Private Member's Business. - ACC Bank Bill, 1992: Second and Subsequent Stages.

I move: "That the Bill be now read a Second Time."

Before moving to my prepared speech on Second Stage of this Bill I should like to take this opportunity to refer to some rather heated debate in the House this morning on the urgency of the Bill in question. I accept that Deputy Bruton was acting in good faith when he put forward the view that the proposed increases in authorised share capital and borrowing limits under sections 7 and 8 respectively were not of sufficient urgency to warrant speedy enactment of the Bill. I agree with him. However, the financial limit that does warrant urgency in this matter is the one which governs the ability of the ACC to lend outside the agriculture sector.

Section 2 of the Agricultural Credit Act, 1988 prescribed that the corporation could lend up to 25 per cent of its agricultural loan book to non-agricultural sectors, that is, for every £4 loaned to agriculture, £1 could be loaned elsewhere. The ACC have now reached this ratio of lending and are prevented from further lending to the non-agricultural sectors unless they were to artifically increase their agricultural lending in order to be able to loan 25 per cent of that increase to non-agricultural business.

The farmers know that that is not possible.

It is this limit, the 25 per cent limit, which has been reached and which demands urgent action by way of legislative amendment. This is provided for,inter alia, by the provisions of section 5 of this Bill.

Without the removal of the existing restrictions on non-agricultural lending, the ACC will remain at a standstill in their efforts to develop and diversify. Effectively they are blocked from taking up good lending opportunities even now. The option of artificially boosting agricultural lending, to which I have referred already, is not a serious one. Hence the need for urgent action. I hope I have explained the urgency satisfactorily.

The Minister has not explained it satisfactorily.

I take it that Deputy Flanagan would prefer that good opportunities be lost, that the ACC should not lend to people to whom they want to lend, thus putting more jobs out of existence. Is that the Deputy's policy?

The alternative put forward was that this matter could be debated all day Friday.

I am sorry, Deputy Flanagan, the Minister must be allowed to make his speech without interruption. Doubtless Deputy Flanagan and others will have an opportunity to intervene at the appropriate time.

The Minister invited comment.

Please, Deputy. He ought not to. The Minister, without interruption.

He did not expect a response.

Will we receive a copy of the additional page the Minister has just read?

I am sending it to Deputy Bruton. I wrote it specially for him and waited all day to give it to him. Since he did not arrive I will send this copy to him.

I would like the Minister to know I have a number of farmers who will be interested in reading it. I, too, should like to have a copy.

Please, Deputies, there is a very limited amount of time to deal with this important matter. Let us not waste it.

Smart comments like that are unbecoming of a Minister for Finance.

I listened this morning to ill-informed, inaccurate comments, totally at variance with reality. Deputy Flanagan should understand that he is doing a great disservice to very many business people who require loans. If he checks his facts I will endeavour to answer him.

The Minister is ensuring, by the use of the guillotine, that comment will be very restricted in that we shall have only one and half hours.

That is a matter for the Whips. If the Whips cannot negotiate that, that is their problem.

That is the problem of the Government.

Would the Minister please continue, without interruption?

Essentially, the purpose of the Bill is to assist in the further growth and development of the corporation and their activities; to facilitate the Agricultural Credit Corporation's development as a bank by bringing them within the normal banking supervision of the Central Bank; and to ensure that the corporation will be in a position to meet EC regulatory requirements in the banking area.

The various provisions and amendments contained in the Bill are summarised in the explanatory memorandum which has been circulated with the Bill for the convenience of Deputies. Before moving on to discuss the contents of the Bill in some detail, I should like to say a few words by way of background about the ACC.

As the House will be aware, the ACC were established to cater for the special needs of agriculture in this country, in particular by way of the provision of long term credit not easily available from other sources. The process of growth of the ACC was a slow one, however. It was not until the sixties that the corporation began to establish themselves as a major lending agency, assisted by legislation which increased their borrowing powers and enabled them to accept deposits from the public. In this period and in the following decade, growth in agriculture was generally strong, boosted by Ireland's entry into the European Community. The subsequent economic difficulties of the early eighties impacted adversely on the agricultural sector, however and, as a consequence, on the performance of the ACC. Defaults on loans outstanding and increases in arrears seriously affected the profitability of the corporation, culminating in heavy losses in 1987. The Agricultural Credit Act, 1988, sought to help address the problems of the ACC, in particular through the granting of powers to the corporation to lend to non-agricultural sectors amounts up to 25 per cent of loans outstanding in the agricultural area.

Since 1988, the ACC have turned the corner in relation to their financial position and are now heading for their fourth successive year of increasing profitability. The application of strict lending criteria to new loans, the vigorous pursuit of arrears of payments and the contribution from new areas of lending to the income of the corporation have helped make this new, healthier position possible. It is not now considered good banking practice to confine oneself to sectoral banking or, indeed, to over-expose a loan book to a single sector. The Bill is intended to ensure that the improvement in the corporation's situation continues by making provisions to assist in the further development of the ACC, in particular through diversification. In line with Government policy on the sale of State assets, the disposal of the State's interest in the corporation will fall to be considered in due course when the time is considered appropriate.

I now turn to the provisions of the Bill itself. Sections 1 and 3 are, of course, standard provisions relating to necessary definitions to be included in the legislation. Section 2 provides for a change of name of the ACC. The new name will be "ACC Bank". Although there is no change in substance involved in this new name, it does signal a change in the direction which the corporation are taking. As part of their development and diversification plans, the ACC are seeking to attract new customers from the non-farm community. In particular, the major urban centres of population present a potential new market for the corporation's products, such as competitive home loans, cheque book and cheque card accounts, credit cards and personal loans, which were introduced in the recent past. However, market research has indicated that many urban dwellers have little or no awarnesss of ACC and their activities: in so far as knowledge of the corporation or their role is concerned, they are perceived as an organisation which relates to farming only and not of relevance to the majority of people.

The change of name, accompanied by appropriate marketing efforts, is intended to help change this "rural only" image of the Agricultural Credit Corporation. The word "bank" in the new title will put across the message to people that the ACC can offer a full range of banking services relevant both to farming and agri-business on the one hand, and personal and business customers on the other.

Section 4 provides for the application of certain supervisory provisions contained in Central Bank legislation to the corporation at a date, or dates, to be determined by Ministerial order and after consultation with the Central Bank. These provisions of course will be administered by the Central Bank in respect of the corporation while I, as Minister for Finance, will continue to exercise my existing functions with regard to the ACC. The proposed Central Bank supervision is in line with Government policy in this area, namely, that given the small scale of resources available for financial supervision of deposit-taking institutions in Ireland and given EC requirements for the regulation of financial markets, it is appropriate that a body such as the ACC should come within the appropriate prudential supervision of the Central Bank. This has occurred already in the case of the Trustee Savings Banks and building societies, and is part of the consolidation process required by the imminent completion of the internal market in financial markets with its attendant increase in competition. The board of ACC are fully supportive of this new relationship with the Central Bank and see it as an essential step on the way to becoming a competitive banking institution subject to the same rules and regulations as the other credit institutions supervised by the Central Bank. Indeed, the corporation for some time now, have been submitting financial reports to the Central Bank on a voluntary basis, similar to those which the bank requires of other credit institutions.

