Seanad Éireann - Volume 128 - 15 March, 1991

Sugar Bill, 1990: Committee and Final Stages.

Section 1 agreed to.


Dr. Upton: I move amendment No. 1:

In page 2, lines 25 to 29, to delete subsection (2) and substitute the following:

“(2) (a) The Minister shall at all times maintain his equitable holding in the Holding Company at at least 51 per cent of the total equitable shares of that Company.

(b) The Minister shall retain 15 per cent of the equitable shares for the beet growers and for the employees of the Company.”.

This amendment provides that the Minister would continue to hold 51 per cent of [239] the total equitable shares of the company and that he would also hold 15 per cent of the equitable shares for the beet growers and for the employees of the company.

With regard to the second part of the amendment, what we are aiming at is that the employees and the beet growers would have a stake in the company. This seems to be a very wholesome and worthwhile idea. We believe the company would work more effectively if that were the case and if the people who keep the company going had a stake in the company.

We are particularly concerned that the Minister should accept the first part of the amendment and continue to hold 51 per cent of the total equitable shares of the company so that he can effectively control what goes on and ultimately call the shots. That is very important because of our concern that the sugar quota would be produced outside this country. Despite the talk of golden shares, I do not believe that there is any foolproof guarantee that will be the case. In future, because of the provisions of European law, we may find that part of the quota is lost to us. That would have disastrous effects for the 5,000 beet growers and for the people who work in the company.

Mr. J. Ryan: I support Senator Upton on amendment No. 1. The 51 per cent holding the Minister should have is the most important part of the Bill because it means that the Government will still have a very important role to play as regards employment, diversification, investment and future planning. In regard to the production of the sugar, while the quota is 200,000 tonnes there is no firm guarantee that the tonnage would be produced from local natural resources. For that reason also the 51 per cent is the most vital aspect of this Bill.

There has been much discussion on whether this is privatisation, semi-privatisation, Thatcherism or whatever, but a 51 per cent holding means that the Government and the people will have a majority in the new company. The people [240] would be properly represented and any policy changes would have to come before Government, as would any new ideas on the development of the company. Over the years both the workers and the beet growers have given tremendous service to the company and the amendment recognises the contribution they have made.

Professor Raftery: I do not agree with this amendment for a number of reasons. We want the sale to be a success. We are talking of selling 5 per cent of the company. If this amendment is accepted we would be selling 34 per cent of the company. I do not think that will make it very attractive to investors. The investment will be much more attractive if it is seen that the Minister has less than a 51 per cent shareholding.

On the question of the quota, of course we are concerned about the quota remaining in the country but the most effective way of doing that is for farmers, workers, Irish institutions and individuals to make an investment in the company. I believe they will be more interested in investing if the Government have less than a 51 per cent share.

The workers and farmers have made a great contribution and provision is made for them in that workers will get a bonus of £250 worth of shares free and there will be a 20 per cent discount plus provision for finance for them to buy shares. Farmers will also get a 20 per cent discount and provision for finance to help them to buy shares. We should be encouraging the farmers, the workers and others to invest rather than trying to hang on to the old idea of Government having control over everything. We have had too much Government in business in this country and not enough business in Government in the past.

Mr. Ross: I do not agree with this amendment for reasons similar to those of Senator Raftery. What the Labour Party are doing is renationalising the Sugar Company. Giving the Government 51 per cent is in effect nationalisation. The Bill is bad enough as it is with the [241] Government having 45 per cent initially, but to give them 51 per cent would mean that they would have complete control. The Sugar Company would be renationalised and this would not be a Bill privatising the company. It would negate the whole purpose of the Bill.

The Minister does not need the 51 per cent. The golden share gives enormous protection to the Sugar Company in that it stops any other shareholder taking more than 15 per cent. It gives protection to the quota and in so many other areas that, as was said on Second Stage yesterday, there is a very large discount on the shares. If, as Senator Raftery said, the Government were to hold 51 per cent I cannot see anybody being interested in buying large blocks of shares in the company. One thing institutions do not like is to be locked into a minority situation.

Senators Upton and Ryan spoke about 49 per cent. I am not clear that it is 49 per cent, I presume the 15 per cent reduces it to 34 per cent and it is not part of the Government's 51 per cent.

Dr. Upton: It says at least 51 per cent.

Mr. Ross: It is 34 per cent they would be in favour of floating but the 34 per cent would not be nearly as attractive as it was in the first place. If one holds 51 per cent for the Government one might as well hold 100 per cent for the Government. What will happen if the amendment goes through is that the 34 per cent of the shares which are not held by the Government, will be issued at a heavy discount.

One cannot have partial privatisation where those who are buying shares are minority shareholders to the Government's 51 per cent. There is no attraction in it for them. By doing this we are renationalising the Sugar Company. I can understand what the Labour Party are at but it is time they declared whether they are in favour of nationalisation.

Mr. J. Ryan: The Senator was not too sure himself yesterday.

[242] Mr. Ross: I was absolutely sure yesterday on what I wanted to privatise and what I did not. The Government were not sure what they wanted to privatise. What the Labour Party must tell us is quite simple: are they in favour of nationalising companies like the Sugar Company and keeping them in the State sector and are they in favour then of nationalising further companies? Do they believe in nationalisation? The real problem is that if this amendment is pushed through the shares will not be sold profitably on the market.

Mr. Hussey: I oppose the amendment. There is little point in talking about privatisation if the Minister and the Government are expected to hold 51 per cent of the shareholding. That would be a negative approach to take to this Bill. If the company is to grow and expand we must encourage people and institutions to invest in it. It would be foolish to expect people to invest in a company where the Minister would hold over 50 per cent of the shares.

Section 2 of the Bill takes care of the fears the Labour Party might have because it allows the Minister for Agriculture and Food to acquire a special share, which he may not dispose of, in the holding company. This gives him power to prevent the disposal of the controlling interest in the Sugar Company assets and also prevent a group of shareholders acting together from gaining control of the holding company.

With regard to the workers, the Minister had discussions with the Irish Congress of Trade Unions and with representatives of the beet growers. He has specifically included in the Bill a provision that the special share which the Minister referred to may not be sold. It is very important that the rights of workers are protected. I oppose this amendment.

