Amendments Nos. 2, 3 and 35 are related and may be discussed together, by agreement. Is that agreed? Agreed.
Harbours Bill 2015: Committee Stage
I move amendment No. 2:
In page 8, lines 8 and 9, to delete “by order provide that, without the need for any instrument of transfer or other form of assignment” and substitute the following:
“not less than one year after the publication of an independent cost-benefit analysis of all options for the future of a port”.
As always, I welcome the Minister for Transport, Tourism and Sport. On this occasion, we are here to discuss harbours. It is not the first time that both of us have discussed harbours, we have both done so in our previous existences in a place of higher education. He is welcome and it is an honour to be here with him to discuss these issues.
Looking at the harbours scene, as the Minister said on the previous occasion, the sector peaked at handling 54 million tonnes in 2007. Within two years its tonnage had decreased to 42 million. It has increased again to 47 million, which is 88% of peak tonnage. I agree with the Minister that the sector is almost back at peak tonnage. It is in that context that I propose the first of my amendments. We should deliberate long and hard as to which configuration of ports is best for the economy of the country. We can either put them into local authorities, which is a feature of this legislation, we can run them on a group basis or we can see whether some of them have a future, as my amendment states, as independent entities.
I hope to illustrate that ports are a very good business. I am also concerned about local authorities taking over ports. The cause of my concern is Irish Water and I do not say that in an underhand way. Irish Water exposed problems which the McLoughlin report had stated earlier were inherent with the process of government in this country. The McLoughlin report recommended that the number of county and city managers should be reduced from 34 to 24, representing a reduction of 30%, that the number of directors of services should be reduced by at least 20%, from 240 to 190, and that the number of senior and middle managers should be reduced by 15%. It also recommended that: the number of corporate service staff should be reduced by 10%; the number of planning staff should be reduced by 10%; the number of roads staff should be reduced by 250; and that there should be a 15% reduction in staffing and local government arrangements in Dublin and Cork. I have outlined these numbers because I am not convinced that our local authorities are models of efficiency and that moving ports into them is beneficial for the economy.
Let us look at the specifics of the first amendment that is in my name. In terms of the Bill as proposed, my amendment states, "In page 8, lines 8 and 9, to delete “by order provide that, without the need for any instrument of transfer or other form of assignment”, which seeks to ensure that the ownership of all of the shares and share capital of the company concerned can be moved.
Amendment No. 3 in my name seeks the deletion of lines 15 to 17 which read, "No consideration shall be payable by the local authority specified in an order made under this section in respect of the shares vested in that local authority under this section". The reason I use the words "without the need for any instrument of transfer" is because what is proposed is almost casual. I know that is not the way the Minister operates and is not what he intended it to be but it almost seems as if we can just do this at the stroke of a pen. Does it make economic sense? The Minister is running the risk of encountering the problem the McLoughlin report identified in respect of layers of management at local government level. I am unaware that those concerns from July 2010 have been addressed.
We have a business which, as the Minister said on Second Stage, is highly competitive. In the Northern Ireland market, Warrenpoint has taken over as the second port from Larne. As the Minister will be aware, Dublin Port has gained a huge market share from all of the other ports, including ports in Northern Ireland. When one considers the material provided for us by the Oireachtas Library and Research Service one can see that Dublin Port made a profit of €26 million in 2013, Cork made a profit of €1.7 million, Shannon Foynes made a profit of €2.8 million, Waterford has improved by making a profit of €1.5 million, and Rosslare made a profit of over €1 million. These harbours made a combined profit of over €33 million which shows that they are highly successful businesses Therefore, I would not make the casual assumption that they should be moved to local authority control or that local authorities represent a more efficient kind of model for running harbours. It takes a specific kind of skill to relate to one's customers and competition also keeps harbours efficient. As I mentioned on the last day, we are at fault because we have not implemented the Competition Authority's report on competing terminals, more people doing stevedoring and having shorter leases on facilities at ports. There is a job to do at those ports to make them efficient.
There is a serious question to be asked on whether it is correct to place an emphasis on transferring them to local authorities in view of what I have outlined. Obviously, I make an advocacy case for them here. We need to sit down and see what is the best option for these ports. That is why I mentioned in amendment No. 2 "an independent cost-benefit analysis of all options for the future of a port”. The ports are good businesses which I shall go through individually and they have a high amount of turnover per staff employed. They also have, as a group, a combined profit of €33 million. As the Minister said on the last day, as much as €26 million of that combined profit was generated by Dublin Port. These businesses compete internationally and have a track record. Therefore, an assumption that they could be run better by local authorities is one which would require to be proved.
Amendments Nos. 2, 3 and 35 have been grouped together. I tabled amendment No. 3 because I am concerned about what will happen if these assets are transferred. My amendment seeks the deletion of lines 15 to 17, on page 8, "No consideration shall be payable by the local authority" in respect of those assets. I contend that they are valuable assets. Perhaps they can be sold to somebody else if a local authority does not want to pay for them. They are businesses which are up and running. That is the caveat that I have about amendment No. 3.
I shall move on to discussing amendment No. 35, which relates to section 30. I have elucidated the same principle in amendment No. 35 which states, "following published evaluation of the productivity both of the port company and the local authority concerned”.
Is the port company operating to full productivity? Has it left un-implemented the recommendations of the Competition Authority? Is the local authority operating at full productivity? We do not assume that the takeover by the local authority of a port will in fact give us the desirable result. The relevant section is section 30(1), which states:
A local authority specified in an order made under section 28 shall, on the company transfer and dissolution day, accept into its employment each person who immediately before that day was a member of staff of the dissolved company concerned.
That is almost negating any possibility of productivity gain without investigating the two factors mentioned in amendment No. 35.
The other concern I have is referred to in the documentation prepared by the Library and Research Service. Where county councils run ports, their level of traffic is far lower than at the ports listed in Schedule 1. The list includes the ports in Drogheda, Dún Laoghaire, which is a special case, Galway, New Ross and Wicklow. Where local authorities have taken over ports, one could say they had gone so far down in the market that they could not be reversed. However, looking through the list that the Library and Research Service prepared for us, it seems that up to seven of them have no ships calling at all. Arklow, which is under the control of Wicklow County Council, has nine. Wicklow Port, which has a separate authority, had 70 ships in the past year. Is the running of ports by local authorities a good idea? Granted, some of them had gone very far down the list of busiest ports, and that was the reason they were transferred. However, would it amount to death for ports that might otherwise have recovered as the economy recovers? Certainly, I have looked through all the zeros on the list as well as the very small numbers for the ports at Ballyshannon, Annagassan, Baltimore, Buncrana, the River Moy, Westport and Wexford Harbour. Compared to what the independent port companies have been doing, there is not much evidence, going on past record, of local authorities being able to develop ports. The only one I could find was Youghal, which had 73 ships per year. All the rest are way out of line. Some places are serving four or five ships per year. That does not equate to commercial business for a port. Is it the wrong model, then, to allow local authorities to take over ports? I maintain that such ports are feasible, making money, attracting ships and, as the Minister said the last day, reviving themselves as the economy pulls out of the recession.
I am making the case in my three amendments that ports are a specialised business. They are disciplined by their customers. The idea of local authorities taking them over, particularly in light of the McLaughlin review and the experience of Irish Water, is not a precedent that commends itself to me.
I am pleased that the Minister is considering these great issues, but I wonder whether the speed of takeover by local authorities of the ports listed in schedule 1 is too great. Are there alternative models that should be considered? Should a further cost-benefit analysis be done?
Cuirim fáilte roimh an Aire. It is great to have the Bill before the House. I thank Senator Sean D. Barrett for tabling these amendments. They tie in with my concerns about Galway Harbour. I have grave concern about the Minister's recommendation that Galway Harbour come within the remit of Galway City Council.
I am familiar with how councils work. I was a member of Galway County Council. To say they have a mixed bag of duties is an understatement. I had grave concerns about the local enterprise offices being within their remit. At issue is a particular set of skills and expertise. I want to know the Minister's reasoning to justify placing a harbour such as Galway Harbour within the remit of Galway City Council.
I completely agree with Senator Sean D. Barrett that it is a specialised business. Ports and harbours need dedicated staff who know their business. The Minister is familiar with what we are trying to achieve in Galway. We are trying to extend the port. It is now in a Bord Pleanála process. We had hearings some months ago as part of the process. Galway Harbour is a commercial port which has particular challenges around its depth and so on. That is all in the plans for expansion. I have listened to those in business who rely on it. According to the Minister's report, it is graded as a tier 3 port, and that is of major concern to us. At a minimum it should be a tier 2 port in order to attract funding from the European Commission trans-European transport network, TEN-T, in time. The plans are ambitious for the extension of Galway Harbour. They include bringing the city further out into the bay and making it a far more feasible option. I call on the Minister to respond to these issues.
Perhaps the Minister can explain something else for me. There was no consultation with the harbour prior to the issuance of the national ports policy which formed the basis of this Bill. Why was that? I have no doubt it preceded the current Minister's time in office. What were the commercial and economic reasons for the proposed transfer of ownership? There are no cost savings or synergies for the proposed transfer of ownership. There are no benefits, but I see downsides.
Again, I am very concerned about the classification of the port as a tier 3 port. As the Minister is aware, the port in Galway is one of five commercial ports to be designated as ports of regional significance. Two others, the ports at New Ross and Wicklow, will come under the remit of Wexford County Council and Wicklow County Council, respectively. The remaining three, namely, Drogheda, Dún Laoghaire and Galway, will remain as limited companies with their shareholding held by the chief executive of the local authority. The first two have been included with Dublin Port as being eligible for TEN-T funding, but Galway has been excluded. It is, therefore, the only commercial port of its size in the country to be excluded from TEN-T funding. Can the Minister tell me the reason for that? As the Minister is aware, Galway is critical to the balanced regional development of the country. It is a city of excellence when it comes to education and hospitals. Why are we being excluded when it comes to ports?
This is worrying given our ambitious plans for the growth of the city and the region. This classification of Galway as a tier 3 port could amount to a closing out of 20% of funding. We would be placed at a serious disadvantage and that is very worrying. Galway is the only port of its size in the country being denied this opportunity. I strongly believe the port of Galway should have been afforded the same status as the ports at Waterford and Rosslare - that is to say, tier 2 at a minimum. This would have made it a designated national port eligible for TEN-T funding. I believe the legislation is anti-competitive and discriminatory. In fact, it creates a monopoly on the east and south coasts, contrary to balanced regional development aims. The effect of not being a tier 1 or tier 2 port will make it extremely difficult for Galway to attract investment funds for the port extension.
The Senator has moved away from the amendments.
It is building up to the overall point relating to the classification of the port and the transfer of the ownership. I will leave it at that and wait to hear the Minister's reply.
