Seanad Éireann díospóireacht -
Thursday, 19 Dec 1991

Vol. 130 No. 19

B & I Line Bill, 1991: Committee and Final Stages.

Sections 1 and 2 agreed to.

NEW SECTION.

Mrs. Doyle

I move amendment No. 1:

In page 3, before section 3, to insert the following new section:

"3.—The Minister for Finance shall, notwithstanding any disposal of his shares in the Company, retain a special share in the Company to which shall be attached the following rights exercisable by the Minister with the consent of the Government:

(a) no sale or disposal of shares in the Company, and

(b) no sale or disposal of strategic shipping services (as may be determined by the Minister from time to time).

shall take place unless the terms thereof have been approved by Dáil Éireann.".

I have tabled this amendment which is similar to one tabled in the other House, mainly to emphasise again to the Minister the concern from many quarters about the lack of retention, if you like of a golden share. The Minister in his response to Second Stage referred to this and he knows, indeed better than I do, the concern expressed on this matter, particularly as it appears to be a departure from precedent when one looks at the structures that were put in place in relation to previous privatisation measures of commercial semi-State companies over the years.

I know the situation is not exactly analogous with anything that has gone beforehand but given the fact that £35 million of the taxpayers money is being written off and there will be a net loss if you subtract or assume the £8.5 million we may get from Irish Ferries if the performance clause is not called into operation, there is still a large loss to the taxpayers, ignoring the investment over the years that would be written off effectively at this stage. For that £26.5 million net, could not equity to that amount be claimed under section 2 of this Bill by the Government of the day to use that effectively as a golden share or a State equity in the new company even for five, six or ten years just to monitor performance and ensure that the agreement entered into with SIPTU and the B & I group of unions, which I applaud as does the Minister, works as it is intended to work and that there are no hiccups? Is there not a case for the Minister even to claim equity to the value of what he is writing off even over a short term — he can always release that equity again at another stage if needs be — to protect the workers and in the interest of a peaceful transfer to the Irish Continental Group of B & I?

Minister for Tourism, Transport and Communications (Mr. S. Brennan)

I am sympathetic to what the Senator wants to achieve but I do not believe the golden share is the way to achieve it. In fact, I believe we have already achieved it with this agreement with the trade union movement. In our negotiations with the unions initially they sought this golden share but in completing the agreement and finalising it they did not actually insist on this golden share. Rather they settled for the undertakings which the Government had given and the undertakings which the Irish Continental Group had given in regard to maintaining the routes, additional investment, all the type of issues for which you would use a golden share. Therefore, I am quite satisfied that the type of thing the golden share would be useful for is actually covered in the trade union agreement.

I would be against taking the golden share as equity for the money put in because the whole purpose of the proposal is to withdraw the State, and to let it ease back in for a small share, is neither one thing nor the other. It is the worst of all worlds. You are in there, you have an investment and you are part of the capital structure and any benefit the State gets from being out completely would be muted.

The two other reasons for not going the route of the golden share were that there are plenty of safeguards in European Community and competition law to ensure that the State's strategic interest can be protected. Senator Mooney made the point this morning that you do not need to own a shipping line to influence it and there are many examples of that. Senator Foley spoke very effectively this morning about the Cork-Swansea line. I would like to pay tribute to the management and the staff of that line. A consultants' report two years ago advised me not to give the line any money, that it could not actually work. I rejected that advice. We gave them the funds and they have now paid it back and are making profits.

Mrs. Doyle

It is within EC competition law I trust?

Mr. S. Brennan

That is a separate question, Senator. We took the risk with that and it is working. We do not own it but in ways we are able to influence its decisions. The other reason, of course, was if I retained the golden share I am certain the price in the market-place would have been less and not more because I do not think any potential new owner would want the Government sitting on its shoulder demanding all sorts of extra accountability. They already have accountability to the Stock Exchange in this particular case.

