I welcome the Minister for Transport, Tourism and Sport, Deputy Paschal Donohoe. I also welcome the teachers and pupils of Bayside national school, Scoil Náisiúnta Muire agus Iósef, Sóisear, who are here with Senator Averil Power. I hope they enjoy their visit to Leinster House.
Harbours Bill 2015: Second Stage
Question proposed: "That the Bill be now read a Second Time."
I am pleased to introduce the Harbours Bill 2015 to the House. The Bill builds on the recommendations of the national ports policy published in 2013. Its primary purpose is to provide the necessary legal basis to allow for the later transfer, by ministerial order, of the five designated ports of regional significance to local authority led governance structures. Every Senator is aware that, as an island nation, ports are critical to our ability to trade with the rest of the world. However, every Senator will also be aware of the social and cultural importance of ports to the communities and cities in which they are located.
The varied stories of ports’ development are mirrored in the diversity found today in our modern commercial port network. Nine State commercial port companies operate under the Harbours Act 1996, namely, Cork, Dublin, Dún Laoghaire, Drogheda, Galway, New Ross, Shannon Foynes, Waterford and Wicklow.
We also have Rosslare Europort which, for historical reasons, is a business unit of larnród Éireann and not subject to the Harbours Acts. In addition, there is one fully privately-owned port at Greenore and there are various other local authority-controlled ports and fishery harbour centres that handle commercial freight. To give an example of this diversity, last year Dublin Port handled 21 million tonnes, 7,000 vessels and generated a turnover of €72 million, while at the other end of the scale Wicklow Port handled 94,000 tonnes, 56 vessels and generated a turnover of €250,000. Clearly, different ports perform different functions and service different markets.
The national ports policy recognised these differences through providing a clear outline of the Government's strategy for the sector by categorising the sector into three tiers. The ports of national significance that come under tier 1 are Dublin, Cork and Shannon Foynes. Collectively, these three ports handle more than 80% of all tonnage handled in Irish ports in any given year. All three ports have development master plans and earlier this year I launched the first phase of Shannon Foynes €50 million quayside improvement project. Both Cork and Dublin received planning permission from An Bord Pleanála this year in respect of their projects at Ringaskiddy and the Alexandra Basin. The total outlay on all three projects is more than €350 million and all will be delivered without Exchequer contribution. All these projects have qualified for EU funding through the TEN-T programme and its related connecting Europe facility, CEF, funding stream.
The ports of national significance that come under tier 2 are Rosslare and Waterford. These ports together currently handle approximately 7% of total tonnage and offer competition to the larger ports in the economically significant unitised lift-on lift-off and roll-on roll-off trades, while both are well positioned in terms of their ability to service direct routes to Europe and both are well connected to the rail and road networks. While both ports suffered tonnage losses during the recession, there is no doubt about their potential in the context of ensuring healthy competition within those important unitised trades. I am happy to inform Senators that both ports are now recovering the tonnage lost in recent years.
The ports of regional significance are Drogheda, Dún Laoghaire, Galway, New Ross and Wicklow. These are the ports which are central to the Bill. Currently, they handle approximately 4.5% of total national tonnage, which represents a decrease of more than 30% in their collective market share when compared to 2000. Within these five ports there are very different stories, with some quite dramatic decreases in tonnage at Dún Laoghaire, New Ross and Wicklow, while both Galway and Drogheda are performing reasonably well in terms of tonnage handled, albeit at a lower level than in previous years.
I recognise that there are those with particular interests which may question the need to make any change to the status quo. Some of these local interests made their voices heard during debates in the Lower House. However, at a national, strategic level we must be clear about which ports are fundamentally significant for national performance and which ports are crucial for regional performance. Notwithstanding some of the contributions made during the Bill's progress through the Lower House, I believe the approach adopted by the Government is broadly accepted by the Dáil as being one of common sense. The Oireachtas Joint Committee on Transport and Communications in its pre-legislative scrutiny report stated that the "overall purpose of the Bill was broadly supported by the Committee". In respect of the ports of regional significance, the national ports policy explicitly recognises that these five ports continue to play an important role for their regional hinterland. This is an important policy statement in respect of those ports. However, this role is not one that requires central government oversight. In line with the Government's reforms of local government, the oversight of these regionally significant ports should be devolved to the most appropriate level of government - the local authority. This devolution of responsibility will allow these ports develop as required by their regional economies and in tandem with their regional communities. The change in perspective will enrich and enhance their future development and better aligns the needs of local authorities, regional economies and the ports themselves.
Senators will note that the Bill is flexible enough to allow for either the continuation of the existing company and a transfer of the ministerial shareholding to the local authority or a dissolution of the existing company and a physical transfer of all assets, liabilities and employees into the local authority. This flexibility in primary legislation is, I believe, entirely appropriate. I have been clear throughout the debates on this Bill that for some of these ports the requirement that a separate statutory company oversee and manage the port may no longer be appropriate. Equally, for other ports, the continuation of the corporate model and the recognition of an entity enshrined in company law could well be the best fit. My Department has made funding available to local authorities for due diligence in respect of all five companies. The results will inform the model of transfer ultimately chosen for each particular port.
I will turn now to the key provisions of the Bill, which are found in Parts 2, 3 and 5. Part 2 deals with the first of the two possible transfer methods, that of a transfer of shareholding in the existing company. Section 8 provides the power to transfer the shareholding in a port company. Any order will be made by the Minister for Transport, Tourism and Sport with the consent of the Minister for Public Expenditure and Reform, as the other current shareholder, and the Minister for the Environment, Community and Local Government.
Section 9 provides a potentially interesting new dynamic to our commercial ports sector. It allows for the local authority chief executive, subject to the consent of the elected members of the council and the Minister for Transport, Tourism and Sport, to consider a divestment of shares in a transferred port company to the private sector. The section ensures continued public ownership of the port through limiting any such disposal to 49% of the shares in the company. This represents a new potential method of funding for future development in these transferred port companies, one that is not currently a feature of the sector.
Section 10 provides for a general ministerial power of direction to the transferred port companies in respect of the national ports policy. The section requires the Minister for Transport, Tourism and Sport to consult both the Minister for the Environment, Community and Local Government and the chief executive of the local authority prior to issuing any such direction. This requirement for consultation addresses a concern the Oireachtas joint committee identified with regard to its potential unilateral use and possible interference in company operations. The section explicitly restricts its use to general policy matters only and cannot be used to direct a company to act in a particular manner in a particular instance.