I support Senator Sean D. Barrett. I am a little confused about why we are bringing local authorities in to run ports. The ports are a specialised area. I would rather see an integrated transport policy, whereby the big ports in use would incorporate some form of rail transfer of assets, etc. I am a little concerned that we are asking too much of local authorities.
We have stripped them of practically all of their other powers and we are now burdening them with the management of ports, a highly specialised area. Later on I will refer to the removal, to all intents and purposes, of the right of a harbour master to sit on a board of directors.
I refer to section 8. Senator Sean D. Barrett mentioned the transfer of assets. If there are assets that cannot be utilised by a port, surely they should be sold and the funds recouped. While I would not want to see any employees lose out on the transfer of assets, a point on which the Senator and I may differ, I have some serious concerns about a port being transferred to a local authority. It is a case of horses for courses.
I have listened to other speakers and concur with a lot of what they said. I refer in particular to New Ross. I understand that two decades ago it was the fifth largest port in the country by volume of trade. My business background involved working in ports all of my life, particularly in New Ross. I was also involved in operations in the ports of Foynes and Waterford.
The closure of Albatros which was a very large customer, the expiry of zinc from the Arcon mines and the transfer of a lot of oil imports from the port of New Ross have eradicated much of the trade at the port. It is not generally known that in the 12th and 13th centuries New Ross was reputed to be the largest port in the country. In the middle of the 19th century it was a very prominent port - many of our emigrants left from New Ross and went directly to places such as Vancouver and Liverpool. It was a very busy port and trade then declined for well over half a century until, I understand, the Stafford family invested in the port. It then became very active, and over the years many hundreds of people and their families earned a living from it.
I was a member of a local authority for 30 years. I am not convinced that transferring assets to local authorities will assist in any way in the rejuvenation of ports. As semi-State ports, they had a commercial focus that is missing in the current proposals. I understand Drogheda is on the list of ports to be transferred. I saw great potential in that port. At one stage, I was involved in trying to acquire it in order that we could have activity there. I saw potential in the outer port of Drogheda, in particular, for transferring some of the work done in Dublin Port to a deep-water port in the area. It has always struck me as something of an anomaly that the major port in the country is located in the middle of a city. A lot of investment has taken place, which might make such a change uneconomical. During the past decade the real estate value of ports was such that the opening of a new port in a deep-water location somewhere north of Dublin would have underpinned significant development. That opportunity has been lost, but it may return. It should be part of our thinking. In all probability, there would not have been a necessity for the port tunnel if the port had been transferred north of the city. We need that kind of strategic thinking to emerge, particularly in the medium and long term. Unfortunately, we do not have that within the public service.
The Senator is straying from the amendments.
The Senator is.
I thank the Cathaoirleach for reminding me. Will he tell me what amendments we are discussing? I will try to get back to them.
We are discussing amendments Nos. 3 and 35.
I thank the Cathaoirleach. It is proposed to carry out an independent cost-benefit analysis of all of the options for ports in amendment No. 2. A cost-benefit analysis must take into account the potential for commercial elements.
I remember when the tonnage in New Ross surpassed that in Foynes which has much deeper water and greater potential in that regard and it was considered a shipment port. However, its location did not lend itself to use by a lot of the traffic that came in through the eastern ports.
As a country that depends on imports and exports, we receive a lot of 3,000-, 4,000- or 5,000-tonne deadweight ships from mainland Europe. They fit very well into ports the size of New Ross and Drogheda. New Ross gained significantly at the expense of Waterford when the latter was locked down for two decades because of a dispute. It was akin to what went on with Waterford Crystal during the years. The dispute involved very difficult industrial relations, and very difficult players such as union activists were involved, which mitigated against those enterprises.
Smaller ports are better managed and have more focused workers who are keen to gain tonnage and improve their prospects and livelihoods, but this is being lost. I do not think local authority structures that have been denuded of funds will be in a position or have the commitment to promote and market those ports.
No matter what business one is in, if one does not market it, it is unlikely to do well. We will probably not deter the Minister of State from following through on the planned route, but when he was in the Chamber previously he showed an independence and clarity of thinking that needs to be brought to bear on this issue.
I refer specifically to two ports because my life's work in the port industry around the country has led me to understand what went on with competitors. I see potential in the two ports to which I referred, even though at present they may not be fulfilling their potential. Consigning them to a group and transferring assets to local authorities will not be a step in the right direction in terms of recovery in those ports.
If the Minister is going down this road, I would have preferred him to consider some sort of privatisation of the ports or a mixture involving privatisation. That is what is needed if there is to be any hope of the ports recovering and regaining the potential and business that they had in the past.
I wish to speak briefly in support of Senator Sean D. Barrett's amendments. I will not delay the House very long and will not speak for four and a half or five hours. I see a lack of joined-up thinking in the port system in Ireland. Some are independent, while others are controlled by local authorities. For example, the legislation against which I fought dealt with Cork, and Kinsale and Baltimore were taken under the umbrella of Cork County Council. I fought against the legislation pertaining to Bantry but failed, and nothing has happened in the past five or six years. There have been a lot of plans and talks, but nothing has happened. My view is still that I would have preferred to see the local authority take over Bantry rather than the Port of Cork, because it would have involved more local cohesion. There is now provision in the Bill to allow the Minister of the day to transfer the likes of Bantry back to a local authority when the time suits. Bantry is a little nugget of gold, given the proximity of the Whiddy Island mine. When the Port of Cork decides that something is no longer viable or Whiddy closes down, it will transfer it back as a dead duck to Bantry.
If one considers the overall system of ports in Ireland, there is no cohesion in that one port is independent and another has been taken over by the local authority. The establishment of Bantry Port as an independent port was almost achieved back in 1997 or in that era. As a former member of Bantry Harbour board who has read many reports on all these ports, some of which are in west Cork, I make the point that a local authority with hands-on control of a port, as opposed to it being brought under the auspices of a larger port, is the lesser of two evils. This is because I know for a fact the Cork Port authority had no interest in Bantry but was nudged along by the Department and the mandarins and agreed to take it over because at that point, there was €1.5 million in the kitty in Bantry.
A plan was then drawn up, which was agreed in principle, that particular development would be carried out with State aid and with investment by the Port of Cork but four fifths of it have been taken out and the planning was torn up. I note it took approximately 15 years to sort out planning in respect of due diligence and various items of work it was necessary to carry out before planning was complete. While that plan was to carry out A, B, C, D and E, Bantry is now left with A, and B, C, D and E have been thrown down the drain.
This is not a personal criticism of the Minister, but I have grave reservations that the entire system is higgledy-piggledy and has no cohesion. While I cannot envisage how this Bill will be of help, I would prefer Bantry to be under the control of Cork County Council, in the same manner as are Baltimore and Kinsale, as opposed to the Port of Cork board. This is because the Port of Cork has a big vision and plan and Bantry is, was and ever will be a nuisance to it. Those who tell me otherwise will not convince me and will not convince 90% of the people of Bantry.
I thank all the Senators for the different points they have made about the amendments before the House. I wish to clarify what the Bill is and is not about and to outline the work that has taken place to date in respect of the Bill. I might offer some context as to how the Government has reached this point with the Bill.
Work and consultation regarding national port policy began in 2010 and after three years of that work, the Government published a national port policy. The Bill before Members went through pre-legislative scrutiny and nearly three years after the publication of the aforementioned national port policy, the Government reached the point of publishing a Bill that deals primarily - I might address some of the points made by Senator Jim Walsh - with ports of regional significance. That is the focus of the Bill and by way of offering this context to Members, I emphasise to them the amount of time, consultation and work that has gone into getting to this point. In particular, when Senators Gerard P. Craughwell and Sean D. Barrett make the point about not moving with too much haste in considering how one deals with local authorities, I assure them that whatever the Bill can be accused of, one genuinely would struggle to levy the charge against the Government that it is moving too quickly in dealing with this matter. The Government has been moving with great care to deal with this issue in putting together a consultation period and then putting together a policy, which in turn has formed this Bill. As I stated, the Bill went through pre-legislative scrutiny, went through work in the Oireachtas transport committee and has now reached this point. To those Senators who raise the charge of rushing the legislation, I give this context and make the point about the time that has gone into getting to this point with the Bill.
If I turn to the Bill and refer to the ports raised by Senator JIm Walsh who focused his contribution on Rosslare and Waterford, for the purpose of absolute clarity they are ports of national significance, tier 2. Consequently, they are not part of the group of ports I propose to move into a model of local authority ownership. I agree with a point the Senator made regarding the Port of Waterford in particular to which he referred in his contribution.
While I made an observation, New Ross and Drogheda were the two that are affected by the Bill.
Very well, I will talk about each port. but I will talk about Waterford for a moment to make clear it is not the kind of port that will be moving into a local authority structure. I simply wish to emphasise that point.
Likewise, while I acknowledge Senator Sean D. Barrett appreciates this point on some of the ports to which he referred, I wish to make clear regarding the proposals for the Port of Dublin, the Port of Cork and Shannon Foynes Port Company that they are outside the remit of local authority ownership or governance. The Bill deals purely with the governance structure for a group of ports the Government proposes should move into local authority governance and by governance, I specifically mean who owns the share in this regard because as matters stand, as Minister, I and my Department hold the share. In the Bill I am proposing that this share, through two models, will be held by a local authority structure.
I turn to the points made by Senator Sean D. Barrett and consider the amendments he has proposed. I absolutely agree with the Senator who knows so much about this area on much, if not all, of what he said in respect of the competitive reality faced by the ports and their centrality to the economic development of Ireland. During my time in office, I have had the opportunity to visit nearly all the ports for which I am responsible or to meet their boards or both.
As to how they are performing at present, many are doing well and some are doing very well but all are different. They all face many challenges and in his contribution the Senator picked up on this point. From my perspective, this is the great benefit of the national port policy on which I have worked, that I am proposing and from which the Bill flows. The policy recognises that all ports obviously are different but within that, a cluster of different ports are sufficiently similar to allow one to state some of them should be treated in a certain manner and that each group of ports plays a different role in how they support either the national economy or regional economies.
I will give a small example of the kind of market about which I am talking. If one considers the existing number of ports and the amount of business they now handle, five ports handle almost 90% of the tonnage that comes through the State.
Did the Minister say 90%?
Yes, five ports handle 90%, much of which is entirely due to the kind of changes to which Senator Sean D. Barrett referred, namely, the kind of changes that have taken place in the economy and in markets to which Ireland is exporting or from which it is importing. If one considers the 10% of tonnage that is not handled by the aforementioned top five ports, out of that 10%, 4% is now handled by the five remaining State commercial ports. As that figure of 4% constitutes a 45% decline on the position they held in 1998, one therefore is witnessing a real change in the nature of shipping throughout the world.
