I am pleased to see this Bill coming before the House not least because some little time ago, as Minister for Transport, Energy and Communications, I was in charge of much of the preparation of the Bill. I was particularly pleased that it was possible to make provision for the winding down of the company's debt by direct Exchequer injection in such a way as to facilitate the simple company structure that is provided for in this Bill rather than a more complex two-stage operation which seemed to be required at the outset.
The Bill gives the company a structure that is in keeping with the commercial environment in which it has to operate, a structure far more in keeping with that environment than the one currently in place. The company is operating in a market that has changed very much in nature, and in some respects in scale, since it was founded, a market that has changed a great deal even in the past decade.
The key to reforming the company in the way it has now been reformed was the decision of the last Government to provide the funding necessary to get the company out of the hobble in which it found itself as a result of debts built up during times of energy crisis when the company had to incur major investment expenditures to expand without any direct assistance from the Government, thereby incurring costs that told very heavily against it when energy prices dropped. It is fair to recall that the package which made the presentation of the Bill possible needed the agreement of the European Commission authorities. That agreement was forthcoming and the Commission proved very understanding of the issues and challenges facing the company.
The company is now in a better position to deal with the kind of markets in which it operates, the foreseeable changes in these markets and competition. Its balance sheet has been cleaned up and is healthy. The company can engage in the full range of commercial practices and options which should be open to a company in a competitive marketplace. Specifically, it can consider joint ventures or equity partnerships in a way that was not possible before.
In this context, the provision in section 16(3) which states that the Minister for Finance shall not reduce his shareholding to less than 50 per cent unless authorised to do so by a resolution of Dáil Éireann is unusual and is clearly included for political reasons only. It has not been explained by the Minister and we have not been given any detailed reason 50 per cent should be the figure, why it is provided for and why it needs a resolution of Dáil Éireann rather than the agreement of the Government or some other form of agreement. Will the Minister give us some more detail on why it was thought necessary to include this very unusual provision? I do not imagine that there is a great deal of pressure for a provision of this kind from the bargain basement Progressive Democrats bit of the Government and I wonder where it came from and why.
Section 41 provides that more than 50 per cent of the aggregate value of the subsidiaries taken as a whole cannot be disposed of without the approval of the Dáil. This is an unusual provision which seems to have been included for political reasons only. While I do not have any great love for this provision, logic leads me to ask why it is framed this way. Why does it relate to 50 per cent of the aggregate value of the subsidiaries taken as a whole? Why does it not refer to 50 per cent of the value of any one of the subsidiaries taken individually? Is there a reason for this? We are entitled to know why matters of this kind should be brought before the Dáil in the context of a Bill which is designed at the very beginning to give the company a commercial mandate, the leeway to operate in a commercial market without the kind of interference we so often hear claimed, sometimes rightly, as the source of many of the ills suffered over many years by semi-State companies.
The commercial freedom of the company being set up by the Bill is circumscribed to an extent by these two provisions. It may be said that these provisions in themselves will not constitute a substantial obstacle to the company in its operations in the foreseeable future but the time could come when they might prove to be so. The time could also well come when the company adopts a strategy which necessitates a new form of equity partnership that requires more than 50 per cent of the aggregate value of the subsidiaries to be sold to another person as part of that deal. The company could find itself "upscuttled" in that because a majority in the House did not provide for it.
Equally, the company might find itself in a position — this is something we might hope would happen — where it expanded to the point that it needed a large injection of new capital and new equity partners which might want more than 50 per cent of the equity in the company. Although it might have a good financial proposition to make, it would have to come back to the House to get agreement for that. It could face the prospect of having that arrangement "upscuttled" if it was not possible to get a majority in the Dáil for the Minister for Finance to dispose of more than 50 per cent of the shares in the company. If that happened the people behind these two curious provisions might find they had outsmarted not only themselves but the workers in the company and the people who depend on the company for a living.
The Government must make up its mind on this matter. The Minister for Public Enterprise must make a decision. Will we take the commercial route? Will we make this company part of a competitive, rapidly changing energy market? Will we make it a valid player in that market? The Lord knows what the future holds for companies in the energy market. The company and people who speak on its behalf will increasingly make the point in the future that the fuel it produces is more environmentally friendly than some of the fuels it would replace, and that may be the case, but people will have to be convinced of that. It could happen that the company would market not only unmixed peat fuels but fuels or other products that are a mixture of peat and other materials, requiring the participation of other actors. I fear these provisions will prove to be obstacles to such development of the company.