Sections 11 to 27, inclusive, lay out the administration of the transferred companies under the new local authority shareholding arrangements. It is important to note that the Harbours Acts will continue to apply to any company which transfers under this transfer of shareholding model. As the Harbours Acts contain a number of explicit provisions relating to the ministerial shareholding, these sections require amendment to reflect the fact that the shareholding has transferred. The exercise of these shareholder functions will primarily be one for the chief executive, but the Bill also provides for a number of important oversight functions for the elected members of local authorities.
Section 11 lists the 17 sections of the Harbours Acts that will no longer apply to a transferred company. These sections require an active role for the shareholder in consenting to something. Obviously, as the shareholding has changed, these particular sections can no longer apply and amended versions of these sections are instead included within sections 13 to 27, inclusive. Many of these sections are routine in nature such as section 14 which requires any change to a transferred company’s memorandum and articles of association to be approved by the local authority chief executive. I will instead, therefore, focus on a number of the more substantive sections and also on the role of elected members generally in the oversight of these transferred companies.
Where the transfer of shareholding model is chosen as the transfer method, the company structure remains in place, as it is today. An important consideration in the model is to ensure the appropriate balance between the commercial freedom of the company and democratic oversight. The Bill achieves that balance through providing for a number of specific oversight functions for elected members of a council. First and foremost, section 23 requires the chairperson and CEO of a transferred company to appear before the council, if invited, and account for the administration of the company. Second, section 22 provides that a proposed chairperson of a transferred company shall appear before the elected members prior to his or her formal appointment. This mirrors the current practice of prospective chairpersons appearing before the Joint Committee on Transport and Communications. The Government introduced this practice and it has proved valuable in allowing elected representatives question prospective chairpersons on their vision and ambition for the company. In many ways, the power that will be afforded to local authority members is similar to the power Oireachtas Members have by virtue of their membership of the committee.
Section 19 requires the annual audited accounts of the transferred company accompanied by a report on the year to be laid before the elected members. While ultimately a matter for the relevant local authority, there is an obvious link between the submission of these accounts and the power of elected members to require a chairperson and CEO to appear before the council under section 23. The consent of the elected council will also be required where the disposal of shares in the transferred company to the private sector is envisaged. With regard to board appointments to these transferred companies, I am clear that the improvements to the board appointment process generally must also apply to any transferred company. Section 22, therefore, mirrors the improvements introduced in section 39 to those companies remaining under ministerial shareholding. Directors will be selected through the State board appointment process launched last February. The Bill requires that certain skill sets must be present on the board including maritime transport, financial, legal and commercial skills. The Bill also indicates a further set of skill sets which might be considered for board level representation such as infrastructure planning or environmental management. The local authority chief executive will formally appoint the persons recommended by the Public Appointments Service. The maximum total service of a director will be ten years, which will allow for both the development of board level experience and also provide fresh thinking which is a necessary feature of any board. The central oversight of the Department of Public Expenditure and Reform as regards board fees will continue. The CEO of a transferred company will, as of today, be appointed by the board of the company following consultation with the local authority chief executive. The central oversight function of the Department of Public Expenditure and Reform in respect of the terms and conditions of CEOs will be maintained. These are the key issues addressed in Part 2.
The legislation also provides, however, for a second transfer method within Part 3. This model is called "transfer and dissolution of companies" and outlined in sections 28 to 33, inclusive. These sections are based on existing precedents generally and provide for the dissolution of the company as body corporate and its complete integration within normal local authority structures. The port would be administered as a functional area of the local authority. All employees would transfer, as would all property, assets and liabilities of the company. The legislation provides for the continuation of any harbour and pilotage limits.
Part 5, covering sections 37 to 49, inclusive, comprises technical amendments to the existing Harbours Acts which are being made on foot of submissions made during consultations or on foot of experience gained in the years since the previous amendments. Three important elements to this Part further improve the overall corporate governance culture within the ports sector. Section 39 amends the board appointment process through introducing mandatory skill sets and introducing overall term limits of ten years. Section 40 introduces a new statutory provision regarding the accountability of a chairperson and CEO of a port company to elected representatives. The section requires that the chairperson and CEO appear before the Oireachtas joint committee, if invited to do so, and account for the administration of the port company. Section 42 extends the current prohibition on Deputies, MEPs and Senators serving on the boards of port companies to councillors. This will apply equally to companies whose shareholding remains with the Minister and those where the shareholding transfers to a local authority shareholding model. National ports policy is clear that the boards of port companies must comprise individuals with the necessary skills required of any commercial company. I am legislating for that in sections 22 and 39. There have been instances in the past where councillors serving on port company boards have had to absent themselves from discussions at board meetings and from council discussions on topics due to potential conflicts of interest. When people elect their local representative, they obviously do not want to see his or her contribution to local democracy restricted in such a manner.
As I hope is clear to the House, the Bill is an important step in the development of the commercial ports sector and represents an important contribution to the further devolution of responsibility from central to local government. The changes introduced will enhance the ports’ role as centres of their regional economy, deepen the economic development role envisaged for local authorities and improve the corporate governance and democratic accountability of the sector overall. The ports sector is critical to the nation and the economy. As an island nation, we need to ensure the ports sector is positioned to deliver cost effective and efficient services, irrespective of whether their significance is national or regional. The amendments the Bill proposes in respect of board structures will enhance the corporate performance of ports and ensure they continue to fulfil their vitally important role as facilitators of the economy. During the past year I have had the opportunity to visit and meet the boards of almost all our ports and to appreciate at first hand the necessary and vital contribution they make to the economy and growth within the country. It is frequently understood they make such a contribution to our export economy, but what is less frequently understood is the role they play in respect of imports whereby products such as oil and petroleum, which are vital to the functioning of the economy, are brought in through the ports, with other raw materials.
Value is added to them in the country and then they are exported again. I am very clear that how we support that sector in the future will be an increasingly important part of how the country prospers. The Bill will make an important contribution to the even better governance and corporate leadership of this sector in the years to come. It is for these reasons I commend the Bill to the House.
