I welcome Mr. McCabe, director of transport in IBEC, and Mr. Lacey, managing director for the freight division of Irish Ferries. We are conscious that Mr. McCabe sent this committee an e-mail concerning the COM we will discuss in a moment with the officials from the Department, and we will give him this opportunity to make a short presentation to the committee to make it aware of the problems he sees with this regulation.
Scrutiny of EU Proposals.
Mr. Reg McCabe
How much time is available to us?
There are three EU legislative proposals for consideration. The first is COM (2004) 478, which is a proposal for a regulation of the European Parliament and of the Council of the European Union establishing the second Marco Polo programme for the granting of community financial aid to improve the environmental performance of the freight transport system. The second is COM (2004) 654, which is a proposal for an EU directive on market access to port services. The third is COM (2004) 497, which is a proposal for a Council of the European Union regulation — European fisheries fund. I propose that the committee considers COM (2004) 478 — the second Marco Polo programme — and COM (2004) 654 on market access to port services together.
I welcome Mr. Reg McCabe from IBEC's transport and logistics council and Mr. Liam Lacey, managing director of the freight division of Irish Ferries, who will now make a presentation to the committee. Members of the committee have absolute privilege but this privilege does not apply to witnesses appearing before it. The committee cannot guarantee any level of privilege to witnesses appearing before it. Under the salient rulings of the chair, members should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable. The committee will use the same format as before — a short presentation followed by a short question and answer session.
Mr. Reg McCabe
Would five to ten minutes be sufficient for a presentation?
Yes.
Mr. McCabe
As we have not previously been before the committee, it would be useful to record IBEC's role as the main employer and business representative organisation in Ireland. My involvement relates to transport matters in general. Ports, shipping and related industries are probably the chief priority for IBEC's transport council. Like a political party, IBEC places great emphasis on its regional structure. We are fortunate in having quite a good ports industry with good infrastructure here. Ports throughout Ireland provide an excellent service for the economy generally, a service that IBEC recognises.
Our specific focus today is on the so-called ports services directive. There has been an unusual degree of media interest in the ports sector in recent weeks. Some of this interest has been prompted by the publication of the policy statement by the Minister, Deputy Gallagher. Some of the media coverage has referred to issues like privatisation of the ports. I was particularly interested in a comment by ICTU last week that used IBEC as an authority for citing a lack of interest in privatisation in the ports, which I think was somewhat disingenuous of it as it seriously misrepresents IBEC's position. IBEC takes the view that the ports are already substantially privatised and this is a theme that runs through our position on the ports directive.
Representatives from ICTU are not present today. Mr. McCabe is being unfair to the committee by going off on a tangent. The committee is giving Mr. McCabe the opportunity to comment on the proposal before us.
Mr. McCabe
It is quite relevant.
Would Mr. McCabe like to continue with this opportunity?
Mr. McCabe
It is relevant because the directive addresses competition within the ports. Private companies operate services provided within the ports. It is not entirely accurate to paint the ports sector as being State-dominated. It would be appropriate to have a wider national debate about some of the issues addressed in the statement because there are so many issues relating to the performance, ownership and management of the ports.
Mr. McCabe may not be aware of this, but the committee visited the port of Cork, which is a very successful port, in 2004. The committee intends to examine ports in general, probably in the autumn.
I suggest that the committee should visit Dublin Port at the first opportunity.
The committee could do that on a Tuesday before the Dáil.
Ninety per cent of the goods entering the State come in through Dublin Port.
We will allow the clerk to make arrangements.
That would be very much appreciated.
Mr. McCabe
As IBEC has provided a written submission, I invite my colleague, Mr. Liam Lacey, to speak on behalf of his own company. Before I do that, we need to ask whether the kind of legislative imposition contained in the directive is justified, having regard to the performance of the ports. If one looks at the provision in the directive, particularly having regard to the licensing of all internal services within ports and the regulatory burden that the implementation of that requirement would impose, one would have to question whether the cost is justified in terms of the benefit that will accrue. Any objective review of the commercial operation of the ports has not produced evidence of lack of competition. IBEC is satisfied that there is very vigorous competition between and within the ports.
The European Commission would probably answer that there are ports in other parts of Europe where there are restrictive practices, sweetheart deals and port authorities that provide many of the basic services in the port under their own account. There are serious questions to be asked about the level of competition and the scope for malpractice. However, there is very little evidence of lack of competition in Ireland and northern Europe. We accept that there is a need for a legal framework for the ports sector in European law. We ask whether the kind of imposition detailed in the directive is necessary or desirable. As evidence for that, I would like to invite Mr. Lacey to make some comments on his own operations in Dublin Port and elsewhere.
Mr. Liam Lacey
As an operator in and out of ports across Europe, we would welcome the increased liberalisation of access to port services if that comes about. There is a downside to that in that many shipping companies invest heavily in their port operations, both in terms of facilities and infrastructure of the ports and in terms of vessels. Security of tenure at ports is an issue that arises for those operations. The extent to which the directive envisages re-examination of some of the relationships between ports and service providers puts a question mark over security of tenure. I raise this matter in the context of an industry that is highly capital intensive and where the shipping companies need to know, with a fair degree of certainty, that their operations are secure at the different ports into which they operate. That is the extent of my observations.
With regard to Mr. McCabe's point on the necessity for the framework going forward, will he agree that a large number of ports around the country are almost practically closed? Up to 90% of the goods entering the country come in via Dublin Port. There has been a considerable lack of investment and development in ports around our coastline where alternative enterprises could have been established. Does IBEC concentrate mainly on Dublin Port? Having regard to the scale of the lack of potential of other ports, would Mr. McCabe consider there is potential to introduce harmonisation and have a level of development that would grow business in ports on our other coastlines?
I take Mr. McCabe's point regarding liberalisation of services. Does he believe the ownership of the port should be in State control, that the State should have a shareholding ownership of the port company or is there a case for its privatisation?
As transport spokesperson for IBEC, which covers the areas of road and rail as well as that of ports, can Mr. McCabe indicate what percentage of freight traffic in Dublin Port is transported from the port by rail? How does he envisage the road network will handle the three million tonne to four million tonne increase in freight traffic from the port predicted as being necessary in the recent port strategy document? What road network will cater for that?
There are eight independent stevedoring companies in Dublin Port, according to what is stated in the document. Is Mr. McCabe saying that if I telephone those eight companies I will be quoted a different price for that service? Is there price competition among those companies for importing or exporting goods?
Mr. Lacey referred to security in his presentation. Will he explain to the committee what he means by security? I presume his reference was not to pilferage and things like that, but to something more fundamental.
Mr. McCabe
Deputy Perry referred to the Dublin dominance of the sector. It is worth emphasising that we operate in a freely competitive environment. There is an onus on all ports to attract business. It is hard to fault Dublin Port for being a successful——
I am not faulting it.
Mr. McCabe
I am simply making the point that Dublin Port is a successful company. It has achieved critical mass. As in the case of an airport, when one has critical mass in terms of services, there is a tendency to grow. One could call it a self-sustaining facility.
I appreciate there are issues about regional balance and so forth, but the Minister made a statement when launching the ports policy document. I was interested to hear him make the comment that there were too many ports and that mergers were desirable to reduce the number of them. We would not have a difficulty with that approach. I do not know if that answers the Deputy's question. It is true that some of the smaller ports are not economically viable, but that is an issue for those ports to address. We are interested in seeing efficient and price competitive operations. We are reasonably satisfied that in the case of the major ports we have achieved that.
Is IBEC actively involved in other ports outside of the larger ports, or is all its focus concentrated on the larger commercial ports?
Mr. McCabe
Inevitably, our natural focus is on the dominant operators. As the Deputy rightly pointed out, Dublin Port accounts for 60% of total trade from this State — that is a phenomenal percentage. Therefore, that facility is important. Cork accounts for another 20% of such trade. Therefore, those two facilities account for 80% of such trade.
With regard to the expansion possibilities for Dublin Port with the Dublin Port tunnel due to open in the next 18 months, does Mr. McCabe consider that there will be a capacity problem in Dublin Port going forward?
Mr. McCabe
I will take that question with Deputy Ryan's question on the road network. Deputy Ryan asked about our view on State control of the ports. I could answer that by reference to Irish Ferries. I do not know how long — perhaps it was for generations — we had the B&I company which was really a basket case, and it was under State ownership. Now we have Irish Ferries and the position is transformed. That is not only the position in the case of Irish Ferries. All the shipping companies are private entities and they perform well.
The natural disposition of IBEC, given our role in the economy, would be to have a preference for these kinds of commercial, trading facilities operated by the private sector as opposed to the State. ICTU — I apologise for mentioning it again — referred to this issue. On the basis of the danger of replacing a public monopoly with a private monopoly, a number of our members are of the view that perhaps there would not be huge support in the industry for that kind of approach.
Does Mr. McCabe believe the directive contains anything to encourage the State to sell or privatise the port company?
