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Seanad Éireann díospóireacht -
Wednesday, 23 May 2012

Vol. 215 No. 11

National Lottery: Motion

I welcome the Minister, Deputy Howlin, to the House.

I move:

"That Seanad Éireann:

notes the decision of the Government to conduct a competitive process for award of a licence to operate the National Lottery over a 20 year period;

considers the National Lottery one of the most valued resources owned and funded by the Irish people; and

therefore calls on the Minister for Public Expenditure and Reform to make proposals to Government to reconsider this decision.".

The Minister has declared his intention to open to bids the licence to operate the national lottery. The purchase of the lottery licence for 20 years will deliver money necessary for the children's hospital or maybe other matters, but it surely will deliver a great deal of money.

The Minister has also assured us that funding for good causes will be ring-fenced. Some 30.5% of the profits from the national lottery will continue to go to good causes. This is good news for the country and it is a great story all round, with no cost to anyone. I am not so sure.

First, I thank the Minister for coming into the House today. I want to speak to him with respect to his office, his ability, his talent and his attention. Unfortunately, I am strongly of the view that his intention to sell the operating licence for the national lottery is unthinking. I would go so far as to say it is "unethical" and I will tell him why.

I respectfully suggest with dignity that the operating licence for the national lottery is not the Minister's to sell. It is not the Taoiseach's to sell, it is not mine to sell and it is not ours to sell.

It would help if the Minister listened.

Senator O'Donnell without interruption.

She is the one who is speaking.

Senator O'Donnell without interruption.

The Cathaoirleach is in the Chair, I understand.

That is correct.

I thank Senator Norris.

Senator O'Donnell without interruption.

The electricity grids may be, aspects of Coillte may be, gas basins may be, electric cables may be but the lottery is not. Everything about the national lottery is fuelled, furnished, finance, stocked, sourced, owned and possessed by the people. It is ours. In every way it can be defined and in every which way we can argue it, it is ours. It belongs to us, lock, stock and barrel. It derives from us, it originates from us and it exists because of our individual voluntary pockets and purses.

The national lottery has done its job well over the past 25 years. In 2011, €231.9 million was used by the Government for good causes. In the past 25 years €12 billion has been made in sales, €3.9 billion of which was for good causes. This is a good thing.

Online sales are seen as the new big cash cow. We know this from lotteries all over the world. How come it is seen as the easy way of delivering huge new profits? If it was that easy, why has it not been easy for the national lottery in Ireland? Surely, it cannot be the case that the Government plans to lift all sorts of restrictions around online sales just in time for an international owner to come in and to benefit.

In 1997, there was a report of the review group on the national lottery. The group made ten recommendations. I will not read them out. One of the recommendations suggested that the most disadvantaged groups within the voluntary and community sector should be given priority in the allocation of lottery funds. The ESRI backed this up in 2007 because it was the poor, the less educated, the less well-off and the disadvantaged who bought most of the lottery tickets.

In my first speech in the Seanad, I asked the Minister for Arts, Heritage and the Gaeltacht, Deputy Deenihan, how he was going to alter and change this forever in the distribution of arts and cultural funds and how the disadvantaged could get to the top of the queue, or at least in a parallel queue, when it came to grants. The benefits are not shared equitably. It is merely another case of the great transfer con, but I did not get an answer.

This selling of the national lottery licence is a human equality rights issue and it is preparatory to the core of my argument. As Irish people, we own and fund the lottery. All the money from the lottery derives and originates from Ireland. It is ours entirely, absolutely, directly and voluntarily, and it belongs personally, privately and publicly to each citizen of this country.

It is now being suggested that we sell the licence for 20 years to anybody who can come up with approximately €500 million for the children's hospital and, of course, to answer Government requirements. The sale of the licence to operate the lottery will deliver funding of €300 million, €400 million or €500 million. Those who would put up that kind of money are buyers who expect a significant profit from the licence over the next 20 years. There is no way anyone pays out such an amount of money for an asset unless he or she expects that asset in time to make a handsome profit. We know what the lottery makes because it is ours, and I have stated it.

This is the core of the argument. Those who will provide this great new operator, portrayed as a kind of a saviour to the Irish people, with that tidy profit will be the Irish people. It will be mostly the poor, the less educated and the disadvantaged, returning to the ESRI argument and the great con transfer. Once again, within the lottery, the Irish people will put their hands in their pockets, take out their euro, buy their scratch cards, Lotto and Lotto Millions, and create a lottery pie, only from now on a great big slice of the pie will go straight into the coffers of the licence owner, whose sole reason for being involved is to make money for itself. It will be, once again, the greatest transfer of wealth from the pockets of the poor to the pursuit of privatisation.

It does not make any sense to put the lottery up for sale. It is our greatest and most valuable worthwhile resource, and why sell it?

I put it to Senators that we would be better selling the Book of Kells. If we were to sell the Book of Kells to some museum in Australia, Canada or London for €500 million, we could come home and put that money in our pocket. We might have fewer Americans around but we would still have the €500 million in our pockets. If we sell the lottery for €500 million to a person, an organisation, a syndicate, a cash-rich and ready offshore pension fund, a wealthy billionaire or a parallel lottery organisation in some other country which may buy it for €300 million, €400 million or €500 million, that will not be the end of it. We will give back millions of euro in interest, over and above any lottery profit, and we will do so for 20 years. We will be paying, out of the pockets of the Irish people, interest on what belongs to us, what we own and what we fund ourselves, and I cannot think of anything more unethical. We will be giving away our lottery licence to strangers and paying them to take the money out of our pockets.

It is not in the Minister's gift to sell the lottery to anybody but the Irish to run it. It is only in his gift to keep the lottery and ensure it is kept and controlled under the umbrella of the Government of the Irish people.

One of the big moments of his reassurance has been that we need not worry, that the cash for good causes will be ring-fenced. Some 30.5% of sales will be ring-fenced for good causes. Is the Minister sure it is that simple? Is he quite sure that he can slap down that stipulation and not upset the balance of the different games? Is he quite sure about that calculation?

The Minister may find a buyer who is sufficiently cash rich and ready to pay up for this licence — a pension fund in another country prepared to hold out for some time for the great day when the profit comes home. He may portray all of this as a kind of triumph but no matter how long a potential buyer might have to wait for a big profit, the only reason a buyer will buy this licence is because in time that buyer will get a huge profit. That profit will come from one place — the pockets and the dreams of the Irish people.

It is incumbent on the Minister to sit down with as many people as he needs, including me, to come up with creative ideas to find the money to build the children's hospital. I have plenty of ideas as to how he might do that. I suggest we borrow the money ourselves, and we might start with Mr. Boucher in Bank of Ireland to which we gave €3.75 billion, and whom we have not seen since. If the Minister wants to ring-fence something, why not ask the Irish people to ring-fence a particular draw on a Wednesday night for the children's hospital and I guarantee he might have the money within six years. That way he would keep the lottery within the control of the State and the people who own it and its profits.

My argument is not about transparency, about where the Exchequer begins and lottery gifts end or about the disadvantaged, although they have a huge part to play. It is about the thoughtlessness of selling the national lottery on the basis of a 20-year contract, without having identified a more creative way to find the money necessary to fund the children's hospital project. What I am concerned about is Irish people's pockets being pilfered in order to bolster the profits of others.

The national lottery is the greatest gift the disadvantaged and the poor could give to the State. It is rather like St. Patrick's Cathedral in New York, which was built with the pennies of the poor. It is a gift to the State and it is in the Government's gift not to sell it. The Government has the power to ensure that everything it does in respect of the licensing, operation and profits relating to the lottery parallels the gift to which I refer. The Government also has the power to ensure that the licence remains within the control of the State and that the profits relating to the lottery remain in the pockets of all Irish citizens.

I wish I did not have to second the motion and follow such a beautiful speaker.

But the Senator is seconding the motion.

Yes. I second the motion. All I have to say in respect of Senator O'Donnell's contribution is "Follow that". I thank the Senator for the work she has done in bringing this motion before the House. I welcome the Minister and I hope he will be in a position to address our concerns in respect of the proposed sale of the national lottery.