Mr. Dardis: We oppose the amendment. I share the views expressed by Senator Raftery that if we are to make the company attractive for investors they [243] must be given more than a 50 per cent stake in it. I would go further than giving them the 55 per cent that was suggested. I made that point on Second Stage yesterday. I accept that there is need to ensure that the national quota is protected and that the workers are protected, and the so called golden share provides that protection. I accept what the Minister said in the other House in this regard. I am reassured by what is in the Bill. We either privatise it or we do not.

If the farmers and the workers were to exercise their rights under the 20 per cent discount and take up the shares, is there any indication of how much of the company they would then own at the end of the day? Perhaps that is an impossible question to answer when we do not have a prospectus in front of us but, if possible, I would like to have an answer to it.

Mr. Hourigan: I support those who advocate that the Minister should not hold more than 45 per cent of the shareholding for the many reasons stated, particularly from the point of view of having an attractive proposition to place on the market. Like Senator Dardis, I feel that the figure could even be less than 45 per cent but, having said that, there is no question but that 55 per cent should be held by the growers, the workers and others. In this connection I would address a question to the Minister. It is not specifically taken care of in the Bill but it relates to the interest of the growers and the workers. I stressed yesterday that the contribution of the workers and growers has been phenomenal. They must not be left aside.

As regards the operation of the company in the future, we know that the Minister will appoint the first board and the first chairman. I advocated in my comments on Second Stage yesterday that there should be an early annual general meeting in accord with the ordinary business regulations of other companies, which I presume will obtain. I would like to have it on the record that thereafter the board and the chairman would be [244] elected by the shareholders. I have been asked by both growers and workers to raise this point regarding the appointment of subsequent boards.

Mrs. Honan: I cannot support the amendment to this section. I am confused about their worries. If we asked for a 51 per cent holding to be given to the Government, whatever Government, be it confused coalitions or new coalitions — the Labour Party might be in a coalition with us in the future so I better be careful — they would be the very party who would say no Government should have 51 per cent.

Mr. J. Ryan: We were there before and hopefully we will be there again.

Mrs. Honan: If the Labour Party have worries about this they should read what the Minister, Deputy O'Kennedy, said in the Dáil and in his address to this House.

Mr. J. Ryan: I have read many——

An Leas-Chathaoirleach: Senator Honan, without interruption.

Mrs. Honan: Senator Hourigan had worries about the board. There is no mention of the board in the Bill. I presume the new company has to be set up before we deal with the composition of the board. The Minister has given free shares to workers and beet growers. Positive talks took place between the Minister and the Congress of Trade Unions and the beet growers. I seem to have more faith in these talks and in the sincerity of the men who took part in them than some of the people who should have faith in them. Maybe that is not a new role for me——

Dr. Upton: A conversion.

Mrs. Honan: It is not a conversion. It is proof I believe in something that Labour only pretend they believe in.

Dr. Upton: The newly converted are invariably right.

[245] Mrs. Honan: Do not start. I cannot support this amendment because I do not want any future Government to have 51 per cent of this company.

Mr. Harte: I listened to Senator Ross and his concept of privatisation is to go through life with a hatchet and chop anything that is in the way.

The attitude of the trade union and Labour movement towards privatisation is similar. We have no objection provided there are certain safeguards for workers and that they get their rights. It is not a question of all or nothing. We must look at the reasons put forward to justify privatisation and its impact on job security.

There is no evidence to suggest that private enterprise on its own generated full employment. It depends on the State to create jobs.

Mr. Ross: Tell that to the B & I workers.

Mr. Harte: It is not an ideological matter but rather one of protecting the workers. What is the extent of the public's interest? Competition is all about putting the other guy out of business and taking it all for yourself. The workers must be protected. I am not suggesting that the Government will have blanket privatisation. It is essential to understand the Labour Party criteria in relation to protecting the workers. The proposed 51 per cent holding should be looked at. In the case of a public company would it be a question of going the whole hog? It would not.

Let us get it straight. It is not a question of picking up a hatchet and chopping jobs. Let us make sure the necessary protections are there for the workers. Let us take it nice and slow, and not rush at it like a mad bull. It is as if we were smashing our china. The way we look at this, is, you are welcome to privatisation but let us do it without hatcheting jobs and denying people their good pensionable employment.

There is no commitment by the private sector to create jobs nor is there any mention of it in the Bill. The only way [246] we can safeguard jobs is by having some control over the company.

I was born in 1920. Will somebody tell me when the private enterprise system created full employment? They cannot do it. They will not get a free ride but will have to prove themselves.

Mr. J. Ryan: My good friend and colleague from Clare, who has departed from the Ennis-Limerick road onto a new road, tried to allay our fears by saying that the Minister's speech should allay our fears. The Minister for Agriculture and Food happens to be a constituency Minister from my area. I assure Senator Honan that I listened to speeches and statements by the Minister allaying the fears of the workers in the Thurles beet factory and we know what happened there — there is no longer a factory in Thurles.

Mr. Dardis: If it were privatised it would be open.

Mr. J. Ryan: I appreciate the concern and interest expressed by Senator Dardis. I am talking about an industry which has been in operation for 60 years. It is one of our oldest natural resource industries and it has been successful. We are saying not anti anything. We are being realistic in the interests of both the producers and workers.

Mr. Ross: I was interested in what Senator Harte had to say. He said he had no objection to privatisation as long as the State holds 51 per cent. This is a contradiction in terms. That is nationalisation. One cannot privatise a company and hold 51 per cent of the shares. It is very simple. The Labour Party will have to make up their mind about this. They are caught on an ideological hook. They do not object to privatisation as long as the company is nationalised. That is what the Senator is saying. Let me ask him another question.

Mr. Harte: Let them show us what they are doing.

[247] Mr. Ross: Senator Harte says that private industry never created full employment and he is correct. It is not a panacea to nationalise industries. The semi-State sector has not produced full employment either. Look at the B & I workers who were here yesterday. They were part of a semi-State industry which has been run down and they laid off people year after year. It has been a disaster. There was no job security for those people. The same applies to Irish Shipping and An Post. I do not have with me the figures I quoted yesterday on Second Stage but they showed that, in the UK, the privatised sector created more jobs in the past ten years than the nationalised sector. There has been a massive reduction in jobs in the nationalised sector in the UK in the last ten years. It does not wash any longer to blandly assert that semi-State or nationalised sectors equal jobs. In fact if that sector is inefficient the people there will lose their jobs more quickly, or certainly as quickly, as in the privatised sector. It is only a doctrinaire dictum to say that it protects jobs because the State cannot, no more than anybody else, continue to subsidise jobs ad infinitum in unprofitable companies. That is the problem. The safeguards which Senator Harte expects to be provided by nationalisation which he is obviously in favour of are simply not there. The evidence here and in the UK directly contradicts the myth which he is perpetrating.

