I am pleased to be in the Seanad for the Second Stage debate on the Air Navigation and Transport (Amendment) Bill, 1997. Committee Stage of this Bill in the Dáil took a great deal of time as many amendments were tabled, including several substantial ones which were debated at length. All parties are anxious to pass this legislation before the recess.
This Bill deals principally with the management and operation by Aer Rianta of the three State-owned airports — Cork, Dublin and Shannon. The Dáil has already considered this Bill and examined it on Committee Stage. There was a most useful debate in that House and several beneficial additions resulted from the Committee Stage interventions. A total of 108 amendments were considered on Committee Stage and 41 on Report Stage during the passage of this Bill through the Dáil and I will refer to these again. Some of these amendments were debated and not accepted. The resourceful Deputy Stagg has tabled them on Committee Stage in this House.
The main purpose of this Bill is to end the present State airport management arrangement in which the Minister owns the airports and Aer Rianta operate the airports as an agent of the Minister. To end this arrangement it is necessary to transfer the assets at Cork, Dublin and Shannon airports from me, as Minister, to Aer Rianta and to assign to the company certain functions previously undertaken by myself and my predecessors in relation to the management of the three State airports.
The opportunity is also being availed of to amend and update miscellaneous provisions in civil aviation legislation generally. In particular, a new offence of unruly behaviour on an aircraft in flight will be created under this legislation. This measure was proposed in an amendment tabled by Deputy Yates on Committee Stage. It was redrafted by the draftsman and will close off a loophole in the law as it stands at present.
The Bill has been a long time in gestation. Apparently, work began on drafting the heads as long ago as 1969. The principle of what is proposed has been agreed by all sides of this House and recommended by joint Oireachtas committees and several working parties over the years. It is said that the wheels grind slowly — eventually they ground exceedingly well in this case. However, various events intervened, the first being the oil crises of the 1970s which led to a major economic downturn and a decline in civil aviation. Later it was funding issues which forced a rethink. The measure was deferred by successive administrations until, finally, the previous Government approved the scheme of the Bill in October 1996.
The principal impact of the Bill is that the current agency status of Aer Rianta will be ended. For the first time in its history, the company will own the assets it manages. This will put it on the same footing as all the other commercial State-sponsored bodies. There are no implications in this Bill for the ownership of Aer Rianta itself. The Minister for Finance has held 100 per cent of the shares in the company since it was first incorporated under the Air Navigation and Transport Act of 1936, and that continues to be the case under this Bill. Aer Rianta, which was established as a limited company in 1937, was a holding company for Aer Lingus and its objective was to promote aviation generally. Its airport management functions evolved over time and it became a public limited company in 1985.
Being the agent of the Minister for Public Enterprise means effectively that Aer Rianta is, theoretically, merely a name under which the Minister acts. The company as of now has no assets, functions, activities or revenues in its own right in the field of airport management. While Aer Rianta has itself funded all airport investment since 1988, the company simply holds these assets in trust for the Minister of the day, who is their legal owner. Clearly, this arrangement is outdated and outmoded and the object of the Bill is to bring that situation to an end.
To put this in context, it may be appropriate to recall briefly the development of the management structure of the three airports. Neither Cork nor Shannon airports were managed by Aer Rianta when they opened. Cork Airport, which opened in 1961, was managed directly by the Department of Transport and Power. Likewise for Shannon Airport, which began construction in 1936 and was managed initially by the Department of Industry and Commerce and later by the Department of Transport and Power. Aer Rianta was given responsibility for the management of Dublin Airport from its construction in 1940 and has exercised that duty ever since.
In 1969 an administrative arrangement was entered into which extended Aer Rianta's responsibility to include the management of Shannon and Cork Airports. At that time the late Erskine Childers, the then Minister for Transport and Power, indicated that it was his intention to regularise the status of Aer Rianta at the earliest possible opportunity. Almost 30 years later the Bill is at last before this House. I cannot account for those delays. As well as the oil crises they may be due to the various elections and changes in Government.
Aer Rianta has a long history stretching back to the foundation of the aviation industry in this State. It has been highly successful in its core job of ensuring good quality airport facilities at the three airports it manages. It has also built on that success abroad where it is involved in airport related business in many countries, acting as an ambassador of Irish enterprise and opening the door for others to follow.
