Adjournment Debate.

Grocery Industry.

Deputy Joe Carey

I have asked for this Adjournment debate in the context of what has happened here in Ireland and internationally in the banking system. Today, I heard that Barclays bank is to pay €3.1 billion in bonuses on €13 billion profits earned last year. This has become all too familiar in international banks such as Goldman Sachs, and in Irish banks which are lesser in size and international influence, although not in sheer brass neck, and which depend on the state to bail them out when the going gets too tough.

To my mind, one can draw very strong comparisons between this experience and what is happening in our food sector. It has been quite obvious for some time that the major players are fast approaching the "too big to fail" Rubicon. This is a situation that the Minister cannot allow to continue. If these corporations are allowed to carry on unfettered with practices such as hello money and paying unviable product prices to the primary producer or farmer, where will we find ourselves in a short number of years? Indigenous food production and the farming industry will be destroyed and its best international traceability and quality will be squandered under a slogan of bringing the customer the cheapest prices.

Spokespersons for these corporations make much of the fact that food prices are 8.2% cheaper this year than last, but at what cost to their own bottom line? To my mind there is none. They do not publish accounts so we do not know the margins. While the consumer apparently gets cheaper food, the corporation's balance sheet is still intact because the farmer and producer has been squeezed more and more in the past 12 months. This is a totally unsustainable position and the Minister must meet the corporations head on.

I fear it will end in the following scenario. If these companies are allowed get bigger and stronger, the system of food production we have in Ireland and Europe may be undermined to the point where it is no longer sustainable. Large international retailers can source produce from countries which lack our level of agricultural development and good practice. Their farming methods are more intensive because that is the only scale at which profits can be made. If we compromise in quality and safety, we will find ourselves where we are today in regard to banks which are too big to fail. At that stage it will be too late to do anything.

I urge the Tánaiste to take this matter seriously. She must use the legislation at her disposal to deal with the problem and, if that is not sufficient, develop more robust laws. She could start by directing the Competition Authority to deal with the issue immediately.

I understand she shortly will be publishing proposals to ban secret multi-million euro payments within the grocery sector. A draft code of practice for the grocery sector seen by The Irish Times also proposes to appoint an ombudsman to arbitrate disputes between suppliers and retailers and investigate complaints by consumer organisations. The code would prohibit a wide variety of payments currently demanded by big retailers in return for listing or promoting products in their stores. These payments, which have grown significantly in recent years and now amount to hundreds of millions of euro, have been blamed for inflating the cost of groceries for the consumer. The question of whether the code would be voluntary or statutory has been also left open. The consultation paper indicates that the feasibility of a voluntary code depends on the willingness of companies to subscribe to it.

I ask the Tánaiste to put in place these vital safeguards to protect our food industry. She has at her fingertips Fine Gael's Food (Fair Trade and Information) Bill 2009 and I ask her to implement that legislation if she has no alternative proposals.

Minister of State at the Department of Enterprise, Trade and Employment (Deputy Billy Kelleher)

One of the principal functions of the Competition Authority is to enforce the provisions of competition law as provided for in the Competition Act 2002 and the Competition (Amendment) Act 2006. Competition law provides for a general prohibition on agreements, decisions and concerted practices that have as their object or effect the prevention, restriction or distortion of competition. Anti-competitive practices such as price fixing, limiting or controlling production and markets, market sharing, applying dissimilar conditions to equivalent transactions with other trading parties and thereby placing them at a competitive disadvantage and making the conclusion of contracts subject to the acceptance of supplementary obligations are specifically prohibited. The Competition Acts also prohibit undertakings which hold a dominant position from abusing their dominance.

In so far as practices in the grocery goods sector are concerned, existing competition law prohibits undertakings from engaging in particular practices. These prohibited practices include: the imposition of resale price maintenance, that is, the practice whereby manufacturers or suppliers specify the minimum prices at which their goods may be resold; unfair discrimination in the supply of grocery goods involving a supplier offering preferential terms to one buyer over another even though the transactions involved are equivalent in nature; retailers or wholesalers of grocery goods compelling or coercing suppliers into payment of advertising or display allowances, for example, where a retailer seeks payment from a supplier in order to advertise the supplier's goods as a means of attracting customers to the retailer's premises; and retailers compelling or coercing suppliers into payment of hello money, that is, where a retailer demands a payment from a supplier before agreeing to stock that supplier's products. The circumstances in which a practice will be prohibited include the opening of a new store, an extension to an existing store or a change of ownership of a store. These practices are prohibited where they have as their object or effect the prevention, restriction or distortion of competition in trade of any grocery goods in the State.