Mr. McCabe
The directive does not have a direct bearing on the ownership of the port companies. It is structured in a way that it focuses on the critical operations within the port, which are provided in practically all cases by private companies.
Deputy Ryan asked about rail transport. I understand the rail modal split would be of the order of 80% and that is declining, which we regret.
Is that 80% of freight traffic out of Dublin Port?
Mr. McCabe
No, that is the figure nationally. I do not have a figure for Dublin Port. A good deal of ore is transferred by rail into Dublin Port. I do not have the detail of the traffic figures for Dublin Port, but we will be happy to come back to the Deputy with that information. Nationally, the quoted figure in the strategy rail review is of the order of 80%.
Does Mr. McCabe believe the road network can cater for another four million tonnes of freight given that 90% of such traffic would be by way of road transport?
Mr. McCabe
No, I am glad the Government in a sense anticipated the growth in the economy and is putting in place a motorway network which will serve the economy well. In terms of the network throughout the country, we do not currently have the capacity, but my view, and IBEC's general view, is that within several years, as the NDP is implemented with the roads programme, we will have adequate capacity. Congestion is localised but it is a serious problem in Dublin. I share many of the concerns expressed about the performance of the M50 and we have some concerns about how the port tunnel will operate.
I am sure Mr. McCabe is aware, as is the Taoiseach, that despite widening the M50 to effectively an eight lane carriageway, from the day it opens it will be completely congested.
Mr. McCabe
Yes, but there are techniques available to manage the traffic in a variety of ways. I do not believe we are incapable of managing a facility like the M50.
In other words, tolling on the M50.
Mr. McCabe
Yes. The media referred to places such as Toronto where there is so-called open road tolling, which seems to work very well. Pricing can obviously have an impact on behaviour.
Mr. McCabe will be aware of the recent presentation by Dublin City Council regarding the potential for a major new development in the south port area. In light of his background in transportation, I am sure he will agree that one of the solutions we must employ is to develop in the centre of Dublin rather than allowing development to continue to sprawl outwards leading to unsustainable transport patterns. As regards the current use of the south docks, does Mr. McCabe believe it might be more appropriate to develop an entirely new community at that stunning location rather than continuing to allow it to be used as a container storage area?
Mr. McCabe
I am not sure the phrase "stunning location" is apt but these things tend to be subjective.
It has a lovely riverfront and beaches.
Mr. McCabe
The beach was not so lovely on my most recent visit. However, perhaps I am being facetious and I apologise if I give that impression. The Deputy's question is certainly important. I do not have a position on the Ringsend peninsula as such. However, I am happy to give my personal view, which is that Dublin City Council may be, even inadvertently, walking itself into a major property play in the south port area. The latter could adversely affect the port's operations. I will say no more than that but I would be concerned about such a development. This is a matter for the Government to consider.
I do not understand Mr. McCabe's position.
Mr. McCabe
I would not like to convey the impression that IBEC has a position on a particular plot of land or area of the city.
Mr. Lacey
To answer Deputy Fitzpatrick, there are independent stevedores in Dublin Port and there is competition between stevedores at the port. There is significant evidence of transfer of business from one facility to another as a result of price competition between the different facilities.
The Deputy's second question related to the security issue. He may have misunderstood me. I referred to security of tenure for existing operators in and out of ports. Shipping lines and the providers of stevedoring services are obliged to invest heavily in capital equipment. To generate a return on those investments, it is essential that they have adequate security of tenure and a sufficient period in which to generate a return. If, as envisaged in the proposed directive, that situation is to be reviewed, those framing the legislation should take into account the fact that to attract investment there must also be security of tenure.
Will that not happen? Surely Mr. Lacey's company has long leases on the land out of which it operates in the port. Will its landlord-tenant relationship be affected?
Mr. Lacey
My reading of the proposal, as it stands, is that those situations will be reviewed. There are operators in different ports throughout Europe who operate on lease and licence arrangements, the terms and conditions of which are different. As I understand it, those arrangements will be reviewed. If they are reviewed, those framing the legislation should take into account the fact that to attract investment into the sector there must be security of tenure for those making such investment.
My party is concerned about any attempt to privatise Dublin Port, particularly in light of the critical role the latter plays. This is the first occasion on which I saw the report. I was not here on the day it was presented at Earlsfort Terrace. I do not believe copies of the report were sent to members.
I was not present at the launch, which took place on 6 January.
That is correct. More than a month has passed and this is the first time I saw a copy of the report. I accept it can be found on the Department's website but one would expect that the committee would have been sent a hard copy.
Is the Deputy stating that the Department did not send him a copy?
Yes.
I thank the clerk for downloading it from the Internet. Copies were not sent to any members of the committee.
The Department's behaviour is extremely arbitrary. I am not sure whether the Minister of State, Deputy Gallagher, was aware that this sort of thing was happening.
A number of workers and stevedores employed by various companies have expressed concern that the type of development that has occurred at the old port of London and on the east bank of the Thames——
Tilbury.
——at Tilbury, Canary Wharf, etc., might be carried out in Dublin Port because the land holdings offer attractive propositions for people with no interest in trade in this city or country. I will meet a delegation from Drogheda — comprised of the mayor and some of his colleagues — shortly to discuss the new plans for the port at Balbriggan. It is critical that the premier port of the country should be strongly maintained and enhanced and that the country's trade should be facilitated. People should not be allowed to execute strokes to bring valuable land into the domain of property speculation.
There are many long-term leases at Dublin Port. The bulk of the property there is occupied by companies, which signed in the 1930s and 1940s. There is a monopoly at the port and that is the case at quite a number of ports throughout the State where deals were done at different times. In many ways, this type of behaviour has impacted on the potential development of the country's ports. Is there a possibility that the leases to which I refer might be reviewed? Dublin Port is comprised of 600 acres of land and possibly two thirds of this is tied up in leases signed in the 1930s and 1940s. Does this present huge difficulties in terms of the development of Dublin Port and other ports throughout the State?
Mr. McCabe
I have to plead incompetence on this matter. I am not a lawyer. Landlord and tenant law is extraordinarily complicated.
I did not expect Mr. McCabe to answer that question. We will have to put it to the authorities at the port when we visit them. Mr. McCabe need not comment further on the matter.
Mr. McCabe
The important point to make as regards Deputy Broughan's assertion — this is somewhat relevant in respect of the comments Deputy Perry made — is that the fact the port is not in private ownership and is in State hands does not immunise it or protect it from property plays and takeovers by people one would never imagine to be players but who come in and buy out existing companies. In that context, there is a court case ongoing involving IGB, etc. Irrespective of who owns the port, property plays and so forth will happen in a relatively uncontrolled manner. As far as we are aware, there is no current proposal to privatise Dublin Port. That is the position.
I thank Mr. McCabe and Mr. Lacey for sharing their opinions and concerns regarding the regulation we are about to discuss with the officials of the Department.
Mr. McCabe
We appreciate the opportunity afforded us to appear before the committee to discuss the matter.
I welcome from the Department Mr. Fintan O'Brien, Mr. Kieran McCann and Mr. Patrick McHale. Before we begin, I draw the attention of witnesses to the fact that while members of the committee have absolute privilege, the same privilege does not apply to witnesses appearing before it. The committee cannot guarantee privilege to witnesses. Under the salient rulings of the Chair, members should not comment on, criticise or make charges against persons outside the House or an official by name or in such a way as to make him or her identifiable.
I call Mr. Fintan O'Brien.
Mr. Fintan O’Brien
Deputies referred to the ports policy document. If that was not forwarded, it was an inadvertent omission and I apologise for that.
Will Mr. O'Brien keep the committee on his mailing list for such documents? Will he provide 16 hard copies of each document for the members and the clerk?
Mr. O’Brien
Absolutely, we will do that.
I am accompanied by Kieran McCann who is responsible for shipping policy and Patrick McHale who is responsible for ports policy. I am the principal officer in the maritime transport division. I refer to the Marco Polo project, on which Mr. McCann will make a presentation.
Mr. Kieran McCann
Marco Polo made its first appearance in the Commission's 2001 White Paper, Time to Decide. The reason the Commission promoted short sea shipping and the Marco Polo initiative is it envisages that freight traffic will increase by 60% by 2010 and Europe's roads will not be able to cope. The Marco Polo measure aims to move freight traffic from roads to short sea shipping, rail and inland waterways.
The Irish Maritime Development Office, our statutory development agency for shipping and the shipping services sector promotes the Marco Polo programme in Ireland. The IMDO's website carried documentation on the Marco Polo programme and experts in the development office assist project promoters. These projects are run by the private sector and they require a promoter in Ireland and in another member state.
The first programme from 2003 to 2006 has a budget of €100 million, which works out at one project per year per member state. That has changed since the accession of the new member states. The budget for the first call in 2003 was €15 million. Six Irish applications were submitted, one of which was successful. This was quite an achievement and the project has received €1 million in grant aid. The second call was completed in 2004 and the budget for all projects is €20 million. One project is Irish-led and two have Irish partners — one is Spanish, the other French. The Commission ultimately selects projects but there is involvement by the member states and the European Parliament.