Section 5 is concerned with making explicit the powers of the corporation to engage in normal, modern banking and financial transactions and to provide associated services of his nature, subject to conditions which may be imposed by the authorities. To this end, section 8 (1) of the Agricultural Credit Act, 1978, is being amended and a related provision, namely, section 2 of the Agricultural Credit Act, 1988, is being repealed by section 13 (b) of this Bill. Apart from some few changes in the description of the activities which may be engaged in, the activities of the corporation covered by section 5 are the same as those enumerated in the 1978 and 1988 legislation referred to. There are two additional amendments, however, to section 8 (1) of the 1978 Act. Firstly, section 5 now provides for consultation with the Central Bank in respect of any conditions which the Minister for Finance may impose in relation to the lending and other activities of the corporation. This consultative process however, will be reversed when the Ministerial order or orders to be made under section 4 of this Bill come into effect; that is, when the Central Bank take prudential supervisory control of the ACC as provided for by section 4. The Central Bank will then assume the power to impose conditions on the corporation's activities, after consultation with the Minister for Finance, which is provided for in section 5.

The second main difference between this section and the corresponding provisions of the Agricultural Credit Acts, 1978 and 1988, is that the existing formal restriction on lending outside the agricultural sector is removed. The 1978 legislation prohibited any such lending while the 1988 Act limited such lending to 25 per cent of the corporation's lending to the agriculture sector.

This removal of the restriction on lending outside agriculture is a logical one in the development of ACC. The corporation's share of the farm lending sector has been on a downward trend in the last ten years, but overall they remain a single-sector bank with far greater exposure to this one area than their competitors. As the corporation are set to come under the supervision of the Central Bank in the near future — under section 4 of this Bill — it is necessary that the ACC should be in a position to move towards the standards which the Central Bank will wish to lay down in relation to their exposure to risk. These bank standards, for example, limit the amount which credit institutions may lend to any one borrower or associated group of borrowers or to any particular sector. However, I want to emphasise that the removal of the existing limit on non-agricultural lending by ACC will not precipitate an untoward rush into diversified lending outside agriculture. I intend, and the Central Bank are of like mind, that the development of ACC's lending in other directions will be a controlled one which is why section 5 includes the provision I have already mentioned that the lending activities of the corporation may be made subject to conditions imposed by the Minister for Finance, after consultation with the Central Bank, andvice versa, when regulations under section 4 are made.

Of course there are other reasons why the removal of the present lending strictures on ACC are necessary apart from the prudential one already mentioned. The ability of ACC to provide credit for the agricultural sector is not enhanced by limiting their opportunities to lend and gain profit in other sectors. ACC's competitors, who have by far the lion's share of the farm loan market, have no similar restrictions on their lending outside agriculture. ACC's return to profit since 1988 has been aided by their, albeit limited, powers to lend to the non-agricultural sectors and it is envisaged that extension of their ability to lend in these areas will contribute increasingly to their profitability in the future.

From the point of view of the disposal of the State's interest in the corporation in the future, if this course of action becomes appropriate, it would be foolish not to recognise that an organisation which continued to be hamstrung by restrictive lending conditions would be less likely to realise their full potential and thereby maximise the return to the State in terms of the price to be obtained for them.

However, the further diversification of ACC's lending should not be seen as a diminution of the corporation's commitment to the agriculture sector. The farming and agri-business sector is recognised as one which will continue to be the single most important strand of the corporation's activities for some considerable time.

Section 6 provides for an increase in the maximum number of directors of the corporation from seven to nine. This will allow additional expertise to be brought onto the board at a time when the ACC are at a critical stage of their development and diversification and, incidentally, will bring the corporation into line with the other State bank, ICC, who have nine board members.

Section 7 provides for an increase in the authorised share capital of the company from £35 million to £50 million. This is an enabling provision only as it relates to authorised rather than actual share capital. The total share capital subscribed for to date is £25.4 million.

Section 8 provides for an increase in the existing limit on borrowings by the corporation from £800 million to £1,000 million. It also provides that the Minister for Finance may attach conditions or limitations to such borrowings, after consultation with the Central Bank. Again, this is an enabling provision only as borrowings by the corporation, at around £628 million at present, are comfortably below the existing limit of £800 million.

Section 9 requires that the ACC alter their memorandum and articles of association in accordance with the provisions of the Bill. This is a standard provision.

Sections 10 and 11 are of a technical nature. They extend the scope of the Banker's Books Evidence Act, 1879, as amended, and section 2 of the Bills of Exchange Act, 1882, as amended, to the corporation. These Acts already apply to banks and building societies.

Section 12 provides explicit powers for the ACC to engage in guarantee-type business by the amendment of section 27 of the Insurance Act, 1989, so as to include the corporation among the institutions who are named in that section as being empowered to carry on guarantee business.

Section 13 (a) recognises that as the ACC are now engaging in the provisions of mortgages in competition with other financial institutions, exemption from payment of Land Registry and Registry of Deeds fees is no longer justified. The reason for the exemption in the first place had been recognition of the restricted nature of the activities that ACC could engage in, that is, restricted to the agricultural sector.

Section 13 (b) provides for repeal of section 2 of the Agricultural Credit Act, 1988. I have already dealt with this when talking about section 5.

Section 14, is a standard section. I hope I have explained clearly the provisions of this Bill but, of course, I shall be happy to elaborate on them if required by any Deputy.

To conclude, I should like to compliment the board, management and staff of the ACC for their work in turning the corporation around in terms of their financial performance. I am confident that this Bill will enable the corporation to make further strong advances towards becoming a modern, diversified credit institution who are capable of serving all sectors of the community equally well while retaining their long-established, important relationship with the agricultural sector.

I fully appreciate the frustration felt by my colleagues and, in particular, my party leader, Deputy John Bruton, at the decision to rush through this Bill in a short time. It was annoying to hear the Taoiseach state then that this was purely a technical Bill. As we can deduce from the Minister's speech, it is more than a technical Bill. Having analysed it, it is hard to understand why it is being rushed through the House. The Minister said it was necessary to move with this Bill urgently. However, I remain unconvinced of this because so far as I can see the main purpose of it is to increase the share capital of the corporation from £35 million to £50 million. This is an enabling provision as the capital subscribed by the Minister for Finance at present is £25.4 million.

The ACC were established in 1927. Over the years they have been closely linked with the development of farming. In keeping with modern trends they will be known in future as the ACC Bank plc. According to theProgramme for Economic and Social Progress, the core business objective of the ACC will continue to provide the agriculture and food sector with credit facilities. The Government have given a commitment that the ACC will adopt a central role in the provision of necessary credit facilities.

