Seanad Éireann - Volume 138 - 10 November, 1993

Irish Aviation Authority Bill, 1993: Committee Stage (Resumed).


Question again proposed: “That section 16 stand part of the Bill.”

Mr. Ross: It would be useful to have an indication of the Government's proposed dividend policy regarding this semi-State body. As the Minister knows, there has been an anomaly in relation to Telecom Éireann in recent times in that they declared profits but decided against paying a dividend because of the high borrowing level. Without giving any figures the Minister anticipates there will be dividends from this new company but he does not give us an indication of the criteria which will be used. It might be helpful in teasing out the attitude of Government to State-sponsored bodies and to dividends if he could at least tell us what yardsticks are to be used.

It is not good enough to say that some years will show a profit and some a loss and that it will depend on various factors. Will he say what multiple of earnings or return on assets would determine the issue? What will be the price to earnings ratio? How many times will the dividend need to be covered by earnings if the Government will require a dividend from this company?

There is a danger the company will borrow £100 million and then another £15 million from the Minister for Finance so it may borrow £115 million without any great difficulties. It may be in debt to this extent, have spent the money on justifiable capital expenditure and report profits of £5 million to £6 million, perhaps more. Will the Minister then take the attitude, as has been done in the case of Telecom Éireann, that the Government does not require a dividend because it is more in the interests of the company that the debt be paid?

Government policy on the payment of dividends by semi-State bodies seems to change from year to year. Last year when Telecom Éireann's debt was £998 million the Government made it pay a dividend. This year when the debt is similar or identical the Government has decided not to require a dividend. We should know what projections the Government has for this company, what profits it projects for it and what return it expects on the money borrowed and on capital employed. Perhaps the Minister could also give a forecast of future profits.

Minister of State at the Department of Transport, Energy and Communications (Mr. N. Treacy): I have listened with great interest to Senator Ross. I gave a long dissertation in response to this section earlier.

Within international regulations this company should not be making a profit on its core business. It is supposed to provide a service to the users on a cost recovery basis. We are commercialising the company to give it opportunities in [357] ancillary services, mostly training and consultancy. We must give the company some breathing space. We will be putting in position a solid professional board, giving the company a commercial mandate and the board a commercial brief with good management and committed staff in the organisation. We will be taking sound financial advice from professional consultants and others vis-à-vis the future development of the company.

At this stage it would not be possible to say what dividend might be returned by a new company being established to provide this service which has certain international parameters. We expect that it will return a modest profit. We would expect it to make a modest contribution in its earlier years but we must give it up to three years to establish itself and, over that period, to have clear criteria through which to make a contribution to the Exchequer.

An Cathaoirleach: Senator Ross, we have had a long debate on section 16 and on section 7. Perhaps we can try to clear the section as quickly as possible. Have you a further query to the Minister?

Mr. Ross: I have. I can understand the Minister wanting to give what he claims is a breathing space. Presumably any new company, setting up as this one is, has a budget, forecasts and projections. If it is projecting that it will not make any money in the first three years, fair enough. That is normal in many companies setting up, but can we not hear the projections? We are being asked to take this completely on assurance. This company in its old form reported profits and apparently now the Minister is unable to tell us whether it will go in its new form into losses or profits. Any company in the private sector which went to a bank looking for money — and this is what in effect this particular company is doing — and said it did not have any forecasts, did not know whether it would make profits and wanted a breathing space, would be laughed out of court.

Nobody will necessarily hold the Minister to it but we want detailed profit or [358] loss and expenditure projections in its first few years. That is a perfectly reasonable request for the Minister to answer when he is asking the House to authorise guaranteed loans of £80 million. He is not providing us with any information about the other side. If the Minister came before the House and said they were expecting to lose £10 million in the first year, £5 million in the second, nothing in the third and move into profit in the fourth, fifth and sixth years, I would not accept it as a reasonable proposition but at least we would know where we stand. At the moment we are being asked at one level to give authority for exorbitant loans without being told if this company will go into profit at all, or if it goes into profit what will happen, or whether it will be in loss and if so, why. It is totally unreasonable for anybody to come before this House and expect us to give a blank cheque for the Exchequer to guarantee loans. It is unsatisfactory.

Mr. N. Treacy: I would not come into this House and ask the Legislature to effect a decision and transform a Civil Service organisation into a semi-State commercial body that would create an imposition on the taxpayer. We have done analysis and looked at the past performance of ANSO. We have done projections for the future and I am happy to say that based on the performance last year, and the years before, we expect to make, on average, £1.95 million at the end of this year to about £2.5 million profit by the end of 1996 and I am optimistic that we can deliver. I believe we are making a major transformation and the company is entitled to an opportunity to perform. I am confident it will make a return to the Exchequer.

Mr. Ross: That is very satisfactory and I am grateful for the information. It may not be correct to raise this under this section but could the Minister be as specific as possible about the purpose for which the loans will be used? Perhaps that comes under a separate section.

Question put and agreed to.

[359] SECTION 17.

Question proposed: “That section 17 stand part of the Bill.”

Mr. Mooney: I raised this point in error earlier. Could the Minister explain the system of rotation of directors in subsections (2) (c) (ii) and (2) (d), “the directors may act notwithstanding one or more vacancies in their number”? There have been occasions in the past where some boards of semi-State bodies have taken decisions that have been subsequently questioned by the Minister — for example, where an alleged cabal has operated within the board of directors or there was a very powerful chairman. Is the Minister satisfied that safeguards are in place, notwithstanding subsection (2) (d)?

Mr. Burke: Section 17 (h) illustrates Senator Ross' point. Under this section the Minister appears to be giving wide ranging powers to this committee and its subcommittees to raise funds for various functions which are covered in the memorandum of association. I agree with Senator Ross and I oppose giving such powers to the committee.

Under section 17 (2) (a) the number of directors to be appointed shall be nine and the Chairman of the Committee of Public Accounts should be on that board. As public representatives we have no rights when it comes to any State-sponsored bodies or boards. How can this be when we are elected to the Dáil and Seanad and are answerable to the people? I propose that the Chairman of the Committee of Public Accounts should be on the board. I also suggest to the Minister that the employees should have a say in who is on the board and they should have their own representative on it.

Mrs. McGennis: I hope the Minister will reassure me that the composition of the board is gender balanced; it should be at least 40 per cent male or female.

Mrs. Taylor-Quinn: I support the line promoted by Senator Burke in relation [360] to the appointment of the Chairman of the Committee of Public Accounts to the board of directors of the new body. Senator Burke correctly said that there is a lack of accountability by semi-State organisations to the Houses of the Oireachtas. If there were more accountability and more powers within the Oireachtas to scrutinise semi-State operations there would be fewer problems in that sector. One of the deficiencies of semi-State operations is not the extensive powers vested in them by these Houses but their lack of accountability. It is important that an initiative be taken in this new semi-State organisation and that there be accountability to these Houses through the Chairman of the Committee of Public Accounts. We will be tabling an amendment on Report Stage to include the Chairman of the Committee of Public Accounts as a director.

Mr. N. Treacy: It would be my great desire to be in a position to appoint the Chairman of the Committee of Public Accounts to a State board. From my information it seems that under the regulations for membership of Dáil Éireann and Seanad Éireann a Member of the Legislature cannot be a member of a semi-State body or a director thereof. There would be conflict between the legislative position, where we represent the common good, as distinct from the particular interest that a member of a board would have in pursuing the good of the company. I know of cases in the past where people were members of State boards, were elected to the Oireachtas and automatically had to resign their membership of the State board. I am almost certain it is included in the regulations for membership of the Oireachtas.