As always, the Minister is very welcome.
I welcome the Minister and give a broad welcome to the Bill. It will not be opposed by my party at this stage, if at all. Ports and harbours are among our most important pieces of infrastructure with regard to the overall economy, communications and goods inwards and outwards. I speak as someone with the privilege of serving for 16 years as a director of a number of harbour boards in the west and on the River Shannon in particular under various denominations. I was a director of the Limerick harbour board and the Shannon Foynes Port Company, with a number of other local authority members. The prohibition on Deputies, MEPs and Senators serving on boards will now be extended to include councillors and although I know that the chestnut has been debated well, I have very mixed feelings about it. In the 16 years in which I represented County Kerry on the Shannon Estuary, the best informed and least personally biased directors, aside from parochial interests, would have been county councillors. If a board is to be created where members cannot have another interest, it will be very difficult to form any board. If somebody from the business sector is put on, who is to say the person does not have financial arrangements regarding import or export for a particular harbour? It is very difficult to find somebody who would be squeaky clean.
When I was first elected here in 2007, I was followed by a Standards in Public Office, SIPO, request or a complaint about me from a disgruntled person in County Kerry who felt I had over-extended myself by representing the interests of the harbour board on Kerry County Council with regard to a planning matter. For a while I was worried about the complications as I had no axe to grind or anything to gain personally. I suppose the harbour board and the interests of the county council did, to a certain extent, overlap. As a member of both, I felt it was my duty to represent both. I was fortunate to receive a full and positive exoneration by SIPO. I can see the other view also. There is a blanket exclusion of county councillors, notwithstanding what we saw in last night's programme. That exposé asked more questions about RTE than it did of councillors. I heard my colleague, Senator Terry Brennan, making the point that we know and have worked with councillors and they are decent, honourable people. Like every other job in the world, there are aberrations and anomalies, with people doing the wrong thing. We are proud of our councillors and we are proud to be elected by them. I am digressing from the question but the blanket exclusion of county councillors should be considered more seriously.
The Minister has indicated the Bill is not prescriptive but sets out the framework by which statutory instruments can be used. There is a question about that. As the Taoiseach famously asked, does Paddy know everything then? We are voting on the outline of legislation but the devil will be in the detail when the Minister introduces a statutory instrument. What level of control and oversight will we have of this? Will the Minister accept that this should be teased out on a committee level with various parties in order that we could have the main bullet points of what the statutory instrument might entail? I will not exaggerate and say we are creating an enabling Act like Hitler, but we are giving the Minister carte blanche to a certain extent. Fianna Fáil supports the transfer of responsibility for the regional ports and harbours to local authorities. We would like greater detail from the Minister at a later stage. As I stated, we would like a draft statutory instrument to be made available to the joint committee.
I am sure the Minister agrees it is important that councils inheriting responsibility for harbour boards should not be heirs to any dogs tied, as we say in County Kerry. There should not be any debt, as some of these debts are often hidden. It is important that this is done with a clean sheet and not by carrying legacy issues or problems. I am sure the people from the east coast have their views on what are to be designated regional harbours on the east coast. The only ones I am reasonably familiar with on my own side of the coast, apart, naturally, from Shannon, are Cork and Dublin. Shannon, Cork and Dublin are responsible for 80% of all cargo handling in this country. The Shannon Estuary is the biggest bulk cargo handling port in Ireland. It is probably second only to Rotterdam with regard to its natural deep harbour.
I do not want to pre-empt the comments of my colleague from Galway but to a certain extent, its port seems to be losing out. Galway is the only port of consequence north of Kerry on the west coast. Knock Airport proved to be central to the revival of the west and I want to ensure nothing in this Bill will downgrade or make less appealing the facilities in Galway. Designations have a habit of creating their own problems. We have the three major harbours, a raft of important harbours and then smaller harbours. Fenit's facility was transferred to the local authority in County Kerry without much trouble. Has the Minister given sufficient thought to how central Galway's port is to the economy of the west and mid-west?
I could go on at length, but the bottom line is we are giving the Minister the go-ahead at this stage. We wish the Bill well, but we will consider the detail later.
I welcome the Minister to debate the Harbours Bill 2015. As he indicated, thieBill will continue what was Government policy from 1999 to 2011, when 13 of the smaller harbours were transferred to local authority control. The Bill deals with the ports of regional significance, including the ports at Drogheda, Dún Laoghaire, Galway, New Ross and Wicklow. This will bring about the dissolution of the existing port companies and transfer of all assets, liabilities and employees to the relevant local authorities.
Taking into consideration the Government's many reforms of local government, the oversight of these regional ports will now be the responsibility of local government. This devolution of responsibility will allow the ports to continue to develop, as required by the regional economy and in tandem with the regional community. The change in perspective will enrich and enhance their future development and better align the needs of local authorities. For some ports, the requirement that a separate statutory company should oversee and manage the port may no longer be appropriate.
As the Minister stated, as an island, nation we rely on ports for the majority of imports and exports. As agricultural and pharmaceutical industries account for nearly €25 billion exports, it is important that ports are run in an efficient manner.
He said the Department of Transport, Tourism and Sport would provide funding for local authorities in respect of all five companies and that the results of this exercise would inform the model of transfer ultimately chosen for each port. As the Minister said, the Bill is flexible enough to allow for a continuation of the existing company and the transfer of the ministerial shareholding to the local authority, or the dissolution of the existing company and a physical transfer of all assets, liabilities and employees to the local authority. This is dealt with at sections 8 and 9, which I will address with later in my contribution.
In 2013, just over 800 vessels called to the five designated regional ports named in the Bill, in other words, about one every two days for each port. Four of these ports returned a profit in 2013, with the exception of Dún Laoghaire, although it technically no longer operates as a commercial goods transit port. Of the 26 ports in Ireland, only five will now not be in local authority control, that is, Dublin, Cork, Shannon Foynes, Rosslare, which involves Iarnród Éireann, and the port of Waterford, which is actually in County Kilkenny. I remind the Minister of State at the Department of the Environment Community and Local Government, Deputy Coffey, that he is not getting it back.
