Dáil Éireann

1. Mr. G. Mitchell asked the Minister for Tourism and Transport if his share-holding in Aer Lingus plc has in any way diminished by reports of unreported losses of an Aer Lingus subsidiary and if he will make a statement on the matter.

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3. Mr. Byrne asked the Minister for Tourism and Transport when his attention was drawn to the reported discrepancy of £10 million in the accounts of an Aer Lingus subsidiary; the action which he has taken as a result; if he is satisfied that the moneys have now been accounted for; if, in light of this discrepancy, he intends to request Aer Lingus to review its procedures for supervising the activities of subsidiary companies; and if he will make a statement on the matter.

Minister for Tourism and Transport (Mr. S. Brennan): I propose to take Questions Nos. 1 and 3 together.

The discrepancy in Aer Lingus Holidays to which the Deputy refers was brought to my attention on 24 January last by the chairman of Aer Lingus who informed me that major losses had been incurred in the Aer Lingus subsidiary company, Aer Lingus Holidays Limited. These losses, I was informed, had arisen mainly from unreported trading losses over a number of years of some £7 million.

The chairman also informed me that, in addition, it had been deemed prudent to write down the value of the company's apartment properties by some £3 million.

I was assured by the chairman that appropriate remedial action had been taken already by Aer Lingus in relation to the subsidiary company situation:

(a) a new chief executive and new financial controller had been appointed at the holiday company; and

(b) new financial and management reporting procedures had been put in place between Aer Lingus and the holiday company.

As is now public knowledge, an investigation into the reported discrepancies is being carried out by a major chartered accountancy firm, Craig Gardner, and the Garda have also been contacted by Aer Lingus. I expect shortly to receive the Craig Gardner report, and I will then consider what further action needs to be taken in this matter. Pending receipt of the report, I am not in a position to comment further in any detail.

With regard to the effect on share-holders' funds, I have been advised by Aer Lingus that as a consequence of the unreported trading losses and property revaluations, the accumulated share-holders' funds in the Aer Lingus Group [692] balance sheet at 31 March 1990 will be £10 million less than otherwise would have been the case. In the group's accounts for the year ended 31 March 1989 shareholders' funds were shown at some £267 million.

I am deeply concerned at the reported discrepancies in the Aer Lingus Holidays accounts and I have requested the chairman of Aer Lingus to review procedures for supervising the activities of their subsidiaries. He has informed me that the board have introduced changes in Aer Lingus to improve and strengthen the finance function, including the financial control function, at group level, in the airline itself and in all the individual subsidiaries.

I have also requested the chairman to let me have a full report on the management information systems and financial control/audit procedures now in place.

Mr. G. Mitchell: The Minister and I are used to preparing and reading sets of accounts. Will the Minister tell the House how it is possible to have unreported losses of £7 million and assets over-valued by £3 million without in some way doctoring the accounts in a fraudulent manner? If there was fraud in this case, what exactly was the involvement of the Garda? What management personnel have been removed from office as a result of these unreported losses?

Mr. S. Brennan: I share the Deputy's concern in regard to these matters. It will not be clear, until I get the Craig Gardner report, to what extent — if any — fraud was involved. I should have the Craig Gardner report formally presented to me within two weeks and I am confident that it will indicate the exact ratio — if there is one — between fraud and anything else that may have been involved in the unreported losses. We will have to see the report to ascertain how this happened.

Mr. Byrne: How did the chairman of Aer Lingus know of the problems in order to contact the Minister given that [693] Stokes, Kennedy, Crowley, the accountants who did the books for the past number of years, seemed to have failed to notice the discrepancy of £7 million over the three year period? Have Garda inquiries been completed and, if so, will criminal proceedings be initiated against any member of the staff? Why was it necessary to bring in an alternative set of accountants to investigate? Is the Minister happy with the performance of Stokes, Kennedy, Crowley, who are the company's accountants?

Mr. S. Brennan: I understand that the matter came to light because of inquiries from the group. Their finance department were involved and they brought in a smaller, less well known, firm of accountants in a routine manner to look at the subsidiaries as they were concerned about the reports they were getting. I am very reluctant to comment on the performance of auditors and, obviously, the reason we asked Craig Gardner to look into the matter is that they are not currently involved in the company. It is appropriate that an independent firm of accountants should now look into the situation. Let me assure the House — and particularly the public — that any action required to be taken by me or the Government — and whatever action is open to us — will be taken as urgently and as firmly as possible. In so far as I am in a legal position to do so, I will be making a very full disclosure of all the detailed information as soon as I receive the Craig Gardner report.

Mr. G. Mitchell: The Minister did not answer the question I asked as to whether officials were removed from their positions as a result of this. What rank did these officials hold? Will the Minister agree that a sum of £10 million is not peanuts? It would seem to a reasonable person that there was an attempt to cover up the fact that this had happened. Although the Minister told the House that he was contacted by the chairman of Aer Lingus on 24 January, he reportedly told a Sunday newspaper two weeks ago that this was a rumour and that “we do [694] not investigate rumours”. I am very concerned — perhaps the Minister will allay my fears — that there was an attempt to cover up these losses and not to let the Dáil or the public know about them.

Mr. S. Brennan: I completely reject that. When the information became available every possible action was taken with very considerable speed. The Garda were immediately informed and Craig Gardner were immediately put in place to get the full picture and to establish whether we are talking about unreported losses, fraud or a mixture of both. Correct action was taken with all due speed and, within a matter of two weeks, I will have the formal report from Craig Gardner. I assure the House and the public that I will take whatever firm action is open to me — given the legal constraints on me — without hesitation.

Mr. Byrne: Will the Minister say whether we should be congratulating the chairman of Aer Lingus who, he implied, discovered the loss with the staff of the companies involved seemingly without the assistance — at that stage — of Craig Gardner or Stokes, Kennedy, Crowley? The statement by the Minister that he intends to instruct Aer Lingus to pull out of the business altogether should be reversed, because we should congratulate them for identifying the problem. Does the Minister feel that there might possibly be a conflict of interests for many of these accountancy companies who would, presumably, be doing the books of other tourist interests? Perhaps the Minister should use the Auditor General on occasion to audit the accounts of companies like Aer Lingus when events like this come to light?

Mr. S. Brennan: I want to point out clearly that I have not instructed Aer Lingus to pull out of the holiday business. I said that when I receive the Craig Gardner report I will discuss with Aer Lingus whether they should continue in the holiday business. How firm I will be in that regard depends a lot on what the report tells me. I want to make that clear.

[695] In case someone who has booked holidays gets the wrong impression, I want to make it crystal clear that there will be no danger to Aer Lingus holidays this season. If members of the public are thinking of booking holidays with Aer Lingus it is perfectly in order for them to do so. There is no reason Aer Lingus should not see this season out. With regard to the future of Aer Lingus in this business, I will be very firm in this regard, but whatever I do the public will not be affected.

It is not really for me to comment on accountacy firms, but I am satisfied that the various accountancy firms looking after the books of State companies are professional, and I have no reason to believe that they are anything other than professional.

Mr. G. Mitchell: May I——

An Ceann Comhairle: I want to bring supplementaries on these two questions to finality by reason of the fact there is still another Priority Question to be disposed of within the prescribed time, which is 2.45 p.m.

Mr. G. Mitchell: May I ask the Minister——

An Ceann Comhairle: Brevity please, Deputy.

Mr. G. Mitchell: ——for the third time, he has not answered this question, if heads have rolled?

Mr. S. Brennan: No. I do not know how the Deputy would operate but I will wait for the full report before I pass sentence. If the Deputy was sitting over here I think he would do the same.

Mr. Byrne: Will the Minister——

An Ceann Comhairle: A final brief question, Deputy Bryne.

Mr. Byrne: ——inform the House whether the subsidiary company made a [696] profit for the Aer Lingus group of companies?

Mr. S. Brennan: That may appear to be a simple and innocent question but I think the Deputy will appreciate that it is not. We are investigating this issue which is at the very core of the difficulty about whether there were unreported losses or profits, and what the exact position is.

An Ceann Comhairle: I am calling Question No. 2.

2. Mr. G. Mitchell asked the Minister for Tourism and Transport the progress which he has made to date in advancing Irish tourism needs during European Year of Tourism.

Mr. S. Brennan: The programme of events outlined in my reply on 1 February to the Deputy's question about plans to mark 1990 as European Year of Tourism is now well under way.