There was a review of semi-State bodies last year when the Minister for Finance issued strict guidelines to the chairmen on the boards and Government Departments involved with State bodies — my own Department has responsibility for many semi-State organisations. This new system, which has not been used since the Central Bank Act, 1940, is a [361] good one. We believe this because we have looked at it and the existing composition and structure for other semi-State bodies. It maintains an experienced board in office, brings in fresh thinking and allows it to make decisions for the company at all times. The whole board will not leave office at any time unless a serious situation arises and one will have that continuity of commitment, application and decision making, coupled with fresh thinking on the board. The thrust of the section is that members of the board would not end their term in office on the same day. If this were to happen and the Minister had not appointed their successors in time, the company would be left without a board and could not function properly. It is a new and welcome departure, it will maintain continuity and bring about fresh thinking on the board at all times.

Mr. Quinn: I support the Minister's comments with regard to two points. I understand the reason behind the spread out term of office for board members which was well explained by the Minister. I also support the view that Members of both Houses should not be on State boards. The Minister may not be correct in saying that the barring of Members from these boards is part of the rules governing the Oireachtas, but it is part of the rules governing each State company. It is a good rule because if a State company is to work with independence and freedom, it should be able to work independently, and to make its decisions and not have to report back.

Mr. Ross: What Senator Quinn has said is fair enough, but the advantage of having Members of the Dáil and the Seanad on semi-State boards is that they are far more accountable than these boards are at present. What worries me — I mentioned this on Second Stage last week — is that there does not seem to be precautions or safeguards in this clause to protect us from the sort of disasters we experienced from these boards in the past. It is easy to accept assurances here, but there is general public unease about [362] political appointments to State boards, not only because of the obvious political patronage involved and exposed in the past, but because in certain cases, people have been promoted regardless of their knowledge or expertise in the area. If responsibility for the dreadful situation at Aer Lingus lies anywhere, it is with the board. An examination of the board members would not reassure one into believing that they have expertise in the aviation area. What worries me is that we will again have people on this board, sitting in judgment on matters about which they are unqualified to speak or to make decisions on: that is the history of State boards.

Last week, the Minister assured me that it would not happen in this case. I welcome that assurance and the fact that it is on the record. However, the Minister should have considered taking this body out of the political arena. It is possible, as was shown in the Environmental Protection Agency, to devise a model which takes directorships and the office of the chief executive out of the Minister's hands because even if a good and impartial Minister is involved, he will still be open to the charge of political patronage, even if it is not true. All parties have been guilty of this practice — I am not trying to score a political point against the Minister — and it should, and can, be removed from our political system. Will the Minister, when appointing the board and chief executive, consider following the Environmental Protection Agency model, which is a more reassuring one to the public, who are concerned about this matter?

I am also worried about a repetition of the situation in Bord Telecom, where the board, after deciding to purchase the Johnston, Mooney and O'Brien site, seems to have gone to ground — it has disappeared. Nobody seems to have been held accountable for that action. I sit on the Oireachtas Joint Committee of Commercial State-Sponsored Bodies and that body, already referred to under this section, is inadequate. It has no power to compel witnesses to come before it, it has issued multiple reports, which, up to [363] recently, have not been debated in either House. The Minister must assure us that, under this section, the directors will be experts in their fields and be accountable. If we got that sort of assurance, I would be happy. However, I would not be satisfied with a mere assurance — not that I doubt the Minister because he is a man of integrity, but his successors might not honour it. As long as that power is there, the temptation for those with power to look after their friends and supporters by appointing them to State bodies as rewards will be too great, all Members know it happens. Those who primarily suffer as a result are the taxpayer and the companies themselves, because some people on boards who know nothing about the matter in question.

Mr. Mooney: Much of what Senator Ross has said is waffle and casts a slur on the many decent and honourable people who served on semi-State bodies since their foundation. I suggest to Senator Ross that perhaps the main problem arose, not with the type, selection or number of those on semi-State bodies but on the flow of information, or absence of it, from the employees at higher management level, who took corporate decisions and subsequently informed their boards, who were left to clean up the mess. The final arbiter is the Minister. Not only, as Senator Ross correctly pointed out, has the Minister the right to appoint, he also has the right to remove.

Mr. Burke: Is Senator Mooney saying that the Minister was to blame for the current situation in Shannon and Aer Lingus?

Mr. Mooney: With all due respects, it was not the board.

Mr. Burke: If it was not the board, then it must have been the Minister.

An Cathaoirleach: We are not discussing any other board. We are discussing this Bill.

[364] Mr. Burke: What criteria will the Minister use when choosing the board for a semi-State body and what experience will be required? When I was speaking, I specifically said that I wanted the Chairman of the Public Accounts Committee to be appointed to the board of the new Authority. I stated that the workers should also have a representative on the board and I would like the Minister to take that into account.

Mr. N. Treacy: I will certainly take into account what the House said pertaining to the board. I was asked what criteria I will use in selecting the board. I will recommend to the Government that those with a proven commercial track record, who have experience in various commercial activities who are competent, efficient and able would sit on the board. I would like to see a good mix in it — people from the financial and travel industries and from other facets of business activity. My colleagues and I will not appoint political hacks or friends to this board. Board members will be carefully selected and I assure Senator McGennis that I too would like to see a gender balance. Although I am not the final arbiter in this matter, I will do my best to ensure that a balance is maintained.

Mr. Ross: I thank the Minister for his reply which was given with integrity and honesty. I am worried, not by what the Minister said, but by what Senator Mooney said. Senator Mooney has just exonerated — this is relevant to the section — the board of Aer Lingus. If that is the Government's attitude to the boards of semi-State, we should not appoint a board. If the Minister appoints a board of nine people and there is a catastrophe similar to that in Aer Lingus will he return to the House and, in the words of Senator Mooney, exonerate them? The board of Aer Lingus is to blame for what happened in that company, it is ultimately responsible in this regard. Perhaps this betrays the attitude of certain politicians, that the boards of semi-State bodies are basically stuffed dummies, they do not know what they [365] are talking about and they would not know a Boeing from a balloon. If something goes wrong and they get into debt of £550 million, it is not their fault, it is the fault of the chief employees. I never heard anything as fatuous. If boards do not know what is going on we should not appoint a board. The Minister must decide whether these boards are important and responsible or rubber-stamps. Boards must be fired if companies get into difficulties. Senator Mooney's comment was highly irresponsible, but revealing. I am sure the board of Aer Lingus would be delighted to hear it because that is not what Deputy Geoghegan-Quinn said when she was Minister for Transport and Tourism.

Mr. Magner: The doyen of private enterprise is lecturing us on State boards when the biggest scams in history were foisted on an unsuspecting public by the private sector. Half the members of the New York Stock Exchange are in jail and the City of London has witnessed some of the greatest crookery in the history of international finance.

Regarding objective criteria, in Guinness, for example, you were appointed to the board if you were the son of the owner or the current MP. That was the criteria and the system which Senator Ross has lauded from time to time in his article in the Sunday Independent. When Senator Ross refers to well run companies, he means companies where families are in positions of trust. It is not possible to protect against mismanagement, fraud, etc., in the public or the private sector. A Government can only take steps to ensure that the public purse is protected. That is what we expect the Minister to do. We do not not need lessons from the private sector. Who was involved in the Telecom Éireann scam? Was it the public or the private sector?