Persons aggrieved by a practice or abuse prohibited by the Competition Acts have the right to take a private action under the Acts. Relief by way of an injunction, declaration or damages, including exemplary damages, is available. Alternatively, complaints alleging a breach of competition rules may be referred to the Competition Authority for investigation. While a considerable amount of comment and allegations have been made regarding practices in the grocery goods sector, no concrete evidence of prohibited practices has been forthcoming. I not aware that any evidence of such practices has been reported to the Competition Authority or of any proceedings taken before the courts in this regard.

The Tánaiste has on numerous occasions urged anyone with evidence of undertakings engaging in prohibited practices to bring it to the attention of the Competition Authority to allow it to be fully investigated. I have been assured by the Competition Authority that any evidence of such practices will be investigated as thoroughly and expeditiously as possible. In the absence of concrete evidence, however, it is difficult to see how the authority could usefully conduct an investigation of the type sought by Deputy Joe Carey. As Minister of State with responsibility for trade and commerce, I have on numerous occasions urged parties to submit any evidence they possessed of these practices to the Competition Authority. If the Deputy has evidence, I urge him to submit it to the Competition Authority for investigation.

Aside from considerations of competition law, the Government fully recognises the importance of achieving a balance in the relationships in the grocery goods sector which takes account of the interests of the various parties, including the consumer, and the need to ensure there is no impediment to passing on lower prices to consumers. To this end, the renewed programme for Government contains a specific commitment on implementing a code of practice for doing business in the grocery goods sector, developing a fair trading relationship between retailers and their suppliers and reviewing progress on the code with a view to putting in place a mandatory code if necessary. The Government will give effect to this commitment by including in the legislation currently being prepared to merge the National Consumer Agency and the Competition Authority a specific provision allowing for the introduction of a statutory code of practice in the grocery goods sector. The Tánaiste expects to publish this legislation later in the year. Until the legislation is enacted, she will explore with all the relevant stakeholders the possibility of agreeing a voluntary code which would respect the interests of all parties. A voluntary code offers stakeholders the opportunity to develop guidelines which are suited to the dynamics of the Irish grocery goods sector and form the basis of any subsequent statutory code.

The relationship between suppliers and retailers has been also identified as a key concern by the European Commission in its 2009 communication, a better functioning food supply chain in Europe. The Tánaiste is working closely with the Minister for Agriculture, Fisheries and Food on the initiatives proposed in the Commission's communication.

While the negotiation of commercial relationships between undertakings in the grocery goods sector is ultimately a matter for the undertakings themselves, the Government is concerned with ensuring a balance in these relationships, particularly given the important role that the grocery goods sector plays in the national economy. Accordingly, I trust the House will appreciate that the Government's actions in this area have been focused on achieving a fair balance which respects the interests of all stakeholders.

State Airports.

Deputy Pat Breen

I thank the Ceann Comhairle for affording me the opportunity to raise this issue. I am disappointed the Tánaiste is not available to clarify the comments made in this House last night. Perhaps she could also update me on her meeting with Michael O'Leary.

While I accept that Ryanair is not interested in building an aircraft maintenance facility at Shannon Airport, I am deeply concerned about the airline's plan to axe 18 destinations from its schedule at the airport from next month. The recession is having a more severe impact on the tourism industry in the mid-west region than on any other region in the country. Passenger numbers slumped by 27% last year and access capacity through Shannon Airport has decreased significantly. Capacity has dropped by 50% in transatlantic traffic, 37% in European traffic and 11% in British traffic, and the outlook for 2010 is even bleaker. When I met Michael O'Leary tonight, I encouraged him to return to Shannon Airport and to provide flights to his previous destinations. He said the travel tax is still a major impediment to a new deal. I am interested to hear the Tánaiste's view following her meeting with Michael O'Leary.

Earlier this evening, we debated a motion of confidence in the Minister for Defence, Deputy Willie O'Dea. I remind the House of what the Minister, Deputy O'Dea, said when the recommendations of the interim report on the mid-west task force were debated in this House last month regarding the Lynxs cargo facility: "A great deal of work is being done behind the scenes in this matter and an announcement is imminent." Is that another case of mistaken recollection by the Minister? In response to questions I raised with the Tánaiste on the Lynxs project in the House last night, she said, "It is not fully mature yet, in order to move on to final decision making". She continued: "The task force has afforded it a high priority and we will ensure, in the context of the former's final report, it remains so."