Professor Raftery: I can understand Senator Harte's concern about protecting the workers. I am a worker myself. I have read very carefully the agreement which was signed by the trade unions and the company. As far as I can see the workers were very carefully protected by that agreement. It was signed by the representatives of the workers and they seemed to be happy with it. I find it difficult to understand why the Labour Party are so unhappy about it. Senator Ryan mentioned the producers. The producers are not getting anything like the same protection. They are the ones who have to [248] take the risk and they are prepared to take it.

With regard to his assertion that private enterprise has not created the jobs or full employment, I only know of one system that created full employment and it has been roundly rejected after 70 years of misery, leaving those countries totally devastated. We have had a bad record on employment here and we have had the highest percentage of public ownership of any country in Europe other than those behind the Iron Curtain. That is the record of the public sector here. In countries with a reasonably good record of employment, such as Japan and the USA there is considerable private ownership, and more capitalism. It is time that we, like every socialist country in the world, gave a chance to private enterprise. Every socialist government in the world is privatising, not for the love of privatisation, but, as the Minister for Economics in Spain said to us when asked why a socialist government was privatising, “Sir, we are interested in results, not ideology”.

Mr. Harte: Listening to Senator Ross is like selecting something from the Bible; there are about 40 dishonest ways of arguing and he knows them all. That is the advantage of going to college. He selected certain topics. If he wants to go into the whole history of public ownership we can have a few hours debate on it and I will show how Governments down the years caused the problems in the public sector through not funding it. CIE is a typical example.

I have no hang up about the question of private enterprise. My attitude for most of my life, and most trade union people share the same attitude, is that the mixed economy is the thing for us. That was the trade union attitude and I speak as a trade unionist. The private enterprise system has been less than adequate in the creation of jobs even in the last Programme for National Recovery and we are wondering what is going to happen with the Programme for Economic and Social Progress. It is necessary for us to ensure, at every opportunity, [249] that we bring this home, get it on the record and make sure some attention is paid to it.

On the question of the 49 per cent or the 51 per cent, if there is a 51 per cent public ownership and people see the company are not going as they should, it will not end there; somebody will come back under the programme and say “Look, this is not working”. They both have access to a consultative process even though the legislation does not refer directly to it. If they are dissatisfied with the 51 per cent, they have a right to come back to us. That will be brought back to us if there is evidence that it is not a working proposition and we will have to think about the whole question of the 51 per cent going the other way. That is reasonable. At the moment the trade unions are ready to accept the proposals set out in the Programme for Economic and Social Progress but they have a right to go back and talk about aspects of it that are worrying them. The same applies to the other parties to the programme. It is not one-sided. I am concerned that this is being rushed through and a little worried about what happened in the other sugar factories. There is a lesson to be learned from the inefficiency there. Nobody said that we should keep supporting inefficiency.

Mr. J. Ryan: It was not the workers' fault.

Mr. Harte: Even in State enterprise we would never argue that. There are a lot of arguments about lack of finance. The mistake we are making is to go down Senator Ross' road. We are talking about the Sugar Bill and he has brought us on a trip round the whole idea of privatisation. We are actually talking about the Sugar Company and the problems that might face them in the light of their past history and difficulties peculiar to them. We have walked down that road with him unfortunately.

I would like to get back to the question of the Sugar Company and say that in the light of the circumstances, the background and history of events in the Sugar [250] Company, the amendment is properly set out and would, in our view, give adequate protection to the people we are interested in. I never claimed that there were only three sides to enterprise. I have always claimed that the community is right. I have always said that the trade unions, employers and Governments excluded in the community, many of their agreements. They settled the agreements in a pragmatic way that suited their own interests. I do not blame Governments as much as the trade union movement and the private enterprise people. The community at large, as a partner to industry, was never taken seriously. That is part of the problem for us and why we are concerned that people should take us seriously. We are not putting these amendments down for a joke; we believe that the sensible thing to do is to have a go and try the suggestion. If any problems arise, we will have to look at it again.

Minister of State at the Department of Agriculture and Food (Mr. Kirk): The first effect of this amendment would be that the Minister for Agriculture and Food could not acquire a special share in the holding company. The special share will, of course, be the major safeguard which the State will have to protect the sugar industry following the restructuring of Siúicre Éireann. This amendment is totally unacceptable to me and to all who are interested in safeguarding not alone the workers in the industry but also the growers, and, most importantly, the Irish sugar quota.

Senator Upton proposed that a 51 per cent holding should be retained by the State in the company. As I mentioned in the course of the Second Stage debate yesterday, the intention is that following flotation the State will retain a 45 per cent shareholding in the company. The Minister for Finance will make a statement in the prospectus which will issue prior to the flotation to the effect that he will not dispose of any further shares for a period of at least two years, from the flotation date.

However, if the State were to have a 51 per cent holding it would be unable to [251] get value for shares sold. Indeed, it is doubtful if the flotation could proceed on such a basis as the market would react most unfavourably to a situation where the State controlled the company. The position is that for the flotation to proceed, investors must be confident that the company can operate on fully commercial lines and in accordance with the dictates of the financial markets. The major concern will be that the company should maximise its value to the benefit of the Exchequer and, of course, ultimately to the taxpayer. Securing a good price for the State shares and enhancing the future of the company are the best means of ensuring value for the Exchequer which has invested £65.5 million in Siúicre Éireann, £59 million of which was contributed in the eighties. It is essential to get a return on this investment and the best early means of doing so was through sale of a portion of the shareholding.

The residual 45 per cent State shareholding, provided the company are successful, should appreciate in value while, at the same time, an annual dividend can be expected. The question of making a specific block of shares available to beet growers and employees has been agreed and the company has been in touch with both groups about this matter. The amount of shares to be made available to these groups is 10 per cent at discount prices and a further 5 per cent at par on issue to beet growers. In addition, employees will receive £250 worth of shares free. It would be undesirable to include a legislative provision on the lines proposed on this issue. It is not an appropriate matter for inclusion in the Bill. This amendment is unacceptable and cannot be supported.

