Dáil Éireann díospóireacht -
Tuesday, 10 Dec 1985

Vol. 362 No. 9

Private Members' Business. - Joint Committee on Commercial State-Sponsored Bodies — Orders of Reference: Motion.

Minister for Industry, Trade, Commerce and Tourism (Mr. J. Bruton): I

move:

That paragraph 1 of the Orders of Reference of the Joint Committee on Commercial State-Sponsored Bodies, constituted pursuant to the Order of Dáil Éireann of 21st June, 1983, and the Order of Seanad Éireann of 29th June, 1983, be amended by the deletion of all words after ‘Bodies') where it first occurs and the substitution therefor of the following:—

‘to examine—

(a) the Reports and Accounts and overall operational results, and

(b) in the light of the reports published pursuant to sub-paragraph (a), the common issues relating to Board responsibility, structure and organisation, accountability and financing, together with the relationship with central Government and the Houses of the Oireachtas

of State-Sponsored Bodies engaged in trading or commercial activities referred to in the Schedule hereto and to report thereon to both Houses of the Oireachtas and to make recommendations where appropriate.'.

This motion broadens the terms of reference of the Joint Committee on Commercial State-Sponsored Bodies. At the moment essentially the committee look at each individual State body and make individual recommendations about these State bodies. This is, of course, a very useful and practical activity. It is an activity which has been conducted for quite some time now by the present and previous committees. In the course of that work they have accumulated, in the view of the Government, a number of useful ideas about the general management of State bodies as a whole, as distinct from the particular recommendations that they made about the individual bodies on which they produced special reports. That is why we are proposing in this motion to expand their terms of reference to allow them to examine the reports and accounts and overall operation results of bodies and, in the light of these reports, to examine also issues common to a variety of or more than one State body, relating to board responsibility, structure and organisation, accountability and financing, together with the relationship with central Government and the Houses of the Oireachtas.

The motion before the House follows on a commitment by the Government in the White Paper on Industrial Policy published last year to expand the orders of reference of the Joint Committee on Commercial State-Sponsored Bodies. This, in turn, is part of an overall desire by the Government that the commercial State bodies, which have been subject to growing criticism in recent years for a variety of reasons, should once again reestablish themselves as a source of commercial and entrepreneurial innovation in our industrial and economic development.

In view of the diversity of their activities and the varying reasons for their incorporation into the State sector, in the first place, there is a need to devote serious attention to the development of a properly structured relationship between the State bodies and central Government.

There are many reasons for the overall poor financial position of the commercial State bodies. While these bodies have, like other sectors, felt the effects of recession and adverse cost movements, other factors, sometimes unique to State enterprises, have led to the present situation. Such factors, which are unique to State enterprise, identified in the White Paper, include:

(1) lack of clarity in objectives and confusion between commercial, social or strategic roles, particularly where questions of closures or cessation of operations arise;

(2) the imposition of non-commercial obligations or arbitary tax and price adjustments on products or services provided by State bodies;

(3) inadequate surveillance and control in relation to matters such as major capital projects and refinancing;

(4) an expectation by boards, management and employees that the Government would be obliged in practice to bail out various enterprises and honour their debts, and that market disciplines which apply to non-State owned companies would not apply;

(5) under-capitalisation and excessive reliance on guaranteed borrowing rather than equity; and

(6) lack of capacity to adapt quickly enough away from wrong product or market situations.

The White Paper detailed a number of measures, which have now been introduced, aimed at improving the commercial performance of the State bodies. Corporate planning has been introduced to ensure that the bodies become commercially oriented. They have been directed to draw up five year rolling corporate plans in respect of their activities. These plans are designed to provide an outline of corporate objectives, the strategies which are being adopted and the detailed programmes to achieve these objectives. In addition, projected profit and loss accounts, balance sheets, cash flow statements, production targets and cost reduction programmes will be required on an annual basis.

Central Government have improved the monitoring of the State bodies. New reporting arrangements have been devised whereby the relevant Minister will regularly review the performance of each body with emphasis on financial and trading particulars, production levels and actual performance as against targets.

Measures have been introduced to prevent a repeat of the cost overruns of recent years by more intensive monitoring and control of investments and a more systematic approach is being adopted in appraising capital projects. In addition, improved project management techniques are being applied. Appointments to boards of State companies will reflect the type of skills and expertise required by each body, and board members will also have their role and responsibilities more clearly defined.