Furthermore, this change is not simply happening in respect of where tonnage is going to but also in how that tonnage is arriving at ports. One can now see tonnage arriving in vessels of a different kind that are larger and need a better capacity in ports to receive them. For example, in 2013 Irish ports handled 17% more tonnage than in 1998 but there was a reduction of 28% in the number of vessels entering those ports. This highlights the need for investment and how different ports will respond to this in different ways. This really is the context of the policy.
I will deal first with the amendments Senator Sean D. Barrett has proposed. Without wishing to crudely summarise them, all the amendments focus on the need to recognise the commercial challenges ports face and consider the need, in the Senator's view, to put in place a cost-benefit analysis before any such transition would take place.
It is for this very reason that a due diligence process will apply in the case of all ports that I recommend should go through the process of share ownership and come under the control of a local authority. My Department is funding this process which will consider all matters the ports in question must address as part of the transition to local authority ownership.
As to the rationale for moving into local authority ownership, different transition models will apply to different ports. I have proposed two different models, the first of which is the amalgamation model to which many Senators referred. Under this model, an entire port will transfer into the local authority structure. Under the second model, the port will remain a company, with its shares held by the local authority. The approach we are proposing is correct because it offers the ports and regions in which they are located the best opportunity to implement the type of integrated planning about which many Senators spoke, in particular, Senator Denis O'Donovan.
On my visits to ports, I have noted that many require either national or regional infrastructural development. In the case of national ports, we have responded through our decisions on the national rail and road networks. For example, in the case of Shannon-Foynes Port I have prioritised the N69 in the new capital plan and in the case of Cork Port I have recognised the need for road works at Ringaskiddy and Dunkettle. We are addressing the issue of regional integration and the infrastructure the ports will need if they are to be secure in the face of the type of competitive pressures I outlined. All the work we have done in this area strongly indicates to me that the best way to address the issue is through the local authorities.
Senator Fidelma Healy Eames raised a specific point concerning Galway Port. I have met members of the board of the port and listened to their views. I assure the Senator that ports were given every opportunity to participate in the consultation process. The board of Galway Port expressed its views on the proposed policy to the Senator and to me and my Department and we listened to it. Notwithstanding the substantial dialogue that has taken place on this issue, I accept that individuals, stakeholders and boards may still take a different view from me on the issue.
On Senator Fidelma Healy Eames's specific concern regarding TEN-T funding for Galway Port, the ability to access TEN-T funding is entirely independent of anything in the Bill. TEN-T funding operates in parallel with the national ports policy and the criteria for accessing it are set by the European Commission. The Commission examines the track record of a port to determine whether it ships a specific percentage of freight in the European Union by tonnage and value. Ports that reach a certain threshold will be able to access TEN-T funding, while those that do not will not be able to access this funding. Nothing in the ports policy or the Bill affects the ability of a port to apply for TEN-T funding because the criteria are set by the Commission. Many ports elsewhere in the European Union are integrated in local authority structures and are able to access TEN-T funding on the basis of their size.
In recognition of some of the points the Senator and other public representatives in County Galway have made to me, I do not propose to apply the provisions of the Bill to Galway Port for a period of up to 18 months. This is being done to give the board sufficient time and space to conclude the various processes under way at the port. If these processes conclude before the 18-month period elapses, either I or the next Minister will apply the legislation to Galway Port. The 18-month period will be provided to allow the matters and processes that are relevant to Galway Port to be completed.
I thank the Minister for his response. I always value his attendance in the House. My experience of being locked up downstairs for the past few months has meant that in recent times I have not recognised any part of the economy except banks. I hope, however, that I was trying to pay attention within those constraints.
The Minister's comments on Galway Port are welcome. The company is making €456,000 profit on 144 ship visits per annum, which amounts to approximately €3,000 per ship. That appears to be a pretty good return and I contend that the port should be given more than 18 months to increase its profitability. I view local authorities in the context of the McLoughlin report, on which I will not dwell, and the serious housing problems they are facing. What are county managers supposed to bring to the specialised activity of running harbours? The 47 staff in Rosslare Harbour achieve an annual profit of approximately €1 million on a turnover of approximately €10 million. These are not railway staff but a group of people who specialise in running the port. The success of the ports to which the Minister referred illustrates my point. Do the local authorities possess previously unknown hidden talents that will enable them to start running sea ports?
The Minister is correct that Galway Port has experienced a wobble as a result of the recession. However, it is currently making a profit of €456,000 on 144 ship visits. Drogheda Port is also on the list for transfer to local authority ownership. It had 332 ship movements in 2008 and 314 in 2013, which indicates it has recovered to reach 95% of its previous activity. As the Minister stated, given recent changes in shipping, few ports have returned to 95% of previous activity levels. What will the combined wisdom of Louth and Meath county councils bring to the running of Drogheda Port? I pose this question somewhat rhetorically. Would Drogheda Port also benefit from a pause of 18 months?
As the figures show, New Ross Port, which is also listed, has experienced problems and I am sure the Minister is concerned that it made losses of €200,000 in 2012 and €333,000 in 2013. I do not know whether activity has picked up in the port in the meantime. Wicklow Port is doing better than Arklow Port, having reached a break-even position with a profit of €33,000. In my time in transport economics with people such as the Minister, I learned that ports are a specialised business. I do not see what they stand to gain from local authority control as they have a commercial challenge to deal with.
I welcome the Minister's comments on due diligence, which were very reassuring. While provision may have been made for different transitional models, I am not sure what happens with integrated planning.
Perhaps one should not be unduly influenced by having spent the best part of two years with bankers. The consensus between the Department of Finance, the Central Bank, the banks, the regulator and so on was achieved by shutting out contrarian views, in particular those of Morgan Kelly, although he was not alone as Mr. David McWilliams and the National Treasury Management Agency also had different views on banking.
Perhaps people tell Ministers what they think those Ministers want to hear and then tell others what they think they want to hear.
I am not going to press amendments Nos. 2, 3 or 35 because I was pleased to hear the Minister's comments on how carefully he is going to evaluate these options. However, I am glad the amendments were tabled because it was a most interesting discussion, perhaps because some people were involved in too many bank-related discussions and left out harbours and seaports and should have been talking to the Minister. I am indebted to the Minister for his views on that matter. I see Galway and Drogheda ports in a stronger position than might otherwise have been envisaged. There is a problem in respect of New Ross Port which requires special attention. Wicklow Port seems to be doing all right and it may not want to follow Arklow into the control of Wicklow County Council. I thank the Minister wholeheartedly for what he has said.
I thank the Minister for his reply. It is welcome that he will not apply the Bill's provisions to Galway Port for 18 months, a development of which I was aware. My concern is that decisions which are made now, without seeing the realisation of our very ambitious plans in Galway Port, would limit, hinder and disadvantage the growth of the port. As Senator Barrett outlined, Galway Port is now back in profit. The figure of €456,000 is not to be scoffed at, given the significant challenges around the port size and the ships that can and cannot come in. However, we have plans and I ask the Minister to enable the port to grow. I understand the 18-month grace period is part of that but the port has to work with other processes also such as An Bord Pleanála; therefore, our hands are tied in that respect. Based on his point about the TEN-T funding and it being an independent process and EU based, etc., could the Minister clarify if a tier 3 port qualifies for such funding?
The Minister has said the Bill has nothing to do with TEN-T funding at all.
I am just seeking clarification. Would a tier 2 designation not have helped? Putting ports such as Galway into the control of local authorities is very worrying - I understand that everybody in the House has been singing the same tune in this regard - despite the Minister's explanation of the structures and the shareholding. Councils already have too much on their plates and I do not see them meeting many of the significant responsibilities they have, for example, around housing and emergency services, etc. There are so many unmet challenges. The current funding model which supports councils is really suspect.
That matter has nothing to do with the amendment.
It has much to do with it.
It has nothing to do with the amendment at all.
It has absolutely loads to do with it. Would the funding model that currently supports councils be relied upon for ports? I hope the answer is no.
I agree with much of what Senator Sean D. Barrett said and I agree with the figures. The figures for New Ross Port are very bad because of a significant decline in the traffic through that port. I am familiar with ports, although it is 45 years since I operated in Wicklow Port when I was with Nitrigin Éireann Teoranta. We brought rock phosphate through that port. Wicklow and Galway ports have very limited potential, in my opinion. Drogheda and New Ross ports certainly have potential and they have proved this by having good operations and large tonnage well in excess of those other ports for 40 or 50 years up until the last decade.
In the context of putting ports under the control of local authorities - I think Senator Sean D. Barrett asked a very succinct question in this regard - the difficulty is around what local authorities will do to enhance the recovery of operations in those ports. There is a complete imbalance in giving all the powers to county managers who will often have many more problems with which to deal. Most of the managers are contemplating losses. The deficit in Wexford is approximately €10 million and that will concentrate the mind of county manager ahead of what happens in the Port of New Ross or whatever new responsibilities he might have there. I am concerned that the local authorities would consign a peripheral contribution to the ports in the future. From my experience at New Ross Port, it gained considerably at the expense of Waterford Port because of the bad industrial relations at the latter, particularly in the 1970s, 1980s and into the 1990s. The whole south east depended on New Ross Port being a functioning facility and the area made a contribution. Business and traffic through ports is cyclical. The Ministers made reference to the move towards panamax sizes. The animal feed shipments used to come in on 1,000, 2,000 and 3,000 tonne ships and are now coming in on 20,000 and 25,000 tonne ships. There are only a couple of ports in the State that can actually handle that size vessel. However, traffic and shipping changes. My main concern is that removing the potential to meet the country's future needs could be an error and a lack of foresight.
I take the Minister's word that there was a significant period of consultation but everything about this Bill seems to remove the opportunity for locally elected people to have a serious input into the ports' boards. The boards would have oversight of what goes on. We seem to be empowering chief executives and disempowering elected people, a theme which appears to run right through everything that has happened in the State. Has there been consultation with county councillors? I have been contacted by many of them asking me to ensure that councillors' positions on boards are not removed. I understand the Minister said that a councillor board member may have a conflict of interest if he or she returns to the council and a particular item is being discussed. There are ways around this potential conflict, such as having non-voting board members or consultant board members. The exclusion of locally elected representatives from the harbour boards is causing outrage around the country. I would appreciate if the Minister would deal with that concern.
I thank the Senators for their comments. Owing to the level of consultation and the degree of work around this policy and this Bill, the national ports policy is in quite a rare position within the Department of Transport, Tourism and Sport as being endorsed by both IBEC and ICTU. Senators made reference to the ability of ports to respond to economic opportunities and I could not agree more. This policy is also supported by the Irish Exporters Association and the Chartered Institute of Logistics and Transport. There is recognition that the policy tries to acknowledge that different ports play different roles in our economy and that we need to have a policy which reflects this.
My colleagues made some very good points. I thank Senator Sean D. Barrett for noting the role of due diligence and how that will address some of the points to which reference has been made. We must ensure that we do not find ourselves in a place where Ministers are surrounded by people who tell them what they think said Ministers want to hear. That does not feel like the case with this policy because I have had much feedback on it which I know has prompted the Senators' contributions. The policy gives us the best platform to respond to the changes taking place in how countries export and import, a matter of which I know the Senators are aware.