This Bill regularises Aer Rianta's corporate and commercial mandate. It challenges the company to continue to be competitive and innovative in securing its place as the prime provider of air access gateways to and from Ireland. The Bill provides a basis for sharing the benefits of its competitiveness with its customers, the airlines and the travelling public, as well as rewarding the shareholder.
The text before this House follows closely on that general scheme brought forward in October 1996. The main effect of the Bill will be to transfer all of the assets held in the Minister's name at the three State airports to Aer Rianta's balance sheet. Because all of the assets are currently vested in me, as Minister, neither corporation tax nor local authority rates were payable by the company, though a small amount of corporation tax was paid by subsidiaries. So a side effect — and, I am sure, an unwelcome one — of this legislation is that following the change of status of the company, full corporation tax and rates will be paid by Aer Rianta.
At present the authorised share capital of the company is 60,000 ordinary shares of £1 each. Some 51,000 of these shares have been issued and have been allocated to the Minister for Finance. He is well off.
For the purpose of meeting the requirements of the Companies Acts regarding the minimum number of members of a company, a further nine shares have been issued to each of the members of the board of Aer Rianta and one each to the Secretaries-General of the Departments of Finance and Public Enterprise.
This level of issued share capital is far too low for a company which will have more than £200 million in assets. Therefore, the Bill provides that the old shares be surrendered and a new share issue be made which will be equal to the value of the assets on the company's balance sheet, less the liabilities. It also provides that the Minister for Finance may transfer a share to one or more persons for the purpose of compliance with the Companies Acts.
This is not a Bill to privatise Aer Rianta. There was much debate on this point in the other House and no small amount of confusion. Lest it be thought that that is the end of thinking about Aer Rianta in any other guise, except that envisaged by the legislation, since we came into Government — as I told the board of Aer Rianta recently — the winds of change are blowing through the semi-State companies. There is no secret and we all know it. The change is coming form all sorts of viewpoints. There is the worldwide need for competitiveness, trading in a global economy demands that one is competitive. There is the EU compulsion because we are now subject, and properly so, to ideas on liberalisation, deregulation and competitiveness. Therefore, if there was no compulsion from Europe, there is a compulsion on all of us to have constant regard to our competitiveness. Aer Rianta does that admirably. I salute the company's staff members who are present in the Public Gallery, including the new chief executive. He is giving great service, as does everybody who works in the company.
There is no ideological push in this Government to knock off all the semi-State companies one by one and say: "Ha, ha. That's you gone, now on to the next". That is not the way we do business. In the Programme for Government issued last June we laid out clearly that each semi-State company would be viewed in a pragmatic fashion as the company's and customers' needs unfold. It is not a matter of wholesale privatisation, which, when applied in one fell swoop in the UK, led to many unhappy situations because it was privatisation from an ideological point of view. The UK authorities did not look at State assets and decide what was best for the company, the consumer and the country.
There has been a gradual unfolding. Telecom Éireann led the way when the previous Government brought in a strategic partner. Last year there was Esat and there will be IPO next year. There will be a loosening of the ties, whether it happens through a strategic alliance, privatisation, through public and private sector involvement, or by way of employee share ownership. It is correct that it should happen that way. If we are to supply goods and services which are viable and sustainable then we must obey the global rules of trade, commerce and competitiveness which are at our door.
While the winds of change are blowing, they are not doing so in an ideological or threatening way company by company. I think that would be wrong. They are blowing in a practical fashion. During the week I attended a conference on semi-State companies and I quoted the former Taoiseach, Seán Lemass, who when he was setting up a semi-State company in 1959 said he was doing so from a pragmatic and practical point of view, not for any ideological purpose. Forty years on the emphasis is still the same.
The Bill is silent on the matter of disposing of the shares of Aer Rianta to any third party other than transfers for the purpose of complying with the provisions of the Company's Act, where the Minister for Finance remains the beneficial owner. The Bill does not change the current rights and responsibilities of the shareholder.
Whatever position colleagues may wish to take on this issue, and there has been some recent media speculation on Aer Rianta as a privatisation candidate — although I hate that phrase — it is not the subject of the Bill and it should not cloud our discussions on the issues raised by the Bill. Clearly, anybody is entitled to raise the issue on the floor of the House and discuss it as much as they wish.
