It is essential that State-sponsored bodies when trading abroad have a certain degree of commercial freedom. Now that the wheel has turned and the company has run into trading difficulties, there is a loud scream from people like Deputy Taylor who do not acknowledge that this commercial freedom has enabled these companies to operate successfully abroad.
Irish Shipping Limited was established in 1941 but only ran into financial problems in the last two years. I want the Government to acknowledge that these State-sponsored bodies operated successfully abroad because of this commercial freedom and because we had confidence in them. In the decent days of the Labour Party, which I would like to see again, Fianna Fáil Governments were supported by the Labour Party when we were establishing these State-sponsored bodies.
Now the crudest possible legal mechanism has been adopted to deal with an admittedly difficult financial position, that is, the liquidation of this company. That procedure is adopted only by businessmen of doubtful character. It is not the attitude that should be adopted by a responsible Government who depend on their reputation for their creditworthiness and respect abroad. That is not the way for a Government to do business. For many years the Irish Government had a very good reputation and their creditworthiness was beyond reproach. The successful operation of our State-sponsored bodies trading abroad helped to build this reputation. Many of our State-sponsored bodies raised most of their current expenditure and a large share of their capital on the open market without any letter of comfort or without any Exchequer guarantees.
When the Government start to take this type of action against one State-sponsored body it puts every other State company in serious jeopardy as far as their creditworthiness is concerned. We have dealt drastically with one company with a skilled workforce of about 1,000. These people have acquired their skills under excellent training schemes run by the company in conjunction with the trade union movement. This Government are liquidating this company and as a result the people with these skills will leave this country. Let there be no mistake about it, our present high emigration is something we cannot afford. This is being totally clouded and ignored by the Government in so far as various documentation is concerned, especially in the recent document we have been discussing. Most of these skills will have to go abroad. Taking the numbers on a three to one ratio we are talking about 1,000 people losing their jobs but about 3,000 to 4,000 being affected when we think of the families involved. The workers have acquired skills and training by reason of having been employed by this progressive company but they will have to leave the country quickly to seek work elsewhere because of the inevitable commitments they have as a result of the kinds of jobs they have had down through the years.
There are a number of other State companies with a far higher labour force than the one we are talking about and who rely on a high creditworthiness abroad. I refer to Aer Lingus, for instance. That company employ 5,000 people. They are financed largely in regard to their commercial operations abroad on the basis of Exchequer backed guarantees but largely by reason of the goodwill they have generated as a viable and commercially successful enterprise. Those jobs, too, are in jeopardy now. Do the Government appreciate what is involved? One can apply this argument also to the B & I, a company who are almost entirely dependent on their earnings from commercial dealings abroad. Again, they are a company who do not run every other day to the Department of Finance seeking an Exchequer backed guarantee or a letter of comfort. They carry out their commercial practice day after day and this involves the confidence of lending institutions, merchant banks, insurance companies and so on. All of this is being ignored.
In that respect also, NET are another major employer, as also are the ESB, who have always borrowed substantially outside the Exchequer umbrella. Bord na Móna, too, have borrowed in that manner. The Government must not have been aware of what they were doing when invoking the liquidation process in this case. They did not do so recently in regard to another case. If there were some legal reason for their not being able to appoint a receiver in this case we would have facilitated the passage of legislation for the appointment of some person to manage the firm, someone who would try to trim it and make a go of it and who would at least have honoured the financial commitments that were entered into.
In recent years the Government brought in legislation dealing with the PMPA in exactly that manner. They appointed an administrator who is carrying out in a way that is reasonably viable a large part of the business that existed there. We helped in this house to ensure that the legislation went through as rapidly as possible because we realised that a matter of urgent national importance was involved. It would have been disastrous for the whole insurance business to have put the PMPA into liquidation.
I am appealing to the Government to realise the enormity of the damage they are doing to the whole future of our economy, to the future of the creditworthiness that has been built up in the name of Ireland and particularly in regard to the State companies who are engaging in exporting commercial business abroad. The whole image of the banana Republic which is engendered by this sort of action can extend to Irish private firms. The whole country will bear some stigma because of this action.
I wish Irish Shipping Limited and the Government luck in regard to the recapture of the vessels. The company's boats are all over the world but to bring them back is another matter. By their action the Government are bringing in all sorts of people such as those alleging to be creditors and so on. Instead of proceeding in the way of administration or receivership the Government have used the crude instrument of liquidation.
Only six months ago the Minister for Communications brought a Bill to the House for the purpose of enabling a further extension of State guarantee in respect of further loans to be entered into by Irish Shipping for the purchase of more boats and for other matters also. At that time there was not a word about anything of this kind taking place. The Government then expressed confidence in regard to the future of the company. There was an acknowledgement of difficulties but, according to the Minister, these difficulties were to be resolved by way of a further injection of State guaranteed funds.
The Government have been in office for two years. During that time the problem of Irish Shipping Limited could have been tackled but instead we now have this panic decision. The matter will now be dragged through the courts with all the damage that will entail, not only to the company involved but to other semi-State bodies and to private firms also.
It is shameful that the Government should do such damage to the good name of Ireland, damage that will have massive repercussions. The Government have lost all their feeling for what is necessary for the country. More than anything else they have lost any feeling for the national interest. Apart from the economic and commercial matters to which I have referred, it is essential in a world that is as difficult today, if not more so, than was the case in 1938-39, that we have a basic strategic fleet tonnage available. The present world scene is reminiscent of the world scene of the thirties, but a Fianna Fáil Government at that time realised the importance of having a basic strategic fleet. That issue of national security is the one, more than all others, that we should appreciate. The abandonment of that concept is the full indictment of the Government.