In the present climate in agriculture it is unlikely that farmers will want to extend their borrowings. However, increasing, financial pressures on farmers, particularly on those with low incomes, will force them in the direction of seeking extra credit. The necessity to conform with environmental and pollution control measures will place an added strain on farm incomes which are already in decline. One-third of Irish farmers have taken out loans. However, due to the decline in farming many of them are not able to pay off their outstanding loans. It behoves the ACC to be constantly sensitive to the plight of farmers, especially farmers who are in financial difficulties.

Farmers with dry stock receive a higher proportion of their income from short term sources. In the cattle system 40 per cent of the money borrowed is for the purchase of livestock. While farmers with farms under 20 hectares account for 56 per cent of the farm population they only account for 12 per cent of the total farm debt. This is an indication of just how viable these small holdings are and is the reason a large number of farmers are not in debt.

Together with other sectors small and low income farmers are under siege at present. The long term survival of this segment of the farming sector is at stake. I am referring in particular to farmers who have less than 20 hectares. As we know, the Common Agricultural Policy and GATT negotiations, which overshadow all other issues in agriculture, will have a further destabilising effect on this sector. The cost of implementing the new dairy hygiene regulations will also have a destabilising effect on this sector. We can appreciate why farmers are under serious pressure.

Milk is to Ireland what oil is to Texas and the small quotas given to many farmers have placed them in an intolerable position. Proof of this is contained in the recent statement by the Minister for Agriculture and Food that the 16,500 small scale milk producers who have a quota of less than 12,800 gallons will receive an additional allocation of up to 500 gallons. While this is desirable, it indicates the seriousness of trying to remain financially viable.

The area of headage grants has caused a lot of concern and many farmers who made small mistakes were deprived of payment. There has been a little relaxation in the Department's approach and I compliment the farming organisations on their increased vigilance in this area in along with the politicians, pressuring the Minister for Agriculture and Food to make some positive moves in this area. However, many farmers are still being penalised. At times one would need to be a graduate to understand all the regulations applying to these schemes. It is not recognised that many farmers left school at an early stage. I am advised that the Minister for Agriculture and Food is examining this whole area at present to simplify it. As a result I trust that the Minister will be far more sensitive and appreciate the financial hardship which a refusal of these headage grants causes.

The Minister should also look at the staffing level in the Department of Agriculture and Food offices. Over a period of time many politicians in this House have been critical of the slowness and inefficiency of these offices. I would not like to cast aspersions on the staff of these offices because I am aware that in the Limerick office in my area they work extremely hard and diligently. However, when one talks to these officials it is obvious that their workload has increased considerably over the last few years as a result of more farmers being eligible for headage grants. Their workload has also increased because of the extension of the disadvantaged areas and the reclassification which has been going on for the last few months and which is due to conclude shortly.

This whole area has been the subject of much controversy in farming circles, although 72 per cent of the country has been included. One hopes that the extensive survey, the appeals which are now being completed and the task of processing the large amount of data will be done quickly. I understand that in the autumn the Minister will be making submissions to Brussels. I appeal to the Minister to ensure that there is no restriction on the areas to be included in the submission to Brussels. If farmers are eligible they should be included and there should not be a stipulation of 1.5 per cent or 1 per cent on eligible farmers because there has been a deep distrust of this scheme in the past.

The Minister's proposals outlined in the budget delivered another Scud missile against farmers by removing the tax exemption on the co-operatives and expecting them to pay 40 per cent. Is the Minister aware that powerful countries such as France, Germany and Italy are exempt? The co-operatives employ about 16,000 people in Ireland, the vast majority of whom are in rural areas and provincial towns where there are few other jobs. In addition, the co-operatives and the jobs involved create service employment and in the region of £50 million is provided to the Exchequer in PAYE. Those co-operatives have a membership of up to 120,000, many of whom are living on an income of less than £7,000 per annum and they are dependent on farmers' dole. The Minister should seriously reconsider his proposal in relation to taxation of co-operatives.

It would be remiss, of me not to mention a significant event which indicates the Government's attitude to rural Ireland. I will illustrate it by means of a small example. In my constituency, in Carrigkerry, a place I am sure the Minister never heard of, there was a rural post office. We have all heard references to the Leader, the INTERREG programmes and others, but those references are hypocritical in the extreme. This was an example of a post office in an isolated area in hilly terrain on which 88 old age pensioners depended, but, according to An Post, it was no longer viable because it would have cost an extra £6,000 per year to run.

I am sorry, Deputy, this matter is not the responsibility of the Minister for Finance.

I accept that. However, when I tried to raise it I was stymied

I am sure the Deputy will find another way of raising the matter.

Another Scud missile.

It is like a speech on the budget.

It is impossible to raise an issue like this.

Let us stick to the legislation before us.

Deputy Finucane should refer to them as potential ACC depositors.

I raised the matter because you, a Cheann Comhairle, come from rural Ireland and I am sure you are aware of these situations, even in south Tipperary.

There are many ways of raising such matters in the House and it is inappropriate now.

When politicians in future talk about helping people in rural Ireland they will come across as hypocritical and totally lacking in sincerity. There is a social aspect to these post offices in rural areas and the Minister should approach the Minister for Social Welfare, Deputy McCreevy, to give a subvention in cases of this kind.

I have one caveat in regard to this legislation. The ACC have been synonymous with the development of farming. Can the Minister assure me that it will still be their core business, a statement enshrined in theProgramme for Economic and Social Progress, when it becomes the ACC Bank plc? I trust the Minister will give this assurance.

This Bill is a simple measure; its purpose is to turn the ACC into just another little bank. The reason is to enable it to be sold to the first available bidder, not to facilitate people waiting for loans, as if in effect they did not have a choice in relation to the rest of the Irish commercial banking sector. Note that I did not say it would be sold to the highest bidder. When this Bill has been passed the ACC will be disposed of for petty cash. The Minister has all but admitted that it is being prepared for privatisation and we have seen what happened in relation to that in the past.

This Bill is nothing more than a coat of polish for the family silver, to borrow a phrase from across the water. That coat of polish is designed to make it more attractive when it is taken to the pawn shop. There is no strategic thinking behind this measure, and I will return to this later on. As far as the Labour Party are concerned, we should be preparing Ireland for 1992, and for the period after that, when we have the completed internal market in the run up to the implementation of Economic and Monetary Union. Within a very short period of time, with the advent of Sweden, Austria and Finland to the European Community, there will be a market of 350 million people. By 1997 we will have an economic and monetary system which will have,inter alia, a single currency. Against that background we should look at what the Government are doing or, more to the point, what they are not doing, in relation to this situation.

Instead of selling our few banking assets should we not now be looking at the future and at the possibility perhaps of linking the existing banking institutions which are indirectly under the control of the Government? I will name them. ACC, which is being fattened for sale in the marketplace now that it has turned the corner in regard to profitability. The ICC has effectively been on the marketplace for the last two years, but because of internal constraints — namely, the Devlin report — there are no bidders. The Trustee Savings Bank is ready for sale, now that the legalities have been removed in relation to the nature of its precise ownership; and, to refer to Deputy Finucane's contribution, there is the entire network of the post offices around the country. Those four institutions, if brought together, could form the nucleus of a diversified and integrated banking system under the control of the State and provide some of the benefits to which the Minister referred in his opening speech. The idea that ACC could enter the marketplace which is by common consent already over serviced by the banks and gain a significant market share is highly optimistic. I would like the Minister to indicate the growth ACC anticipate over the next number of years when they redirect their focus from the agricultural sector. This is a signal to rural Ireland and that section of the community that depended exclusively on ACC for agricultural credit that the Government are getting out of this business in real terms. I think the Deputies from the Fine Gael Party agree by their presence here. If the Government want to re-enforce the agricultural sector of ACC there is a much better way of doing that and I suggest that could be achieved by broadening their entire base and by linking them with ICC and the Trustee Savings Bank.