A special European Year of Tourism promotional project co-funded by the Commission and aimed at the leisure segment of the European market will be launched later this month. Meanwhile a second project, which comes under the pan-European category, has been developed in conjunction with the Wales Tourist Board and involves promoting a tourist trail along the main Celtic monuments and sites in Ireland, Britain and France.

The winners of the National Essay and Poster Competitions will be announced on 18 and 24 May, respectivley, and will then go forward to represent Ireland in the European finals. Other competitions covering research, facilities for the disabled and the environment are underway.

Meanwhile the Irish tourism industry has begun sponsoring a series of special European Year of Tourism promotions and value-added offers which will serve to further highlight the year and to encourage travel in the off season.

[697]Mr. G. Mitchell: Is the Minister aware that only two of the 250 events listed in the calendar of events for the European Year of Tourism published by the European Community will be held in Ireland — a rural tourism press conference in Shannon and there is the Cork City of Festivals. Does the Minister agree that it is reasonable for the House to presume that he has wasted his time as President of the Council of Tourism Ministers because not alone is this great engine not moving in any direction which will be of benefit to us but in connection with the national plan for Dublin Tourism we seem to have opted out of European activities in this regard?

Mr. S. Brennan: The Deputy misunderstood the European institutional arrangement. The European Year of Tourism has nothing to do with the Presidency of the Community. The European Year of Tourism is a separate venture undertaken by the Commission with the involvement of all the member states to a greater or lesser extent.

Our Presidency of the Tourism Council is moving very rapidly. At an informal meeting of Tourism Ministers, a tourism document was agreed. To the best of my knowledge this is the first time the European Tourism Ministers have agreed to formulate a European tourism policy. They did not formally undertake to do this in the past and I regard this as a major breakthrough. I have called a second meeting of Tourism Ministers for the end of June which will agree a final blueprint for tourism for the European Community.

Announcements will be made next week about the Structural Funds. We are substantially on target to double the number of tourists coming to Ireland over the next four years. These events and competitions are interesting and important in so far as they highlight the European Year of Tourism, but they alone will not bring tourists to Ireland. It is important that we get concrete decisions in regard to tourism policy during our Presidency, which we can only do at Council of Ministers meetings. We made [698] more progress at the last Council meeting than in all the other Council meetings taken together.

Mr. G. Mitchell: Given that this list includes 250 events does the Minister not agree that the two activities to be held in Ireland are very minor? In fact, the event to be held in Shannon was organised at the behest of the European Parliament. Will the Minister tell us what effectively he, as President of the European Council of Tourism Ministers, has been doing to advance the interests of Irish tourism while he has been entertaining his ministerial colleagues in Europe and their companions at various lavish hotels in the west of Ireland?

Mr. Carey: What is the Commissioner for Tourism doing?

Mr. S. Brennan: Clearly the Deputy has not been listening to me. I told him that at the meeting in Ashford Castle we formally agreed a tourism document, the first time Tourism Ministers in the European Community have done this. We have agreed to bring forward more concrete plans for the June meeting. This is a substantial breakthrough for Tourism Ministers in Europe as it is the first time they have formally agreed to a tourism policy of any sort. This document was agreed at an informal meeting and will be subsequently confirmed at a formal meeting.

With regard to my efforts to advance Irish tourism, I am concentrating on correctly investing the Structural Funds, which mark a historic investment in Irish tourism, and on our marketing drive to double the number of tourists who come to Ireland. It is much more important to get this done than to organise poster competitions and raise flags, which is what much of what the European Year of Tourism is about. Of course, I support the European Year of Tourism but I am not taken in by it. I do not regard all the hype about the European Year of Tourism as a substitute for putting tourism policy in place, which is what I am doing.

[699]Mr. G. Mitchell: It is no substitute for the Government's hype about themselves.

4. Proinsias De Rossa asked the Minister for Tourism and Transport if he is satisfied that all tour operators sending holiday makers abroad are operating on a sound financial basis and capable of honouring all commitments; and if he will make a statement on the matter.

Mr. S. Brennan: Tour operator licences are issued on an annual basis in accordance with the Transport (Tour Operators and Travel Agents) Act, 1982. Before a licence is granted, a tour operator is required to submit a detailed application, duly audited and certified accounts and any additional financial and such other information as may be required as part of the process of satisfying my Department that the tour operator's resources are adequate for the purpose of the business. Decisions on individual applications are taken only after they have been carefully examined by my Department.

The performance of individual tour operators is monitored during the period of the licence. Where there is any reason for concern about the financial position of a tour operator, a further detailed examination is carried out in consultation with the tour operator concerned. Where such examination identifies a potantial problem, the operator is required to take the necessary steps to ensure that he or she can continue to meet his or her obligations. Failure to do so would lead to the withdrawal of the tour operator's licence.

Mr. Byrne: The question was tabled arising out of the serious concern expressed in the recent issue of The Sunday Business Post that the largest tour operator, JWT, was in serious financial difficulty. The Minister would seem to have agreed that the over-booking of seats by tour operators this year does pose a possible threat. Is the Minister satisfied that, if the largest of the tour [700] operators was to get into difficulty, at that stage, there might not be sufficient accommodation for those who have booked holidays with them?

Mr. S. Brennan: The Deputy will understand that I am not prepared to comment on an individual company. What I am prepared to say is that, for some years now, the tour operators' industry has been experiencing a difficult time. One of my first actions as Minister was to call in the tour operators and seek their agreement — which I got — to reduce the actual number of seats they book, as an industry, in advance. The Deputy will appreciate the manner in which the industry works, that early in the year they book a lot of seats and are then faced with having to sell them. The capacity now stands at 175,000. In 1989 approximately 215,000 seats were sold. I have now got their agreement to reduce that number to 175,000. I am told there is still difficulty in filling even that reduced number of seats.

Mr. Spring: I had intended asking the Minister to allay the fears Deputy Byrne has spoken about now obtaining in the marketplace. I am afraid that, if anything, the Minister's comment that he is not prepared to comment on individual situations will increase those fears among the public. Would the Minister now state categorically to this House that he is satisfied there will not be any serious problems encountered by this industry in the course of this year?

Mr. S. Brennan: The Deputy will appreciate my caution in this area. Throughout the media speculation I have avoided commenting on a particular company; it would not be correct for me to do so. I can say to the travelling public that there is a bonding system and a fund in place, so that whatever company — I stress, not necessarily the one in question: last year there were a number of casualties; who knows what casualties there will be in the future — may run into difficulty the systems are there to prevent any loss to the public. I do not regard the [701] position as being one of crisis. I do not see any crisis in the tour operators' industry. I see them as having experienced a difficult time. I am reasonably optimistic that the industry will firm up and that all will be well. That comment is based on my optimistic nature.

Mr. Byrne: Unfortunately, the Minister has not reassured me in any way. He mentioned the 175,000 seats that are booked whereas, in an interview with him as reported in Business and Finance, he argued that the industry would be very lucky to achieve a target of even 110,000 seats. He seems to be implying that he is not happy with the bookings the industry has made. Can the Minister assure the House that he will maintain close contact with the industry to assure the travelling public this summer that all holidays they book with any Irish tour operator will be guaranteed, so that they will not be left stranded?

Mr. S. Brennan: I want to reassure the public that my Department, on a week in, week out basis, keep in close touch with tour operators. We are talking about only 12 dedicated, particularly concentrated tour operators. My Department keep in touch with them week in, week out. In fairness to the industry I should say that, when they saw the position, they agreed to dramatically reduce the number of seats they would book in advance. Elements of the industry are now informing me that they are confident they will be able to fill all of those bookings. It is really in the hands of the public whether they wish to travel to sun spots, is it not?

Mr. Spring: I appreciate the reticence and reluctance on the part of the Minister to comment on individual companies, but can he distinguish between “inaction” and “caution”? Is he satisfied that it is not necessary for him to hold a further meeting, or constant meetings, with the people involved in the business? Furthermore, would he agree that, unless he does so, he might end up with the problem because, at the end of the day the [702] problem and responsibility rest with the Minister?

Mr. S. Brennan: I accept that. Let me reassure the Deputy that, at this time of the year, almost on a daily basis, we are in touch with some of these 12 companies, particularly the large ones, with whom we maintain regular contact, I might say almost on a day in, day out basis. We are monitoring the position right across the board extremely carefully.

5. Mr. Spring asked the Minister for Tourism and Transport if he will co-operate with the Standing Conference for Regional Policy of South Wales in their efforts to upgrade the service from Swansea to continental destinations, as this proposal may benefit the access of Irish producers to European markets.