The Labour Party must realise that being linked with people in Fine Gael who can make decisions of this kind has done enormous damage to the whole philosophy of that party to which Deputy Taylor and Deputy O'Sullivan belong. That is reflected already in the total withdrawal of support from the party by ordinary decent Labour Party supporters. Labour are no longer true to their roots but Fine Gael are being true to their monetarist policies. They are behaving in the shadow of the British Prime Minister. They are behaving in the monetarist manner so beloved by the first Cumann na nGaedheal Government which a combination of Fianna Fáil and Labour ousted from public life in 1932.
The tone of my comments will be somewhat different from those I have just heard, as will the volume. The original decision to undertake these charters is effectively inexplicable. The rates at which they were undertaken, the rates which we agreed to pay for them, at that time were at levels which were very high indeed, though slightly below the rates paid at that time for charters.
It must have been readily understandable to those concerned that in undertaking these charters for such long periods, when charter rates were approaching or at their peak, that an enormous risk was being taken. The drop in the trans-shipping index between 1980 and 1982 precipitated this crisis. It is not significantly different in its magnitude from the drop that occurred between 1969 and 1971 or in 1975.
Therefore, there was ample warning that in chartering at these rates there was every likelihood that the position of the company would be put at risk. It is impossible to understand how that decision could have been taken. The action taken at that time was not known to the Government. I say this in fairness to the Deputies opposite who during that period and almost right up to the day when the last charter was undertaken were in Government, but on the evidence available to us, despite four meetings in 1980 and seven in 1981 when Deputies opposite were in power in the latter part of the year, the chartering was being undertaken; and despite the meetings that took place between Ministers and civil servants on the one side and the board or senior management on the other, there is no record of any reference to these charters in the accounts of these meetings.
It is right that the House should know that, and although the inexplicable decisions which caused the disaster were taken when Fianna Fáil were in office, as far as we can establish they were taken without the Government's knowledge. I would not wish to state otherwise, despite the tone the debate may have taken up to now. A very disturbing connection is that the board's minutes do not contain any reference to any board decision on the matter. The fact that decisions involving a State company's liabilities which were in excess of £100 million could be made by an executive or executives without board approval raises most serious issues going beyond this instance. In the future we must manage our affairs having regard to the fact that such a thing could have happened without endorsement by the board or the knowledge of the Government of the day.
This Government inherited the situation and earlier this year after Irish Shipping had undertaken renegotiations of some of these contracts we decided to enter into fresh Government guarantees which added £25 million to the State guarantees then applicable. I believe that this decision was justified at the time by the importance of Irish Shipping and of trying to maintain it if there was a reasonable chance that it would survive, and because of the advice available to us at the time on the prospects of the company.
Obviously, other views can be held. Some people would criticise us for not having acted then. Hindsight makes such conclusions very easy. At the time the decision seemed reasonable and justified on the basis of what we knew at that time.
It is evident to everybody, including the Members opposite, that a repetition of that decision on an enormously larger scale, multiplied many times in terms of liabilities, would clearly not be justified and could not be justified in the light of what has happened since and of the advice now available to us in regard to future prospects. It is very difficult to see how anybody seriously could suggest that we should pledge the credit of the State to the tune of £150 million on the basis of the projections for the future which we now have. Even if that were done, at the end of it we would still have a debt-ridden company. The total involved in amounts that would have to be pledged in guarantees and in the debts the company would have at the end would be £200 million.
We have obligations to the taxpayers and obligations of public responsibility. There is a limit to the manner to which any Government can or should act in such a way as to commit the community to sums of this magnitude for objectives which are dubious and highly improbable of achievement.
The advice on which these figures were based are in figures obtained by the chairman of Irish Shipping from a leading London broking firm. It assumes an 8 per cent annual growth in revenue. Of course that estimate could be pessimistic. We are operating in an area in which there are wide fluctuations in rates. If, for example, the Gulf were closed for a long period or if a world boom emerged out of nowhere it is possible that the rates would increase to a greater extent, but they would need to increase by something like two and a half times their present level even to break even, never mind making an essential profit.
I do not think any Government would be expected to or would be justified in gambling sums like £200 million on such hypothetical eventualities as the Gulf being closed or a world boom suddenly emerging from nowhere.
On the other side, that forecast could be optimistic. I will cite two authorities on this subject. Lloyds Shipping in July 1984 said that, despite the decline in lay-up levels of dry cargo vessels, freight rates and the high level of new ordering seem to suggest that the market is still in the doldrums and is likely to remain there for some time.
If anything, that view would suggest that the advice given to us of an 8 per cent annual increase could be optimistic rather than pessimistic. Lambert Brothers Shipping, quoted by Lloyds on 1 October 1984, warned of a renewed slump for shipping as the world economy slows down. They advise ship owners to plan on the assumption that economic storms are brewing just below the horizon.
There are authoritative views which move in the other direction, which suggest that even the advice given to us as to what the rates might be on which the assessment could be made may prove to be over optimistic. In that situation, with so little prospect of any eventuality arising that could make this company viable, the Government must take a Government's responsibility and act. I am sure the Members opposite would do the same if they were in Government. Whatever they may say now, I doubt very much if they would act with the irresponsibility they now claim for themselves.
