I welcome the Minister of State, Deputy Brian Hayes.
National Lottery Bill 2012: Committee Stage
SECTION 1
Amendment No. 1 in the names of Senators O'Donnell, van Turnhout, Zappone, Mac Conghail and Mary Ann O'Brien has been ruled out of order.
Amendment No. 1 not moved.
Question proposed: "That section 1 stand part of the Bill."
I welcome the Minister of State. I got a note from the Cathaoirleach to say my amendment was out of order because it was merely declaratory in nature. I do not really know what that means. I know what declamatory means because the Minister told me last week he found me too declaiming and that it got in the way of my message. I would have considered it more in the line of conviction.
I do not really understand what declaratory means, although it probably means recite. I could not find it in Roget's Thesaurus because I do not really understand what the word means. However, I appreciate the Cathaoirleach giving me the time to speak but I do not understand why he ruled the amendment out of order.
It was not descriptive enough in regard to the Title.
I accept that.
The Title should be changed because the Bill is about the sale of the national lottery licence and it is not the National Lottery Bill. It is completely different. Why would somebody in the private sector want to buy our lottery? Why are we seeking €500 million for the sale of our lottery, if it is not a sale? Why is some outside gaming consortium in the private sector going to pay us? Why are we looking for bidders, if it is not a sale over 20 years? Who will give us €500 million?
I understand we need the money to build the national children's hospital but my argument is that we are automatically on the back foot if we look for €500 million. If we were to get €400 million, €500 million or €600 million upfront, that is a sale and if it is not a sale, it is a loan. If it is a loan, that makes it even more disastrous. Either way, we must pay it back. Not only do we have to pay it back but we must pay back the profit on it. If one has to extract profits, no gaming consortium or otherwise will give the Government €500 million unless it will look for that €500 million and the profits on it over 20 years back.
One cannot say it is a National Lottery Bill; it is the sale of the national lottery licence over 20 years for money upfront to pay for the national children's hospital.
It follows that any investor will expect to make a massive profit from the venture. It will have chosen it because the Irish national lottery is known as one of the best cash cows in Europe and is guaranteed its money back. One cannot say that it is not a sale. It is a sale of the national lottery licence. It is not a national lottery Bill that will reap a rich reward.
I wish to make a basic point. What if somebody hands over between €400 million and €600 million? I feel that the national lottery is worth an awful lot more but we will not get that sum in July which is why selling it off is a massive mistake. The sale is an exchange. The licence is a commodity. It is an exchange of the operation and running of the licence for the next 20 years yet we do not know what Ireland will look like in three years. I hope that I have not been theatrical and declamatory as was stated last week. I am extremely convinced about my claim and I would like the Minister of State to answer my query. When people rose to speak about the matter they said, and they have told me the same for weeks, that this is not a sale. However, on every second line the term "sale" is used. It is the sale of the national lottery licence for 20 years and that is why the head of the Bill should be changed.
I am a communicator - at least I hope I am - and I implore the Minister of State to say what the legislation is. This is obfuscation. The whole thing is built around receipt of an upfront payment which twists our lottery from what it was into something else, a profit and loss margin. The profit may come from a gaming consortium or whoever buys it. The buyer will not be from England or Ireland because we do not have €500 million. An Post does not have €500 million and I do not know of any pension fund with €500 million. People are looting their pension funds to pay for goods in this country. I shall not carry on. Perhaps the Minister of State will answer my question.
Yes, on the section.
The definition section refers to the name of the Bill. I must say to the Senator that I do not have responsibility when it comes to ruling amendments out of order. That is not my function here. If one reads the Constitution one will find that Ministers are here at pleasure. She will be glad to know that the Constitution does not require Ministers to attend here to take Bills through these Houses.
That is nice to know considering that we are coming to a vote on our functionality in October. We now know that we do not have one.
The Senator has my word that I shall not interrupt her. Let us agree to that at the very least.
We, the Executive, have no responsibility in respect of the amendment. The Senator shall accept it is a matter for the Speaker of the House, the Cathaoirleach.
With regard to the Title, I understand the view of the Senator but we do not agree. She has her view and the Minister, Deputy Howlin, and the Government have another view. I suspect that we will not reach an agreement on it but we may as the Bill progresses its way through Committee and Report Stages.
We do not agree with the Senator that this is a sale. We believe that this is a competition under EU law to establish a licence, as it has in the past, for a period of 20 years. We are hopeful that the competition process will obtain financing. We all agree that finance is very important for a national infrastructure project such as a new tertiary paediatric hospital. It is the firm view of the Government that the Title of the Bill, which is effectively the issue that we are discussing, section 1, is correct. We are using the opportunity, as I said last week in the House, presented by the competition for a new licence to generate an upfront payment, part of which will be used to finance the new national children's hospital. Even if no provision were made for the upfront payment, a competition would have to take place for another licence. One might question the duration of the licence but either way a licence competition must occur. It is our considered view that the means through which we have chosen to operate the licence for a 20-year period with an upfront payment means much-needed funds can be used for this purpose. I know that the Senator does not agree with my comment but I respectfully disagree with her. It is okay not to agree on the issue but that is what parliamentary democracy is about. It is okay not to disagree.
(Interruptions).
I do not need the Minister of State to agree with me. I am not in any way personally angry that people do not agree with me. I am trying to make a case by making two points. First, the sale is not under EU law, it was not under EU law and it is not part of EU Law. It was not even part of the troika's communication with the Minister at the time, it was outside of it. I have a quote by him that stated that it was outside but he and his Department made the decision which is fair enough.
Second, the Minister of State said that the competition must take place anyway. Yes, the competition does have to take place for operation but not for sale. Of course he was correct that it must be opened up for operation. I know that it was the Minister's Department which decided to sell and the idea came from New South Wales. Over the past three or four years it has been a trendy idea to sell lottery licences because they are natural cash cows, especially the Irish one which is a most magnificent sacred cash cow. I understand the reasons to sell them and to get money. Let us not say what it is not. It is not a national lottery Bill, it is the sale of the lottery licence. It is not under EU law, it was not part of the troika and is not part of EU law. It does not have to happen because one must have a competition to sell, one does not. One must have competition to open up the operation which is different from a sale. The Minister decided to sell it because he wanted the money upfront. I do not have a problem with that but let us say what it is. We are not saying what it is. My problem is that we are not doing it for ourselves and that we are letting somebody else do it. I am not against the measure but we could have done it for ourselves by providing a weekly draw. That is my opinion and I am not against the measure. I am opposed to selling it to a gaming consortium from outside of the island. Here we go again. It reminds me of what happened to Shell, pharmaceutical companies, Eircom and the privatisation of public moneys.
The Senator is right and the Minister, Deputy Howlin, has said the measure has nothing to do with the troika. She is right and the Minister conceded that point from the start.
As the Minister of State responsible for procurement, I have a little knowledge of the matter myself because these licences are under EU procurement, particularly when it comes to a State asset which the national lottery is, effectively. As the Minister has said, we have a responsibility. As the Senator will know, between 1999 and 2001, three competitors competed for the licence, Sisal from Italy, Autotote Lottery from the USA and the winning bid came from An Post, our own national lottery company. She is incorrect to say that EU law in this area does not apply. That is not correct, it does apply.
And "operates."
The fact that the Government has chosen this means to construct the particular competition-----
With EU law.
-----for the purpose of the upfront payment is all to do with the objective that we have set.
I concede the following. I have heard the point the Senator made about this being a one fell swoop attempt to generate funds for a new national hospital. I understand and appreciate her view but it is not true to say that the licence does not have to comply with EU law because it does. That is exactly what all of the directives on procurement are about and is something that we are implementing to the letter of the law.
I shall finish on my next point about a lottery operation and it not being a sale. There is no EU law that says Ireland should sell its lottery licence for money upfront.
(Interruptions).