I come to a number of points raised by Senators Hourigan and Honan on the question of the appointment of the directors. The initial board of Greencore will be appointed by the Minister for Finance. Subsequent boards will be appointed in accordance with the terms of the memorandum and articles of association and these articles are standard and similar to those used by other [252] companies, except for the provisions relating to the special share. The precise provision relating to the appointment of directors is that at each annual general meeting, one third of the directors who are subject to retirement by rotation shall retire from office. However, directors retiring by rotation may be reappointed if elected. It is intended that there will be nine members on the board — a chairman, three executives, one representing the interests of beet growers, one representing the interests of workers and three others making a total of nine. The Minister for Finance will appoint the first board, and we are expecting — all being well with the completion of all Stages here today and the completion of the whole process of enactment — that the board can be appointed fairly soon.

Senator Harte mentioned the question of the creation of employment and the comparative performances of private and State companies. It is worth looking at the record of Siúicre Éireann in this regard. The number of employees in Siúicre Éireann has decreased from over 3,000 in the late seventies to 1,556 in 1989, It is clear from that statistic alone that being a semi-State body has not protected the jobs in that company structure. We are satisfied that the restructuring of the company will enable it to diversify, expand and in the process, create other jobs. For that reason I sincerely hope the Labour Members in the House will see the wisdom of proceeding with the partial privatisation of the Sugar Company to ensure that the necessary financial wherewithal will be available to the company to expand and develop in the future.

Amendment put and declared lost.

Question proposed: “That section 2 stand part of the Bill.”

Mr. Hourigan: May I ask the Minister if it is possible to get in writing what he explained vis-á-vis the appointment of the board to allay the fears of people. I am very satisfied with the Minister's explanation.

[253] Mr. Kirk: I think the Senator should be able to pick that up from the record. I clearly said that there will be one member representing the interests of the beet growers and one board member representing the interests of the workers on the new nine member board.

Acting Chairman (Professor Conroy): Is section 2 agreed?

Mr. Ross: I am slightly confused about the appropriate time to bring up the members of the board as the Minister raised it in reply to an amendment which did not seem to relate to the membership of the board. Could I make a plea to the Minister at this stage that political considerations not be paramount in his mind when members of the board are being appointed? I think that is a very important point.

Mrs. Honan: That never happens.

Mr. Ross: I hope that is being picked up by the record, Senator Honan. May I ask the Minister one or two questions on section 2. I was delighted to hear that the Minister for Agriculture and Food said in the Dáil that it was the intention of the Government to hold on to 45 per cent of the shares for a considerable time. I am delighted to hear it because it is information, not because of the facts. It is a very important point and we should know exactly the Government's intention regarding that 45 per cent shareholding.

May I ask the Minister to expand on that and to tell us why the Government intend to hold on to that 45 per cent, of what value, he believes, it is going to be to the Government and whether it is in the interests of the Sugar Company and of the other shareholders?

May I also ask the Minister what he thinks the Sugar Company is worth. It is a relevant and a very fair question when we are being asked to sell off the assets of the State and to sell off the Sugar Company. The Minister should give us [254] some information on a bottom line which he has about the value of the Sugar Company. I do not expect him to give us a totally accurate valuation of the Sugar Company; nobody can do that. What he could do is give us a level below which the Government will not sell. It seems that very recently a decision was taken not to sell the Industrial Credit Corporation simply because there was no buyer around at the level which the Government wished to find for the ICC. I hope in this case the Minister is not prepared to sell the company, willy-nilly.

We are being asked to pass this Bill in a hurry for very good reasons. I suggest that the market is buoyant at present, and that the Government are likely to get a much better price than on 25 January. There is no guarantee that stock market conditions will not change very dramatically in the next few weeks and that by the time the Sugar Company comes onto the market, market conditions could have changed to such an extent that there would no longer be an appetite for this sort of company there. If that happens — it seems unlikely today but it is very difficult to anticipate these things — could the Minister give us guidance as to a level below which the Government will not sell the Sugar Company or is it going to come onto the market will-nilly, regardless of market conditions? Is there a bottom line? Is he not going to sell below £50 or £60 million or something like that because what I would not like to see is the Sugar Company being sold off for a song. We are entitled to information and guidance on that. We are entitled to know the level below which the Government will not sell it.

The other important area which I think we should get some indication of from the Minister is the method which he intends using to sell this on the market. Does he intend this to be sold by tender or by ballot or any other particular method? What would be the pricing policy and who is likely to get the shares? In other [255] words, are institutions or private investors going to be given preference or does the Minister want to see wide share initiatives or narrow share initiatives?

Acting Chairman: I would make it clear that we are now dealing with the section. We have finished on the amendment. Does the Minister wish to make a comment on section 2?

Mr. Kirk: I would like to respond to a number of points raised by Senator Ross which we covered at the winding up of the debate on Second Stage. On the question of the appointment of the directors, standard procedures were applied to the appointment of directors for the first board which will be effectively appointed by the Minister for Finance who will be the sole shareholder of course at the time.

I can assure the Senator that the Government are conscious of the need for a strong and experienced board and the weight given by investing institutions to a good well balanced board. In appointing the initial board due account will be taken of the fact that the correct signals regarding the need to run the company commercially should be given to the institutions through the composition of the board. I think the Minister for Agriculture and Food, Deputy O'Kennedy in the Dáil, clearly indicated that it would be a matter of appointing members of quality to those positions.

Following the flotation it is intended that the Minister for Finance will retain a 45 per cent shareholding in Greencore. This will be a substantial holding and would in the normal course give the State a significant influence on the running of the company. The Government are, however, conscious of the need for the company to operate on fully commercial lines and in accordance with the dictates of the financial markets and for this reason it is not intended that the State, as a significant shareholder, should seek [256] to play an active role in the operation of the company. The major concern will be that the company should maximise its value to the benefit of the Exchequer and ultimately the taxpayer.