I am deeply concerned about those comments as I fear the region could lose the Lynxs facility if the Government does not fast-track the project. I would like to know what the Tánaiste meant by saying the project was not "fully mature". I hope there is no suggestion of another report. We are blue in the face with reports. We need Government action. Even the chairman of the task force is frustrated by the Government's inaction. He is on record as saying that he has no notion of wasting his time moving on to complete the final report until a number of the recommendations of the interim report are acted upon. If the Tánaiste is going to wait for the task force's final report, we could be waiting for another two or three years. One could ask if we will ever see a final report.

When the Lynxs Group signed a memorandum of agreement with the Shannon Airport Authority in March 2009, it anticipated that the final stages of construction would be in place in 2011. The company will be lucky if the Government has made a decision on the project by then. The Lynxs Group is investing more than $15 million in the project. A total of €7 million is required in investment to upgrade the airport's infrastructure. I refer to improvements to the runway, the building of a new taxiway and the provision of additional aircraft parking spaces. That is not a significant amount of money. It is peanuts compared with the €62 million the Government wasted on e-voting machines, for example.

The Lynxs Group has an international reputation for building and managing first class cargo facilities across the world. When the green shoots begin to emerge in the industry, which will happen sooner rather than later, the first business to show improvement will be air freight. We have to be ready to capitalise on the opportunities which are presented.

Our region is being paralysed and strangled by the Government's lack of decision making. This country's reputation abroad will be damaged if we are seen to be a country that is paralysed by bureaucracy, red tape and indecision. The development of Shannon Airport as a first class cargo facility in partnership with the Lynxs Group is a project which is strategically important to the future of the airport. The Government's task force recognises its merits and its strategic importance for the mid-west region. One can ask what else is needed to convince the Government of the merits of the proposal.

I seek to clarify a number of issues such as the timescale and whether the Tánaiste will bring the project to fruition before the task force's final report. It would be unforgivable if the jobs to be created by the project are lost to the region because of Government inaction. I urge the Minister of State to clarify the situation regarding the Lynxs project. What is needed is a serious approach to the project by the Government, for it to show leadership and that it is equal to the task. It might be necessary to make a leap of faith and give the project the green light to proceed.

Deputy Billy Kelleher

I thank Deputy Breen for raising this matter. The Deputy referred to this country's reputation and the fear that we would be seen as bureaucratic and in a state of paralysis. The contrary is the case. All surveys on this area show that this country is nimble and flexible. It is very much seen as being pro-business in terms of setting up business here or establishing companies for investment purposes. We would not wish a negative view to be portrayed without correcting it.

The mid-west task force has already made its recommendations on the Lynxs cargo facility project and the project is currently being considered by the Minister for Transport. The Dublin Airport Authority has statutory responsibility for the operation, management and development of the three State airports. The Minister for Transport advised in February 2009 that the DAA had concluded a memorandum of understanding with the Lynxs Group, a global airport cargo facility company, to explore jointly the feasibility of developing a major cargo facility at Shannon Airport. I understand that the basic concept underlying the proposal was, among other things, to secure existing cargo at the airport, increase the potential for cargo growth and to provide flexibility and operational readiness for the potential requirements of US cargo pre-clearance in the event that the US authorities would agree to cargo pre-clearance at a future date.

The involvement of a global air cargo development company, such as the Lynxs Group, was seen by the DAA as important for the provision of investment and to raise the profile of the facility in the freight community and cargo industry generally. In the initial phase, it is proposed that there would be investment in a new cargo facility that would involve the transfer of existing cargo operators from current locations. In later stages, it is proposed that the facility might be expanded to attract increased traffic and to realise the airport's potential as an airfreight hub, as well as further opportunities that might evolve from pre-clearance, which would underpin the development of a logistics, distribution and manufacturing cluster in the Shannon area.

It is recognised that Shannon has a number of strengths, such as a well developed economic hinterland and its proximity to major economic and distribution centres in the United Kingdom and Europe. It can also reap the benefits of current and pending road access improvements. The Minister for Transport also advises that, on the other hand, the DAA has to operate to a commercial mandate and it does not have access to unlimited funds to undertake capital investment. Any investment that the airport undertakes must be evaluated carefully to ensure that there is a commercial business case.