Mr. Ross: Certain allegations have been made and they must be responded to. I have never, nor would I, defend scams in the private sector. If the private sector is guilty of wrongdoing, it must be brought to book. This is a red herring is [366] drawing attention from difficulties in the public sector. There are provisions in this Bill relating to the public sector.

An Leas-Chathaoirleach: I ask Senator Ross to be brief because we have been discussing this section for some time.

Mr. Ross: Lessons should be learned in regard to the lack of knowledge of the boards of semi-State bodies. We should find a new way to appoint boards of semi-State bodies. Such boards should not be filled with Senator Magner's cronies.

Mr. Magner: Or Senator Ross's cronies.

Mr. Burke: Section 17 (h) gives the board power to set up subsidiaries, while section 14 gives the board power to look after design and manufacture. If the board decided to manufacture aeroplanes, would it be given full responsibility to raise finance for their manufacture?

Mr. N. Treacy: We intend to appoint a competent, professional and commercially driven board. Aer Lingus had a board and subsidiaries with boards and management, but there were vacuums. That is all I will say on this matter. We can reflect on decisions taken and on mobility, some of the problems lie in this area.

In response to Senator Burke's question, this subsection empowers the company to acquire or establish subsidiaries and to transfer the functions to the subsidiaries. It may be desirable for the Authority to set up an organisational structure in which different functions are carried out by different companies in the group. We do not intend to manufacture aeroplanes, etc.

Mr. Burke: Technically, the Authority could do so.

Mr. N. Treacy: Technically, they could manufacture aeroplanes, but it is not our intention to do so. It is normal in legislation to create such an opportunity. [367] Although we do not see an opportunity in this regard at present, it may be considered in the future. It may prove desirable for the Authority to divisionalise some of its functions into subsidiary companies. It may be effective and efficient to do so and give the flexibility required to exploit commercial markets throughout the world. This would be cumbersome if the Authority and board were to do so as flexibility is vital for commercial success.

Question put and agreed to.

Section 18 agreed to.


Question proposed: “That section 19 stand part of the Bill.”

Mr. Quinn: Regarding shares, on vesting day the company comes into possession of the assets. Receipt of these assets are balanced in two ways, partly by issuing shares to the Minister and partly by the creation of a debt to the Minister. We have not been told how many of these assets will be covered by the shares and how many will be covered by the debt. For example, if assets totalled £100 million, equity could amount to £100, while the debt could total £99.9 million. In other words, the company could be saddled with a considerable debt at the outset which could affect its ability to pay its way. This is a stupid way to capitalise the company. All the assets should be turned over to the company in return, exclusively, for shares. We should not hang a burden of unnecessary debt round the neck of a new company like this. I may have misunderstood it, that may not be the intention.

The State should get its rake-off in the proper commercial way, in a dividend on the basis of its shares which should reflect the profitability of the company, if there are no profits then the State gets nothing. If one takes the debt route the State gets an immediate and short term payoff. However, it is doing so at the expense of [368] the company's viability. The debt burden is restricting the company's ability to grow and is an unnecessary added cost to the company. One has to remember there are extra costs such as the cost of funding pensions. I am not sure if we have covered that one.

There seems to be a view that these new State companies are a bottomless pit, that one can keep loading them with costs which can then be recouped by charging more for the services they provide. That is the quick route, I suggest, towards pricing yourself out of business and I hope that will not happen here. I know it may not be what is intended.

Mr. N. Treacy: I listened with interest to Senator Quinn. The effect of this section is that on vesting day the Minister will transfer to the company the property used by ANSO; mainly air traffic control equipment, other communications equipment, office machinery and supplies as well as some lands and buildings. The total value of what will be transferred will, as I mentioned earlier, be circa £30 million. In return for that the Minister for Finance will get shares to an agreed value of approximately 15 per cent or £15 million. There will be an agreed quantity of debt equal to another £15 million. It will be a balanced situation. The total value of the shares and debt will be equal to the value of the transferred property. If any land is transferred at a later date the company will issue debt to the Minister for Finance to the value of the land. We are giving assets, the assets have been paid for by the taxpayer from the Exchequer and, based on that, the company will write shares to the value of 50 per cent of that asset base. It will borrow the balance of it, fund that and transfer same.

Question put and agreed to.

Sections 20 and 21 agreed to.


Question proposed: “That section 22 stand part of the Bill.”

[369] Mr. Ross: Section 22 states that the Minister for Finance may, subject to this Act, exercise in respect of the shares of the company held by him all the rights and powers of a holder of such shares and, where a right or power is exercisable by attorney, exercise it by his attorney.

Presumably that means the Minister will transfer those shares?

Mr. N. Treacy: In the normal situation in State bodies, the shares are held by the Minister for Finance on behalf of the taxpayer. It is normal that they are named — one or two particular names in the relevant Department — basically it means that the Minister for Finance can hold the shares but can appoint an attorney to act instead of himself. That is a normal provision in legislation of this kind.

Mr. Ross: I know it is a normal provision, normal provision often worry me. Who would exercise this power on behalf of the Minister for Finance? Would it be civil servants in his Department?

Mr. N. Treacy: It may be civil servants in his Department, it usually is. It could be an assistant secretary, a principal officer, a lawyer, a financial consultant, or somebody else whom the Minister could delegate to act on his behalf.

Mr. Ross: Is it restricted?

Mr. N. Treacy: Normally it is a civil servant.

Mr. Ross: Yes, but is it restricted in any way? Is it at the discretion of the Minister, or is he saying that, by precedent, it is likely to be a civil servant?

Mr. N. Treacy: It is normally at the discretion of the Minister for Finance but, by precedent, it is usually a civil servant of high standing and great capability.

Mr. Ross: The Minister says it is normal in legislation of this sort, but that [370] is not necessarily reassuring. If the Minister does have power of this sort, which is considerable, it would be open to him or her to transfer that power to anybody. I cannot see why this particular power is not restricted in legislation. Why is it not possible to say that these powers can only be transferred to principal officers or people of that level in the Department, or to lawyers? Why is there no restriction in this legislation? It is another blanket permission for the Minister to transfer these extremely important powers to anyone, whereas a restriction would be far more reassuring. The Minister should not be defensive about this. This is not a reflection on him, the Government or anybody else. It is simply a matter of bad law to give blanket permission to Ministers, until kingdom come, to have powers of this sort which — perhaps in 20, 30 or 40 years — could be abused. That is really the importance of this section. It is not relevant in the Minister's case but we are making legislation which will not be repealed in the next few years. Will the Minister state why, in legislation of this sort, there is not a greater restriction on the transfer of these powers?

Mr. N. Treacy: Senator Ross is technically correct in that the Minister for Finance can exercise his power absolutely and transfer those shares and powers of attorney to whosoever he sees fit. Since the foundation of the State this has been done and there has never been any difficulty with it. Over the last few years, where there were problems in various semi-State bodies, the Minister for Finance was able to send in very fine civil servants to represent him. There is no point in giving the Minister political responsibility while at the same time tying one of his hands behind his back. In particular situations it may be necessary for the Minister to appoint a lawyer, financial consultant, economist or accountant to attend a meeting, and give him powers of attorney. We must allow the Minister to have the flexibility, in any given situation, to do this in the best interests of exercising control and exploring the relevant information that may be [371] required to satisfy him, his Department, the Government and, indeed, Parliament that may ask certain questions. We must give that flexibility to the Minister. It has never been abused in the history of the State and I think it will be wisely used.