It states "operation" and not "sale". It was the Minister - a Labour Party member - who had the idea to privatise public funding.
That has come from his own office. It is his decision. It is one I do not wish to live with but it is not under European Union law. We had a competition in the past but it was a competition for operation, not sale. We all know that because of the brilliant way An Post runs the lottery in Ireland, it does not make a huge profit. The way we will do that for the outside gaming consortiums is by opening up online gambling. That is how we will attract them in to give us their €500 million.
I welcome the Minister of State to the House. As we know from his reputation, the Minister is financially astute. Therefore, I ask him to clarify whether we are licensing, leasing or selling this asset. First, regarding this wonderful up-front payment we are hoping to achieve-----
Aspiring to achieve.
-----if we were to retain the lottery, how long does the Minister believe it would take us to achieve the €500 million we are aspiring to achieve with the up-front payment from a new acquirer of the licence? Second, do we have to do this under EU procurement law?
I remind Senators that this section deals with the Title of the Bill.
Yes. I am sorry, a Chathaoirligh.
I thank the Minister of State for recognising that this Bill has nothing to do with the troika agreement. It is one of the first occasions on which the Government has admitted that something it is doing has not been forced on it by anyone else. It is worth putting on the record that the original troika agreement did not commit the Government to sell any State assets but merely asked the Government to examine what I believe was in the McCarthy report at the time. There was no agreement to sell State assets, and therefore, what the Minister put on the record with regard to this legislation is important.
I agree totally with my good colleague, Senator Marie-Louise O'Donnell, about the naming of the Bill. I do not understand why there should be any resistance to telling the public exactly what it is, namely, the sale of the national lottery. That is what we are doing; we are selling the national lottery. I believe in honesty. I know it is not fashionable but it is good to be honest, and the Title of the Bill should express the content of the Bill and its impact on the Irish people.
It strikes me that we should try to keep as much as we can that is profitable at home. This is selling off State assets, and I do not approve of it at all. It does not bother me whether it is at the instruction of the troika but it is very bullish and hectoring. We should retain as much of this as we can and make as much profit out of it as we can, because public assets that are privatised invariably go wallop from the point of view of the public. I instanced previously the bin collection services, which are disastrous because they have been privatised. There is mess everywhere throughout Dublin and the poor unfortunate corporation, having had its aspect of it sold off, now has to come around and clean up after the commercial boys.
The Senator is straying from the section.
No; I am not. I am talking about what happens when public assets are sold off. That is wrong and I wonder why companies would pay such enormous amounts of money unless they were going to be able to print their own money out of it.
Mention was made of competition. It is about time we started revising drastically our view about the virtues of competition. It can drive people out of business sometimes. Unscrupulous people can use competition. We only have to look at what is happening to our domestic shops. Enormous supermarkets are coming in here selling trash, doing down local bakeries-----
That has nothing to do with the Title of the Bill.
It has, because we are selling Ireland, so to speak. We are selling bits and pieces of Ireland, as we have done in allowing these supermarkets to come in here.
Competition was invoked by the Minister. That idea is ludicrous. I remember being here when a previous Government introduced the Competition Bill, under which everyone had to compete for everything and everything had to be advertised. It was just like the bloody European Union, but it forgot to ensure that the chief executive would be appointed as a result of an open competition. I do not believe in bowing down to these false gods of competition, EU authority and all the rest of it. It is about time people challenged them, and thank God for Senator Marie-Louise O'Donnell, her colleague, Senator Mary Ann O'Brien, and others who are prepared to stand up, speak the truth and alert people to the fact that this is happening.
Also, we have a reasonable lottery, and if we sell it I believe it will be largely out of control. That worries me because, as a gambler and somebody with an addictive personality who, in the days up to yesterday, used to smoke - I would start at one end of the packet and end up at the other; it was the same with chocolates-----
(Interruptions).
That was only a one-day lapse, for which I think I can be forgiven. It is a serious point. Where are these wonderful places from which the Minister suggested they might come? Did I hear Sicily and Las Vegas?
That was over ten years ago.
Yes. They can expect the same bunch to come in. It is shades of Meyer Wolfsheim and the fixing of the 1918 World Series. I expect the Minister will get a good deal of shady competition in this respect but we would be much better off keeping the national lottery and not selling it. If we do sell it we should let the people know, in the Title of the Bill, that what it says on the tin is what they will get - that is, the sale of the Irish national lottery.
Does the Minster have anything further to offer?
I will clarify a number of issues raised by colleagues. The reason for the Government's view of section 1 is that this is not the sale of the national lottery. It is effectively a long-term, 20-year lease, and therefore it would not be correct to say the national lottery is being sold, because it is not being sold. There are many examples of State assets being leased into the private sector for a period of years, and a number of models in which that occurs. We stand over section 1 because it is not the sale of a State asset.
How about the rent?
It is a lease of a licence that returns to the State in 20 years, as did previous leases.
I cannot recall the colleague who said that this was a vagary of the Minister, Deputy Howlin, or the Department of Public Expenditure and Reform. This is the Government's decision. It is the view of both parties in Government that this Bill, and this process, should proceed. The Minister is not taking some sort of out-of-orbit position and moving ahead of everyone else. This is the Government's position. The Government stands over it and it respectfully asks colleagues here in the Upper House to support this Bill. We are not selling this asset in perpetuity. That is not happening. It is a long-term lease.
Senator Mary AnnO'Brien asked if I had a means of establishing how we would come up with a figure, and she gave a figure. The Government has been careful not to use a figure because, pending the decision of this House on the Bill, a competition will commence and it would not be useful for any Minister to set out his or her ambition for an amount. That would not be useful. We will have a competition, and the outcome of the competition will set out what the market shows for these things.
In terms of the operation of all these licences, there is a view internationally that they can be done differently and that the model of business can be different. The Senator would know from her own business that flabby costs can be taken out.
It is called privatisation.
As Senator Mary Ann O'Brien would testify from her business, it is no different for the private sector than it is for the State. We must have the same rationale and the same competitive edge in the public sector as we evidently have in the private sector.
One of the reasons I suspect there could be interest in this lottery internationally is a view that significant savings can be made on its operations, which would make it more sustainable in the long run. It is not just a question of people coming in to make a cheap buck out of our lottery. On the contrary, one of the reasons people view it as a good licence to obtain is that they believe they can drive greater efficiencies. It is no different from the rationale within the private sector.
Senator Mary Ann O'Brien asked if we were bound by this measure.
The answer is "Yes", we are bound by this under EU law. It is the same as the situation where Irish plcs and semi-State organisations can pitch for business across the 26 member states. The same principle applies in this instance. There must be consistency for procurement purposes across the European Union or advantage will be taken by the cottage industry of lawyers who take the State to task if there is some peculiarity in a procurement process. What we are doing is entirely within the spirit and the letter of EU law. It is in our own interests and the long-term interests of the lottery.
I suggest respectfully that this is not about a sale. We should rename the legislation the long-term, 20 year lease of the national lottery Bill to ensure the public knows what we are doing.
If the Senator wants to move an amendment on Report Stage, we will consider it.
Will the Minister of State confirm that the sale of the national lottery for 20 years is required by an EU directive, which is to say we must sell or lease the lottery for an up-front payment for 20 years? I thought it was a Government idea. Obviously, the Government thinks it is a good one. I disagree. The Government will not get the price it wants in July, but that is another day's work. Will the Minister confirm that it is an EU requirement that we open it up to operational competition? I may be wrong, but it is not an EU requirement that we sell the lottery for 20 years for an upfront payment.
The licence comes up for renewal and must, as a result of EU law on procurement, be put out to competitive tender. The Government has decided to construct the deal as it has because of the up-front funding we want to obtain. Whether it be a five or 30 year licence, once one seeks a preferred bidder, it is a matter of EU law.
It is not on foot of an EU directive that we must sell it. It was our own idea.