When times are tough it is all too simple for governments to take the easy option, the one which generates much-needed revenue to cut the gap between what we spend and what we receive and which, at the same time, inflicts little or no pain on the electorate. It is for this reason that the prospect of selling the family silver always arises in the midst of a recession. Is this a good time to sell when, in the context of the economy, we are at the bottom of the market? It is generally accepted that one should buy at the bottom of the market and sell at the top. The national lottery is a profitable institution and is not draining the State of resources. What research has been undertaken with regard to the sale of national lotteries in other countries? How was revenue maximised from such sales?

Our national lottery is most certainly not at the top of the market at present. The An Post National Lottery Company's results show that recent sales have decreased by 1.4% in comparison with the figure for 2010. The company's sales stand at €761 million in what it describes, in light of a 5% decrease in footfall, as a very challenging retail environment. In the current economic climate, there is a need for the Government — now more than ever — to get more for less. If we are going to sell this national, income-producing lottery, then we must obtain cast-iron assurances that we will get a good price for it.

The second issue which it is exceptionally important for the Government to address is the impact of the sale of the national lottery on the small news agencies, post offices and convenience stores throughout the country. We are all only too well aware of the tough economic climate in which small business people are operating at present. The national lottery machine in local shops acts as a critical driver of footfall and increases the amount of business transacted. When the national lottery licence is sold to a private bidder and as is the case with any commercial enterprise, an assessment will be carried out in respect of maximising the profitability of the operation of the licence. As has been indicated, a minimum of 30% of the revenue of the national lottery will be ring-fenced by the Minister in respect of charitable causes. That is the same amount that was donated to good causes in 2011. We welcome the Minister's commitment in this regard because it relates to a vital source of community funding and reflects one of the founding principles of the national lottery.

I understand that the relevant legislation contains a requirement to the effect that a minimum amount of the revenue received from the sale of national lottery products, some 40%, be returned to the purchasers in the form of prizes. This means that the remaining 30% of revenue is split between meeting the operational costs of the national lottery and paying the profits of the company charged with running it. Therefore, it stands to reason that the actual impact of the sale of the licence will be on the operational side. As a result, the operator will seek to reduce the margin which small retailers receive in order to increase its own profits. This margin, which currently stands at 6%, makes a valuable contribution. The Minister should bear in mind that in 2010 revenue from lottery sales contributed €48 million to the overall profits of small local newsagents, post offices and shops. Many of these businesses are already teetering on the precipice of financial sustainability and they have little or no bargaining power when it comes to negotiating margins in respect of the operation of national lottery machines. I plead with the Minister that if he is going to sell the national lottery to put in place some form of safeguard in order to protect the margins of the local businesses that are the life and soul of our country.

When embarking on the process of selling the lottery, the Minister should bear in mind that the public's perception of it is that it is something of a slush fund used by politicians to finance——

——local golf courses, sports clubs, schools, etc. If members of the public were asked to name a project of national or international importance funded by the national lottery, they would be unable to identify one. There is no equivalent to Sydney Opera House——

I beg the Senator's pardon but I must refer to Wexford Opera House in this regard. Does that project not qualify?

I thank the Minister for that and I accept that Wexford Opera House was constructed using lottery funding. The finest and closest example of how to run a lottery is in the UK, where profits are paid into designated trusts and thereby protected from political interference. Unfortunately, that is not the position in Ireland. More often than not, the organisations that regularly receive national lottery funding in this country can be traced back to the constituencies of the holders of ministerial office.

I do not believe that any of the companies which are likely or possible buyers for the national lottery will be happy to operate in a climate where profits are distributed at the whim of politicians because this will always impede their marketing campaigns to harvest a greater spend by the public at large. I fully acknowledge that the Government is linking the sale of the national lottery to the funding of the new national's children's hospital. As someone with a keen and passionate interest in the welfare of children, I accept that there will potentially be an alternative cost if we do not sell the national lottery. If the choice is between just these two alternatives, then the hospital must be built. However, like Senator O'Donnell, I would like to be in the room with the Minister when this matter is dealt with because we have many ideas in respect of other alternatives.

Governance is all about the art of making choices. I firmly believe that there is never a situation in which there are only two choices. It is for this reason that I would like the Minister to give further considerations to the options available in respect of raising money in order to discover whether there are any which will not have as negative an impact in the overall context as selling the national lottery. If the plan to sell is to proceed, then I urge him to endeavour to incorporate as many safeguards as possible in the licence in the interests of protecting the margins paid to the local shops and news agents in which national lottery machines are located. I ask him to examine ways to ensure that local shops, particularly those in rural areas with low population densities, will not be deprived of their lottery machines. The removal of such machines would, of course, result in lower overall maintenance costs for the operating company. The businesses to which I refer will serve as low-hanging fruit in the context of driving the profit margins of the purchaser of the national lottery.

I ask the Minister to bear in mind that in the context of the charitable and community ethos which has surrounded the national lottery in Ireland since its inception, it can prove all too easy to adopt a numbers-only approach and refer to this as a "business-minded approach" to government. In light of the drive towards efficiency and reform, we need to consider the impact of the sale of assets in its totality. We must take into account not just the immediate monetary impact but also the many and varying ripple effects while will occur as a result of the sale. I look forward to the Minister's reply in respect of the issues I have outlined.

I move amendment No. 1:

To delete all words after "Seanad Éireann" and substitute the following:

"—welcomes the decision of the Government to hold a competition for the next licence to operate the National Lottery for the period 2013-2033 in compliance with EU legal requirements;

recognises the major achievements to date of the National Lottery and the widespread support of the Irish public for the Lottery;

recognises the need for the State in the current economic situation to pursue opportunities to generate additional revenues that do not impact on taxpayers;

welcomes the fact that the terms of the next licence will continue to involve an ongoing payment to the State through the provision of a fixed percentage of 30.5% of annual National Lottery turnover for good causes; and

welcomes the fact that the new licence will also involve an upfront payment to the State, with some of the payment being used to help fund the building of the proposed new National Children's Hospital".

It is a pleasure to follow Senators Mary Ann O'Brien and Marie-Louise O'Donnell. I must be honest and state that Senator O'Donnell's contribution sounded great but there was really nothing in it. I am surprised by that fact. The reality is that the licence to run the national lottery is going to public tender. This is no different to the position with any other licence.

On a point of order, I do not believe it is the Senator's place to judge my contribution or make an adjudication to the effect that there was nothing in it.

I agree, particularly since the Minister showed gross discourtesy by not listening to what Senator O'Donnell had to say.

(Interruptions).

It is an extremely weak way to begin an argument by stating that there is nothing in someone's contribution.

Senator O'Donnell, please respect the Chair. You will have the right of reply. What you have raised is not a point of order. I call Senator D'Arcy. Did you move the amendment?

I did. Why are we here? We are here as a result of a motion. The Minister has been clear. A tender process must be adhered to and it is a matter of law that the process is adhered to. We are also here as a result of choice. We have had this discussion in the Chamber previously. The choice is about whether we are required to move State assets that we can move today, if necessary. We have held a debate with Senator Barrett on the importance or otherwise of certain assets. We are not selling a lottery. We are putting up a licence for tender. That is an important aspect that we cannot simply ignore. I agree with some of the points made. The "slushfundability" of the way the sports capital programme operated was disgraceful and appalling but, if memory serves me correctly, there has not been a sports capital application since 2008.

What did Senator D'Arcy say? Slush fund what?

Slush fund ability. Senator O'Brien knows what I mean.

I have no idea what he is talking about.

It has not been available since 2008. Today, the funds or moneys go mainly to the HSE and the Department of Health. We have a choice to try to build the children's hospital. This is one funding aspect. Can we do it? When the tenders come back we will see within a matter of months how much money is to be returned under the tender and licensing arrangements. We are not shutting down the RTE concert orchestra or selling the National Gallery. Reference was made to sales in the area of the arts. We are not selling the Book of Kells. No one has mentioned that. Anyway, I do not imagine the State owns it; it probably belongs to Trinity College.

