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SELECT COMMITTEE ON PUBLIC ENTERPRISE AND TRANSPORT díospóireacht -
Tuesday, 2 Mar 1999

Vol. 2 No. 1

Postal and Telecommunications Services (Amendment) Bill, 1998: Committee Stage.

I wish to advise Members that a printing error has resulted in incorrect line references from line 6 onwards in page 7 of the Bill. This error affects amendment No. 31, in the name of the Minister, and amendments Nos. 30 and 32 to 34, inclusive, in the name of Deputy O'Shea. These amendments have been redrafted with the correct line references and recirculated on a substitute list of amendments.

Also, on pages 6 and 7 of the Bill, the shoulder notes to the First Schedule and Second Schedule refer to section 3(1) and (2), but there are no such subsections in the Bill. It should be section 2(1) and (2).

Is there agreement to those changes? Agreed.

SECTION 1.

Amendment No. 11 is cognate to amendment No. 1 and they may be discussed together.

I move amendment No. 1:

In page 3, subsection (1), line 19, to delete "p.l.c.".

These are technical amendments. The Explanatory Memorandum states that the Bill will lift the restriction on the company using the word "limited" in its title but in this case the company is still simply Bord Telecom Éireann, it is not a plc. The company may decide in the future to include p.l.c in its title but, as it stands, it is simply Bord Telecom Éireann.

The Assistant Secretary informs me that the name registered in the Companies Office is "Bord Telecom Éireann p.l.c.".

Even though the legislation does not provide for that?

It does. The Bill gives recognition to the company's title as registered in the Companies Office. The 1983 Act stated that the company would be exempt from the requirement of section 6(1)(a) of the Companies Act, 1963 to include the word "limited" or "teoranta" in its title, but that is how the company is registered.

Amendment, by leave, withdrawn.
Section 1 agreed to.

Amendments Nos. 2 and 3 are out of order as they are outside the scope of the Bill.

Is it the Minister's intention to address these points which have caused difficulties in the past in other legislation?

I am glad to talk on the amendments. The 1996 Bill, which was brought in by the previous Government, contained a vacuum in that there was no mention of accountability for the director. The legislation immediately ran into trouble in the context of the committee. Etain Doyle has come before the committee several times, but by law she is not obliged to do so. We are arranging a section in a Bill which willrender the Director of Telecommunications Regulation accountable to the committee, the Houses of the Oireachtas, through a statement laid before it, and the Minister, as appropriate. Therefore, upcoming legislation will cover the vacuum identified in the amendments put forward by the Deputy.

Amendments Nos. 2 and 3 not moved.
NEW SECTIONS.

Amendments Nos. 4 and 7 may be discussed together by agreement.

I move amendment No. 4:

In page 3, before section 2, to insert the following new section:

2. Section 8(2) of the Act of 1996 is hereby amended by the insertion after paragraph (a) of the following paragraph:

'(aa) The Minister may not dispose of any shares in the company other than as provided for in subsection (3)(a) without the terms of such sale being laid before and approved by Dáil Éireann.'.".

These amendments were previously tabled by Deputy Séamus Brennan to the 1996 Bill.

I recognise them.

What was valid then is surely valid now when Fianna Fáil is in Government. Amendment No. 4 seeks that the Minister "may not dispose of any shares in the company other than as provided for in subsection (3)(a) without the terms of such sale being laid before and approved by Dáil Éireann". It is self-explanatory. The Dáil would still have a role in relation to the Minister disposing of shares.

Amendment No. 7, which is a repeat of Deputy Brennan's amendment to the 1996 Bill, seeks that "Notwithstanding the repeals effected by this section, the Minister shall retain a shareholding of at least 25% in the company." I would like to hear the Minister's views on whether she considers it appropriate that the Government should continue to hold a substantial share in the company.

That is a matter which the Government will decide. We have not yet deliberated on how many shares we will sell. I expect we will deliberate on that matter in the next month or six weeks. I will bring memoranda to the Cabinet, which will then make a decision. I do not know if the Cabinet will decide to sell the shares in one or two tranches. It is prudent to dispose of the shares in two tranches, but that remains a matter for the Cabinet. I have no idea what percentage, if any, will be retained by the State. Our financial and legal advisers are putting forward ideas on that matter.

Amendment No. 4 provides that the Government shall seek permission from Dáil Éireann before taking action. I will certainly make statements in the Dáil on the plan, the percentage of shares and various other matters relating to the shareholding. However, I do not think it would be wise to include such provision in the Bill. Though it was not my brief in Opposition, I remember Deputy Brennan tabling similar amendments. I kept an eye on the debate and would hop up and down if I wanted to make a contribution to it. However, that debate took place in 1996 when there was a derogation until 1 January 2000. The purpose of the Bill was to secure a strategic partner for the company. Nobody ever dreamt that this business would gallop on in the manner in which it has. I will give a commitment that I will make a statement in the Dáil on whatever the Government decides in its collective wisdom regarding the number or percentage of shares.

I welcome that undertaking by the Minister. However, I recall that on the Second Stage debate Deputy Upton spoke about the information rich and the information poor, based on the idea that telecommunications will play a very large role in information technology, as is currently the case. To maintain a strong element of democratic control is something this party sees as important. We should all be concerned if people who are outside the loop in terms of the fruits of the Celtic tiger are denied access to IT and the communications system. In this context there should be democratic safeguards. I hope the Minister will re-examine this issue. The Minister did not give her personal view on whether shares should be retained by the State.

I said it is a matter for the Cabinet to decide. My view is that the disposal of an enterprise of this size should not take place in one tranche. Not all my colleagues share that view and that is why I said it is a matter for the Cabinet to decide. The State should for the moment retain some shareholding in Telecom Éireann, although I do not know how long it should do so. That is a personal opinion.

I take it that the Minister at this time is not disposed to accepting amendmentNo. 4 in spite of its genesis.

The fact that it reflects Deputy Brennan's amendment to the 1996 Bill does not sway me very much. I will certainly come to the Dáil when the Government has made a decision, which is only right. If everyone does not share in the interconnectivity, the broad band and the other links in this context, then we will create another elitist layer. When President Clinton was in Ireland he spoke about the democratic nature of the information society. Its facilities should be as available to the slums in Karachi as in the boulevards of Paris. When the Government takes a decision concerning shares and related matters I will come to the committee or the House for a short debate.

Amendment, by leave, withdrawn.

Amendments Nos. 5, 6, 10 and 12 are related and may be discussed together by agreement.

I move amendments No. 5:

In page 3, before section 2, to insert the following new section:

2.-Section 10 of the Act of 1996 is hereby amended by the insertion after subsection (1) of the following subsection:

'(1A) In the event of the sale or transfer of shares in the company, the proportion of employee directors in relation to the total number of directors on the Board shall remain fixed at not less than the proportion of employee directors at the date of passing of this Act,'."

We are revisiting previous amendments. Amendment No. 5 concerns worker directors and maintaining them at their present strength. Amendment No. 6 further clarifies this by proposing the insertion of a subsection stating "Notwithstanding the provisions of subsection (1), the number of employee directors shall not be reduced below 4".

The chairman also asked me to address amendment No. 10. Logically the Worker Participation (State Enterprises) Acts cannot apply after the company is privatised. In this amendment I am seeking another mechanism to ensure the level of worker directors is maintained. Legislation applying this has been implemented for State enterprises. Obviously it would be illogical to leave that in place. I want another legislative device to maintain what I am seeking.

The purpose of amendment No. 12 is to allow one worker director to be retained as the State dilutes its shareholding. It is being suggested that the Government might sell 35 per cent of its 50.1 per cent share in one go and retain 15 per cent. The proposal in section 5 allows a worker director to "continue until such date as may be specified by the Minister". The option is for the Minister to have an ongoing role while the State retains a shareholding which is not the present level of majority 50.1 per cent. I understand ICTU has made representations on this matter. If, for example, the Minister was to sell 30 per cent or 35 per cent, in the revised situation there would be one worker shareholder so members would at least have a voice on the board. That is a reasonable proposal. It may be the Minister's intention already in the current wording. I am not sure of her view on it.