When the Bill is passed and the amendments made, it is important that proper structures are put in place in order that the executive and members of the local authority can perform due diligence and that the new port authorities, together with the audited accounts, can appear before the local authority members, as the Minister has outlined. It is welcome that the Minister said funding will now be in place to support the five ports because it is important they are not placed under financial strain as these transitions take place. In this regard, I would appreciate it if the Minister could tell the House how much funding is going to be put in place. It is important no financial burden is placed on the local authorities, although section 8 suggests a fairly straightforward transfer, if that is the model that is put in place.
Given the LEOs are in place in each local authority area, it is important the ports work closely with the LEOs to ensure continued economic growth and development in their areas. As they say, all politics is local, and the members of the local authority, in conjunction with the new ports boards, will know exactly what is necessary in order to achieve this.
Section 9 is perhaps the most controversial section, in that up to 49% of the shares may be privatised. In that regard, who would value the shareholdings of the ports? What rights would the new shareholders have in regard to properties of the ports? We must remember that Aer Lingus and Eircom were State companies that were privatised. There is a fear that if we go down this road, we might come to a point where we lose control of the ports.
I welcome the Bill. It is important that we continue to develop ports. As an island nation, many of our exports and imports have to come through the ports and we do not yet have a tunnel to Europe or Britain, unless the Minister is going to make an announcement about that in the near future, given the economic upturn. Everything has to come in through the ports. It is important we do not keep the pressure too high on the main ports of Dublin, Cork and Shannon-Foynes and that the regions are also looked after. I welcome the Bill. I ask the Minister to give us more detail in regard to section 9, which is the most important section in that some areas may be privatised.
I welcome the Minister. It has been of interest to see how policy in this area has developed. When I served on the Culliton committee in the early 1980s, the issue then was to reproduce the efficiency of Larne at ports in the State and I think that was substantially accomplished. Competition between ports had an impact then and a substantial impact on the lack of efficiency at Dublin Port was achieved by competition from Waterford when the containers went there and also from ports such as Drogheda.
The scope for inter-port competition is limited, as the Competition Authority said in its report, and therefore we have to look at competition within ports, or intra-port competition. The issues raised by the Competition Authority should be addressed in this legislation, in particular the allocation of leases on terminals within Dublin Port and making sure there are enough stevedores to ensure competition. It seems that, yet again, the Competition Authority's views have been forgotten by the other Ministers around the Cabinet table and the same happened last week in regard to the views on the conveyancing monopoly. Competition is essential in this island economy. Ministers should liaise with the Competition Authority and should take on board what I consider an excellent and impressive report by its economist, Ciarán Aylward, who also made a presentation to TCD students.
If competition between ports is limited and we do not look at restrictive practices within ports, particularly within Dublin Port, we are not doing any great favours to the competitiveness of Ireland as a country. In a minority report to the Murphy report on ports which was commissioned by the then Minister, Mr. Michael Woods, I recommended that we run ports as a business. That is what we want. Ports need customers, namely, the shipping companies and the shippers on the land side. Where they do not have them, as Senator Pat O'Neill has just said about Dún Laoghaire, it is a ghastly prospect because a lot of investment has gone in but it is sitting there, doing nothing. It is very sad to see the Dún Laoghaire Harbour front in its current state, with the facilities built for Sealink, which are no longer wanted.
I am a little nervous about the local authority model. The McLoughlin report which is gathering dust in the Custom House showed substantial excess managerial layers in local government. I do not know if we will improve the productivity of ports by transferring them to the local authorities. I do not know many people who would come in here to say local authorities are so efficient that we should do more things through them. Given the Irish Water example, they might be thinking the opposite, namely, that we should not let the local authorities determine their definition of productivity because, when it is made explicit, as with the water charges, we can get some appalling results.
We need to look at the first recommendation of the Competition Authority on the leasing and licensing of the Dublin lo-lo terminals. The Competition Authority stated this was a matter for the Department of Transport, Tourism and Sport in the first instance and in November 2013 the Department was asked for its view on the leasing and licensing of Dublin lo-lo terminals as an essential part of improving the efficiency of ports. The second recommendation concerned stevedore licensing. The Competition Authority stated that, for Dublin Port, at least two new general stevedore licences should be issued by the Dublin Port company, one on the north side and one on the south of side of the port, and it recommended consideration of this by the Department of Transport, Tourism and Sport. We have to address these issues.
We need more analysis of what has been happening in the south east, given that the port in Arklow is virtually shut and Wicklow Port deals with a very small number of vessels, as the Minister said. What is the future of Rosslare Harbour? There is a secret report on it, and the Minister referred to some correspondence that is on the website of the Competition Authority. Has Iarnród Éireann an interest in it any longer? It removed the railway tracks and the railway now ends about a half mile before the port. If passengers try to get a passenger train through Rosslare to get on the ferry, they could face a walk of some hundreds of yards in the rain.
I do not know why. We got a grant from the European Union. The buses still use the terminal but the railway mysteriously left. There is no longer any rail connection between Waterford and Rosslare Harbour.
A huge facility was put in at Belview, which is in County Kilkenny, as Senator Pat O’Neill has reminded us. We accept that point but has it lived up to expectations? Although it has been recovering recently, why did traffic fall? Is there something in the management or in the way the port in Waterford sells its services to customers in the freight forwarding sector? The high hopes for Belview and the Port of Waterford have not been realised. Drogheda and New Ross are both on the border between counties - Drogheda between County Louth and County Meath and New Ross between County Kilkenny and County Wexford - therefore, which local authority do we mean? I am inclined to look askance at the idea of letting any local authority run those ports. Is local authority the model that gives the least cost result? I share people’s misgivings about the position in Galway too. Is local government in Galway so efficient in any legendary sense that it should take over a harbour which has been doing quite well, retaining a good oil business from Whitegate? The harbour had to do the numbers on whether the oil went from Whitegate to Galway by road, rail or ship and managed to get the best contract. Will that kind of efficiency be lost if Galway Harbour goes into the local authority structure?
It is good that the very substantial loss of business from the ports in the Republic of Ireland to Larne has been won back, not by restrictive practices but by making ports more efficient. I thank the harbour in Larne and its manager, Denis Galway, for showing us how to do that. We learned the lessons and have retrieved a substantial amount of business that used to go over the Border to Larne, Warrenpoint and Belfast. Let us not eliminate the prospect of competition within Dublin Port and the remaining competition, which is probably small at this stage, as stated by Ciarán Aylward of the Competition and Consumer Protection Commission. He adds that we must improve competition within ports. When there was some mining in Kilkenny, there was a choice to go to either Cork or Waterford Ports and Cork won that competition.