We do not accept-----
Please, Minister. I will put the question if Members continue to veer away from the section.
I find some of the Minister of State's arguments compelling. He is correct that if the State puts something out to tender, it must be advertised in Europe. There is no question of this. However, the Government does not have to put the national lottery to tender. There is no EU law which prevents the Government from operating it within a Department. EU procurement law is generally neutral on whether a state owns something. It could be decided to run it from within a Department without putting it out to tender.
The Senator is straying from the section.
We seem to be getting confused in the debate. I worry that there is an impression that somehow this is being forced on us-----
I am not suggesting that.
Exactly; generally speaking.
-----when I hope it would be clear to the public that the Fine Gael-Labour Party Government decided it.
I have a few comments on the language used.
On the section, please.
Yes. The section is directed by language. I would have thought that was clear, philosophically. A tender implies a contract and a sale. The Minister of State is wrong to say one cannot sell a lease. Of course, one can and it happens every day. If one goes to London, buildings are often not bought outright as they are so enormously expensive. One buys a lease. The cost may be €1 million for a 20 year lease. If one buys something, it must be for sale. Therefore, this is a sale. It is not a sale for infinity, but then "infinity" is a problematic concept which few Members understand completely. This is something of a problem. There is no logical or philosophical reason to discount the change of title suggested by Senator Marie Louise O'Donnell.
I compliment the Minister of State on his fine use of Hiberno English in terms of language and pronunciation in referring to "vagaries". It is an Irish word and has an Irish meaning. Among the English stress is placed on the first syllable. I say this for the benefit of anyone on the neighbouring island who is listening on their twiddly thing.
Especially as they are about to buy it.
As someone famously said to Tony Benn, "I would have thought we public school boys should stick together."
Section 2 agreed to.
Question proposed: "That section 3 stand part of the Bill."
Question put and declared carried.
SECTION 3
Many speakers have referred to the sale versus lease issue. I want to discuss the model itself in terms of section 3. The Government is using the Bill as an opportunity to change fundamentally the model of the national lottery. While we will be discussing the regulator later in the debate, the fact that the Minister is being removed from the equation and a regulator introduced underscores yet again the private, for-profit nature of the new lottery model being advanced. The fact remains that since the commencement of the national lottery, we have seen €12 billion in sales, €6 billion in prizes and €4 billion raised for good causes. It has been a tremendous success story and has a tremendous track record. That the amount of money generated through the current model has remained broadly the same despite the catastrophic collapse of the economy and the finances of the State is an indication of the resiliance and strength of the current model. Therefore, we should not change it. To brand as positive reform interference with something that has been so successful is wrong. We should not pretend that because the licence is up for renewal, these changes have had to be made. It is an initiative of the Government and a move from the traditional, successful model over which the State has had some control and authority to a privatised model.
No one will make the upfront payment on the basis of pragmatic decision-making. Whoever takes on the licence will do so solely on the basis that it is a commercial concern. On Second Stage in the Dáil the Minister and the Minister of State reaffirmed what a successful story the lottery had been, which begs the question of why it is being undermined by changing the model and moving towards privatisation.
I thank the Senator for her contribution on section 3. While the Bill replicates many of the provisions of the National Lottery Act 1986, it is intended that the former will replace the latter. Therefore, section 3 provides for the repeal of the 1986 Act. Section 1(4) provides that a ministerial order to repeal the 1986 Act may provide for the repeal of different provisions on different days. Section 6(2) provides that notwithstanding its repeal, the provisions of the 1986 Act will continue to apply to the current licence as held by An Post National Lottery Company until the termination of that company.
Before the Government made a decision on this legislation, it considered an analysis of the options for the licence. The decision was based on that analysis. While it is correct to say the model and the appointment of a regulator are new, it is not unusual in other areas of State activity to appoint a regulator to supervise the operation of a licence. It is a more recent parliamentary device. The new model puts the regulator at the heart of the lottery. The Government's decision was made in the context of the current fiscal environment.
All we are doing in section 3 is providing for that, in order that the long-term sustainability of the lottery adapts itself to that environment in the most efficient way possible.
I will be uncharacteristically brief. Section 3 of the Bill repeals the 1986 Act. Section 2 provides that "Minister" means the Minister for Public Expenditure and Reform. I presume this is a transfer of authority from the Minister for Finance?
Yes.
I thought so. I thank the Minister of State.
I apologise if Senator Reilly has already dealt with the following point. Section 3 repeals the 1986 Act. However, section 44 refers to the 1986 Act and states that the fund established by that Act continues. Is there a contradiction in that section 3 repeals the legislation, yet there is a reference to it in section 44?
I, too, raised that question.
It seems problematic. I believe this needs to be clarified.
For the purpose of clarity, even when repealing an Act there are occasions when the original reference must be included in the new legislation. When I raised this question I was told that the reference had to be included for the purpose of clarity. Senator Byrne and I have previous experience of obliteration of all references to previous Acts. My understanding is that it was necessary to include the reference in the later section.
Question put and declared carried.
SECTION 4
Amendments Nos. 2, 3 and 8 are related and may be discussed together, by agreement. Is that agreed? Agreed.
I move amendment No. 2:
In page 6, between lines 29 and 30, to insert the following:
"4. The National Treasury Management Agency shall manage that portion of the proceeds from the sale of the National Lottery Licence designated for the National Children’s Hospital.".
It goes to the heart of the Bill and our concerns about it that what we are relying on is a promise from Government, and particularly from the Labour Party, to apply the funds generated from the sale of the national lottery to the construction of a children's hospital, which has been delayed for various reasons. The question that arises is: can we believe this promise? The record shows that the Government cannot be trusted when it comes to promises made. Why can this provision not be written into the legislation?
The proposed amendments refer at least to the purpose of this sale of the national lottery licence. What will happen to the money derived from the sale if a financial emergency arises during the summer? One may well arise, given that we have been told Anglo Irish Bank may require additional capital when assets are realised and that there may well be other capital calls on the banks. There is no legal commitment to use this money for the construction of the children's hospital. It could well be that the people are being sold a pup, namely, that this licence is being sold and no provision is being made, legally or otherwise, for that money to be utilised for the construction of the children's hospital. We have to take the word of the Minister in this regard, which is not believed by the public. That is an unfortunate political reality. The broken promises have been rehearsed on numerous occasions.
In proposing these amendments we are seeking to ensure that the money will go to the construction of the children's hospital and that the National Treasury Management Agency be designated with responsibility in this regard. We are also seeking that the Minister bring forward a report in regard to the ring-fencing of that money. We believe this is critical. What we are seeking may not even go far enough but it is important to highlight the significant absence of such provision from the legislation. I will push this to a vote because I believe this provision is central to the legislation. While four years ago I would have advocated something along the lines of privatisation of the national lottery - it is opportune to do this now given that the current licence will soon expire - as a means of generating funds for capital purposes, that is not what the legislation will do. That is unfortunate and it is a missed opportunity.
I separate the dancer from the dance. I do not personalise this by saying that any Minister should not be listened to. I do not agree with Senator Byrne that any Minister is in a position he or she should not be in. Most of the Ministers are in position because they should be there. I do not agree that the Minister, Deputy Howlin, is not believable.
In general terms.
I do not believe that is right. My personal views on this matter differ from my political view on it. I would like to know the reason the Minister of State would not give credence to a dedicated draw for the national children's hospital, which is one of the most important aspects of health provision in this country. If we do not have education or health provision for children we do not even have a country. The British did this during the Olympics. I have stated many times in the debate on the sale of the national lottery licence that if we are serious about building a national children's hospital we could have done so through funding derived from a dedicated draw. I believe the people would have supported it and that the hospital would long since have been built. Some of the €240 million per annum available after prize and administration costs had been met could have been used to build the children's hospital over the next three years. The people would have supported it. Why was this not given credibility? Why has there been no outside-the-box thinking on this proposal, which is well proven and in respect of which the statistics indicate no other good causes would have suffered? I would like a response from the Minister of State to that question, given that stated reason for selling the licence is to obtain funding for construction of the hospital.