There are four or five very good reasons for not going the golden share route but the main one at this stage is that we have sat down with the trade union movement, negotiated an agreement which, in fact, gives assurances on the strategic future in so far as it is practical to do it. No legislation will do that, by the way. I rejected an amendment in the Dáil already which asked me to take the power to direct the company to keep a particular shipping line open. If you wanted to do that at some stage, even if it is a private company, you may end up having to grant-aid it or subsidise it. You do not have to own it to make it happen. That has been shown right throughout the whole area of Government.

I am sympathetic to the intention behind the Senator's amendment but I would argue that the objective she seeks is more than adequately covered by way of the agreement rather than by the way of equity which she suggests.

Mrs. Doyle

I am puzzled by one remark made by the Minister there. I will paraphrase him rather than quote him directly. He stated that the main reason why he felt it was unnecessary to go down the route of the golden share was because of the union agreement but he argued just as vehemently against it last week in the Dáil before there was any agreement. The union agreement only came into place on Tuesday of this week.

The second question I would like to ask is whether the Minister discussed specifically with the Irish Continental Group the possibility of a golden share arrangement and whether the Irish Continental Group specifically stated they did not want to know or, if they did, that the price on offer would be much lower?

Mr. S. Brennan

The Senator is quite right. The agreement only came into being after I had actually indicated on a number of occasions that I was not attracted to the golden share but there were the other reasons on their own which were quite sufficient for me to reject it. I simply do not believe you need to hold a share in a company which you are disposing of in order to influence the future direction of that company, particularly one that has plenty of competition. If it was a monopoly that you were privatising it would be different but in this case there was plenty of competition. Most shipping companies around the world are in the private sector. The State should make up its mind; either get into it or get out of it. I took the view we should be out of it and that is why I thought it should be as clean a cut as possible. As I say, the agreement gives the workforce the assurances which they want in regard to their futures.

Did I ask Irish Continental Group about the golden share? Yes, we discussed that with them. We discussed every item with them when the negotiations were taking place and they were not at all attracted to the idea of having the State involved. They took the same view I did, which is if we want to get out, they want to get in and that we should not——

Mrs. Doyle

They would not have come in if we had insisted on a golden share?

Mr. S. Brennan

I cannot say that absolutely. I think they were very interested in the line and very keen to make the purchase so I cannot say they would have formally rejected it. They certainly left me under no doubt that they were most unattracted to the idea and only if I absolutely insisted on it would they then rethink their position.

Amendment, by leave, withdrawn.

Section 3 agreed to.

SECTION 4.

Question proposed: "That section 4 stand part of the Bill."

Mrs. Doyle

I just wanted a brief mention of the pension fund and whether the agreement with the unions during the week took into account any concerns there may have been in this area. Apparently it is surplus to a considerable extent which is good news. It is usually the contrary when we are discussing pension funds. How will the surplus of the moneys in the pension fund be used by ICG and will those workers who opt for voluntary redundancy or severance packages benefit because of the excess money in the pension fund?

Mr. S. Brennan

I am glad the Senator raised the question of the pension funds because it was a major flash point in the Dáil during this debate. I wrote to the Irish Congress of Trade Unions on 1 November, 1991 and I want to quote from my letter:

I wish to assure you that the Government will not accept that any sale transaction be conditional on the Company liquidating the assets of B & I pension schemes for any amount. In my view, the control and management of pension funds are the responsibility of the trustees of such funds. The sale to the Irish Continental Group is consistent with that commitment. I remind Senators that the management-staff buy-out offer included the use of £6 million of workers' pension funds. In fairness, I understand the trustees agreed to that so they were not doing anything wrong. It is a matter of judgment as to whether one considers that to be a wise decision.

B & I's pension funds are subject to the general pension legislation of the State. It is not necessary in this legislation to tinker in any way with the pensions because the general pension legislation covers that. The amendment which was agreed by the Dáil guarantees the continuity of existing pension rights so that the pension rights of workers in the B & I moving to a new organisation are guaranteed.

The agreement which I signed enshrines a commitment from the Irish Continental Group that they will abide by the current trust deeds and rules of the B & I pension funds which have been disclosed. What that means is that the Irish Continental Group must rigidly adhere to the very tough regulations which currently apply under the deed of trust and the rules of the B & I pension fund. In simple English, there is absolutely no question of abuse of pension funds. They are pinned down very tightly under legislation, under my agreement with the unions, and particularly under the amendment which I put to the Dáil.