I would like to see a more commercial emphasis on keeping pressure on this sector. As the Minister said, in serving an export-orientated island economy, we need ports performing at the highest level. I hope the Department and the Competition and Consumer Protection Commission will combine in their efforts to extract monopolistic rents where they still occur in the sector. Let us see the numbers to show that the harbours in Galway and Drogheda would be better run by the local authority than by a separate port company, facing competition. If they are not efficient, they lose the business. Is that not the test rather than whether we see them as part of local authorities?
I am filling in for my colleague, Senator John Kelly, who cannot be here today.
I welcome the Bill and note that it will further enhance the corporate governance structures of all port companies, that the oversight functions make sense and are useful and that the transfers support the Government forums in the area of local government through enhancing the role of the local authority in regional economic development. That is a welcome step and demonstrates the Minister’s commitment in this regard, but it also demonstrates a common sense approach to accountability, which is very welcome.
I have found the contributions interesting and look forward to the next Stages of the Bill.
I echo the sentiments of many Senators that the harbours are a very important part of coastal communities, providing recreation and commerce, and as a major asset in attracting tourism, especially for an island. They can be engines for growth and a sustainable source of good employment. Access to the sea brings many opportunities, but it also brings the challenges of maintaining and growing that opportunity. It is unfortunate that some harbours have gone to rack and ruin which has a domino effect on some of our local economies. It is important that we do all we can to enhance and support the potential of harbours, particularly in their efforts to support growth and employment opportunities. For that reason, a harbour policy must have at its core a drive to maximise the potential of the harbours to support and encourage growth and job creation and, most importantly, to do so in a sustainable and environmentally sound way which incorporates the community in important decision-making.
The Bill is taking a step in the right direction. The Minister mentioned that oversight of these regionally significant ports should be devolved to the most appropriate level of government, which is the local authority. One concern raised by my colleague, Deputy Dessie Ellis, in the Dáil was that the Bill can be seen to be empowering local authority chief executive officers and less so the local councillors. The CEO is not elected and that person can often be at odds with the elected officials in local authorities who derive their mandate from the local community in democratic elections.
In what respect are we devolving oversight to the local authority? How much will go to the CEO? What is the balance between the councillors and the CEO? Studies by the Organisation for Economic Co-operation and Development, OECD, show that councils are very efficient at managing and overseeing local services because of their local know-how and expertise to complete the job at hand. They have the support of the public. It does not always work perfectly but local authorities are more accountable than those in corporate spheres.
The Minister has said the Bill tries to balance the commercial needs with democratic oversight. That needs to happen and it is a fine line to try to do this. Democratic oversight is an important ingredient in finding success in the management of the harbours but it also ensures success benefits the wider community which will last for generations. We need to get the balance right and make sure there is a greater level of democratic accountability.
We are told that the controls will be handed over to the local authority, but can the Minister give us a picture of that in reality? Will control rest primarily with new bodies established by the CEOs of the local authorities? What accountability will there be to councillors as opposed to the CEO? Will there be adequate consultation on the directors nominated to each harbour? The Minister said the proposed chairperson will appear before members prior to formal appointment, but is that just to question them? Is that the only role they may have? Concerns were raised in the other House about the board’s ability to sell off assets without consideration or oversight by local authorities. Could this lead to some damaging sell-offs that may be against the wishes of the local community? I welcome the role of the local authority members in overseeing the accounts of the harbour companies under section 19. I hope the link the Minister mentioned between this and section 23 is real and the councillors can employ this. Local authority members should be allowed to debate the accounts and have oversight of the audits of the harbour company. What role will local authorities have in respect of performance reviews, given their role in ensuring the provision of quality services and value for public money?
We support the legislation because it makes the harbour structure more democratic and accountable, but I would like to hear the Minister’s response to some of the questions raised. He probably responded to them in the other House but I would like them to be included in the Official Report of the debate in this House. I look forward to debating the Bill further.
This Bill came about as a review of the ports policy which began in 2010 and led to the national ports policy 2013.
As Senator Ned O'Sullivan stated, many people underestimate and do not realise the importance of ports to the country. The Competition Authority estimates that ports handle approximately 84% of the volume of all merchandise and trade and 62% in terms of value. As an island nation, ports are critical to our ability to trade throughout the world.
The purpose of the Bill is to allow for the transfer by ministerial order of control of the five ports of regional significance, Drogheda, Dún Laoghaire, Galway, New Ross and Wicklow to local authority-led government structures. Some people will cringe when they hear this. I am aware that Senator Sean D. Barrett has reservations in this regard. However, I note, as did Senator Kathryn Reilly, that an important consideration in the model is to ensure the appropriate balance between the commercial freedom of the company and democratic oversight. This is a key element of the Bill. It is important that the commercial entity be allowed to exercise freedom also and that there is democratic oversight.
As someone whose grandfather was a sea captain who plied his trade on a three-masted schooner from Waterford to Wales and as a person who worked in the Port of Waterford for over 20 years, I have a love of ports and port activity in Ireland and worldwide. To answer Senator SEan D. Barrett's question as to why the Port of Waterford thrived since it moved to Belview, there are a number of reasons for this. Having witnessed the storm damage of recent days, I recall that storm damage once brought down the main crane in the Port of Waterford. There was also the demise of the major customer on which the port was probably over-dependent, namely, Bell Lines. These were the main reasons for the lack of growth of the port.
I am happy to say that under the new board and management, things are improving significantly. There is no reason this should not be the case. It is a port with a load-on, load-off facility and where trains can go right in under the gantries. In respect of trains however, CIE abdicated its responsibility in regard to rail transport and just did not want to know about the port 20 years ago. I do not know if the situation is any different now. It has not been competitive in its rates. At that time the Port of Waterford was served by three or four trains from Dublin at weekends. Trains also came from Belfast, from Ballina - with freight from the Asahi plant - and from all over the country. Now such traffic is negligible, mainly because CIE was uncompetitive and abandoned it. That is why we see so much heavy goods traffic on our roads. This must be rethought in the context of a transport policy for the country.