We must make choices. We have come to the Chamber on many occasions and agreed and disagreed. If this is how the children's hospital gets built, it is a choice I am prepared to make. I do not care which licence we put up for tender or who disagrees with it.

The use of the phrase "a great con" was ridiculous and over the top. We must advance this project as quickly as possible. The children's hospital has been delayed for many reasons. Many people were shocked and horrified at the decision of An Bord Pleanála but we must get on with it. This is a method of funding the hospital and I fully agree with it.

I will try to bring some calm to the proceedings. The Minister is welcome back. It is always good to see him in the House. I thank Senator O'Donnell for bringing the motion to House. It is important we debate properly the issues of whether people agree and whether it is simply the sale of a licence or the sale of the lottery. This is something I have called for consistently with regard to the sale of State assets. Far from being ridiculous and far from there being nothing in Senator O'Donnell's speech, this Private Members' motion affords an opportunity for us to discuss in a calm and collected way the merits or otherwise of selling the lottery licence.

I welcome the Minister's comments with regard to the tendering process. I have, however, weighed up the issues and, as currently structured, the proposal is not how I would go about selling the licence. There are other options. It is linked. There is a big and important carrot, namely, the children's hospital, which we are all keen to see advanced as quickly as possible. I genuinely wish the Government well in this regard and I hope we move quickly towards selecting a site, getting on with it and building it. Figures have been bandied about concerning the upfront sale. Obviously, it has not been put out to tender but I assume the Government will set a minimum reserve on this as well, should it proceed in this way, which I hope the Government does not do. I have examined the figures.

Senator Mary Ann O'Brien raised several interesting points. At the moment An Post charges approximately 0.5% of turnover, which is substantial. Last year's figures were in the region of €761 million. How will any private operator make any money out of it? People have raised figures suggesting that the handling fee would have to rise to 6%. If the Government gets an upfront payment of between €300 and €400 million, on the basis of the sales we have seen when they are averaged out, a private operator is likely to receive in the region of €50 million per year. As far as I am concerned, that is easy money. If it is a question that the handling charge is 0.5% with An Post at the moment, why does the Government not make a decision to increase it and keep the licence in Government ownership? The Government should proceed in that way and let people know the fee will be increased from 0.5% to 1% or 2% or whatever. I am keen to hear a response to that proposal. Were the Minister to ring-fence some of the lotto games and draws and make clear they were for the children's hospital, people would buy into it. I realise there would be a downside for the Government. It would not get a large sum of money upfront which would enable it to build the children's hospital. However, I do not believe there has been enough discussion of the sale of the lotto and the concerns raised by RGDATA and Tara Buckley about the impact it would have on more than 4,000 small retailers throughout the country. By the way, no one has mentioned the 100 staff. While it may appear to be a small number, a total of almost 100 staff work directly in the An Post National Lottery Company. What will their position be should the licence be sold by the Government? There are many unanswered questions.

Senator D'Arcy commented on the slush fund ability of the capital sports programme. That is rather amazing. I take it from Senator D'Arcy's comments that neither he nor any of his Government colleagues will make any representations whatsoever to the Minister of State, Deputy Michael Ring, with regard to the next round of the sports capital programme.

That is correct.

I will assist in this regard by proceeding with a freedom of information request at the right time to determine whether any Government party Members have made any representations for any sports clubs or community groups. Senator D'Arcy should note that there is nothing wrong with this approach. What if he sees value in a project in County Wexford, for example, one relating to the Wexford Opera House or Wexford Youths Football Club? In my case, a proposal was made relating to the cricket grounds in Malahide. Malahide now has the only international ground in Ireland thanks to the sports capital grant. We will play the first game on it in June this year. To be serious, a €500,000 capital sports grant means the money would stay within the community and 15,000 people can attend international cricket games in Malahide. However, there are further knock-on effects of such investments in the community.

That is not my criticism.

I have certain concerns in this regard. The reason I raise the issue is that I am unsure how the Government will ensure, once the licence goes into private ownership, that 30.5% will go to good causes? How will it be monitored in future? Will there be any Government oversight of the operation or will there be a situation like that involving the HSE whereby the Government cannot answer questions on it because it is not the immediate responsibility of the relevant Minister? Will a Department pass on any questions to a given lotto regulator which would be the only body in a position to answer any questions? That would involve setting up such a body at arms length from the Oireachtas.

Some valid questions remain to be answered. I am rather surprised at the response of Senator D'Arcy to Senator O'Donnell's opening remarks. They were rather thought provoking, well put together and well meaning. We should not rush into the sale of any State assets. I wish to put on the record of the House that the original memorandum of understanding signed by the previous Government made no commitment with regard to figures, sales or the fire sale of any State assets. The revised memorandum of understanding referred to the sale of non-strategic State assets. I call on the Minister to consider the hundreds of charities throughout the country. These charities are strategic in their communities. Those are the charities and community groups that have been funded by the lotto.

I remind Members this is not a frivolous motion, although I accept the Minister is not viewing it as such. It deals with a serious issue that will have a knock-on effect. If this proceeds and God forbid ten years from now we are not hitting the 30% target for good causes, others in this House and in the other House will ask us why we made this decision to sell on the licence for 20 years.

I am delighted to be in the House and thank Members for the invitation. I am always impressed by the passion with which Senator O'Donnell presents any case, and tonight's presentation is no less. I almost always believe she speaks sense. I disagree with her on this issue and I want to explain the reason.

There is a fundamental misunderstanding of what is actually for sale. What is for sale is the licence to run a lotto in Ireland. It is not the Book of Kells. It is a licence, in the same way as we sold off mobile telephony licences last year. It is a licence which we are obliged, under European law, to put out to tender. We are doing something that has happened since the lotto was instituted, and I remember it. The last two times it happened, An Post won the competition and it may well win this competition. It is not going out of State ownership. It is a licence to broadcast and use mobile telephony and broadband. These are State assets that are put out to tender under European law in a procurement process that is open to all.

In terms of what is different about this one, there are two fundamental differences. The first is that because of the incredibly difficult financial position the State is in, we must have as much upfront payment as we can, first, to meet infrastructural demand such as the national children's hospital that people have talked about since I was in the Department of Health. We want to merge the children's hospitals, to have one flagship. Second, we want to get people back to work and stimulate as many construction projects as possible. This is only one of the stimulus packages I am trying to leverage.

In response to Senator O'Brien, I was in Brussels last week where I met Commissioner Geoghegan-Quinn and Commissioner Hahn to discuss a variety of issues. I also met the principal of the European Investment Bank to leverage more investment into this economy because we want to get as many projects as we can. I will come back to the House in detail about those projects as soon as they have shaped up.

In terms of what is at stake here, there is a fundamental misunderstanding. We are not selling off anything or handing it over from the State. We are doing what we have always done. We are putting up for open tendering, as we are obliged to do, to determine who will run the lotto in the best interests of the State and its people. There are conditions attached to that which I will outline but one of the conditions is that we will set all of this out in law. I will come back to the House to give Members a line by line analysis of what we need to do, which we will frame in law. A total of 30.5% of the income of the lotto will be ring-fenced by law to good causes. It will not be a matter for dispute. I picked that figure because that was the outturn figure for last year.

In terms of fears people may have of an impact on retailers, and Senator O'Brien's contribution was passionate in that regard, that is something that must be safeguarded. People talk about rushing in. I announced this last November. We have taken the most careful due diligence in regard to this process. We met representatives of RGDATA, the National Federation of Retail Newsagents and the Convenience Stores & Newsagents Association, and I understand fully their concerns. I will now say something to this House that I have not said to them. I intend to safeguard their margins in the legislation as well. That is important for them to know.

I have not told them that yet because we have not yet put the shape of the legislation together. We will safeguard the retailers. We will promote the lotto.