As I understand it, there are actuaries working in the Department of Finance. Has an actuarial valuation of the national lottery been carried out? I ask that question based on the assumption that between €400 and €600 million will be achieved from the sale of the lease for 20 years. A turnover of €762 million with a net profit of €240 million does not add up. The Government hopes to put by €300 million from the sale of the licence for the national children's hospital. What will happen if the highest tender is €300 million? Much of the discussion thus far has been about bids from outside tenders. I am aware of an Irish consortium hoping to tender for it. I hope it will be successful; however, we have no power over that. The figures in respect of gross turnover and net profits do not add up. I have a 20-year lease, which includes a five-year rent review and a ten-year opt-out clause.
The amendments we are discussing relate to ring-fencing of money for the children's hospital.
Yes. Three amendments are being discussed together. This must be established before we go any further.
When I mentioned the figure of €500 million earlier, the Minister of State said the Government had not yet set a target to be achieved. Surely the Minister has not drawn up this legislation if the Government does not know where it is going with this. Surely he has set a target or goal in terms of what it is hoped will be achieved. Otherwise, we should go back to our offices, pass "Go", collect €200 and start again. Perhaps the Minister of State will clarify whether a target has been set.
It was quoted.
I mentioned it here during one of the Stages of the Bill. The Minister was quoted as giving a figure of €500 million. He might have changed that target. I do not link him with the figure, but he was quoted as having given it.
I apologise to the Senator. Will she repeat the point?
On some of the thousands of pieces of paper I read on this issue it was mentioned that the Minister had mentioned a figure of €500 million. It could have been between €400 million and €600 million, or €500 million. It could be more or less. That is the reason I mentioned it. I just cannot remember the actual reference.
Is the Senator saying the Minister said this?
Yes. It was a quote in The Irish Times.
Senator Darragh O'Brien is right in assuming that we have expectations from this process and clear views on the valuation. I am sure the Senator will appreciate that it would not be prudent for any Minister or the Government as a whole to place that assessment in the public domain in advance of the competitive tender. I was told that when the previous Government had decided on decentralisation, property prices in the proposed locations for decentralisation mushroomed by one third on the evening of the decision. The way to proceed is to first seek support from the Houses of the Oireachtas for the legislative base and then run the competitive tender. The third step is to see what exactly is in place. We have an open mind on this. The Senator is correct in assuming we have clear indicative valuations which are predicated on an expert report and analysis submitted to the Government in advance of the process. I understand Davy was the company in question. This is in the public domain. Based on the potential valuation, the Government has embarked on the process. It would not help the process, however, if a Minister was to state in public what he or she believed the valuation was. We have a firm view on what we want to obtain from the process. Let us just see whether we do obtain it.
With regard to the issue the Senator Byrne and others raised about ring-fencing, I have some sympathy for the argument. If the objective is to get the up-front payment to build a hospital, it is not unfair of parliamentarians on both sides of the House to seek guarantees if there are to be risks later in the year, as EU officials tell us. The Senator is correct in highlighting this issue. To get over the problem, the Minister for Public Expenditure and Reform made a firm commitment to Deputy Tom Fleming on Committee and Report Stages that when we concluded the process at the end of the competitive tendering and valuation process, he would return to the Oireachtas Joint Committee on Finance, Public Expenditure and Reform to discuss the arrangements for the up-front sum payable to the successful bidder. Deputy Tom Fleming acknowledged the Minister's bona fides is in that regard. We want to involve colleagues because, if they choose to do so, they will give us the power to embark on the process. Therefore, it is only right and proper that a committee of the House examine this issue in detail with a Minister at the end of the process. Our firm view is that Parliament, in all its manifestations, needs to be kept abreast of this issue. The way in which we believe this should be done is through informing a committee of the House.
Senator Marie Louise O’Donnell asked why we had chosen to go this route as against the one-off dedicated draw for the purpose of obtaining funds for the new national children's hospital. She correctly cited the example from the United Kingdom of where a series of draws had been established for the purpose of funding the bid. To be honest, I am not very competent on this issue, but my understanding from the debate thus far is that the Government examined the matter. The view of the Government is that if we were to do as proposed, it would represent a significant drawing away from other good causes up and down the country to which people were already committed. The Senator will make the point that this is a once-off project based on getting behind the campaign to build a hospital as part of one great initiative, but, given the scale and the number of organisations at the pin of their collar trying to raise funds, one would have to ask whether it would be an undue burden on them in circumstances where we want to keep all of the voluntary bodies and NGOs in place in communities. From my limited understanding of this issue, there was an assessment in this regard made by the Government which concluded that the best route forward was through the one suggested. I hope I have answered all of the questions.
The Minister of State has raised a related point, to which I want to return because it is very important. He has refused to state the sum the Government expects to receive from the valuation. He is right in that regard, but I ask him to examine, in his capacity as procurement Minister, the process throughout the State system. Certainly in local authorities, councillors are still going around stating there is €25,000 for one road or €50,000 for another. It is lethal to the tendering process if firms know exactly the bidding position at local level. This is rampant throughout the country.
There is something of a Hobson’s choice if the bid is constrained. In this regard, the opening up of online gambling must be considered. We have not spoken about this issue yet. How is the Government to obtain €300 million to €700 million, unless it has some carrot? The carrot is the opening up of online gambling. To date, there has not been a big profit, as I stated. If one constrains bidders because one wants to control online gambling, the price will go down towards an insult. The Leader has been speaking about the explosion of online gambling and other issues every day in the House. If one does not constrain bidders, one has-----
The Senator is moving away from the amendment.
I suppose I am and I apologise, but my point concerns the amount of money we hope to obtain, of which some is to go towards the national children's hospital. The argument is linked, but I understand I may be a little off the point.
On the latter point, a balance must be struck. In seeking the permission of both Houses to advance this legislation, we are asking to give the Minister for Public Expenditure and Reform and his Department the opportunity to strike the balance in a fair way that will allow people to see the opportunity presented by the lottery, while at the same time putting in place the safety valves we would like to see. The way in which one should strike that balance is through ministerial order and negotiation, rather than primary legislation, notwithstanding the fact that the primary legislation needs to set out the standard on which the discussions, negotiations and deal between the winning bidder and the Government are to take place. The balance needs to be struck at the end of the process, having regard to the fact that all of these issues have been raised in the context of the discussion in both Houses.
I do not disagree with Senator Thomas Byrne's point. The small contracts announced locally from time to time are an important source of local employment. In many cases, the contracting is carried out by the local authority as opposed to the State. The State gives a block grant for various purposes, including road construction and flood relief works, for example. Local authorities need to be mindful of this and of how they construct their panels and proceed with procurement. It is fair to state we all want etenders.gov.ie, the Government's website for the purposes of procurement, to contain every SME. I understand up to 50% of all Irish SMEs do not even know about it. One cannot pitch for Government business unless one knows about Government business. That is important. There ought to be confidence at local authority level that we will run the competitions in a fair and open way to allow businesses, both big and small, to pitch. The Senator has made a fair point that if one sets out the block grant by way of announcements by politicians, it may result in a false dichotomy. We always need to be mindful of this and guard against it. The way around it is through the etenders website and using technology for the purposes of achieving better procurement and helping Irish SMEs to determine whether they can win a percentage of the public pie.
The way around this is through e-tenders and using technology for better procurement, as well as helping Irish SMEs to find out if they can win a percentage of the public pie. The public pie, even in these constrained times, is more than €9.5 billion per year. That is a lot of money for the public sector, but SMEs must get their act together to pitch for this business. The way to do that is through better technology.
Amendment put and declared lost.