Mr. S. Brennan: I understand that the Deputy's question relates to the upgrading of rail services between Swansea and Continental Europe.

I will be happy to provide whatever support I can to the Standing Conference for Regional Policy in South Wales in their efforts to achieve improved rail services from Swansea to continental destinations.

In that context, my Department have requested that the potential for Irish ferry traffic, using an upgraded rail service between Swansea and Continental Europe, be assessed in the context of the Consultancy Study on Access Transport which I commissioned earlier this year.

Mr. Spring: I welcome the Minister's comments in relation to supporting the efforts of the South Wales Regional Policy Conference setting out to improve the rail link between Swansea and London with a view to improving their access to the continent. Would the Minister accept that that access route can play a vital part in opening up the continent to both passenger and freight services from [703] this country; that, in view of the development of the Channel Tunnel, not only can that route play a vital role but, as a country, we should be seen to both co-operate with and assist the South Wales Regional Policy Conference to ensure the best possible access to these markets?

Mr. S. Brennan: I agree with the Deputy. I have no difficulty at all in proceeding on that basis. I might just say to the Deputy and the House that of course, the southern corridor, is critical. I will be giving full support along the lines the Deputy has suggested. I must say, that the Dublin-Holyhead route is obviously the larger one, carrying more freight and traffic, and that the route from Holyhead down through the centre of the United Kingdom and on to the tunnel remains a priority. In that regard I might inform the House that I have written to Mr. Cecil Parkinson, the United Kingdom Secretary of State for Transport, highlighting to him Ireland's keen interest in improving road and rail infrastructure to Holyhead. I have also written to Mr. Jim Tunney, the co-Chairman of the British/Irish Interparliamentary Body and have sent Deputies Barry and Spring a copy of that letter which sets out my keen interest in developing access to the tunnel. I am keeping in close touch with the United Kingdom authorities in order to ensure that tourists and freight can get across the United Kingdom to the tunnel as speedily as possible. We are looking particularly at the rail and road links in that area.

Mr. Spring: I can assure the Minister that his correspondence in relation to the British-Irish Interparliamentary Group will receive a positive response because it is the type of area in which we have a role to play. In relation to his statement that the Dublin-Holyhead link is equally important, would he agree it is very important for us not to put all our eggs in one basket but rather to exploit as many possible options as present themselves. Does the Minister foresee any opportunity, during the remaining [704] months of his Presidency of the Tourism Council, to promote the subject matter of this question?

Mr. S. Brennan: I have raised the matter with the Transport Commissioner, Carl Van Miert of Belgium, on more than one occasion, pointing out to him — not that he needs the information — the proportionately more important role of access transport to Ireland because of our island status with a view to ensuring that the EC understand that our ferry ways and air links are our roads to the United Kingdom and the continent. We are getting to a point where the EC accept that argument and progress will be made. As I said, with the help of the EC, I have commissioned a major consultative study the results of which I hope to have very soon. They have been charged with identifying the arteries we must try to develop. I share Deputy Spring's view that we must look on the UK's road and rail arteries as arteries through which our freight can get to the continent.

Mr. G. Mitchell: Would the Minister agree the extent of the problem is such that what is needed is a development and promotional policy for Dublin port and Rosslare in view of the fact 125,000 units are being collected as far south as Cork and brought to Larne, Warrenpoint and Belfast dock and onwards to as far south as London ignoring the central and southern corridors in the process and that it would make sense, given that the cost to the economy is £56 million, to have a free ship operating either from the central or southern corridor? Would the Minister agree that drastic action is needed as well as a development and promotional policy for both Dublin port and Rosslare?

Mr. S. Brennan: I understand that both Dublin port and Rosslare have commenced marketing drives and I would be happy to encourage them to go further. I should point out that I have provided [705] funds for the development of the Cork-Swansea car ferry this year and am placing my faith in the business people of the Cork and Kerry region to make sure that it pays its way. Finally, I do not support the idea of a free ship.

6. Mr. Byrne asked the Minister for Tourism and Transport the level of financial subsidy from the Exchequer for the Dublin city bus service; the proportion of revenue for the Dublin city bus service which is provided from (a) fares and (b) Government subsidy; the way in which this subsidy compares with subsidies provided for public transport systems in other major European cities; and if he will make a statement on the matter.

Mr. S. Brennan: Annual subvention for Bus Átha Cliath is allocated by the board of CIE out of the total Exchequer allocation to that body in accordance with EC Regulation 1107/70, which specifies that State aid may be paid in respect of losses on road passenger services which cannot be recouped by fare increases or eliminated by economies in operations. The allocation of State subvention for Bus Átha Cliath for essential public transport services in Dublin city in 1989 was £14.8 million or 16.5 per cent of total revenue received by the company. Revenue received by the company from fares amounted to £74 million or 82.5 per cent of total revenue. The balance of 1 per cent is accounted for by miscellaneous receipts.

Figures available for international comparisons have to be treated with caution, because the definitions of “revenue” and “costs” differ considerably from one country to the next. In addition, in the case of the most recent comparison available the figures compared do not in many cases relate to the same year. Subject to these qualifications, however, bus transport in Dublin city emerges as requiring a considerably lower level of subsidy by comparison with other major European cities.

[706]Mr. Byrne: Once again, The Workers' Party have extracted information from the Minister which indicates that Dublin Bus is hardly subsidised. When compared to our European partners, the subsidy at 16.5 per cent of total revenue is insignificant. For example, the public transport company in Rome receives a subsidy amounting to 80 per cent of total revenue. In the light of his decision not to grant any further fare increases and the annual 3.5 per cent reduction in the rate of subvention, is the Minister happy that Bus Átha Cliath will able to continue providing a service? What the Minister should do is increase the subvention so that a proper transportation system can be developed.

An Ceann Comhairle: I appeal for brief, relevant and succinct questions.

Mr. Byrne: Would the Minister agree that the policy should now be to increase the subvention so that a proper transportation system can be developed?

An Ceann Comhairle: I think the Deputy has made his point.

Mr. S. Brennan: First, I do not agree the subsidy, at £15 million, on top of £74 million, is insignificant; in fact, it is a substantial figure. Second, the Deputy referred to Rome and if I was on the far side of the House I too would have selected Rome as it is at the bottom of the league, with its own particular difficulties. The Deputy could have chosen Dusseldorf which is at the top of the league but then, as I say, if I was on the far side of the House I too would have chosen Rome as my example. I am not disposed at present to granting any further fare increases to Dublin Bus. I should point out that the subsidy in question works out at about 9p per passenger journey while the figure for DART is £1.17p per passenger journey. Dublin Bus has a very good future but it will have to try to increase the number of passengers it can attract.

Mr. Byrne: Would the Minister not [707] agree that there is traffic chaos in Dublin, that it is doubtful if there is any other city which has to endure such congestion, and that the only solution is for the Minister to encourage and aid financially the development of public transport? Would the Minister outline what steps he has taken to improve the present position where traffic in the city is at a standstill each morning and evening?

Mr. S. Brennan: I have no doubt that the Deputy is aware that we already subsidise public transport in the city. The subsidy being paid to CIE is over £2 million a week.

Mr. R. Bruton: Would the Minister agree that one of the problems we face is that Dublin Bus has been losing passengers consistently despite the growth in population and all other changes resulting in buses making journeys only a quarter full on average? Would he outline his strategy, if he is not prepared to provide a subvention, to increase the number of passengers in Dublin city and reduce conjestion?

Mr. S. Brennan: All this can be a circle which has stopped spinning as far as I am concerned. The management of Dublin Bus have commenced a major marketing drive to attract people to use their service. Dublin Bus is a business and it has to try to increase its market share. I want the company to attract more business; I want it to be increasingly marketing orientated and it does offer a good service and it can attract more passengers if it markets its services in an even more determined manner.

In relation to traffic congestion in Dublin, I note questions on that topic have been tabled.

Mr. Garland: Would the Minister agree that if a fraction of the money being spent on road widening schemes in the city with the aim of facilitating private motor cars was allocated by way of subsidy to CIE we would find ourselves in a far better position?

[708]Mr. S. Brennan: I am not in favour of making a further subsidy available to CIE. It is obvious that we must develop our roads network as well as our transport network. In that regard I am working very closely with the Minister for the Environment to ensure we have an integrated system and not two separate systems. I am trying to achieve a balance with both being fully integrated. As the House is aware, the Minister for the Environment made an announcement yesterday about the position in Dublin.