There will be two more calls for projects under Marco Polo I in 2005 and 2006. Marco Polo II will have a greatly increased budget of €740 million, working out at approximately €100 million a year with 25 member states, the application countries and countries adjacent to member states in the Mediterranean region eligible. Ireland does not have a greatly increased opportunity, therefore, of getting more than one project per call.
The current Marco Polo programme provides funding for three types of projects — modal shift actions, catalyst actions and common learning actions. Modal shift actions involve shifting large volumes of freight off road to short sea shipping, rail or inland waterways. Ireland is only promoting short sea shipping projects. Catalyst actions are attempts to deal with logistical problems, lack of technology or inappropriate or lack of equipment to handle a particular trade. Common learning actions deal with procedures and logistics and agreements between companies on how better to handle their trade. All Irish projects so far have been modal shift actions.
Marco Polo II introduces two new actions. One is called traffic avoidance actions and the second is motorways of the sea actions. The traffic avoidance actions are designed to assist industry to streamline its supply chains and they are regarded as being similar to catalyst actions. The motorways of the sea actions are similar to modal shift actions, shifting large volumes of freight off roads on to ships. The Commission expects as few as six projects will be sanctioned under the motorways of the sea actions, which will probably involve significant movements of goods. It would be difficult for an Irish project to have large volumes of goods to avail of funding under these actions.
Marco Polo II is much more ambitious. It proposes to shift greater volumes of goods off roads on to shipping, rail and inland waterways. The weight of the goods one wants to shift is measured as well as the distance of roadway on which it is proposed to transport them. If a large volume of goods is to be transported over a long distance, one will reach the thresholds at which one's projects will be considered. The Irish project that has been chosen improves a lift on, lift off container connection between Ireland and continental Europe, involving movements between Dublin, Rotterdam, Antwerp and Le Havre, and reduces the road journeys that would previously have been taken to move those goods.
There is not much money in the Marco Polo programme, given the number of private sector interests in member states eligible for funding. Motorways of the sea actions under the TENT-T initiative will produce more funding than the Marco Polo programme. Irish project promoters will be encouraged to seek funding under that initiative when it comes on stream in 2007.
Mr. O’Brien
Patrick McHale will make the presentation on the port services directive.
Mr. Patrick McHale
I will concentrate on the main elements of the presentation. Its structure is a brief introduction, a summary of the Commission proposal, followed by details of the national consultation process, developments at EU level and the Irish position. This is the second proposal from the Commission for a directive on port services. The first proposal in 2001 was part of the so-called ports package. Under the co-decision procedure laid down in the EC treaty, the European Parliament ultimately rejected this proposal in November 2003. The Commission made its second proposal in October 2004 and, similar to the first proposal, the Commission places this proposal within the context of the market liberalisation element of the Lisbon Agenda.
The objective set out in Article 1 of the current proposal is that the freedom to provide port services shall apply to Community providers of port services, which is subject to specified constraints relating, for example, to available space or capacity, security, development policy of a port. The freedom is to be exercised in compliance with specified requirements relating to safety, environmental protection and public service obligations.
I refer to the scope of the proposed directive. The directive covers ports with annual traffic of not less than 1.5 million tonnes of freight and-or 200,000 passengers. In the Irish context the headline figure for freight would encompass the ports of Dublin, Rosslare, Waterford, Cork and Shannon-Foynes. However, member states are free to limit the application with regard to areas of the port that are only open to general commercial traffic. That might, for example, mean that Shannon-Foynes would not ultimately be covered in the application of the directive. On the issue of passengers, the directive will cover the three international rail-road ports at Dublin, Dún Laoghaire and Rosslare. The port services covered are all cargo-handling and passenger services and technical-nautical services, which include pilotage, towage and mooring. The directive also requires member states to designate competent authorities which are bodies designated by the member states and have as their objective under national law the implementation of the directive. The neutrality of the competent authority is provided for in the text as appropriate.
Articles 4, 5 and 6 deal with the following matters which are not to be affected by the application of the directive, namely, the application of the social legislation of member states and the rights and obligations of member states under the areas of law and order, safety and security at ports and environmental protection. The directive must also be without prejudice to other Community legislation in the areas of public procurement and mutual recognition of professional and educational training.
Article 7 of the directive deals with the authorisation requirement. Authorisation is defined as any permission, including a contract, allowing the person to provide a port service. The article provides that all providers of port services in a port shall operate on the basis of an authorisation granted by the competent authority. This is required no later than 18 months after the end of the transposition period. Article 8 selection procedure may apply if the competent authority decides so or if an existing or potential service provider requests it.
With regard to the granting of authorisations, only criteria specified in the directive, which are non-discriminatory, relevant and proportionate may be applied. These criteria relate, for example, to professional qualifications, compliance with employment and social rules, environmental requirements and the development policy of the port. The criteria shall be made public and an authorisation may be revoked of a substantial failure to comply by the service provider.
On the procedure for granting the authorisations, when Article 8 is applied, the competent authority shall ensure a transparent and objective selection procedure using proportionate, non-discriminatory and relevant criteria. It shall issue a public invitation to interested parties to participate and provide full documentation on request, detailing in particular authorisation, selection and award criteria. It shall also make public its decisions from the selection period. If no suitable service provider is found, the managing body of the port may reserve the provision of the service to itself for a period of five years.
The directive defines a limitation of the number of service providers of one or more port services as a situation in which the competent authority does not allow a provider that fulfils the criteria for authorisation to provide one or more categories of port service. This may only be done for reasons or constraints relating to space or capacity, safety considerations or requirements deriving from environmental regulations. The directive provides that member states shall ensure that the highest appropriate number of service providers must be allowed. It also clarifies that a determination of the range of commercial activities to be carried out in the port by the competent authority is not considered to be a limitation.
Article 10 deals with the granting of authorisations. This article requires that if limitations on the number of service providers appear, a selection procedure under Article 8 is a requirement. If the selection procedure has been applied before the limitations come into effect, the existing authorisations shall remain in force until they expire. However, if the selection procedure has not been applied at the time the limitations appear, the directive provides that all existing authorisations shall be terminated and the Article 8 selection procedure shall be launched within six months. Article 10 also provides that member states shall enact appropriate compensation arrangements for existing service providers not selected under this process. Also, as an exceptional case, it provides that existing authorisations deriving from ownership of a port shall remain in force.
Article 11 deals with the case of new ports or new parts of a port. This objective here is to ensure that the directive will not hamper investment decisions to be made with regard to the provision of new port facilities. It provides that an investor in a new port, prior to the mandatory authorisation system coming into place, shall be granted a relevant authorisation to provide port services. It provides that a future service provider who is to contract irrevocably for a significant investment regarding the provision of a service in a new port shall be granted an authorisation. It also provides that in the event of the appearance of limitations, authorisations shall remain in force provided the opportunity to invest was generally available.
Article 12 deals with the duration of authorisations. This article provides for maximum duration of authorisation of eight, 12 or 30 years, depending on whether there was significant investment made.
What do these eight, 12 and 30 year maximums mean?
Mr. McHale
These would be maximum periods of the duration of the authorisation that could be granted by the competent authority. If, for example, the competent authority was of the view that the service provider required no significant investment to provide the service, the maximum duration of that authorisation would be eight years when being granted. If the competent authority was of the view that the service provider had made a significant investment in immovable assets, the maximum period could be 30 years.
Does immovable assets mean buildings?
Mr. McHale
Yes, fixed assets or cranes. It would be assets that would not easily be transferred to another port location.
Is that not the point Mr. McCabe made about security of tenure? He said huge investments were put into port related business activities, but then the investor did not have secure tenure.
Mr. McHale
Yes, that is IBEC's concern. However, the intention, as the Commissioner would explain, is to provide an appropriate tenure period, depending on the types of investment decisions the service provider would have to make. Does this explanation help?
No, I am confused about it. I presume an immovable asset is a fixture such as a building of some description. I would certainly not like a 30-year maximum authorisation and then find my building is of no use to me. Is it intended that if there was a new service provider, it would have to buy the asset of the outgoing service provider?
Mr. McHale
If the service provider is replaced under a selection procedure, there is a requirement on the member state to put in place provisions whereby the outgoing provider receives compensation for example, for assets which have not yet been amortised.
Will Mr. McHale give us an example of a service provider that might get an authorisation for 30 years?
Mr. McHale
I will take an opportunity to consult the text on that point.
May we have it in Mr. McHale's own words?
Mr. McHale
There is a level of detail in the Commission proposal. It describes immovable assets and comparable moveable assets such as container bridges, ship to shore gantry cranes, bridge unloaders and specialised tugboats. The proposal on the directive gives some detail as to what would be regarded as assets in that category and in Article 12 states immovable assets and comparable moveable assets.
Does the article not mention buildings?