I had a private discussion about this with Senator O'Donnell en marge of this House. At the heart of this is a visceral concern about the lotto as a concept. We had a strong debate on the idea of the State promoting a lotto to fund itself or any part of its own services because it is taking advantage of people’s desperation for wealth in some instances, but it is the same as putting a few bob on the horses occasionally, and I do not believe we will outlaw gambling on horses. Mature citizens are entitled to gamble, and it is better if it is done in a regulated way. It is better also if, by and large, the proceeds of it go to good causes and to the State.

The two fundamental differences in this process over what happened in the past are, first, we are looking for an upfront payment because we need it desperately in the terrible times we are in and, second, the duration of the lotto licence will be longer. The second facilitates the first. Having a longer-term licence means that we can leverage more money upfront. Considerable technology is invested in establishing a lotto, and all these things must be renewed. They have approximately a ten year lifespan and are very expensive. The longer the lotto is allowed to operate, therefore, the better value it is because less money is gobbled up with technology by handing it over to a new operator.

I said that on the previous two occasions this was tendered for and An Post won. I understand from An Post that it will be a tenderer. I will be impartial in that regard. It is not my business and I should have no view about who comes out the winner in a fair procurement system but I am aware there were other tenderers on the previous occasion, one of which was the Swiss lotto company. This is nothing different from what happened previously and I assure the House, particularly those who are passionate about this, that all concerns will be taken into account. When we shape the legislation I will bring it before the House and if Members can find loopholes or difficulties in it that I or the Government have not seen, I assure them I will have an open ear to their concerns.

I will deal with some final points. Senator O'Donnell probably has a niggling view of the value of a lotto in supporting State coffers, but that is something about which we might have a separate debate. Legislation will determine the regime. The amount we will get for good causes will be ring-fenced. I will ensure retailers continue to enjoy a fair margin in regard to it. Senator O'Brien should be aware we are not selling off the family silver. We are doing what we normally do in any tendering process that we are obliged to undertake by European law, and if I was handing it out without a tendering process, I would be in here answering a different set of questions.

In terms of the use of funds, I mentioned the national children's hospital. An important but separate issue has been raised, which we might address separately, which is the way those funds, which are a considerable portion of moneys, are distributed and whether it is done in a fair and impartial way. That is a stand-alone issue that I am willing to determine how we can address separately. I do not believe political decisions by nature are always somehow biased and wrong and that there is some tribunal or body of people who are above reproach and will always make righteous decisions, but we must have transparency in this regard, and I am happy to come back to that.

Senator O'Brien referred to the way we will get at the upfront payment. In truth, the more we ring-fence the other elements of it, the more we squeeze the upfront payment. As we do in determining the other assets we are bringing to the market, when the State is in such dire straits, we have tested the market to ensure there is a robust interest in anything we put in the market.

Senator O'Brien said we should not do it right now. Unfortunately, the ship needs bailing out. We cannot wait for it. The children of Ireland need their hospital. We cannot postpone that for better times because we do not know when the better times will come. We must make the best use of the assets we have right now. There will be no fire sale of any assets, and I am convinced we will get a robust response to this process. It will be strictly regulated by law, and in terms of legislation I will bring to this House, I will have an open ear to any amendments or suggestions Members might wish to make. I have asked my departmental officials to deal specifically with the staff of the national lottery. We have not determined how that will be done, but I do not wish to spell it out yet because it would compromise our negotiations. The very competent staff of my Department are also exploring in great detail how we can safeguard minors and others from being exploited in any new licensing regime and how we should deal with retailers.

Senators Darragh O'Brien and Marie-Louise O'Donnell have kindly offered to come forward with suggestions on how we can raise money. I have open ears, if anybody has suggestions to make. The country desperately needs money, not only for the National Children's Hospital but also for other health projects, school projects and all the things we would love to be able to do to drive job creation, growth and development in the economy. I have an open office to hear ideas Members may have.

I also welcome the Minister and a number of elements of his contribution, particularly his commitment to bring the Bill to this House, the fact that he is open to suggestions from Members of this House and the guarantee of fairness. I may not always agree with him, but I know that he is both fair-minded and decent.

The Wexford Opera House was not built, rather it was refurbished. It was a very good job.

It was built from scratch.

I stand corrected.

The Senator must come and visit it.

I have visited it. I was going to say how impressed I was with how they had remodelled the building.

Remodelled from scratch.

As the Minister is the local involved, I will not waste too much time on the issue. I also enjoyed his wonderful mixed metaphors about the ship of State needing to be bailed out and then building a children's hospital on it. I do not think I would build a children's hospital on a ship that was sinking.

The Minister has said this is something absolutely routine; why, therefore, do we need new legislation? Why do we refer to the extraordinarily difficult economic position and use words such as "innovative" and so on? Clearly, there is something new. A linguistic analysis of what the Minister has said will show that there is something new happening. There is no question or doubt about it.

The national lottery is a success story, of which I am part because I have contributed to it since it started. I am a lottery addict. I have won three times —€11, €17 and €400 — and estimate my investment at about €15,000. I regard it as a form of tax and I am delighted with most of the places to where the money goes, but I do remember analysing on one occasion and discovering that in every single county the largest beneficiary was the GAA. I was not sure how appropriate that was. Perhaps it was, but the GAA already has very substantial sources of income and I would prefer to see the money going to organisations which are less well resourced.

I compliment Senator Marie-Louise O'Donnell on a brilliant, eloquent and witty speech. It was superb and a credit to this House. I do not think her friend, Senator Mary Ann O'Brien, need to feel diffident in seconding it. She raised another important issue, namely, that of small traders and post offices. We must put the human element first. That is what is wrong all over Europe — we have put the preservation of the system before the general interests of the community.

This is not about selling the family silver, although I wish to God it was, as we could always buy more silver. It is much more like selling one of the tractors on a farm that is barely able to keep going. This is an income generating system and a licence to print money.

We are getting a measly sum of less than one third from it, which is extraordinary. If we can make so much money out of it, why does the Government not nationalise it? Why are we so stupid? Are we telling the international community that we are lazy, stupid, thick and inefficient; that we cannot even run our own lottery and that if it does it for us, we will give it shovel loads of money? That is what is behind the thinking. This is very important because the proceeds from the national lottery are used to fund all kinds of projects. It funds sports projects, the Arts Council, the national theatre and various other projects. Therefore, it is something to be treasured.

I counsel my friends and colleagues on the other side of the House to vote with us. Their proposal has reasonable qualities, but the amendment tabled by the Government is appalling. It welcomes the decision to sell the national lottery, recognises its major achievements — the only part of the amendment with which I agree — and welcomes the terms laid down of the next licensing agreement. Should we welcome the fact that we receive less than one third of the proceeds? I am not going to welcome it. If the Minister does, shame on him. He has told us how poor the country is. He is like an old one saying, "Don't hit me with the baby in me arms." He is also bringing the children's hospital into it. He always does this.

That is shocking.

The Minister is right, it is. Children are always introduced as a defence. The children's hospital will be built and I do not think selling off the national lottery is a fit excuse for it. This idea is included in the motion and the Minister's speech.

The motion should have the support of the House. There should be a free vote on it. The national lottery belongs to the people. I do not believe there is nothing new in the proposal. It is regrettable that the children's hospital has been dragged into the equation.

There is a convention evolving, whereby Senator Michael D'Arcy praised Senator Darragh O'Brien who, in turn, praised Senator Marie-Louise O'Donnell, but I cannot follow that convention and praise Senator David Norris because I did not understand a word he said. It seems that he just does not understand——

I do apologise to the Senator for using words of more than onesyllable. I shall try to be monosyllabic in the future.

I defer to the Senator's superior intellect in all matters.

On a point of order, I ask Senator David Norris to withdraw his sneering remark, please.

Certainly, when the other Senator withdraws his.

Senator John Gilroy to continue, without interruption.

I can take it. I will start with another great word used by Senator Michael D'Arcy, "slushfundability", which Senator Darragh O'Brien has difficulty in understanding. To illustrate what Senator Michael D'Arcy meant by it, I can point to a certain boathouse in the constituency of a former Minister with responsibility for sport that cost so much it would probably have been cheaper to build the ships rather than the boathouse.