An Ceann Comhairle: Question No. 7. Progress is slow, only six questions have been dealt with in 40 minutes.

7. Mr. G. Mitchell asked the Minister for Tourism and Transport if he has considered the possibility of an employee share option plan as a possible way of assisting in the future development of Aer Lingus.

Mr. S. Brennan: I have no plans to introduce an employee share option scheme in Aer Lingus nor have I received any proposals to that effect.

Mr. G. Mitchell: Would the Minister inform the House if his Department have been approached by anyone offering to purchase part or all the shares in Aer Lingus. Would he agree that it would be preferable to give employees an opportunity to participate in the purchase of the company by allowing share write-offs which would be consistent with the statement made by his colleague, the Minister for Labour, on 6 September 1989 at the University of Limerick?

Mr. S. Brennan: I am not aware of any such offer. Certainly no formal offer of that sort has been made to me. Second, as the Deputy will be aware the ownership of Aer Lingus is in State hands and I have no proposals to sell shares in Aer Lingus.

Mr. G. Mitchell: Would the Minister [709] inform the House if any informal approaches have been made to him to purchase part or all of the shares in Aer Lingus and if it is a fact that Aer Lingus have run into difficulties with their development plans and recently gave up the options it has to purchase aircraft due to the lack of resources? Would he agree to look at the question of an employee share option scheme as one way of funding the future development of Aer Lingus?

Mr. S. Brennan: First, I have had no formal or informal contacts with regard to purchasing shares in Aer Lingus. Secondly, I am not aware of Aer Lingus dropping any options on aircraft. I understand they are forging ahead with their fleet replacement programme as strongly as possible. Thirdly of course I will look at the Deputy's suggestions.

Mr. G. Mitchell: Is the Minister assuring this House that there was no formal or informal approach to him or his Department to purchase Aer Lingus or its shares in any shape or form?

Mr. S. Brennan: The Deputy would not expect me to be fully aware of informal contacts throughout my whole Department. I have no knowledge of any formal contacts or offers to my Department and I certainly have had no formal or informal offers. I cannot speak for all of the couple of hundred members in regard to what some might say to them at a party or something.

Mr. Spring: Can we take it from the Minister's responses, dragged slowly from him in this case, that there have been no contacts and that we can take it in effect that the Minister is not telling the House that discussions have not taken place between some members of his Department and Aer Lingus? In fact, since the Minister is responsible at the end of the day, he has the responsibility to know whether discussions are taking place. Can he say exactly whether discussions have taken place between the officials in his Department and Aer [710] Lingus management in relation to the matter under discussion?

Mr. S. Brennan: I have to be careful about what I say here because Deputy Mitchell has asked me if I have had offers to buy shares in Aer Lingus and Deputy Spring has asked me if there have been discussions about share options. I have had no indication and I am not aware of any formal discussions with my Department in regard to the purchase of shares by employees. The reason I want to be careful here is that we meet regularly with the board of Aer Lingus; we meet officials of Aer Lingus regularly. Occasionally the question of future equity comes up and the usual hardy annuals are kicked around the table about how we are to buy aeroplanes in the future and where we will get the money. In that context, month in and month out, the future capitalisation of Aer Lingus is discussed around the table.

Mr. Spring: Nobody mentioned this option?

Mr. S. Brennan: That is not the same thing as formal offers to buy shares in Aer Lingus of which I have had none.

Mr. Spring: Can we take it the Minister has had no approaches to buy the company in any other shape or form, by merger or otherwise?

Mr. S. Brennan: I have had no approaches.

8. Mr. Allen asked the Minister for Tourism and Transport if, in view of the recent McCarthy report regarding transatlantic flights, he will consider allowing indirect flights to and from Cork Airport from the United States; and if he proposes to make changes in the requirement to land at Shannon Airport, in view of reports and comments in this regard and also in view of the recent statements made by the chief executive officer of Bord Fáilte.

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9. Mr. R. Bruton asked the Minister for Tourism and Transport whether he has studied the recent report on the impact of the Shannon stopover on the development of Dublin Airport; and if he will indicate the grounds for artificial restrictions on transatlantic air traffic.

15. Mr. Quinn asked the Minister for Tourism and Transport if his attention has been drawn to a report (details supplied) concerning the provision of a direct air connection between Dublin and the United States; the steps, if any, he has taken to discuss the matter with the Dublin Chamber of Commerce; and if, in light of the expressed needs of the Dublin International Finance Centre, he will make a statement on the matter.

20. Mr. McCartan asked the Minister for Tourism and Transport the current Government policy on the Shannon stop requirement on transatlantic air traffic in the light of his decision to allow direct charter flights top Cork and Connacht Regional Airports; and if he will make a statement on the matter.

Mr. S. Brennan: I propose to take Questions Nos. 8, 9, 15 and 20 together.

I am aware of the report to which the Deputies refer. I am also aware of the views of the Dublin Chamber of Commerce and others in relation to the issue of transatlantic air services and the Shannon stop. Deputies will be aware that, in the light of an ongoing review of charter policy, I announced recently that charter flights from North America may now operate direct to and from both Cork Airport and Connacht Regional Airport, without a requirement for a stop at Shannon Airport. That decision was taken with the objective of encouraging the further development of charter services from the United States in the interest of increasing the number of US visitors to Ireland. It will enable the airports concerned to play a more active role in developing charter services from North America, bringing benefits to the local tourist industry in the southern and western regions.

[712] I am continuing to review the charter business in regard to Dublin and should complete this review within a few months. I am not reviewing the scheduled business.

In relation to scheduled services, Shannon Airport is Ireland's sole transatlantic gateway and all scheduled transatlantic air services must operate via Shannon in both directions. As I made clear in my recent announcement, this policy remains unchanged.

Mr. R. Bruton: Would the Minister not agree that Dublin is the only EC capital where direct transatlantic flights are prohibited? Would he further agree that the fact that scheduled flights have to land at Shannon adds four hours and £8,000 to the cost of the flight and is, therefore, a direct way of undermining the ability of the capital to attract tourism? Would he not further agree that deregulation throughout Europe has proved that all those in the aviation business have gained from it and that, therefore, such restrictions are no longer appropriate?

Mr. S. Brennan: Let me take the Deputy's questions in order. I understand Dublin is the only capital in that situation. Secondly, £8,000 is a figure in an independent report. I cannot confirm it but I suppose it is as good an indication as any. I do not have more detailed costings myself. Obviously it costs more to land than to keep going so that is common sense. Thirdly, in the context of doubling tourist numbers and being on target to do that, I think our tourism record is moving well. Finally, in regard to deregulation, throughout the United States deregulation is nearly completed and it has its advocates and its critics. In Europe at the Council of Transport Ministers we are agreeing to liberalise transport very substantially, particularly in regard to access, fares, capacity and those types of issues. Yes, deregulation and liberalisation is the order of the day in the aviation industry.

Mr. Spring: Is the Minister aware the [713] members of the workforce in Shannon consider his recent announcement a breach of faith by the Minister in the context of previous statements and assurances given to them in relation to the future of Shannon Airport? Secondly, does the Minister accept the conclusions of the DKM report on the matter of flying over Shannon as valid and sound economic conclusions? Thirdly, does the Minister see any expansion of Shannon and expansion of the services into Shannon taking place in the near future?

Mr. S. Brennan: I would be sorry if the union saw it as a breach of faith. I would like them to consider that by standing over the situation in regard to scheduled flights I am ensuring the status of the airport. If they reflect on it they may see it that way. I can understand if they feel otherwise. I did point out that I was not reviewing the status of Shannon, nor am I doing that. I do not believe the charter situation affects the status of Shannon. As I am not reviewing the situation in regard to scheduled flights, I do not have any public views on the DKM report. Finally, I think Shannon has an excellent future. It is much more than just an airport. Shannon has 1,000 jobs coming onstream from GPA. It is developing a new product called Shannon Express where it will try to mop up business from the centre of the UK that would otherwise have to try to go through Heathrow. Instead, it will seek to win business in the centre of the UK to fly to Shannon, clear Immigration in Shannon and fly on to the United States from there. The Shannon Express manager tells me that would save about four hours for somebody travelling from the centre of England to the US. I wish them well with it and I will give them every help to promote that product.