On the points raised by Senator Fidel;ma Healy Eames, I thank her for acknowledging the point I have made in respect of the period of 18 months. I always have to say this and I know the Senator believes the same, but nothing I say about this port or any other is in any way seeking to be involved or to be seen to interfere with the role of An Bord Pleanála and the independent work it does. That is a comment on the port about which the Senator asked questions.
In relation to the TEN-T funding, the criteria are it is for annual passenger traffic volume which exceeds 0.1% of that for the European Union or total annual cargo volume which exceeds 0.1% of that for the European Union; that it is located on an island and provides the sole point of access to a region in the comprehensive network; and that the port is located in the outermost region or a peripheral area outside a radius of 200 km from the nearest other port in the comprehensive network. The classification for ports as to whether they are tier 2 or tier 3 is entirely independent of these criteria. If a port meets those criteria or if it can put the case to the Commission for meeting the criteria and persuade it of that fact, it will be in a position to access that funding but it is not influenced by a classification that we are giving it.
Senator Jim Walsh touched on the change that is taking place and how ports perform. He offered his views on different ports. Different Senators will have different views on that issue. I would make the point that when I or a future Minister seek to make a decision on the mode of integration of a port into the local authority, the choice that is made has to reflect the commercial reality that the port faces. For a port that has a significant tonnage business, that has plans and the ability and can credibly grow that in the future, then a model of the retention of that port as a company within the local authority is the most appropriate one.
For ports whose future is best delivered in integration within the local authority and in the development plans of that local authority, one of complete integration and the dissolution of the company into the local authority could be right for them. The answer will depend on the ability and the prospects of that port.
That leads back to the two points Senator Gerard P. Craughwell put to me. I know that councillors who are on some port board and who may be on the boards of ports in the future will not be happy with the direction in which the Bill is going. I can assure the Senator that those councillors in the local authorities who are not on those boards - there are many more of them - will be given an opportunity, through different sections of the Bill, to engage in the kind of oversight and relationship with these port companies which any Member of the Oireachtas can do if a member of the Joint Committee on Transport and Communications. I hope the Senator will consider that is a very significant change versus where we are at.
Where the integration of a port into the local authority occurs, will the Minister outline what consideration has been given to the issue of rates of pay? In some instances people working in ports were handsomely paid which was traditional because of their commercial success. If they are integrated, presumably people will come in at a particular grade. If the salaries are in excess of those grades, what happens? If they are left on higher salaries how will that affect-----
I do not think that is included in the amendments.
It is a point that arises from what the Minister has said.
It may be, but it is not included in the amendment.
It is a pertinent point given that local authorities are taking over the shareholding in a situation where the operation of the port is totally integrated, not the company, but the operation including the personnel. Presumably, there is a transfer of undertakings arising so that employees will have to transfer. If there is a disparity of rates for people on the same grades, will that lead to a knock-on claim for differentials, be it going in one direction or the other? That strikes me as an issue that must have received serious consideration. Will the Minister, please, outline his opinion on that issue?
I thank the Minister. I wish to withdraw amendment No. 2.
Does the Minister wish to comment on Senator Jim Walsh's comments?
Yes, the Senator asked a direct question. In relation to all employees, their terms and conditions are protected by this Bill. They will transfer in on the terms and conditions they have. That was the feature of the consultation that took place in the run-up to publication of the Bill.
In relation to some of the other matters to which the Senator has referred in regard to the integration of some employees into the pay scales of local authorities in the future, that would be a matter for the chief executives of the local authorities to deal with.
My question is-----
It has nothing to do with the amendment.
It might have to do with the section but not with the amendment.
The amendment deals with the section on the issue of the shareholding and who owns the shareholding. The Minister has pointed out the integration. My concern is that the Minister is setting local authorities up, many of them are already in serious deficit, to knock-on wage claims because of the integration. To transfer people from commercial or semi-State operations into the local government system on much higher salaries than people on a similar grade within the local authority would surely give rise to a claim to be made by unions to address that particular anomaly and, therefore, could we have a knock-on wage claim as a consequence of this? That is my concern.
No. I genuinely believe not. The reason is that for those companies we are going to transfer through which will have a significant commercial activity in front of them, we will be transferring them as a separate company. They may well be in a place where the share is owned by the local authority, but they will be a separate company under company law. That is the way in which that matter will be dealt with.
And will be protected.
I thank the Minister for providing for the period of 18 months. It is more generous than what the amendment asked for, which was 12 months. I thank the Minister for his generosity in response.
Can the amendments be resubmitted on Report Stage?
No. If they are not being discussed, they cannot be reissued.
Many of the amendments on the list refer to section 9(1) which provides that a local authority chief executive may, at such time or times as appear to him or her appropriate, sell, transfer, exchange, etc., any shares vested in the local authority. Why is that not subject to a reserved decision of the council? It strikes me that councillors elected-----
Does it? I have seen it in the past.
I ask the Senator to read the section.
Therefore, it is provided for. I only read section 9(1).
On Second Stage I outlined that section 9 was one section on which I needed further clarification.
Section 9 deals with the right of the local authority on the advice of the CEO to sell up to 49% of the shareholding of a port or harbour. Who values these shares and at what valuation will they be set? What rights do the 49% shares give shareholders in relation to lands and rights in the port, including access to the water? Will the Minister clarify if the shares will be valued by an independent body or the Minister's office? Where does the valuation come from and what rights will people have when they take over the shares?
I assure Senator Jim Walsh that section 9(1)(c) requires the consent by resolution of the elected council which is in line with the powers local authority members have in other financial matters. It is entirely consistent.
On the point Senator Pat O'Neill put to me, the valuation of the shares would have to take place via expert advice that would have to be procured at that time. Anything that would happen to the shares would require the consent of the local authority but also the consent of the Minister. Any concerns people might have on the disposal or valuation of shares or any of the rights that could be conferred can be addressed not only through the scrutiny of the local authority, but also by virtue of the fact that the Minister's consent would also be required. That would happen in consultation with the Minister for the Environment, Community and Local Government and the Minister for Public Expenditure and Reform, thereby dealing with any issues of valuation that might arise in the future.
I understand what the Minister is saying because the local authority and the Minister would still control 51% of the shares. If I held some or all of the other 49%, would I have the right to sell them to a third party, or would I require the Minister's consent to do so?
Will the Senator put the question to me again to ensure I answer the right one?
I understand the local authority and the Minister will control 51% of the shareholding, but if I was a person who held some of the 49% of the rest of the shares as a private citizen, would I have the right to sell them to a third party without the Minister's consent or that of the local authority?
If a private citizen holds private shares that have been issued in a company, he or she has the right to do with those shares as he or she sees fit. Once one buys shares, they are then one's private property. This is precisely the reason I am saying in the Bill that 51% of the shares should be retained within the ownership of the local authority. While there are some extenuating circumstances in relation to that, all of them require very explicit consent. My strong belief is that ports such as these are national assets. Regardless of whether they are regional or ports of national significance, the majority share should be kept in public ownership.
Senator Pat O'Neill has raised a point in respect of which it has occurred to me to wonder why the Minister looks to retain 51%. It does not make any sense. If a company is going to invest in a port, it will come with some expertise in the shipping or port business. The least that party would want is management control but it would not have that at 49%. What the Minister is doing is leaving the local authority holding management control. I do not see any real benefit in that if the partner coming in has the expertise I suggest. I would see some benefit in the State holding 26% to ensure that the assets could not be disposed of. The next threshold after the 51% is 75% where one can control the sale of the assets. Why is it imperative for a local authority, which is not in the business of ports at all and which may have no staff member with expertise other than a person working in the port, to control management? It might just deprive a port of the opportunity to have commercial entities becoming involved.
In all of the consultation we went through to develop the policy, in particular in relation to ports of regional significance, at no point did we encounter any great demand or even interest within the private sector to buy ports in their entirety. There is a lack of demand. Were the demand to develop in the future, my view is that up to a 49% share would deliver the kind of equity holding that in turn would deliver a commercial return for investors to be interested in it. However - here is the "but" - as a small open economy for which access is of fundamental importance, it is prudent for us to retain the right to at least have a majority share in port assets if not to entirely own them outright. It will not surprise the Senator to hear me say I do not believe private sector investment in State assets is a bad thing. It can play a very positive role in developing assets like ports. Given their importance to our ability to trade regionally and nationally, however, the State should have the ability to retain an ownership stake.
I move amendment No. 8:
In page 10, between lines 7 and 8, to insert the following:
“(4) The Minister shall, after consultation with the Minister for Jobs, Enterprise and Innovation, give a direction to a Port Company to report on the implementation of the Competition Authority Report on Competition in the Irish Ports Sector (2013) in particular in respect of the vital need for intra-port competition and shall report on these matters to both Houses of the Oireachtas.”.
Section 10 deals with general ministerial powers of direction. The amendment proposed is an invitation or an offer in spirit to assist if the Minister thinks the general power of direction would be useful to him in the discharge of his duties. In addition to the other directives the Minister may issue on the development of harbours, navigational safety, security, operations generally in harbours and other items, having consulted the Minister for the Environment, Community and Local Government and the local authority, the amendment would allow the Minister to give a direction to a port company to report on the implementation of the 2013 report of the Competition Authority on competition in the Irish ports sector, in particular with regard to the vital need for intra-port competition, and require him to report on these matters to both Houses of the Oireachtas. It is a power which would strengthen the hand of the Minister in trying to ensure efficiency at ports.
On file is a letter to Ms Isolde Goggin of the then Competition Authority, dated 11 August 2014. The letter stated the Minister was looking at the authority's recommendations on leasing and licensing of Dublin lo-lo terminals and stevedore licensing. On the first matter, the Minister said, "It is not one in which I as Minister have any role". Over the page and on the second matter, the Minister stated: "The statutory functions of port companies are not areas in which I as Minister have any role." Will they do it without the Minister pushing? Will those necessary competitive gains, as documented very well in a very long report by the Competition Authority, be made? That is why I tabled the amendment. If the Minister thinks it enhances his control of the ports sector, would he wish to add improving efficiency as recommended to the matters in respect of which he has a power of direction? Would it just lie there or does it fit in with his remit as he sees it in running ports? If it is, I will hand it over as the Minister's amendment. It does not necessarily have to go as far as mine. It would complement the package and what the Minister is trying to do. My fear is that reports gather dust. Obviously, the people who are benefiting from restrictive practices and arrangements are not going to get up one morning and say, "Let's all implement the competition report". Is this power of value to the Minister? That is the spirit in which it is offered.