I understand the Department of Transport has recently received the DAA's evaluation of the business case for the project. Consideration of the best way to support the project will take account of the extent of potential investment by the DAA on foot of its evaluation of the business case and any support that could be provided by the State, subject to compliance with EU state aid rules. The DAA has financed pre-clearance facilities at Shannon at a cost of some €22 million since it became operational for commercial aircraft on 5 August 2009. The service is working very well for all concerned. Given the significant investment involved in the construction of the pre-clearance facility, it is hoped that as many flights as possible would use the pre-clearance services there. The next phase of pre-clearance is to extend its use to private aircraft en route to the United States. Following close engagement with the US authorities in recent weeks, preparations for general aviation pre-clearance are well advanced and it is hoped that the service will become operational in the coming weeks.

This is a welcome development for Shannon and one that I know the authority there will market vigorously. There is great scope for growing this market given that already significant numbers of private aircraft land at Shannon for refuelling and other technical reasons prior to completing the journey to the US. The pre-clearance agreement with the United States does not provide for cargo pre-clearance currently. However, that is an issue the Minister for Transport has raised with the current and previous US Secretaries for Homeland Security. Both of them were receptive to giving further consideration to cargo pre-clearance from Ireland, once passenger pre-clearance is fully established.

The issues facing the mid-west region are the issues facing other regions and facing the country as a whole. The situation in the mid-west was exacerbated by the Dell decision. The work of the mid-west task force has helped to focus the response of Government and agencies. The Tánaiste is very grateful for the work Mr. Brosnan and the other members of the task force have undertaken to date. The task force has identified a number of issues for further study in its final report, which she looks forward to receiving in the coming weeks.

We have had such discussions in previous Dáil debates. The DAA is commercially mandated to operate Shannon Airport and any investment has to have a business plan and to make sound commercial sense if it is to receive clearance.

Hospital Staff.

Deputy Denis Naughten

I thank the Ceann Comhairle for giving me the opportunity to raise this issue on the Adjournment. I am extremely disappointed that the Minister for Health and Children walked out of the Chamber approximately ten minutes ago and did not think it worth her while to be present for this debate. Sadly, neither she nor a representative of her Department considered it worthwhile to hear my contribution this evening.

I wish to raise the attempts by the Health Service Executive to downgrade Portiuncula Hospital and Roscommon Hospital by instructing them to report directly to the general manager at University College Hospital, rather than to their own managers who operate the hospitals on a daily basis. The HSE claims the objective is to expand the scope of the Galway general manager, which is the start of the restructuring of hospitals in the region and which will result in the downgrading of the skill mix and services available to the people of counties Roscommon and Galway who avail of services at both Roscommon and Portiuncula hospitals. The proposal to introduce a new reporting structure will mean that the hospitals will be managed from Galway and this is the thin end of the wedge. Professor Brendan Drumm has made it clear in the past that he wants accident and emergency departments and surgical services transferred from both hospitals to Galway and this change to the management structure is the first step in that process.

The HSE has continually misrepresented its intentions regarding Roscommon and Portiuncula hospitals and there is no doubt that if the executive gets away with this change further, more significant transfers of medical capabilities will take place. The hidden agenda behind this process is to move accident and emergency and surgery departments from both hospitals to Galway. Currently Galway hospitals are struggling to discharge patients and under the new management structure the patients will be operated on in Galway and then transferred back for respite care to either Portiuncula or Roscommon hospitals. This will dramatically reduce the capacity of both local hospitals to deal with emergencies and ongoing surgical procedures. This modus operandi was used in respect of both Ennis and Monaghan hospitals where the management structure was downgraded initially followed by services.

The HSE has issued weasel words in response to concerns raised locally and it stated:

In the course of recruiting a new general manager for Galway University Hospitals, a national decision was taken to expand the role to include Portiuncula Hospital and Roscommon County Hospital. There is no question of the downgrading of any hospital as a result of this expanded role.

This is a blatant lie on the part of the HSE. In the final quarter of 2009, a report on a review of surgical specialties in the western region identified realistic solutions for the medium term that would take five years to implement. The report states the only value of conducting such reviews is they would act as a guide to the decision-making process. Regarding the HSE strategy for acute services, it states: "The national strategy to reconfigure acute services with a smaller number of large hospitals providing the full range of acute care and all emergency services, with smaller hospitals providing elective procedures ... raises particular issues" in the western region.