I understand it is intended that as the worker directors go, the CWU intends to nominate a Member of the Oireachtas to fill one of their positions.

That would not be to fill one of the worker director positions.

It would fill one of the shareholding positions.

I understand Deputy Dick Spring is the intended person and he would be a fine representative on the board. Will the Minister clarify the legal situation on this? Should we repeal this in its entirety? Perhaps Members of the Oireachtas should be members of State boards. What was the justification for the legislation in the first place? If it was justified will she please explain why an exception is being made here? Deputy Spring would not only make a good board member, he would also make an excellent UN Commissioner or EU Commissioner. There are a number of other jobs to which he would be well suited.

We need someone for the EU at the moment.

I will not trespass on that sensitivity. I believe it is being dealt with elsewhere. I ask the Minister to outline the original policy which precluded and debarred TDs? What is the thinking? I could not discover in the Bill if the Minister proposes to allow for a TD? I do not want to personalise the issue. I want to know the principle and the policy.

My amendment for one worker director states the Minister "may allow" rather than "shall allow" so it would be at the Minister's discretion. However it would provide the power that as the shareholding is diluted there could be one, and on the day the State has no shares, that worker director would go. That is a reasonable compromise given the unions' representations.

There are four amendments relating to this matter. As Deputy O'Shea stated the Worker Participation (State Enterprises) Acts can no longer apply. Yet ICTU has made representations to me. About one month ago I met Patricia O'Donovan and a varied group of State employee or worker directors on the boards of State companies. In the course of a good conversation the group realised and said to me that this was a far bigger issue than they had realised. This has moved on more quickly than any of us had anticipated. The sale will I hope take place at the end of June and it has all happened in accelerated fashion.

Following my meeting with ICTU, I have spoken informally to Con Scanlon by telephone three or four times. The two unions know about this too. On 1 March I received a letter at 4.45 p.m. from Peter Cassells regarding legislation dealing with the future of Telecom Éireann. It reads.

Dear Minister,

I refer to the legislation being considered by the Oireachtas on the IPO and the future of Telecom Éireann. It has always been our understanding that in addition to their role as shareholders, workers would continue to be represented on the board of Telecom as employees of the company. This is a crucially important issue for Congress, not only in the context of Telecom, but also in the wider context of the development of social partnership at company level. Ways and means need to be found to accommodate worker representation on the board of Telecom and Congress would welcome an early meeting, either directly or through the Department of the Taoiseach under Partnership 2000 to discuss this matter.

Following from that I telephoned Dermot McCarthy and Paddy Teehan who deal with these Partnership 2000 meetings. I replied to Peter Cassells. My letter was as follows:

Dear Peter,

I refer to your letter of today's date. As requested, I agree with your suggestion that Congress should have an early meeting with the Department of the Taoiseach under Partnership 2000 to discuss this issue. The issue of representation of employees on the board of Telecom Éireann is an issue that has implications far beyond Telecom Éireann itself.

That is because it will apply to all semi-State bodies. It is not just the ACC and the TSB. It is not for me to decide on what is becoming a more global issue. My letter continues:

Accordingly I have asked Dermot McCarthy, assistant secretary in the Department of the Taoiseach to raise discussions with you in the context of Partnership 2000.

That was written yesterday evening. They know Committee Stage is taking place now. I share the point of view of the Deputies but I do not yet know how it can be accommodated because talks must take place. Perhaps it need not be a worker director. It could be someone representative of or aligned to their interests, in the public and workers' minds. It would be very satisfactory if we could arrange that. The Bill will go to the Seanad and then to Report Stage in the Dáil next. If both Deputies O'Shea and Yates agree, we will see how the issue has developed when we reach that point.

Certainly there would not be four as it would skew the board's numbers for representation. It would not be a simple matter to put in legislation, however, I am open to the talks which will take place under Partnership 2000 and to the idea of somebody who is representative of, or aligned to, workers' concerns.

What does section 5 allow? Does it allow the Minister continue——

The section provides that the Minister will decide when the worker directors cease their business.

Does the section allow the Minister continue?

I will fix the date after whenever it is decided to do that.

Is that already provided for in section 5?

No. The section allows for the cut-off point. We cannot employ or appoint him or her under the Worker Participation (State Enterprise) Act because that covers the semi-State bodies and is no longer appropriate. I suggest we allow the talks to take place. The Bill will go the Seanad and will then be sent back to the Dáil. However, the matter may be resolved on Report Stage.

I am agreeable to that procedure and will withdraw my amendment on the basis that the Minister is not opposed to the idea.

I am not opposed to the idea. A resolution reached between Congress and the Partnership 2000 committee may not provide for a worker director, but for somebody conducive and aligned to workers' concerns.

It could be Peter Cassells or somebody like him.

I will withdraw the amendment and await the outcome of talks which are to take place.

The CWU has a right to an ESOP director who would guard the interest of the trust, the money put into Telecom Éireann and the shares that were purchased. That was the principle laid out, which I believe everybody accepted. Approximately six weeks ago the general secretary of the union told me the union intends to nominate Deputy Spring to be the ESOP director. I thought it was a good idea because Deputy Spring is a person of prestige and would be well qualified to carry out that remit. I was asked on "Morning Ireland" why I appointed him. I did not do so because he was nominated by the union and has technically not yet been appointed.

After the IPO takes place, Telecom Éireann will be a publicly quoted company, albeit one in which we will still have a shareholding. The Bill proposes to repeal various legislative measures which currently apply to Telecom Éireann and to any other semi-State body, but which are inappropriate in a publicly quoted company. This includes the provision I mentioned on Second Stage which precludes Members of the Oireachtas from sitting on the board of the company. That part of the 1983 Act will, therefore, have to be repealed because they sit on the boards of private sector companies as appropriate.

ESOP has the right to nominate a director and it has nominated Deputy Spring. The transfer of shares bought by the workers is planned to take place by the end of March when, it is hoped, the ESOP director can take his place. Deputy Spring will not represent the State but the ESOP trust, which is the money the workers have put into purchasing the 14.9 per cent of the shares. Neither he nor any other Member of the Oireachtas could be on the board per se, but Deputy Spring will be on it as a representative of the trust when the section of the relevant legislation disallowing Members of the Oireachtas to be members of a semi-State body is repealed. We got legal advise on that.

Take the case of a residual State shareholding in the ACC and the TSB where neither was State owned. Will this legislation apply in that instance or will it also apply to all semi-State bodies? Will it be possible for a Deputy or Senator to be appointed to a board in which the State, arising from this legislation——

It applies only to Telecom Éireann. I do not know what arrangements the ACC will have for workers to purchase shares.

Is it the legal position that in other State companies where the State has a minority stake, a Deputy cannot be appointed?

Deputy Spring will be an ESOP director. When other semi-State bodies come up for consideration, I do not know what State holding the workers will buy or get.

This situation will probably arise again.

It will. When that happens, say to the ACC, the relevant legislation will have to be repealed. A similar position would apply to every semi-State body

If there was a shareout of EU Structural Funds to telecommunication companies, which delivered a large proportion to Eircom and a smaller proportion to Esat Digifone, it could be argued that including a Deputy on the board might give the relevant company more influence. It is important to protect the best interests of Eircom. Presumably the thinking behind the present legislation is that Deputies would have inside knowledge about public sector policy or allocations.

That would be in respect of semi-State bodies.

In that instance they would represent the State's interests, which would be incorrect.

A competitor might complain.

If there was a conflict of interest, a board member would excuse himself. I believe Deputy Spring is well qualified for the position and would make a good board member.

Personality is not the issue.

I believe he would make a good board member. As a representative of ESOP he will make a contribution. He is also a person of standing. I received legal advice from the Attorney General which states: "Once the IPO Bill is enacted there is no problem with the legislative mechanism to permit Deputy Spring to sit on the board". The Attorney General's office also makes the point that there is no general principle that members of the Oireachtas cannot have interests, but only that they must declare them.