The Senator should look at the sports capital grants allocated to County Mayo this year.

There are also anomalies in the proportion of funding allocated to certain counties such as Donegal, Offaly and Kildare. I must acknowledge a certain former Minister in Waterford who resisted the temptation to do so. Senator Darragh O'Brien's reference to freedom of information requests has given me an idea to submit some requests covering the last few years.

The national lottery reached a significant milestone in 2008, when the cumulative funds raised for good causes reached the figure of €3 billion, which increased to €4 billion in 2011. This is an enormous amount of money and the good done is probably incalculable since the national lottery was established 25 years ago. Most people are familiar with the benefits accruing in the areas of sport and recreation which come within the remit of the sports capital grants section, but not so many know about the benefits accruing in other areas such as youth, health, welfare, the arts, culture, national heritage and the Irish language. There is not a single community which has not benefited from the national lottery. We can all agree that this is a valuable resource for every community and that whatever we do, we must ensure this element of the programme is protected. I am sure this has been factored in.

The scale of the operation of the national lottery cannot be underestimated. In 2011, in the middle of the worst financial crisis ever to hit the country, €761 million was raised by national lottery products, of which €423 million was awarded in prizes. To put this in perspective, this morning, NAMA announced a stimulus package of €2 billion, yet three quarters of a billion euro is recycled into the economy every year by the national lottery. This illustrates the public good done by the national lottery.

We note that the national lottery in the United Kingdom has been run by a private company for the past 17 years. The licence there comes up for renewal at regular intervals and is put out to tender, subject to the same strict legal requirements proposed for Ireland. The Government is proposing to put the national lottery out to tender for a longer period than in the United Kingdom. I note the Minister's comments on that. I wonder why the longer period is deemed more appropriate here.

I also note that the company running the UK national lottery is specifically charged with maximising returns to society in the most responsible and cost effective way. National lotteries are seen as good investments, as has been noted by other speakers. Their benefits are often compared with those of running public utility companies. This is due to the regular income streams generated by lotteries. It is interesting to note that the owner of the operating company in the United Kingdom is the Ontario Teachers' Pension Plan. That lottery provides regular steady and not exorbitant profits. If there were exorbitant profits to be made from lotteries, pension plans would be outbid by hedge funds for the contracts to run them. The responsible running of the lottery in the UK is seen to be a good thing.

The figures quoted by Senator O'Brien may not be fully correct. A breakdown of the revenue and cost of the lottery in the UK is as follows. For every pound collected, 50 pence goes to the prize fund, 28 pence to good causes, compared with 30% in Ireland, 12 pence goes to the UK Government, five pence to the retailer and five pence to the operators, of which four and a half pence goes in operating costs, leaving a profit of half a penny per pound. That is not an exorbitant profit, but it is being claimed by some speakers that we are proposing to sell the national lottery licence to a gang of multinational speculators who are coming into the country to asset strip the lotto, and perhaps asset strip the country. That is not the case. That kind of hyperbole is no more than scaremongering or misunderstanding.

I have been involved in many community projects that received support from the national lottery and I am acutely aware that virtually none of these worthwhile projects, ranging from playing pitches to arts programmes and innovative community health programmes would have gone ahead without the support of the national lottery.

The proceeds of the sale of the national lottery licence will go towards the construction of the children's hospital, which is badly needed. The hospital's building schedule is badly overrun, but let us not open the argument about the siting of the hospital at this time. It gives a real sense of how the recession is affecting the lives of everyone in the country that we are taking this route. If we take care, we can achieve the policy objectives of building our national children's hospital and securing the future of the national lottery and the public good that grows from it. We have seen how our neighbouring island has managed to run an equitable lottery system where public good accrues to the state in the form of supports for good causes and a Government duty.

The Minister proposes that a front-loaded sum will accrue to the State on the sale of the licence. In the United Kingdom, there is a 12% accrual each year from the lottery. Has the Minister factored that into his considerations? If not, can he explain the logic of not including it?

I have much more to say on this subject. I wish the Minister well. I have every confidence that he will manage the sale well and that it will benefit the country by creating a vital infrastructural project and running a fair, equitable and responsible lottery.

I welcome the Minister to the House. Fianna Fáil Senators will, of course, be supporting our independent Seanad colleagues on this issue.

The Minister has already outlined the history of the national lottery, the funding that comes from it, where that funding goes and the causes it is aimed at. I smiled wryly when I heard that the money from the sale will go to projects such as the national children's hospital. It sometimes seems that every taxation measure currently proposed is to fund some worthy cause. I often wonder where we are getting the money to pay back the banks and the loans from Europe when the reason given for everything, from the sale of the ESB to the sale of the national lottery, is that it will fund worthy causes.

I am well aware of the issues surrounding the national lottery and the money that has been allocated from its funding. My colleagues opposite might point towards sports programmes, many in their own constituencies. Indeed, Kerry was lucky enough to get a good deal of funding.

Luck had little to do with that.

It was luck and a very good application process, possibly.

Senator Daly's language gives the game away.

The Irish Kidney Association, for example, benefits from the national lottery to fund its organ donation drive and donor cards. Such initiatives are rarely alluded to. People tend to mention other projects that are highlighted in the media. Worthy projects, such as the kidney donor card, have extraordinary outcomes and a huge effect on people's lives. I am sure the Minister will take this into account when he is looking at the legislation. While we do not support his proposal, weight of numbers will ensure that the Minister has his way.

We have had an enormous amount of success since national lottery funding first became available. Many communities and organisations have benefited from it. It is of concern to all in the House that this benefit to the nation should continue. If the Minister's proposal goes ahead, I am concerned that we will, in time, regret the fact that we took the money upfront and did not take a bigger stake in the ongoing lottery. I know we will get the money back in 20 years, but that will be a long time in coming.

I did not hear the conclusion of the Minister's speech. Has it been decided that the money from the sale will go to the proposed national children's hospital? Has the funding been ring-fenced and will that ring-fencing be included in the legislation? The only way to guarantee that the money will go to the new children's hospital is to state as much in the legislation. It is not sufficient for the Minister to say so in a speech to the Seanad. I suggest to my colleagues who put down this motion, which we are supporting, that they table an amendment to the Bill on this issue and see if Government Senators support the implementation of what the Minister has promised in his speech. The Minister can hardly object to enshrining it in legislation that the money from the sale of the national lottery will be ring-fenced for the new national children's hospital if he has undertaken to do so.

I must declare an interest. I was chairman of a club in Kerry that received funding from the national lottery.

Was it by luck again?

I filled out the application form myself. I must say I did an excellent job on it. The Minister may come to Kerry some time and we will allow him to open the sports hall and synthetic grass pitch which we achieved purely because I was chairman of the club.

Will the legislation include a provision whereby money from the sale of this State asset will be ring-fenced for the new national children's hospital? Senators on this side of the House supported, I hope, by our colleagues on the other side, would like to see that provision in the Bill.

I welcome the Minister, Deputy Howlin. This is my first opportunity to say a few words in the Seanad in his presence. I welcome Senator O'Donnell's words and her motion. However, I am not sure I agree with the motion or support it, in particular having heard the Minister's response that this is not a sale of the national lottery but a tendering process for the licence. I remember in 1983 or 1984 the then Minister of State, Mr. Donal Creed, with responsibility for schools building and sport, who during the momentous occasion after the World Championships in Helsinki made a presentation to me on behalf of the people of Ireland of a beautiful piece of Waterford crystal. During the conversation on that day there was a debate about the forthcoming lottery that was being introduced into the country. At the time, 25 years ago, there were many debates and arguments on whether a lottery should be introduced into this country similar to the debates currently ongoing about whether to allow gambling.