Essentially, we must achieve a balance between the legitimate freedom of the bodies to pursue their operations within a commercial framework and the control necessary to safeguard the interests of the public to whom they are ultimately responsible.

The Oireachtas has a legislative role relating to the formal establishment of nearly all of the commercial State-sponsored bodies and the Minister responsible are answerable to the Oireachtas for the overall policies and operations of the bodies. The establishment of the first Oireachtas Joint Committee on State-Sponsored Bodies in 1976 was one of the most significant developments in recent years as far as increased control and review of the commercial State-sponsored bodies by the Oireachtas were concerned. It heralded an increasing awareness on the part of the Houses of the Oireachtas of the activities of the State bodies.

The original committee, which produced 18 reports on individual bodies before lapsing in 1981, played a very useful role in provoking both public and parliamentary interest and debate on the State-sponsored sector. However, the terms of reference of that committee, as in the case of the present committee on commercial State-sponsored bodies, restricted the role of the committee to an examination of the past performance of State bodies. Moreover, the committee had to concentrate on specific bodies, essentially on their activities and financial results. Because of the terms of reference, very little attention was given to broader areas affecting the role of these bodies as a whole.

As part of their general review of the commercial State bodies, the Government decided that the committee's mandate should be extended to enable the committee to bring their experience to bear in a more constructive manner. The extended terms of reference as proposed by this motion, will empower the committee to examine the common issues relating to board responsibility, the structure and organisation, accountability and financing and relationship with central Government and the Oireachtas of the commercial State bodies. While I would not like to pre-empt the committee in their new task, the fact that the Oireachtas establishes these bodies places on it the responsibility for ensuring that the founding legislation for these bodies is clear, concise and unambiguous.

I would like to take this opportunity to thank the committee for their work to date which, I believe, will be even more valuable and constructive with this extension to the committee's terms of reference. Accordingly, I commend these changes to the House.

Mr. Flynn

In so far as it goes, I do not think that anybody could object to the implementation of what the Minister is suggesting in the extension of the powers of the Oireachtas Joint Committee on Commercial State-Sponsored Bodies. In effect, his introductory speech is really a paraphrasing of section 11 of the industrial policy as published in July 1984. The aims set out there as regards getting good value for funds invested in this type of operation are, of course, to be welcomed. It is justifiable that every effort should be made on the part of the Minister and his Department to get full value in difficult circumstances for the taxpayers' money which is invested in these State bodies. However, it would not be remiss at this time to make some comment as to how the Joint Committee on Commercial State-Sponsored Bodies have been functioning to date, and if the Minister's good wishes for the committee are fully justified in the outcome since the committee began to meet in 1983 and, indeed, since the original committee started making their reports back in 1976.

The Oireachtas Joint Committee since 1983 have been examining reports and accounts and operational results of some of the State-sponsored bodies named in the schedules. I would have to ask the Minister if he is satisfied at this time that the published recommendations of that committee have had any real worthwhile bearing either on Government policy or on thinking in so far as investment is concerned. The extraordinary thing is that even up to 1981 some 18 carefully compiled reports on various State-sponsored bodies were placed in the Library of the House, but I cannot remember any of these having been debated here. That is a sad reflection on a committee of such standing as the Oireachtas Joint Committee on Commercial State-Sponsored Bodies. We are dealing with an enormous arm of Government expending enormous volumes of public finance in selected areas, yet the reports and recommendations are gathering dust in some Minister's office.

While one can express a wish that the committee should continue to look in depth at what is being done on our behalf, at the same time I wonder what the end result has been over the past few years. The Minister does not sound convincing. He could have insisted that these reports be placed on the agenda of the House but he has not chosen as yet to do anything about that. Since he is changing the orders of reference to accommodate, as I understand it, section 11 (5) of his White Paper on Industrial Policy, the committee will be enabled to carry out a general review of commercial State-Sponsored bodies and will be empowered to deal with the common problems of commercial semi-State bodies in a global way. That is to be welcomed but I would suggest that these difficulties and problems encountered by these bodies have already been identified in his own document in section 11 (2) and they are reiterated in the Minister's contribution. If he has already identified the problems, I fail to see why we are to have fresh orders to enable the committee to deal with them at great length.