Amendment, by leave, withdrawn.
Amendments Nos. 5 to 7, inclusive, not moved.

I move amendment No. 8:

In page 4, between lines 3 and 4, to insert the following subsection:

"(3) Notwithstanding the repeals effected by this section, the company shall continue to recognise any trade union which was recognised by it immediately before the passing of this Act.".

This amendment is self-explanatory. It seeks a continuance of trade union recognition.

Section 16(2)(e) of the Postal and Telecommunicatons Act, 1983, provides that: ". . . . the company shall, in consultation with recognised trade unions and staff associations, set up machinery for the purposes of negotiations on the pay and conditions of its staff." There are no plans to repeal that provision. This section establishes the principle of the company recognising and carrying on business with trade unions. We are not repealing that section of the 1983 Act.

Does that protect against a hypothetical situation where the company could decide not to recognise a particular trade union?

Section 16(2) of the 1983 Act provides that the company shall, in consultation with recognised trade unions and staff associations, set up machinery for the purposes of negotiations of the pay and conditions of its staff. We do not propose to interfere with this provision. The Deputy is seeking to copperfasten that provision which is not being repealed by the 1983 Act.

I will consider what the Minister said and withdraw the amendment.

Amendment, by leave, withdrawn.
Section 2 agreed to.
SECTION 3.

I move amendment No. 9:

In page 4, between lines 9 and 10, to insert the following subsection:

"(2) Notwithstanding the repeal by this Act of section 90 of the Act of 1983, in so far as that provision applies to the company, a scheme made under that section shall continue in force and, subject to any enactment or provision of law, may be amended or revoked by the company.".

This amendment relates to schemes made under section 90 of the 1983 Act which is listed for repeal in the Schedule. The schemes established under this section set out the company's tariffs and conditions of service to customers. It is important that schemes already established under section 90 should continue to have effect after repeal of the section. This would ensure that contracts made with customers under these schemes will continue to be valid. This amendment enables that to happen.

Deputy Yates raised last week the question of a customers charter and other matters relating to consumers. The amendment is similar to the existing provision in section 3 of the published Bill which provides that despite the repeal of certain parts of section 46 of the 1983 Act, superannuation schemes made under that section shall continue to have effect until such time as they are revoked or amended. The amendment seeks to consolidate the company's rights to set out its tariffs and conditions of service to customers.

The Minister mentioned the point made by me about the customers charter and the information age town commitments given to 47 towns. Do those commitments have to be honoured on an ongoing basis and what will be done to make good outstanding commitments in that regard?

I noted what the Deputy had to say. Any commitments given or entered into should be honoured. How could it be a company of repute if it ditched its commitments? Since that debate took place in the Dáil I have had representations from one of the towns concerned that it has not received money or equipment. It is my intention to speak to the chairman this week and inform him that it is the wish of the Oireachtas that the customers charter and the information towns provisions would be honoured by the company.

Amendment agreed to.
Question proposed: "That section 3, as amended, stand part of the Bill."

The section deals with superannuation schemes. I asked the Minister during my contribution in the Dáil to outline the pension liabilities. I received an information note from the Department of Finance on 30 December which I would like to discuss with the committee. It states:

. . . . By 1993 the amount owed by the Minister to Telecom Eireann and An Post funds [pension funds] had reached £460 million. If the Minister's liability had continued to accumulate it would have reached £1.1 billion by the year 2000 and £1.8 billion by 2007.

It goes on to say:

"The present value of the future liability to the Exchequer to both funds at present is £1.15 billion, £725 million to the Telecom Eireann Superannuation Scheme and £400 million to An Post superannuation scheme."

I am aghast at these figures.

The first part was done during your party's term in office.

I have not made any political points yet.

I was aghast too.

Is there any way this can be capped. The note also states: "In the light of improved budget situations, the Government, in 1994, approved arrangements whereby the Minister's liability would be capped at its end 1993 level of £460 million."

They continue to pay it each year.

We all agree with the ESOP at 14.9 per cent but now £725 million is to be added to this. Everyone except the taxpayer is walking away with something. It is a phenomenal amount of money. The figure was £460 million in 1993 and it has now reached £1.1 billion. It has increased by £690 million over a period of six years, which is a huge increase. Perhaps someone could explain, from an actuarial or other point of view, given that inflation has been in single digits, how a cumulative figure could have more than doubled over that period. I would like to hear the committee's observations on the matter.

When we had the Estimates debate here we got all the information from the Department of Finance. It is a matter for the Department of Finance but I was aghast when I saw what was owed because I saw my fine plans evaporate, as I am sure did all other Ministers. Perhaps the Department of Finance will not demand the full amount. It will have to be paid at some stage. Perhaps it is part of the national debt. I will write to the Deputy on the actuarial position because I do not know enough about it.

Has the Government considered whether the proceeds can go to the pension fund?

Thought has not been given to that. Those around the Cabinet table - apart from the Minister for Finance and me, and perhaps the Taoiseach and the Tánaiste - would be aghast at this; it is an enormous sum of money.

Question put and agreed to.
Section 4 agreed to.
Amendments Nos. 10 to 12, inclusive, not moved.
Section 5 agreed to.
SECTION 6.

I move amendment No. 13:

In page 5, between lines 13 and 14, to insert the following subsection:

"(2) The legal provisions relating to the interception of communications shall apply to all licensed telecommunications companies equally, where sought by the Garda Síochána or other State authorities.".

I spoke to people in the legal department of a licensed telecommunications company operator and asked if they could suggest any amendments to the Bill. One of them asked what would happen if in accordance with the law, a Garda superintendent asked for us to tap someone's phone and it was one of theirs as opposed to one of Telecom's? They said that at the moment this is a legal grey area. Does it need to be put on the same footing as procedure for non-Telecom licensed operators as for Telecom licensed operators? This will become more prevalent in years to come.

I propose that whatever legal provisions apply to Telecom Éireann vis-à-vis the State authorities, the same would apply to those licensed by Etain Doyle to operate the national system. If a tap or an interception is justifiable in circumstances for Telecom Éireann it should apply equally here.

Telecom Éireann is being discommoded because it is not subject to the provisions.

One could have a drugs baron who would go to ESAT for a telephone connection.

The Deputy's amendment makes sense. The legal people are not too happy with the wording.

I am not surprised.

They have to have the last word. Proper wording can be agreed but the thrust of what the Deputy said is commonsense. Why should one company be subject to the interception?

That makes eminent good sense, but was this not envisaged in the legislation which allowed for the other operators to come in? It is strange. After today's meeting there will be a major increase in drugs barons and various money launderers applying for an 086 number rather than 087. Deputy Yates has put his finger on a very interesting lacuna in the law. This will apply in the future.

That is the point. Statutory instruments introduced many of the earlier provisions. This illustrates that Bills are not always perfect. If there is one interception arrangement put upon one company it should apply to all companies.

I agree with the Minister and Deputy Yates. It would unnerve me if there is a legal grey area there. I can see a situation where, for example, the CAB could find itself frustrated in a court action if it were to be established by a criminal that they were subject to a phone interception on an 086 line. There is a legal lacuna there.

ESAT is covered by the interception arrangements. There are other companies, such as Ocean, who advertise as giving services. It is a matter of getting proper wording. I accept the thrust of the amendment.

I will be happy to withdraw this but on the advice received by the Minister that ESAT is covered, it was intimated to me that if, for instance, a drug baron has an ESAT phone and the gardaí consulted ESAT who are agreeable to the Garda intercepting the calls the drug baron can sue ESAT.

They are covered by statutory instrument.

ESAT is already covered.

We are now of the opinion that statutory instrument is not sufficient, that primary legislation is required.

It will be dealt with in this Bill.

Yes. We will get the proper wording.