As far as the Labour Party are concerned we, as an island country, with a market of 3.5 million people, which is about to be integrated in an open market of at least 350 million by the end of 1995-97, depending on which way you wish to anticipate it, cannot confine our perspective and analysis to the Irish segment of what will be an integrated European market. For that reason I would like to see the Irish Government engage in strategic thinking so that they would group into a complementary structure those components of banking, deposit taking or money lending that the Irish Government currently have and which are under their control for various reasons. Not only should those components be integrated in a modern, efficient and rational way but the Government should now be actively looking for partners of like mind and like tradition in the broader European Community. There are State banking systems right across Europe, some banks have been nationalised in the past for political reasons and other banks were set up in a manner not dissimilar to ACC. That is where the marriage broking, strategic thinking role of a progressive Minister and his Department of Finance should be focused and not on the sordid little exercise that we are now engaged in. This has nothing to do with the inability of people to get loans but everything to do with meeting the imperative to dispose of assets. It is necessary in order to meet the budget targets for the realisation of assets in 1992 and it is necessary in my view to get this little matter out of the way so that a willing buyer can be found and the proceeds of the sale will go to the Minister for Finance in 1992.

We already saw the indecent haste with which the Department disposed of their shares in Greencore, much to the chagrin and annoyance of the marketplace because there was a general view, which was never adequately replied to by the Minister, that the market had been misled in the way in which the shares were sold but also in the manner in which they were sold. There is no strategic thinking in this Bill other than the short term one of selling the family silver. I defy the Minister and his advisers in the Department of Finance to contradict me in relation to that. If there is to be a future for ACC — I accept they are locked into a particular position at present and as far back as the early eighties they were saying to people in Fóir Teoranta and other places that they wanted to reduce their dependence on the agricultural sector and broaden their lending base. If they want to broaden their loan book into different sectors of the economy there are different ways of doing that and in my view this is not the way to do it.

The Minister should be looking at why ICC are so unattractive in commercial terms. In banking circles around town ICC are affectionately known as the "FAS" of banking, that is where bank officials on restrictive wages are trained by the State and then those who are talented are head hunted into the commercial private banking sector or into the wider banking network. Anybody in the finance industry will tell you that ICC are great for producing people but are not a great institution because they operate under the constraints of the Devlin wage and salary structure. It is not so long ago that it was revealed that ACC had found creative ways of getting around the constraints imposed by the Devlin Commission.

The Labour Party will be opposing this measure. We believe this is the wrong way to plan for the future of ACC, ICC or Trustee Savings Bank. We view the Minister's task as creating a new vibrant banking sector that will meet the scale of the challenge that this economy has to face between now and the year 2000. I suggest that a strategic timeframe should be taken; that the domestic components of the State's financial institutions — essentially the four elements I have already described — should be integrated in so far as this can be done effectively and that the Government should look for a partner in the context of the wider European Community — and not somewhere in New Hampshire or outside the EC market because we have seen the disastrous results that policy has effected in respect of the two major domestic banks here. I would even go further, there is possibly a better prospect of introducing a dynamic commercial element to Irish banking by linking these institutions with a continental State owned bank. Anybody who is familiar with the Irish banking system can but wonder at the vibrancy of the way the Woodchester Bank has entered the Irish market and has emerged as a major force. One of the reasons is that they have the backing of Credit Lyonnaise which itself is a State-owned bank. There is no conflict whatsoever, and there never has been as far as the Labour Party are concerned, between State ownership on one hand and vibrant commerciality and competitive performance on the other. Some people would argue that the sluggishness and conservatism in the market place of both Allied Irish Banks and Bank of Ireland owes as much to their historic traditions as to the nature of the ownerships of the banks in question.

The Minister has indicated the sections which are merely technical, that is, that ACC will pass from the Minister's responsibility, properly in my view, to come under the supervision of the Central Bank and will be treated as just another little bank. It is quite clear that the bank is ready for sale and will be sold off as soon as possible. There is no strategy in relation to buyers. There is clearly no strategy in relation to ICC. Will the Minister indicate if the possibility of ACC merging with ICC has been considered so that they will have the kind of mixed loan book they were seeking. In addition, they might be able to tap in further into the post office network in order to bring about additional synergy in that direction. These questions have to be put but there is no reference to the possibility that that alternative was considered. Instead we are faced with what has been proposed by the Minister — and let me repeat that this refuses to recognise the European dimension. At the end of the day this will impact on every Irish person whether we see themselves as having a left wing or right wing perspective on the future of our society.

We are entering into uncharted economic and monetary waters to the extent that the economic levers that will determine economic policy on this island will be controlled from somewhere in the region of Brussels. The traditional options open to those on the right or left in terms of a nation State economy will be removed as a consequence of the economic and monetary union component of the Maastricht Treaty. If you accept that analysis it is absolutely essential, as Culliton and many other Irish commentators have proposed, that we have rooted in the country economic institutions, corporate enterprises and other bodies with sufficient clout who have an overall loyalty to this place and the capabilities of our society. Unless we can create strong financial institutions that are capable of performing in an open competitive market of 350 million people and yet have a rooted sense of loyalty to this particular place, we will jeopardise the future for all of us whether we are of the left or of the right persuasion.

To prepare the ACC for sale without having any strategic vision as to what kind of role, what kind of allegiance or affiliation with any other particular institution they should have, is an act of irresponsibility. Not only will the interests of that sector of the agricultural community who depend on it be damaged — and there are Deputies in this House who are better able to comment on that than I — but it will not, in the long term, reinforce the already frail Irish institutions in the financial sector by virtue of their existing scale and size.

The Minister for Finance is, in fact, further weakening the potential for a financial consolidation of various institutions by this particular act of pawn broking, at a time when, in the context of the completion of the internal market and the free movement of capital, he should be doing everything possible to consolidate those institutions within a broader market. Would anybody think an Italian, Spanish or French Minister for Finance would engage in this type of exercise? This is the residue of discredited Thatcherism whose legitimisation has long since been discarded even by the adherents of Thatcherism across the water. The residue which is now discredited is being implemented here and if it goes ahead it will have disastrous results.

I am now calling Deputy E. O'Keeffe. The House appreciates that the Deputy is entitled to and capable of taking the remaining time. I gather he is not anxious to do that. I suggest, if the House is agreeable, that we agree to give the Government side 20 minutes of the time remaining, that would allow for a five-minute-each contribution for the four Deputies who are on the right. Is the House happy with that? Agreed.