I come now to the question of the strategic fleet about which Deputy Lenihan was speaking somewhat loudly when I entered the Chamber. I was involved in setting the target for the strategic fleet. I was acting on a committee at the invitation of the then Taoiseach, Seán Lemass.
Speak up. We cannot hear the Taoiseach.
I was advising on transport for the second economic programme. At that time there was a target of 200,000 tons dried cargo tonnage. We inquired where that came from but no one could remember. If I remember correctly, the file was lost. It was suggested that we should try to estimate it ourselves. I suggested that we should take a reasonably extreme hypothesis that the northern hemisphere was wiped out by a nuclear war leaving only Ireland with everything being imported from the southern hemisphere. On that basis it was established that the appropriate size of the dry cargo fleet with ships of the efficiency and speed then available would be 155,000 tons.
The suggestion that we are leaving ourselves without any capacity in this area is unjustified. On the figures given to me it would appear that without the Irish Shipping fleet, but including the Irish Spruce, 72,000 tonnes, which is not part of the Irish Shipping fleet for technical reasons which I will not go into, the total tonnage available, exclusive of ferries and tankers, is 160,000 tonnes. We now appear to have a total tonnage which is fractionally higher than the amount thought to be necessary over 20 years ago with less efficient ships and of a slower speed on the assumption that the entire northern hemisphere was wiped out and we alone survived. The suggestion made by Deputies opposite that we have to keep Irish Shipping alive for strategic reasons cannot carry much weight in the light of those facts of which I have personal knowledge.
The Taoiseach is on very dangerous ground.
The Deputy was on very dangerous ground. He did not know it at the time but he can see now that he was.
Was that the time the Taoiseach put too many seats on Aer Lingus planes?
Deputy Prendergast asked whether a receiver might not have been appointed and suggested he might have been able to handle this matter in a more advantageous manner. The position is that a receiver can be appointed in law only by some person or company which has a charge on the assets of the concern in question. We have no charge on the assets of Irish Shipping nor has any Irish bank or other institution. That option was not open to us either directly or by way of inviting some other institution to act in a manner which would lead to the appointment of a receiver.
We would have given the legislation to do it.
The only option open to us was the appointment of a liquidator. The time scale involved is that the next payment which would create an insolvent situation is due in the next few days. It was for that reason that we had to act rather than leave it until the payment was due when the Dáil would not be meeting. We decided to take action today so that the matter could be debated in the House. The date for payment is 20 November but we felt it should be brought to the House first. That is why the matter was brought before the House today.
I wanted to make these comments to reply to some of the points made in the debate. I hope in doing so I am maintaining a reasonable tone and contributing to the knowledge of the House and perhaps lowering some of the temperature which has been rather artifically raised by Deputies on the other side of the House.
The Taoiseach spoke about the strategic fleet. He said that it would be 160,000 tonnes deadweight including the Irish Spruce. The Irish Spruce is 71,927 tonnes and the rest of the fleet is made up of very small boats. If the Taoiseach is talking about trading over long distances it is unrealistic to expect that this can be done with the size of the boats that make up the remainder of that tonnage.
The fleet decided upon in that recommendation in 1963 was based on the assumption that in the event of such a war ships could be exchanged for ships of a different size.
We are talking about small ships along the coast.
(Interruptions.)
The Taoiseach's speech was more a series of musings than a contribution to the debate or a justification of the decision to liquidate Irish Shipping. There are a few questions I want to ask the Minister. I would be pleased if he would reply to them. If Irish Shipping disposed of their assets at the value mentioned in the Minister's speech and if the amount guaranteed by the Government is paid by them what debts will remain? How much debt is the Minister walking away from? It is important we know that.
We have already said that this action on the part of the Government could do immense damage to the country. It could do immense damage in the commercial world. I made out the figure to be £54.5 million. Deputy Brennan when speaking mentioned £78 million. The Minister should let us know the figure. This company is a State company in the full sense of that word.
In his speech the Minister spoke about the position of the Irish Spruce and the Taoiseach has just referred to it. It seems to be in some kind of never-never land. What is special about the Irish Spruce. What is the legal position of the Irish Spruce? Is it owned by Irish Shipping or why does it deserve special mention in the Minister's speech?
I thought when the Taoiseach came in he would explain to the House the avenues which had been explored by the Government and the Minister in order to avoid a liquidation. For example, was any study made of what the position would be if the company succeeded in disposing of the elaborate and misconceived chartering operation? This is where the complaint which I and other speakers made is highly relevant. Why did the Government not wait for the committee to report? This committee had studied the case of Irish Shipping and had listened to the directors and chairman. It had paid consultants to work hard on this matter. Why was all that thrown to the wind? Why did they not wait a few weeks when the report would have been available to them?
The Minister referred to the value of the punt vis-à-vis the dollar and said it was relevant to what happened. Surely if Irish Shipping transported from the US it was paid in dollars. Surely it was not all one way. How could the weakness of the punt vis-à-vis the dollar have such a deleterious effect?
The Minister referred to this dramatic collapse. That is a pathetic bleat. It was not a dramatic collapse. People knew that the chartering operation would cause trouble. This was known to the Minister a few months ago. When the Taoiseach was speaking he very quietly moved from the position which the Minister had in this House four months ago to the position he has today. He did not explain how the note of quiet optimism which the Minister had four months ago became a mandate for the liquidation of this company. That deserves an explanation to the House. Perhaps that is building on reality — liquidation into reality.