Mr. McHale
In the main, buildings would not be provided by a service provider. In medium and larger ports internationally the landlord model is increasingly used. In this case under the landlord model, the port authority or the managing body of the port would tend to provide infrastructure such as the quay space and significant buildings. In practice that is where the provision of a building would be made.
Mr. McHale should finish his presentation after which we will take questions from Deputies Ryan, Fitzpatrick and Perry.
Mr. McHale
I have dealt with the duration of authorisations. Article 13 deals with self-handling. The directive provides that self-handling means that an undertaking provides one or more categories of port services for itself, using its own land-based personnel. It provides that self-handling is also possible using the seafaring crew in the case of short sea shipping services operating exclusively within the customs territory of the Community. The proposal for a directive also provides that member states shall take the necessary measures to allow self-handling wherever possible. Self-handling may only be refused where objective reasons or constraints exist relating to space or capacity, safety considerations or requirements deriving from environmental regulations. It also provides that the authorisation shall be granted in an expedient manner.
Article 14 on pilotage allows for the adoption of port specific solutions given the particular nature of the pilotage service. Member states may submit the granting of the authorisation for pilotage to particularly strict criteria relating to maritime safety and public service requirements. Competent authorities may prescribe appropriate organisational rules including the possibility of reserving for themselves the service or assigning it to a single provider. It is clarified that exemptions from compulsory pilotage shall constitute self-handling within the terms of the proposal for a directive.
Article 15 provides that member states shall provide for a right of appeal against decisions taken by the competent authorities or managing body of a port. It also provides that an applicant who is rejected shall be informed of the reasons for rejection. Articles 16 and 17 deal with inter-port competition. Article 16 provides that the existing Commission directive on the transparency of financial relations between member states and public undertakings shall be applied to all ports covered by the directive. Article 17 provides that the European Commission shall within one year draw up state aid guidelines for funding given to ports for infrastructure.
The accounting provisions in Article 18 provide that service providers shall keep separate accounts for each port service they operate. Article 19 provides that the managing body of a port shall keep separate accounts in respect of each port's service activity. Article 20 provides that the directive shall not affect the rights and obligations of member states with regard to the international status of ports, waterways and maritime zones. Articles 21 to 24, inclusive, are standard provisions in a directive on reporting, revision, implementation and entry into force.
At a national level we have engaged in an initial consultation process and the proposal has been circulated for observations to the Irish Maritime Development Office, the Irish Ports Association and the Department of Transport in respect of Rosslare Harbour.
What positive responses were received from those organisations?
Mr. McHale
We received a generally supportive view from the Irish Maritime Development Office. It pointed out the concerns of existing service providers over security of tenure and it pointed to the general complexity of the proposal. The executive committee of Irish Ports Association is to formulate its view later this month and communicate that to the Department. The Department of Transport has forwarded views from Iarnród Éireann as the managing authority of Rosslare Harbour. It points to the potential for loss of revenue and the security of the jobs of 80 people working in Rosslare Harbour on portside activities.
I do not believe we will be in a position to make a decision today as to the outcome of our scrutiny of this proposal for a directive. Is it correct that a significant number of member states have questioned the value of the proposal?
Mr. McHale
Yes.
What points are those member states making?
Mr. McHale
They cited the speed with which the Commission produced its second proposal after the first proposal failed in a vote at the European Parliament in November 2003. The second proposal was made in October 2004. They cite lack of consultation with the new member states and with the port sector on the formulation of a proposal for a directive that meets the regulatory need. They also cite the European Commission's failure to carry out an impact assessment. The European Commission has clarified with the working group that the impact assessment is underway and will be complete some time this year.
Why is the proposal before the committee today if that work is not yet complete? While I understand the Sub-Committee on European Scrutiny referred the proposal to this committee, why are we discussing it at this stage?
Mr. O’Brien
We are in the committee's hands on that matter. We were requested to attend. The Chairman is right in pointing out that it is still at a relatively early stage.
I believe it was on that basis that we asked the Sub-Committee on European Scrutiny why it referred the proposal to us.
I ask Mr. McHale to conclude after which Deputy Ryan may ask questions.
Mr. McHale
I will finish talking about the national consultation process. The Competition Authority commented in detail on the first Commission proposal and was of the view that the proposal provided a unique opportunity to foster competition in the port sector and advocated a complementary move towards the port landlord model.
The following developments have taken place at EU level. The text is currently the subject of a detailed examination by the shipping working party under the Luxembourg Presidency. As I said, a significant number of states have questioned the value of the proposal. The principal issues arising from the working group relate to the mandatory nature of the authorisation system, the transition period for the directive, authorisation periods and the compensation provisions. Five of the EU member states are landlocked and they wish to be exempted from the requirement to transpose the directive. We are awaiting the results of the impact assessment study announced by the Commission. We are also awaiting the Commission's state aid guidelines regarding port infrastructure. The Luxembourg Presidency has had initial contacts with the European Parliament and the rapporteur from the European Parliament explained that the Parliament's committee on regional policy, transport and tourism is expected to receive a report before the end of August. It is expected to vote on the report by October or November.
On the Irish position, as the Chairman is aware, the Government's ports policy statement was launched in January 2005. One of the core policy objectives in the statement is to ensure the provision of efficient port services within a competitive marketplace. The Department, within the context of the policy statement, has a policy of seeking to ensure that ports uphold the market access principles of the proposed directive and maximise private sector involvement in port service provision, as ports move towards the landlord model. Within the European Council, Ireland supports the provision of a Community legal framework in the field of market access to port services. We propose to work constructively to this end within the co-decision legislative process.
I thank Mr. McHale. The members of the joint committee would like to ask some questions. I will recommend to the committee that it should consider the matter further. Members need to read and consider the report that was launched by the Minister. I am not happy with the proposals. Are the EU officials who came up with the proposals the same officials who wanted straight bananas and cucumbers?
Mr. McHale
I do not think so.
This policy has been introduced as part of the Lisbon Agenda, which the Government trumpeted until it recently discovered its socialist beliefs. The proposals make a great deal of sense in that context. I would like to ask Mr. McCann about the two projects. I do not know whether he can give details about the project that is in operation and the project that is being considered. None of the projects are leading to a reduction in traffic in Ireland. They may be assisting traffic reduction in the UK because mileage is lost. Is Ireland doing anything to reduce freight port traffic? Have projects been initiated to encourage transport by rail? Is there any ambition to reduce the number of trucks on the roads? A cyclist was killed by a truck in Dublin yesterday. I do not know how many cyclists have been killed in this city by trucks turning left. Is anything being done to reduce the number of trucks on our roads? Are we engaged in any projects in that regard?
I would like to ask Mr. McHale about the possibility of an authority working in this area. The need for co-operation between the Department of Transport and the port authorities is becoming increasingly evident. I have concerns about safety. I assure the committee that the plans for the development of Dublin's transport infrastructure will not work. The way things are going, nobody will be able to get anywhere soon. Is it possible that we will have greater integration if we establish a public transport regulator? The Government has considered the possibility of putting in place a body to regulate public transport and I believe it is likely to come about. Would such a body be appropriate for the regulation of port activities? Could a broad transport regulator be established? Does the directive contain specific details in this regard? Does it state that the work of a regulator needs to relate specifically to port activities? Can a general regulator be put in place to avoid increasing the number of agencies?
I thank Mr. McCann for his presentation in which he mentioned the funding criteria for a modal shift. The maximum subsidy is 30%, 35% or 50% of total expenditure, depending on the action. Who pays that money and who receives it? We seem to be pulling in different directions. Iarnród Éireann recently increased its unit load prices by 25%. I appreciate that the delegation cannot discuss policy. If we provide tax breaks to support the stallion industry, is there any reason tax breaks should not be provided to support a modal shift?
I thank Mr. McHale for his presentation. Do we need the kind of legislation he mentioned? Mr. McCabe of IBEC said that ports are commercially driven entities. He said that there is a great deal of price competition in the Dublin area and that the ports seem to be working well. I presume the members of IBEC and other unions would complain loudly if the ports were not working for their benefit. Perhaps I am wrong, but it seems to me that we are introducing a level of legislation that might hinder the development and operation of ports, rather than helping them.
Mr. O’Brien
I will let Mr. McHale respond to the Deputies' questions. I may make some comments later.
Mr. McHale
Deputy Eamon Ryan asked what is the competent authority for implementing the directive. That issue was considered during the high level review of the State's commercial port companies. A report that was produced in 2003 on foot of that review listed the advantages of the Commission for Aviation Regulation. It stated that the commission is a possible competent authority for the implementation of the directive in Ireland. The Department of Communications, Marine and Natural Resources is conscious of the need to avoid the unnecessary replication of regulatory agencies.
The Deputy also mentioned the proposal to establish a public transport regulator. That is a matter for the Department of Transport, which has close connections with the Department of Communications, Marine and Natural Resources on transport policy issues. My Department could raise the issue with the Department of Transport as the proposal is brought through the legislative process in Brussels. It will certainly consider the issue.