I would like to compliment the Minister on introducing this Bill this evening. In doing so I pay tribute to the management and staff and the board of the Agricultural Credit Corporation who have done some great work over the years in providing risk capital to the agricultural industry and mainly to the farming community. There are very few farmers who would criticise the ACC for their contribution to Irish agriculture. Were it not for their role in the development of agriculture in providing the kind of moneys I have stated we would not see our agricultural industry developed to the extent it has reached today.

Agriculture is a difficult business — a risk business — and there are very few people who would like to get involved in it. I would like to see a greater commitment from the Agricultural Credit Corporation in the continuation of their financing of agriculture. We are told this evening that the purpose of this enabling legislation is to broaden the base and to make it an ACC bank which would compete with the commercial banks. In doing that I am aware it has a successful network throughout the country who have served the people well. We are seeing it diversify into the areas of the commercial banks. I am genuinely worried as to whether we will see the same commitment to agriculture and to the farming community as we have seen in the past.

The main trust of the ACC in the deposit area has often come from people in the urban community. The farming community must have the same trust in depositing money in that organisation. I wonder why we have not seen cheaper moneys being made available to Irish farmers in terms of Euro loans, because they are at a much lower interest rate than Irish loans. I am aware of the broad base of loans available from the Agricultural Credit Corporation.

Land purchase has been one of the areas that has bedevilled Irish agriculture, and the enormous prices being paid for land have done irreparable damage to the reputation of Irish farmers. There should have been some agreement between the financial institutions in this area where land has made astronomical prices, often with no capacity in earnings to repay, which has put many Irish farmers in grave difficulty and put many packs on the roadside. We have seen harsh measures being introduced by all Irish financial institutions on the farming community. I believe that problem arose because of the manner in which the institutions involved themselves in seeking new business. They were prepared to take risks at all times which was foolish on their part.

Farmer financial difficulties have been with us for some time and they have been sad on many occasions. I am aware of one case, a late as today, in my own constituency on which I do not want to dwell. It was a sad case and I am glad there has been a compromise. I would ask the question: Why do we not see a greater involvement of the co-operative movement in owning a farmer bank? We have only to look at the French agricultural industry which is mainly financed from Credit Agricole in France — a major financial institution. I think it is the eighth largest financial institution in the world. I do not understand why Irish farmers and the co-operative movement generally do not make an effort to establish a farmer's bank because we have heard here this evening from the Labour spokesman on Finance, Deputy Quinn, about the threat of privatisation. I am fully committed to privatisation because capital can be secured only from the market place to further develop the ACC to the level required in the Bill. The Irish farmers and the co-operative movement generally should interest themselves in the purchase of the Agricultural Credit Corporation and have a farmer bank in this country as we have a farmer-owned insurance company which has been very successful for Irish farmers.

Is this to be an agricultural bank?

I was not aware the Deputy was in the House.

That will not be the case for long.

He is a man who stands out.

Having listened to the Opposition's main contribution this evening I wondered whether I was listening to a budget speech or a contribution about Private Members' Time.

It was representing rural Ireland.

I expected something more from Deputy Finucane. The Deputy shed crocodile tears on behalf of the co-operative movement and as he is aware, the Finance Bill has not yet been published. I am further aware that the Minister for Finance is capable of taking care of the taxation in the co-operative system. We have heard utterances about 10 per cent tax on co-operatives. I hope that gets rid of the Deputy's fear.

It is the state of our environment.

That is a signal.

Thanks for that news.

The Minister stated that borrowings by the corporation at around £628 million at present, are comfortably below the existing limit of £800 million. That is good housekeeping on their part and I compliment them in having the ratio in order. With the right to borrow to the extent of £1 billion I see the increase as going to another sector of our society and less emphasis, as I have already stated, in agricultural development. Agriculture is a capital-intensive business. If there is to be any cutback in that area it will be to the disadvantage of our economy and to the disadvantage of Irish farmers and the agricultural industry generally. I hope we will see the same commitment from the Agricultural Credit Corporation as we have seen in the past. We are all aware of the fine network of branches throughout the country.

I was annoyed a few years ago when I say my local branch in Fermoy facing closure. Much reference has been made to the closure of rural post offices. I do not like to see ACC branch offices closing especially in an important market town like Fermoy which is known to have the finest agricultural production in the country and the finest cattle sales ring in Munster. Much business was lost which they could have controlled had they remained in the area.

I wish the Bill well. If the ACC is privatised I have no difficulty with that because that is the way forward. I ask the Minister to contact the farming organisations in an effort to get them to take an interest in the ACC so that farmers once and for all would have a say and an input in relation to the financing of agricultural development as money would be available to them in the corporate sector. I think that is the way forward for our farmers.

I thank the Deputy for honouring the time arrangement. I call on Deputy Sheehan. He has five minutes.

In introducing the Bill the Minister for Finance is showing a lack of confidence in the agricultural industry and is writing off our young farmers. The ACC were created chiefly for the benefit of our farmers and it is a sad day when the Minister for Finance admits to the House that there is no potential for further expansion in the agricultural industry which would warrant increased borrowing by our farmers. In relation to their lending powers, the ACC will be dictated to in the future by the Central Bank. It is apparent that in the future the ACC will only be a figurehead with no lending powers. The Minister has thrown in the towel and has shown no vision so far as the future of the agricultural industry is concerened. It is a sad day when the Minister for Finance admits that there is no future for our young farmers when it comes to borrowing from the ACC.

It is the Deputy who is saying that.

The Minister should be ashamed of himself for making such an admission in the House, because when the last of the oil and gas is drained out of the Celtic Sea and the seas around our coasts, agriculture will still be our predominant industry. We have not been blessed with any industry of any consequence apart from agriculture, but down through the years it has been bedevilled by quotas since our entry into the European Community. The trumpets blared when we joined the European Community. It was said that there would be no end to the rainbow so far as farming was concerned, but it is evident that the end of the rainbow is now visible.

It is also sad that a country which depends to a great degree on agriculture is now enlarging the borrowing and lending powers of the only lending agency with a responsibility for the development of agriculture. The Minister should think again. He stated that the farm sector's share of the corporation's lending business has shown a downward trend during the past ten years, but what attempts have the Government made to redress this trend? Have they made any attempt to restore the confidence of the agricultural industry. Given this lack of confidence, the directors of the ACC have asked the Government to grant them special powers to enlarge their business, but as a result they will be dictated to by the Central Bank.

It can be seen from the Bill before us tonight that the Government have failed in their efforts to preserve our only industry. It is also evident that the Agricultural Credit Corporation in the future will be dictated to by the Central Bank who will decide their destiny. This is a sad day for agriculture and our young farmers, who will now be exposed to the whims of the Central Bank. The Minister for Finance and the Minister for Agriculture and Food have shown a lack of confidence in the agricultural industry. Indeed, I am amazed that the Minister for Agriculture and Food is not present in the House tonight for this important debate for our young farmers.

The Deputy should not talk about his neighbour; he should leave him alone.