It could be dealt with in this Bill vis-à-vis the main subject of this Bill which is Telecom and its successor company. It may need to be considered in a broader sense to give cover across the board. It is an interesting point. I agree with the Minister that a statutory instrument would not be sufficient in law to provide sufficient cover for the CAB and the Revenue Commissioners if they get the new draconian powers, which I am campaigning against. A situation might exist where we would find ourselves in a constitutional mess.

That is to take up the point made by Deputy Yates that the person so arraigned under the interception would have a case against ESAT. I do not think statutory instruments have sufficient force in such a situation; it requires primary legislation.

I agree. I am just making the point that it is something that would need to be highlighted. To be fair to Deputy Yates, he has done us a considerable service.

Between now and when we meet again, we will consider that. The thrust of what he said is correct.

Amendment, by leave, withdrawn.
Section 6 agreed to.
SECTION 7.

I move amendment No. 14:

In page 5, lines 15 to 17, to delete "company, shall, to such extent as may be sanctioned by the Minister for Finance, be paid out of moneys provided by the Oireachtas" and substitute "shall be borne by the company".

I drafted this amendment on studying how much we would be taken for on the superannuation scheme. It would not be a bad thing if the company were to bear the cost of this.

The sum of £1.4 billion?

No, the cost of AIB and Merrill Lynch. The taxpayer will not get much lose change from the sale of this.

They will get a chance to buy, I hope.

No, the taxpayer who has invested. There is an overlap here. KPM Telia and so on have done rather well out of this. The price at which everyone bought in, be it by ESOP or KPM Telia, was good. They have all done well. I do not think it is unreasonable that the company should bear the cost of this exercise. Has the Minister an indicative figure of what the cost of the sale share is likely to be? I have heard figures mentioned for, I think, Merrill Lynch——

The AIB capital markets for Merrill Lynch.

Has the Minister an indicative figure as to whether it is £1 million or £5 million?

No, but each day there seems to be a new addition to a subsection of some of the advisers. I am sceptical about advisers but I am told we need them. Every day there seems to be a new addition to a subsection by the advisers.

Or some other helpers.

I am very sceptical about advisers, but I am told we need them. I do not share Senator Ross's viewpoint that all I have to do to improve share prices is to appear on television. However, I do have an instinctive small town view of advisers which is that there are an awful lot of them, they come and go, they look important and they think they are important.

They probably are.

Advisers cost a lot of money, but I am told they are necessary and that we will not get value for money or be properly equipped if we are not accompanied by them all the way.

One day last summer - in the latter half of August - I got into a lift with four or five very important looking people who were carrying briefcases, bags, mobile telephones, etc. I greeted them and asked them if they were going to meet someone. They all clutched their briefcases to their bosoms and said they were not allowed to talk. I said I did not want to discuss important matters with them because it was not part of my brief. When they recognised me, I was invited to dinner the next night, but I did not take up the offer. They are full of themselves, and perhaps they have reason to be. Mr. Andy Cullen is in charge of some of these people, but I do not know if he would agree with my view.

Does the Minister have an indicative cost figure?

There is no better man than Mr. Andy Cullen to bring those advisers to heel.

He has been promoted to Assistant Secretary.

It is not before time. Mr. Cullen and I are old colleagues and we worked together in the past.

I raised the point on Second Stage that the privatisation of companies in the UK has given rise to some debacles, but there was never any diminution of the extraordinary charges the experts levied. On the one hand, the taxpayer was badly advised and, on the other hand, the taxpayer had to pick up the tabs for the large fees because they were front loaded and were paid by the seller. Deputy Yates raised a very good point about those costs. Is there some way they can be rolled back into the company? That would have some impact on the value the taxpayer gets from a sale.

We allowed for a figure of up to £40 million in the Estimates. Everyone ran around saying the figure was a secret, even though it was written in the Estimates. Once those people know an amount of money is specified, they will work to that in their bills. We would all do the same if we were international experts. The number of advisers is multiplying by the day. I am not exaggerating when I say there are an awful lot of experts. I am sure they will give us excellent advice and it will all work out.

It is normal international practice for some of the costs of the transaction to be borne by the company. This is particularly true in relation to assets which will raise the profile of the company like marketing, public relations, the setting up of a share register, share office, etc. We are currently discussing the sharing of the costs with the company.

Naturally it is normal practice to do this, because normal practice is determined by these people who have made such an extraordinary cack-fisted effort at privatisation in a number of other countries. It is not necessary for us to follow blindly the normal practice. The reason the sum of £40 million was included in the Estimates is that no-one every reads them. The best place to put a secret is in the Estimates.

I was then told not to mention the money.

I can imagine that happening. It is premature for us to be discussing this matter if discussions on sharing costs with the company are taking place. It is rational to share costs. On the issue of costs, I think Deputies Yates and I share a common concern about the lunatic decision to ditch the name. I hope we will not be front-loaded with those costs.

We will have an amendment on that issue later.

On the general subject of costs, I do not accept I should not criticise advisers and people will say it to me when I leave here. I am sure they are worthy men, but I still have the right to criticise their immense fees. I await the result of the float to see if their huge fees are worth it. There seems to be advisers, advisers to advisers and so on down the line.

Is there any way we could provide that if the flotation is not successful the advisers could face a reduction in their fees?

Do you mean like the way teachers were paid by the results their pupils achieved? That was the case a long time ago.

Humble Dáil Deputies quickly lose their seats if they do not produce the results they promised.

They are not re-elected.

My official, Brendan Tuohy, tells me that some of the fees are related to results. I was not told that before.

Like the Minister, I am staggered by the sum of £40 million. The usual procedure is that an estimate for £10 is moved and post hoc a supplementary estimate is moved. The procedure in the Department of Agriculture and Food is to specify a minimum figure, not an upper limit.

When I was spokesperson for finance I dealt with a major row. Deputy Bertie Ahern was the Minister for Finance at the time. Greencore and Irish Life sold shares, but the sums involved were nothing like £40 million. They retained advisers to the Government, advisers to the sellers of the advisers and other consultants. I agree with the Minister that it is not uncommon to employ a plethora of advisers, but at a fraction of the sum mentioned.

I have been told by stockbrokers that the reason AIB were chosen was that they had a retail network of banks. In other words, if shares were sold across the counter people would need an office network whereas a stockbroking firm would not have that. If that is the case they will get a commission on the sale of the shares or there will be a facility at that stage. Given that they have a potential income from a commission, the same as when any piece of paper is sold across the counter, is there a facility for a commission or will they be sold at an all-in price. Are we looking at a further retail commission as well as AIB advisory and consultancy fees? We both agree these shares should be sold at retail price to the public.

I asked them if post offices could be used as well. Post offices are located everywhere and people feel at ease using them. They were surprised when I suggested that they use the chain of post offices. I also thought it would be good business for post offices.

All of them are now part of the figures.

Will there be a retail commission?

I am inclined to stand my ground on this amendment. If Alfie Kane had to pick up the bill for this, he would be a lot harder, knowing Alfie Kane, than the Department on controlling the cost.

I will withdraw the amendment because I will table one on Report Stage requesting that a proportion of the costs be borne. Section 7 states: "money required to meet the sums payable . . . . shall be sanctioned by the Minister for Finance". It does not place a limitation on the exposure to the State. The Minister should consider this——

In conjunction with the company.

——to put herself in a negotiating position and place a cap on it.

The inclusion of the words "in conjunction with the company" can be considered before Report Stage. Irish people have a tendency to bow their heads to advisers as if they know everything about everything, but they do not.

I will withdraw the amendment on the grounds that an alternative wording will be considered.

Amendment, by leave, withdrawn.
Section 7 agreed to.
Section 8 agreed to.
NEW SECTION

I move amendment No. 15:

In page 6, before section 9, to insert the following new section:

9.-The Ombudsman Act, 1980, the Ethics in Public Office Act, 1995, the Prompt Payment of Accounts Act, 1997, and section 521 of the Taxes Consolidation Act, 1997, shall not apply to the company.".