The Bill does not require the Minister for Finance to retain a specified shareholding in the company as to do so would be a restriction on the Minister's rights as a shareholder. It is the intention of the Government to maintain a large shareholding in the company and there are no plans for a further sale of shares. Indeed, the early sale of a significant block of shares would be undesirable as it would not be welcomed by the market and would depress the share price. However, the Government must retain discretion to exercise their rights in the public interest in relation to the shareholding. Yesterday on Second Stage I was taken to task by Senator Ross for not giving him an explicit assessment of the valuation of the company saying that no sensible shareholder would sell his shares without knowing their value. I have, of course, taken expert financial advice on what the value might be in flotation but it would be most imprudent to discuss that here.

Mrs. Honan: And Senator Ross knows that. You are not going to get inside information.

Mr. Kirk: The one sure way for the financial speculators to profit would be if I were to say now what the expert advice revealed, and I am sure that the Senator will concur with what I have said. I envisage a broadly based floation aimed at the institutional investors and the ordinary investors. There may be a foreign element but the intention is to maximise the proceeds from domestic sources. The Senator can rest assured that there will be adequate scope for private client investors to subscribe for shares.

Acting Chairman: Is section 2 agreed?

[257] Dr. Upton: I wish to be recorded as being opposed to this.

Mr. Ross: I accept what the Minister says about the value of the company, and that it would be commercially indiscreet to let it out, but I would like an assurance that there is in the minds of the Minister and the Government and his advisers a bottom line below which they will not sell. That is important. I do not expect, of course, that it should be publicly revealed but I think the Minister should give us an assurance that he is not going to sell the company for a song.

The other question I would like to ask the Minister on this section is about the golden share. It presumably is the Government's intention to hold onto that golden share ad infinitum, but do the Government anticipate that that will be overtaken by EC non-competition rules? Could the Minister give us an indication of what the fees will be to advisers, consultants, accountants, solicitors and all professional people in this particular section?

Mrs. Honan: He wants a bundle of them.

Mr. Kirk: I can assure the Senator that the company will not be sold at any price. It will only be sold by the Minister for Finance when he is satisfied on the basis of the internal expert advice available to him that he is getting value for the shareholding, and I can assure him that the price will be set very carefully after flotation takes place. On the question of the special share, this area has been checked out and the clear advice to the Minister in the matter is that he is quite within his entitlement and rights to make provision for the special share. There are precedents apparently in other jurisdictions and it is the mechanism that is used within the flotation to protect the vital interest of the company. I think we have spent some considerable time discussing those vital interests both here [258] and in the other House and I am clear that we have focused on the need to protect them. On the question of fees I cannot reveal the precise amounts at this stage but I can assure the House that the level of fees to be paid by the Government will by any measure be quite modest.

Question put and declared carried.

Sections 3 to 5, inclusive, agreed to.


Acting Chairman: Amendments Nos. 2 and 3 are in the name of Senator Upton. Perhaps the Senator will move amendment No. 2 and we can discuss both together.

Dr. Upton: I move amendment No. 2:

In page 5, before section 6, to insert the following new section:

6. —(1) All employees of Siúicre Éireann c.p.t. and its subsidiaries shall become members of the staff of the Holding Company upon the transfer of undertaking from Siúicre Éireann c.p.t. to the Holding Company.

(2) The Holding Company shall ensure that all employees are covered by the superannuation scheme or schemes that applied to their position prior to the transfer of undertakings.

(3) Each employee on being transferred to the Holding Company shall hold his/her office or employment on the same terms and under the same conditions as applied to his/her contract of employment immediately prior to the transfer and while in the service of the Holding Company the said terms and conditions shall not be less favourable to him/her than those prevailing immediately prior to the transfer save in accordance with a collective agreement negotiated with the trade unions [259] or staff associations representing such employees.

(4) The trade unions and staff associations recognised as representing the employees by Siúicre Éireann c.p.t. and its subsidiaries shall be likewise recognised by the Holding Company and its subsidiaries.

(5) Until such time as the scales of pay and the terms and conditions of employment and any other benefits, including rights and privileges, obligations and any other arrangements applying to employees so transferred are varied resultant from negotiations with the trade unions or staff associations concerned, the conditions which prior to the transfer had been negotiated on their behalf and applying at the time of the transfer, shall continue to apply to them save in accordance with subsection (3).

(6) Any authority exercised by a member of the staff of Siúicre Éireann c.p.t. shall continue to be exercised by him within the Holding Company until the same is varied by the management of the said Holding Company. If such variation works to the detriment of the status or pay and conditions of the said staff member within the Holding Company it shall be null and void unless the said variation shall have been negotiated with the trade union or staff association representing the said staff member.

The basic reason for the proposal that this new section be included is to comprehensively protect the rights of the employees in the company. The transfers and changes which are taking place are, to some extent, similar to what took place in relation to Telecom Éireann and An Post in 1983. In sections 45, 46 and 47 of the Telecommunications Act, 1983 there are provisions which are pretty similar, [260] but not entirely identical, to the provisions which are contained in our proposed new section. We are very concerned that the rights of the workforce in the company would be adequately and fully protected. It is for that reason that we want this section to be written into the Act.

We are concerned also because of some of the items which have come to our attention. I understand that the pension scheme in the Sugar Company is in considerable difficulty. A figure of something like £12 million in deficit has been suggested. I would be interested in hearing the Minister's response to that. If it is true, what plans has he for dealing with it? We are also concerned that the rights of unions, and so on, should be written into this Bill in terms of their capacity to negotiate. It seems that there is an anxiety to keep all mention of unions out of the Bill. That, of course, is a relatively recent development. During the tenure of the 1987-89 Government, it was possible to mention unions in legislation. It was possible to do so before then but it does not seem possible now. Our worst fears are that this is being done so that the people who will ultimately buy the company will have the capacity to do their thing, so that they can maximise their investment without due consideration for the obligations they have to the workforce.

We are also concerned that this new section be included in the Bill so as to allay the fears we are being acquainted with of the workforce. My understanding is that quite a number of workers in the Sugar Company are very concerned at what the impact of the legislation will be on their rights as employees and on their job prospects. Certainly, we would be concerned that those fears would be allayed. Indeed, it is only proper to say that there has been talk of strikes and disruptions after this Bill becomes enacted, if it does become an Act. That, of course, would be a matter of great concern. It is for these reasons that we are very concerned that the Minister agree to this new section we are proposing. It is not at all unprecedented. Previous [261] Governments have been quite happy to go along with such provisions. It seems as if there is a great anxiety to obscure or to remove from this legislation any references to unions. It would be a matter of great concern to us as to what the implications of that would be three or four moves down the road.