I agree with Senator Ned O'Sullivan. I abhor the blanket exclusion of councillors because, over the years, I have known many good councillors who were excellent members of port companies or harbour commissions. Now that these ports are coming under the local authority umbrella, councillors should be included on the boards. What is the reason for excluding them? There can be no conflicts of interest in that regard.
In the context of local authorities, section 23 of the Bill requires that the chairperson and chief executive of the transferred company can appear before the elected council, if invited, to account for the administration of the company. I am of the view that we should not include the words "if invited" and that these individuals should come in each year to report to the relevant local authority. If the local authority is taking over the port, why should there not be an annual report from the chief executive of the port authority? We need to reconsider the use of the phrase "if invited" in the context of our discussion on the later Stages of this Bill. It should be a requirement that they report to the council. If we are giving control to the local authorities, why not give them the power to question the report. If councillors are being excluded totally from the boards, surely they should have the facility to question the chairman and chief executive of these ports each year. There is no point in excluding the councillors totally.
In general, I welcome the Bill which has come about as a result of the review of port policy. It is a step in the right direction, but we will need to monitor the model on a regular basis to see how well it works. I am sure we will have many teething problems before these companies are set up under the local authorities. I welcome the Bill but I have reservations in regard to the total exclusion of councillors. If they are to be excluded from these bodies, then the local authorities' oversight and that of the chairmen and chief executives should be extended to those members each year.
Cuirim fáilte roimh an Aire. I welcome the Bill in so far as it provides for democratic oversight of the running of harbours. It is important there be accountability for such assets of the State to the State. However, like Senators Maurice Cummins and Ned O'Sullivan, I have reservations about the exclusion of local councillors - the people on the ground who know exactly what is going on - from membership of the boards. I can understand why Oireachtas Members or Members of the European Parliament might be excluded, but I cannot for the life of me understand why we would want to exclude the people who live locally and who have an interest in developing their local harbours. I am delighted the Bill provides that any transfer will involve discussions with the relevant trade unions. That is a positive step which will make the transfer somewhat easier.
In regard to Dún Laoghaire Harbour, I have worked and lived adjacent to Dún Laoghaire for over 20 years and have watched the direction the port has taken and seen the loss of lines to and from Britain. The HSS Stena Explorer has gone and that was a serious knock for the port. However, I have watched Dún Laoghaire Harbour develop a yachting industry. I believe that if these port companies were left to their own devices, they would respond and find a way forward for themselves. I was born and reared within sight of Galway Port and spent many long summer days there. Notwithstanding that this port lost the trade of Tynagh Mines several years ago, it managed to move its entire oil storage system from the centre of the city out onto a little island just off the harbour. There is also a massive coal import industry through Galway Port. Again, left to its own devices, I believe Galway Port would probably respond better than it will under the cumbersome management of a local authority.
I agree with Senator Sean D. Barrett that local authorities are not exactly known for their dynamic, market-focused approach towards driving issues forward. I am not sure that is the right way forward. I agree with Senator Maurice Cummins that the annual report should be part of the reporting mechanism for the harbour boards locally. I am somewhat concerned by the level of authority we are ceding to the chief executive officers of local authorities.
I accept what the Minister said that this is under the full sight of the local authority, but it strikes me that if we cannot have a member of the local authority on the board as a voting member, surely we should have a nominee on the board who is there to represent and report back to the local authority first-hand information rather than second-hand information.
Section 13(3) deals with the harbour master. For some reason, we seem to be sidelining the harbour master. Perhaps I am wrong and, if so, the Minister might correct me but it appears the harbour master's attendance at board meetings is at the discretion of the board. Anything he or she may have to say is at the discretion of board. The harbour master does not have a right to cast a vote at a board meeting. Surely, the harbour master is the person who knows what is happening on the ground and, like a chief executive officer in a major company, should have the right to cast a vote at any meetings. That is all I am willing to say on it. Overall, I welcome the move to bring some form of democratic accountability to harbours. Those are some of my concerns.
I welcome Deputy Joe Carey and his guests to the Visitors Gallery.
I welcome the Minister. The importance of ports and harbours cannot be over-emphasised, as has been mentioned by many of my colleagues. Ports which are not a requirement as commercial ports for the area in which they are located should be developed into ports of recreation and amenity. A river flowing through a town should enhance that town rather than, as in some instances, detract from it, perhaps due to a lack of investment in the hinterland of the river. To be parochial, in Dundalk's case, very little if any of the limited amount of cargo coming through the port is actually for Dundalk or its immediate hinterland. This is already well served by the ports of Drogheda and Greenore. Incidentally, I began my working life at the very port which contributes significantly to the economy of the entire area and the Cooley peninsula. It is doubtful if trade through Dundalk could meet the cost of dredging the port without Government assistance. This dredging has to take place on a fairly regular basis as far as ports go. In the event of a transfer to Louth County Council, what body will shoulder any trading deficit or the cost of dredging the port when the need arises?
I, too, disagree with elected members of county councils being excluded from directorships. I am not convinced this is a good idea. I refer to the experience of elected members, and I am familiar with two or three from my 25 years on Louth County Council. One, in particular, although not of my political persuasion, could run any port in this country given his tremendous experience and I do not say this lightly. To exclude a man of that calibre and with that experience from any board is wrong.
I could not countenance costs being the responsibility of Louth County Council which has difficulty enough in balancing its budget at present, but I admit I am not fully aware of the detail of this transfer. However, there are a number of scenarios which will require to be addressed before the transfer actually takes place. What was the recent experience of Dublin Port when it was charged with the running of the local Dundalk Port?
There is a Latin motto over the door of Ballymascanlon hotel, Festina Lente. Latin scholars could probably translate it. It means, hasten slowly. We should apply that motto to the transfer of Dundalk Port to Louth County Council.