Because of its status as a predominantly State-owned company, Telecom Éireann comes within the ambit of the Ombudsman Act, the Ethics in Public Office Act, the Prompt Payment of Accounts Act and the Taxes Consolidation Act. The purpose of the amendment is to exempt the company from the scope of these enactments. The inclusion of this exemption avoids the necessity of enacting separate statutory instruments to effect each exemption. Once the company becomes a publicly-quoted and largely privately-owned entity its obligations under the enactments mentioned will no longer be appropriate.

I move amendment No. 1 to amendment No. 15:

In the first line, to delete "The" and substitute the following:

"As and from the date on which legislation is enacted and comes into operation providing for equivalent alternative provision (in relation to the three next following enactments), the".

When the company becomes a privately-owned entity the Ombudsman Act, the Ethics in Public Office Act, the Prompt Payment of Accounts Act and the Taxes Consolidation Act will no longer apply. I am concerned about the protection of the consumer. Similar provisions to those contained in the Acts mentioned should be put in place. If the protection afforded by these Acts is removed, how will customers with a grievance seek redress?

Deputy O'Shea has a point, even though he has not indicated what protection should be provided. We referred earlier to the new legislation which will allow the Director of Telecommunications Regulation, Etain Doyle, to appear before an Oireachtas committee. I have had reason to write to her about consumer complaints about the quality of reception. Her office is not in a position to deal with such complaints because it is up to its ears in dealing with Brussels and the lawyers of licensed service providers. The Minister should consider whether a consumer protection unit should be established in that office as the current service is weak.

The new company should not be burdened with special conditions which would not apply to every other company trading in the private sector. I do not like referring to the United Kingdom as a model but the Office of Telecommunications, Oftel, and the equivalent offices created to deal with some of the privatised companies have a strong consumer protection element.

My experience in writing to the Director of Telecommunications Regulation is positive. I have written to her on two occasions about MMDS and the failure of a cable television company to provide cabling. She did extraordinary work and within days the problems were resolved. Deputy Yates is correct. Given the size of the other companies involved, which in a sense are also creatures of statute, there is a need for a telecommunications regulator with a consumer orientation. As Etain Doyle said, her primary focus is on the mechanical aspects, but her office should also focus on the consumer. When Telecom Éireann was included in the remit of the Ombudsman there was a huge increase in his workload.

I was not surprised by that.

That was indicative of a high level of customer dissatisfaction. In the following two or three years, because it was subject to scrutiny by the Ombudsman and public criticism in his reports, Telecom Éireann made remarkable strides to become much more consumer friendly. The company and the consumer benefited. If there is naked competition, sight will be lost of the consumer's interest. There is a necessity, therefore, to create a strong consumer watchdog in the telecommunications industry, perhaps in separate legislation.

The powers of the Director of Consumer Affairs embrace various services. Consumer legislation also applies. The Director of Telecommunications Regulation, Etain Doyle, has much work to do arising from the derogation and the transposition of EU directives into Irish law. She is extremely conscientious and has good staff. I will consider including a provision in the regulatory Bill, which I will introduce later this year and which will assign to the director the accountability role about which I spoke, to provide for the establishment of a consumer protection section within her office.

It would make much more sense to do it in separate legislation which would apply to all telecommunications operators, not just Telecom Éireann.

There is the Insurance Ombudsman of Ireland and the ombudsman for the credit institutions——

No. There is an office that has borrowed the title.

The offices exist, even though they were not established by the State. As this will constitute a major sector of our economy, there is a special case for placing the onus on the industry to provide an ombudsman whose office could be funded by the industry. Obviously it is in the industry's interest to iron out difficulties and to run a more streamlined system. I accept the Minister's point about the Director of Consumer Affairs, but a stronger system is required. Complaints other than those concerning the querying of bills would be referred to such an ombudsman, as is the case with complaints referred to the office of the Ombudsman.

I have been a member of the international ombudsman institute since 1978. It is a world recognised body. That institute is anathema to the use by sectors, such as the insurance sector, of the title "ombudsman". The word "ombudsman" has a specific meaning and the office of Ombudsman has been established by statute. It is a creature of State, not of an industry. Self-regulation by this or any other industry does not work. That is a fundamental point. I urge the Minister to consider this issue in the manner she suggested. I strongly support her view that when we come to deal with the legislation covering Ms Doyle's office we should ensure it contains a strong consumer protection element to create the equivalent of an ombudsman. If we take away the consumer protection afforded by the Ombudsman, as we have to do under this legislation, we should create a similar mechanism to protect the interests of the consumer across the telecommunications industry.

I fundamentally oppose the industry borrowing the title "ombudsman" as the insurance industry has. There is also a newspaper ombudsman, which does not make sense. The word "ombudsman" has been abused by many industries. Deputy Yates and the Minister made the good point that it is important to put in place an office to provide statutory protection for the interests of the consumers. If enterprises are grouped, the old maxim of Adam Smith, that as soon as a group of business men get together they conspire against the public, will come into play. He was right about that in 1790 and that is still the case in 1990. We must have regulation by statutory control in those circumstances, otherwise it means nothing.

I am mindful of the sad events that transpired in the case of the former insurance ombudsman, Paulyn Marrinan Quinn. If the chairman agrees, perhaps we could address this issue in the regulatory Bill that will be introduced later this year. That regulatory Bill will provide for the removal of anomalies from various legislation.

Can I take it the Minister is strongly committed to substituting protection that is as strong as the consumer protection provided by the Ombudsman's office?

That would come under the remit of the Director of Telecommunications Regulation. It would be necessary to set up a section in her office to provide that and it would apply to all telecommunications companies.

That is an excellent idea. If we achieve nothing else here today other than agreeing to establish that principle, we will have achieved a good deal. That would be widely recognised as a good principle.

Deputies O'Shea, Yates and Roche are correct. In this new era, politicians will no longer have responsibility for these matters. Directors for regulation will be appointed for different industries. Such directors are not elected by the public. They do not choose that route. Politicians, who rely on the electorate for votes, will no longer be responsible for these matters, responsibility will be passed over to unelected directors. Under this Bill the director will be accountable, but we still have to look out for the consumer. Perhaps we should set up a unit in the office of the Director of Telecommunications Regulation to protect the interests of the consumer in terms of the telecommunications industry. That provision could be included in the Bill that will be introduced later this year.

There would be value in proceeding that way because if that unit had to expand dramatically, the cost involved would be levied on the enterprises that are causing the problems.

It would under State direction.

It would be answerable to the Dáil.

It would be, unlike the insurance ombudsman.

That is why that ombudsman is not really an ombudsman. That position is a joke.

It is worth remembering that under the old P&T system there was a post office user's council. I suggest that a similar group could be set up under the remit of the Director of Telecommunications Regulation. Almost 80 per cent of the customers' complaints to Telecom Éireann are accounts related.

Are they still?

The number of complaints have decreased substantially due to itemised bills. I agree with the previous speakers. There is a need to put something in place to protect the consumer. To address this need, we could set up a telecommunications users' council which would deal solely with customers' grievances. The post office users' council was abolished when the office of the Ombudsman was established.

I accept the Deputy's point. We could address this matter in the regulatory Bill that will be introduced later in the year.

Amendment to amendment No. 15, by leave, withdrawn.
Amendment agreed to.

We must vacate this room by 5 p.m. as another committee is due to sit. It was suggested that some members may wish to go back to the Dáil for the Order of Business and they are anxious to expedite this process. I am sure the Minister has no objection to that.

I am not suggesting we do that. That is a matter for the committee.

NEW SECTION.

I move amendment No. 16:

In page 6, before section 9, to insert the following new section:

"9.-The company established under this Act shall be called Board Telecom Éireann p.l.c.".

I will be brief on this. This matter was discussed extensively on Second Stage. I was surprised, but pleased, to note that whatever view I had on this was but a breeze compared to the gale force of the Minister's view.

I was very mute. I was told by the advisers to be mute about it.

I was told by Telecom Éireann that they felt a gale rather than a breeze.

That is shooting down the idea of a breeze.