Mr. J. Ryan: I would like to support the submission made by Senator Upton on the proposed section. We are fully aware that when the Bill was introduced in the Dáil there was no section whatever in it to protect the interests of the employees. When this was questioned I received the response publicly that the workers would be protected under EC legislation, that there was no need for such provision to be included in the Bill. I, for one, at that stage was not satisfied that workers who had given such tremendous service over the years to a very viable State company should have to depend on legislation in Brussels. I contended that if both Houses of the Oireachtas were to mean anything, this Bill itself should include a particular section to ensure that the workforce in the Sugar Company would be given their rightful protection.

Eventually, after debate in the other House, this section 6 was introduced by the Minister for Agriculture and Food. As I said during my Second Stage speech yesterday, I was not at all satisfied that the section was sufficiently strong to ensure that the workers in the Sugar Company would be protected. Our concern is that, even at this stage, there are sections of the workforce who are not at all happy with what is happening and with what is envisaged under the new company.

The Minister in his response to Senator Harte about the comparison between the State and semi-State employment indicated that in the sugar industry the workforce had reduced from 3,000 to 1,500 and that it was reasonable to accept that the employment factor in the public sector was on the downgrade. I want to [262] make the point very clear, with particular reference again to the Thurles plant, that it was not because of lack of enterprise and initiative that the Thurles plant closed down. It was a planned decision by management of the Sugar Company to downgrade the plant through lack of finance. A decision was taken that mechinery would not be renewed. Eventually, it could be decided when we reached a certain point in the life of that factory, that management could say they have a plant of the 1930s, which is not in keeping with the needs of modern day industrial development, that it could be said that it would cost too much money now to invest in the plant to bring it up to the standard required to keep it viable with Mallow and Carlow. That was a decision taken by management, a vicious decision taken in Clare Street with a view to ensuring subsequently that a day would be reached when the manager of the local plant would have to say: “Regrettfully, I am sorry the plant is no longer a viable plant and is not capable of or competent to meet the needs of the Sugar Company's projects and industrial developments.” I say that with particular reference to section 6.

There is a definite weakness in this Bill. Professor Raftery referred yesterday to the vehemence of the Left and his realism of the Right. I think he got caught between socialism and capitalism and did not know whether he was playing inside left of inside right. Whether it is vehemence, anger or concern, as far as I am concerned, as someone who appreciates what the industry meant to workers and people in my area, for the future prospects of this company, section 6 is the weakest section of the Bill and at the same time the most important section. There is need for a very strong amendment to that section if we are to be sincere. We are talking about the one thing. We appreciate what the workers and the producers have done, and their contribution to the Sugar Company. If we are sincere, we must accept that section [263] 6 is weak. It needs strengthening and I believe our amendment is sufficient.

Mr. Hussey: I cannot understand why the Labour Senators are so concerned about the rights of workers. From what I have seen of the agreement worked out between the trade unions and the company — the trade unions who are representing the workers — I am perfectly satisfied that those rights are taken care of. In order to be doubly sure, the Minister went to the trouble on Committee Stage in th Dáil to insert a new section, section 6, in the Bill which underlines the rights of employees. That section reads:

6. —(1) Every person who immediately before the transfer date was an employee of the Company, shall, on the transfer date, enjoy the same rights (including rights under a pension or superannuation scheme of the Company) and be subject to the same obligations as he enjoyed and was subject to immediately before the said date.

As far as I am concerned, that section sets out quite clearly the rights of the workers. Their rights are protected there. I am perfectly satisfied that everything Senators Ryan and Upton are asking for is provided in that section.

Mr. Dardis: I share Senator Hussey's view. I do not understand the need for this amendment. Senator Raftery may be interested to learn that while he was out of the House it was suggested that he was very much to the right and Senator John Ryan was to the left. I am relieved to hear these things being said because I was under the impression that the road was getting very congested in the centre. It appears we may have misunderstood that.

Mr. J. Ryan: We are on a dual carriageway.

[264] Mr. Dardis: As long as we are all going in the one direction it is all right. If we were to pursue this argument in the amendment to its logical conclusion we would wind up having statutory provisions within the Bill for the IFA and the BGA, possibly even for the banks and maybe for the shareholders. I agree with Senator Hussey in relation to enjoying the same rights and being subject to the same obligations as those enjoyed prior to the change of the company into privatisation. I have no fears about this. The workers will retain their jobs. Thereafter, it is a matter between the unions and the company to regulate and look after the welfare of the workers.

Professor Raftery: I do not know what was said in my absence, but I can assure the House I do not believe in any “ism' only pragmatism and realism. The reality is——

Dr. Upton: That is what is said about Fianna Fáil, the Senator is on the wrong side of the House.

Mrs. Honan: Where common sense is concerned, Senator Raftery and ourselves have a lot in common.

Dr. Upton: Who would like to join whom, I ask?

Professor Raftery: When it is sense, Senator Honan, we have it in common. I am amazed at the stance taken by the Labour Senators this morning. Effectively, what they are saying to us is that the trade representatives for the workers did a bad job. I have carefully examined this and I have pointed out already that I am a worker. I know what it is to have lost a job. I believe the agreement reached was a good one. It was signed by the workers' representatives. What is all the hassle about? We should just get on with it. The workers, through their representatives, are satisfied as far as I am aware. What is the concern of the [265] Labour Senators if it is not just for the optics?

Dr. Upton: The concern of the Labour Senators this morning is fairly straightforward. We are getting representations. We are hearing of unrest, discontent and dissatisfaction.

Another point that should be made is that in relation to section 6 which speaks in terms of rights, our amendment clarifies and defines them. Any rights mentioned in the Bill will, ultimately, have to be determined by a court. It is a matter of the law being the factor which determines them. We are very concerned at what we are hearing about unrest in Carlow. For those people who concern themselves with the sale of the company and how much money it will make, I would suggest to them that if there is unrest in Carlow it is going to be a very important factor in determining the value of the company and in determining how the company can be sold. For those reasons, we are anxious that what we have spelled out in this new section should be included in the Bill.