Deputies are also aware of the very substantial Aeroflot involvement in the Shannon Airport region and I am also aware that the airport now proposes to seek to do additional business with the UK and also to seek additional carriers to come to Shannon from the United States. I want to point out that the number of charter flights involved here is [714] less than 10 per cent of the total business that went through Shannon last year so it gives an opportunity to Cork and to Knock, not to take business from Shannon but to do more business themselves. I appreciate Deputy Mitchell's support which he expressed for my decision to allow charters into Knock and Cork.

Mr. Garland: I am disappointed with the Minister's reply that he is not extending the little concession he made towards the liberalisation of aviation policy. I put it to him that the present situation at Shannon is parochialism of the worst kind.

Mr. S. Brennan: I suppose anybody speaking for his constituency could be accused of that.

Mr. Byrne: Given the dilution of the status of Shannon but recognising its potential for growth in other fields, will the Minister not agree it is time to honour the request by SIPTU for a meeting — although the last speaker referred to it as a parochial issue? I am sure the Minister will agree that the workforce have given a tremendous performance and the State has benefited tremendously from their performance. Would he not agree that, in partnership with the trade union movement, he should sit down and plan the future development of Shannon, in whatever shape or form that should take?

Mr. S. Brennan: I very much share the Deputy's salute to the workforce in Shannon. They have been magnificent and I join with the Deputy in paying tribute to them. I want to make clear what we are doing: we are separating the charter business from the schedule business. As I said in my reply, I am continuing to look at the situation in Dublin with regard to charter flights.

Mr. R. Bruton: Given that the Minister has agreed that removing artificial regulations can help all those involved in the aviation industry and that direct flights into areas can help local tourism, how [715] does he justify the continuing disallowance of direct scheduled flights into Dublin?

Mr. S. Brennan: I think the Deputy appreciates the difficulties. That side of the House had this difficulty for a number of years and presumably that Government had opportunities to look at the issue. I am doing what is practical. I am permitting other airports to compete for the tourist business by allowing charters to fly direct into two airports at present and I am continuing to look at the situation.

Mr. R. Bruton: I asked the Minister to explain his policy.

Mr. S. Brennan: It is the same as your Government's policy except that I have liberalised it to some extent, which I think is an advance.

Mr. Spring: In view of the minimal liberalisation which the Minister has just referred to, may I ask whether he expects increased pressure from the US authorities and airlines — I am aware that the pressure has been building for the past ten years in particular — in relation to the situation at Shannon? Given that the Minister has, in effect, changed the policy for overflights to Shannon for the first time, does he expect the pressure from the US to increase?

Mr. S. Brennan: The Deputy is quite right. There has been for at least that period of time representations — pressure may be too strong a word — from US airlines who want direct access to Dublin. They regularly make the point to successive Ministers that they would like direct access but they are regularly told that Government policy is to have scheduled flights stop at Shannon. As I have previously said, I am trying to be practical. I have reviewed the charter policy and have taken action on it. I am continuing to review the charter policy in relation to Dublin but at present I am not reviewing the scheduled flights.

[716]

10. Tomás Mac Giolla asked the Minister for Tourism and Transport if workers in CIE will be awarded a third phase increase under the terms of the Programme for National Recovery; and if the company will claim inability to pay because of the Government's refusal to sanction a recent fare increase; and if he will make a statement on the matter.

Mr. S. Brennan: Payment of the third phase of the increases provided for under the terms of the Programme for National Recovery for CIE regular wages grade staff will not arise until 1 October 1990 and for salaried staff until 1 December 1990. Neither I nor my Department have been informed by CIE that the increases will not be paid.

The CIE group have made an application to my Department for increases in rates and fares and this is being examined at present.

Mr. Byrne: Will the Minister explain how CIE will be able to meet their commitments to their workforce to pay the third phase under the Programme for National Recovery if CIE are not being allowed to perform as a commercial company? It cannot increase its charges because the Minister said so and the rate of subvention is being reduced from the very low base by three and a half per cent per annum and there is no provision for an increase in inflation. Will the Minister say where he hopes CIE may be able to find the money to pay the increase, given that their first option was to increase fares to maintain viability?

Mr. S. Brennan: Since the question was tabled, I checked with CIE and I understand from them that they have not informed the unions that they would be claiming inability to pay. I have been told by CIE that they have made no such statement and I can, therefore, only assume they will meet all their commitments in the normal way. It is interesting the Deputy asked that the [717] company be allowed to perform commercially while, at the same time, he asked me to increase their subsidy.

Mr. Byrne: I suggest the Minister owes the workforce of the CIE group of companies some reassurance that their increases will be paid in October and December. The workforce will certainly argue that if the company are trying to perform in a commercial manner and the Minister has forbidden increases that CIE may claim inability to pay on foot of the Minister's directive that fares cannot be increased.

Mr. S. Brennan: I would expect the board of CIE, if they have any difficulties meeting their obligations to their employees, to come and tell me and they have not done that.

Mr. Byrne: In the event of CIE group of companies not being able to meet their commitments under the Programme for National Recovery, would the Minister agree to make up the difference by way of a subsidy?

Mr. S. Brennan: Unless and until the company tell me that is the situation they face, I can only assume they will meet their obligations. I will have to proceed on that assumption.

11. Mr. G. Mitchell asked the Minister for Tourism and Transport the plans, if any, he has for national aviation; and his views on whether a national aviation plan is desirable.

Mr. S. Brennan: Since coming into office, I have carried out a review of all the major elements of Irish air transport policy and, following this review, I have set the following objectives: (i) to establish a clearer two airline policy designed to focus aviation policy on a strengthening of the Irish presence on services to/from Ireland, rather than having two Irish carriers actively pursuing traffic on identical routes; (ii) to encourage further [718] the development of a soundly based air transport industry which can compete effectively with foreign airlines; and (iii) to promote the needs of tourism, trade and industry by providing a range of reliable and regular air services to/from Irish airports at the lowest economic cost.

In line with these objectives, I am actively pursuing the further liberalisation of the air transport regulatory environment for the benefit of both Ryanair and Aer Lingus, the expansion of the State and regional airports to meet anticipated traffic demand in the coming years and the upgrading of the capacity of the Irish air trafffic control system. Last September, I announced new arrangements for Ryanair and Aer Lingus on routes to and from Ireland.

During Ireland's Presidency of the EC, one of my major priorities is to secure agreement on the second phase package of air transport liberalisation measures. During the meeting of the Council of Ministers of Transport in March, substantial progress was made in developing the various elements of the package which, if adopted in June, will result in greater flexibility and freedom for Irish and other Community airlines in the fields of market access, capacity and air fares. The more liberal air transport policies which are being spearheaded by Ireland increases the possibility for more competition between airlines and for more passenger traffic at airports.

Mr. G. Mitchell: Would the Minister not agree that aviation policy should include a policy on the future development of regional airports throughout the country? Would he further agree that there is a need for consistent policy, given the proliferation of regional airports and the prospects for their future development? Baldonnel Airport has a major modern network connection to Dublin and would the Minister consider that it is suitable for development as a joint civil-military airport and that it is the desired location for future charter flights into Dublin, and if there is a change of policy that it is suitable for transatlantic flights? Would he agree that this is consistent [719] with what has been done in other European capitals? Finally, would he agree that a national aviation policy should be addressing this problem?

Mr. S. Brennan: We have a national aviation policy very much in place and we are still developing it. On the question of regional airports, I can tell the Deputy that I am currently working on a policy to pull together the future development of the regional airports. I hope to announce an overall strategy and policy for regional airports in the not too distant future. Substantial investment has gone into regional airports. I am anxious that we rationalise matters and that we will have a clear picture of where we should be investing in the future. I share the Deputy's concern about the need to pull this together. I am in the process of doing that and in the not too distant future I shall have something on it.

In regard to the suggestion about Baldonnel, all I can say is that Dublin Airport is extremely busy. The number of passengers coming through there has doubled in a few short years. There are now over five million passengers coming through Dublin Airport, double the number four years earlier, but because of the new runway and the new air traffic arrangements there, it is still not operating at capacity. It can take a lot more business and my immediate priority is to get that business.

Mr. G. Mitchell: Would the Minister not agree that part of the justification for the continued arrangements at Shannon is the fact that the airport creates regional development and assists with employment in the area? The Minister will be aware that Clondalkin and Tallaght are employment blackspots and yet there is the most modern network of roads in that area, directly connecting it with Dublin Airport. Would the Minister agree that this is now the golden opportunity to re-examine the possibility of developing Baldonnel as the main airport for business aircraft and charter flights and indeed as a regional airport in its own [720] right, like Waterford, Galway or Kerry? Would he agree, as part of his review of the regional airports and national aviation policy, to look again at this suggestion, given the possibility of spin-off jobs for the Clondalkin and Tallaght regions?