I move amendment No. 3:
In page 6, between lines 29 and 30, to insert the following:
“4. The Minister shall, within one month of the enactment of this Act, bring forward a report outlining how the proceeds from the sale of the National Lottery licence shall be ring fenced for the purposes of meeting the cost of constructing the National Children’s Hospital.”.
Amendment put and declared lost.
Section 4 agreed to.
Section 5 agreed to.
SECTION 6
Question proposed: "That section 6 stand part of the Bill."
I used to marvel at people arriving with a pile of papers on Committee Stage, but now I know why. It is a learning process.
Will the Minister of State reassure me about the 108 jobs in An Post? The company is going to be terminated under section 6 and I am anxious to know about the 108 jobs. Will the 108 people be subsumed into An Post? When private companies come in they tend to cut their cloth to suit their measure. Will these people be retained in the national lottery or return to An Post? Is there a guarantee from An Post that this will happen and where is that written? If not, who will pay for their pensions?
The Senator asks about a number of relevant and pressing issues. I have a note on the matter.
Departmental officials have held discussions with the management of the national lottery company and the management of An Post, which is the employer of the majority of the staff. Officials have also had discussions with trade unions which represent the staff of the national lottery. These discussions were held to clarify the issues that arise in the context of the next national lottery licence. Further engagement on this matter will take place as soon as possible. In view of the ongoing consultation on the matter, it would not be appropriate for me to comment further at this stage. However, we are working through these issues to obtain a fair outcome for all the people concerned, given their long-standing service to the company. With that, I will hand over to the Minister, Deputy Howlin.
With that, enter the king.
I welcome the Minister for Public Expenditure and Reform, Deputy Howlin, and thank the Minister of State, Deputy Brian Hayes.
I welcome the Minister. With regard to security of employment for the employees, will the Minister confirm that it might be a situation where the transfer of undertakings legislation will come into effect to secure the tenure of employment for those employees?
Yes, it may well be. Depending on the outcome of the tendering process, there might be no transfer of employees. Everybody would be pleased with that, but I cannot prejudice what might be the outcome of the discussions. We have been anxious to be very clear with a number of key stakeholders throughout this process. Obviously, we wish to have a robust new lottery regime and to protect the flow of income to good causes as well as the retailers and employees. I heard the Minister of State tell the Seanad that there have been ongoing discussions with them. Those discussions will continue. The employees have legal rights on a number of fronts and the transfer of undertakings legislation might well apply to them.
Question put agreed to.
SECTION 7
Amendment No. 4 not moved.
I move amendment No. 5:
In page 7, between lines 19 and 20, to insert the following:
“(4) The Regulator will cease to exist at a date to be set by the Minister.”.
We have a major difficulty with the issue of a regulator. It is probably unnecessary. As I oppose all the sections dealing with the regulator, I presume I should talk about the various issues section by section rather than all together. Is that correct?
The Senator has a specific amendment to this section.
I know, but all the sections to section 20 are about the regulator.
Each section has to be agreed to individually.
Okay, I will discuss them individually.
The amendment is self-explanatory. We do not believe there is a need for ongoing regulation. The regulator should cease to exist, in the interests of costs and not increasing the bureaucracy at a time when this and previous Governments have been determined to cut bureaucracy as best they can. I have other issues with the regulator which I will discuss section by section. What is the Minister's response on that?
We had a long debate in the Lower House on this matter. I understand the very legitimate case put as to why we should establish any body unless there is a compelling need for it. We thought long and hard about it. Under this legislation we are asking people to make a bid for a robust contribution to the State. They will want to ensure that the licence will operate in accordance with the law, and the general trend now is for that not to be done by the State but by an independent person. I do not expect this to be a very elaborate body. It will be a small, self-funding unit. It will be funded by the lottery profits. I hope it will be a modest outfit. We will set out in the licence terms the scope and work of the new regulator. Other than ensuring full compliance with the terms of both the law and the licence agreement, it will also ultimately do the ground work for the next lottery licence because, under the law, that will not be a matter for a Government Department but for the regulator.
I do not wish to trespass on the remit of another Minister but Members will be aware that general legislation on gambling is being examined. Many Members expressed a concern in this regard on Second Stage. I am aware from reading international papers on this area of gambling that lottery operators do not even like to regard this as gambling. The lotto is somehow like a national punt that people take on the grand national. However, it is very regulated. There is a great deal of other gambling that is not regulated at present, including online gambling, online casinos and so forth. The Minister for Justice and Equality, Deputy Shatter, is advancing detailed legislation in that regard. I have posited the view, although it might not come to pass, that we might have a single regulator for gambling and that the lottery regulator might migrate into that wider role, but that is a matter to be considered by the Minister, Deputy Shatter, and would be subject to legislation being brought forward for consideration by the Houses in due course.
However, even as a stand-alone entity, I am convinced from my consideration of international best practice that there is a case for a discrete, singular function, lottery regulator. It will not be extensive. I understand the very reasonable point that we should not set up another quango. This is a small, discrete, single function body which will be funded by the lottery, not the State.
I will wait for the discussion on the section because I wish to speak further than what is contained in the amendment. I will withdraw the amendment in order that we can move to discuss the section.
Amendment, by leave, withdrawn.
Question proposed: "That section 7 stand part of the Bill."
I wish to discuss the section. It is extraordinary that the Minister is always late for my speeches.
I was watching "Macbeth" last night, starring Orson Welles, who was, I believe, a very articulate actor. Every time I saw the witches I thought, "That is probably what the Minister thinks of me each time he comes in here."
How very cruel.
He probably thinks there is a fair and foul witch in the audience.
I do not agree for one moment with this lottery Bill, not even the Title, but one thing I agree with is the establishment of a regulator. That is a good idea. I think we will sell the company but, regardless, it is a good thing if out of this we get a regulator for the lottery and for gambling, because we need to be far more objective in how the money is distributed. Also, if we are to open up online gambling, it should be regulated. I give the Minister that as my only gift in this whole thing.
I can see why someone would want a regulator but I believe it is time for new thinking in this whole area. Why can a Minister not do the job? At least if we are not happy with a Minister he can be kicked out. We can do that and there is public accountability. When a politician makes a decision the public can do something about it to effect change. We have had multiple instances of regulatory capture over the years, most famously with the banks. They were all playing golf together as the banking system was destroyed because of regulatory capture. We have seen other regulators in the media discussing price rises and so on but they seem to be acting on behalf of the industry they are regulating. One does not know what is going on. They see their area as their fiefdom and they become so entrenched with the industry and so knowledgeable of it that they cannot see the other side. There must be a way of doing this differently. One way would be to have a politician do it. In the United States, people in such positions are routinely elected. Another way to do it - the Minister might consider this - would be to appoint a regulator from within the staff of the Department to do it as a side job within the Department, rather than establishing a new office. A relatively senior official could carry out these functions and it would not be too much. Why not do it within the Department? Does it have to be independent of the Department or could it operate independently within the Department to avoid the opening of a new office? The Minister would have theoretical oversight of the official and therefore there would be some political responsibility. There may be an example to follow in the appeals office of the Department of Social Protection, which is independent but remains part of the Department.
I urge the Minister to consider some of these possibilities because the legislation allows the Minister to appoint a person on such terms and conditions as he may determine. Therefore, he could appoint someone to do it for nothing - for example, a businessman who is independently wealthy and honest and whom the public would accept. Let such a person be the regulator, as in the case of an honorary consul. As far as I can see, there will not be a great deal of work to be carried out. The regulator would not be regulating a market as such but only one entity. I am concerned that if we set up an independent office, it would simply become a sub-office of the lottery company. It may be better to have someone who is completely independent and who will take a wider approach, because he is not dealing only with a lottery company. If such a person was dealing only with the lottery company he would start to see everything from the point of view of the lottery company. That is the natural way of things. It has happened time and again with regulators in this country and other countries.