Mr. Ross: Will the Minister consider restricting it? I do not want to delay the House any longer, but it is dangerous. Will he consider a broad restriction to people with professional qualifications, including——

Mr. Magner: Why?

Mr. Ross: I will tell you exactly why, and I could broaden it much more than that. The Minister must restrict it in some way because there is always a danger that power may be abused. In this case it could be given to anyone, regardless of qualifications, in the same way as a director can be appointed to the board regardless of qualifications. That is wrong and a limit or restriction on a power of this sort is important. Will the Minister consider limiting it in some way? A broad restriction, to lawyers, to people with professional qualifications, if you like, give it to people——

Mr. Magner: Why lawyers?

Mr. Ross: It need not be restricted to only lawyers.


An Leas-Chathaoirleach: Senator Ross without interruption.

Mr. Ross: The power should not be generally extended to people. It cannot be known in advance that there will be an abuse of power. It is no good pointing to precedent and saying a power has never been abused. Many abuses of power only happened 50 years or more after the foundation of the State.

[372] Mr. Kelleher: It is a slur on all professions to suggest that the legal professions is the only one which would not abuse this power.

Mr. Ross: I did not suggest that.

Mr. Kelleher: The Minister is elected and he is ultimately answerable to the people.

Mr. N. Treacy: I wish to allay any fears Senator Ross may have. My colleagues are correct. The Minister is elected to the Dáil by the people. The Taoiseach is elected by those who are elected by the people to the Dáil. The Minister for Finance, on the nomination of the Taoiseach, is appointed a member of the Government by the President after a vote by the Dáil.

Mr. Magner: Lawyers are selected by God.

Mr. N. Treacy: He is answerable to the Dáil which is the Parliament of the people. He is given very serious constitutional, legal, parliamentary and financial responsibilities and must discharge them according to laws and regulations. He has a duty to the people in relation to the decisions he makes. He is responsible and answerable to the Parliament for those decisions. We cannot say to the Minister for Finance that we have no confidence in him and that he has not the ability to make a selection which is to our satisfaction. Since the foundation of the State Ministers for Finance from all parties have done so with great distinction and have shown great judgment. By and large they have been good, able people who have left a distinct mark on Irish politics and financial management. They have made good decisions. Their Department is very important. I am confident we should leave this function to them.

Mr. Ross: There have been cases of abuses.

Question put and agreed to.

[373] Sections 23 to 26, inclusive, agreed to.


Mr. Quinn: I move amendment No. 2:

In page 20, subsection (2), line 32, to delete “£80 million” and substitute “£1”.

The object of this amendment is clear, it is to remove the power of the company to borrow under State guarantees. We cannot have it both ways. This is either a commercial company or it is not. If it is commercial, even though it is owned by the State, it should borrow money in a commercial way on the backing of its assets and track record and the viability of its development proposals. There seems to be a knee jerk reaction to State guarantees for companies like this — if it borrows let us guarantee it.

There is a sloppy argument in favour of State guarantees which we have heard ad nauseam and no doubt will hear again today. The argument is that State guarantees allow a State company to borrow more cheaply and therefore the State saves money which we all favour. This argument is sloppy because it ignores reality. If a company with a State guarantee seeks a loan the bank will roll out the red carpet. We are used to banks doing this. The bank is making a profit and the State is taking the risk. The bank could not care about the State of the company or the viability of the proposition being put to it because the bank does not take a risk as long as there is a State guarantee.

This is bad business for the State. If companies like this had to borrow under normal criteria the banks would think carefully before parting with their money. They would vet the proposition with great care. That vetting would be a safeguard for us as taxpayers and for the State. It would mean professionals would apply their slide rule to the borrowing proposal and if the sums did not add up they would reject it. None of this happens when there is a State guarantee. The only vetting is done by civil servants who, although they may have the best will in [374] the world, are not professionals in that area. We are asking people to vet and approve proposals, some of them involving huge sums of money, who do not have the qualifications or business experience to do so. This is mad; worse than that, it is a growing habit.

Every Bill of this kind which has come before the House since I became a Member last February contained a provision for large State guarantees. We should stop this madness. We should stop creating new State guarantees and work instead at reducing and removing some of the borrowing powers under existing guarantees and force each State company to argue its case and have it vetted by the bank before it is given a loan. In this way we will be safeguarded and somebody other than us will examine and make the case.

Mr. Magner: Senator Quinn's amendment looks attractive on the surface. In a normal commercial situation a company presents a proposal to a bank and pledges its property and assests as security against any loan. If the bank approves the loan it does so on the basis that it can acquire the factory, equipment, stock and all other assests. If the Irish Aviation Authority were to seek a loan of £50 million, what security could it provide? It has navigation equipment in Dublin, Shannon, Cork and other airports. How could the bank acquire these assets? If the Authority defaulted on the loan the bank would not go to the airports to acquire them. It will say to the Authority that unless it provides a guarantee it will not be given a loan because the bank will not be able to realise any assets the Authority may pledge. We may or may not include such a guarantee in a Bill but we will have no choice but to provide it. We all know AIB, the Bank of Ireland or any merchant bank will not go to Dublin Airport to acquire navigation equipment. The Government will have to bail out the bank.

Mrs. McGennis: I have a different fear in relation to the amendment. I do not have the faith in the banks others may [375] have. I would not like my safety or that of any air passengers to be dependent on the banks saying that although the Authority needs £80 million it will only give it £60 million. There are safety implications which Senator Quinn may not be considering when he suggests that the Authority should use its own resources. I do not have faith that the banks will take on board proper proposals which are put to them——

Mr. N. Treacy: Or moral duty.

Mrs. McGennis: ——or that they believe they have the moral duty to so because they feel there is a need to borrow a certain amount to ensure all the Authority's activities are safe. I am not just referring to financial safety. Senator Magner's argument is a business one. I want to be sure the Authority does everything properly and that the safeguards mentioned in the Minister's Second Stage speech will be provided. I do not think the banks would be the least bit concerned about the safety of passengers. They are only concerned about the safety of their money.

Mr. Burke: I agree with Senator Quinn. We have been given guarantees by the Minister and Senator Magner that the Authority will operate on a commercial basis and that it will not be in a position to lose money. If that is so I do not see why we have to provide State guarantees of £80 million. If we arrive at the situation outlined by Senator Magner the Government could give a State guarantee at that stage; at least it would be vetted at that stage.

Mr. Magner: Exactly.

Mrs. McGennis: In the event of a crisis we will carry the can.

Mr. Ross: This is quite interesting. Senator McGennis wants the £80 million loan guarantee for safety, Senator Magner wants it for commerce. It is a [376] strange reversal of roles but it is a great coalition.

Mr. N. Treacy: It shows the diversity of thinking.


An Leas-Chathaoirleach: Senator Ross without interruption.

Mr. Ross: I am sympathetic with Senator Magner on this issue.

Mr. Magner: In that case I am obviously wrong.

Mr. Ross: And not for the first time. The Minister could give us some help and tell us what these borrowings are for. Our two confused friends between them have put their finger on the problem: what is this semi-State body about and what is the money for? Is it for Senator Magner's commerce or is it for Senator McGennis's safety?

Mr. Burke: Or the board.

Mr. Ross: It will not all be for the board. I support Senator Quinn's amendment because experience with State guarantees has been disastrous. All that happens is that the boards and the executives regard it as free money but do not really worry about how it is going to be repaid. I do not know what the semi-State debt is at the moment but it is phenomenal. The reason it is so large is the State guarantees.