Mr. S. Brennan: I am always happy to consider any suggestions made by the Deputy, as an Opposition spokesman. I was interested to hear the Deputy in his earlier comments refer to a proliferation of regional airports and then seek that I add another one to them.

Mr. G. Mitchell: I was asking about the question of national policy and aviation given that there has been a proliferation. I was not criticising the fact that there has been a proliferation. Proliferation means there has been an increase in the number of regional airports. It does not mean——

An Ceann Comhairle: This question is leading to argument.

Mr. G. Mitchell: Would the Minister agree that the question of an independent air traffic control body and also the question of the future of ANSO within his Department might be addressed under some future national aviation policy?

Mr. S. Brennan: The Deputy is well informed. I am reviewing the future of air traffic control and it is no secret that I want to give it greater autonomy. I am not convinced that it should remain a full Civil Service function and in the not too distant future I will be in a position to make proposals in that regard. We are upgrading our air traffic control services and we are in the course of investing £30 million which will give us-one of the most modern air traffic control systems available in any airport or any set of airports in Europe.

[721]

12. Mr. Rabbitte asked the Minister for Tourism and Transport his Department's policy for the future development of B & I; and if he will make a statement on the matter.

Mr. S. Brennan: During the recent passage through the Oireachtas of the B & I Line Act, 1990, I announced my intention to carry out a review of the future options for the B & I. The main objective of this review, which is already under way in full consultation with the company, is to determine how soon B & I's dependence on Exchequer financial support can be ended. The achievement of that objective is in the best interests both of the Irish economy and of the company itself. I must stress that I am not looking at any particular option at present. I will choose the best option in due course, depending on the outcome of the review.

Mr. Byrne: Will the Minister inform the House whether he is in receipt of the blueprint by CIE which was promised to be submitted to the Government and, if so, will he give the House some idea as to the proposals of B & I on that?

Mr. S. Brennan: B & I have not yet formally presented me with their report which I have asked for on the matter. A draft of their current thinking on it has been made available to me by the company and I have had an opportunity to look at that but I would prefer to wait until I have their full formal report. They are still talking to my Department about elements of the report and I understand the board want to have another bite at it before they present me with the formal report which, I understand, will lay out options which they see for the future of the company.

[722]

13. Tomás Mac Giolla asked the Minister for Tourism and Transport if his attention has been drawn to the alarm being expressed in the tourism industry at the ability of any person to erect bed and breakfast signs and run such a business without any obligation to register with the tourists boards; if he will introduce legislation to prevent the operation of unauthorised bed and breakfast operators as they can cause severe damage to our tourist industry; and if he will make a statement on the matter.

Mr. S. Brennan: I am aware of concerns expressed by some tourism industry bodies about unapproved bed and breakfast establishments. Bord Fáilte, the body with responsibility for regulating standards in tourist accommodation, continue to actively promote and encourage bed and breakfast operators to participate in their approval system. There is no evidence to suggest that a mandatory as opposed to a voluntary approval system is currently warranted.

Mr. Byrne: I would suggest to the Minister that certain tourist boards are quite disturbed, particularly in areas where there is a high presence of tourists, at the fact that tremendous damage can be done to the industry by virtue of these fly-by-night operators. They allege that the first image and impression of the country is gained from the experience in bed and breakfast houses. Could the Minister make some incentives available to encourage people to take on registration with Bord Fáilte?

Mr. S. Brennan: The number of approved such premises is just over 2,500. I would estimate that the number of unapproved operators could be up to 4,000 at the height of the season. The reason I favour voluntary as opposed to mandatory registration is that I am simply not interested in organising an army of public officials on a year in year out basis to inspect and police all these operators.

Mr. Byrne: Would the Minister not agree that when tourists are not happy with the service provided by an unregistered bed and breakfast operator, Bord Fáilte are not interested in their complaint and will not follow it through? That leaves a very nasty taste in the mouth of the tourist who feels he has been stung. Finally, would the Minister not agree that [723] these 4,000 operators are providing unfair competition for those who are genuinely interested in tourism and its development and the least he should afford them is some sort of recognition over the unregistered operators?

Mr. S. Brennan: The Deputy should be aware that, in terms of complaints to Bord Fáilte about unapproved as opposed to approved operators, there is no clear pattern. Certainly there is not a preponderance of complaints about the unapproved operators. It is not right to suggest that the complaints are about the unapproved operators. Being unapproved does not mean being in the black market. Some of these people choose not to register. It is for the other agencies like the Revenue Commissioners, the fire authorities and the local authorities in regard to sign-posting to make sure that everybody meets their obligations. There are as many complaints about approved operators as there are about unapproved operators. Bord Fáilte investigate all the complaints made to them.

14. Proinsias De Rossa asked the Minister for Tourism and Transport if he or his Department, have issued any instructions to CIE regarding the manner in which they should present their accounts especially the manner in which the Exchequer subsidy should be accounted for; and if he will make a statement on the matter.

Mr. S. Brennan: Prior to 1984 the Exchequer subvention represented a contribution towards losses incurred by CIE and was shown in the board's accounts as below the line receipts. In 1984 it was decided to treat the subvention as a payment from the Exchequer to CIE in respect of essential public transport services of a social nature, which could be included above the line in the board's accounts. I recently decided that above-the-line accounting of this kind tends to [724] give a misleading picture of CIE's financial performance and, in the interests of improved transparency, I have requested CIE to ensure that their accounts reflect this.

Mr. Byrne: Surely the Minister would have to agree that this is precisely what the workforce and CIE management do not want. Above-the-line accounting was fought for by the unions down through the years and they are happy with it. The morale of the workforce will be severely undermined by the presenation of their companies as loss-making companies. Would the Minister agree, in the interests of morale of the workforce and the development of the company, that he should not revert to the old transparency argument of below-the-line accountancy but rather that he retain as has been requested by the trade union movement, the above-the-line formula which, I am told, is standard accountancy practice.

Mr. S. Brennan: I will certainly give some thought to the Deputy's points. That is probably as far as I can go — if that relects the view of the workforce as he portrays them. I should also like to say that the taxpayer has a say in this matter also. When one reads in the newspapers that there has been a profit from CIE that can give a wrong impression — not deliberately I hasten to add — and a misleading picture when in fact, because there is a social element the companies are not able to meet all their outgoings. I am anxious that the public would not be misled either. That is an important matter to which the Deputy should give some consideration.

Mr. G. Mitchell: Is the Minister aware that a former Secretary of the Ministry of Finance in Northern Ireland described the arrangements by which her Majesty's Government paid Northern Ireland administration moneys as a system of fudges, wangles and dodges? Would he agree that a similar term might be applied to the accounts of CIE, not only in terms of what they receive from the State through the money they receive for [725] school buses etc.? Would he agree that it would be worth while ensuring that the amount they receive is immediately obvious to anyone reading their accounts and that what should be removed from their accounts is the cost of maintaining and extending the permanent way. In other words CIE have to meet a cost which road transport carriers do not have to meet. The accounts, therefore, of CIE both in what they receive and what they do not receive are distorted.

Mr. S. Brennan: I would agree with that description of the CIE accounts. A maintenance charge in regard to the permanent way is a legitimate one in any set of accounts. Maintenance is sufficiently legitimate to have it included.

Mr. Byrne: Is it not the Minister's policy to get CIE to prepare this set of accounts so that CIE, a public company, would be seen in the worst possible light. The Minister, in effect, is softening up the public and undermining the morale of the 12,800 workers in the CIE group of companies, notwithstanding the fact that today we have elicited that the rate of subvention to CIE is relatively small by European standards——

An Ceann Comhairle: Ceisteanna le do thoil.

Mr. Byrne: ——with this headline shock result.

An Ceann Comhairle: Let us proceed by way of questions.

Mr. S. Brennan: That is not what I am doing. I think all Deputies and all parties in the House would want us to reflect the situation as it is. Mature people can make up their own minds. If a company is showing a loss, then we should show a loss; if it is showing a profit, we can show a profit. We can explain why there are profits and losses. What has been suggested to me is that in order to make people feel better we put up with and encourage headlines which say: “Another record profit” when in fact that is not the case.

[726]Mr. G. Mitchell: May I ask the Minister——

Mr. Byrne: The Minister prefers a poor image of the company.

Mr. S. Brennan: I am not prepared to doctor it, which is what the Deputy is suggesting.