This is a meritorious amendment. We are taking a number of ports which, while they now account for only a small percentage of traffic into Ireland, accounted for a significantly greater proportion in the recent past. It is therefore imperative that they remain commercially focused and that they are there to provide competition, often to neighbouring ports. If I could extend the question in that regard, I presume the individual companies, if they are maintained and integrated into the local authorities as companies, will have to do their annual returns as port companies, which will outline all of that. Is there any requirement in the Bill - I cannot see it, but I have not read all 50 pages from cover to cover - for the companies, where they are integrated into the local authority, to issue some report that will show the commercial activities within the port and in particular what they are doing to improve the prospects and business through the port? Marketing should be a requirement for the local authority, as well as setting out its plans to increase traffic and commercial focus and to enhance the operation of the business.
This is an excellent amendment and that was a very good question from Senator Jim Walsh about the maintenance of competition within ports. If I could deal with the amendment first, it is one that is very close to my own heart in terms of trying to drive and increase competition within the port sector, because I can see the benefit of it to ports and to the country. I have to respectfully say to Senator Sean D. Barrett that I am not in a position to accept it. The simple reason is that I have to recognise that if a port is integrated as a company into a local authority, it has its own board and its own autonomy and it is not up to me as Minister to get involved and to issue instructions as to how it conducts its business. I have to recognise its role as an independent board of directors.
All that being said, if I could give him some encouragement regarding the implementation of that report, which was one of the first things I brought to the Cabinet shortly after I was appointed, I would point to the kind of change that is now happening in Shannon Foynes Port Company. It has reorganised how it provides stevedoring and has significantly modernised it. I point now to what is happening in Dublin Port. It has now published its own review and analysis of the Competition Authority's recommendations. It has published that on its website; therefore, it is available for stakeholders and interested figures such as the Senator to see. It is now looking to incorporate the principles of the Competition Authority's report into how it plans to manage its estate in the future. The Competition Authority has indicated its broad support for what we are looking to do here by having ports of national significance in two different tiers as well as ports of regional significance, because it offers us a platform to develop more competition in the future.
On alternative ways to address the point the Senator has made, under other legislation I already have power as Minister to seek information from ports regarding how they operate. The statutory accountability of port companies to the Oireachtas transport committee is in place under section 40 of this Bill. Perhaps members of the transport committee could in future issue an invitation to the boards of companies to come in and explain to the Oireachtas what they are doing to implement the analysis and recommendations of the Competition Authority. I reassure the Senator that my Department and I are working to see the implementation of that report over time.
On the point Senator Jim Walsh put to me, the answer will depend on how the port is integrated into the local authority. If it is integrated as an existing and stand-alone company, it will have to produce its financial accounts and an overview of how it is trading that will in turn allow the Senator and other public representatives to quiz it on how it is performing vis-à-vis the implementation of that report and its general trading.
Will the Minister give consideration between now and Report Stage to requiring the local authority, where the company is integrated with the local authority, to issue some formative report, which would show the activities in the port and, more importantly, show what plans it has for increasing traffic through the port? This would place an onus on it. It would then have to do something, because it would have to compile a report and develop a strategy to improve the traffic through this port, which is now its responsibility and which is a national asset that it holds. Would he consider it?
I am not sure that is a matter that could be dealt with through primary legislation. What I will say to the Senator is that there may be a way it could be dealt with through the due diligence process, in that such a matter could be dealt with at the point at which the Minister of the day makes the decision on the type of integration. I will give consideration to this before I am back in here on Friday. It is my absolute expectation that all the ports, regardless of how they are integrated into the local authority, will have the ability to trade successfully into the future. On Report Stage, when I get the opportunity to revisit this point, I will see if I can give the Senator more of an update.
I thank the Minister for his reply. We are on the same side in regard to both of those recommendations - that is, the recommendations regarding competitions between terminals and competition in stevedoring. If the Minister were to table an amendment on Report Stage, I would be delighted to support it, but we are on the same side. What leverage does he need to make sure this will happen? There is a fear that lethargy would take over. We have had a very good review of the issues at stake.
Amendments Nos. 12 and 13 are related and may be discussed together, by agreement. Is that agreed? Agreed.
I move amendment No. 12:
In page 10, line 35, to delete “may” and substitute “shall”.
I can see this amendment has Senator Gerard P. Craughwell excited already. The line reads at present "a harbour master may attend formal meetings of directors of the transferred company". I wish to change this to "shall attend." We need the people who know the harbour on the ground, particularly if we are bringing in what might be called the landlubbers in the county management. One of the problems I have with much of managerial theory is that it creates layers of bureaucracy and never involves talking to the people who are actually there. The harbour master is there and I hope he might be given that role. He should be there. He will know what he is talking about, unlike the others who have come in from the local authority.
Amendment No. 13 states: "In page 11, to delete lines 3 to 11". If we allowed him to be at meetings in any case, we would not need that other section regarding when he can attend. By being at the meeting, he is best placed to offer the kind of advice and wise counsel that will be useful.
The harbour masters know the ships inside and out. They know the captains and the pilots who guide the ships ashore. We want the knowledge of such people, rather than people from the land side.
Senator Sean D. Barrett is correct. For the life of me, I cannot believe we would want a harbour that would be managed by a load of "landlubbers", as the Senator has called them. Surely the harbour master - the person who understands the harbour - is the one person we should want to be present at all board meetings. A number of harbours around the country are extremely peculiar in their design and their abilities. Galway Harbour, for example, is a tidal harbour. The gates in Galway Harbour limit the size of craft that can come into Galway. Surely we would want the harbour master, who understands these kinds of things, to be in attendance. I do not intend to waste the time of the Minister because I respect the patience he has shown. If the Minister accepts the proposal to replace the word "may" in section 13(3)(a) to "shall", there will be no need for sections 13(3)(b) or 13(3)(c). If we take this great step forward, we will all have a great Christmas.
I support the amendment. It would be a retrograde step if a harbour master were not present. I am not familiar with the other ports, but having been at meetings in Galway Port I am familiar with the expertise that has been presented to us by the harbour master and the people who are on the front line at that facility. If we failed to take on board the expertise of the key people who are on the front line, it would run contrary to everything we believe in. Case studies are about getting it from the horse's mouth, so to speak. I think the amendment carries a lot of weight.
The Bill does not change the current status of harbour masters or the current relationship between harbour masters and boards of directors. Everything the Senators have said about the important role of harbour masters in the operation of ports is correct. I have met many of them on my journeys to various ports throughout the country. I have heard their absolute and genuine expertise on matters from dredging to sea walls. I have heard much about these topics. However, there is a fundamental difference between a director and an employee. That is what this boils down to. The relationship between boards of directors and harbour masters will be completely unchanged by the passage of the Bill. I assure Senators that this legislation does not in any way change the status of the harbour masters vis-à-vis the boards of directors. The harbour masters will retain all the powers and rights they enjoy at the moment. Fundamentally, it is up to the directors on the boards of companies to decide who should attend meetings. As directors, they are responsible for the organisation of the company and for their employees. I assure Senators that contrary to what has been suggested, there is no question of any kind of a "retrograde step". The Bill does not in any way change the statutory responsibilities of harbour masters and boards of directors of harbours.
The Minister used the word "retrograde", but it would be progressive to provide for those who actually do the work on the ground, as the Minister has said, to attend board meetings. As he was speaking, I was reminded that I sat on a board at Trinity College Dublin before I was elected to this House. The people who gave the lectures were there as board members. It worked very well, although there were complaints that it was like a mini parliament. Perhaps it was training for people like the Minister and me who wanted to come up to Leinster House. I do not know whether this falls into the category of ministerial advice. I suggest it would be crazy to allow a meeting to go ahead while the harbour master is left outside. I do not know what this means for the role of directors, etc.
We need to listen to men and women who know their stuff. I am sure the Minister found when he was going up and down the country that they are great characters. They know everything about ports. Their expertise is invaluable. Under a previous system, they may have been regarded as workers who were not worthy of being on the board or attending at the board. As it progresses, Ireland should examine how to learn from those who know so much. We should do away with the old idea that the harbour master should be outside the door with his cap in his hand, unable to come in until he is invited to do so. We need to avail of all the wisdom that is available. Many reforms of this nature are needed in this country. The Minister and I are on exactly the same page on this one spiritually and temperamentally. This has been a fine discussion. I will not pursue this amendment. The Minister is aware that the Seanad agrees with him on the need to avail of expertise. Nobody should be left out as we try to continue the reform of this country. In this case, we should not leave the harbour masters out.
I accept what the Minister said. The magic word in what he had to say was "employee" because it suggests that it is envisaged, as suggested by Senator Sean D. Barrett, that the harbour master will be standing outside the door with his cap in his hand waiting to see whether his masters inside want to hear his wisdom. These men have developed wisdom over many years. By right, they should be ex officio members of the board with full voting rights. Senator Sean D. Barrett has said he is withdrawing this amendment, but I wish to make it known that I intend to resubmit it on Report Stage.
I will not move amendment No. 13 because it arises from this amendment and also relates to harbour masters. Obviously, Senator Gerard P. Craughwell would have the harbour masters inside already. I think the Minister is veering in that direction. I will not pursue amendments Nos. 12 and 13, which are being taken jointly, any further.
We will be back on Report Stage.
Amendments Nos. 14 and 15, which were tabled by Sinn Féin, seek to remove the authority of the chief executive officer and to vest that authority in elected council members. I appreciate that the Bill gives the council some powers of oversight. It is most regrettable that we are not in a position to consider amendments Nos. 14 and 15.
I am sorry, but it is not our fault.
The Sinn Féin Senators are not here to move their amendments.
It seems from sections 18(1) and 18(2) that a harbour company that wants to borrow will be required to get the approval of the county manager. Will the Minister clarify whether the county manager will be a director ex officio? I do not believe he will be. If he is not a director, this section of the Bill will make him a shadow director. I would like to know whether the fact that a company's borrowings will have been approved by the county manager - they are subject to his approval - could subsequently put the banks in a position to be able to pursue the local authority. I do not know whether this has been legally checked. Is a provision that gives somebody outside the board of the company responsibility for such an important decision in compliance with company law? That is my first question. I have a number of questions on this section. It is customary - I think it is a requirement - for all local authority borrowings to be approved by the council as a reserved function.
Overdrafts and loans are, I believe, all subject to the formal approval of the council. In a scenario where there is full integration, I presume that still applies. However, when the company remains as a stand-alone company, this does not apply; instead, it is left to the discretion of the manager. In particular, the issue of blurring the corporate refinement of the manager is significant. I also note that the amount is €200,000, or 50% of the transferred company's assets.
It is €200 million.
Yes, a large amount of money. It is very difficult to value the assets of some of the port companies because they are in the form of fixed assets such as jetties. It is a bit like having a property: anybody valuing those assets would have to look at the income they were generating. I am wondering if that could become a hindrance to the development of the port. Very strict statutory guidelines are being applied as to how they will be done.