What future do our young farmers have when they can no longer have confidence in the Agricultural Credit Corporation to meet their demands in relation to the expansion of the agricultural industry in the future?

As an urban Deputy, I welcome the Bill. Given the way banking has developed in the nineties, if the ACC are to survive they will have to diversify and find a place in the marketplace. They cannot fight a battle among the banking giants with one hand tied behind their backs, but that is exactly what is happening. Those banks who have attempted to survive by depending and relying solely on the farming sector have got into serious trouble. If the ACC are to expand they must move in this direction.

Last year the number of staff in the ACC increased by 4 per cent at a time when unemployment was and still is a major scourge. This in itself was an admirable feat. The ACC have flexed their muscles and are now preparing to take their place in the banking system in Ireland. Perhaps they will move on from there to other spheres of activity under the excellent stewardship of Mr. John McCloskey and the chairmanship of Mr. Dan McGing. They have an excellent team at work. The ACC have modernised and are in tune with the requirements of farming. It would be unrealistic for any rural Deputy to suggest that the ACC will abandon their rural base, their core value base. That is the one way they can develop.

Who will call the tune?

The fact that they are working throughout the country speaks for itself. Furthermore, they are also prepared to make changes, unlike many of our major banks today who are far more rigid. There is a lack of competition and the major banks are charging their customers outlandish fees. Indeed, they are operating almost — I do not like to use the word "cartel"— in a dictatorial way and they leave much to be desired.

It is undersirable that our banking system is now gaining a bad image because we have to depend on the major banks. However there is no competition, and competition is the lifeblood of trade. That is stated in the House day in, day out; yet, when the ACC are preparing themselves to move onwards, reservations are being expressed.

In relation to the question of clearance, I would like to see the ACC competing within the clearance system. While I realise that this is a costly operation and that it costs in the order of £2 million to become a member of this rather exclusive club, nonetheless they should have this option. I would like to see the base of the ACC strengthened and I would welcome the possibility of a merger. It has been suggested that there are other vehicles poised in such a way that this would strengthen the base of the ACC. As a result more funds would be made available for the farming commmunity. However, they should not tie themselves solely to the farming community but make their services available in towns and cities. They should not be associated with the rural community only. Competition is badly needed given the way the banking system is now operating.

The unreasonable constraints that the major banks are imposing on small businesses, particularly for collateral for security, tying in with mortgages in a very rigid sense, leave a lot to be desired. Competition is badly needed in this sphere. As modern technology finds its way into financial services and banking institutions perhaps the real question to concern us is the possibility of people becoming unemployed as a result of future mergers and privitisation. The way to safeguard against that is to prepare ourselves now for that possibility. We should install the best possible technology and personnel in the ACC bank and give them the opportunity they are seeking, not as a hand out but because they have deserved the success they have achieved. Anyone who takes the time to study the success of the ACC bank over the past few years must agree with me, because the facts speak for themselves.

I welcome the Bill and look forward to the future development of ACC, and not only for the rural community. I congratulate them for getting out there, finding customers and operating a cheque system, with one of the banks acting as agent for them. I congratulate them on having their independence and fighting for their survival. I warmly welcome the Bill and wish the ACC bank every possible success in the future.

I would advise the Deputy that our cosy arrangement is even better than it was. Even allowing for 28 minutes remaining, we can have four sixes. The Minister will conclude with his six minutes.

I am grateful for the Chair's guidance as to the time and I will try to be more disciplined than my predecessors.

The core of this Bill is contained in the Minister's speech where he says:

It is now considered good banking practice to confine oneself to sectoral banking or, indeed, to over-expose a loan book to a single sector.

I presume there was a misprint in the script and that the Minister meant "not to over-expose a loan book to a single sector" and that the Bill is intended to ensure that the improvements in the corporation area continue by making provisions to assist in the future development of the ACC, in particular through diversification. I will refer to this later. Good banking practice has a particular resonance for those of us who have been watching the Irish banking sector for some years. The sentence which is crucial in the Minister's speech is:

In line with Government policy on the sale of State assets, the disposal of the State's interest in the corporation will fall to be considered in due course when the time is considered appropriate.

I would like to reflect for a moment on the implications of this. I have not time to go into it in detail. The evidence from Britain, where it has been studied, is that privatisation of an uncritical kind, which the Minister is advocating, has not resulted in greater competition in the British economy. It has not resulted in less inhibiting bureaucratic interference. In the British case there have been non-statutory authorities set up in the case of gas, oil and other things which are taking up more time of executives than did the previous statutory controls.

The Minister in his speech talks of a complicated mechanism of consultation in the future in which the Minister for Finance of the day would have an opinion and would have the advice of the Central Bank, but it would have hardly any statutory effect. It is just a time wasting exercise. Finally, there is the question whether privatisation reduces the public service borrowing requirement. Sadly, in the case of even the most ideologically obdurate of Mrs. Thatcher's advisers, the public service borrowing requirement was not reduced in Britain; rather were the gains from the sale of State assets translated into tax reductions for those at the top of the tax scale. The Minister in his speech very honestly acknowledged the public ownership of State assets and what their privatisation means. There are powerful arguments to show that the inherent advantages of privatisation have not been achieved. We have witnessed the last rattle of this kind of economic thinking with the death of the founding high priest of this, Von Hayek, just a couple of days ago and in ten years we will find that most people will be neo-Keynesians again in Europe.

Deputy Quinn spoke of the alternative merger of ICC and ACC. This is an important point which links to my reference to good banking practice in the Minister's speech. If the Irish people have been let down by the Irish banking system in recent years it has been because of the banking system favouring a culture of speculation rather than a culture of production. Anyone involved in producing anything significant found it difficult to get credit in terms of demand for collateral and in terms of making stage repayments. On the other hand those within the banking sector who were also having a shady existence in the interstices of speculation were the people who found a ready availability of capital. After all of this minor amending bank Act, which points the ACC in the direction of the private sector of banking, will he have any control over credit policy in this country?

I would ask the Minister to watch an interesting paradox in this exercise. Privatising is moving in the direction of excluding the State from forms of control, yet when he was Minister for Labour he was moving in a corporate tendency towards inviting the trade unions to come and sit at the table with him. If the Minister continues this tendency, he may in future be inviting the trade unions and the other social partners to sit at the table with a Minister for Finance and a Minister for Labour who have no control over anything. The Minister will have handed the banking sector to speculators who have no commitment to anything in this country or abroad except speculative profit.

It was certainly a pleasure to listen to a severely disciplined Deputy Higgins, who left us, as usual, with some food for thought.

We should acknowledge that Deputy Brady had ten minutes of which he only used eight, so he was exceptionally disciplined.

The Minister was correct in that the ACC have always been seen as a basically rural organisation. The change of name from ACC to ACC Bank has not been the cause of much public discussion to date. The only matter of public discussion in relation to ACC is the question of when it will be privatised. I congratulate Deputy O'Keeffe for coming clean on that issue and for stating his support for the future privatisation of ACC. The Minister's speech gave a few hints as to how the corporation will be disposed of by saying that the disposal of the State's interest in the corporation will fall to be considered in due course. The Minister also said that if this course of action becomes appropriate it will be sold. We should have been informed tonight by the Minister of his intentions in that regard. It is the most pertinent thing in relation to the ACC. I have no ideological objections to the privatisation of ACC, but we should have been informed. The time has come to stop beating around the bush.