However, the situation is worse than that because even if the money is not guaranteed, the banks regard is as guaranteed anyway. That is the reality of the semi-State sector. If the Government gives guarantees on £80 million and it does not give guarantee on another £20 million, in reality a banker will regard the £20 million as being guaranteed as well. It does not matter whether it is guaranteed. I do not know if the Minister of State is aware of this, but little of the £560 million owed by Aer Lingus — and I am sure it is nearly £600 million now [377] — is State guaranteed; I think only £30 million or £40 million is State guaranteed. However, those who loaned money to Aer Lingus will regard it as being State guaranteed anyway. The reality is that the State will pick up the tab whether it was State guaranteed or not.

Our problem is not just the State guarantee, it is the borrowing of the semi-State sector, because the banks and the lenders regard it as being guaranteed one way or the other. They regard a semi-State company as blue-chip. That means the semi-State body can borrow at advantageous rates and with a certain reckless abandon. I support what Senator Quinn says but I think we should be looking at borrowings in the semi-State sector altogether because the experience — £580 million for Aer Lingus and £900 million for Telecom — is disastrous. In those cases nobody knows how any of that money is going to be repaid.

I would like the Minister to look at the whole semi-State sector and say what the attitude of the board is going to be to borrowing. There should be serious restrictions on the board rather than allowances and enabling legislation; guarantees should be given to stop the board borrowing money because experience — and as I am sure the Minister of State will not deny it — in this area is disastrous, and will be disastrous for the taxpayer in the long run.

Mrs. Taylor-Quinn: This amendment is interesting. By tabling this amendment, Senator Quinn has raised the question of the difference between State and semi-State sectors. The question must be asked: would it not be better for the Minister to leave this entire operation under ANSO with direct State control, income going directly back to the State and the supervision of the Minister and the Department of Transport, Energy and Communications, rather than giving it to a semi-State body, creating another layer of bureaucracy and giving extensive borrowing powers, as Senator Ross said, a gilt edged guarantee? There are many semi-State bodies at this stage and I do not think the taxpayer can afford to take [378] another which has been given unlimited guarantees. The Minister of State may say it is limited but Senator Ross has outlined clearly how that limit can fluctuate up rather than down.

Senator Quinn is tabling an amendment which is fundamental to what the Minister said on Second Stage, that is, that this being a commercially viable operation. It would not necessarily have to be in profit at all times but it should be in a position to do so. In section 17 the Minister empowers the company to set up subsidiaries to undertake various activities. There are activities which the company will be able to undertake in the area of training and so on, which I suggested on Second Stage. There are many opportunities for it to be commercial and to operate as a viable commercial entity independent of the State. It is time the Government addressed their thinking in relation to semi-State bodies and the level of guarantees which the taxpayer should be asked to give them. Senator Quinn's amendment deserves support and consideration.

Mr. Kelleher: I presume that the Opposition is advocating complete privatisation.

Mrs. Taylor-Quinn: That is another question, there are three strands.

Mr. Kelleher: I would like to ask the Senator how this company would borrow because, effectively, the banks would not be interested in the existing collateral as it is not saleable. From the company's point of view it would be difficult to borrow from private banks.

Mrs. Taylor-Quinn: There are subsidiaries; it is important that we take notice of that.

An Leas-Chathaoirleach: Senator Kelleher, without interruption.

Mrs. McGennis: I am confused. I worked in what was once a State organisation, the Department of Posts and Telegraphs. This suggestion is ludicrous. [379] When I applied for a telephone I had to wait four or five years. The suggestion that we should have cut the ties and told the organisation to be in profit and to provide telephones without giving it a penny, is nonsense. I do not know the purpose of this debate. I was accused last week of not being political. I am not questioning Senator Quinn's amendment which I know he thought through. However, the rest of it is rubbish.

Mr. N. Treacy: I listened with interest. If I was borrowing money for safety and commercial reasons I would be happy to do so. Consequently, my defence by my colleagues is pretty good. If the amendment was accepted it would remove the capacity of the Minister——

Mr. Burke: Does that include Senator Kelleher?

Mr. N. Treacy: Absolutely. It would remove the capacity of the Minister for Finance to guarantee borrowing by the Authority. This section gives the Minister for Finance the power to guarantee borrowings by the Irish Aviation Authority of up to £80 million. I must emphasise that the Minister is enabled in legislation to give these guarantees, he is not obliged to give them. With the Minister's guarantee the Authority will be able to borrow at a significantly cheaper interest rate. I am sure I do not have to emphasise that lower interest rate payments will give the Authority a competitive edge in the international market.

In setting both the borrowing figure at £100 million and the guaranteed figure at £80 million we took into account the Authority's potential future borrowing requirements. Over the coming decade or so, the Authority's capital development programme will cost approximately £60 million at current prices. Senators have argued that if the Authority is a good credit risk it will not need a ministerial guarantee of its borrowings and that if it is a bad credit risk it should not be borrowing at all, which would be [380] stagnation. That would be ideal but we must be practical in a commercial world.

Its initial borrowing requirements will be determined by the capitalisation for the Authority involving fixed and current assets of £30 million and by its working capital requirements. Thus, the Authority which must be fully operational from vesting day will have a substantial initial borrowing requirement of a minimum of £10 million and a maximum of £20 million. The absence of a ministerial guarantee, especially in the initial years would make it difficult, expensive and perhaps impossible for the Authority to engage essential borrowings. As the House will appreciate, to accept Senator Quinn's amendment would strangle the Authority. Therefore it cannot be accepted.

I would like to mention the wider concern about £100 million and the £80 million guarantee and the comparisons made with the projected capital programme of £60 million. The next decade will see rapid and unprecedented changes in air navigation services. Satellites, synthetic radar and advance computing techniques will revolutionise airspace and air traffic management. We must be sure that the Authority has the expertise and the financial capacity to meet those challenges.

I would like to give some figures for comparison purposes. In Britain, the Civil Aviation Authority has a borrowing capacity of £500 million, all of which is guaranteed as most of the borrowings are made direct from the Exchequer through the public sector borrowing requirement. We have a large block of strategic airspace and we intend to ensure that we will always operate effectively and efficiently.

To deprive or radically reduce the Authority's capacity to borrow or have those borrowings guaranteed would give a strong and incorrect signal to the international aviation community. Depriving or reducing these limits would be equivalent to a supermarket chain signalling that it did not intend to defend its market share.

For some years ANSO has had a commercial insurance policy worth $1 billion to protect the Exchequer in the event of [381] a catastrophic accident. We hope, pray and plan that we will never have to call on that insurance cover. However, simple prudence dictates that we should have it. Similarly in the case of the borrowing and guarantee limits, they may never be reached or required but we are putting them in place to demonstrate our determination and commitment in this area.

It is clear on any commercial criterion that if one has assets, one pledges them. Projection and anticipated performance is shown and borrowings are divided. One has one's equity ratio, liquidity and reserves and guarantees are given. Personal guarantees may be given in normal commercial life by directors of companies but they do not have to given by the State.

It is different in the State sector but in the normal situation subsidiaries are established and corporate guarantees are given by the parent company against borrowings by subsidiaries. It is a normal relationship in any corporate operation. In this case, we are removing the organisation from the Civil Service, asking it to have shares, giving it assets, equity and a normal commercial mandate.