However, my understanding in 1983 to 1986, before it became law and was formally introduced, was that the lottery would be ring-fenced for sports and arts. My only disappointment was that I personally did not gain in the same way as contemporary athletes from lottery funding but sports has gained immensely. While money went to sports and arts, it went beyond that to welfare, health, culture, heritage and the Irish language. Senator Mary Ann O'Brien referred to the fact that she is not aware of one single project that she can recall that has benefited from the national lottery. I somewhat agree with her because the national lottery does not pride itself on promoting properly to the people of this country what the money from the lotto tickets people buy week in and week out has achieved. I am aware through my work with the Irish Sports Council that the National Aquatic Centre has benefited from it. We brought the Special Olympics to this country with its help and the Aviva Stadium has benefited from lottery funding.

It is approximately nine weeks before the Olympic Games take place. Through the work of the Irish Sports Council, the likes of Katie Taylor, Derval O'Rourke and all the athletes participating in the Olympic Games have been funded by the national lottery in recent years. If I was to estimate the amounts involved, Ms Taylor has probably gained funding to the tune of €250,000 in sponsorship from the national lottery, which is a phenomenal achievement. Only last week when she won the World Championships, someone asked her whether she would turn professional and she said that she is making more money as an amateur than those involved in the professional ranks. That is indicative of the support that the national lottery has given Ms Taylor as well as all the other sports people.

The national lottery has helped to develop local sports partnerships in almost every town in the country. It has also supported the women in sports campaign. The national lottery has made a great contribution to Irish life and, in particular, sport. However, now we are debating whether the licence should be sold or if it should remain in the hands of the Government. My question to the Minister is whether research has been done on the sale of the lottery to private interests in other countries and, if so, what are the results. The lottery is going out to tender. According to The Irish Times there is potential to raise €500 million as a result of a successful bid for the licence. If An Post is the successful bidder for the licence and the cost to it will be €500 million, where will the money come from? Will it come from the Government, taxpayers and the people of this country? I would like to know the answer to that. However, from an economic and business perspective if it is to come from a private agency from within or outside of this country that will be €500 million extra into the coffers of the Irish people from which we can benefit. I am in favour of allowing this licence to go to tender in the future.

Like other Members I thank colleagues for tabling the motion. One of the things we are finding at present, with a view to events next week, is that we have lost a bit of our radicalism and we will have to address the reform agenda. I do not know what way things will work out next week. We inherited a situation when we were elected as Members — 42 of us were new — that the country had to be rescued by the IMF and is in serious trouble and that we must think of new ways of doing things because the established ways are not working. That is where we are now — broke.

Asset disposal is referred to in the McCarthy report and privatisation is an inevitable part of trying to put the country's finances together again. Every time we raise one of the ways in which we might secure asset disposal there is always a chorus of objections. We can reject every individual case but the overall package is that the State in this country is too big to be supported by the revenues and either we will end up looking at the options such as we have today or opt for cuts in the number of special needs assistants or to the carer's allowance. Some kind of shrinkage of the State must be considered. Selling what in my younger days used to be known as raffle tickets is fairly low down on the list of national priorities. Competitive tendering is the right way to go about it. An Post might win again, as the Minister for Public Expenditure and Reform, Deputy Howlin, said. That would satisfy many people, but by having competitive tendering it would go through every ounce and inch of its cost base and see how much it could bid upfront for the money which would be used for the children's hospital, as we are assured will be the case.

That kind of competition is good as it tackles cost and promotes innovation. It is also the worldwide experience. The economists writing in 2002, Megginson and Netter, indicated that this is a trend worldwide, in particular now that governments are in so much trouble, that they look at assets they can realise. They say that in the past 20 years — to 2002 — the percentage of global GDP takings of state-operated enterprises declined from 10% to less than 6%. Therefore, it is happening. According to the McCarthy report, we have approximately €8.5 billion already in privatisation receipts. Let us imagine the greater difficulties we would be in if we did not have them. Some of them are spectacular successes such as the Kerry Group, which the Minister, Mr. Mark Clinton, sold to Mr. Denis Brosnan and friends. It is now a spectacularly successful company. The B&I line was always in trouble in State ownership and it was sold. It now operates without assistance. Other examples include Greencore and Great Southern Hotels.

The Minister, Deputy Howlin, mentioned on the previous day when we discussed the matter that in his constituency of Wexford a power station had been sold and now contributes to the national grid and the local economy. Sometimes we get concerned. Trees seem to be a particular issue of concern. We can take a bid for trees now on what they will be worth in 20 years' time, in which case they will be cut down and taken away by someone and made into something else or we can sell them now and take a gamble. I do not think there is any great ideological issue. Ditto with electricity. I do not have a difficulty with having some electricity stations sold off and in private hands. In addition to meeting some of our IMF targets, it is not a major disaster if when one turns on the lights some of it has come from privately run power stations. There are efficiency gains because Megginson and Netter also say that privatisation works in the sense that divested firms have almost always become more efficient, more profitable, increased their capital spending and become financially healthier.

The dilemma facing the Cabinet is not the worst possibility. Other examples come to mind. Mr. John Teeling bought the industrial alcohol plant on the Cooley Peninsula and developed a major whiskey business, which he sold for a substantial sum. The State should be more flexible in its asset portfolio. The priority should be to try to retain money for health, as in this case, and education. Some of the other functions are not the core functions of government and arise for review in the appalling situation in which we find ourselves.

We will need this debate frequently, although not just on this issue. I commend my colleagues opposite on tabling the motion. When the State gets too big for its budget, there must be parliamentary debates on which functions should be dropped and which should be put up for competitive tendering. I welcome the latter action. One of the lessons we have learned is that so-called beauty competitions are unsatisfactory and result in vast legal and tribunal costs.

As we try to pay our way and exit this debt trap, we must consider how to work better. That involves Members on all sides of the House tabling motions such as this one. The State must live within its means. Anything else is a tax on future generations of people who will inherit a vast debt.

I thank Senators O'Donnell and Mary Ann O'Brien for raising this matter. When I first read the motion, its wider relevance was not immediately clear to me. As the debate has progressed, it is clear there are wider issues. The overall programme of privatisation is an important issue and should be debated regularly. To some extent, I do not agree with Senator Barrett, as privatisation does not always work. Across the water in the UK, there are many shining examples of privatisation that have not worked.

I welcome the Minister of State, Deputy Perry, to the House. The Minister for Public Expenditure and Reform, Deputy Howlin, made a robust defence of what he has in mind for the national lottery. I was reassured. It might be a statement of the obvious, but the national children's hospital is a vital strategic development. Yesterday saw the announcement of the first phase of development of the national rehabilitation centre in Loughlinstown, Dún Laoghaire, which is my constituency. In the previous 14 years of Fianna Fáil Government, not a single significant public hospital was developed. The last such development was Tallaght hospital when I was almost a child in short pants. My colleagues on the other side of the House are laughing, but this is no laughing matter. The children's hospital is an important strategic development. Even if I believed the preservation of the national lottery in State hands was more important than it is, I would need to weigh its significance against the importance of building a national children's hospital today and not in five or six years' time when we will have the capacity to raise the necessary funding.

A number of good points have been made and well answered. However, some points could be restated. The Minister has made clear the Government's commitment that jobs in the national lottery will be protected. There is also a commitment that the margins of the distribution network and individual retailers will be protected, which will in turn protect jobs in the retail sector. Although such commitments may impact on the envelope the State can expect to receive, it is important, when we sell this or any other asset, we do so with the protection of employees and wider society to the fore.

A valid point has been made. If one is to protect retailers and, via the 30.5% floor, good causes, from where will the money come to make bidding for the national lottery profitable? It will come from the prize fund. If that fund is not maintained, the person who bids for the lottery will be biting the hand that feeds him or her. The prize money must be maintained.

The way forward for the national lottery is growth. Would it be the end of the world if a company such as Camelot was to bid for it and bring it to Australia, Canada, the US or other countries where there is a significant interest in Irish affairs? It is not beyond the realm of possibility that we could grow the lottery significantly. When we put together the request for tender, RFT, we should include growth as an important strategic aim.