The ACC were considered, and probably still are, as being the friend of the farmer. That was the concept during the sixties and the seventies, which was a boom time in the agricultural industry. In the late seventies and early eighties certain factors changed, a credit squeeze was imposed and there was a crisis in agriculture. Many people who had put their faith in the ACC and borrowed money from them received threatening letters, legal edicts and knocks on the door from the sheriff seeking money. Their faith in ACC may have been diminished somewhat. When it comes to money matters the ACC are similar to every other financial institution and the market must dominate.

Many of the people who ended up in severe financial distress were in that position because of inflated land prices. It was sadly ironic that land worth £1,000 per acre was making £3,000 or £4,000 per acre. Neighbour was bidding against neighbour and in many instances the same financial institution were providing ammunition to both parties. That type of credit policy resulted in a degree of human misery in the late seventies and in the early and mid-eighties. Let us not have a repeat.

We are to discuss during the next few days the termination of the Land Commission, which used to provide some control over land sales. It would be detrimental if we were again to see neighbour versus neighbour and inflated land prices.

Deputy Quinn mentioned the lack of strategic thinking in this legislation and he may well be correct. The Culliton report puts forward a number of suggestions about the utilisation of the food industry to create the jobs needed in the nineties. Surely an institution such as the ACC should play a leading role in the developmental side of agri-industry, but nothing we have heard from the Minister tonight or from the ACC indicates that they see as part of their future a developmental role in agriculture and the food industry. Action is required on that front. We need a concerted, planned economic policy for the future of agriculture and the food industry. The financing of that industry must be a central part of the planning. I hope the ACC will play a leading role.

I welcome the fact that the ACC will be enabled to become involved in related borrowing. This will help to strengthen their position. They should not forget the farmers of rural Ireland who, I hope, will be in a position to borrow money to develop their farms during this decade. Many speakers have said that agriculture is in crisis and suggested that we may never again see the expansion which we witnessed in the seventies. I hope they are incorrect. We need to see a growing agricultural industry in the years to come.

There is a difficulty in Government with that dreaded "P" word, privatisation. Certain Government sections and external factions advocate privatisation, but the Minister for Finance has not come clean on this issue in relation to the ACC. He should outline very clearly when he sees the ACC being privatised. His speech indicates that they are due to be considered for privatisation. We should all like to know when that day will come.

Deputy Bradford made a point about the impact of legal edicts and the fact that the ACC pursued farmers relentlessly for non-recoverable loans. That regrettably is true but it derives from the fact that the associated banks fuelled the level of borrowing in the seventies and led to the tailspin effect to which Deputy Bradford referred. My memory of the accounts of the ACC is that about £60 million was written off in the years immediately preceeding 1990 in non-recoverable loans. That was because of this spiral——

The Klondyke syndrome.

——of inflated land prices and so on. The Minister is preparing the ground for this to happen again uncontrollably when he prepares this bank for privatisation. The Bill is misconceived. It would be more honest of the Minister to bring the sentence to which Deputy Higgins drew attention to the top of his speech and to say that this is the purpose for which he is introducing the Bill. He should say it is necessary to make these technical changes to facilitate the transfer of this bank to the private sector.

This Bill highlights thead hoc nature of planning for industrial and agricultural development. The Culliton report contains a key section on the development of the food industry. Very little attention was paid in that report to the financial institutions, but it is clear that if we are to exert any strategic control over the direction of the developmental role envisaged originally for the ACC it is important that the State maintain the power to have some strategic influence. That is what the Minister is giving away.

Deputy Higgins and Deputy Quinn referred to the Thatcher experiment. Television coverage of the British election campaign shows that after extensive privatisation the Exchequer borrowing requirement has gone up and taxes for the top bracket have come down. Privatisation has not solved any of the structural problems in the British economy and certainly has not facilitated investment in industry. The critical issue is investment in industry.

My party produced a recent policy document which argued for a look at the area of the financial institutions. Piecemeal measures have been taken in the abolition of Fóir Teoranta, the extension of the 10 per cent tax regime and a number of otherad hoc measures which are not integrated in any plan for industry. We argue for an examination of the role of the IDA lending division, the ICC, An Post and the ACC. The elements are there which could give the Minister, the Government and the State some strategic control over the direction of development in a key industry, which is what agriculture is.

Industrial development is still the key to job expansion. Of course services are taking up a more and more important proportion of job creation and to some extent wealth creation, but industrial development is still the key to job expansion. If we are to achieve any major boost in job expansion, we will have to look to this area, including agriculture and the food industry.

There has been a public outcry in recent weeks about the significance of the UMP collapse. Local Deputies in the areas affected by that tragic economic and industrial blow, particularly the towns in the west, will argue whatever it is expedient to argue in the circumstances, and most politicians understand that. At the end of the day there probably is an argument for a body such as Fóir Teoranta, not a body abused and used as a milch cow, as were Fóir Teoranta in the past, but a financial institution that can intervene to keep alive, or bring back to health, an industry that is basically sound.

I regret that as the tide of Thatcherism ebbs in Britain, we are caught up in the wash. On a serious political point, the Bill is a manifestation of the struggle that continues for the soul of Fianna Fáil. Only a few years ago, the Minister for Finance in particular would have denounced this kind ofad hoc privatisation. It was the dynamic that drove the Progressive Democrats who clearly have won the day for the policy struggle within Fianna Fáil and we will all live to regret that. As Mrs. Thatcher flew to the United States last night, leaving her successor sinking deeper and deeper into the mire that she created for him, capital will have to be found to renew British industry. I do not think that this measure offers any hope for using agriculture as a basis for job creation in the future.

In the time available to me I will try as best I can to answer the questions raised. Only 15 per cent of farm lending comes from ACC while 85 per cent comes from the associated banks. Obviously that is not known to the vast majority of Deputies who spoke because they seemed to think that ACC are responsible for 95 per cent of farm lending. It is important to restate that the bank have already reached the 25 per cent ceiling on their non-agricultural lending. Since I came to the Department of Finance, both the board and the executive have been asking me to remove the ceiling immediately in order to allow the bank to continue developing.

I find it hard to take seriously people who on the one hand talk about development of State companies while at the same time miss the point of the legislation. It is the usual double think arrangement. Deputies want to stifle the company and put them out of existence but they will probably support privatisation when there is nothing left to sell. We are not abandoning the agricultural sector. Deputy Finucane asked a question on this matter and I am glad to tell him that what is involved is the inevitable and necessary process of diversification, of spreading the risk in order to ensure a continued increase in profitability and financial stability of ACC.