I agree somewhat with my colleague, Senator Byrne. The Minister has referred to the possibility that the office of the lottery regulator could be enhanced to create a gambling regulator. That is a different story and it is badly needed. It occurs to me that we could set up a lottery regulator who would be paid for by the lottery company and whose biggest decisions would be to allow the lottery to bring in new games, etc. I would prefer if in some way a percentage of profits could be taken off the lottery company to run the regulator's office. This should be provided for in the legislation. Hypothetically, the lottery company could pay €1 million per year to run the regulator's office and the regulator could then determine whether the lottery company should be given three or five new games this year, next year or whenever. While I agree with an overall regulator for all gambling, I believe we should tread carefully. I am concerned that the regulator would have one job and that his job, effectively, would be to accede to requests from the lottery company to introduce new lottery games and, as we discussed previously, put gambling in people's faces.
We had much discussion in the other House on this issue and I have given it a fair deal of consideration. The points made are very reasonable. I am not in the business of setting up any entity for the sake of it, but I am convinced by the argument put to us by my advisers and by the specialist advisers we brought in that this is the best way to go. I have no wish to hang my hat entirely in respect of the potential for the office to migrate to something else. I have no wish to make commitments on that, but it is something I would like to see and I believe it would be a good thing if we had a more regulated structure for gambling. Anyway, that is for another day, another Minister and another debate in the House.
I made a point in the other House and have no wish to sound discordant in this regard. Reference was made to the failures of banking regulation. Bluntly, the regulator is only as good as the policy set down. There was a determination of light-touch policy that broke up the powers of the Central Bank at the time. A committee made those recommendations and they were enacted. Light-touch regulation was the order of the day. However, not all regulators have failed. I believe we need to have an independent regulator to ensure the law is applied. I do not believe the regulator would be captured by the lottery company because the terms and conditions, wages and so on would be set by the Minister and not by the lottery company. Therefore, being nice to the lottery company would not result in an enhanced wage packet or bonuses for the regulator. We will set the schedule of payments to support the office of the regulator.
Senator Byrne makes a fair point. Up to now the Minister has been the regulator and it has worked. That is true. However, this is a new departure, and since we are modernising the legislation it is appropriate to take the regulation of games or the regulation of how the lottery is done away from the Minister and leave it to a professional, competent regulator. I have acceded to the request made in the other House that the regulator be amenable to the Houses. It would be proper for this committee, if it believed he or she was not doing his or her job, to bring the regulator in and put questions and get a regular report. There will be an annual report as well. The regulator will be subject to a good deal of scrutiny, probably in a way that a civil servant would not, unless one established the office of the regulator - I believe this is what Senator Byrne is suggesting - and appointed a civil servant to that office. Is that what he is suggesting?
No; I am suggesting something like the social welfare appeals office, which is independent of the Minister but is actually part of the Department of Social Protection administratively. As I understand it, staff are appointed by the Minister to be independent but the office is within the Department. The Minister could establish a smaller entity within a Department in an administrative sense. It would save costs, there would be no need to recruit staff, and the civil servant could possibly be given some other things to do. It is not that we are accusing people of corruption or suggesting they will act only in the interests of the lottery company or that they will do something wrong. Bank regulation is not the only example of regulatory capture. There are multiple examples of regulatory capture in various countries throughout the world. It is a natural consequence of having a regulator for one industry that he begins to see everything from the companies' point of view. I cannot see how the regulator could stay independent if his entire life is dedicated to discussions with the lottery company unless he has the opportunity to talk to colleagues within the Department and get a different view. Such a person would be single-minded and would believe he is doing the right thing, but I can see it ending badly. I do not mean in an unlawful or corrupt way or anything like that, but it is the natural order of things that regulators inevitably know too much about the market and too much about the bodies they regulate and simply become less independent as a result.
I disagree with the Senator. I believe the regulator is a bigger job than that and it would not be a case of having nothing else to do. There are two massive strands to this: the regulation of the lottery, because it is so vast and because it makes so much money, starting at €763 million per year; and the distribution of money to good causes, including the questions of objectivity and how we distribute the money.
The Government is often accused of being prejudicial when it comes to giving lottery money to constituencies.
The opening up of online gambling is an enormous issue. I agree with the Minister - it is possibly the only thing on which I have ever agreed with him - that it is a most important role. Objectivity is the key, which is why the regulator is in place, not a civil servant who has nothing better to do. Other lotteries around the world have regulators who like to speak to other regulators about co-ordinated lottery funding, namely, north-south, which did not happen here for that very reason.
The regulator would be acceptable, but there should be a tax on online gambling before the office is established.
I have nothing further to add. A coherent defence of the proposal has been made.
It is a pity I was not on the Minister's side for the entire debate.
Amendment No. 6 not moved.
Question put and agreed to.
SECTION 8
Question proposed: "That section 8 stand part of the Bill."
This section is trying to draw back in ministerial responsibility for matters that should be within his or her remit. It has been promised in terms of reform and it is a pity to see matters relating to the national lottery moving away from the scope of parliamentary questions. I listened to what the Minister had to say about the regulator coming before committees. The tabling of a parliamentary question in the Dáil is a critical function of a Member and should be allowable in the regulation of the national lottery.
This is a new regime and the Minister will not deal with these matters. The regulator and the operator under the Bill, when enacted, will be amenable to the Oireachtas.
Question put and declared carried.
Sections 9 to 20, inclusive, agreed to.
SECTION 21
Question proposed: "That section 21 stand part of the Bill."
On how the regulator will deal with the company which will hold the lottery lease, it seems that, as well as the disclosure of interest, there is a needs for some provision on the interaction of the regulator with the lottery company and how it will deal with that issue. It is inevitable that there will be massive communication between both sides. While it may not be a direct interest of the regulator under the terms of this section - perhaps I should have discussed this issue under an earlier section - it seems that the Minister will have to keep a close eye on how the regulator operates in practice. He or she should not get too close to the lottery company. He or she should keep his or her mind broad in how things operate and should not be captured. As I keep saying, regulatory capture is a well known phenomenon in economics and business. It is not just about the unfortunate regulator of the banks. The Minister has to be on guard.
I agree entirely. It will not just be a matter of the Minister being on his or her guard but also the Oireachtas. There will be an annual report and the regulator can be called in and questioned. It will be the job of the Oireachtas to ensure this will work. This section obliges the regulator and its staff to disclose any pecuniary or beneficial interest they may have in a matter which falls to be considered by the regulator, his or her office or staff. It requires the regulator to disclose any conflict of interest he or she may have to the Minister and that a staff member to make any such disclosure to the regulator.
Does that mean the regulator and the staff will be allowed to hold shares in the gambling company, as long as they are declared on the register?
There is no legal prohibition in that regard as long as it is understood. If there is a conflict of interest, it is something we could consider. We do not have to include it in the base legislation, but we can consider it as part of the guidelines to be given to the regulator.
We could discuss the matter on Report Stage, as it is important. The Minister could also include it as part of the terms and conditions of the regulator under section 7. If one has a financial interest in the matter one is regulating, one has a financial interest in the company that is operating. That should not be the case. It should not be a matter of declaring it.
The Senator can table an amendment on Report Stage.
If I am entitled to, I may do so.
The Senator is.
The Senator made a very valid point. It is something I would prefer not to deal with in the base legislation but in the licence. Let me consider it. If the Senator tables an amendment on Report Stage I will tell him what the best way of dealing with the issue is.
Question put and agreed to.
Section 22 agreed to.
SECTION 23
Question proposed: "That section 23 stand part of the Bill."
On the advance of funds by the Minister to the regulator, why should the regulator be paid through a levy from the successful company?
This section relates to the funding of the regulator's office. It will work in conjunction with section 24. It provides that the Minister may advance to the regulator what is essentially a loan which the regulator shall repay with interest. The Departments of Finance and Public Expenditure and Reform, I am afraid, take the pound of flesh.
Amendment No. 7 not moved.
Question put and agreed to.