Senator Mary Ann O'Brien asked when it was a good time to sell an asset. It is when one needs the money, and we need the money now. As someone who has had children in the hospital system down the years and whose close friend's child died of leukaemia, I am well aware of the hospital system's inadequacies. The time to sell is now. The lottery is not a port, a strategic infrastructural asset or a bog. Its sale will not impact on the economy's capacity to do its business. Weighing the balance of what can be achieved by its sale versus what can be achieved by its retention, selling the lottery is a good strategic move if all the interests of the workers, good causes and those who depend on it, including retailers, are protected.

I will not use all of my speaking time. Sinn Féin will support the motion and oppose the Government amendment. The motion is set against a particular backdrop. The Government has been tossing around the idea of selling off the family silver or, as Senator Norris suggested, the farm tractor for a while. Flogging State assets for a quick buck is not in the public interest. This is aside from the fact that the prices we are likely to get for such assets are unlikely to be handsome. The State is required to maintain minimum standards, particularly in certain service areas.

No one in the State would deny the national children's hospital will be strategic infrastructure or argue against the importance of developing it as soon as possible. Sinn Féin has called on the Government to match European Investment Bank funding with moneys from the discretionary portfolio of the National Pensions Reserve Fund, NPRF, and private pension funds to pay for a stimulus package, including infrastructural development projects. Selling State assets is a failed policy and would work against the public interest. If we want bang for our buck and are serious about economic recovery, we need to invest in the economy and not flog bits of it.

The Minister, Deputy Howlin, has stated he intends to use the upfront payment from the new national lottery operator to fund the national children's hospital, but some of the original commitments have been watered down. For example, just one third of the upfront payment will go towards the hospital project. Will the Minister of State, Deputy Perry, confirm what the Minister intends to do with the balance of the upfront payment and how the remainder of the project will be financed? The Minister stated the new licence contract would include a good causes clause to ensure current funding levels would be maintained. According to him, the 2011 level was 30.5%. As the House has been told, one third of national lottery sales provide funds for good causes. In 2010, these sales amounted to €244 million. Never more have those community goods and services needed to rely on that funding stream. If profits increase, will the good cause moneys increase too? How will the annual national lottery surplus be dealt with under these proposed arrangements? Why will this new licence be for 20 years when the last licence period was less than 20 years? Why such a long period when other opportunities such as online transactions could open up the national lottery? The Minister stated the lottery is doing more business online and that we need to provide for this. What regulatory changes will the Bill to amend the National Lottery Act 1986 provide? We believe this motion should be passed unamended and the Government should reconsider its policy in this area.

I commend Senators O'Donnell and Mary Ann O'Brien on tabling this motion. It is an issue everyone will be thinking about because they will want to ensure it is done properly. People still remember the sick feeling of what happened with the sale of Telecom Éireann. It should be remembered the national lottery will not be a sale but a lease. There is a bad feeling about some privatisation. Personally, I believe the proposal with the national lottery is a good idea. I hope the Minister of State, Deputy Perry, will relate to the Minister for Public Expenditure and Reform that the competitive tendering process should be shorter for the same reason of online gaming and gambling. Up to 30% of lottery sales in the Scandinavian countries are online. The Minister stated he will have to introduce legislation to deal with the online aspect of the lottery. This will bring more online investment in the lottery and further proceeds to the company which purchases the licence. We must ensure this is factored into the tender.

Safeguards to prevent online gambling should be built into this legislation too. Gambling is an addiction and a serious issue for some. While we all want to ensure there is an online part of the lottery, we must ensure also people addicted to gambling are protected.

The national lottery provides funding to organisations which promote the Irish language. However, since 2009 funding for the language fund has decreased. On average, 64% of the overall fund comes through the national lottery. Irish language organisations want it ensured this funding allocation is protected in the tendering process and the fund will not be depleted in any way by the company that takes over the lottery. If a company from outside the country wins the tender, the Irish language will not be its priority. It also would not be categorised as a charity. It is important this is written down in the initial stages. With the new online aspect of the lottery, I would prefer if the licence was for ten years rather than 20 years. I am glad the Minister said moneys for the children's hospital will be ring-fenced, a hospital which we need immediately.

I commend Senators O'Donnell and Mary Ann O'Brien on tabling this motion. They made much sense in what they said about the national lottery. The debate can be divided into two categories — the public service ethos and the business ethos. I am not criticising the Minister for it because he comes from a public service background and is advised by people in the public service, but his speech displayed all the elements of the public service ethos.

I listened with interest about what Senator Barrett had to say about privatisation. I concur with him in that I would support privatisation in certain selective instances. There is no doubt that businesses can be more efficiently and effectively operated in the competitive environment of the business sector. Equally, there are situations where it behoves us not to go that route with certain State assets. The proposals with the national lottery are not an asset disposal. The M50 West Link and National Toll Roads contract was a significant public sector and political mistake at the time. The revenue accrued to that contract was enormous. I see this proposal in a similar light. We are looking at capitalising a significant annual income flow. That is much different from an asset disposal. That point was badly missed by the Minister in his contribution.

The motion's proposers are correct. There will be no bidder for the lottery licence who will not do so out of a clear vision of a very significant profitable return to themselves.

That is just speculation.

Figures of between €400 and €600 million have been expressed. Most business people will look for an internal rate of return of between 20% and 30%. In this case, they may settle for somewhat less than that but there will still be a significant double digit rate of return. Those sums could be used more prudently by the State. Selling off that profit to a private operator shows a complete lack of vision.

If we wanted to go this route, surely we would not leave the lacuna of going online which could see a significant escalation in returns. I am involved in a small project, the John F. Kennedy trust, in New Ross. We invested in the famine ship, Dunbrody, a visitor centre and a coffee shop. The trust’s board examined franchising the coffee shop because it was not part of our expertise. At the time it was recommended not to franchise it out because we were not sure what revenue would accrue from it. The revenue is now multiples of what we expected. The centre would have lost out considerably if we had franchised the coffee shop because we would have let it go far more cheaply. It is the very same in this instance.

In the first year of the lotto, sales came to €170 million. In 2011, sales came to €760 million, a four and a half fold increase. At the end of the new proposed licence in 20 years, lottery sales could be somewhere north of €3 billion per year. Can one imagine the percentage that will be accrued in profit? I predict that in the last two years it will recover the quantum. While there is a time element, that is a factor that has not been taken into account. Clearly, from a business perspective it does not stack up. We are taking a capital sum, as the Minister said, but we are sacrificing ongoing annual income to the State, which is a big mistake and will be a major loss. It will be seen as such in time. This is the time to stop it. As the Minister said, he will take up the invitation to meet the proposer and seconder of the motion and I hope he will listen to them.

The children's hospital has been thrown into the mix. It is a red herring, as it has nothing to do with the disposal of the licence. We should find a management company, define what the management fee will be, set out the criteria it must meet and the remaining income should come to the State for the good causes it supports and to fund other projects. There is a hospital in my town which was established as a community hospital, as Senator Michael D'Arcy will be aware. That would not have happened without a commitment to meet the ongoing costs of running it. It has been in place for the past 20 years.

This will be similar to the levy on pension schemes. A figure of 0.6% was imposed. As in the case of the children's hospital, the money was supposed to be used to create jobs. As soon the funds had come on stream, they were taken into the Exchequer. Will the money be used to increase the salaries of the advisers, party hacks, being brought on board?

No, we are not Fianna Fáil. Those days have been left behind.

Will it be used to fund such expenditure? It is symptomatic of the Minister's failure to tackle the structural fiscal problems. It is like the budget. We cut capital expenditure which would have resulted in the creation of jobs in the short term and improved infrastructure and increased competitiveness in the long term. The increased VAT rates have affected the retail trade. The structural deficiencies in the economy have not been dealt with because they involve difficult decisions. The Minister has taken the soft policy option. I am disappointed by the Minister for Public Expenditure and Reform, Deputy Brendan Howlin. I have acknowledged in the House previously that he has the intellectual capacity to make good decisions and be a good Minister. Unfortunately, however, he does not have the backbone to follow through on the difficult decisions that need to be made.