Mr. Harte: The fear I have is that there is nothing to stop foreign interests taking over this company at a later stage and the company going out of Irish control. That means there is no guarantee about protection of work. There is a general statement here. What we are trying to do is write it in and say we agree with the general context, but we want to safeguard it and make sure it fits in with the section. At the moment there is no real desire on the part of private enterprise to have a worker participation system, even though it does exist in the private sector in many European countries. The safeguards must be built in now so that the people we are interested in will get the maximum possible protection with regard to their terms and conditions of work.

Professor Raftery said the unions were [266] satisfied. That is correct but, as a nominee of the Irish Congress of Trade Unions, I went to the bother to make some inquiries. While they agree in the broad context, reservations have been expressed as to whether the safeguards are adequate. There is general goodwill towards the development. Quite frankly, they want it on record that they are looking for safeguards. We can provide safeguards only by adopting an amendment that will build in to the Bill a little more muscle with regard to wages, conditions, the future of employees, and of the public. In essence, the functions of trade unions relate to the fixed principle of wages and conditions. In view of observations from some members of Congress and while there is a general consensus with the idea — and they have spelt out their attitude to the whole concept of privatisation — it is not to say that they have lost interest in public enterprise being developed also. They also feel that they have no control over the legislation. They could make submissions before it is passed. There are feelings among members of the executive of Congress that the safeguards are not secure enough in the Bill.

I say that with all the goodwill in the world. I am not saying that Congress are pulling back. The unions are satisfied with the development of privatisation. There are people on the executive of Congress, and others in trade unions, who are concerned about the fact that companies can go out of Irish control. When they do, there is not adequate protection for the workers in advance. It is not only a question of giving them something in advance but of trying to protect them in so far as it is possible to do so. The Government have an obligation to do that and we appeal to them to do that.

Mr. J. Ryan: I would like to return to the point I made earlier. Senator Raftery is of the opinion we should accept section 6 as it is because of factors that occurred [267] outside this House. I learned English going to school. I did not go to university like some of our professors.

Mr. Dardis: I hope you learned English before you went to school.

Mr. J. Ryan: I learned a lot before, and I am still learning. The wording of the first part of section 6 (1) is not sufficiently emphatic on the employment factor in the company. It states:

Every person who immediately before the transfer date was an employee of the Company, shall, on the transfer date, enjoy the same rights (including rights under a pension or superannuation scheme of the Company) and be subject to the same obligations as he enjoyed and was subject to immediately before the said date.

Down along you read about benefits, annuities, lump sums, gratuities and life payments. I would like to see emphasis laid on the rights of permanent employment. That is my greatest concern. Whether it is going semi-State, public or private, a man who has given 30 years service in a company and is now moving into another company surely, aside from what discussions have taken place between the trade unions movement and the company, if he reads subsection (1), there is no mention whatever about employment or permanent employment. That is our concern. Maybe there are people in the House who think we are being over-anxious or over-concerned but if we are going to do it we should do it right. If it is only a matter of including in the amendment the question of permanent employment, I think we are all concerned about the future prospects of the company, and that includes the workers and the permanent employment. I can see no problems with the amendment.

[268] Mrs. Honan: All Senator Ryan's worries should be cleared by section 6 (1). As for any permanent jobs, he is in the right place to be talking about permanency.

Mr. J. Ryan: I am not talking about Dáil Éireann.

Mrs. Honan: We are in the Seanad. You can go down to the other place after the next election, if there is room for you.

I think section 6 (1) gives all the guarantees that are needed. If you were to go into sections on legislation in this House, and write all the things down, we would be talking about bringing in a Bill in book form. Where I am concerned, the guarantees that can be given are in section 6 of this Bill. Often before, with Fianna Fáil legislation we have had a Bill amended by a Minister. I do not have the worries the Senator had. I appeal to Senators to accept the section as it is before us. Any guarantees that can be given are there in that section.

Mr. Kirk: Amendment No. 2 relates to the rights of employees consequent on the setting up of Greencore, the new holding company. Section 6 of the Bill provides that the rights, including pension rights, of employees of Siúicre Éireann, or any of its subsidiaries, shall be the same on the day on which the Minister for Finance transfers his shares in Siúicre Éireann to the holding company as they were immediately before that date. That is to say, they will not be affected at all by the transfer of the shares.

As I said yesterday, employees rights are already protected under the European Communities Safeguarding of Employees' Rights on Transfer of Undertaking Regulations of 1980. Because of the concern expressed about these rights, the Minister for Agriculture and Food specifically inserted section 6 in the Sugar Bill, 1990, which underlines the right of employees. Section 6 is a general section [269] as it is not considered appropriate that detailed provisions relating to protection of employees' rights should be included in legislation. It is more appropriate that such detailed provision should be contained in an agreement between the company and the unions.

Siúicre Éireann and the group of unions have recently drawn up a detailed agreement relating to employees' conditions subsequent to the restructuring of the company. This agreement contains the following commitments:

(1) No interruption in continuity of employment;

(2) Current rates of pay and conditions of employment will continue to apply;

(3) The company will continue to recognise the existing trade unions;

(4) Existing procedures for determining rates of pay and conditions of employment will continue to apply.

The current redundancy terms being paid by the company are those which emanated from the 1981 conciliation conferences. The company acknowledges that this is the current position and it has no plans to change these terms.

Privatisation will not give rise to changes in continuity of employment in subsidiary companies or to existing procedures for determining rates of pay or conditions of employment in those companies. Within 30 days of vesting day, moneys to be transferred into the manual pension scheme to cover pre-1984 pensions as determined by the scheme's actuary — pre-1984 service in the manual scheme — will be funded on a phased basis over the five year period from 1991 in accordance with the advice of the scheme's actuary. The agreement was registered with The Labour Court last week under section 27 of the 1946 Industrial Relations Act. Both parties formally lodged a copy of this agreement with the Labour Relations [270] Commission and requested the commission to consider itself the guardians of the agreement.

This amendment is not acceptable. Therefore, it is not considered necessary to include in legislation the provisions proposed by Senator Upton.

Acting Chairman: Is the amendment withdrawn?

Dr. Upton: No.

Amendment put and declared lost.


Dr. Upton: I move amendment No. 3:

In page 5, subsection (1), line 12, after “Company”, to insert “and the terms and conditions of the Company/Union agreement registered with the Labour Court under section 27 of the Industrial Relations Act, 1946”.