There is also provision in the Bill for the payment of dividends to the Exchequer by the company where profits allow and for the regulation of the borrowings of Aer Rianta and its subsidiaries. Controls of this type are fairly standard among semi-State companies.
The core element of the Bill transfers to the company all of the land and property vested in the Minister of the day. All new assets were, in fact, acquired by the company and are held in trust for the Minister. However, the original lands and some property were acquired and paid for directly by the Exchequer. It is good to recognise that fact.
Aer Rianta has to pay for any assets being transferred. The amount in question will be a matter to be finalised by myself and the Minister for Finance on vesting day, but I expect we will talk about it beforehand. The intention is that it will closely reflect the written down value of the property in question.
I plan to vest the lands in the company on 1 January 1999. The first payments of corporation tax, rates and normal dividends will not arise until the year 2000, so there will be no question of Aer Rianta having to pay on the double in any one year. That issue accounted for a whole day on Committee Stage. Deputies Stagg and Yates mounted opposition to the "double whammy". I do not know which Deputy coined that phrase but it is a good one. I do not know if I am allowed to talk about what arose in Cabinet, but when this matter came up I recognised the danger and got a tail put on the Cabinet decision which allowed that if difficulties emerged we could all talk about it. That is what we did. The officials went to the Department of Finance, and the Minister for Finance, Deputy McCreevy, and I worked out a formula avoiding the "double whammy".
I was buoyed up not only by the Cabinet decision but also by the debate on Committee Stage which put forward in a logical way how we could get around the problem. The end result was a far better Bill and a better deal for Aer Rianta. That shows what can be done if one is prepared to listen. We have worked that out.
The Bill is also concerned with the ending of the outmoded agency arrangement between Aer Rianta and the Minister. Accordingly, in addition to transferring the assets to the company, the Bill transfers a number of powers such as the right to establish airports and to acquire or enter onto land. These are powers which up to now were exercised by the Minister of the day but would more appropriately reside with the company.
Similarly, there are a number of general provisions in existing legislation in regard to the administration of commercial State companies which should be provided for in respect of Aer Rianta. The Bill sets down the principal objects and general duties of the company and it deals with the appointment or removal from office of the chairperson, directors and chief executive, reporting procedures to me and requirements in respect of the conduct of directors and employees of the company. These provisions bring the company up to date as regards corporate governance and individual responsibility.
The Bill also provides that the Minister will retain certain rights, including the power to approve changes in airport charges. Access costs are a key issue in maintaining Ireland's competitiveness and airport charges are a component of those costs. I hope that all factors will be taken into consideration in deciding on any adjustments.
The day to day regulation and control of airport users, including the making of by-laws and the appointment of authorised officers, is transferred to the company in this Bill. Other aviation related legislation is also amended in this regard. These changes are necessary either because of the knock-on effects of the provisions of the Bill or because a lacuna has been discovered in the legislation in question.
I pay tribute to Deputy Yates who brought forward a new provision to cater for the growing problem of unruly behaviour on board aircraft in flight. Current law adequately provides for serious offences in the air but has not provided for public order type of offences, which are on the increase. The Irish Independent carried an article last week about a person who, while not intoxicated, got the notion into this head that he wanted to pilot the plane on which he was travelling. He stormed up the aisle and had to be restrained and brought back to his seat a number of times. The individual in question continued to believe he was the pilot and the cabin crew were almost obliged to tie him down. It must have been a difficult situation with which to cope. On the next occasion that person takes such a notion into his head he will be fined heavily but I do not believe he will be allowed to travel on aircraft in the future in any event.
The Bill was amended on Committee Stage in the Dáil. I took on board many other substantive amendments proposed by the Opposition and many technical amendments. If Members wish to peruse them, these amendments are attached to the supplied script. I already mentioned the new section dealing with unruly behaviour on an aircraft. I have also inserted a clause which ensures that the chief executive is automatically a member of the board. The position of the three worker directors is strengthened by an explicit reference in the Bill. The power of the Minister to direct the company has been modified and a basis for revising the ceiling on borrowing has been added. A procedure for avoiding an excessive charge on the company, or double whammy, on vesting day has been agreed.
The Bill is long overdue and I look forward to the debate. I commend the Bill to the House.