In order for it to perform, we must put it in an environment where it has the security of the State as it is being asked by the State, on behalf of the taxpayer, to perform in a commercial environment without the security of the State carrying its expenditure. We must maintain the guarantee so that it is given a fair chance to compete in a difficult international environment and expand to contribute to the nation.

An Leas-Chathaoirleach: Is amendment No. 2 being pressed?

Mr. Quinn: I would like to press it. I have made the point so I will not repeat it. Since I came into this House, in excess of £500 million has been given in State guarantees. This is a mistake because it removes the normal criteria and on that basis I would like to press this amendment.

[382] Mr. Burke: It is obvious that this board will borrow a lot of money.

Mr. N. Treacy: Some money.

Mr. Burke: I hope we are not going to create a situation where it will be too expensive to fly over this country never mind land.

Mrs. McGennis: If we had not introduced this Bill, would the State be footing the bill for ANSO? Would we be talking about investment and would it be coming out of the public purse?

Mr. N. Treacy: In the last couple of months we invested £6 million of Exchequer money in modern technology to service the aviation authority.

Mrs. Taylor-Quinn: Will jobs be lost because of that?

An Leas-Chathaoirleach: The Minister without interruption.

Mr. N. Treacy: Is Senator Taylor-Quinn saying that this nation, or any Minister acting on behalf of the Government, does not have a fundamental duty to provide the most sophisticated, modern technology to protect people who travel by air? We have a public duty to everybody.

Mrs. Taylor-Quinn: The lads in Ballygirren asked me to ask if jobs will be lost as a result of this.

An Leas-Chathaoirleach: The Minister without interruption. I ask Senator Taylor-Quinn to restrain herself.

Mr. N. Treacy: Whatever the lads in Ballygirreen asked is a matter between the Senator and the lads in Ballygirreen.

Mrs. Taylor-Quinn: It is a matter between the Minister and the lads in Ballygirreen.

Mr. N. Treacy: I have pledged that Ballygirreen will have a key role to play in [383] managing the North Atlantic air system. That is the position and it will remain so. However, that does not mean this nation is going to be left behind the rest of the world and not take advantage of modern technology in managing our aviation services.

We must acknowledge that we are giving a commercial mandate and consequently we have a duty to provide an environment in which this body can compete with other commercial organisations.

Mr. Magner: I want a word of comfort from the Minister. When speaking about the £1 billion insurance, he said, we “pray and plan”. I am assuming that the emphasis is on the planning.

Mr. N. Treacy: Absolutely.

Mr. Burke: The national plan.

An Leas-Chathaoirleach: Senator Quinn has indicated that he is pressing his amendment.

Mr. N. Treacy: Before you put the question, I want to clarify one issue arising from a statement made by Senator Burke. We have the cheapest air fares in the world.

Mr. Burke: Now.

Mr. N. Treacy: Our international users acknowledge this and we intend to maintain them or we will lose the airspace. Our intention is to get responsibility for more airspace.

Mr. Magner: We are the best.

Mr. N. Treacy: Exchequer power is everything.

Amendment put and declared lost.

Question proposed: “That section 27 stand part of the Bill.”

[384] An Leas-Chathaoirleach: Is section 27 agreed?

Mr. Ross: No.

Mrs. McGennis: Has the Senator no home to go to?

Mr. Ross: I am sorry but I am not going to hurry for the Senator; we are discussing legislation. The Senator may be in a hurry but we adjourn at 10.00 p.m. We can come back another day.

Mrs. McGennis: I will stay as long as the Senator.

Mr. Ross: This body, in keeping with other semi-State bodies, can borrow abroad and in foreign currencies. I see no problem with that. To restrict it to borrowing in the currency of the State would be wrong and could cause some sort of commercial paralysis. However, I ask what freedoms will be given to this body to deal in these currencies when and where it feels it is necessary?

I refer specifically to the problems encountered by some semi-State bodies during the devaluation crisis earlier this year. They felt they were coming under strong pressure not to deal in certain currencies because it was deemed to be unpatriotic by various Ministers and members of the Government. Due to the political pressure they felt was put on them not to deal in these currencies and not to move out of foreign currency debt into Irish debt, certain semi-State bodies were reluctant to do so and were stuck with a very inflated foreign currency debt. This debt could easily have been avoided if they had taken the same decision as people in the commercial world to sell their foreign currency debt and convert it into Irish pounds.

Will this semi-State body be able to deal in foreign currencies freely and on a purely commercial basis? Will the Minister give me an assurance that they will not be subject to political pressures in their dealings with regard to foreign currency debt?

[385] Mr. N. Treacy: I have spent 11 years in this political system and six years as a member of Government and I never heard of political pressure being applied vis-à-vis borrowings or borrowing in any particular currency. We do not envisage that this Authority will have major external currency requirement borrowings. Many of the demands will be made in the domestic area. At the moment, we have a facility for ANSO's requirements. Obviously many of them are met in Irish punts, sterling and French francs. We do not see a major requirement in that area.

We are fortunate that the Government in its wisdom established the National Treasury Management Agency. We have, as Senator Ross knows, cashed in some of our foreign currency loans at particular times to the advantage of the Irish Exchequer, thus reducing the foreign debt and easing the pressure on the taxpayer caused by repayments. The National Treasury Management Agency, in co-operation with the Department of Finance and the Central Bank, has done an excellent job. I am confident that it will do a greater job in future years and, more particularly, continue to give relevant advice on all currency requirements for borrowing to various State bodies.

Mr. Ross: The Minister has made things much worse. He is now saying that the NTMA will manage this debt.

Mr. N. Treacy: No, I did not say that.

Mr. Ross: Who will manage this debt?

Mr. N. Treacy: I will answer the Senator when he is finished.

Mr. Ross: The NTMA, supposedly an independent body was, at the time of devaluation, subject to a political decision not to devalue. The NTMA, with the Central Bank and the Department of Finance, acted according to that political decision. As a result, the NTMA was unable to make commercially sensible decisions. It was hidebound in its currency dealings and decided that it [386] could not sell Irish currency for reasons which I understand perfectly.

Mr. Magner: The Government has a wider agenda than the NTMA.

Mr. Ross: Telecom, which also has a huge foreign currency debt, lost an enormous amount of money as a result of being unable to transfer it into Irish currency debt at the time. It was thus landed with an extra 10 per cent debt because, as a semi-State body, it felt political pressure not to transfer the foreign debt into Irish currency debt.

That may or may not be the right thing to do. However, the point is that if this body borrows in foreign currencies on the foreign exchange market for good commercial reasons and, because of a currency crisis in this country feels constrained to hold on to that foreign currency debt, it will not then be acting in a commercial manner. Telecom's foreign currency debt went up by 10 per cent overnight as a result of political pressure in this area. I do not wish to make a judgement on this. The flaw here is that it may decide in a commercial environment and according to commercial criteria to borrow in foreign currency but when it wishes to reverse that decision it will feel constrained not to do so. I would like an assurance from the Minister that there will be no political constraints on its foreign currency dealings because they have occurred in the past.

Mr. N. Treacy: I listened with great interest to Senator Ross and, with all due respect to him, he is external to the decisions taken during the currency crisis and devaluation. He is mistaken if he thinks it was a political decision to arrive at a conclusion at a particular time. The agreement was reached between the Central Bank, the National Treasury Management Agency and the Minister for Finance and the timing was political. The judgement of the Government and of the Minister for Finance was that it should be done at a particular time. There was a consensus and if we had not acted at that time and in that manner we would [387] have been in serious trouble and forced into a second devaluation. Our decision has clearly been vindicated. We have stabilised our borrowing and interest rates, we have allowed the economic environment to proceed on a solid commercial basis and economic development has not stagnated.