The report further states regarding emergency services that "Portiuncula, being closer to Galway, and with the completion of the M6 motorway to Galway and Dublin, could conceivably transfer its emergency services to Galway in the nearer future" but there are issues relating to the planning timescale and capacity to deal with the additional demand following the closure of the accident and emergency department in Portiuncula Hospital. It is reasonable to assume acute services will remain in the hospital for the a period of five years while the HSE has time to upscale its capacity in Galway University Hospitals. The report goes on to state Roscommon County Hospital

. . .will be reconfigured in the nearer term to provide only non-emergency services, following the process now underway or completed in Monaghan, Louth, Nenagh and Ennis. The medical and surgical emergencies which currently present there will need to be dealt with elsewhere, and this must be planned for.

The report was produced within the HSE and it has not been published. However, it clearly identifies the executive's intention and the proposed change in the management structure is the first step in implementing this plan. In addition, the executive received a report 12 months ago from Prospectus Consultants, which reviewed the critical care services in all the acute hospitals in the State, including the intensive care service at Portiuncula Hospital and the coronary care service at Roscommon County Hospital. For some unknown reason, neither the HSE nor the Minister for Health and Children is prepared to publish the report, even though taxpayer's money was used to compile it. The report copperfastens the ethos outlined in the review of acute services and it is the sole purpose of the HSE to put the new structure in place and to transfer both surgical and accident and emergency services from the two local hospitals to Galway University Hospitals. That is unacceptable to the people of counties Galway and Roscommon and we will oppose it tooth and nail.

Deputy Billy Kelleher

I am taking this matter on behalf of my colleague, the Minister for Health and Children.

Deputy Denis Naughten

Has the Minister of State an explanation as to why she is not present? This is a disgrace.

Deputy Billy Kelleher

The structural changes referred to by the Deputy are designed to promote good co-ordination between hospitals. The initiative is not about downgrading any hospital or reducing its service. It is simply about improving management processes and, thereby, improving services for patients.

Deputy Denis Naughten

That is not true.

Deputy Billy Kelleher

With this in mind, the HSE plans to recruit a general manager with responsibility for Galway University Hospitals, Portiuncula Hospital and Roscommon County Hospital. This involves the expansion of the current post of General manager at Galway University Hospitals. The development will facilitate closer collaboration by the hospitals concerned and a more integrated and strategic approach to the management of services. It will ensure better and safer patient care, and provide additional support to Portiuncula Hospital and Roscommon County Hospital. The Minister has welcomed the HSE's decision.

The appointment of a general manager with responsibility for the three hospitals concerned is in line with the Health Information and Quality Authority's report on quality and safety of services at the Mid-Western Regional Hospital Ennis published in April 2009. This report identified the importance of integrated governance across hospital networks as an important way to ensure higher quality services for patients. The HSE has assured the Minister that it is committed to full engagement with all stakeholders regarding the general manager post. The final interviews for the post will not be held until the competition to appoint a regional director of operations in HSE west is concluded. This means that the regional director can take an active part in the selection process.

The development is also very much in line with the greater collaboration between Roscommon and Portiuncula hospitals in the provision of services that has been taking place over recent years. The HSE is proceeding with the reconfiguration of the surgical and anaesthetic departments of the two hospitals into a joint department of surgery and anaesthesia. As part of this plan a joint clinical director was appointed this year and joint consultant appointments are being progressed that involve sessional commitments at both hospitals. In total, five consultant surgeons will serve the two hospitals. A new consultant surgeon post was filled in September 2009 and a replacement consultant surgeon post is in the process of being filled. The majority of sessions for both posts are in Portiuncula Hospital and the basis for the split is 25 hours in Portiuncula, eight in Roscommon County Hospital and four in Galway University Hospitals, which creates a linkage with the cancer centre. In addition, two consultant physicians with sessional commitments at the three hospitals have been recruited and there will be joint sessions between Portiuncula and Roscommon hospitals in radiology and anaesthetics.

The Government is satisfied that the plan to recruit a general manager with responsibility for the three hospitals will enhance the capacity for collaboration in service provision, will provide a more strategic approach to the management of the hospitals concerned and will ensure the provision of better and safer services to the people of the region.