I know that one or perhpas more of the port companies has a significant pension deficit. What happens to that? Does it become the responsibility and liability of the local authority? How will it be addressed? In many instances, these are defined benefit schemes backed by commercial insurance.
The valuation of assets has to be dealt with in the financial accounts that the port produces each year. It could be considered at the point of integration. The financial accounts will provide the valuation of the assets.
What happens to liabilities will depend on the mode of integration of the company into the local authority. If it goes in as a stand-alone company, both assets and liabilities are retained within that company. If it is integrated completely, they are dissolved into the broad balance sheet of the local authority.
As I have said, assets must be monetised in the financial accounts that the port has to provide under company law. If any further work needs to be done, going back to Senator Pat O'Neill's earlier point, expert advice would need to be brought in. The Bill is absolutely consistent with company law. The chief executive would not be a member of the board of directors if the port was integrated into the local authority as a stand-alone company.
I thank the Minister. He has clarified some of my questions. The assets of these companies would be difficult to value. We saw the balance sheets of the banks before the crash; they had no connection whatever with reality. I would have thought it prudent, if the State is taking over - even in the case of a semi-state company - to have at least a couple of valuations done on the assets as a precautionary measure. That should then be certified in the accounts with the attachments, in order that the local authority would have some responsibility to validate the valuations for itself.
I ask the Minister to deal with the issue of the pension deficits in both scenarios - that is, where the company is integrated in the first instance, and when it remains as a stand-alone company within the local authority. The Minister is giving a very important corporate decision to the chief executive of the local authority, who is not a member of the board. He is making the board's decision subject to an external person in the very important area of borrowing money. The chief executive may be a shareholder but he is still external. I am concerned by the legal interpretation as to the chief executive being regarded as a shadow director. He is playing a fundamental role with regard to a very important decision. He is the primary decision maker, the approver of borrowing within the company. As a consequence, he is putting himself in the role of a shadow director. Has legal advice been taken? If he is a shadow director and the loan cannot be repaid by the company for some reason, if a stand-alone company cannot pay, could the banks have recourse to the manager and the local authority for repayment of that loan? The banks could go outside the corporate pale simply because the manager was, in fact, the approver and maybe the decision maker for that borrowing. There is very extensive borrowing, as we have mentioned.
Absolutely not. He or she, as chief executive, would not be a shadow director of the company but the shareholder and would occupy the role I currently occupy. There is no question of company law being breached in any way in this regard. I accept the Senator's point about the need for valuations and balance sheets to be checked. That is exactly why we have a due diligence process in place which has to be completed before either form of integration can happen. That would be covered within it.
I know that there will be a very substantial deficit in at least one of the companies. How is it proposed to deal with it?
The answer will depend on the mode of integration. If it is a stand-alone company within the local authority, the pension deficit or surplus, should there be one, will be retained within that independent company. If it is integrated into the local authority, it will be a matter for the local authority.
I am sorry for pursuing this point. In the event of a decision to integrate the assets, in order that the pension liability becomes the responsibility of the local authority, will the Minister recompense the local authority for that deficit?
Absolutely not. Any decision I make on the method of integration will be taken in close consultation with the local authority and port in question.
Amendments Nos. 24 and 25 are related and may be discussed together, by agreement. Is that agreed? Agreed.
I move amendment No. 24:
In page 16, line 18, to delete “local authority chief executive” and substitute the following:
“Minister for Transport, Tourism and Sport on the advice of bodies representing trade, commerce and tourism, and local government”.
This section currently refers to the chairperson and directors, of which there are eight, of the transferred company. It states that "[t]he directors of a transferred company [...], other than the chief executive, shall be appointed by the local authority chief executive." My concern is that this makes the county manager master of all he surveys. It is an incredible amount of power to reside in one pair of hands. I have proposed that we delete "the local authority chief executive" and insert a reference to the Minister who is before us, as per the text of the amendment. Too much power resides in the county manager. The Minister is elected. He is a great democrat and is in touch with more views.
Some county managers are very autocratic and to give them the power to put eight people on a board with nobody else there has me worried. I would prefer the Minister to discharge that responsibility.
I thank the Senator. Perhaps at some point in the future when time permits and we are less busy with other matters, we can look at the difference the new Public Appointments Service process is making for the appointment of directors to companies. It is a matter I was dealing with only today. As such, I can assure the Senator that because of that process, the variety of candidates coming through and their huge diversity of experience is offering the shareholder, whether me or the local authority, the ability to appoint a breadth of people that will really benefit these boards.
The appointments process that will happen when the Bill is, I hope, implemented, will have to follow the process launched by the Minister for Public Expenditure and Reform, Deputy Brendan Howlin. The very reason I am so confident that the quality of boards will meet the need the Senator describes for better diversity and expertise is that we now have a better process in place to deal with these matters. The simple reason that I cannot make the particular appointments is that I will no longer be the shareholder in those ports. It will be the chief executive who is the shareholder, but that person will need to follow the new process I have just described.
I thank the Minister for his patience. I agree with Senator Sean D. Barrett. Where power is invested in a local individual, those autocratic people are suddenly given the power to put a number of puppets in place who will behave as desired. I would have no problem with the local authority chief executive making a recommendation while the final decision rested with the Minister of the day. Like Senator Sean D. Barrett, I consider that the Minister would have a far more democratic view of the world than a Civil Service appointed chief executive.
I accept totally what the Minister said. I have seen that process in operation and we know that some of the candidates who have emerged have been very impressive. Perhaps the Howlin method might be considered for Report Stage, if that is possible. I endorse fully the sentiments the Minister has expressed. It is most encouraging to see the variety of backgrounds of candidates who have come forward.
Amendment No. 25 is a small provision. The requirement is that the local authority chief executive shall have regard to Government or nationally-agreed guidelines which, for the time being, are extant, or to Government policy concerning appointments to State boards. We have had the requirement to "have regard to" in other legislation. For example, I had regard to the fact that I was in a 30 km/h zone and just happened to be doing 50 km/h. A requirement to comply is much stronger and would strengthen the Minister's hand. We can all say we had regard to something and then go off and do something else. It is in the spirt of the Howlin amendment the Minister described that a requirement to comply with the procedures laid down by that Minister should be provided for. Those procedures have been impressive in the way that we have seen them executed. Is "comply" better for the Minister than "have regard to"?
They are exactly the same. I have checked on the matter and been advised that from a drafting point of view, the phrase "shall have regard to" is exactly the same as "to comply with".
Is the Senator happy?
As long as they comply.
Section 22(7)(b)(vi) provides that in considering whether to appoint a person to be a director of a transferred company, the local authority chief executive concerned shall have regard to the desirability of experience of local government. However, we have ensured that those with the greatest experience of local government are excluded. We will be talking about that a little later in the Bill. I cannot for the life of me see why. One could have two brothers, one of whom is a local authority employee, while the other is a local authority representative. The employee is eligible for appointment to the board while the elected representative is not. There is a great deal of disquiet about this among local authority members and I have not heard the Minister address it specifically. He has had wide consultation with IBEC, ICTU and others, but I have not heard him say he has addressed all the local authority members.
I have met many councillors who are highly supportive.
Many, many councillors.
We are meeting different guys then.
I say to the Senator respectfully that earlier in the Bill he was challenging me to say local authorities were not the right place for these ports. Now, he is standing up to say it is terrible that local authority members will not have a role on their boards.
In fairness, if the harbour was not under the control of the local authority, an elected member of a local authority would have no difficulty being on the board whatsoever.
As the Senator is making his point, I affirm to him that I have met a large number of councillors who are very much looking forward to this change. There is a point he should address and I look forward to hearing him do so. Why should powers of oversight be confined to a small number of councillors as opposed to all of them?
With respect, I have never suggested the power of oversight should be invested in any small group that would be appointed to a harbour board. I welcome most of the Bill and what the Minister is doing in terms of oversight. I am a little sorry Sinn Féin Members are not here to move some of their amendments, but I welcome what the Minister is doing. At the end of the day, there is a subtle difference between having oversight and being a member of a board. The latter is about being there and being party to the decisions.
There is an important distinction. What I understood was being said and certainly what I was saying was that the better model for ports and harbours as referred to in the Bill did not involve them being under the jurisdiction of local authorities. However, if they will be under the jurisdiction of local authorities, the democratic process is important. The more members that are empowered and have a say, the more the issues will be brought out. That is not to say what perhaps the Minister said Senator Gerard P. Craughwell was saying. That distinction is important.
I note again that I have met many councillors who are looking forward to this change.
It is a point of principle that people should not automatically be excluded from a board simply because they are councillors. There is no justification for that. People who go forward for councils are generally people who are interested in participation and making a contribution to various aspects of life in their localities.
The Minister can correct me if I am wrong on the following. Perhaps I am reading it in the wrong way. If a local authority takes over a port and integrates the assets, the corporate veil is gone. In that scenario, they are subject, like any asset of a local authority, to the direct input and control of the councillors. In a scenario where a local authority takes over the shares of the company, we are excluding them from involvement in it. That looks like an anomaly to me. Will the Minister give me the logic behind it? If one owns the assets directly and is trading them, one has a direct input. If shares are purchased and the corporate veil is maintained, however, one is debarred from a direct input.
I believe there is an amendment from Senator Gerard P. Craughwell on this point and perhaps we might have this debate when we get to it. As it is tangentially related to this point, I look forward to a debate with the Senator on it.
I move amendment No. 29:
In page 19, to delete lines 39 to 42.
This deals with the accountability of the chairperson and chief executive to the local authority, which we support and have been talking about for a long time. In subsection (2) it is stated, "Neither the chairperson nor the chief executive of a transferred company referred to in subsection (1) shall be required to attend before the elected council if a resolution referred to in that subsection was made within a period of 6 months of the making of the last such resolution". It is somebody declining to be democratically accountable except at six monthly intervals. I have never come across anything like it. A Minister would not come into the Seanad because he was here six months ago. It does not seem to add up under the heading of accountability. This is something none of us in the room believes in. If I told my electorate I did not intend to talk to them for the next six months, they would issue a P45 fairly pronto.
I support Senator Sean D. Barrett's amendment. What is the logic behind this? Is it expediency? It could be one of the biggest decisions that was ever made. Perhaps then they would not need to attend to respond to it. It does not make sense. I completely agree with Senator Sean D. Barrett that if we are talking about accountability they need to be present.
We are bringing in a provision for mandatory appearance. This has not happened before. In subsection (1) it is stated "may by resolution require the chairperson ... to attend". Senators Gerard P. Craughwell and Fidelma Healy Eames spoke about accountability, but this Bill gives local authority members the ability to require the chairperson to come before them. These powers will in many ways be similar, though not identical, to those of an Oireachtas committee. We will still have ports commercially trading and which have a commercial mandate; therefore, in recognition of the fact we are granting a substantial new power to local authority members, we are seeking a balance in order that we create a framework within which that power can be appropriately and responsibly discharged. This section gives local authority members the power to require the chairperson or chief executive to appear before them rather than just to invite them to appear.