Senator Ross should think again because he cannot, under any circumstances, compare the borrowings we will require for this company to a major currency crisis that affected the world. As a small nation we held our own. We stayed in the EMS and the great United Kingdom had to bow out. We have been vindicated in the manner that decision was made. It is a vindication of the ability of the Minister for Finance, with the support of the Government, to time the execution of that decision perfectly.

Over 80 per cent of our revenues is in foreign currency. Apart from that, we do not expect to deal in a major way in foreign currency exposure on borrowing. Any exposure will be alleviated by its revenues being in foreign currency, as Senator Ross accepts. The National Treasury Management Agency is an independent body but it is there to advise the Government and agencies of Government on what is appropriate at any particular time. Its services will be available and called on if necessary.

Mr. Ross: It does not answer my question. I am devastated by the ability of the Government to portray devaluation as a great victory.

Mr. Magner: It is pretty good.

Mr. Ross: It is an amazing turnaround and I congratulate the Minister and the Government. Is the Minister's memory so short that he does not remember the promise of doom, gloom and disaster which would follow devaluation——

Mr. Magner: Come on, be generous. Give us some credit.

[388] Mr. Ross: No. The Minister made the most extraordinary claims which must be countered.

Mr. Magner: He is the Minister; he is entitled to do that.

Mr. Ross: Does the Minister not remember, having claimed this incredible victory and having brought down interest rates, that we were warned by the Minister for Finance devaluation would cause increases in interest rates?

Mrs. McGennis: It was the wrong time.

Mr. Ross: The Minister must make up his mind whether devaluation was a victory, it was a disaster.

Acting Chairman (Mr. Belton): Will Senator Ross return to section 27?

Mr. N. Treacy: I will clarify the situation. Senator Ross has an ability to take my contributions out of context. I did not claim a major victory on devaluation.

Mr. Magner: Which it was.

Mr. N. Treacy: It was a major success. My point was that if we had not executed it at a particular time we would have been forced to devalue again but the political wisdom, holding firm until the right moment, has been clearly vindicated. By making the decision at the right time we did not expose the Exchequer or our currency to further impositions.

Mr. Magner: The Spaniards got it wrong.

Question put and agreed to.

Sections 28 and 29 agreed to.


An Cathaoirleach: Amendments Nos. 3, 4 and 5 are related and may be discussed together.

[389] Mr. Quinn: I move amendment No. 3:

In page 22, subsection (2), line 50, after “Oireachtas”, to insert “within 4 months of the end of the relevant financial year”.

This is related to the following section which is concerned with the annual report.

I want to ensure a system of reporting in line with normal commercial practice and which subjects the company to the same constraints, pressures and disciplines placed on a company in the private sector. Time is of the essence in company reporting and stock exchanges around the world have strict deadlines within which they expect companies to report. They know that things can go wrong very quickly and if problems can be corrected the sooner that is done the better.

We must send a clear signal in the company report that results are quickly notified. We also must send a clear signal to the sponsoring Department to publish the reports immediately. That is why the time limit specified in this amendment applies not just to the company reporting but to the entire process of getting it to the Oireachtas. In the past, Departments have sat for months, sometimes for years, before publishing a report from a State body under its tutelage. That is bad practice against which we should legislate. Annual accounts should be published immediately. There is nothing for the Department to do but pass them along, that is the reason for substituting the four months at the end of the financial year.

I also wish to talk about the other two amendments. Their purpose is to reduce the delay before publication of the annual report. I commend the Minister for having a time limit in this Bill, that has not always been done and is a welcome step forward. It is the first time it has been in a Bill since I came into the House and I am delighted to see it. I will be magnanimous in my welcome and will not refer to the objections to my suggestions [390] about incorporating such provisions in earlier Bills this year.

Since we are providing a time limit, let us do it right. Time is of the essence in reporting and the nine months proposed here is too long. The world can change in nine months, the timescale I suggest is just enough to do the job properly but it is also the outer limit of delay at which the report can be really useful. We need State companies to report in this time if the annual reports are not to be history books. I am glad Senator Lee is not here because the last time I referred to something being history because it was delayed he seemed to take it as a reflection on history and, as a professor of history he was upset. I do not suggest that there is anything wrong with reading reports as history but I know from my experience as chairman of An Post that it is possible to report very quickly. We set very short time-scales for that. You have to put your mind to it, if you want to create obstacles you can talk about the difficulty of getting the audit done and the problems it creates for staff, but if you want to do it you just do it. We should show our willingness to do it by writing it into legislation.

I appeal to the Minister to put the seal of quality on this section by getting the timing right. There are three different amendments, all with the same objective, of getting any new organisation to report to its Government Department within three months, to have that Department report within a month to the Houses of the Oireachtas and to publish it.

Mr. Burke: I support Senator Quinn. Six months is far too long and when six months is coupled with the three month period before the report is laid before the Houses of the Oireachtas there is a time lag of nearly 12 months. I welcome the fact that the Minister set a time limit, at least, as Senator Quinn said, it is one step forward. While it is very welcome we agree with Senator Quinn's proposed time limits of four months and one month.

Mr. Magner: Senator Quinn's proposals make sense because, as he said, [391] the only value such reports have is when they are relevant and action can be taken. We have already discussed some of the gaps in regard to State companies. I cannot support the amendment, but the unit within the Department should take its thrust on board and put pressure on to get reports within Senator Quinn's timeframe. If that does not happen, the Government should come back with an amendment and make them do it. That is a job for the unit within the department.

Mr. N. Treacy: I thank Senator Quinn for acknowledging that we have put in a time limit for reporting back. As far as we are aware, it is the first time this has been done. I am responding to amendments Nos. 3, 4 and 5. The effect of the amendment to section 30 would be to require the Minister to lay the Authority's accounts before the Houses of the Oireachtas within six months of the end of the financial year to which the accounts relate. I agree it is important that the Oireachtas should receive the accounts of semi-State bodies in good time. It would not be appropriate to fix a time limit within which this must be done. The Minister cannot lay the accounts before the Oireachtas until he has received the full, final, audited accounts. For example, if there was a delay in completing the audit, which would not necessarily reflect on the performance of the Authority, the Minister could not comply with the requirement. It would be inappropriate to impose on the Minister an obligation which it might not be within his power to meet. However, I assure the House that there will be no undue delay in providing the accounts of the Authority to the House, which will normally be published with the Authority's annual report.

Section 31 requires that the annual report be supplied to the Minister within six months of the end of the financial year and laid before the Houses of the Oireachtas within three months. These are maximum time limits and the accounts will normally be available at the same time. Amendments Nos. 4 and 5 [392] would make the Authority supply its annual report to the Minister within three months and lay it before the Oireachtas within one month of receiving it. While I deplore any delay in providing the information, six months is a more reasonable time limit for the production of the Authority's annual report, particularly if it is to contain audited financial information. An unduly short time limit might hamper the Authority in producing its annual report. It would be preferable for the House to receive full information within six months rather than sketchy information within three months.

Amendment No. 5 would oblige the Minister to lay the annual report before the Oireachtas within one month of receiving it rather than three months, as is in the Bill. Three months is a more reasonable time limit. The Minister and his advisers will need to consider the report and may require additional information to be included in it. This would take some time and a one month time limit would be unduly restrictive.