Deputy Denis Naughten

What about the closure of local services? It is a disgrace.

Tourism Promotion.

Deputy John O’Donoghue

I thank the Ceann Comhairle for allowing this matter. Following two extremely difficult years for the tourism industry, particularly in the south west, most people will realise it is of crucial importance that we improve transport facilities into the country in so far as that is possible. Fastnet Line, the new ferry service to be operated by a co-operative of 500 people from the south west, hopes to set sail between Cork and Swansea on 1 March. It was estimated that, until its cessation in 2006, the previous ferry service between both cities generated more than €40 million for the local economy annually. As more than two thirds of its users were coming from the UK into Ireland, its loss has had a significant negative impact on businesses in the south west — particularly small businesses operating in the hospitality and retail sectors — and it is estimated that the return of the ferry will preserve and create more than 1,000 jobs in the locality in the coming years.

A total of €13.5 million in aggregate needs to be raised to ensure the business commences as planned on 1 March. Following a fund-raising drive, which received tremendous support from people on the ground in Cork and Kerry and further afield, €4 million was raised in small lots from more than 500 people and local businesses, and €6.3 million was obtained from a Finnish bank. In addition, a private equity business in Wales has agreed to invest €1.7 million subject to the remaining balance being raised. Thus, €12 million in total has been already raised or committed — representing an incredibly positive community effort in the current economic climate — but the balance of €1.5 million needs to be fully committed immediately if this business is to become a reality.

The Fastnet Line business is taking shape. Sales for the year are ahead of target, as are car and passenger numbers for the first month of sailing, which is March. The company is expecting up to 30,000 cars and 80,000 passengers to use the service in 2010, and this number is expected to grow in subsequent years. These are people who, because of the nature of their visit, tend to stay longer and spend more than air travellers. They will be welcomed again to Ireland with the return of the ferry service.

Local businesses and private individuals have been supportive of this project to date. They have invested in the prospect of a €40 million annual injection into their local economy. These smaller investors could have found numerous ways to justify not investing in the current economic climate; had they taken that view earlier this year, the project would have gone nowhere. The Exchequer will also benefit from this project, both directly and indirectly, and we now need to find a way to make this project happen for the south west by finding €1.5 million immediately. This is of the utmost urgency and importance to all those involved in the tourism industry in the south west of the country.

Since the closure of the Cork to Swansea ferry in 2006 there has been a noticeable absence of cars with yellow number plates across Cork and Kerry. This is of crucial importance to small businesses and those involved in the hospitality sector. I forecast that if the ferry is not put back in place immediately, we will see closures in the hospitality sector across the south-west region.

We are often told by IDA Ireland, Forfás and other agencies of major investments in which employment is created. These are welcome. However, we often unfortunately forget that we have an indigenous tourism industry on which we can capitalise, in which we should invest and which can yield real jobs for real people, not just in the medium to long term but also in the short term. In these circumstances, I strongly exhort the Government to find a way for these funds to be made available immediately in order that the ferry can recommence business on 1 March and in order that we can do justice to all those involved in the hospitality sector in the south west of the country, many of whom are totally dependent on the industry for their livelihoods.

I take the opportunity of thanking the Taoiseach for the personal interest he has taken in this project from the outset and for attending various meetings with a view to providing assistance. I sincerely hope the Minister of State who is here this evening will be in a position to put forward a positive proposal on behalf of the Government.

Deputy Billy Kelleher

I thank Deputy O'Donoghue for raising this issue. The Minister for Transport, Deputy Dempsey, hopes the Cork to Swansea service can be relaunched successfully and that it is commercially sustainable. However, the Department of Transport has no function in or finance for the provision of ferries on this or any other route, other than by being as supportive as possible.

The Swansea Cork Ferries company suspended its service in 2007. The Minister for Transport fully appreciates that this has had an impact on the local region, particularly on tourism, and that there is a strong desire for the service to be re-launched. However, market conditions are challenging at present in the shipping sector. The slowdown in global trade, coupled with underlying problems in the international ship finance sector, have created difficult market conditions for Irish and foreign shipping groups. The sector has been hit harder than most by the global recession. As in all businesses, securing investment and bank financing in the shipping sector is at present very difficult.