Deputy Fitzpatrick asked if this proposal is needed. The ports policy statement acknowledges that there is healthy competition within and between Irish ports. The proposal for a regulator of ports, which was made by some commentators, was considered within the policy statement. It was decided that the case for a regulator of the pricing of port services had not been made, although the matter will be kept under review.
The Deputy also asked about the need for a Community legislative framework. The Department considers that the principle of the proposed directive will bring added value to the ports sector. That is reflected in the Government's ports policy statement. Faltering competition is one of the core policy objectives set out in the policy statement. Ireland and many other EU member states have concerns about the current proposal. We consider that there is a need to ensure that the regulatory framework is workable, as Deputy Fitzpatrick suggested. During the negotiations in Brussels, we propose to devote our energies to ensuring that the framework is workable, in a practical sense, and to achieving the objective of market access.
Mr. McCann
I will have to plead the fifth amendment on road and rail policy, which are matters for the Department of Transport. I would like to speak about intermodality and the suggestion that we should use rail. One incurs costs every time one engages in a modal shift, for example, by moving one's container from a lorry to a train or vice versa. It would be detrimental to the profitability of our operators to add additional modal shifts to their transport costs. Irish road journeys are quite short by European standards. They do not allow opportunities for ordinary lo-lo containers to move from road to rail.
The possibility of providing tax breaks for modal shifts is a matter for the consideration of the Minister for Finance, in the first instance. The Department of Communications, Marine and Natural Resources deals with the Department of Finance in respect of tax breaks in the shipping sector, for example. The question of tax breaks for modal shifts has not featured in the Department's dealings with the Department of Finance. Aid under the Marco Polo programme is paid by the Commission to project promoters, who are private sector promoters. The different rates of aid relate to the different actions. There is great sensitivity about competition so one does not get 50% for a modal shift action because that would generally involve shipping or rail companies and one does not want to create difficulties as regards other operators by getting into court disputes about competition concerns.
Competition concerns also remain a serious consideration with regard to Marco Polo II. This may be the reason the Commission is suggesting that there be only a small number of motorways of the sea projects and that these should be between countries with large trade volumes and serious road problems. For example, this would apply to France and Spain where there is a great deal of congestion crossing the Pyrenees.
Does Mr. McCann expect to have proposals under Marco Polo II?
Mr. McCann
Yes, under certain of the actions.
Will Mr. McCann provide some detail on the two projects, as I appear to have missed it?
Mr. McCann
I have details of the project that was successful under the 2003 offer. The Commission has not yet made its decision on the 2004 offer. It will probably be made around April. The approved project involves lift-on lift-off, that is, container connections between Ireland and continental Europe, establishing new lo-lo services with modern intermodal equipment between Ireland and the ports of Rotterdam, Antwerp and Le Havre and continuation of the transport chain by barge as far as possible. Those are the details.
We are spending approximately €20 billion on a road network to bring traffic to Dublin where it will get caught in congestion. If the philosophy of "just-in-time" delivery is driving this process, given that the boat journey is the slowest part of the process, would it not be better to invest in shaving off even one additional knot in speed or half an hour of the turnaround at the port than to invest €16 billion on the roads programme?
Mr. McCann
I will only comment on the maritime sector's involvement. It is envisaged that, under TENT-T, motorways of the sea projects may involve either subsidising a ship journey or helping in terms of depreciation following the acquisition of faster ships which carry more freight. This would result in more frequent service by ships carrying greater capacity, making the service a more realistic alternative to road transport. This is likely to be more applicable in a continental European than an Irish context, given that our ships are large enough to carry the volumes of freight we require.
COM (2004) 478 and COM (2004) 654 are linked. Despite the increase in funding for the motorways of the sea concept, it is still only the tip of the iceberg in the context of an enlarged Europe. The concept is very much aspirational in the sense that only one applicant was successful. Has a benchmark been established to measure the effectiveness of the fund? Has the fund made a difference? Could the motorways of the sea concept be simplified?
Ireland could co-operate with the United Kingdom and other jurisdictions outside the Marco Polo programme. Could we act in parallel, perhaps in partnership with other countries, to get heavy goods vehicles off the road by increasing sea freight? Would this be possible without receiving funding under the programme? This kind of co-operation among unsuccessful applicants could be beneficial. Were the unsuccessful applications developed privately?
Mr. McCann
State aid guidelines, the latest of which were published in 2004, determine the aid that can be given to the maritime sector. Member states are constrained in what assistance they can give to ship or port operators. It is envisaged that under the TENT-T Marco Polo programme, under which more aid would be needed than for Marco Polo, port projects will be aided to facilitate handling of higher volumes of freight or larger containers or for the introduction of new services. The projects will require that at least two member states sign up to approve the private sector projects. We will shortly discuss with the Commission our views on the motorways of the sea initiative. We will also talk to other member states with which we might establish partnerships to develop projects in the near future.
State financing of shipping services is precluded under the current state aid guidelines. It is possible to give operators tax breaks, a number of which are in operation. For example, a tonnage tax operates for our shipping sector and we have an income tax allowance for seafarers. We have also received Department of Finance agreement to reintroduce an employers' of seafarers PRSI refund scheme. The Minister has indicated that he will consider, with the Irish Maritime Development Office and the shipping sector, whether our state aids are adequate or should be amended or whether we should seek new state aids. We expect the Department of Finance to be involved in this examination. Any new state aid or amendment of an existing state aid will require Commission approval.
While I appreciate Mr. McCann's comments, my point related to the capacity of business to survive on its own resources and co-operate with foreign ports. The large private sector freight business can be effective when working in partnership with the Department. I have no doubt that the ethos behind the Marco Polo concept could also be developed privately and result in significant benefits for the sector. I hope this will be the case given our position as an island nation. In light of the high level of goods entering Dublin Port and other ports, it is important that we have effective co-operation. The approval of one application to the fund is a minor advance for Ireland.
Mr. McCann
No other member state had more than one project approved. Given the money available, it tends to be the case that each member state gets as slice of what in this case was a small cake.
Does Mr. McHale agree with the comments of IBEC on the viability of our main ports? The joint committee has not yet studied the ports policy statement, which indicates that the core policy is to ensure the provision of efficient port services in a competitive marketplace. Have we reached the position that Ireland's ports are efficient, effective and competitive? We have 28 ports divided into different categories.
If we subscribed to the directive, would it not guarantee the viability of the ports currently doing business to the exclusion of all others, which would be relegated to a lower scale of development? Are the smaller ports more aptly described as marinas as opposed to ports?
With regard to the level of current development, the economy has been expanding for only eight or nine years. Only now are we beginning to realise the potential of our ports. Signing up to the EU directive at this point would circumscribe the potential to develop all our ports, including Foynes, Rosslare, Cork, Waterford, Dublin and Belfast. What is the timeframe for the directive? What happens if Ireland refuses to sign up to it? Is it possible to obtain a derogation or is the directive mandatory?
Mr. McHale
I will respond to the last question first. There are no proposals for a derogation. The purpose of the directive is to provide for a Community-wide, harmonised legal framework and, as such, it will apply to all member states.
No derogation will be allowed.
Mr. McHale
No, it is addressed to all member states and they will be obliged to achieve the results specified in the directive.
In what timeframe?
Mr. McHale
The timeframe is currently included in square brackets in the text. Member states will have 18 months to transpose the directive in national legislation. In regard to the general development of ports, the proposal seeks to provide a harmonised legal framework for access to the market for the provision of port services. It would really be neutral in terms of developing port infrastructure at any location in a member state.
The ports policy statement which was launched in January deals with infrastructural capacity issues arising at ports at present and it highlights a shortfall of capacity which is predicted for the period 2007-14. It includes, in particular, a projected capacity deficit of approximately 4.44 million tonnes of unitised trade, that is lo-lo and ro-ro trade. One of the things the Department is doing, as outlined in the ports policy statement, is inviting the ports concerned with unitised trade to inform the Department of their proposals for development of additional capacity so as to meet this predicted shortfall, to ensure that such shortfall does not materialise. That process has just begun, as outlined in the ports policy statement.
State aid to Dublin Airport is currently at issue. Will there be a difficulty in getting state aid for ports in need of development? Will the Government be precluded from giving state aid when the unified code of European ports operationality comes into effect? Does Mr. McHale envisage a difficulty in regard to ports which may need investment in five years' time but where the Government would be prevented from investing in them under EU competition regulations?
I did not understand what Mr. McHale said. Will the effect of the directive be neutral as to the development of ports? I assume it would not affect small ports and that, for example, the town of Youghal port would not be forced to shut down under this directive. Youghal might have only one boat in a month but it has an efficient turnaround system. Likewise I am unclear about the appeals mechanism. Will a special appeals tribunal be set up or will people who want to appeal have to have recourse to the courts?