The Labour Party and the workforce deserve the attention of the House. I had a submission from the FWUI and I called the attention of the Labour members of the Government to what they said, that their workers had put so much into this company which was now being allowed to go down the chute. It is hard for members of this union, who have contributed so much over the period of their employment with Irish Shipping, to see the company spiral downwards. When they were putting that submission together — one would think that the Labour Party members would listen to that submission — they did not think that the death of the company was imminent and would be brought about by a Minister in a Government which they support.
The union in their submission talked not merely about the operation of Irish Shipping but also of other allied businesses. They spoke about ship building and the effect of that on workers. Indeed, Fianna Fáil in Government, were fully aware of that when commissioning the Irish Spruce and were criticised for it. They also talked about the repairing of ships and the importance of that industry in employment. They also mentioned other spin-offs.
A number of people mentioned that a receiver could have been sent in and that in a very short time he would have had the benefits of the conclusions which the all party committee would have reached. Deputy Mervyn Taylor said, in a hair splitting exercise, that it would not be possible to do that. You need not call him a receiver, call him an administrator but do not indulge in this kind of precipitate action.
I wish to refer to something that is becoming apparent day after day, the attack on State companies. If one were to look for defenders of State companies one would look to the party of James Connolly. However, they seem to be letting those who are criticising the companies away with all kinds of attacks, a philosophy which is derived directly from a neighbouring country and from a Tory Government which attacked quangos and semi-State companies and wants to privatise across the line. That is their entitlement in their own country, but why should we have to follow that philosophy in regard to semi-State companies, one or two of which were set up in the twenties and the vast majority in the thirties and forties by the late, lamented Seán Lemass? Why should we go on a quango hunt just because it is popular to do so in a neighbouring country? I am asking the Labour Party to consider their position. If they have any shreds of their own philosophy left they will not vote for the liquidation of this company on the basis that no one can have trust in a State company to develop a business and to make a profit. If they do so, they are putting a nail in their own coffin.
Not too long ago there was an article in The Irish Times which said that when Moneypoint was commissioned the amount of money which Irish Shipping could earn by carrying coal to Moneypoint would again put them in the black on their books. What has happened to that consideration? Will other ships be carrying the coal to Moneypoint? Will we have any kind of a fleet to deal with that situation when the time comes? The Irish Spruce is in never never land, but perhaps it can be used for that purpose. Our original thinking in regard to that was related to the development at Moneypoint. I should like the Minister to let us know if the ESB will have to rely on foreign vessels when the time comes.
I want to refer to another aspect of the debate and the speeches which were made from the Government side of the House. Time and time again they have trotted out the figure of £145 million. Watch the papers tomorrow and you will find that that is what the handlers are going to concentrate on. Frighten the people with the large figure. However, the House should not forget that this figure covers a five year period, and unless my judgment is wrong, this Government will not be responsible for part of that period. If you divide £145 by five you will see what they are talking about. They are talking about £29 million per annum, but you must realise that the Minister when speaking today brought his head handlers to condition that people to accepting this scandalous decision by the Government.
I always had a regard for the Labour Party's origins and I thought they would come down hard and fast and object to this kind of thing. I thought they would not condone depriving workers of their livelihood in 24 hours without warning. Our ocean going fleet is being taken from us. As Deputy Lenihan said, God knows what kind of people will pounce now on our ships and God knows who will be taking down the flag wherever our ships come in to harbour. Will we have to depend on our neighbours for ships after this to bring goods to our shores? Maybe the UK Government will let us into NATO, make us part of a large cosy family, deprive us of all freedom of movement and of all transport with which we could control ourselves in any eventuality. I am afraid that is the kind of situation into which we have been pushed by this precipitate and unreasoned attitude of the Government. If they had put their cards on the table, if it had been debated and if we had been defeated on a vote there might be some justification for their modus operandi but there is nothing to be said for their actions. Yesterday there were rumours but the Taoiseach sat there dumbly and the Minister also gave no indication that this bombshell was going to be launched.
I make a final appeal to the party of James Connolly to vote with us against this liquidation, which is only the thin end of the wedge. Every other State enterprise will also be under attack and indeed many are under attack already. Why did the Labour Party not insist that this operation should have been slimmed down? We should pay the bills for the chartering mistake, but let us have an efficient if smaller fleet so that we can be in charge of our own destiny in this area.
There is one main point I should like to have clarified by the Minister when he replies, namely, the claim that has been made by the Government and by Fianna Fáil that nothing was known of the charters in which Irish Shipping was involved. I have been reading the 15th report, dated 3 March 1981, of the Joint Committee on State-Sponsored Bodies which concerned Irish Shipping. That report had an appendix which was a submission from Irish Shipping Limited. In that it was specifically stated that Celtic Bulk Carriers now operate as time charterers of other people's ships, thus adding to the pool of ships available.
The committee's own report which was agreed by them, and presumably subsequently by the Dáil, also states on page 27, under the heading "International Shipping Service":
Irish Shipping also charters-in ships to contribute additional tonnage to the pool, depending on the demands of the market. The latest annual report lists eight such ships on charter to the company.