There is a specific problem in the company with which the new structure will help it to deal. The peat products division of the company is the most difficult part to deal with in the sense of its placing in the market, its profitability and the prospect for its development. That is not helped by ignorant remarks made by high personages elsewhere about a product that is quite inoffensive and has a number of enormous advantages. I hope that under the new structure of the company with its subsidiaries it will be easier to deal with the problem in that part of the company. I hope the 50 per cent provision will not get in the way of dealing in real terms with that problem.
I make that comment, having freely admitted to having a particular interest, as has my colleague Deputy Power, in the future of the operation at Kilberry in Kildare South. It has been part of the economic fabric of that part of Kildare for many years and all of us would like to see that continue. If that requires new forms of association, co-operation or venture partnership with other companies, that should be done because we need to maintain that part of the economic base as long as that can be done on a viable basis.
The Bill is in many ways only one part of the outcome of a process that has gone on for a long time. It would be unreal to debate the Bill without reflecting on the history of the company. For a period it had to engage in heavy investment from its own meagre resources and as a result incurred substantial debts. It has undergone major rationalisation in the past ten years. The staff and management has gone through one of the most fundamental restructuring operations which has ever taken place in a branch of Irish industry. At one time a large proportion of the population of counties Kildare and Offaly, in particular, and counties Westmeath and Longford were employees of Bord na Móna, but only a small proportion of them are currently directly employed by it. However, a number of them perform various operations on contract for the company.
I wish to refer to a matter which has informed the approach of successive Governments to the company and to the introduction of this legislation. For many years Bord na Móna and the ESB have had a social and economic influence on the midlands which is inadequately understood. Even though the population of the midlands is not sparse, it is very dispersed because of the location of work with Bord na Móna and the ESB. As I stated, Bord na Móna has undergone enormous structural change and the ESB is going through similar change, but the people still live where they lived when the organisation of those companies was different. Many of them provide services on contract for Bord na Móna, some have retired and others have been made redundant. While the economic circumstances of a large number of people in north and west Kildare and counties Offaly, Longford and Westmeath have changed fundamentally in recent years, and they have little prospect of ever again being employed by their previous employers, little is being done to provide alternative employment in the region. I am not insisting that this newly constituted commercial company should be given a particular role, but when implementing this necessary legislation it would be wrong to overlook the consequences which have made it necessary to make changes in the company. Some Members on this side of the House have been calling for some time for a fresh look to be taken at the development requirements of the midlands which are easy to overlook because of the imperfect understanding of economic changes in that area in recent years.
Although it may not be popular to say this, we owe a substantial debt of gratitude to the board and senior officials of Bord na Móna. They have brought the company through difficult days and allowed us introduce this forward-looking legislation. Section 26 provides for the appointment, and terms and conditions of appointment, of the managing director of the new company and the following sections relate to staff. According to what I read in the newspapers in recent days, the Government does not intend to proceed with the Buckley proposals which, among other things, would give us an opportunity to consider the remuneration of chief executives of semi-State companies. That is a great mistake.
While it would not be appropriate to recount the history of a well known case which arises in this connection, it is obvious that the rules we apply to a number of semi-State companies in fixing remuneration for their chief executives are utterly unsuited to their positions. The more our semi-State companies enter the competitive market, which is what we are rightly imposing on them by liberalising legislation, whether from our inspiration or that of the European Union, the more we are pushing them into competition with private sector companies. Yet, we are also imposing on them a number of restrictions which in some cases prevent them from getting the expertise and staff input they need to operate in that market. The ideal outcome would be to give these companies the freedom to head-hunt in the market for the type of people they need, but as the Buckley proposals have been published, it is outrageous that the Government should close its eyes and hope the problem will go away. That is not satisfactory. I would be delighted if, as a result of this debate, the Minister adopted a new approach.
Members of the boards of semi-State companies are often criticised and held up to ridicule, their motives are often suspect and they sometimes achieve notoriety in their own right. From time to time they are among the popular whipping boys. They get paid a pittance for the services they give to the State. A great many of them do not do much more than they are required — they cannot be blamed for that — but a number of them make a contribution to their companies that is far above the level of recognition they receive by way of directors' fees. We are fortunate that some members and chairpersons of such boards are willing to do that. Now that more of our semi-State companies are moving into the competitive market it is time to reconsider how members of their boards are treated. If the Government wishes, I am also willing to consider the appointment of members to such boards. Board members usually have to wait until they retire and write a book to get the appreciation they deserve.