I welcome the Minister. In general, an updating of ports policy is welcome and on this basis, I welcome the legislation. However, the Minister will be aware that politicians in the west have had particular difficulty with the legislation, specifically the decision which still remains active, to place Galway on the lowest rung of ports in the country. I, therefore, very much welcome the Minister's decision not to sign any commencement order until planning decisions are finalised in Galway and elsewhere. However, while this is welcome, I wish to bring some of the concerns of the people in Galway to the Minister's attention. They and I would be interested to know the commercial or economic reasons for the proposed transfer of ownership. They are of the view that there is little or no benefit to such a transfer. I would be interested to hear the Minister's view on that issue. There is also a general concern that for a city of its size and potential and for a port serving a vast area of the coastline, the absence of a modern national port is unacceptable. If this comes to pass, as outlined, there will be no national port from Foynes to Donegal and, as stated, in the other House, Foynes is nearer to Cork than it is to Galway.
Access to TEN-T funding was mentioned in previous debates. In the Dáil the Minister of State was at pains to point out that Galway or a local authority port would still be eligible. However, the legislation seems to have Drogheda, Dún Laoghaire and Galway remaining as limited companies with their shareholding held by the CEO of the local authority. Only the first two seem to have been included with Dublin Port as eligible for TEN-T funding. It would, therefore, seem to those involved that Galway has been excluded and is, therefore, the only commercial port of its size in the country to be excluded from TEN-T funding. The Minister will be aware that this can amount to up to 20% of capital expenditure for the proposed extension of Galway Port. What reassurance can the Minister offer the people of Galway that they will not be disadvantaged when seeking funding?
While the Minister's decision not to sign a commencement order is welcome, the issue still remains outstanding pending the expansion of Galway Port. My view is that the port of Galway should have been afforded the same status as Waterford and Rosslare Ports, that is, tier 2 status. The decision would appear to have been taken without any regard to future capacity and made on the present tonnage and capacity. Galway needs to be a national port and eligible for TEN-T funding. The Minister should be aware that the effect of not being a tier 1 or a tier 2 port will make it extremely difficult to attract investment funds for the port's extension as potential investors in the sector will look to national ports.
I see no provision in the Bill setting out the criteria for any port to be upgraded to a tier 1 or a tier 2 port. If this were in place, the people of Galway could see what is required in order to benefit from an upgrading. It would bring much clarity to the situation. Will the Minister look again at the legislation in this regard to see whether it would be possible to insert a section on what the requirements would be to move between designations? Galway Port has the potential to become a major employer and a major source of revenue, not only for Galway but for the western region. This is not a flight of fancy; it is a fact. There is significant cruise ship business going untapped. To attract this investment, there is a need for an upgrade of the port and it is vital that it achieves tier 2 status to do this. The current proposal has the potential to hamstring any future development by making investment in the port unattractive. I urge the Minister to examine my constructive suggestion and to include a provision to enable a port to upgrade if it meets these suitable criteria. Again, I thank the Minister for his decision to postpone the signing of the commencement order.
I thank all the Senators for their contributions. They managed to cover the full breadth of the Bill in the different matters they raised.
Senators Ned O'Sullivan, Pat O'Neill, Sean D. Barrett, Máiría Cahill, Kathryn Reilly, Maurice Cummins, Gerard P. Craughwell, Terry Brennan and Hildegarde Naughton raised important matters connected with the Bill. I will address some of the common themes raised with me and then possibly address some of the specific matters raised by Senators. I thank Members for offering broad support for the Bill.
A core theme that emerged in the points made by colleagues was the role of councillors in local authorities. There are two ways by which a transfer can take place. The first is complete dissolution, by which method the company is merged with the local authority its entirety. The concerns raised by Senators are more likely to emerge in the second model which is referred to in the Bill as a transfer of shareholding. It means that the company will be transferred to the local authority, with the key difference being the shareholding will be held by the local authority as opposed to the Minister of the day. In that context, I respectfully suggest the potential in the past for a perceived conflict of interest, let alone an actual conflict of interest, could become even bigger. I will give an example of what I am referring to.
Let us take a scenario in which the accounts of the company are being laid in front of the local authority, as required. This involves their being laid in front of a body of which a director of the company issuing the accounts could be a member. The director could find himself or herself in a position where he or she might not be able to engage in detail on the accounts, but questions would be raised concerning whether it was appropriate for accounts to be laid in front of the local authority of which the director was a member.
What about the CEO?
The CEO would not be a member of the local authority.
What about the manager of the local authority?
He or she would not be an elected member of the local authority. Of course, the flip side is that the members of the local authority will have a far larger role in the scrutiny of the accounts of the company or the questioning of the board or officers of the company than in the past.
They will not be able to give a direction.
That is a very fair point. The Senator is right that they will not be able to give a direction to the company because, as he can appreciate, it will still exist under company law and be obliged to make decisions on what is in its best commercial interests. Any member of the local authority will have the ability to engage on any matter relevant to the port in a more direct way than they can at present. If I look at the very good example Senator Maurice Cummins offered in respect of how they will be able to engage with the chairman or CEO of the port and harbour company-----
If they are invited.
Why would they not want to invite them?
Why not make it part of the Bill?
It is because I believe in the autonomy-----
I am sorry, the Leader, Senator Gerard P. Craughwell and other colleagues-----
(Interruptions).
I am very happy to respond to such helpful questions.
If colleagues wish to table amendments on Committee Stage, I am sure we could facilitate them, but there are time restraints. I ask Members to let the Minister respond to the comments that have been made on Second Stage.
The very fair question was raised as to why I was giving them the ability to invite people as opposed to compelling or requiring them to do so. The answer is I have great faith in the ability of members of local authorities to exercise that power. We are going to be in a situation where a local authority will be able to quiz the chairman of the board of a port or harbour. If I am conferring that power on it, which represents a very significant change in its relationship with a port, is it not enough for me to confer it without requiring it to exercise it? I would expect local authorities to exercise the power far more regularly than once a year.
On the different situations that could develop, an aspect that perhaps was not touched on enough on Second Stage - it can be dealt with at a later point; Senators understandably and correctly focused on the steps we were taking towards democratic accountability through the auspices of the local authority - was the great benefit to be gained in proper planning and the integration of a port into the local authority unit and community in which it was located. I look at the issue raised by Senator Hildegarde Naughton and other colleagues about the port in Galway and pose the question as to whether it would be a more effective use of resources and a better way of handling the future of the port to recognise its needs and look at how it could be integrated into the overall development of the city and county through the local authority. It appears obvious that local authorities in integrating harbours and ports into the decisions they will make will provide opportunities for joined-up government and the integrated planning about which many of us speak in other areas of economic and public life.