Are those eight ships included in the nine which the Government are talking about and which have caused this disaster? How is it that nobody knew about them? The claim is being made now that the Minister of the day did not know anything about them, and presumably by extension the Opposition did not know anything about them. This is particularly odd because at the time the members of the committee were the following: Deputies Barry Desmond, Jim Fitzsimons, William Kinneally, Liam Lawlor, William O'Brien, Austin Deasy and Michael Herbert. Some of those Deputies are now Ministers in this Government. Are we talking about the same ships that were reported on in December 1980? The report is dated March 1981 and it states clearly that Celtic Bulk Carriers were involved in the chartering of ships and that eight ships were chartered by Irish Shipping. If they are the same ships, why are the Government and the principal Opposition Party now claiming that they knew nothing about this business in which Irish Shipping was involved? It appears to me there is something of a witch hunt going on. It appears an attempt is being made to put the blame for the disaster in Irish Shipping on someone down along the line, on the head of some unfortunate junior manager, and that various people at the top in Irish Shipping and in Government are trying to wash their hands of this disaster.
The entire handling of this matter has been in itself a disaster. A very strong case has been made here tonight that renegotiation by the Government of the charters involved could have brought about a different result. From reading a number of articles recently on the issue it appears that what the Government may be trying to do is to get out from under the debts and form a new company. If that is so they should let us in on the secret, but if it is not the case they should make a commitment that a new Irish shipping company will be established to protect the strategic interests of this country.
I wish to thank Deputies for having this urgent debate, which I welcome. It may well be that the Deputies opposite would have been better prepared if they had more time and perhaps their contributions could have been more relevant.
Before the Government came to the decision they weighed up very carefully every possible factor that could be thought of as part of the whole problem. Having analysed those problems, any reasonable person in looking at the figures would say there was really little choice. I regret very much that in the main the tone of the contributions from the Opposition benches has been party political. They have sought to make an issue of the question of the creditworthiness of this State. If that were in question their attitude would be highly irresponsible and inimical to the national interest. Fortunately that is not an issue and is not in question. I regret very much that we have an Opposition who see themselves as an alternative Government but who have such scant regard for the national interest as to raise questions and to drum up fears about the creditworthiness of this State.
The Minister is the last person entitled to be sanctimonious. Let us have less of that.
The Taoiseach, the Minister for Finance and I have made clear that this State is and will always meet its legal liabilities. That is a most important fact that must be stated and it must be left beyond any doubt. This problem arose in a period before I came to office and I inherited the problem.
Pontius Pilate.
I have said that my belief, understanding and knowledge is that none of my predecessors was made aware of this until Deputy Wilson was made aware that there was a problem in the latter part of 1982. It is fair to say that the scale of the problem was not brought to his attention, nor was the scale of problem even remotely understood at that stage. I make that clear to put the debate in perspective. There has been a recklessly political contribution from the Opposition which I regret. If we did not have the debate tonight and if the Opposition had had more time to reflect and prepare I am sure they would not have made their contributions in that way.
The Minister said that already.
Good advice is always worth giving again.
He is not entitled to give sermons.
He is entitled to give the Deputy good advice.
(Interruptions.)
A number of erroneous figures have been used in the debate and I wish to deal with some of them because it is important to put the facts on record. Deputy Mac Giolla raised the question of 1,300 employees losing their jobs. I have the highest regard for Deputy Mac Giolla who shares a constituency with me as does Deputy Lenihan. I have always respect for what Deputy Mac Giolla has to say.
Oh, come on.
(Interruptions.)
What Deputy Mac Giolla has to say usually has attached to it a certain credibility, but in this case he is wrong. It is not 1,300 employees. The entire Irish Shipping group employ about 854 people of whom 380 are in Irish Shipping Limited. I can give more details in the breakdown. The rest of the employees, 290 or thereabouts, are employed by Irish Continental Lines and 180 are employed by Belfast Car Ferries. If Deputies would wish for a more detailed breakdown of that——
No, tell us what is going to happen to them.
(Interruptions.)
It is important that Deputies understand the facts. Certain figures have been used here this evening which are not factual and it would be wrong if people were to run off with the wrong figures. It is important that there is an understanding of the figures. As I said, the number of employees is 854. The number employed in Irish Shipping is 380 and that is the only thing that is in question today.
It puts them in jeopardy too.
I hope that it might be possible for the provisional liquidator to save some of those jobs in some respects. Not all of those people are directly employed on the ships and there are other aspects of this, so I hope that as many of those 380 jobs as possible can be saved. In relation to the jobs in the subsidiary companies, it is unlikely that any of those jobs will be threatened. The probability is that those jobs will be kept. It is important that that point be gone into.
On the question of the number of ships involved and which ships, there are 12 ships at the moment in the Irish Shipping fleet. Seven of those are chartered-in ships, all foreign crewed and foreign owned ships. There are five other ships, the Celtic Venture and the Slaney Venture, the other two charter ships of the nine of which we are speaking, were purchased as part of the renegotiated deal entered into at the beginning of this year. They are also foreign crewed. The Irish Cedar and Irish Rowan are wholly owned by Irish Shipping and fully Irish crewed. The Irish Spruce is in a special category and also fully crewed by Irishmen. The situation of the Irish Spruce is special. Deputies opposite will know that arrangements were made whereby this ship would be built in Cork at a cost greatly in excess of what it could be built for elsewhere at the time, and because of that it was agreed that the Exchequer through the funding of the Department of Industry, Trade, Commerce and Tourism and the Vote of my Department between the would bear three-quarters of the leasing cost of the Irish Spruce. However, the Irish Spruce does not belong to Irish Shipping, it blongs to the leasing company. That is why it is in a special category and remains to be considered further, as I said in my speech in the Dáil at 5 o'clock this evening.
