I am not sure the section overcomes the problem highlighted in the recent case of Magher and the Minister for Agriculture. This Bill has probably been in gestation for several years as some Bills often are. When this section was drawn Magher's case was not decided but it seems this would be in conflict with the principle in the case because it is purporting to give the Minister a general power to change the law in the future in a very general way. I do not know whether that will stand up. Before one could be satisfied that it did, an analysis of Magher's case as applied to this would have to be undertaken. The way this is worded is not unusual and would have been common enough pre-Magher, but I do not know whether it is going to stand up post-Magher.
SECTION 15.
I agree with Deputy O'Malley. This goes back to what I said about the forms of the orders provided under section 6. It is another reason for reconsidering the functions the Minister will be allowed carry out by order under this Bill. The Minister has agreed to reconsider the provisions under section 6 and the type of orders that are provided in various sections. Section 15, and the matters now raised by Deputy O'Malley, is yet another reason for doing that.
There is certain merit in what Deputy O'Malley stated. I responded to Deputy Dukes in a similar manner this morning. I would not want there to be any doubt in regard to any part of the Bill or on any decision taken by any Minister at any time on any section or subsection. This law must be operable, bona fide and binding and I am prepared — I gave that commitment this morning — to review the situation to see what effect the Magher case will have on this or any other section and I hope to come back on Report Stage with some information on that.
I move amendment No. 14.
In page 16, subsection (1) (a) (i), lines 28 and 29, to delete "payable out of its revenues".
The amendment seeks to delete a phrase included by a clerical error. It is enough to say that the company should meet all charges and costs which are properly chargeable to its revenue account. The purpose of the amendment is to delete the phrase.
I agree with the deletion of that phrase. I refer the Minister to section 16 (1) (a) which states that it shall be the general duty of the company to conduct its affairs so as to ensure that the revenues of the company are not less than sufficient taking one year with another. That is a hallowed, time honoured phrase and it has been used for as long as we have been drafting legislation on these matters. It usually means that when a company takes a long time, for example, ten years with another and does not achieve its targets it gets a certain type of indulgence. We have heard the phrase used in the most recent celebrated fashion in connection with export credit insurance, where it had a certain meaning, but is there not a clearer phrase that will give a company, like the one we are setting up, a more specifically commercial mandate? That is the intention of this section.
This is the section that states this company should operate on a commercial basis. This company should operate as a prudent entrepreneur in the private sector. This company will not allow itself to get so far into debt that it becomes insolvent or to be brought so far into debt that its only hope of rescue would be for the shareholders, with a large dollop of taxpayers' money or borrowed money, to bail it out.
Is there any reason that the Government should not specify something more clearly and, I would almost say, more aggressively commercial in the mandate of this company than this rather anodyne phrase taking one year with another. It means, for example, that if this company, or any other with this mandate in its legislation, found itself for the fifth year in a row making a loss and having to reschedule debt, representatives of the company would approach the Minister and outline its problem of losses for the past five years and that given different circumstances the company's performance would improve and its prospects for the next two to three years would be favourable. The representatives would ask the Minister not to operate the hammer yet. Three years later the company may still be in trouble and its representatives may say that taking one year with another means that at the turn of the decade the airline business would expand again. They may ask the Minister to wait a little longer but after a time the company may have a big debt and will need rescuing. That is usually what is meant by saying taking one year with another in the semi-State sector.
It would be worth considering whether a more aggressive and a more specifically commercial mandate could be given to this company. One of the reasons for setting about doing this is to make it very clear that this is an area of activity that provides a service to commercial operators and which should itself be commercial.
One of our ambitions for the Authority is that it should be in a position, as time goes by and technology develops, to invest at the level required to enable us to carry out our part in the progress of the development of an integrated European air traffic control system. Unless there be any doubt, I would not like anybody to be under the illusion that I have dreadful reservations about giving up the mythical national sovereignty over our air space.
I would be much happier to see an integrated European air traffic control system with a single European sovereignty if I thought it would provide safer and more predictable air travel than a series of independent little mythical national sovereignties over air space that does not mean anything. We cannot pursue even commercial jets in our air space pace the Minister for Defence and there is not much point in having that sovereignty anyway. Our ambition for this Authority is that it should be commercial, be able to invest and be able to carry out its part in the development of an integrated traffic control system: we want it to have an aggressive commercial mandate.