I support the Minister fully on this one.
I understand what subsection (1) states about the local authority requiring the chairperson or chief executive to attend. However, if a new resolution were taken within six months of a previous appearance, would it not be necessary for the person to attend? The new resolution might be one of the biggest decisions to be made in the history of a particular port. Will the Minister clarify the matter?
Will the Senator explain what she means? I did not understand her.
A mandatory appearance is built into subsection (1), but in subsection (2) it states that if a person appeared less than six months ago, he or she would not have to appear until six months had passed since his or her previous appearance, even if there were a new resolution as referred to in that subsection. If a new and important decision were to be made but within six months of the previous appearance, the person would not have to reappear. Is that correct?
The mandatory requirement to come before a local authority is as a result of a substantial new power in the Bill. I am trying to seek a balance to ensure that power is discharged appropriately. In the scenario the Senator has raised, local authorities are entitled to decline to exercise the power at a particular time, instead inviting the chairperson or chief executive to come in. All the power they have to invite people to come in and to ask people to appear in front of them is still there, but I am a creating a whole new space of power for the local authorities. In recognition of the fact that a mandatory requirement to come in is such a big development, the ability to trigger it should be limited to particular time periods. Outside of those periods-----
They can still invite them in.
Absolutely. I will outline a hypothetical situation to illustrate. If something is happening within a port with which the local authority is not happy, the local authority could invite the chairperson and chief executive to come in. The person or persons will come before the local authority, but if the authority decides to require them to come in at another time, it has a new power which it can now use on top of inviting people to come before it. Since it is a new power, I do not believe it would be appropriate for it to be triggered with the same frequency with which invitations can be triggered.
Is the Senator withdrawing his amendment?
Yes, but somewhat carefully. I hope officials would not just turn up every six months. I hope they would be required to turn up and would accept invitations. We will have to conduct the experiment. People should respond to the democratically elected representatives of the people and not be begrudging or parsimonious in their attendance. Having to be required to turn up is not a good definition of accountability. I will go with the Minister as he was very generous to us earlier.
I move amendment No. 30:
In page 21, line 14, after “executive” to insert “or acting chief executive”.
This is a small amendment relating to subsection (1) in which it is stated, "There shall be a chief executive of a transferred company". Is it helpful to the Minister to offer the option of an acting chief executive rather than have to promote somebody who can fulfil the requirement and engage in a lot of public expenditure? Is it understood that if there is not a chief executive, there would be an acting one? I offer it in case it is of use to the Minister and helps in the operation of the legislation. It is onerous to have a chief executive always present when vacancies may occur for all sorts of reason.
I thank the Senator for his amendment. I assure him the drafting we have is consistent with what we have with all other harbour legislation, the origin of which is in section 35 of the Harbours Act 1996. I do not want to accept the amendment because I am fearful that if I were to introduce a term that is different from what we have in other legislation, it could create a consequence I cannot foresee and which might require me to be in front of Senators again on the issue at some point in the future.
I prefer to exercise caution and prudence by leaving the language as it stands because it is consistent with that used in other harbours legislation.
I will withdraw the amendment, despite the inducement that the Minister could return to the House.
I move amendment No. 32:
In page 23, line 35, after "company" to insert "following a vote of the local authority".
The amendment provides that a local authority chief executive may, after consultation with the transferred company, give a direction in writing to the transferred company following a vote of the local authority should he or she bring the members of the local authority along with him or her in that transaction. The purpose of the amendment is to strengthen the legislation.
I am satisfied with the way in which the legislation is drafted. Under local government legislation, it is the elected members who set the policy of the local authority. Therefore, any direction relating to local authority policy would be in respect of a decision of the elected members. The fact that the direction in writing issues from the pen of the local authority chief executive reflects the reality of the issuance of such an authority. As I indicated, under local government legislation, policy is set by the elected members.
Amendment No. 35 was discussed with amendment No. 2. Does Senator Sean D. Barrett propose to move the amendment?
No. I thank the Minister for the thorough discussion on the earlier amendment.
Amendments Nos. 36 and 37 are related and may be discussed together.
I move amendment No. 36:
In page 27, line 22, after "may" to insert the following:
", not less than one year following publication of an independent cost-benefit analysis of Bantry Bay Harbour as an independent entity, as part of the Port of Cork Company or as part of Cork County Council".
The control of two ports is jumping from one alternative form of governance to another. The first of these is Bantry Bay Harbour. It is a pity Senator Denis O'Donovan is not contributing on this occasion because he knows much more about the harbour than I do. Bantry Bay Harbour was independent before control over it was transferred to the Port of Cork Company. It is proposed to transfer responsibility again, this time to Cork County Council. Do we know the ins and outs of the evaluations done on the harbour?
The second port in question is Dundalk, which was independent before it was transferred to Dublin Port Company. It is now proposed to transfer control of the port to Louth County Council. The changes in governance over a relatively short period are almost dizzying. What is the text underpinning this? Did Dublin Port Company find Dundalk Port unviable when it took it over? Was the issue competition with Drogheda Port, the new port at Bremore or Greenore Harbour? Did Dublin Port change its mind on ownership of Dundalk Port? Fundamental decisions are being made in rapid succession. We expected Dublin Port Company to do something in Dundalk Port. Why did it want to take over Dundalk Port if it is now proposing to hand over control of it to Louth County Council?
What is the best course of action for Bantry Port's future given that its position has changed from being independent to coming under the control of the Port of Cork Company and is now to be moved into Cork County Council? These are important decisions for the areas in question and the country. There should be some text by which we can assess whether these are good moves.
I thank the Senator for raising a number of points. Neither transfer forms part of the immediate policy horizon. However, the opportunity is being taken to provide that the legislative basis will be in place should a decision be taken in future. The Bantry Bay Harbour Commissioners were dissolved in 2014 and control of the harbour transferred to the Port of Cork Company. This decision was taken to ensure the highest standards of safety given that the harbour contains Whiddy Island oil terminal. The expertise of the Port of Cork Company is overseeing and managing the arrival and departure of some of the largest ships calling to Irish waters. It was for this reason that control was vested in the company. However, if at some future point, there is no longer commercial activity at Whiddy Island oil terminal, the rationale for the Port of Cork's involvement with Bantry Port ceases. Control of the harbour should then vest in the local authority given its role in promoting local and regional development and managing the public realm generally. The transfer envisaged is not that an entity will transfer but that an actual physical place will transfer to ensure that a statutory body is entrusted with its care and management.
Senators will recall that in 2011, Dundalk Port Company was dissolved and its functions transferred to Dublin Port Company. That decision was taken in response to the very deep financial difficulties experienced by Dundalk Port Company. Since the transfer to Dublin Port Company, operations at the port have been managed under licence by a local operator. The role of Dublin Port Company is that of statutory authority and licence management. There is, therefore, no entity as such known as Dundalk Port. The role of Dublin Port Company could easily be facilitated at local level by the local authority. In line with the principles of national ports policy and local government generally, control of the harbour area should, at some future point, transfer to Louth County Council.
Given that, as I indicated, neither of these proposed transfers is on the immediate horizon, the appropriate legislative foundation is in place to deal with these matters in the future. Were such a transfer to be considered, we would have to go through the type of process to which the Senator referred in terms of assessing the costs and benefits of such a transfer to the State and completing the due diligence process currently being done on ports of regional significance. For these reasons, I will not accept the amendment.
What is the Minister's opinion not only on the acquisition of Dundalk Port by Dublin Port Company but also the prior acquisition of Greenore Port from the O'Rahilly family by Dublin Port Company and One51? Has this acquisition helped Greenore Port? The context of my questions is that Greenore Port is one of four deep-water ports we rely on to accommodate many of the panamax-type vessels arriving in the country with animal feed and other products. While the issue is not addressed in the legislation, perhaps the Minister will comment as it would be interesting to hear either his view or that of the Department on this matter.
As the port is in private ownership, having been sold in 2014, it would not be appropriate for me to comment on how it is performing.
It is a strategic port.
That is correct. As the Bill relates to the large number of ports that are owned by the State, it would not be appropriate to comment on Greenore Port as it is not owned by the State.
I understand One51 is no longer involved in the port. I presume it is completely owned by Dublin Port. Is that correct?
Will the Minister clarify the ownership?
It is in private ownership.
Dublin Port is no longer involved.
No, it is fully privately owned.
I thank the Minister for describing those two sets of developments in Dundalk and Bantry. I will not press amendments Nos. 36 and 37.
I move amendment No. 38:
In page 33, line 41, to delete “public administration” and substitute “harbour management”.
This amendment goes back to our old friend, the harbour master, and the skills that role requires. The Bill currently reads:
In considering whether to appoint a person to be a director of a company (not being a director to whom the requirements of paragraph (a) apply), the Minister shall have regard to the desirability of there being appointed persons with wide experience and competence in areas such as.
I thought harbour management might be a desirable characteristic rather than or in addition to public administration. It is a skill which is at the core of the Bill and the purpose for putting forward the amendment. It might be a moot point as to whether this would form part of the Howlin guidelines, but it is useful to take the profession of running harbours into the legislation.
I agree with the Senator on the need to have a wide board with honest experience regarding management of harbours. However, the Bill already provides for the kind of skill set for which the Senator is looking. The language used in the Bill refers to wide experience and competence in maritime transport services. The role of harbour management is clearly contained within that language. These are the reasons I am not accepting the amendment. I agree with the Senator on the need to have such experience catered for on the board. However, the language contained in the Bill does that.
I thank the Minister for his response.
Amendments Nos. 39 and 40 are related and may be discussed together, by agreement. Is that agreed? Agreed.
I move amendment No. 39:
In page 38, to delete line 22.
I know that we could joust on this for the evening but we will not do that. When this Bill was first published I contacted all the local authority representatives, sent them a copy of the Bill and asked for their comments. The feedback, particularly from those in coastal areas, was that local authority members wanted to be allowed to serve on the harbour boards for one term and that no local authority representative could serve for more than one term. I believe the Minister is on top of his brief when he says that he has consulted more councillors than I have. I will withdraw these amendments at this stage and bring them back on Report Stage, and in the intervening period I will go back to those councillors. I will be able to give a more robust argument and the Minister might consider it then. I will not delay the Minister any further and I thank him for his time and his patience.
I thank the Senator for doing that. Reference was made to my patience but it is just me in front of the House, respecting the work done by Senators and justifying what I believe is the right approach to take for the Bill. I look forward to spending some hours with the Senator continuing this work on Friday, if he feels it to be appropriate. I appreciate where he is coming from. The Bill will make a difference by allowing a wider group of councillors to have more powers in the operation of the ports. It gives new balance to the area of port management and I look forward to having the opportunity to debate that matter further with the Senator.