I thought that in my statement at 5 p.m. today I made as clear as possible what the financial position is. Let me recall the figures given in my statement then. As we understand it, the total liability of Irish Shipping stands at £117 million of which £39 million is guaranteed. Of course, there are assets the value of which is not in judgment at this stage and will be realised only when the liquidator does whatever he sees fit to do, so we cannot be absolutely certain about the value of the assets. That will become more manifest in time. Of its nature it is an estimate. That is the overall position. Deputy Wilson is a teacher. I do not think he teaches mathematics but I am sure he can do that sum.
I will produce the honours.
You have been getting some of the sums wrong recently.
What are the assets?
You cannot get hold of the assets.
What are they?
They are in boats all over the world. You do not know where they are.
I can tell the Deputy this minute or before we are finished.
Strike the Irish flag first.
I want to take up some of the questions of the Deputies who spoke in this debate. Deputy Flynn is now present. He raised a question cum allegation that the Department of Finance officials recommended against the course of action now proposed by the Government. I say emphatically that that is untrue, and it is a pity that allegations or suggestions of an unsubstantiated sort like that should be made in the House on such a serious subject.
It is only backstairs tittle-tattle. Do not pay any attention to that.
(Interruptions.)
Quite a number of Deputies opposite raised the question, why not leave it for another few weeks until the committee reported? I want to assure the House and the committee particularly that no discourtesy whatever was intended to the committee, and I am sure they will understand that the Government moved when they did because they simply had to.
Why?
As referred to by the Taoiseach in his speech, in effect the date by which a decision had to be made one way or the other was 20 November which is next Tuesday.
Why?
Because very substantial debts accrued to be paid a few days thereafter which, of course, Irish Shipping Limited had no funds to meet. Once they reach the position where they cannot meet their debts as they occur they are in a liquidation situation.
The Government are running the country like a pawnshop.
Fianna Fáil put it in hock. The Deputy is a fine man to talk about a pawnshop.
The Coalition made the position three times worse.
The Minister is only passing time. Let us get on with the vote.
The Minister is faltering.
If Deputies opposite ceased interrupting the flow would be even.
Is Deputy Woods master in his own House?
The Minister is only passing time and we should get on with the vote.
Put Deputy Sheehan in.
I am trying to answer points raised by Deputies opposite in the debate that they requested. The fact is that if there had not been a move a different type of liquidation might have taken place. The decision was necessary because it was intimated to me that 20 November was the latest date by which the board required a decision. I hope that makes that position clear.
The question of renegotiation was raised by a number of Members as if no renegotiation had already taken place. Renegotiation started in an informal way a few days before Christmas last year and in a more formal manner in the first few days of this year. As a result of those discussions, on 31 January last the board came to me with a proposed package. Among other things that package was based on certain assumptions. It assumed what was considered to be a modest recovery in tramp shipping rates of 35 per cent per annum for two years. It assumed no great deterioration in the exchange rates between the punt and the dollar. It assumed no great increase in interest rates. On the basis of those assumptions it was suggested that Irish Shipping could manage with a guarantee of £4.063 million for this year against losses and for the next year with a guarantee of £8.19 million. In addition there was the guarantee against the purchase of two ships, the Slaney Venture and the Celtic Venture of $12.5 million.
I should like to make it clear, in response to points raised by Deputy Wilson, that the problems of the exchange rate and interest rates are only a small part of the overall position but they did add detrimentally to the picture. While what Deputy Wilson said may be true, and a lot of the receipts received by Irish Shipping were in US dollars, the fact is that most of the repayments are in US dollars. Those repayments are a great deal larger with the result that the fluctuation in exchange rates between the punt and the dollar had some effect but I do not wish to over-state it. The main problem was tramp shipping rates. The 35 per cent increase in tramp shipping rates which was given as a conservative estimate never materialised with the result that the situation was worse than expected. That is how the deterioration occurred.
In the report in front of us there is a projection based on the very best international shipbroking advice we can get that tramp shipping rates over each of the next five years are hardly likely to grow from a very low level by more than 8 per cent per annum. There is a view that even that projection of 8 per cent is on the optimistic side but it must be said that it may be pessimistic. Deputies will appreciate that given that scenario the sheer magnitude of the figures facing us were such that no Government, Minister or board appointed by him, could authorise the undertaking of these commitments. It would be incomprehensible to load that type of liability on to the backs of an already hard pressed taxpayer.
I was asked today what the effect of a 1 per cent fluctuation would be. The fact is that for every 1 per cent deviation one would get a £200,000 difference, an insignificant amount per annum. In other words, plus 10 per cent would be £2 million less and minus 10 per cent would mean a £2 million greater debt. We would have needed a much greater annual increase in tramp shipping rates to give this company any hope of being viable in the future.
I regret, as I am sure all Members do, the events that climaxed today. It is a sad day and particularly so for those workers in Irish Shipping who may be without jobs or whose jobs are at least under very serious threat.
Why is it that the Minister did not wait until the all-party committee reported?
I have already answered that question.
Because the payment date would have been gone by then.