The Minister identifies the problem as lack of clarity of objectives, non-commercial obligations of commercial State companies, inadequate surveillance and the expection that Government will bail out the lame ducks who are not matching up to what would be regarded as normal market forces, as well as the under-capitalisation of these semi-State companies. These factors have all been identified in the past and I do not know whether it is necessary at this time to give fresh orders to the committee to carry out an in-depth investigation into common problems which bedevil them all. The Minister's paper on industrial policy and his speech have outlined all these problems in a general way. I cannot see that the work of the committee in the past few years has done anything to tackle any of the problems mentioned in the White Paper and reiterated in the Minister's speech. The whole thing would seem to be some kind of charade. The Minister talks about Dáil reform and one would have expected him to follow through on his own recommendations by giving the House on opportunity to discuss the recommendations which are already in a pigeon hole in his Department.

I have been taking note of some of the reports emanating from this committee. A lot of newspaper headlines have been made by certain individuals to their own benefits.

Mr. J. Bruton

Not on this committee.

Mr. Flynn

They were certainly out of context in criticising certain individuals for doing their best and for very small money — I refer now to some of the directors who are getting less than £800. They have come in for severe pasting by some of the more vocal members of the committee. If they keep up that attitude towards people who have made their services available at virtually no cost and at much risk to their own reputations, we might end up not having such numbers of suitable people to go on State boards.

I took particular note of reports recently which indicated the knocking of some civil servants who have attended and given evidence at the investigations. I take exception to civil servants and some of the people involved in semi-State bodies being ridiculed by the committee for policy decisions with which they had nothing to do. It is not fair that this committee should continue on its way unchecked in making criticisms of individuals who are not responsible for enunciating the policy under which they operate. Ministers take responsibility in that area and Ministers should answer for it. I know the Minister present is not afraid to answer for anything but a certain amount of latitude has been given to this committee in making hard, knocking attacks on civil servants and directors who are not responsible for the difficulties which have arisen in some of these companies. They cannot answer for the policies set down by Government and Ministers. The Minister should monitor it and if he is satisfied, then he is the one who should have to answer for it. Certainly he should not leave the onus of responsibility on these defenceless individuals who, under their terms of appointment, cannot answer on policy.

A fine indication of that point was the refusal of the Department of Energy to appear before this committee. They threw down the gauntlet to the Minister and he did not pick it up. Many other Departments and some Ministers did turn up and took whatever medicine was meted out to them. The Department of Energy refused to send anybody to answer because they said they were not responsible for policy as enunciated by their Minister. The Minister for Industry, Trade, Commerce and Tourism did not insist on the Department of Energy sending in their troops and they turned their noses up at the committee. I believe it was an answer to the sensational headline seekers that live on that committee, who have been making some little headway in enhancing their own reputations.

The Minister refers in his speech to the future policies to be adopted by commercial semi-State bodies. He lays great emphasis on adequate corporate planning by these entities. They are to set down guidelines and budgets, give a better view of their objectives and production targets. All of this is to be incorporated in a nice five-year corporate plan. What is the point in having a corporate plan if that plan is not available to the committee? How can the committee make a proper assessment of what a semi-State body is about or going to be about if they have not access to the corporate plan? What yardstick are they to use? It is nonsense to ask the committee to carry out in-depth investigations into the common ailments of all these bodies when they are not being given an opportunity to look at these five-year corporate plans.

We understand there has been an improvement in the monitoring by central Government of the effectiveness of some of these semi-State bodies. The objectives were to be published and judgments made on the efficiency of these bodies. I cannot remember the Minister ever publishing his objectives in regard to these bodies, what he thought of the efficiency of the objectives and how they were being maintained or attained.

The Minister also referred to strengthening the boards of semi-State organisations. I understand that a Cabinet subcommittee were dealing with that, including the Minister's colleagues in Finance, Energy, Communications and Labour. If that high powered Cabinet sub-committee have been dealing with the question of strengthening the boards of semi-State commercial enterprises, why then is there a need for all this waffle about ongoing monitoring? The Government decide policy and they have been examining the appointments to make sure that only the finest and best "Fine Gaelers" will be appointed to these boards. Since the Government took office on 14 December 1982, no Fianna Fáil man has been appointed to a board.

Mr. J. Bruton

We reappointed people from the Deputy's county.

Mr. Flynn

The only difference is that the people from my county are special.