Ferry services to the UK also face the additional challenge of operating year-round, including when tourist numbers are low, in order to offer a service to the freight industry. Such services are also vulnerable to fluctuating fuel prices. Even modest increases in the price of oil can have a large impact on profitability. Since the previous operator withdrew the service, the Port of Cork Company has engaged in discussions with a number of interested parties with the aim of ensuring the route is served by another operator. The port company also completed a feasibility study on the route.

In early 2009, a west Cork tourism co-operative was formed with the objective of re-launching the service. The port company has worked closely with the co-operative to facilitate the resumption of the service. I wish to express my appreciation of the efforts of the many people involved in the co-operative in organising the finance for this venture. As Deputy O'Donoghue said, from the bottom up everyone became involved. Despite the efforts of the port company and the co-operative, no existing shipping company could be found to operate the service. The co-operative then took the courageous decision to try to relaunch the service itself. The Minister recognises the major effort that has been made by all concerned in an effort to make this a success. This has been a community-based initiative and the Minister acknowledges that there is considerable and broad regional support for this venture.

Over the course of 2009, the co-operative raised €2.5 million from the sale of shares to local investors. It then established a shipping company, Fastnet Line Group, and in September 2009 it purchased the vessel Julia. The vessel cost €7.8 million and was financed by €1.5 million of the equity raised and a €6.3 million loan. In October 2009, the company issued an information memorandum seeking to raise a further €2.5 million to finance pre-launch costs and operating costs up to September 2010. The offer consisted of further share purchases and corporate bonds.

The Minister for Transport has recently given approval, with the consent of the Minister for Finance, for the Port of Cork Company to make a commercial investment by purchasing €200,000 of bonds from Fastnet Line. The final decision was entirely a matter for the board of the Port of Cork Company. The Minister understands that some local authorities have also made similar investments. It must be stressed that it is not open to the Government under state aid rules to provide direct financial support to the venture, but it is advised that commercial investments by State agencies are permissible.

As for any new venture, a range of supports is available from various State agencies. Fáilte Ireland is available to support any new service through active promotion and marketing, as is the case for other air and sea access routes. Fáilte Ireland has also granted business expansion scheme certification to the enterprise. The Port of Cork Company has provided technical and marketing advice, and the Irish Maritime Development Office has met with Fastnet Line and is available to provide further advice and assistance. Thus, a broad range of support has been made available to Fastnet Line to help make it a success. Safety is also of key importance, particularly for passenger ferries, and before entering service, new ferries are subject to an inspection by the marine survey office of the Department of Transport.

The Government has taken a number of initiatives in recent years to support the development of the Irish shipping industry generally. The Irish Maritime Development Office is the shipping sector's statutory dedicated development and promotional agency, and pursues its promotional activities, supported by the Department as appropriate, through direct marketing, including contact through the embassy network and through the holding of information seminars for the industry. The Government has introduced a number of fiscal and strategic policy measures that have had significant positive impacts on the sector. Government policy to promote the shipping sector concentrates on fiscal areas, marketing and education.

A range of beneficial fiscal reliefs, with EU state aid approval, are in place for the shipping sector. These include a full refund to employers of social insurance contributions relating to seagoing employees, a unique €6,350 income tax allowance for seafarers who are at sea for more than 161 days and a €5,000 tax free allowance for Irish seafarers. The Government has also taken a number of initiatives in the area of maritime education. The €51 million National Maritime College of Ireland has been established in Ringaskiddy and is an excellent facility that has been gaining an international reputation as being a fine place at which to study maritime issues.

The above developments illustrate the many initiatives the Government is taking to promote the maritime sector, both at sea and on shore. I will relay Deputy O'Donoghue's opinions to the Minister and the Government because we all accept that a linkage to our markets, mainly the UK and Europe, is of critical importance in sustaining and developing the hospitality sector. We all know that there has been a considerable downturn in the number of tourists visiting Ireland because of the global recession and the weakness of sterling vis-à-vis the euro. All of these reasons are causing significant pressure, so anything that can assist in ensuring the MV Julia sails on the scheduled date I will raise with the Government on foot of Deputy O’Donoghue’s representations tonight.

Deputy John O’Donoghue

Arising from the Minister of State's comments, I propose that the State agencies make the necessary commercial investment available immediately to get around the state aid problem.

The Dáil adjourned at 9.30 p.m. until 10.30 a.m. on Thursday, 18 February 2010.

Dáil Éireann díospóireacht - Wednesday, 17 Feb 2010