I agree with much of what Deputy Dukes said. The section obliges the company to cover its costs, including the costs of borrowing and repayment of capital. Going back to the point he made about the phrase "taking one year with another", I think the use of that phrase in Irish legislation is about 70 years old — it was first used in the setting up of the ESB. We have to use this phrase; it is in accord with the international agreements under which we get most of our revenue. It is intended to give this company a strong commercial brief but we cannot say so in legislation. We have to operate within the international agreements to which we are a party. Certain services have to be provided at cost. That is outlined in the international agreements, which are binding on us. On the other side, the company will have a strong commercial brief in regard to ancillary activities. We hope to export major professional and technical services so as to create commerical opportunities for this company.
I am surprised to find the Minister extending the old habit of subservience to the imperial system to the provisions of international agreements. International agreements do not require us to use this phrase; they do not require us to say "taking one year with another".
What is the basis for that statement?
International agreements could not say boo to us if we were to say that the company shall conduct its affairs so as to make a profit every year. International agreements could not prevent us from doing that. International agreements do not allow us to say that the company shall not be able to cover its costs and they do not require us to use this kind of nonsensical expression. I would not claim to be an expert on the finer details of legislation everywhere else, but I would bet my bottom dollar that one would not find the equivalent anodyne phrase in legislation anywhere else. If we want this company to have a commercial mandate we can say so in our legislation and we can say so in a clearer way than saying "taking one year with another".
It must be obvious to all Deputies who have contributed to this debate that we want this company to have a commercial brief. The Authority will not be subject to the criteria governing the Civil Service. This will give these professional people, who are doing such an excellent job, taking into account the history of Irish aviation, an opportunity to engage in commercial activities. We see major opportunities for the Authority. However, we have been a party to several international agreements for many years and they put certain constraints on the way we operate, particularly from a revenue and cost of service point of view. Based on that, we have to ensure that we are in tune with the directions of those agreements.
We have an opportunity to give the Authority a commercial brief and the right to engage in ancillary activities, for example, services, training, consultancy etc. I am confident that it has the expertise to fully realise its potential in these areas. Article 1 (2) of the Eurocontrol en route specification states:
The charge shall constitute remuneration for the costs incurred by Contracting States in respect of en route air navigation facilities and services and the operation of the route charges system as well as the costs of Eurocontrol in operating this system.
So what? I am familiar with Eurocontrol. I spent many frustrating months trying to make the Commission Transport Director General see sense on the argument we were having about Eurocontrol. What the Minister has read does not in any way oblige us to use the words "taking one year with another". That provision in Eurocontrol is designed on the one hand to ensure that none of the contracting parties will have a basis for feeling that it is being ripped off by another party which is making huge profits and on the other hand, to ensure that none of the contracting parties will be able to say that the mandate they are given requires them to make huge losses, thus leading to refusal to operate the system. That provision does not have anything to do with how one writes the commercial mandate for a company in a section of our legislation.
May I respond to Deputy Dukes.
I have to move on.
I appreciate your wish not to delay the committee. Deputy Dukes, who has a good commercial brief and background, will understand that unless we are very careful about the mandate we are giving the new Authority we could give rise to a situation where companies which use our airspace and pay us accordingly may decide to reroute their flights. We have to ensure that they are given the incentive to continue to use our airspace. Many of the flights which use the upper regions of the airspace do not use our ground services. We must be careful in framing legislation to ensure that that incentive is maintained; otherwise there may be no commercial brief available for the company.
If we were really serious about giving this company a commercial mandate subsection (2) would not be included. Section 16 (2) provides that the provisions in subsection (1) and section 14 shall not be legally binding. In other words, the provisions in subsection (1) are aspirational and merely window dressing, they do not have to be taken too seriously. Of course, the get-out clause is the phrase, "taking one year with another". We know what that phrase has led to in practice — companies which consistently made a loss year after year tried to justify their inclusion within the relevant Act because they once made a profit in the thirties. I would not like to see that happening in this instance. Consideration might be given before Report Stage to deleting subsection (2) which takes away any enforceable meaning from subsection (1) and underlines the fact that that subsection is really only window dressing.
I am very optimistic about the commercial future of this new Authority. Like Aer Rianta, it will be a successful agency. I want to give the Authority a strong commercial mandate. I also want to ensure that we are in tandem with international agreements and that we retain the incentives for other airlines to use our airspace. Taking into account what Deputies Dukes and O'Malley said, I will look at the section between now and Report Stage to see if I can fine tune it in such a way that will make the commercial aspect more transparent.
Every Minister who ever set up a company was very optimistic about its future.
I have no doubt the Deputy is speaking from experience.
No, I did not set up any companies.