Mr. J. Bruton

I agree.

Mr. Flynn

If we could send you ten Monsignor Horans we would fix the Government.

Minister for Health (Mr. B. Desmond)

"Special" is right.

Mr. Flynn

Monsignor Horan has the Minister's measure. Anyway, they are softening up the Minister's image on RTE and it is nice to see him in such a convivial atmosphere doing his own thing. As I was saying, a high powered committee were sitting to examine this and I would have thought that under the Minister's chairmanship they would have been able to tackle any problem——

Mr. J. Bruton

That is only about appointments.

Mr. Flynn

Is the Minister suggesting that when the committee were talking about appointments the general thrust of commercial semi-State bodies was not discussed?

Mr. J. Bruton

That is a separate question.

Mr. Flynn

It is not separate as I know well. When people on a committee talk about appointments they also talk about the health of the organisations to which they are making the appointments. With regard to the appraisal of capital projects, the Minister has certainly done something in that regard, he has made sure that they do not get any extra capital for anything they want to do.

It has also been suggested that the Minister should publish the annual accounts of commercial State bodies within six months of the accounting period. Could the Minister say how that is being complied with? I heard the Minister and some of his colleagues promoting that line over a number of years and surely the one way in which politicians and others can have an in-depth look at the workings and efficiency of any commercial State body is to see their annual report and accounts? If the Minister could have the element of industrial policy as outlined in a document in July 1984 implemented he would be going down the road towards reform. Following that, if he arranged in his programme for Dáil reform to have those reports and the monitoring from both his Department and the Cabinet sub-committee discussed in the House we would all have an idea of how efficient commercial State bodies are. However, that is not happening and while I obviously cannot oppose the change in the orders of references simply because it makes it possible for the committee to have a general look at the ailments affecting our commercial State bodies, at the same time I must remind the Minister that he already has that power. He has isolated the ailments which affect them but he has done nothing about it in the last two years. I am not satisfied that the committee have been doing anything apart from some individuals making hay in the publicity stakes. Nothing has happened to the reports or the recommendations and I await the next step in the Dail reform process in regard to that matter.

Minister for Industry, Trade, Commerce and Tourism (Mr. J. Bruton)

I congratulate Deputy Flynn on a very good speech. It was up to his very best standards and I will try to deal with the points he made. He probably thought that this motion would do much more than was intended and when it did not provide an answer to all the problems he was able to feign disappointment in a very eloquent fashion. However, I will try to deal with the rather overblown pretensions which he has set for the committee.

Essentially, the committee's terms of reference are simply being extended to facilitate them in making a general observation on State bodies as a whole if they want to. We are not giving the committee this power because we insist that they must use it or because we insist that if they do not there will be dire consequences for the State sector. It is simply a facility given to the committee which was omitted when the terms of reference were originally drawn up. At that stage they were confined to making individual reports and prevented from making general observations. That gap has been filled by this motion; it is nothing more grandiose than that. While there is much validity in what Deputy Flynn said in general terms, the motion is not the place in which he should expect to find an answer to all the points he raised.

Deputy Flynn made a valid point when he said that the reports of this committee have not, generally speaking, been debated in the House. I admit that I am disappointed that we have not made more progress in providing time each week or every two weeks for debating reports. This does not apply only to committees of the House, if you look down the Order Paper any day you will see that 15 to 30 documents have been laid before the House under some statute or other. They are supposed to be for our information and there is no procedure whereby these may be debated. Obviously, 90 per cent of them are not worth debating because they are repetitive documents containing information which was presented last year or the year before that. However, there is a case for providing an hour or two each week whereby Members could select some of these reports and debate them. It could include reports of some of the committees of the House although not every report of every committee needs to be debated. The report probably speaks for itself and an additional debate would not add all that much.

The problem — I might as well admit it — is that the Government's legislative programme is fairly full at present and it is difficult to find time between the traditional sitting hours of 2.30 p.m. on Tuesdays to 5 p.m. on Thursdays. To provide additional time for debating reports we would have to extend the sitting week. We have proposals in hand to extend the sitting week, at least on six Fridays, to include Private Members' Bills. We could also extend the time to deal with some of these reports. Of course, if the Government extend the time they are obliged to provide a quorum and we have seen the problems which have arisen in that regard in the recent debate, a subject of great interest. Even then there was difficulty in providing a quorum and the attendance on Deputy Flynn's side of the House was not exceptional. I am not trying to make a party point. There is a difficulty in getting quorums on Fridays. Thus, we are faced with having the House sit at 12 o'clock on Tuesdays or earlier than it normally sits. I know that Deputy Flynn would then complain he would not be able to get here in time from Castlebar. There are problems of time in having these debates. However, I must acknowledge that Deputy Flynn has made a valid point and it is a matter we shall have to consider.