I welcome the Minister of State, Deputy John Perry, and the opportunity to debate the motion. I thank the Independent Senators Marie Louise O'Donnell and Mary Ann O'Brien for tabling it. This has been a lively and enlightening debate which is notable for the emergence of a new word, "slushfundability", which will certainly be quoted in the future. It is notable also because Senator David Norris stood corrected on one important point, the rebuilding of Wexford Opera House——

I have visited it.

——which as, the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, pointed out, had to be rebuilt from scratch.

Of course, I was taking the point that it was rude not to listen to a speaker at the beginning.

On a more serious note, I take issue with Senator Jim Walsh's comments about the Minister. I thought the Minister's response to the motion was superb. He set out clearly and fairly the position on the tendering process for the licence to operate the national lottery for the period 2013-33. As Senator Cáit Keane said, this is not about the sale of a State asset, rather it is about a lease or licensing arrangement. It is about a change to the terms of a licensing arrangement. An Post holds the licence which was put out to tender in late 2001 under a previous Government and which An Post won following a competition held between 1999 and 2001. That licence is due to expire at the end of June 2013. Clearly, it is a matter for the Government to put it out to tender again. It is in its power to do so and it will remain in its power at the expiry of the next licence. Therefore, we will retain ownership of it. Essentially, it is a lease. It is like a landowner who leases his or her farmland for a period of 20 years for somebody else to work it but on terms and conditions that are suitable and appropriate to the landowner. These terms can change. The Minister clearly explained the two changes he proposed would operate in the award of the next licence. From the end of June 2013, the next term will run for 20 years and there will be an upfront payment. That is the quid pro quo. It is welcome that there will be an upfront payment, even though the connection with the children’s hospital has been dismissed out of hand as a red herring. I take serious issue with this. The Minister has made a clear link and the upfront payment will go towards meeting the building costs of the National Children’s Hospital, a project to which we are deeply committed. An Post may tender for the next licence and may win it, but we cannot prejudge the outcome. The Minister has said there were other tenderers on the last occasion and, no doubt, there will be again.

As legislation will be brought before the House to provide the framework for the award of the next licence, we will have an opportunity to debate the terms of the tendering process and the framework to be put in place. If the Minister was present, I would say this directly to him, but I say to the Minister of State, Deputy John Perry, that I hope the debate on the legislation will commence in this House. Given that we have had a debate on the issue, it would be appropriate for us to continue it by looking at the terms and the arrangements for the award of the next licence. The most important condition, apart from the two I have mentioned — the length of the licensing term and the up-front payment — is that there will be a fixed percentage of annul turnover of 30.5% for good causes. That will not change. That was the percentage allocated for good causes in 2011. Senator John Gilroy and others have outlined in detail the good causes that have benefited from that financing and will continue to benefit from it. There should be no change in that regard. The ultimate point is that the right to award the licence will remain with the people. This is a temporary arrangement and a continuation of the process already instituted. We are coming to the end of the term of the licence held by An Post since 2001.

The Minister has clearly said he is open to accepting amendments to the Bill, the debate on which I hope will commence in this House. He is also open to suggestions on additional ways to raise resources. I think it was Senator Marie-Louise O'Donnell who referred to the possibility of holding a specific draw for the children's hospital. I thought that was an excellent suggestion.

That option is open to the State, even if we are awarding a licence to run the national lottery. Clearly, there is potential to run other more limited or specific sweepstakes with different terms and conditions, for example, on condition that money would be raised to fund specific building projects. I see this as a constructive suggestion, one I hope the Government will consider seriously. While this is not about the sale of a State asset, I hope we will have other debates on the sale of such assets. Senator Aideen Hayden mentioned assets of strategic importance. It is clear from the programme for Government that there will be specific checks to ensure there is no sale of a strategic asset. This is not about the sale of an asset, rather it is about putting out to tender a current licence which is due to expire shortly. In a sensible way, with considered and careful consultation with stakeholders, the licence will be put out to tender again. I, therefore, support the Government's counter motion.

It is very nice to see the Minister of State, Deputy John Perry, in the House. I have not had the opportunity to speak to him as a young rookie Senator. Having spent one year in the House I have very broad country shoulders. I have never before received a swipe such as the one I received from Senator Michael D'Arcy and it hurt because he had taken my words out of context, recontextualised them and threw them back at me. I thought it was a trifle unfair.

He never offered an apology.

I mentioned the transfer con idea which was really an idea about privatisation, where the banks privatised losses were put on the backs of the public.

I want to thank the Minister of State for being here and to thank Deputy Howlin for his presence earlier. I understand that the licence is for tender but by tender it means that it is for sale for 20 years because if somebody is going to give you some money for it then it is up for some kind of a sale. My argument was about profit, profit, profit for whoever buys it. Profit, profit, profit that is likely to go out of the country because we do not have the money. Hopefully, An Post might have the money but at the moment, as Senator Eamonn Coghlan pointed out, we do not have the money so it is likely that it will go to a foreign bank, a foreign pension fund, a foreign billionaire, a foreign organisation or syndicate to buy it. We are talking about profit, profit, profit for 20 years.

Or even an Irish one like the toll roads.

Correct. Over and above the national lottery's own profit at €50 million a year. I want the profit to stay with us.

We need it here.

I want it to stay with the Irish citizen, the Irish State and the Irish Government. I also consider it a different kind of asset. I do not consider it a grid or a bog, which I nearly broke my shoulder on last week, or like electricity or pipelines. I consider it to be personal, private, people and voluntary, and to be euro being taken out of their suits, trousers and purses. My argument is that we could come up with a better way of funding the children's hospital and we should sit down and try to do that. I do not agree with the sale. I have a right as a Senator not to agree with the sale. I would like to tell Senator Michael D'Arcy that I think long and hard about what I have the privilege to say in the House. I am against profitability and I am against the profitability going out of the State. I did not talk about transparency regarding Exchequer or national lottery funding and the disadvantaged. I talked about profit. None of the Senators against the argument would argue for that. It is about a profit of €50 million per year leaving the country when it could be kept here. We should be very clear about it. I did not talk about sport, culture, health or youth but I understand that they are the heartbeat of the national lottery even though I do not think its funding distribution is equitable. I talked about profit over 20 years for whomever comes up with the €500 million and I want it to be us. I want the person that owns the national lottery to be us.

A Senator

Hear, hear.

Amendment put.
The Seanad divided: Tá, 28; Níl, 20.

  • Bacik, Ivana.
  • Barrett, Sean D.
  • Bradford, Paul.
  • Brennan, Terry.
  • Burke, Colm.
  • Clune, Deirdre.
  • Coghlan, Eamonn.
  • Coghlan, Paul.
  • Comiskey, Michael.
  • Conway, Martin.
  • D’Arcy, Michael.
  • Gilroy, John.
  • Harte, Jimmy.
  • Hayden, Aideen.
  • Healy Eames, Fidelma.
  • Henry, Imelda.
  • Higgins, Lorraine.
  • Keane, Cáit.
  • Kelly, John.
  • Landy, Denis.
  • Moloney, Marie.
  • Moran, Mary.
  • Mulcahy, Tony.
  • Mullins, Michael.
  • Noone, Catherine.
  • O’Keeffe, Susan.
  • O’Neill, Pat.
  • Whelan, John.

Níl

  • Crown, John.
  • Daly, Mark.
  • Leyden, Terry.
  • Mac Conghail, Fiach.
  • MacSharry, Marc.
  • Mullen, Rónán.
  • Norris, David.
  • Ó Clochartaigh, Trevor.
  • Ó Domhnaill, Brian.
  • O’Brien, Darragh.
  • O’Brien, Mary Ann.
  • O’Donnell, Marie-Louise.
  • O’Donovan, Denis.
  • O’Sullivan, Ned.
  • Reilly, Kathryn.
  • van Turnhout, Jillian.
  • Walsh, Jim.
  • White, Mary M.
  • Wilson, Diarmuid.
  • Zappone, Katherine.
Tellers: Tá, Senators Paul Coghlan and Susan O’Keeffe; Níl, Senators David Norris and Marie-Louise O’Donnell.
Amendment declared carried.
Debate adjourned.
Barr
Roinn