I hope that reassures the Senator that pension funds are secure. They are covered by legislation and if everybody abides by the law there is absolutely no worry about the pension funds.

Mrs. Doyle

Would it be possible for another pension fund to become overinflated? I am thinking back to the mideighties when there was an amendment to a Bill which put a stop to the practice of some of the State subvention to B & I being put directly into the pension fund to increase the pensions payable. I may not have that correct but there was a practice — I am not saying it was illegal — that was questionable and which was since curbed by amending legislation. Is that likely to happen again?

Mr. S. Brennan

I do not want to put words into the Senator's mouth but I know of the recent case in the United Kingdom where there were allegations of misuse of pension funds. That case brought the use of pension funds back on to the agenda. Irish legislation generally is much tighter in regard to the use of pension funds and recent legislation, over the past couple of years particularly, has tightened it up considerably.

The Senator is right to be concerned about the use of pension funds but it is as tight now as it can possibly be unless, of course, somebody wants to behave illegally or fraudulently. In that case there is very little that can be done in terms of legislation other than to prosecute and so on. As the law stands and these agreements stand, I am quite satisfied that the pension fund belongs to the B & I workers. I am quite satisfied that it is secure and it is also secure in the hands of the fresh company.

Mrs. Doyle

What will the surplus be used for?

Mr. S. Brennan

The trustees are the only ones who can decide. When the management-staff buy-out put forward the offer, the trustees apparently agreed to allow them to put up £6 million towards the cost of buying the company. If the workers and the trustees on their behalf agree to investments, that is their prerogative.

Mrs. Doyle

There is the question of augmenting the severance package for those who opt for voluntary redundancy to make it more attractive. That was discussed.

Question put and agreed to.

NEW SECTION.

Mrs. Doyle

I move amendment No. 2:

In page 4, before section 5, to insert the following new section:

"5.—(1) Each employee, following the sale or disposal by the Minister for Finance of shares in the Company, shall hold his office or employment on the same terms and under the same conditions as applied to his contract of employment immediately prior to such sale or disposal and while in the service of the Company the said terms and conditions shall not be less favourable to him than those prevailing immediately prior to the sale or disposal save in accordance with a collective agreement negotiated with the trade unions or staff associations representing such employees.

(2) The terms of the European Communities (Safeguarding of Employees' Rights on Transfer of Undertakings) Regulations, 1980 (S.I. No. 306 of 1980) shall, in particular, be applied at all times to employees of the Company.".

I tabled amendment No. 2 fully aware of the agreement between the Minister and the unions this week. It would be important for the Minister to read that agreement into the record. I was amazed at how many Members, even in this House, were unaware of the terms of the special agreement made by the Minister with the unions this week. I would like the Minister to comment directly on subsection (2) of my amendment:

The terms of the European Communities (Safeguarding of Employees' Rights on Transfer of Undertakings) Regulations, 1980... shall, in particular, be applied at all times to employees of the Company.

Perhaps the Minister could confirm that so that there are absolutely no doubts left in this area from the employees' point of view.

Mr. S. Brennan

I read the agreement into the record this morning on Second Stage. It is signed on behalf of the Minister for Tourism, Transport and Communications, the Irish Congress of Trade Unions and the whole group of the B & I unions.

The Senator asked me about Statutory Instrument No. 306. The elements of the agreement go beyond that. The European Communities (Safeguarding of Employees' Rights on Transfer of Undertakings) Regulations, 1980 apply only to shore based staff. They do not apply to seamen. Applying Statutory Instrument 306 would exclude seamen. What we have undertaken in section 6 goes further than Statutory Instrument 306 and gives the workforce the assurances they require. It is actually stronger than Statutory Instrument 306.

Amendment, by leave, withdrawn.

Sections 5 to 10, inclusive, agreed to.

Schedule agreed to.

Title agreed to.

Bill reported without amendment, received for final consideration and passed.

An Leas-Chathaoirleach

When is it proposed to sit again?

Mr. Foley

At 10.30 a.m. tomorrow.