It could have been there, but it came in indirectly.

The purpose of this amendment is to retain the name of Board Telecom Éireann. A good deal of money has been invested in the logo and in the name Telecom Éireann in the same way as a good deal of money has been invested in brand names such as Kelloggs, Daz or Cadburys. Once an investment has been made in a brand name, if one has to reinvest in the name it will cost a good deal of money, and that amounts to reinventing the wheel.

The little logo with the small "e" inside the capital "t" is on every form of livery from a van to a call box to a call card. Notwithstanding the £4 million or £5 million spent cogitating and navel gazing about this, I am told that it could cost up to £20 million to implement this change. I put it to the Minister that we are being taken to the cleaners for up to £40 million for the cost of this exercise. We are also being taken to the cleaners for the pension fund and now we have been told that the name was wrong in the first place. I submit it would be a good idea for the Minister to assert, on behalf of the Oireachtas, what the name should be.

When the Minister replied to the Second Stage debate, she made a significant point. She said that the board had not made a decision on this.

The board had made a decision. Perhaps the writers took it up wrongly.

It sounded to me as if the management had come to this conclusion but the board had not. The Minister is saying that the board had.

The board made a decision in October or early November, based on consultations with focus groups, to change its name to "Eircom", but I, the shareholder, was not told - I saw a stray bit in a newspaper. On the morning after the board had made its decision, the chairman was in for one of our regular meetings, but he did not mention the decision.

On 17 or 18 December the information was conveyed to me, en passant. I was immediately full of disquiet. Then I read the Deputy’s statements, with which I agreed, but I kept quiet about that. “Telecom Éireann” is a recognised brand name. It has warts, as any brand name has, but it is recognisable as a good name. Suddenly it was decided to change it to “Eircom”. The media advisers were brought in, but I held out because I doubted that we would have time to get the name across to the public. I could not comprehend how that could be done within the timeframe. I had a good session with the media people. We all put forward our ideas, but I could not get it out of my mind that it was a wrong tactic for getting a good price for the shares, which was all I was interested in. That was conveyed to the board and there was some to-ing and fro-ing. I was conscious that the board had taken a decision, which was recorded, whether or not they conveyed it to the shareholder.

Then there was a change in the board and the new chairman came in. Perhaps my concerns were conveyed to the new chairman, but the next thing I heard was that the shares would be floated and sold as Telecom Éireann shares but that the prospectus would flag "Eircom" as a possibility.

That is a real "Yes Minister" solution, if ever I heard one.

I got my point across.

Yes. It satisfied the Minister's point, but not the livery point.

That is going to be changed. I was told that one of the reasons this was done was that if the shares were being sold on the New York stock exchange it might be thought that the company had something to do with Iran - Eircom might sound like "Iran Com".

A price of £5 million was mentioned, which I do not believe, for vans, uniforms, logos, notepaper, bills, headquarters.

It is seldom that I agree with Deputy Yates - I disagreed with him a lot last week——

——but the Deputy is perfectly right. Deputy Dick Roche said the same in his Second Stage speech. It is a terrible waste of money to change a logo and a brand name that we have all become used to since Telecom Éireann was set up when it split from the old Department of Posts and Telegraphs. I strongly urge the Minister to exercise her function as the principal shareholder to call a halt and say we are not going to spend all this money.

I have the moral right to say as I did and get our views across. I will not have that right when it becomes a private company.

What shareholding will the Minister have after that?

I do not know. We went through all this earlier. The Cabinet has not made up its mind.

As the main shareholder, I urge the Minister to set down a marker. It is a waste of resources.

I was very muted in the Dáil.

The Minister put down a clear marker.

It was the price I was worried about.

Let us go back to the first thing. There is the incomprehensible decision to change a brand name shortly before its launch.

What about the focus groups?

They were hocus-pocus groups, more likely. I cannot work out what they are at. I do not know what coven they were sitting in when they came up with this nonsense. I have never heard of a major corporation changing its well established name prior to going to the market. If that is the quality of advice we are getting for some of this £40 million we are spending——

They had come to this conclusion before the £40 million was mentioned.

So this is another couple of million pounds. They will not change every Telecom van, uniform and so on for under £5 million.

I fully agree.

Whatever they do after, none of this bill should be picked up before the event because we, through the Minister as the shareholder, own this company, and this madness should not be visited on us. This is irresponsible, because characters will get out of hand when they visualise the company becoming a private corporation. For the taxpayer, that is the shareholder, to take the hit at this stage for this piece of nonsense would be wrong. I hope the committee's view will be very strongly that there is no way the State will carry this cost. If they want to get involved and pick up the cost later and fight with their board about it, that is fine. It would be madness to do it at this stage.

It was a rare occasion of truly cross-party agreement, whether it was gales or breezes that were floating around the Dáil. I could not conceive of a situation where a brand name would be changed in such circumstances. It was just daft.

The £5 million would go a long way if it were used to reduce the cost of shares for the staff employed by the company, or if it were put into a pension fund for the pensioners. As it is, it is a complete waste of money.

If it was £5 million it would. When Deputy Yates made his protest in the days after Christmas - I heard him on the radio and I read his piece - I said I agreed with him but I was told not to say so publicly. However, I got my chance in the Dáil last week to say it publicly.

Is the Minister saying that the legal position is that after it becomes a private company the Oireachtas will have no say, even if it wishes to?

I would not have a say. Nobody would. However, we have had our measure in that it will be floated as Telecom Éireann.

Amendment, by leave, withdrawn.

Amendment No. 17 is related to Amendment No. 18. Is it agreed that they will be discussed together? Agreed.

I move amendment No. 17:

In page 6, before section 9, to insert the following new section:

"9.-In the sale of shares to be sold by the State arising out of this Act, the Minister may include within the retail offer of shares, a discount scheme, so that there will be a price tier, relative to shares sold to financial institutions.".

There are two proposals. One is that there will be a discount scheme for shares sold to the public as opposed to those sold to financial institutions and, second, that there will be a loyalty bonus in terms of people being given bonus shares if they buy shares and retain them for more than three years. Both would be advantageous to the future of Telecom Éireann. I understand there are regulatory limits to buying future loyalty from customers because they are shareholders. That is one parameter that is in place, but I have been advised by UK stockbrokers who have direct experience of privatisations and share sales that the more shares one can sell to the general public, the more the price is likely to rise than if there are, say, four 15 per cent blockholders in New York, Paris or elsewhere. If someone has to buy shares from the public it will drive up the price. That has been the experience. What I am suggesting will be more than self-financing and it will be fair. Swisscom recently had a marginal discount but others have had a major discount.

In terms of the political principle of democratic shareholding, the assets have been built up not only on the backs of the workers but the people who paid high tariffs and who had no choice but to get telecommunication services from Telecom Éireann. For all those reasons, and the fact that this is the biggest flotation in the history of the State, we should set a principle.

We do not want people to desert Eircom as soon as they invest in it or to take their windfall profit and move on elsewhere. It is not unusual in flotations to offer people who hold on to every ten shares they bought for a three year period either two free shares or two shares at 50 per cent.

I have good commercial advice on this matter. I do not know if the wording is accurate but I believe the Oireachtas should assert its view on how this should be handled. It should not be left to the advisers. What I have set out is both reasonable and commercially sound.

One of the few measures taken during the Thatcher era with which I agree was the idea of trying to create some type of shareholding democracy where the shareholding would be widely distributed. Deputy Yates is correct. The most successful launches were those where the maximum amount of public participation was allowed. He is right also when he said that in addition to the staff, Telecom as an organisation was built up because, comparatively speaking, the people paid heavily for telephone services. That should be recognised. If that is prevented by some EU regulation it would be prudent for us to have the widest possible participation in the shareholding because if institutions are the first to come forward to take up this option, they will make the profits. They will also conspire to keep the price down at the launch date and divide the spoils later.

Deputy Yates made the same points and other Members have made and I believe the Minister responded positively on Second Stage. Through these expensive advisers we should try to achieve the position where the maximum encouragement is given to the people who helped build up Telecom to avail of this share placement.