Mr. McHale
The harbour at Youghal would fall below the minimum threshold for freight traffic according to the terms of the directive. It would not apply to it unless the Government chose for that to be the case. Regarding state aid issues, the aid that would be given would have to be compatible with the treaty provisions on that area. That is the case under EU treaties.
Is Mr. McHale saying that would preclude funding?
Mr. McHale
It would mean that any state aid would have to be compatible with the treaty provisions.
In brief, what are they?
Mr. McHale
State aid is a complex area. The directive notes that one of the articles of the proposed directive is a requirement on the European Commission, within one year of the directive being enacted, to produce common guidelines for state aid to port infrastructure. A document like that from the Commission in its role as guardian of the EU treaties and competition and state aid rules would generally be a useful document for member states, including Ireland. It would allow us to form a view in regard to proposals we might have for the granting of aid to this sector. We would very much welcome the publication by the European Commission of those guidelines, as would many other member states.
I have visited a few ports where I saw dereliction on a grand scale. Major investment is required in Irish ports.
I want to conclude this discussion as we still have to hear from Dr. Beamish. I am aware that members have other business to attend to. Am I correct in saying we are satisfied that Marco Polo II which is COM (2004) 478 requires no further scrutiny? I take it that COM (2004) 654 requires more scrutiny. It must be reconsidered in the context of the ports policy statement, a copy of which we have just downloaded from the Internet. A number of issues arise in regard to it and I propose that the clerk arrange for another day to consider the matter.
I thank Mr. O'Brien, Mr. McHale and Mr. McCann for appearing before the committee. I am particularly interested in hearing the results of the consultation with the Irish Maritime Development Office and the Irish Ports Association and the various other views that have been given regarding the regulation under discussion. We are not satisfied with what we have heard and believe the matter requires further scrutiny by the committee.
Mr. O’Brien
This may take a certain amount of time.
Will Mr. O'Brien liaise with the committee clerk?
Mr. O’Brien
We will. As soon as we get the views we will forward them to the committee.
Like Deputy Broughan, I have to speak on the Finance Bill. As soon as Deputy Ferris appears on the monitor I will have to leave, but I assure the Chairman that I will come back.
The Deputy will be pleased to hear I will not speak on it. He can have my slot. I welcome Dr. Beamish to the committee. We will now consider COM (2004) 497 regarding European fisheries. Before we begin I draw everybody's attention to the fact that members of the committee have absolute privilege but the same privilege does not apply to witnesses appearing before it. The committee cannot guarantee any level of privilege to witnesses appearing before it. Further, under the salient rulings of the Chair, members should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable. I invite Dr. Beamish to introduce his officials.
Dr. Cecil Beamish
I thank the Chairman and committee. My colleagues are Ms Josephine Kelly, principal officer on seafood policy and development, and Mr. Seamus O'Reilly. We have a Powerpoint presentation, the text of which has been circulated. With the agreement of the committee I will proceed with it.
The proposal we are dealing with is Council Regulation for the European Fisheries Fund COM (2004) 497 which was published in July 2004. This proposal provides for the new sectoral fund for fisheries in the forthcoming financial prospectus period 2007-13. The proposed fund replaces the existing financial instrument for fisheries guidance which is in place for the current programming period.
Before the proposal was published last July, a major conference was held in Bundoran during the Irish Presidency which involved 300 stakeholders from throughout Europe and the outermost regions involved in intensive consultation on the direction in which future funding should go for the fisheries sector. On the basis of that the Commission brought forward its proposal in July.
The proposal essentially deals with the areas where funding should be targeted, the priorities to be given and related aspects. The overall financial aspects are to be agreed by the heads of state at a future European Council. The indicative proposal in the Commission's draft refers to funding of €5 billion at 2004 prices. That amount is similar pro rata to the allocation for the EU 15 under the existing financial instrument.
The objectives of the new fund, as set out in the Commission proposal, are as follows: to support the reformed common fisheries policy, with particular emphasis on sustainable management; balance the resources against fleet capacity; develop economically viable enterprises; engage in the greening of the common fisheries policy; protect the environment and the quality of life; and diversify and develop the coastal areas.
The proposal identifies five priority axes through which investment should be channelled. The first relates to measures for the adaptation of the Community fishing fleet. This includes effort adjustment, balancing the fleet size with the available resources and socio-economic measures linked to that adjustment. The second relates to a focus on aquaculture, processing and marketing. It also includes some provisions for temporary closures in that area. The third priority axis concerns measures of collective interest, including investment in fishing ports, the development of new markets and various pilot projects. The fourth priority axis concerns the sustainable development of fishing areas based on locally developed strategies. There is provision for technical assistance in the operation of the programmes.
The Commission envisages a simplified strategic approach to the investment over this financial period. Once the regulation is agreed, the Commission proposes to introduce Community strategic guidelines covering the five priority axes. The intention is to have them in place within three months of the adoption of the regulation. Using those strategic guidelines, member states will then introduce national strategic plans. They are to adopt these plans within three months, in addition to an operational programme under which the fund will operate.
The Commission presented this proposal in July 2004. There was an initial policy debate at the fisheries Council of November 2004 and discussions on the proposal are ongoing in Brussels at technical level.
The position of Ireland to date has been that it will support the objectives of the proposal, particularly regarding aid for sustaining and developing coastal areas and for aquaculture. We have sought some adjustment to acquire aid for the further renewal of the inshore fishing fleet and an extension of eligibility under the aquaculture priority investment axis. The magnitude of funding and the overall allocations will be critical, but those are decided outside the framework of this proposal.
Will Dr. Beamish state the progress being made on the aquaculture report? I know he was engaged in consultation last year? Does he remember our having interested groups and parties before the committee in this regard?
Dr. Beamish
The position on aquaculture is evolving all the time and we have introduced a variety of new measures. We are in the process of working through a series of synchronous treatments in bays around the coast regarding the issue of sea lice, which took up much time when we discussed it previously. Rather than treating all farms individually, we are treating all the farms in an area on a synchronised basis.
Will Dr. Beamish bring us up to date on that? Can he send us a position paper on the subject? I do not want to devote this meeting to the subject. It might be better to send the committee a position paper than to reappear before it to discuss this matter.
Dr. Beamish
We have not published any paper as such. We are working directly with the industry and the Marine Institute. We could put together a paper.
Can the committee be given an update? Dr. Beamish will recall the transcript of the proceedings of the last meeting on this subject. The committee has approved today the setting up of a sub-committee on salmon drift and draft netting and angling. It will have seven members and will begin its hearings shortly. We have identified people who will appear before it. Dr. Beamish can advise the Secretary General and the Minister on this. We will invite some of Dr. Beamish's officials, including George Doherty and Frank Sheridan.
I thank Dr. Beamish for a typically cogent presentation. On COM (2004) 497, how does the funding compare with that under the FIFG period? What is the Irish share? Will we still have to fight for it? It is an issue for the Minister. Is the Irish strategic plan ready?
On foot of the briefing on COM (2004) 497, Dr. Beamish mentioned the elimination of surplus capacity and the question of decommissioning. Will there be funding for decommissioning? How will it pan out in the years ahead for fishing communities that are under pressure either because of the partly unsuccessful negotiations on the part of the Ministers or because of other ecological issues?
Dr. Beamish listed the priority axes. I read a report in a newspaper on the Scottish aquaculture industry, which seems to be a target industry for our own given that it is more valuable than the pork and sheepmeat industries. It is an incredibly large industry. The report referred primarily to salmon and concerned the reports on the new exclusion rules pertaining to Norwegian salmon. Will Dr. Beamish state whether there will be funding for organic and sustainable aquaculture, bearing in mind the discussion this committee had on the subject?
Dr. Beamish referred to sustainable development of coastal fishing areas based on local strategies. Who will be expected to produce those strategies? Will it be existing organisations of local fishermen? Will all the key economic players in villages such as Howth, Dumore and Rosaveel, including the chambers of commerce and town business committees, have a role in the kinds of strategies required to sustain fishing communities?
We examined the Commission document on surveillance of the fishing allocations and quotas and were told about the Spanish having gained control of the new agency. Dr. Beamish stated that the overall allocation will be crucial. By this, I presume he means the national allocation. Will the funding include funding for the Vigo facility?
Dr. Beamish
In regard to the allocation of the fund, the figures in the proposal are purely indicative; they are Commission proposal figures. The actual allocation of funding and the criteria governing it will be determined by the Council. Ireland is taking a co-ordinated approach to the overall funding for the financial prospectus period from 2007 to 2013, under the Departments of Finance, Foreign Affairs and the Taoiseach. This and all the other funds and the general criteria to govern allocation sharing in the size of the funds will be determined in that way rather than sectorally or individually.
That said, the Commission's proposals indicate a fund of €4.963 billion at 2004 prices. That corresponds pro rata to a €3.7 billion fund for the 15 member states in the period 2000 to 2006. The Commission presents this as essentially making an adjusting for the enlargement scenario. That is simply the Commission’s indicative proposal at this time.