With regard to the section, the reference to excluding elected or co-opted members of local authorities from serving on the board of the port company is an anomaly. If the Minister or I served on a local authority and it took over the assets of a port company, we would have a direct say on the port activities through debating in the council chamber. However, if the local authority takes over the shares of the port company and becomes the shareholder, the Minister and I, as local authority members, would be debarred from serving on the board of the company. I do not see the logic in making a distinction between them. Both operations are port operations. In one instance we have a direct say and in the other instance we are not allowed participate on the board. I have always held the view that local authority members should not be barred from any board if they qualify under other criteria to be board members. That a person is a local authority member should not impinge on his or her qualifications and bar him or her from becoming a board member. If the local authority takes over the assets, councillors would be able to be directly involved, but if it takes shares in the company, the local authority members are excluded from any involvement, which is anomalous. The Minister said he would deal with this. I asked earlier if the concerns could be addressed along with Senator Gerard P. Craughwell's amendments which have been withdrawn. This is why I raise it on the question on the section.
I do not believe there is an anomaly at all. The Senator will have to explain it to me again. I wish to make it absolutely clear that this Bill will provide for appropriate separation between the board of directors and local authority members while giving local authority members more say in the oversight of the port company.
That is not the case. For example, if Drogheda Port is taken over by Louth County Council and the ministerial order signs the assets over to the council, the corporate veil is removed and the port is no longer a legal entity separately. The assets are now owned by Louth County Council. The port continues to function in every respect as if it were a company and the elected members of Louth County Council have a direct say and input into the activities of the port.
They are not running it.
They will be. It is being done in Wexford. It will be a shareholding by the local authority like any asset held by the local authority.
They are not managing it.
It will be subject to debate on it at council level. If the council takes over shares of the company, however, the Bill does not allow the members to have similar input at board level. I do not see the logic in that.
The logic is clear. It is a company.
Effectively it is the same operation.
No, it is not.
Of course, it is.
It is not. The difference is that if it is incorporated as a company, it is a company under company law.
I am talking about the operation of it. The Minister is talking about the corporate structure, which I agree with.
No. If it is integrated into the local authority, it is no longer a company, there is no board of directors and the local authority members will have their say in the operation of it. We have agreed to that.
As for the reason, if it is then brought in as a company, there would be directors of the company. Does the Senator agree with me on that point?
My point is that it would not be appropriate for councillors to be directors of that company.
It would lead to a position in which the accounts of that company would be laid before the local authority of which those directors were members. That is why.
While I do not normally disagree with the Minister and normally follow his logic, that is totally illogical. Effectively, the Minister is stating that because the accounts of the company will come before the local authority, members somehow should not be directors of the board. It is the same situation with shareholders, in that a company might have many shareholders some of whom may well be directors of the company, but the accounts will come before the shareholders at an annual general meeting. It is absolutely no different, which is why I do not perceive the logic of what the Minister is doing.
I will state directly to the Minister what I think it is. While it probably is not his doing, I have found previously, even when Fianna Fáil was in government, that there is a prejudice within Departments against having local authority members participate on boards of any companies. I merely state that if a member of a council has the qualifications that would make him or her an eminently qualified director of that company, wherein he or she would be in a good position to make a positive contribution to the development of the company and fulfil his or her fiduciary and other responsibilities as a director, there is no reason for debarring that councillor simply because he or she is a member of a local authority. That ideology has flowed into this legislation, as it does across Departments in other legislation. I also have witnessed this happen in respect of other legislation. However, how many times do companies that are subject to a Department have the Secretary General of that Department as a director? While the argument the Minister has made to me about debarring the local authority members is never made, this is fairly common practice. I believe that in this provision, individuals are being discriminated against simply because they are local authority members. I have never agreed with that and do not believe it is good enough.
However, what exposes the situation is the comparison between this scenario and council members having a direct say in the operation of a port. I presume that even though the operation of that port will continue as part of the assets of a local authority, the port will operate as an unregistered company wherein the accounts will be ring-fenced. I am sure the revenues coming in will not be bumped into the local authority and the expenditure will not be bundled into some other side of the local authority. Surely there will be a separate account to ascertain how that particular operation is performing and members will have a direct input into that operation. However, if the Minister chooses to secure not the assets but the shares, then they are not allowed to have any say in the operation itself. These two things simply do not sit together logically. That is all.
I believe they do.
I am afraid we must agree to disagree.
Of course, we can agree to disagree. It also is worth stating to the Senator that I set the policy in these areas. While I listen to what my officials say, ultimately it is my responsibility and it is a responsibility I take extremely seriously. Any comment in this regard always should be addressed to the Minister with whom the responsibility sits. I am making this decision-----
I am not addressing them to the Minister.
The Senator is addressing them to me. I am making this decision because I believe it is the right thing to do and I am standing by the Bill and the way in which it has been drafted. The reason I do is because there is a fundamental difference between a local authority member being a director in an organisation, which, of course, they are entitled to be, and being a director of an organisation that is inside the local authority of which they are member.
I did not say that.
The potential conflict of interest to which I draw the Senator's attention is a scenario in which the financial accounts for a commercially-trading company are being laid before the local authority of which the director is a member. To my mind, this clearly is a potential conflict of interest, which is why I believe this is the correct approach to take. As the Senator will be aware, it is the same approach that is taken to the Senator as a Member of the Seanad, to Members of the Dáil and Members of the European Parliament. If it is the right approach for the Senator, why is it the wrong approach for a councillor?
I actually do not believe it is the right approach. There are people in these Houses who are directors of fairly important companies who have decisions to make in that regard and who make a contribution to those companies. I believe that if any Member who is a public representative in any capacity has the expertise, then this blanket exclusion of people in any sort of representative role is fundamentally wrong. As I stated, it does not apply to public servants. One can go through the list of companies to establish how many public servants, particularly Secretaries General, are on boards of companies that would be subject in some sense to Departments and, in fact, to the particular Department of the Secretary General in question. I do not believe the Minister's issue in respect of conflict stands up in that regard. However, I take it the Minister and I disagree on this point and I will oppose the section.
I understand from where Senator Jim Walsh is coming and how local authority members, that is, elected representatives on the councils are people one can trust. However, in this section of the Bill I believe the Minister also is trying to protect them from perhaps being accused of having a conflict of interest. It is better, therefore, to have this provision in legislation in order that they are protected. While I understand the Senator's perspective, the Minister is doing the right thing in this regard. He is trying to protect local authority members from being accused of having a conflict of interest. As Members have witnessed the controversy in the past ten days about councillors getting into situations, it is important that the Minister should protect councillors in this way.
Schedule 1 reads "COMPANIES TO WHICH AN ORDER UNDER SECTION 8 OR 28 MAY REFER" and I see it as death row. Section 8 provides for the transfer of shareholdings of a company, while section 28 provides for the transfer and dissolution of a company. In examining the ports listed, I believe there is no need to have Drogheda there. It made half a million euro and its volumes have returned to pre-recession levels. Members have heard the case for Galway Port which made €450,000 and has a profit of approximately €3,000 per ship. New Ross Port definitely needs repair and if I have the numbers to hand, I believe it lost €333,000 in the last year. While Wicklow Port is going reasonably and is breaking even, then there is Dún Laoghaire Harbour which has been in trouble since the departure of Sealink. I believe it lost €3.5 million in the three years from 2011 to 2013. It needs to examine whether it can turn itself into some kind of marina and I gather a planning decision from An Bord Pleanála is imminent. I believe three of the five ports listed, namely, Drogheda, Galway and Wicklow, do not need to be under the threat of transfer and dissolution of company.
Bear in mind that this is an industry in which the port in Larne is in the private sector and presumably makes a profit. Greenore Port is also in the private sector and presumably those who put their money into it are satisfied, or at least they do not come to the House seeking assistance. Cork Port made €1.7 million, Shannon Foynes Port made €2.8 million, Waterford Harbour made €1.5 million and Rosslare Harbour made €1.4 million. That is a total of €7.4 million; therefore, this is a business.
Two ports will require radical change and I believe three can survive. I appreciate what the Minister said about the 18-month period, as it allows for the possibility of them turning around. The two that are in trouble deserve the attention of the House, the Department and anybody who can help to envisage a future for Dún Laoghaire and New Ross harbours, but some of the others are trading successfully. Is their development potential reduced by the fact that there is this threat over them? We have heard what the Galway people have said. I have heard people say the same about Drogheda and Wicklow ports, where there are 70 ships compared with nine in Arklow Port, which is under Wicklow County Council. Is this too draconian a place for all five harbours? Does having that death row list accomplish anything? In other words, if they are not careful they will be moved into local authority control. Those were my thoughts in framing that amendment. The outlook is quite grim if one is under sections 8 or 28, although it states that it "may refer". I am not sure how many ports would wish to be there.
Death row is quite a bleak description for somebody who has been lauding the ability of ports to trade successfully, although the Senator acknowledges the challenges that some of these ports face. It is correct that they face challenges and I am very familiar with them.
The Senator will not be surprised to hear that I disagree with him on the amendment. I also disagree with any suggestion that this is death row for these ports. In fact, it is the contrary. This is the first time there has been a policy that recognises the role of regional ports. If one is working in, a director of or doing business with one of these ports, there is now a national policy that recognises the key role of national ports, which we discussed earlier, and acknowledges that there is also a role for regional ports. The allegation could be made that this is about big ports getting bigger, but we are saying very clearly that there is a role for regional ports and, within that, the appropriate governance structure for them is inside the region within which they are located. That is not to say that they do not face significant challenges.
Earlier, Senator Jim Walsh described the changes he has seen in the ports with which he is familiar. I have also talked about the type of changes that are taking place within the overall sector. The Schedule, as the Senator knows given his skill in this area, cuts to the core of national ports policy. If we believe different ports have different roles to play, as I do, the characterisation in this Schedule is fundamental to this. Were we to accept the Senator's amendment, as currently drafted, these ports would sit outside of national ports policy and some of the challenges they face and the work they must do could get even more difficult outside a Bill which seeks to enact the regional dimension of national ports policy.
The Bill is giving them a ministerial pardon from death row at this stage.
I thank the Minister for his patience and this fine discussion on ports policy. I would not wish to be under section 28, but in the context of the harmonious discussion we have had, I will not press the matter. If the provisions in section 28, which provide for the transfer and dissolution of a company, were in the legislation referring to Trinity College Dublin, I would be worried. I have less optimism about local authorities taking over ports than the Minister, but he is entitled to be optimistic. I will not press the matter, but that is the background to it. Death row is a dramatic description. Obviously, I hope they will live and thrive and never come under county council control. However, we will not go there; we have been there for approximately three hours.
When is it proposed to take Report Stage?
On Friday, 18 December.
When is it proposed to sit again?
At 10.30 a.m. tomorrow.