Mr. Byrne: The Minister does not have to doctor it, just leave the figures——

An Ceann Comhairle: Let us have an orderly Question Time; it has been very orderly up to now, let us leave it so.

Mr. G. Mitchell: Would the Minister bear in mind the point I made earlier in relation to taking into account all the finances received by CIE so that they are immediately transparent? Would he also look again at the question of including the cost of the permanent way? For example, Dublin Bus Company might just as well be asked to include some cost for the maintenance and development of the roads, yet the rail company is asked to do so and the road company is not asked to do so. That is a distortion in the accounts. I understand it is not the case in some European rail companies. Would the Minister agree to look at that case again so that a fair accurate account of the affairs of CIE can be presented and can be easily witnessed by a cursory glance at the issued accounts?

Mr. S. Brennan: I will give careful thought to the Deputy's suggestions and I thank him for them. I want to join with Deputy Byrne in saying that I want the morale in CIE to continue to improve. The workforce there do a very good job. I hope that over time that I could chart out for them, working with me an even more exciting future.

Mr. Byrne: Why change the accountancy practice at this stage?

Mr. S. Brennan: The Deputy would change nothing if he had his way.

[727]

16. Mr. McCartan asked the Minister for Tourism and Transport the progress, if any, which has been made to guarantee that all aircraft, including private aircraft, carry adequate insurance cover for any liability relating to the death or injury of passengers or the loss of or damage to goods carried therein; and that section 17 of the Air Navigation and Transport Act, 1988, will be enforced by ministerial order guaranteeing this cover; and if he will make a statement on the matter.

Mr. S. Brennan: Section 17 of the Air Navigation and Transport Act, 1988 enables me to impose an obligation on owners or operators of aircraft to provide for their liabilities in relation to loss or damage arising from the operation of their aircraft.

In addition to the section of the Act referred to, there are already extensive arrangements in place to ensure adequate cover for the type of liability concerned. As regards commercial services, all States whose carriers operate scheduled air services to or from Ireland are signatories to the Warsaw Convention as amended by the Hague protocol. The Convention lays down a standardised international code governing the liability of carriers.

In the case of non-scheduled services, most services are operated to or from states which are also signatories to the Warsaw Convention. Nevertheless, every applicant for an authorisation to operate non-scheduled services is required to provide a copy of a valid certificate of insurance showing that the operator carries adequate insurance, which in most cases exceeds the limits prescribed by the Warsaw Convention.

All Aer Lingus services are automatically authorised under section 7 of the Air Navigation and Transport Act, 1965, and the company maintain a passenger liability of 100,000 SDRs — special drawing rights — equivalent to IR£81,680 at current exchange rates. The special drawing right is an international [728] unit of account established by the International Monetary Fund. All other Irish carriers are required to hold an authorisation under the Air Navigation and Transport Act, 1965. It is a condition of such authorisation that the holder has a special contract with each passenger limiting the liability of the carrier to the Irish pound equivalent of 100,000 SDRs.

In relation to private aircraft, the present position is that, as it the case in most other European states, there is no statutory requirement on the owners or operators of private aircraft to insure against liability for loss or damage arising from the operation of the aircraft. Section 17 of the Air Navigation Act was inserted in order to enable me to make an order requiring owners/operators of private aircraft to provide insurance cover against such liability, and the preparation of the necessary order is being actively pursued in my Department.

An Ceann Comhairle: That disposes of questions for today.

An Ceann Comhairle: Deputy Michael Higgins was in possession when the debate adjourned and he has 18 minutes left.

[743]Mr. M. Higgins: Before the adjournment I had complimented the staff of the Department of Foreign Affairs in relation to the logistics involved in the recent Council meeting to which the Taoiseach's statement refers. That having been said and listening this morning to the statements of the Taoiseach and of the Minister for Foreign Affairs I cannot but confess to having been somewhat alarmed by the looseness and, indeed, the dangerous nature of the language on occasion. What I mean by the looseness of the language, is that the summit having dealt with the twin developments of German unification and of European political union, the statements did not, in any sense, attempt to define political union or the procedures by which political union might be discussed either in this House or among the public.

It appears that we are to have a rerun of the unaccountable, the undemocratic, the uninformed mass of nonsense that surrounded the Single European Act debate in this country. Neither did it define such key concepts as security, yet it made some tendentious reference to a future role in relation to participation by Ireland in different fora which might discuss a changed role for Ireland. It slid over the issue of neutrality, in fact it avoided it altogether. I want to set the record straight in this regard in view of the fact that one of the Opposition spokespersons, Deputy Barry, in his reported statement on RTÉ, which diverges slightly from the speech I heard in this House this morning, spoke about the time being ripe now to question Irish neutrality. We heard the suggestion that people had not debated Irish neutrality in the past and that our definition of it was somehow incomplete. I am weary of the intellectual dishonesty of the suggestion that neutrality has not been debated by political parties in this country. The Labour Party have consistently published their position in relation to neutrality, and I will say a little more about that in a few moments.

For the record — and let members of Fine Gael please read it — James [744] Connolly argued for neutrality during World War I. The Labour Party participated in the anti-conscription strike which was the first such action within the Labour movement in Europe. At the 1919 Berne International Labour Conference a Labour delegation led by Tom Johnson submitted a memorandum which committed the Irish workers to “maintain these principles of peace, anti-militarism and opposition to war which are the crowning glories of the labour and socialist movement”. In 1928 at the Second Commonwealth Labour and Trade Union Conference in London the Labour Party again made a submission and I quote:

... it is not unreasonable to fear that Great Britain may again become involved in wars....in the case of such an event it would seem unquestionable that some, at least, of the other states .... would desire to be acknowledge as free from responsibility and immune from attack .... so long as they maintained neutrality.

My precedessor as Chairman of the Labour Party, Michael Keyes, in 1941 in a major statement said:

As a neutral country we have no war aims to declare. But neutrality in itself is an important aim. It has been the aim of the Labour Party from its inception, we have proclaimed it in Dáil Éireann .... when others who applauded it today were discussing the conditions under which we might participate in a European war. And besides the very fact that we may still engage in the productive arts of peace ought to have inspired our Government to state in definite terms the goal at which our efforts are to be directed .... a new order is to be established. Justice is promised where injustice formerly prevailed.

In 1969 we had a major document published in that regard.

Lest people think I am speaking historically in the atmosphere of European political co-operation, let me say we published documents on positive neutrality [745] expressing that neutrality did not mean you had no opinions or you did not participate in building the alternatives to war and oppression. In our document issued in 1985 Ireland and World Peace the topic of positive neutrality was expanded. I could go on, but let me say I do not want to hear expressions of the arrogance of those parties whose support for neutrality has been conditional. In the case of Fianna Fáil if there was a hint of Irish unity around the corner their position on neutrlaity could always be suspended. That was the view of Mr. de Valera all his days in Cabinet. From the Fine Gael benches we were told so often that we were militarily neutral but not ideologically neutral; we were part of the moral commitment of the West, which was not, in a sense, the wild west; it was some unstated claim for the hedemony of Christian values and Christian democracy not only in Ireland or Europe but the world.

Mr. J. Higgins: That is right.

Mr. M. Higgins: If these parties want an inner dialogue on neutrality, let them have it and I will welcome it, but let them at least respect what is in print from the other parties. I want to set the record straight just this once on this issue.

In the Taoiseach's speech today there is every evidence that if we ran things well as a small country faced with the elaborate tasks of the Presidency we might feel proud in many senses. I suppose it is right that we have some flushes of self-congratulation. There is equally every evidence of a rush of blood to the head and we might be in grave danger of losing the run of ourselves, to put it colloquially, as we proceed to sort out the world. The Taoiseach said something which reflects an extraordinary hubris. I quote:

There are those with a mild acquantance with history who would suggest that the years of the war itself, when facism was tearing Europe apart and threatening not only Europe but the world itself and democracy all over the world, was a dreary and barren period. Equally there are historians who might think, in response to the appalling happenings of Auschwitz, Dachau and so on, that the birth of a human rights movement was neither dreary nor barren, but there is this notion that the ringmaster of the new dialogue of Franco-Germanic reconstruction of their role in Europe is somehow included and it would not be beyond the grounds of pretention, given the present Fianna Fáil view, to imagine we were somehow or other involved in some new axis of power in the world that included Bonn, Paris and, God help us, Dublin Castle. It is time we earthed ourselves a little. The conference was taking place in the country that contributes the highest unemployment rate to Europe, has one of the highest emigration rates, one of the worst distributions of income, wealth and participation, the least developed institutions for participation and decision making in the Community, neither a foreign affairs committee nor a social affairs committee in its Parliament and no dialogue whatever going on in relation to European affairs with institutions that are separate from Parliament itself. Before we get carried away entirely let us remind ourselves of what we are and what this new Coalition are willing to preside over. They have to their credit that they have blocked the formation of a foreign affairs committee in this Parliament. I would like to be generous on this occasion and say to this President du jour of the Council when he likes to listen that if he wants a dialogue on what is meant by European political union he can find it from the spokespersons on Foreign Affairs on this side of the House. We would be willing to participate in it. He does not include that.