Amendment put and declared lost.

Question proposed: “That section 6 stand part of the Bill.”

Mr. Harte: The whole explanation for the fears in the Labour Party and their concerns and obligations can be found in these extracts that I would like to read into the record of the House. It is an Irish Congress of Trade Unions publication. In dealing with the Sugar Company they made the following comment. It reads:

Erin Food for thought

The major diversification of the Irish Sugar Company was food processing and marketing. Several food factories were built and Erin Foods was established. The Chairman in his annual statement of 25.8.1960 announced: “In response to a request from growers of fruit and vegetables and with the approval of the Government we have expanded our activities into food processing”. But even before its launch, [271] Erin Foods were shackled by Government bias against public enterprise. In May, 1957 M.J. Costello, General Manager of the Sugar Company, in a letter to Dr. J.P. Beddy of the IDA said: “It is fully realised that there would be an outcry from existing producers if we were to go into competition with them”. In a letter to the Department of Finance in December, 1962, M.J. Costello wrote: “This company has so far been compelled to carry out the development of food processing under handicaps, whereas any other industrial development would be encouraged by financial aid. The Government policy that this business will be grant-aided, if it is run jointly with outside firms, will not be so grant-aided if run by us poses a competitive disadvantage. I think that we have shown satisfactory evidence that the sugar industry is one which has not only a chance of, but a great chance, of expansion. I think that it is tragic that any doctrinaire consideration should result in it being handicapped or denied the assistance offered to others.

Acting Chairman: I must request the Senator to stay on the section.

Mr. Harte: This is relevant. They are telling us that there is no need for fear. I have to explain where the fear lies. General Costello's effort to develop Erin Foods into a national food producing processing industry based on co-operation between public enterprise and co-operative farming were frustrated. He resigned in 1966 and Tony O'Reilly, a strong advocate of private enterprise, became general manager. In 1967 Erin Foods linked up with the Heinz Corporation.

There has been a bias against the Sugar Company for a long long time, in favour of privatisation. When you read things like this, when you read things sent to [272] Seán Lemass about the Sugar Company being a failure and Seán Lemass saying: “Yes, maybe it is a failure but let us build two or three more”, when you hear some of the arguments around the place of what we are at and where the problems lay with regard to the question of the Sugar Company, it makes you think, the real fear is built into the idea of privatisation.

There is cause for concern when it comes to protecting workers rights. We do not think the section as it stands gives the necessary protection and we fear we will have problems later with this. Many people in congress share this view. There is inconsistency in dealing with the Sugar Company. We can make mistakes. Many judges in England made a lot of mistakes. We can make mistakes and we are entitled to see that the same mistakes that were made in dealing with the Sugar Company down the years are not made in the transfer now into privatisation. We are entitled to ask for that. We are entitled to look for the protections and to have our fears put on the record. Our fears are there because of the bias towards privatisation. The guarantees that the workers need are given in a very general way and will not, in our view, serve the long term future of the people who should get protection under this Bill.

Mr. Kirk: In my response to amendment No. 2, I clearly outlined what was contained in the agreement between the company and the unions. It is clear and unambiguous. In those circumstances the arguments being advanced by Senator Harte are a little superfluous at this stage. The unions are quite obviously satisfied; the agreement between them and the company have been lodged and it has been signed to both side's agreement. On that basis the Senator should be assured that the best interests of the workers both now and in the future are adequately protected.

Mr. Harte: I made my point and I am [273] glad it is on the record. It covers a few things that were said earlier but in view of what the Minister has said now, we will accept the section.

Question put and agreed to.

Sections 7 to 10, inclusive, agreed to.

Title agreed to.

Bill reported without amendment and received for final consideration.

Question proposed: “That the Bill do now pass.”

Mr. Hussey: Before we finish I had hoped to say a few words. I am very happy that the Bill has gone through and we can see a whole new era developing for the Sugar Company and their workers. Now that the company have got into a profit situation, I hope they will not forget the people who helped them in the early years. I am thinking in particular of my own area of Tuam where many sacrifices were made by workers and by management.

Mr. J. Ryan: Do not forget Thurles.

Mr. Hussey: I am dealing specifically with my own area but I accept that Thurles has the same problems.

Mr. J. Ryan: We will be together on this.

Mr. Hussey: We will be together on this. Many people have been sacrificed. The Erin Foods factory brought great hope to Tuam, but we saw that close. We had the Gowla Farm which again brought great hope to that area it also folded up. Many mistakes were made. We finally saw the end of the factory. Nothing has been done to replace that factory in Tuam. I hope the new company will not forget the commitments that were made [274] to Tuam and that they will honour those commitments.

It is very important that we would see the social dimension of that company expanded because it was not for economic reasons alone that the factory in Tuam was set up. There was a social dimension there — to help the small farmers of the western area. I hope that in the company now being privatised we will see some development along that line and some replacement in Tuam for the factory that closed there some years ago. I hope the same thing happens in Thurles. I accept that Senator John Ryan has the same problem I have.

I wish the company every success.

Mr. J. Ryan: I listened to the Minister, Deputy Kirk, outlining the plans and the eventualities of job creation in the Thurles area. I dread job approvals and job eventualities. If the Minister would like to go to Thurles he will see that the position there at the moment is far from eventualities. I hope his optimism will be fulfilled but, like Senator Raftery, I have to be a realist. I know the facts.

I wish the company well and hope the needs of Thurles will not be overlooked and the needs of north Tipperary, which has given such a tremendous boost to the economy over the years, are earmarked for immediate development.

Dr. Upton: May I thank the Minister, Deputy Kirk, for his courtesy and attention to the arguments we made yesterday and this morning. Unfortunately he did not accede to any of our requests for change but I want to thank him for the attention he paid to us and for the courteous manner in which he responded to our amendments.

Minister of State at the Department of Agriculture and Food (Mr. Kirk): Before we conclude I would like to take the opportunity to thank the Members of the Seanad for their diligence and constructive contributions to the debate [275] today and yesterday. We are delighted to have succeeded in getting the legislation through both Houses of the Oireachtas. I hope we have succeeded in assuring those who found it necessary to put down amendments that there are adequate provisions in the legislation to cater for their fears and worries.

Question put and agreed to.