I agree also with the idea of a bonus for people who will hold shares for a period of time. That is a good discipline. The reality is that we do not have a history of share participation.

I know, because we did not have the money.

Exactly. We can now introduce a wide range of people to shareholding, which is a good way to save. It is also a good way of keeping this company Irish. I agree with the sentiments expressed by Deputy Yates.

The Deputy did that on Second Stage, as I did. The idea that citizens would purchase shares in this company is exciting and interesting. I hope they decide to buy some Telecom shares and that there will be excitement among people about doing that. Most people of my age grew up knowing nothing about shares. I still do not know anything about them but, be that as it may, people have the right to buy the shares and I want them to buy them in great numbers.

I have not yet gone to Cabinet to discuss the amount of shares to be retained or sold, the idea of a loyalty bonus or whether a discount will be given. We have not yet arrived at that point. I will have to prepare a memorandum for Cabinet discussion. It would be incorrect to tie oneself in legislation before putting forward one's ideas. I propose that we have a full discourse on what we have agreed to do. When I bring the memorandum to Cabinet I will encapsulate the ideas put forward here.

I will not press the amendment but I must say that I deliberately used the word "may" instead of "shall"——

Yes, I saw that.

——so that the Minister is not obliged to do it. I thought it would not be unreasonable for the Oireachtas to assert, as the Minister's advisers might, the way this should be handled. This is a political question because in the UK there was enormous dissatisfaction about the windfall profits made by fat cats, whatever about the merits of privatisation and the provision of a leaner, meaner public service. One of the reasons Labour came to power in the UK was Tony Blair's proposal for a windfall tax on those people who had made a fortune after holding shares for a week or a month which were sold initially at a huge discount.

There will be a political backlash if the Minister's advisers suggest that the price of a Telecom share should be £1.42 and when the company starts trading they sell for £4. It will be said that someone ripped off someone else and, needless to say, I will blame the Minister. If the windfall gain goes to Joe Public the Minister will at least have some protection politically, whereas if some institution in Manhattan makes a killing on this, it will not look good.

I submit that if the amendments are in order they are valid. We must avoid what happened in the UK where they had to introduce retrospectively a windfall tax to deal with the problem of the fat cats.

There is no doubt that is the reason many people in Britain got fed up with privatisation. They could not get water supplies and there was no investment in infrastructure. John Prescott told me if he had his way he would reverse the privatisation of British Rail because selling ten miles of rail track at a time does not work.

In the great adventure we are about to embark upon with the sale of these shares, I am concerned that the larger institutions many do much better than the smaller ones. We need the financial institutions to make this a success but it must be managed properly. It must be remembered also that they form a group allied to the advisers. They all have their old boys clubs and we must be very prudent about that.

The reason I am unable to accept amendments now is that I have not gone to Cabinet with my memorandum about this matter. When that is done I will come back to the committee and we will also have Dáil statements. I have not gone to Cabinet with my memorandum on this matter. However, when I do, there will be a Dáil debate on it. I accept that there should not be a closed, secret shop between the advisers and Ministers. It would be preferable to have a wider discourse even though we should be prudent in what we say. We had a debate on it today but at the expense of the advisers rather than of Telecom Éireann and its validity as a company or its future. There will probably always be a degree of aggravation between the little and the big. I accept the reason for putting down these amendments. However, I have not yet gone to Cabinet and I cannot do so with my hands tied.

The Minister could go to Cabinet with a view. We have been discussing this ourselves——

We discussed it at the parliamentary party meeting.

It should be put on record that there is anxiety that this will be done in a way which is not just politically acceptable but which allows people to participate in the excitement of shareholding. One of the big failings of the past 20 years was that privatisation became a case of fat cats carving up State assets, whether it was in the Soviet Union or the UK. Ireland is coming late to this process——

Maybe we can come at it in the right way.

We can learn from it.

We need the financial institutions.

Of course. There is not enough money under people's beds to buy the company. The financial institutions are necessary but it is also necessary to ensure that the people do not feel ripped off.

In preparing the memorandum for Cabinet I will include the viewpoints of the select committee. Following that there will be statements in the Dáil.

I withdraw amendments Nos. 17 and 18. The Minister referred to the kitchen dialogue of people buying shares. Some people can ask a bank manager for a line of credit to buy a large number of shares but most people discussing this in their kitchens would require about three months to plan it. Whenever the Minister makes her decision, it should be well in advance of the June date. People need to plan their personal finances so a lag time is required.

There will also be a build-up of excitement and there must be time to discuss this among friends and family. The public relations people advise us that there is a timetable and they will know from the advertisements how the excitement is building.

There are only three months to June.

Amendment, by leave, withdrawn.
Amendment No. 18 not moved.
SECTION 9.

I move amendment No. 19:

In page 6, subsection (2), line 12, after "Act" to insert ", but not later than the floatation date for the I.P.O.".

What date does the Minister have in mind for the implementation of the legislation? Sometimes implementation can be slow and the amendment provides that it should be not later than the floatation date, which is probably the logical date. Is it the intention to implement the sections simultaneously with the floatation date?

It is not possible to repeal those provisions until the loan is repaid in full or the relevant bank agrees to drop the requirement for a State guarantee. Officials from the Department of Finance have been in contact with the company concerning this matter and with regard to lands which were in the Department of Posts and Telegraphs. On vesting day, 1 January 1984, the lands were transferred to the ownership of An Post but that company was obliged to continue to allow Telecom Éireann to use the lands in question. Commercial agreements, however, on those sharing arrangements do not exist in all cases. It has been given a period of 12 months to conclude any agreements it has before that provision is repealed. We hope to go to the market at the end of June, subject to market conditions. If there was a sudden collapse in Telecom shares throughout the world——

The land problem cannot be agreed.

No. It has been given a period of 12 months to agree it.

Some sections of the legislation will be implemented straight away and others——

Sections 28, 30 and 44 of the 1983 Act. It takes a little longer to do their bits and pieces of housekeeping.

I accept that. The majority of the provisions, except with regard to the land, will come into force.

Yes, except the ones that cannot due to the time involved.

Amendment, by leave, withdrawn.

I move amendment No. 20:

In page 6, subsection (3), lines 13 and 14, to delete "The Act of 1983, the Postal and Telecommunications Services (Amendment) Act, 1984" and substitute "The Postal and Telecommunications Services Acts, 1983 and 1984".

This relates to the collective citation. The section as drafted is incorrect. There is an existing collective citation in relation to the 1983 and 1984 Acts.

The Deputy is right. I accept his amendment. The wording in the Bill is incorrect. The amendment rectifies a drafting oversight and I thank the Deputy for bringing it forward.

Amendment agreed to.
Section 9, as amended, agreed to.
FIRST SCHEDULE.

Amendment No. 27 is related to amendment No. 21. Amendments Nos. 21 and 27 may be discussed together. Is that agreed? Agreed.

I move amendment No. 21:

In page 6, column (3), to delete lines 21 to 23.

This amendment retains the publication of orders and regulations. This remains important even though the regime will change. Amendment No. 27 seeks to retain provision for the regulations to prohibit interception of communications. It is important that these remain in the Bill.

Sections 3 and 98(3) of the 1983 Act concern the making of regulations for the company regarding interception matters. It would not be appropriate for the company, largely privately owned, to have power to allow them to make regulations in relation to interception. It would not be proper or in the public interest. The company will come within the general ambit of the Interception of Postal Packets and Telecommunications Messages (Regulation) Act, 1993, and under the remaining provisions of section 98 of the 1983 Act.

There will not be publication of orders or regulations from the private company.

Is there some way of retaining an element of democratic accountability?

It will not be making regulations because it will be privately owned.

There remains the problem of interceptions being made in a mischievous or improper way. How can one deal with that?

As a private company, it could not start to publish regulations.

We should know what regulations apply to interceptions. They should be in the public domain and subject to democratic accountability.