Section 24 agreed to.
Section 25 agreed to.
SECTION 26
I move amendment No. 8:
In page 13, between lines 23 and 24, to insert the following:
“26. The Minister shall, within one month of the licence being awarded, bring forward a report outlining how the proceeds from the sale of the National Lottery licence shall be ring fenced for the purposes of meeting the cost of constructing the National Children’s Hospital.”.
Amendment put and declared lost.
Question proposed: "That section 26 stand part of the Bill."
I do not want to repeat myself, but this is the nub of the matter. Why do I feel that in holding this competition the Government is giving away our rights as Irish people to make profits and extract them in the next 20 years? Perhaps somebody is lurking in the background, but we cannot get involved in the competition. The competition for the upfront payment, namely, the selling of the lottery licence, is skewing the issue. It is the reason we are all here, why we will probably not have a regulator and why we will have to extract funds and pay back profits to gaming consortiums which will come in with the highest bid. I asked the Minister about bids for the licence. In one sense, the Minister's office is trying to constrain online gambling. If that is done, it will bring down the bid, but if not, it will bring up it.
The holding of a competition for the upfront payment for the leasing, sale or loaning of the licence for 20 years is the nub of the whole thing. I am deeply opposed to this for 1,000 different reasons, one being that we will not get the right price because of the constraint and we will have an explosion if we do not have it.
I am not against change and reform, of which I was accused of. I am not a purist, a fantasist or a lunatic, but I feel we could be opening up online gambling, and restricting it or semi-restricting it for ourselves. It is the upfront payment that skews us to have to repeal an Act, change things, extract a profit, because no matter who they are, whether they are Irish, English or Italian, they are not altruistic and they are not Santa. So over 20 years a profit is going to be extracted back, rightly so. Give somebody €500 million and you are going to get €1 billion back over the years. Section 26 is the nub of the Bill, and I am absolutely and entirely opposed to it for those reasons. We are no longer in control. When you are in control you can tighten things. When you are not in control, and the people who are operating the lotto do not get their money back, it can end up getting loosened, prices can go up and profits must be made. I wonder about that Hobson's choice, because that is the nub of the whole thing.
As the Senator put it well, I will not go over the points again.
I understand the views and the passion with which they are held. I have explained the genesis of this. It is no knee-jerk reaction. We have thought it out very carefully from the time it was first explored. In the preparation for the capital programme we examined how we can provide the capital infrastructure we need. I have just come from a meeting earlier today with the European Investment Bank to get more capital because we have a big deficit regarding schools, the new Grangegorman campus, some transport projects and primary health care centres. There is so much we need to do and so little capital. We need to do these for a range of reasons. Not only do we need schools for children, we need to have jobs for the people building them.
One of the big capital projects we wanted to do in the health area, as I explained, was to build the national children's hospital. As there was so much to do in health, we determined to keep the level of capital available under the capital programme in the health area unchanged at a very high level, while everybody else was squeezed, particularly transport. Even within that high level there was no scope for the children's hospital, and I did not want to abandon it. I thought about getting an upfront payment, as other countries have done. This is not unique and the Senator knows that. We can have a very well regulated, well run lotto that meets the needs of the State and people or groups who want a flutter or a gamble on a weekly basis, and keeps the excitement and fun element in the national lottery.
We will obviously migrate to different platforms, including online because that is the way we will do more and more of our business, and it would be a Luddite approach to think that we cannot do that for the next 20 years. By the end of that time we will all be doing all our business online. At the same time we can get the capital this year, now, to be certain we can build the national children's hospital. Other ideas have been proffered about dedicated games, etc., but I can do this with certainty. It is the right thing to do and I recommend it to the House. As I said, it is no knee-jerk reaction. It is a very considered opinion. We have looked at what happens elsewhere in the world. This is a Bill that has taken very careful crafting. We have had expert advice externally as well as internally. Notwithstanding the sincere and genuine views expressed, I recommend we do this.
I apologise for pressing the Minister a little further on his explanations, which I welcome and thank the Minister for. Hypothetically, if we thought we would achieve €450 million as an upfront payment, what if we were to go to the markets or world banks for a loan instead of an upfront payment, with the Irish lottery to stay within the State as collateral? We know, and have commended, how well the lottery is being run, how well it has withstood the recession, its turnover and its profitability. I am sure the Minister has considered getting that loan at a good interest rate, allowing us to keep the lottery, rather than the upfront payment. The lottery is better than any collateral one can think of for the markets. What would have been the equation? I am sure the Minister feels saddened and I know he has had the best expertise in the world to leave it outside of the nation.
It is a question. Would we gain more from borrowing the money for ourselves from a bank that has €500 million? Maybe we could ask Mr. Richie Boucher for his salary? He has a lot of money from his salary. I am not being smart, but can the Minister tell me what will be extracted from the lottery for this upfront payment? What will continue to be extracted? Will we Senators know that? I know the Minister's heart is in the right place, but is this not the privatisation of public funding, which we are totally against in this country? We have seen what it has done. We know that any kind of private gaming consortium, or people who have lots of money, who come in and bid on something must get back their profit. It is their duty to get back their profit. Camelot Group gave a £5 million advance to its board seven or eight weeks ago because of its success. It is crazy. There is the other side of this, that is the privatisation of public funding. I just do not think the upfront payment is worth it. I want to know what is going to be extracted and what will continue to be extracted over the 20 years, because we do not know what Ireland will look like in three years, let alone 20 years.
To follow on from Senator Mary AnnO'Brien's views, with an annual turnover of €762 million, whoever is successful in the tender will be projecting, through online, etc., an approximate 32% increase in turnover. So in the 20 years they will have a turnover of between €19 billion and €20 billion. With a possible turnover of €20 billion in the next 20 years, a small percentage going to the Government would cover the national children's hospital.
Let me go back to first principles again. This licence is due to be renewed. We have to tender for the licence in any event. We could do it in the traditional way we have done it to date or we can do it in an upfront payment way. I am a social democrat, as Senators know, but I do not regard business and making a profit as a dirty occupation. Obviously whoever is successful in this will expect a return for their investment. Nobody argues with that. However, we have controlled the things we want to control. The bigger the lotto is, the more likely they will get a substantially better return on their investment, but also the bigger the flow of money will be to good causes, because that is a fixed percentage.
I listened to Senator Labhrás Ó Murchú on the last occasion. He rowed in behind the Senator’s view that we should have a dedicated lottery. There are plenty of arguments about having a game devoted entirely to the national children’s hospital for the next 20 years and borrowing money against it. Such a development would impact on the funds available for good causes. There is a finite sum of money. If one were to take away a large chunk of it to fund the national children’s hospital, funding for the Irish language, sporting and other causes would be squeezed. I am trying to square a circle to hold on to funding and increase it in order that all of the organisations that depend on it will continue to have an income stream and that we will have a robust and good lottery that people will continue to support. Would I be better off not doing it at all and borrowing the money? We could do it through a public private partnership, but it would not be done in the timeframe we envisage. It would mean other projects of substance would be knocked off the list. I could replace the whole Grangegorman project and it would not be enough in itself.
Even if one used it as collateral?
What collateral do I have?
The lottery.
Am I to extract an annual payment to pay it back?
The Minister could open up online gambling.
I am not going to turn myself and my Department into a gambling operator. Steady on, please. This has to be done in a regulated and measured way. Having a professional operator who has competence operating within the regime is a much better way of doing it.
I am exploring every avenue to get capital to invest in the economy. Today we had very good talks with the president of the European Investment Bank, Mr. Werner Hoyer, and his team. It was the first time the full board of the bank had met outside Luxembourg. This year they will put €600 million into this country for school bundles, road and other projects. I am in talks with the Council of Europe Development Bank which is funding the project in Oberstown, a development I felt morally we had to pursue to take young boys out of the adult prison at Mountjoy. One has to desperately scramble around to find the wherewithal to undertake these imperative projects. The Minister for Education and Skills, Deputy Ruairí Quinn, recently showed me the demographics to indicate how we needed to build more schools for 10,000 children a year. We have approved three bundles under the PPP system, which are on top of the €2 billion allocated to the schools capital programme. We need to get the primary health care centres up and running to take the pressure off the acute hospital system.