The national strategic plan is a specific concept under this proposal. Before getting to it, the Council regulation has to be agreed which sets out the general principles and the Community strategic guidelines have to be drawn up and adopted. It is only when both of these tasks are completed and one can assess the funding available that the national strategic plan can be properly formulated. It is not formulated at this time; it would be premature to try to formulate it at present.
The position on the issue of decommissioning is that under priority access 1, there is quite a focus on the issue of the adaptation of the Community fishing fleet including effort adjustment, responding to fish stock recovery plans, management plans and so forth. It provides ample scope for funding in that area. The issue will have to be dealt with on a dynamic basis over the programming period because fisheries are always changing as one's fish stock and fish management systems must be able to adjust to natural changes which occur in the marine environment. This dynamic process will have to continue throughout the programming period. All that is provided for here is the scope for funding of that type of initiative; it does not prejudge that it will happen.
In regard to the Scottish aquaculture industry, there is a priority access which provides for scope for investment in aquaculture as it is accepted that it is an industry which can provide alternative employment in the context of reduced employment in the wild seafish industry. There is also a general focus on what are known as environmentally-friendly initiatives across a number of axes during this programming period in terms of selectivity, sustainability and so forth. It is possible to focus attention on organic production in terms of fish farming. Of course, aquaculture is not just made up of fish farming; there is also shellfish farming, which is quite a different activity and is significant in the Irish context. There are specific provisions for that area.
On a previous occasion, we discussed a proposal for a European Community fisheries control agency as part of the structures and the increased focus on fisheries control and monitoring under the reform of the Common Fisheries Policy. The proposal to establish such an agency is the subject of technical assessment at present. The heads of state and government decided on the various locations of the agencies, which is a geographical location, but it is a European Community agency which will remain under the control of the Commission under a statutory arrangement with an administrative board made up of all the member states. The funding for the agency is not linked to the funding we are discussing today. Rather, the Commission has indicated that the agency will be funded from other sources.
This is a very good document. The indicative level of funding referred to in it is approximately €700 million or €800 million per year for the six year period. From the experience gained from the last fund, can Dr. Beamish inform the committee how beneficial it was to Ireland?
Did it make a real difference? Does Dr. Beamish expect much of a difference in the indicative funding? Could it be less or more than that indicated?
The difficulty in regard to fleet capacity is that we have big trawlers even though the Irish marketplace might better suited to smaller trawlers given the quantity of fish and the continuity of supply required. Processing in Ireland could be more suited to smaller trawlers which can provide a continuous supply of fish for processing. Deputy Broughan referred to sustainable jobs in the context of aquaculture and the added value of its products. Does Dr. Beamish consider that the aquaculture sector is being exploited to its full potential in light of the fact that we could create small enterprises along the coastline? Given the huge capacity of some trawlers, there may not be a match between the time of the catch being landed and the processing possibilities on the coastline. Some fish may be suitable to be brought to other jurisdictions for processing, which would be of no benefit to the State.
The Irish position supports the objectives of the proposal, particularly in respect of the sustainable development of coastal areas and aquaculture. What are the criteria for the sustainable development of coastal areas? Is there any new definition? Does one look beyond the Pale and the existing coastal areas already designated for development? Are Dr. Beamish and his colleagues examining any new ports or areas on the coastline which have not been developed to date? Are they looking at any generic new industries in that area? In light of the current difficulties about the sustainability of the industry, does Dr. Beamish see opportunities for the creation of many jobs within the time frame of 2007 to 2013?
What are the relative values to the economy of aquaculture and fish farming on the one hand and wild sea-fishing on the other?
Dr. Beamish
The financial instrument for fisheries guidance — which is still in place in regard to assistance — involves an allocation of €68 million to Ireland from that fund. That does not reflect the total funds provided under the national development plan to the fishing industry because programmes are already in place which are outside the financial instrument for fisheries guidance, such as the ongoing ports development programme and the training of fishermen. The current fund has assisted in a significant development of the commercial sea fishing industry over the past five or six years and the previous operational programme also assisted. We have moved from a situation of a white fish fleet with an average age of 25 to 26 years with significant safety problems in the mid-1990s to one where a major proportion of the fleet has been renewed and has higher safety status.
The fishing industry is seen as a homogeneous industry but it is a series of very different activities and sectors that are not easily comparable. Fish is the only common denominator. Pelagic fishing for herring, mackerel and horse mackerel is different from some of the other areas and tends to involve large vessels hunting for migratory fish which must be fished at high speed over large areas by high volume, large sized vessels. The white fish off-shore fleet uses smaller vessels, although they are large in comparison to older boats. They have the advantage that they can diversify to slope fisheries and are weather independent. There is also a multiplicity of in-shore fisheries. The Minister and the Department increasingly focus on the development of inshore fisheries. There is currently a process involving the licensing of all inshore fishing boats and further fisheries management initiatives in that area will be announced shortly.
That area links into many of the small, local enterprises in terms of supply to restaurants and so on. There are clearly many multipliers involved in that in terms of the local economy.
There is potential for funding to be channelled into a wide set of initiatives in the coastal areas that are dependent on fishing to maintain the populations and economies of those areas. Nevertheless, funding will not be of such magnitude that the entire coastline outside the fishing areas can be encompassed. It is likely that the focus will remain on areas where there has been a high dependency on fishing. That is to be determined and depends on the funding available.
Deputy Fitzpatrick correctly anticipated that I do not have the answer to his question on aquaculture.
Aquaculture is a growing area. Does it have more potential for development than putting trawlers out to sea?
Dr. Beamish
Strictly speaking, they are not alternative choices that must be made. There is a sustainable, renewable, long-term wild sea fishing industry which can exist if stocks can be maintained and managed. There is no reason we will not continue to have a sea fishing industry producing organic, high value and high demand sea food products. It will, however, need to be highly managed to maintain sustainability.
Aquaculture is made up of a variety of activities and is growing quickly worldwide. All the FAO projections for aquaculture envisage a more dominant role for it in coastal communities globally. It provides year-round employment. It does not just involve salmon farming, it is a young industry and cod farming is rapidly advancing. Other species are also developing and it is widely anticipated that a wider range of species will be capable of being farmed in one way or another. Ireland has a large shellfish industry, both intensive and involving the relaying of seed in bays and on ground areas for onward growing in the wild. That is where wild fishing and aquaculture meet.
Do any of our partner countries offer grants to people involved in organic aquaculture? Recent reports and the decision on salmon imports suggested that aquaculture salmon had recovered strongly but organic salmon did not receive an additional premium. Are there supports for those who want a more environmentally sustainable aquaculture sector?
Dr. Beamish
Again, we are categorising aquaculture as salmon farming and that is a mistake, although it is the most dominant form of aquaculture. Salmon farming was the first intensive farming activity and it faces challenges to its sustainability. There is a large Norwegian salmon farming industry with increasing access to the EU, which greatly threatens the economic viability of salmon farming in EU production areas such as Scotland and Ireland. That has had an impact on the development and continuation of that activity in the Union. In recent days, however, the Commission has proceeded with trade protection measures to avoid low cost dumping of salmon into the European Union market and that may stabilise the area.
What impact has Chilean salmon farming had on the EU sector?
Dr. Beamish
Effectively Chilean, Faroese and Norwegian salmon have impacted on the market but much of the Chilean salmon goes into sectors of the market other than those where we are competing, although it displaces other people's production and has a knock-on effect.
I welcome Dr. Beamish to the committee. We have criticised him in the past for presenting long reports and I see he has slimmed this one down. We should perhaps meet half way in this area because we cannot have enough detail on it. It is hugely interesting.
The more I look into this, the more I consider it to be the greatest environmental scandal of our time in this part of the world. I am not directing those comments at Dr. Beamish or his officials but at European policy.
This is an opportunity to ask for different thinking because the Common Fisheries Policy has been an unmitigated disaster in terms of stock sustainability, be it protection of tuna and swordfish in the Mediterranean or cod in our own waters. There has been continual movement from one species to another as each becomes commercially unviable because of overfishing to the extent that we have obliterated deep water stocks that take decades to mature. Political involvement in the process has failed, as we see every December at the circus where politicians row back on what the scientists advise. This country is as bad as any other, coming back triumphantly to boast of beating the odds and securing an additional quota, a quota that is unsustainable. No one carries the headlines five or ten years down the line when the fish no longer exist because of the dramatic waste and overfishing within the system we have created.
While some of the developments in the review of the Common Fisheries Policy are welcome, did we look at the possibility of a radical change in the system? For example, in Iceland fishermen receive lifelong ownership of a certain stock, which gives them an interest in managing the stock rather than in getting it before someone else does, as characterises our system. In New Zealand they are looking at creating no fishing areas to see if that will have a scientific effect——
Those countries are not in the European Union.
No, but we must think in this way. The north-west Atlantic is a large fishery. Can the European Union not think differently? Was it on the agenda to be radical and different and recognise the rapine and slaughter that has occurred?