On democratic accountability, I suggest to Senators that the wins and benefits being offered to all members of local authorities in terms of their ability to exercise their democratic mandate comprehensively outweigh any concern they might have about individual members losing their ability to raise matters with a board. I contend that given the strengthened powers local authority assemblies will have, it makes it even more inappropriate for somebody to be on a board of a body that will now be accountable to the body to which he or she was elected - the local authority.
Senator Ned O'Sullivan asked about what could happen in the case of hidden debts. This is the very reason there will be a due diligence process in which the local authorities and the harbour and port companies will participate in order that these matters can be identified and dealt with before a transfer takes place. Senator Pat O'Neill has made the point that this is a continuation of port policy. I listened to what Senator Terry Brennan said to me. He said I should "make haste slowly." I respectfully make the point that this is the continuation of a policy published in 2013 and that we are moving at a deliberate pace rather than being hasty.
Senator Pat O'Neill's main substantive point was about the potential privatisation of ports. The Bill makes it very clear that the ability to dispose of a share extends only to a maximum figure of 49%. There are two contingencies in this respect which I might explore further with Members on Committee Stage. As things stand, with the potential exception of two developments taking place that would require ministerial consent, 51% of the company must remain in public ownership. This is consistent with what I have said about airports also, that assets such as this, subject to a Government changing its mind - any future Government will have this ability - should remain in majority State ownership. Due to the development for which we have provided, they will be able to be maintained in State ownership and have the ability to raise funding through the issuing of equity.
That is laid out in some detail in the sections, on which we will go into detail on Committee Stage.
In response to the point Senator Sean D. Barrett put to me, as he can appreciate - we can go into the matter in more detail later - the sections of the Competition Authority's report, in particular on Dublin Port, deal with competition within it. In fairness, the Senator did acknowledge this. The Bill is focused primarily on ports of regional significance, as opposed to competition within a port of national significance, namely, Dublin Port. I have written to the Competition Authority and believe my letter is on my Department's website. We can use it as we get into the Bill in more detail as it passes through the House. I agree that there is a need for more competition within national ports. An existing challenge is to recognise legal ownership and existing rights. I wish to see competition increased.
Senator Sean D. Barrett also made a point about how we could maintain commercial focus. Both he and Senator Gerard P. Craughwell inquired as to whether local authorities really had the reputation for efficiency that others alleged they had. My own honest analysis in dealing with this matter is that we will see a greater impetus for regional development from local authorities in dealing with ports of regional significance. In terms of how the commercial focus and ethos will be maintained, in the method of complete dissolution commercial responsibility for ports and the commercial consequences will sit directly with the local authorities, which of itself will create the impetus for at least the maintenance of a commercial ethos. On those ports that we will transfer as a corporate entity, a company, the board of directors will still be in place and they will continue to generate and drive the commercial ethos. When I visit ports, as I do on a regular basis, I am confident that there is definitely a commercial ethos and I do not think the Bill contains anything that will change the position.
Senator Máiría Cahill welcomed the oversight function within the Bill, which is an important development, as it it something we seek to address. I think I have addressed most of the issues raised by Senator Kathryn Reilly. She made a point about the role of the local authority chief executive vis-à-vis the role of local authority members. The Bill makes reference to both. It is fair to say though that because the structure of local government and the functions of the executive and members are not my responsibility – they are the responsibility of the Minister for the Environment, Community and Local Government, Deputy Alan Kelly – I have integrated the governance structures of the ports, depending on how they are integrated into the existing ways in which local authorities are organised, but I still contend strongly that the change will result in significantly more powers for local authority members than is the case.
I have touched on some of the points raised by Senator Maurice Cummins on the role of members. I look forward to debating the issue further in due course.
In response to Senators Gerard P. Craughwell and Hildegarde Naughton, I will handle both of their contributions together because each of them spoke about the future of Galway Port. I emphasise one point very strongly to each of them and thank them for raising the issue in the Seanad. Each of them mentioned trans-European transport network, TEN-T, funding and its importance. The definition of how ports can access TEN-T funding is completely independent of the Bill. We have ports that are integrated into local authorities the length and breadth of Europe that can access TEN-T funding. The challenge is that TEN-T funding is determined by the European Union which has a requirement "that ports have to handle 0.1% of total European Union freight or passenger numbers". Regardless of the designation I offer ports, that is the criterion they must meet. As is the case with any criterion, what the Commission has done is used an historical base in looking at the performance of various ports in meeting the criteria. One point I must emphasise to each of the Senators is that the ability to access TEN-T funding is not affected by the designation of ports in the Bill. One either accesses TEN-T funding or one does not and it is determined by the European Commission. At times, my Department and I offer support to ports all over the country to help them to do this.
The decision I announced in the Dáil earlier – as the Acting Chairman is ringing a bell behind me I will conclude promptly – on the 18 month period before the Minister of the day will sign the commencement order, was made to give space to allow all matters relating to due diligence and transfer to be addressed. On the planning process, that is a matter completely independent of me as Minister. I absolutely respect the role of An Bord Pleanála in making decisions on this matter, as it will, and also that it will take whatever amount of time it needs to make a decision. It is a matter for it to decide and it will make the decision independently of me.
I heard what Senator Terry Brennan said about Louth County Council. He put a point to me about what would happen with a trading deficit and the answer is that it depends primarily on how the company would be transferred. If it is transferred through the shareholding transfer method, in other words, it is an existing company, and maintains its existence as a company, it will still be a matter for the board of directors of the company. If the port is completely integrated into or amalgamated with the local authority, it will be a matter for the local authority.
On the question of dredging, a need in all ports - I should have referred to the matter when responding to Senator Pat O’Neill - Government policy is that we cannot and do not make funding available to meet the infrastructural needs of ports or harbours. It is a matter for them. It is for the local authority to fund the future dredging of any port, as is the case at present.
I have covered nearly all of the issues Senators put to me. I thank them for their broad support for the Bill and look forward to having the opportunity to work with the House to, I hope, allow its passage.
Question put and agreed to.
When is it proposed to take Committee Stage?
Next Wednesday.
Committee Stage ordered for Wednesday, 15 December 2015.