£42 million could have bought half of the fleet——
I have already dealt with that point. It is only fair to say that the problems in Irish Shipping were not any fault of the workers. Irish Shipping had a very good industrial relations record in general. Deputy Wilson made a point about State enterprises. I should like to make it clear that the Government are very committed to State enterprises.
(Interruptions.)
Fifteen years profit in a row and the Government let them go.
The people will collapse in the aisles laughing.
The difference between us is that we want a viable and efficient State enterprise.
(Interruptions.)
Deputies opposite should ask Deputies O'Malley and Séamus Brennan what they have been saying for the last few weeks about semi-State companies. Deputies should read the article in The Sunday Tribune.
Why buy two ships for an amount of money that could buy half of the ships available. A total of £42 million of taxpayers' money was paid for two ships and the Government could have bought half of the ships around the world for that amount.
Deputies should cease interrupting. The Minister has but one minute left.
(Interruptions.)
I must have order on all sides of the House.
Deputy Reynolds is now cribbing about the last renegotiation but a short time ago he asked why we did not enter into a second renegotiation.
The Government never told us the result of the first renegotiation. The Government spent £42 million and could not wait until the all-party committee reported to try to help them get out of the problem.
(Interruptions.)
If Deputies are taking this matter seriously they should listen to the Minister and permit him to conclude.
There are Members on the Government side who are lawyers who told us that the directors could not appoint a receiver.
As I was saying, it is important to this country that we have an efficient, effective and accountable State enterprise. I do hope we will profit from this awful experience in that the rest of our State enterprises will become more efficient, viable and lasting, providing very much needed employment.
Where are the ships I asked about?
Amendment put.
The Dáil divided: Tá, 75; Níl, 67.
Tá
- Allen, Bernard.
- Barnes, Monica.
- Barrett, Seán.
- Barry, Myra.
- Begley, Michael.
- Bell, Michael.
- Bermingham, Joe.
- Birmingham, George Martin.
- Boland, John.
- Bruton, Richard.
- Carey, Donal.
- Collins, Edward.
- Conlon, John F.
- Connaughton, Paul.
- Coogan, Fintan.
- Conney, Patrick Mark.
- Cosgrave, Liam T.
- Cosgrave, Michael Joe.
- Coveney, Hugh.
- Creed, Donal.
- Crotty, Kieran.
- Crowley, Frank.
- D'Arcy, Michael.
- Deasy, Martin Austin.
- Desmond, Barry.
- Desmond, Eileen.
- Donnellan, John.
- Dowling, Dick.
- Doyle, Avril.
- Doyle, Joe.
- Dukes, Alan.
- Durkan, Bernard J.
- Enright, Thomas W.
- Farrelly, John V.
- Fennell, Nuala.
- FitzGerald, Garret.
- Flaherty, Mary.
- Flanagan, Oliver J.
- Glenn, Alice.
- Griffin, Brendan.
- Harte, Patrick D.
- Hegarty, Paddy.
- Hussey, Gemma.
- Kavanagh, Liam.
- Keating, Michael.
- Kelly, John.
- Kenny, Enda.
- McGahon, Brendan.
- McGinley, Dinny.
- Manning, Maurice.
- Mitchell, Gay.
- Mitchell, Jim.
- Molony, David.
- Moynihan, Michael.
- Naughten, Liam.
- Nealon, Ted.
- Noonan, Michael.
- (Limerick East).
- O'Brien, Willie.
- O'Leary, Michael.
- O'Sullivan, Toddy.
- O'Toole, Paddy.
- Owen, Nora.
- Pattison, Séamus.
- Prendergast, Frank.
- Quinn, Ruairí.
- Ryan, John.
- Shatter, Alan.
- Sheehan, Patrick Joseph.
- Skelly, Liam.
- Spring, Dick.
- Taylor, Mervyn.
- Taylor-Quinn, Madeline.
- Timmins, Godfrey.
- Treacy, Seán.
- Yates, Ivan.
Níl
- Ahern, Bertie.
- Ahern, Michael.
- Andrews, David.
- Aylward, Liam.
- Barrett, Michael.
- Brady, Gerard.
- Brady, Vincent.
- Brennan, Mattie.
- Brennan, Paudge.
- Brennan, Séamus.
- Burke, Raphael P.
- Byrne, Hugh.
- Byrne, Seán.
- Calleary, Seán.
- Collins, Gerard.
- Conaghan, Hugh.
- Connolly, Ger.
- Coughlan, Cathal Seán.
- Cowen, Brian.
- Daly, Brendan.
- De Rossa, Proinsias.
- Fahey, Francis.
- Fahey, Jackie.
- Faulkner, Pádraig.
- Fitzgerald, Liam Joseph.
- Flynn, Pádraig.
- Foley, Denis.
- Gallagher, Denis.
- Gallagher, Pat Cope.
- Geoghegan-Quinn, Máire.
- Gregory-Independent, Tony.
- Harney, Mary.
- Haughey, Charles J.
- Hyland, Liam.
- Kirk, Séamus.
- Kitt, Michael.
- Lenihan, Brian.
- Leonard, Jimmy.
- Leonard, Tom.
- Leyden, Terry.
- Lyons, Denis.
- McCarthy, Seán.
- McCreevy, Charlie.
- McEllistrim, Tom.
- Mac Giolla, Tomás.
- Molloy, Robert.
- Morley, P. J.
- Moynihan, Donal.