We judge fishery policies from the perspective of the fishing industry, which is understandable, but we also represent the general public. People must be concerned that the only fish served in the restaurant here, for example, is farmed salmon or seatrout. If wild fish is served one worries is one taking the last one, or where it has come from. The only fish available in my local fish shop is either farmed or the last few wild fish at €16 per kilo.
Surely we should represent the whole population, which has an interest in a healthy ecosystem in the seas around us, and not concentrate on the interests of the industry in this regard. The seas and the fish belong to all of us but the policies have been wont to suit the industry rather than the rest of us.
Dr. Beamish
There are many statements there but I am not sure what the questions are.
Could we have been radical and who do we represent in our policies?
Dr. Beamish
Pelagic fisheries around the world face major challenges on sustainability. This is not unique to the European Union, it is true of Norway, Iceland and around the Union. The situation is much worse in many countries where stocks have collapsed, than in the European Union. Others appear to be moving towards an even worse situation. That is not to say that there are no difficulties under the Common Fisheries Policy but there are problems in most areas where there are active pelagic fishing industries. The limits of sustainability are always being tested.
In the European Union the global production of fish in aggregate terms has been fairly constant for the last 30 years at approximately seven million tonnes per year. That does not mean that everything is constant. The Deputy is correct in that the focus on particular species changes from year to year.
The underlying principle of the Common Fisheries Policy is sustainability of the stocks. The reform process enhanced that focus. Under the priority axes in this fund there is a strong emphasis on adjustment in the industry, sustainability of resources, selectivity and diversification. There is an equal requirement for a cohesion dimension, namely, sustainability for the coastal communities and the human capital, as it is called, which is engaged in the fishing industry.
The industry undergoes constant transformation, as is apparent to anyone studying it. There is an increased emphasis on more complex sustainable management systems. The Deputy referred to the quota management system in Iceland which is one small aspect of the overall fisheries management there. The Icelandic model moved towards total privatisation of access to the resources. A large portion of the national quota ended up in a few hands and that had to be broke out again to avoid undue concentration. This is not a panacea for sustainability.
We have evolved our own range of fisheries management systems which vary from one fishery to another. For example, in our pelagic fisheries most of the quota is allocated to vessels with annual catch limits. They operate within that constraint and choose when to take that available catch. They do not own the quota, this simply constrains their activity, and gives a degree of stability. If they do not take their full catch limit they cannot trade it as a commodity.
Large fishermen would like to have more transferable quotas because these become valuable commodities which are saleable and can be banked. Small fishermen do not like this because they want continuing access to these resources. We are managing a public resource and there are many issues associated with that. Individual transferable quotas have not always helped sustainability, in some cases the opposite has happened. New Zealand is a good example.
I take the point but has this not led in Iceland to a dramatic recovery of the cod stocks?
Dr. Beamish
Yes but cod stocks generally in northern Europe, Iceland, Norway, Russia and the Bering Sea, are in quite a healthy state. What appears to be happening, although nobody has a definitive answer, is that some of these cold water stocks do relatively badly in southern latitudes and better in northern latitudes. For example, in Ireland we have one of the highest haddock stocks ever, certainly the highest in 30 years. This appears to be occupying the space occupied by a large cod stock in the past.
Does that mean that climate change rather than fishing activity is the cause of this development?
Dr. Beamish
Nobody has given a definitive answer to that question. We have some pilchard fisheries off the south coast which were not prevalent until recently. Similarly, our southernmost herring stocks are not as healthy as in the past, whereas northern herring stocks are quite healthy. There are wider environmental phenomena at issue which are not fully understood.
Fishing has an influence. The former Commissioner for Agriculture, Franz Fischler, said the only thing we can influence in the short term is fishing activity so it must be managed in a sustainable way. It is a complex issue and the appropriate management system for one fishery is not necessarily appropriate for another. The fishing industry is an amalgam of a range of different activities for which matching management systems must be developed.
The fund is a piece in the jigsaw, intended to assist the overall reforms made in the Common Fisheries Policy to provide the financial instrument and the structural component to enable the reformed policy function between 2007-13.
Does Dr. Beamish agree that the basic structures are the same? National governments are still responsible for funding and management monitoring, and it is impossible for politicians not to skew policies in favour of short-term thinking. We need a European fisheries policy that is genuinely common as opposed to the present policy that is negotiated by individual national governments
Dr. Beamish
It is hard to reduce this. A variety of general principles are being developed within the common fisheries policy for long-term management such as harvest rules, general guidelines, the way in which scientific advice is produced, the precautionary approach and the margins between the activity and what is regarded as a sustainable level. All these have been developed and strengthened over the last several years in response to the fish stocks situation. The general principle is to move towards a long-term management plan. Recovery plans are in place right around the coast, which are longer term initiatives working within defined parameters to rebuild stocks to agreed pre-set target levels of sustainability. A longer term dimension is coming into the fisheries policy to which end the Council and the Commission have been working. It is not as short-term as may appear from the final December negotiations.
Regarding trade issues relating to salmon, there has been increased production of salmon in both Chile and Norway. As a result, there was a substantial increase in product levels from these countries in the European market. The Commission undertook an investigation and found much of the products were being sold below production costs. This amounts to a form of dumping that undermines EU producers. On that basis, the Commission introduced safeguard measures to protect EU producers, consisting of minimum import prices and tariff quotas, above which a higher tariff will apply. These measures will apply from now until 2008 and it will give Community producers an opportunity to adjust production and be more competitive.
That is a welcome change.
Has Chile a superior method of producing salmon compared to EU producers?
Chile may place less emphasis on environmental issues. It is new to the industry and has been substantially increasing its production levels. Much of the problem arises in the Norwegian situation. Our industry strongly holds the view that Norwegian Government banks are supporting continued production there while allowing for underselling below production costs in the European market. This is a significant trade issue for European producers. As a result, the Commission introduced these safeguard measures.
The bulk of Chilean salmon products is frozen and sold on the European market as frozen products. This would not compete directly with Irish or Scottish products. However, there is a displacement factor involved for our producers. The combined effect of Chilean and Norwegian production elements and trading in the European market has had a significant detrimental effect on our producers.
When the committee examined the aquacultural industry, it appeared that some Norwegian producers were more environmentally sensitive, particularly as production is banned in many fjords if it is considered inappropriate for tourism. It is a complex matter and Norway cannot have it both ways.
If Ireland had authority over its fishing policy, like Iceland and New Zealand, would the management of stocks be different? Serious allegations have been made concerning Irish production levels, particularly at Killybegs. Newspaper columnists have highlighted the discrepancies between production and trade figures. One wonders about some of the figures on sustainability that the Department of Communications, Marine and Natural Resources provide.
Is priority listing a rough indication as to the order of priority that it measures for adaptation of community fishing fleet including effort adjustment? Is it politically impossible to admit that the Irish fleet will have to be reduced? The pelagic fleet in County Donegal numbers 24 vessels. One of these vessels recently had an unfortunate accident. It, however, could land up to 200 tonnes of mackerel. Given those figures, this fleet itself could reach the Irish quota in no time. Is it a case of too many boats with too good technologies chasing too few fish?
Dr. Beamish
The regulation before the committee provides a variety of options for adjusting the fishing effort to the available resources. Some of these will involve the permanent withdrawal of capacity, the temporary adjustment, depending on the stock, and so forth. In some cases, if boats are viable to operate in a scenario of reduced quotas or fishing effort to sustain a resource, itmay be a policy choice to retain more vessels than needed to keep employment distributed around the coast. Alternatively, the size of the fleet can be significantly reduced so that a smaller number of vessels operate at a higher level of productivity and in that way access the quotas. These choices relate to employment, diversification of activity around the coast and so forth. Overall, the regulation is providing scope to member states in the event of the funding being available to implement a range of measures to adjust the fleet size or fleet activity to the resource availability that exists.
Regarding the points on fisheries control, I will not comment on any of the specific ongoing inquiries taking place. Fisheries control is an issue on which the reformed Common Fisheries Policy has increased the focus across a range of areas in all EU countries on the basis that the conservation measures need to be applied to ensure the long-term sustainability of the resource and the industries dependent on it.
I thank Dr. Beamish and his officials for the presentation. Ms Kelly might send the committee clerk a note on what she said about the Chilean and Norwegian impact.
We are agreed that COM (2004) 478, a proposal for a regulation of the European Parliament and of the Council established in the second Marco Polo programme for granting of Community financial assistance to improve the environmental performance of the freight transport system, requires no further scrutiny. We have also agreed that COM (2004) 497, a proposal for a Council regulation, European Fisheries Fund, requires no further scrutiny but that further scrutiny would be required of COM (2004) 654, a proposal for a directive of the European Parliament and of the Council on market access to port services. Is it agreed that the clerk will prepare the necessary reports on the other two proposals for approval by the committee at its next meeting? Agreed.
The joint committee adjourned at 5.31 p.m. sine die.