I take Senator Magner's point that the unit in the Department would look at these accounts and this report, analyse it and make an internal report to the Minister who, in turn, may seek further information and clarification before he finally lays the reports before the Oireachtas for final consideration. It is important to have put in the limits for the first time and it is important that we give that time to maximise the opportunity for the Department and the Minister to scrutinise the accounts and the report in detail so that when it comes before the Oireachtas, the Minister has all the information it may require.

Mr. Quinn: I will not press the amendment on the basis of what the Minister said. He pointed out that it is a first step forward, I appreciate and recognise that fact. However, I do not accept his general points and I will continue to urge that in all similar legislation we arrive at the same standards that have to be adhered to in the case of stock market quoted companies. They are the standards expected, they have to be audited and [393] published within that time. Therefore, we should aim at that and I appreciate the Minister's first step in that direction.

Amendment, by leave, withdrawn.

Section 30 agreed to.


Amendments Nos. 4 and 5 not moved.

Section 31 agreed to.


Question proposed: “That section 32 stand part of the Bill.”

Mr. Ross: I may be wrong but the period of three years seems to be a very long period to allow for the compilation of a report on technical and safety standards. I assume that safety standards are regularly monitored on a normal basis and that there is a daily check. Something as important as safety standards, and Senator McGennis who is concerned with safety would, I am sure, endorse this, should be scrutinised and reported on every three or four months. Unless there are stringent controls on a daily basis this report should be issued far more regularly. I do not understand the thinking behind it.

Mrs. Taylor-Quinn: I agree with Senator Ross in relation to this section. I raised this matter on Second Stage. Three years is a very long time before a report is made specifically to the Minister in relation to safety standards. I thought the Minister at this point might be able to come back and change that to six months or three or four months, as Senator Ross said. We are talking here about something fundamental and although the section does provide the Minister with the power to send somebody to carry out a check within a three year period from the date of vesting, that is a long time in regard to safety.

One is familiar with and aware of the difficulties that can arise with technical [394] equipment, which can quickly become obsolete, and needs close monitoring. It is unwise for the Minister to allow this to be removed completely from his and his Department's control without more regular intervention. I ask the Minister of State to reconsider this matter with a view to allowing him and his Department to have greater input at least every six months.

Mr. N. Treacy: I have listened with great interest to what has been said. Since I joined the Department earlier this year I have been impressed by the emphasis on safety. One could compare the safety system operated to the auditing of accounts where the accountants operate in managing the funds and the books and the auditor then makes the final check and gives his report. ANSO has a team of inspectors with wide ranging powers. They can arrive in any airport, inspect any airplane and meet any member of staff at any time, which they do on a regular weekly basis around the country. In-house, internal inspectors carrying out safety checks at all times on a regular basis.

What we are talking about here is an auditing whereby external auditors will come in on a minimum three-year basis to do an aviation audit on the safety procedures operated by the company. It would be our hope that it may be possible to do it once a year but with regard to safety the inspectors are constantly there. I have seen them and I am highly impressed with the way they operate, their professional standards and the powers they have. Nobody can impede their inspections or their investigations at any time. I am satisfied that the system is absolutely foolproof. We want external checking of the system to ensure that we conform fully with the standards laid by the ICAO and the Joint Aviation Authorities in Europe. That is the effect of these provisions and I am satisfied that it is wise to do so. If we can it on an annual basis we would be delighted to do so. It should be done in not more than three years.

Mrs. Taylor-Quinn: I agree with what the Minister of State said regarding what [395] ANSO has been doing. We complimented them on Second Stage on their fine work and their high international standards. However, 20 years from now when many of the present staff in the Department, who will go to the new Authority, have retired or left and there is a new set of people, what guarantee does this Bill give that the current monitoring system under ANSO will continue under the new authority? There is nothing in this section to suggest that will continue in the new environment.

Mr. N. Treacy: We are confident there will be a continuity in staffing. As people retire they will be replaced by people who are competent and proficient and have come up through the system. The authority will be reporting to the Minister and the inspectors in the authority will be doing their work on a constant basis to the highest international standards. What we are talking about here is an external audit to international safety standards for our aviation services. If they are not satisfied they report to the Minister and the appropriate action will have to be taken on the direction of the Minister.

Question put and agreed to.

Sections 33 to 35, inclusive, agreed to.


Question proposed: “That section 36 stand part of the Bill.”

Mr. Burke: It would seem from this section that the chief executive can override the board. This is a dangerous precedent whereby the chief executive can take the complete power at all times. Senator McGennis and Senator Ross spoke about safety standards. The Minister of State says that the first report on safety standards will not appear until three years after the setting up of the board. At that stage if the board wants to take a decision which is against the wishes of the chief executive a long rigmarole [396] ensues which could take another year. When we are dealing with safety standards could be a dangerous precedent to give all this power to the chief executive.

Mr. Ross: I endorse what Senator Burke said. I do not understand the circumstances in which this conflict will arise. Perhaps the Minister of State could describe how and where it might happen. Does it tell us something about the chief executive? Is the implication that the chief executive is better qualified to make these decisions than the board? I do not understand the circumstances in which there would be such a conflict about safety. Perhaps the Minister of State could give us an example.

Mr. N. Treacy: Senator Ross is absolutely correct on this occasion. This provision is necessary because the directors of the company are unlikely to have the technical expertise of the staff. Due to the paramount importance of safety in aviation it is appropriate to require that before the board of the company makes a decision likely to impact on aviation safety they should take into account all the advice and information available to them from the staff of the company, as conveyed to them by the chief executive officer. Consequently, if the board takes a decision which is not to the satisfaction of the chief executive officer from an international safety standard point of view, this section empowers him not to have to carry that out and to report to the Minister thereon.

Mr. Burke: Does this mean, as Senator Magner said earlier, that this will relieve the board of any blame and put all the blame on the chief executive?

Mr. Magner: I never even mentioned that.

An Cathaoirleach: At this late hour we are not going to have a row.

Mr. Magner: I would like to say a few words on the section. This chief executive [397] will not ultimately be making footwear. These fellows are controlling Boeing 747s and other aircraft. It is sensible if a board which is comprised of lay people decides that the authority should do a certain thing that the chief executive should be able to say to the board “Hold on. You may be contravening a section of the Bill and I think you are wrong. If we implement this we will cause chaos in the sky. I think I should talk to the Minister, who will talk to his experts.” What is wrong with that? Senator Ross sees a plot in every line in this Bill.

Question put and agreed to.

Section 37 agreed to.


Question proposed: “That section 38 stand part of the Bill.”

Mr. Ross: The appointment of a chief executive is for a period of seven years, renewable. That is a long period and it should be possible to appoint a chief executive for four years, renewable. Would the Minister consider — even if he would not consider it in the case of the board — that the appointment of the chief executive should be done on the same model as the Environmental Protection Agency? Someone with immense technical knowledge of traffic and safety regulations in the air will be appointed and will have a principal eye to safety. The Minister should give the granting of that appointment to people involved in the aviation industry, such as various sections of vocational groups in different areas of the aviation industry.

As the Minister will be aware in the APA case, various environmental groups were granted nominations for the position of chief executive.

Progress reported; Committee to sit again.

An Cathaoirleach: When is it proposed to sit again?

[398] Mr. Mullooly: It is proposed to sit again at 10.30 a.m. tomorrow.