The Deputy said the committee were not able to get corporate plans. That arose in the case of Irish Shipping but there has not been a general Government decision to deny corporate plans to the committee.

Mr. Flynn

Have all the bodies been mandated to prepare them?

Mr. J. Bruton

Yes.

Mr. Flynn

That is the point. Ministers had the plans and the committee should have got them also.

Mr. J. Bruton

I have only three State bodies under my aegis. It is a matter of pragmatic judgment. To take an example, NET are in competition with many other fertiliser manufacturers and if they had to provide their corporate plan to the committee it would be tantamount to publishing it and that might not be the wisest thing from their point of view.

Mr. Flynn

Section 3 of the orders of reference ensure that it may not be published. The option is there. If the committee are requested not to make known confidential information to competitors they have the option to accede to that request.

Mr. J. Bruton

That facility is worthwhile.

Mr. Flynn

Is it possible to assess the efficiency of a board if one does not know the corporate plans?

Mr. J. Bruton

There would be difficulty in doing that. On the other hand, there are aspects of the efficiency of a board that one could assess. I accept it may not be possible to do a complete job but it is possible to make as much assessment as is relevant in many cases.

Deputy Flynn made a valid point about a grand-stand type of criticism of directors by members of committees. It is true that we are getting extremely good value from part-time directors. The fee is £800 a year. The people concerned are providing high quality services and it is not fair to criticise them too severely. It would be desirable if we paid them a good deal more. If fees had kept in line with inflation the part-time directors would now receive five times as much as they are getting. I am glad to tell the House that the Minister for the Public Service has instituted an in-depth review of the remumeration of part time directors to State companies. I am not in a position to say what decision will be taken but the matter has been considered and the study is now completed. There is a recognition of the point made by Deputy Flynn. This is a matter that has been allowed to drag on by successive Governments——

Mr. Flynn

The Minister has got his headline for tomorrow. it will be, "State directors to be paid more money".

Mr. J. Bruton

That remains to be seen. We must wait and see what decision has been taken. This matter was allowed to drag on for years by successive Governments. Fees were kept at their original cash value and were not adjusted in line with inflation. At least this Government have undertaken a serious study of the matter, something that was not done before. I dispute with Deputy Flynn the inference — I do not think he meant it — that all appointments to State boards by this Government have been of people of one particular political persuasion. That has not been the case as far as I am aware. I have tried to appoint people on the basis of ability——

Mr. Flynn

It is no burden if they happen to be Fine Gael people.

Mr. J. Bruton

One could have an argument about that. To the extent that State board representatives represent the Government, a certain understanding of the Government's political objectives is not something that is a disqualifying factor. There is a legitimate argument for it. I never criticised the party opposite when they were in Government for appointing people who were able. If the Government of the day want to see a particular line followed by the board, just as any shareholder would wish it is not unreasonable to appoint a person who shares their perspective. I have had the experience of reappointing people who were appointed by a Fianna Fáil Government and I reappointed them on the basis of their ability regardless of their political persuasion. In some cases I do not know what their political persuasion is. I accept that the people may not have been appointed originally because of political reasons. The question of political patronage is sometimes exaggerated. A sum of £800 a year is not much of a plum to give to anyone.

Deputy Flynn made a reasonable point that there is a responsibility on the Government to publish what they think State bodies should be doing. It must be admitted that Governments have been rather coy in not doing this because it could expose them to criticism. Whenever a body has had to come back to the Oireachtas for money, as in the case of Irish Steel, we have been put under the microscope to see if the objectives set were achieved. On the other hand, other bodies have not had to come back to the Dáil and in a sense by not having to come back to this House it is reasonable to assume they are doing relatively better——

Mr. Flynn

It is inevitable that all of them will come back in due course.

Mr. J. Bruton

I hope not. I should like to thank Deputy Flynn for his interesting contribution and for the welcome he gave to this motion.

Question put and agreed to.