Everywhere I look there are screams for capital. I am sure that if I came here with proposals to sell Coillte, we would have a robust debate. People would not be happy with the sale of the generating elements of Bord Gáis or the ESB’s two foreign power stations. We need objectively to make rational decisions to meet the needs of the people and the economy. We are doing everything in a controlled and thoughtful way. Doing nothing is not an option. There is a comfort in the status quo and always an argument not to change it. Objectively, this legislation is a creative and imaginative way of getting an additional significant sum of money which will create short-term construction jobs and, much more importantly, in the long term have a legacy for the Oireachtas, namely, the national children’s hospital which will be a flagship for the island of Ireland and a beacon for all of Europe, if we get it right.
I can assure the Minister that Senator Marie Louise O’Donnell and I are here passionately to assist him. He has claimed he is a social democrat, that he does not think "business" is a dirty word and that he is all for profit. I am all for profit, too. However, in this case, it is profit for citizens. We want to give the licence to a professional company. There is a professional group of people in Middle Abbey Street running the lottery. I want to keep the profits from the lottery for the people and causes that the Minister so eloquently explained he is under pressure to service. I am terrified that Camelot or whoever else is involved will profiteer from citizens.
There is also the possibility that if the licence was just for ten years, one would get the price of a children’s hospital.
With all due respect, we have had external experts shape this legislation. If we get a substantial up-front payment of cash which I can turn into a national children’s hospital and have more to invest in other capital projects, it will get some of the 200,000 of the 250,000 construction workers who lost their jobs and are still on the live register back into work. Also, a national children’s hospital will save children’s lives. This can all be achieved while having a robust, well regulated lottery that will prove a solid and robust stream of income for good causes. Is that not a win-win for the State?
When the Minister speaks about the need for capital expenditure, it is worth reminding him that the Government’s capital programme is significantly less than the one the previous Government signed with the IMF. There was also a significant underspend on capital projects last year. When the Minister makes the point about needing this money from the lottery, he should look at the underspend in other budgets. Roads around the country, for example, are crumbling.
We are straying from the legislation. Does the Minister have anything further to offer on this section?
I will do my best not to be discordant, but it is hard to listen to a Fianna Fáil Senator claim I have had to cut the capital budget. Why did I have to do so? It is because the country the Government inherited is broke.
The Minister is also straying from the legislation.
I am going to respond to this, too.
I have to respond in kind. Yes, I did reduce the public capital programme.
Above and beyond what was included in the IMF agreement.
Can we, please, come back to section 26?
Let me answer the question. I did reduce it. Why? I did so because if we had stuck to the guidelines we had inherited, we would have-----
We are on section 26.
No, this is an important point.
Yes, but we have many sections to get through.
If I did not change it, we would be spending €1.5 billion less on the social welfare programme. We are spending €20.2 billion on such measures. The figure for the Fianna Fáil agreed programme is €1.5 billion less. It is difficult to take it from the capital programme, but it is more acceptable than taking it from the social welfare budget.
Question put and agreed to.
Section 27 agreed to.
Amendment No. 9 not moved.
Section 28 agreed to.
Amendment No. 10 not moved.
Section 29 agreed to.
Sections 30 to 39, inclusive, agreed to.
SECTION 40
Amendment No. 11, in the name of Senator Reilly, has been ruled out of order as it involves a potential charge to the Exchequer.
Amendment No. 11 not moved.
Question proposed: "That section 40 stand part of the Bill."
This amendment was tabled in the Dáil also and the Minister spoke on it. I would like to reiterate the point that one of the major concerns of taxpayers and citizens is that the level of moneys going to good causes will be maintained and this was the reason behind trying to specify an amount in legislation. I understand the Minister has not settled on a precise formula regarding the moneys that will go to good causes. However, will he elaborate on or give us some information regarding when he will make known the formula? This would be of benefit to many of the people, communities, good causes and charities that have benefited from lottery funding over the years.
In respect of retailers, the proposed change in the lottery represents a fundamental shift in the lottery model. It would be good practice to provide all of these people with certainty in as far as the Minister can. Will he give us some detail on the formula he proposes for the future?
During the debate people have asked me why I am so upset about all of this because I should be aware that the moneys for good causes will be ring-fenced. I know that, but the fact is the Irish people own the whole lottery, not just the good causes. Therefore, it is not as if we are gifting back the good causes to ourselves. Why is it the 30.5% is not specified in the Bill? Is that because it will increase to 40.9% or because it will be a moveable feast? That is the question with regard to the operator. It needs to get its profits, which are ring-fenced. However, if they do not happen, what happens the money for good causes or the amount of money for scratch cards or the lottery itself? Will the cost of buying a lottery ticket go up?
It is important that I give some clarification on this. I am anxious to maintain the income flow to good causes. I indicated the amount for good causes would be of the order of 31% of lottery sales, because that was, more or less, last year's pay-out. That figure is not in this legislation nor in the original legislation because it is determined in relation to the prizes and so on. I have asked my officials to consider what would be the most robust way of ensuring that if the lotto grows, we will continue to get a good income flow for good causes. That will be in the licence and the licence will not be subject to change. Neither the operator nor the regulator will be in a position to alter that once it is fixed.
Does that mean that even if the profits go down, as can happen, the operator will not be able to change it?
I intend to construct it in order that the good causes contribution will be linked to a percentage of what is called the "gross gaming revenues", which is the sales less the prizes. The reason I am doing that is that the variety of games offer a different prize fund. Despite what we might think, most people play the lotto to win a prize, not to support good causes. However, there is a comfort in being able to say one's money is going to a good cause and that is important.
And that it is not going to Camelot.
It is important that it goes to good causes. The main point in playing is the chance of winning something. As the lottery has changed, the different games have developed a different prize structure. Some offer prizes in excess of 50% of the take, up to 55% in some of the games. Therefore, rather than have a fixed 30% of all going to good causes, I have suggested a fixed percentage of an overarching amount of sales, less prizes. That is what I am working on currently. The advice I have received is that this is the way all the modern lotteries are structured and that this will maximise the take for the good causes, particularly as the lotto grows and different games are advanced and approved by the regulator. I will write that into the licence and it will not be subject to change thereafter.
I would like to support Senator Reilly's proposal regarding this section. The Minister will recall that seven or eight months ago when we were speaking on Senator O'Donnell's motion on the lottery, I spoke about the retailers of Ireland. We must remember that the lottery was born in our little post offices, in small and rural retailers and in our corner shops. Thank God, many of those businesses still exist. I am somewhat confused, however, by the need for Senator Reilly to make her proposal. Perhaps I am suffering from amnesia, but I thought the Minister had taken on board -----
Senator Reilly's proposal was ruled out of order, because it involves a potential charge to the Exchequer. Therefore, we cannot deal with that here.
If a new operator -----
The Seanad cannot put a charge on the Exchequer. Any time we are dealing with legislation, we cannot deal with anything that involves a charge on the Exchequer.
This would put a charge on the lottery, not on the Exchequer.
That is the point. It will put a charge on the Exchequer, because the money does not go to good causes, it goes straight to the Exchequer.
It is a potential charge on the Exchequer and that is why it is ruled out of order.
To me, it seems it would be a charge on Camelot.
The reason it is ruled out of order is because it is a potential charge on the Exchequer.
I am just trying to rule it back into order.
Back into disorder.
Let me make just one point. I suggest to the Minister that we pretend Camelot is at our door and that it be written into the licence that we try to protect the margin of the small retailers.
Progress reported; Committee to sit again.