- Nolan, M. J.
- Noonan, Michael J.
- (Limerick West).
- O'Connell, John.
- O'Dea, William.
- O'Hanlon, Rory.
- O'Kennedy, Michael.
- O'Leary, John.
- Ormonde, Donal.
- O'Rourke, Mary.
- Power, Paddy.
- Reynolds, Albert.
- Treacy, Noel.
- Tunney, Jim.
- Wallace, Dan.
- Walsh, Joe.
- Walsh, Seán.
- Wilson, John P.
- Woods, Michael.
- Wyse, Pearse.
Tellers: Tá, Deputies Barrett(Dún Laoghaire) and Taylor; Níl, Deputies V. Brady and Barrett (Dublin North-West).
Amendment declared carried.
Question put: "That the motion, as amended, be agreed".
The Dáil divided: Tá, 75; Níl, 67.
Tá
- Allen, Bernard.
- Barnes, Monica.
- Barrett, Seán.
- Barry, Myra.
- Begley, Michael.
- Bell, Michael.
- Bermingham, Joe.
- Birmingham, George Martin.
- Boland, John.
- Bruton, John.
- Bruton, Richard.
- Carey, Donal.
- Collins, Edward.
- Conlon, John F.
- Doyle, Avril.
- Doyle, Joe.
- Dukes, Alan.
- Durkan, Bernard J.
- Enright, Thomas W.
- Farrelly, John V.
- Fennell, Nuala.
- FitzGerald, Garret.
- Flaherty, Mary.
- Flanagan, Oliver J.
- Glenn, Alice.
- Griffin, Brendan.
- Harte, Patrick D.
- Hegarty, Paddy.
- Hussey, Gemma.
- Kavanagh, Liam.
- Keating, Michael.
- Kelly, John.
- Kenny, Enda.
- McGahon, Brendan.
- McGinley, Dinny.
- Manning, Maurice.
- Mitchell, Gay.
- Mitchell, Jim.
- Connaughton, Paul.
- Coogan, Fintan.
- Cooney, Patrick Mark.
- Cosgrave, Liam T.
- Cosgrave, Michael Joe.
- Coveney, Hugh.
- Creed, Donal.
- Crotty, Kieran.
- Crowley, Frank.
- D'Arcy, Michael.
- Deasy, Martin Austin.
- Desmond, Eileen.
- Donnellan, John.
- Dowling, Dick.
- Molony, David.
- Moynihan, Michael.
- Naughten, Liam.
- Nealon, Ted.
- Noonan, Michael.
- (Limerick East).
- O'Brien, Willie.
- O'Leary, Michael.
- O'Sullivan, Toddy.
- O'Toole, Paddy.
- Owen, Nora.
- Pattison, Séamus.
- Prendergast, Frank.
- Quinn, Ruairí.
- Ryan, John.
- Shatter, Alan.
- Sheehan, Patrick Joseph.
- Skelly, Liam.
- Spring, Dick.
- Taylor, Mervyn.
- Taylor-Quinn, Madeline.
- Timmins, Godfrey.
- Treacy, Seán.
- Yates, Ivan.
Níl
- Ahern, Bertie.
- Ahern, Michael.
- Andrews, David.
- Aylward, Liam.
- Barrett, Michael.
- Brady, Gerard.
- Brady, Vincent.
- Brennan, Mattie.
- Brennan, Paudge.
- Brennan, Séamus.
- Burke, Raphael P.
- Byrne, Hugh.
- Byrne, Seán.
- Calleary, Seán.
- Collins, Gerard.
- Conaghan, Hugh.
- Connolly, Ger.
- Coughlan, Cathal Seán.
- Cowen, Brian.
- Daly, Brendan.
- De Rossa, Proinsias.
- Fahey, Francis.
- Fahey, Jackie.
- Faulkner, Pádraig.
- Fitzgerald, Liam Joseph.
- Flynn, Pádraig.
- Foley, Denis.
- Gallagher, Denis.
- Gallagher, Pat Cope.
- Geoghegan-Quinn, Máire.
- Gregory-Independent, Tony.
- Wallace, Dan.
- Walsh, Joe.
- Walsh, Seán.
- Harney, Mary.
- Haughey, Charles J.
- Hyland, Liam.
- Kirk, Séamus.
- Kitt, Michael.
- Lenihan, Brian.
- Leonard, Jimmy.
- Leonard, Tom.
- Leyden, Terry.
- Lyons, Denis.
- McCarthy, Seán.
- McCreevy, Charlie.
- McEllistrim, Tom.
- Mac Giolla, Tomás.
- Molloy, Robert.
- Morley, P. J.
- Moynihan, Donal.
- Nolan, M. J.
- Noonan, Michael J.
- (Limerick West).
- O'Connell, John.
- O'Dea, William.
- O'Hanlon, Rory.
- O'Kennedy, Michael.
- O'Leary, John.
- Ormonde, Donal.
- O'Rourke, Mary.
- Power, Paddy.
- Reynolds, Albert.
- Treacy, Noel.
- Tunney, Jim.
- Wilson, John P.
- Woods, Michael.
- Wyse, Pearse.
Tellers: Tá, Deputies Barrett(Dún Laoghaire) and Taylor; Níl, Deputies V. Brady and Barrett (Dublin North-West).
Question declared carried.
The Dáil adjourned at 11 p.m. until 10.30 a.m. on Thursday, 15 November 1984.