It will come under the Interception of Postal Packets and Telecommunications Messages (Regulation) Act, 1993. It will be a private company so it will not write orders. I could not order it to write orders.

I take that point. However, if orders are written by the regulator or whoever, will they be in the public domain?

If they are written by the regulator, they will be in the public domain.

Will they be placed before the Oireachtas?

Yes, when the regulator is giving her report to the Oireachtas.

That appears to cover my concern.

I understand your concern. As a private company, it could not do that. All telecommunications companies will come under the remit of the regulator for various duties. She, in turn, will report on them.

On that basis, I withdraw the amendment.

Amendment, by leave, withdrawn.

Before proceeding to amendment No. 22 the committee proposed at the beginning, with regard to the shoulder note on page 6, to delete section 3(1) and insert section 2(1). Is that agreed? Agreed.

Amendments Nos. 22 and 31 are related and shall be taken together by agreement.

I move amendment No. 22:

In page 6, column (3), to delete line 30.

This amendment seeks to retain the provisions on State share ownership.

The golden share. Section 19(2) imposes an obligation on Telecom Éireann to issue one share to the Minister for Finance. Section 22 gives the Minister for Public Enterprise the right to take up shares in the company and allows the Minister to exercise the rights and powers of such a shareholder. The cost of any shares taken up by the Minister may be advanced from the central fund.

It should be wholly private one day.

Yes, but the Minister kept a golden share in Irish Life.

It was Irish Sugar. It was an issue with the national sugar quota.

It is the company paying a pound to the Minister for Finance.

There was a belief that the then Minister should have a moral interest in that company. When I was in Opposition I used it against Deputy Quinn over Irish Life. Members will remember the brouhaha in Irish Life over the way it treated its sales people. I said the Minister for Finance had the golden share and that should be recognised. He came out with the most awful diatribe against me one day over how I had misinterpreted the meaning of the golden share. The EU, however, does not allow golden shares. It is called State aid in this brave new world. Everyone has to be treated the same. Irish Life would have been before that. It is contrary to EU policy now.

If the decision of Government is to sell in two tranches, it could be that a new incumbent would be in power when the second tranche goes out. The Minister should not be excluded from taking up an option.

An option on what?

On buying shares.

I am not buying shares, I am not allowed to.

I am talking about State ownership.

Do you mean I should hold them?

It would not be correct for me to do that.

The intention is that all the shares will be put into the private arena?

Yes. That means bye bye.

Amendment, by leave, withdrawn.

Amendments Nos. 23 and 30 are related and shall be taken together by agreement.

I move amendment No. 23:

In page 6, column (3), to delete line 31.

This is to rectify an incorrect placing of the reference to section 19(3) in the First Schedule. It covers both An Post and Telecom Éireann. The reference should be contained in the Second Schedule so the provision is only repealed to the extent that it refers to Telecom Éireann. Part of the purpose of amendment No. 30 is to insert the reference to section 19 (3) into the Second Schedule.

Amendment agreed to.

I move amendment No. 24:

In page 6, column (3), line 33, to delete "(a) and (b)".

This is a technical amendment. The amendment reads that the section to be deleted would be section 44(a) and (b) but the section contains no more than (a) and (b). It would be sufficient to remove section 44. The inclusion of (a) and (b) is superfluous.

The Deputy is always right on these points.

He is. That's Richard Humphries again. He is worth his weight in gold. Telecom Éireann is to be commercially driven privately. This type of provision is inappropriate and facility sharing arrangements should be a matter for commercial agreement between two companies. The Deputy is right.

Amendment agreed to.

I move amendment No. 25:

In page 6, column (3), between lines 35 and 36, to insert "Section 91.".

This proposes the inclusion of section 91 of the 1983 Act in the First Schedule for repeal. It provides that telephone bills and other similar certificates which are signed by an officer of the company are to be taken without proof as prima facie evidence of sums done for telecommunications services. It gives Telecom Éireann an advantage in court proceedings which no other telecommunications provider has. Rather than extend the provision for all operators, it is being put forward for repeal on the basis that it places an undue burden of proof on the customer.

Amendment agreed to.

I move amendment No. 26:

In page 6, column (3), between lines 36 and 37, to insert "In section 95 (4) the words 'by the company'."

This amendment proposes to include the words "by the company" for repeal.

Amendment agreed to.
Amendment No. 27 not moved.

I move amendment No. 28:

In page 6, column (3), to delete line 38.

I am not sure if I am on strong ground. I have been told that this relates to section 99 of the 1983 Act. That section gives powers to Telecom Éireann to lay wires and carry out other activities to get things done. It would be better to leave that on the statute and give the same powers to the other licence holders. I referred to this matter before and you said you were going to introduce a telecommunications infrastructure Bill.

That Bill will go to Cabinet next week.

Should this provision not remain pending that Bill?

It is correct until the other comes in.

That is my point. They should both be allowed to lay cables.

There is a strong section in the infrastructure Bill about all of that.

Amendment agreed to.

I move amendment No. 29:

In page 6, column (3), to delete line 42.

This amendment deletes the unnecessary reference to section 99(1)(a) of the 1996 Act in the First Schedule.

Amendment agreed to.
First Schedule, as amended, agreed to.
SECOND SCHEDULE.

I move amendment No. 29a:

In page 7, Second Schedule, to delete section 3(2) and insert section 2(2).

Amendment agreed to.

I move amendment No. 30:

In page 7, column (3), to delete lines 9 and 10.

Amendment agreed to.
Amendment No. 31 not moved.

I move amendment No. 32:

In page 7, column (3), to delete lines 14 and 15.

This amendment seeks to retain the provision on accounts and annual reports.

So they will be presented to the Minister and then to the Oireachtas?

Would the Minister be doing so when it is a private company? The Minister would not be responsible for publishing reports of private companies.

They would have their responsibilities under the Companies Acts and that would be the extent of it.

Yes, they would report to the Stock Exchange but not to the Minister or the Oireachtas.

Amendment, by leave, withdrawn.

I move amendment No. 33:

In page 7, column (3), to delete lines 19 and 20.

This amendment seeks to retain the provision on pensions.

Does the Deputy wish the company to keep the present pension scheme?

We dealt earlier with superannuation until and unless the company changed.

Why are we deleting it here?

The provisions in subsection 9 will only be repealed if and when the Minister for Finance decides to clear his obligations. Section 46 of the 1983 Act deals with superannuation. In the case of Telecom Éireann the issues covered will be largely dealt with as in the case of other publicly-quoted companies under the company's new articles of association which will be put in place following the IPO.

Section 4 provides for the protection of pension rights of former members or staff of the Department of Posts and Telegraphs who transferred to the company on vesting day. It also makes clear that this protection extends to those members who retired before vesting day and to the beneficiaries of those who died pre-vesting.

So this deletion does not weaken anything?

Amendment, by leave, withdrawn.

I move amendment No. 34:

In page 7, column (3) to delete line 21.

This amendment seeks to retain the provision on loss-making services.

The loss-making services provisions are being replaced by a universal service obligation. An Post has been designated as the universal service operator for Ireland. This issue is arising with the ESB which will have a public service obligation. The title of loss-making is not politically correct. I will sign regulations which, among other things, will provide for carrying out universal service obligations. These will apply to all operators and they will all have to share them.

So the consumer protection provisions will not be weakened?

No. This is Europe's way of dealing with disparity of population and such matters which are involved in the provision of public services and which are necessary. We cannot all be given lines to places like Gorey, Waterford, Athlone and Dublin. They are not called loss-making but universal service obligations. They will apply to all companies and it will be for the Director of Telecommunications Regulation to ensure they are evenly and fairly spread and are followed through on.

So the Minister sees no dilution in terms of equality of access to services?

I see no dilution of services to consumers in what would be called loss-making areas. They will be dealt with under universal service obligations.

Amendment, by leave, withdrawn.
Second Schedule, as amended, agreed to.
Title agreed to.
Bill reported with amendment.
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