I would refer Deputy Michael Higgins to the section dealing with single sector banking, which is not now considered good banking practice. In the modern financial world single sector banking, or putting all one's eggs in the same basket, is an activity fraught with danger. It may jeopardise the very sector that one is trying to cosset if it results in lost opportunities to improve financial performance. That is taken into account by State banking. I could talk at length to Deputy Quinn about Credit Lyonnaise and their experience in that regard, but I do not have the time to do so now. I agree with the Deputy that people must be careful. I have great admiration for Credit Lyonnaise and Woodchester and they would agree with what we are doing here for the sector.

The role of ACC in the agriculture sector must be put in perspective. As I have said, ACC have only 15 per cent of the lending market. The bulk of agricultural lending is operated by the banks and no restriction is imposed on their lending to sectors outside of the agricultural sector. For that reason ACC do not have the same opportunity as have the other banks. There is a more fundamental reason for the removal of the existing restriction on lending by the ACC to sectors outside of the agriculture sector. The Central Bank have indicated that a move in this direction is necessary if the ACC are to be in a position to comply with the normal standards and financial prudence laid down by the Central Bank in respect of banking. However, that does not mean that all powers will be lost. The existing powers and function of the Minister for Finance in relation to the corporation will not be affected by section 4 of this Bill. The Minister will continue to hold all the share capital of ACC and will appoint the directors. He will continue to monitor their general financial performance. An officer of the Department will act on the board and will, of course, remain responsible for amending legislation in the Oireachtas.

Until they are privatised.

No, we are talking about the present.

The real question must be asked.

I will be very glad to answer it. It is remarkable how people read into matters what is not there and, as on many occasions in the past, they can be proved wrong. I will answer the question, but I hope Deputies do not oppose the legislation thereby stifling development and growth of the company, which seems to be what the Deputy is saying.

None of us opposes the legislation. Nobody is opposed to the ACC going outside their current market.

I am glad the Deputy has clarified that matter because from what he has said I would have thought otherwise.

We suggested alternative ways.

I find some of the alternative ways quite interesting. However, in answer to Deputy Bradford, having been in the Department of Finance for a matter of months I am not prepared to jump in a certain direction because somebody says that is the way to jump. The future of ACC is not predetermined, as has been suggested. My Department are aware of some of the possibilities to which Deputy Quinn in particular has referred. I assure the Deputy that all the options are open to the State and will be examined in due course. Some of the synergies referred to by the Deputy are quite interesting, but there is no question of a quick disposal for a quick buck. There is logic in some of the points made by the Deputy, but whether or not agreement could be reached with ICC and Trustee Savings Bank on these issues is another matter. I accept that these bodies are entities in their own right and that they are major employers who make relatively small profits. Unfortunately, one of the dangers of privatisation, whether within the State or outside it, is rationalisation. The difficulty I have with privatisation — Deputy Rabbitte will have heard me say this on many occasions, both in Opposition and otherwise — is that it inevitably leads to rationalisation.

In the case of Trustee Savings Bank, I pushed for amalgamation and signed the order two weeks ago allowing for that. There are about 800 people employed in that instance. In the case of ICC and ACC there are also many people involved, although these corporations may not make a great annual profit. I will consider Deputy Quinn's suggestion, but if these companies were to amalgamate on the basis of a joint venture with another State company it would lead to rationalisation. What concerns me is that at a time when we are trying to protect employment, even where profits are small, rationalisation can lead not only to diversification of activities but to a loss of employment. I do not disagree with the Deputy's point but——

The same thing will happen when the Commerce Bank buy it.

When they buy what?

Whichever bank you name. When that bank goes on the market rationalisation will take place.

In over five years in Ministries I have learned that one must be very careful. When I dealt with the Great Southern development everybody in this House advocated that I was going to privatise the company but I had to be careful to protect the employment.

There was strong trade union leadership.

The trade union movement had practically given up and I had to encourage them——

That is a marvellously selective version of history.

I am sorry to interrupt the Minister, but the time has come to put the question.

Question put: "That the Bill is hereby read a Second Time, that sections 1 to 14, inclusive, and the Title are hereby agreed to in Committee and the Bill is accordingly reported to the House without amendment and, no amendments having been offered to the Bill on Report, that the Bill is hereby passed."
The Dáil divided: Tá, 70; Níl, 20.

  • Ahern, Bertie.
  • Ahern, Dermot.
  • Andrews, David.
  • Aylward, Liam.
  • Barrett, Michael.
  • Brady, Gerard.
  • Brennan, Séamus.
  • Briscoe, Ben.
  • Burke, Raphael P.
  • Calleary, Seán.
  • Callely, Ivor.
  • Clohessy, Peadar.
  • Connolly, Ger.
  • Coughlan, Mary Theresa.
  • Cowen, Brian.
  • Cullimore, Séamus.
  • Daly, Brendan.
  • Davern, Noel.
  • Dempsey, Noel.
  • Dennehy, John.
  • de Valera, Síle.
  • Ellis, John.
  • Fahey, Frank.
  • Fitzgerald, Liam Joseph.
  • Fitzpatrick, Dermot.
  • Flood, Chris.
  • Flynn, Pádraig.
  • Gallagher, Pat the Cope.
  • Geoghegan-Quinn, Máire.
  • Harney, Mary.
  • Hillery, Brian.
  • Hilliard, Colm.
  • Hyland, Liam.
  • Jacob, Joe.
  • Kelly, Laurence.
  • Kenneally, Brendan.
  • Kirk, Séamus.
  • Kitt, Michael P.
  • Kitt, Tom.
  • Lawlor, Liam.
  • Lenihan, Brian.
  • Leonard, Jimmy.
  • Leyden, Terry.
  • Lyons, Denis.
  • Martin, Micheál.
  • McCreevy, Charlie.
  • McDaid, Jim.
  • McEllistrim, Tom.
  • Molloy, Robert.
  • Morley, P.J.
  • Nolan, M.J.
  • Noonan, Michael J. (Limerick West).
  • O'Connell, John.
  • O'Dea, Willie.
  • O'Donoghue, John.
  • O'Hanlon, Rory.
  • O'Keeffe, Ned.
  • O'Kennedy, Michael.
  • O'Leary, John.
  • O'Toole, Martin Joe.
  • Power, Seán.
  • Quill, Máirín.
  • Reynolds, Albert.
  • Roche, Dick.
  • Stafford, John.
  • Treacy, Noel.
  • Tunney, Jim.
  • Wallace, Mary.
  • Walsh, Joe.
  • Wilson, John P.


  • Bell, Michael.
  • Byrne, Eric.
  • De Rossa, Proinsias.
  • Garland, Roger.
  • Gregory, Tony.
  • Higgins, Michael D.
  • Howlin, Brendan.
  • Kavanagh, Liam.
  • Kemmy, Jim.
  • McCartan, Pat.
  • Moynihan, Michael.
  • O'Shea, Brian.
  • O'Sullivan, Gerry.
  • Pattison, Séamus.
  • Quinn, Ruairí.
  • Rabbitte, Pat.
  • Ryan, Seán.
  • Sherlock, Joe.
  • Stagg, Emmet.
  • Taylor, Mervyn.
Tellers: Tá, Deputies Dempsey and Clohessy; Níl, Deputies Howlin and McCartan.
Question declared carried.