Later in the speech, apart from moving [747] from world leadership, he decides that the people of Europe deserve him and his counterparts as leaders. Early in the speech there is an interesting piece of nonsense:

We are living through a major formative period in European history; a time during which the future of the Continent and its people will be settled for a long time to come. The leaders of the Community have the major responsibility of providing the people of Europe with enlightened leadership at this time of decision.

No Pope has ever put it better, but where are the people in Europe? What is meant by this European common home? Where is the Europe of all the citizens? Where is there any reference to participation? The notion is that the people of Europe are so fortunate to have enlightened leadership at this stage so that they can be led into discussion of things which only their betters can discuss.

It is in that atmosphere of claiming it wants to be in charge of massive and historic changes in Europe that we have words used occasionally such as “democratic deficit”. This point has been developed by my colleague Deputy Ruairí Quinn and I do not feel inspired to say very much more about it. There is democratic deficit in this society, in these institutions, in Europe and among the public of Europe, and there has been little intent during the Irish Presidency to redress this.

The second interesting point about this speech this morning from our Taoiseach is the fact that there is one reference to social cohesion and no reference to the Social Charter. The reference to social cohesion is in respect of a meeting that took place, appropriately, in Ashford Castle, and it does not develop what the findings were from that dialogue. The Social Charter slipped away so you might say the meeting was not really dealing with these issues. By the simple construction of ordinary logic, from the speech of the Taoiseach one could say [748] that he was dealing with a European political union that would serve economic and monetary union or perhaps at best some form of economic union within the Community. The Irish public are entitled to ask questions about this. What has happened to the guarantees given about the co-existence of social changes, the Social Charter and the progress towards the completion of the Internal Market? Was this drafted by an official in Iveagh House and thrown out late in the day in the face of the public so that they might swallow the pill of the Single European Act?

I should like to warn the House that a debate will open up here that will get to the root of this problem. To speak of European political union, divorced from the commitments of cohesion as they were in the Single European Act and also from the notion of the Social Charter and a Europe of citizens' rights, particularly of workers' rights, is one kind of debate but, equally, the debate can be about a form of union between the citizens of Europe in which there is a social base, a rights perspective and a Social Charter. That is an entirely different debate. One would get no hint in the Taoiseach's speech of there being any serious thinking in the Department of Foreign Affairs, the Presidency or whatever Departments are running the Presidency. What there is is this Louis XIV thinking, that somehow or other one of us has been chosen by history to be the ringmaster at this crucial stage in the history of Europe. I listened to the Taoiseach's reference to the new Europe's relationship with the greater world, in so far as it is allowed to exist at all. The following quotation is indelibly imprinted on my mind:

Europe ... can ... resume its world role of intellectual and cultural leadership, as it leaves behind the dreary barren years of the post-war period.

It is worth reminding the President of all the Europeans, who is our Taoiseach, of the world to which the European Community relates. It is a world in which the [749] poorest 20 per cent of the population have 1.8 per cent of the world's GNP; in which the richest 20 per cent have 77.9 per cent; in which the developing world with its 75 per cent of population has 17 per cent of the world's GNP. I could go on. There is a very strange imbalance here.

What is to be the relationship of the new and enlarged Europe to that kind of world? It is not an unfair construction to hear, when conservative speakers make a speech, that they regard the rest of the world as being in some sense backward, as not having “growed up” like Topsy to European levels of consumption. That is why on the periphery of the Council last weekend the German spokespersons on the economy offered as an opinion, to anybody who wanted to listen, that even if they were paying for German unification themselves they might have to go back to 1982 consumption levels but they would, of course, be superior to French consumption levels. As for the British and Irish standard of living, let us just be polite and not speak about them. What lies behind the speech of the Taoiseach is the unstated assertion that the strongest will pay for its own unification in its own backyard and what is more, in so far as it is the paymaster of the Community, it will give an odd wink through the window of European consultation to the European partners.

However, there is no indication in the speech by the Taoiseach, or the speech by the Minister for Foreign Affairs, that there will be any involvement at the level of partnership among European Community members to discuss any serious aspect, consequence or evolution of German unification. There is in the language used a very interesting point. I was in Brussels on Thursday and Friday at a meeting of people who were chairpersons of social affairs committees in relation to secondary legislation. After a few quiet explanations to the effect that we had a sub-committee dealing with social and environmental affairs we pointed out that we did not have a social affairs committee at all. I outlined the conclusions of the [750] recently published report of the committee of which I am chairman. That committee, for example, reported — this was agreed by all sides of the House — that there had to be a conterminous development of the completion of the Internal Market and the social action programme. It also agreed, for example, that it could not accept the submission of the Federation of Irish Employers that all the rights of the social type would have to be subsidiary to the completion of the market. There was general agreement among all parties on the committee about that. They went on to speak about the cohesive and the integrated nature of economic and social developments. People were thrilled by this thinking in the Community, by the thinking of this obscure committee on this strange little island that I was from but which does not have a social affairs committee. They were very polite and asked me privately how that relates to the views of the Irish Presidency or of the Ministers who speak at Council meetings on our behalf. It is widely perceived that our position in relation to the Social Charter, workers' rights and the right to freedom, is very thinly behind that great anti-European herself, Mrs. Thatcher.

There was a certain amount of embarrassment in explaining how we as a Parliament can have a sub-committee which has a consensus in favour of the co-existence and the same time frame for economic integration and social rights. Mid-morning, by flash of inspiration as I listened to the Taoiseach, I realised that we were just a Parliament and we were not the enlightened leader. The enlightened leader sometimes passes on this non-consultative status of looking into his heart, which he has inherited from the great tradition of the Government side, occasionally to his Ministers, who take positions that others in the Parliament do not have. The assumption is that at this historic moment this Parliament does not have anything to say at all, that what is best for us historically is known in a special way to one person. Indeed, as a reflection of that, significant decision-making these days has been moved out [751] of Government Buildings and out of the Parliament to the edge of the city in Kinsealy.

An Leas-Cheann Comhairle: The Chair regrets that he cannot continue to enjoy the Deputy's contribution. Tá an t-am istigh.

Mr. M. Higgins: I should like to make a number of points of my own.

An Leas-Cheann Comhairle: The Deputy will appreciate that that there is a time factor involved. The Deputy is now on borrowed time.

Mr. M. Higgins: In the dialogue that has surrounded the Conference, and previous Conferences, there has developed the concept of subsidiarity. That is a word that has an inglorious record from the thirties. It was associated with Quadregesimo Anno but it was reappeared in the language of Europe and it is used by those who speak in our name at the European Council and, on occasions, at more elevated councils. It is used as a screen to mask the fact that there is no agreement of a European kind on anything significant that affects the citizens of Europe. It is a mask for Mrs. Thatcher to say, “I will be able to do whatever I like in Britain”. It is a mask for Irish employers to say, “I will not give information on rights to workers; I will not do anything for part-time workers, for atypical work or in relation to issues like that”.

The Minister for Foreign Affairs in the course of his speech made a reference to Vaclav Havel. What was not quoted from Vaclav Havel in the Minister's erudite script was his most famous essay dealing with words, words that can kill, words that can aid and words that can evade. What we are witnessing in Europe, and in all the statements from the Government side today, is an abuse of language which would appal Havel, if one was to take his essay seriously. There is no reference to the question of the social dimension of Europe. Deputy Roche and others were [752] talking about how everybody in Eastern Europe was rushing to achieve our standard of living.

An Leas-Cheann Comhairle: The Deputy would not want to be accused of abusing my words of warning to him that he is now almost five minutes into some other Member's time.

Mr. M. Higgins: I will conclude by contrasting what I heard in the last speech before Question Time with the words of Eduard Schevardnadze to the political committee of the European Parliament:

... let me just say that the socialist idea, which accumulates people's universal yearning for equality and justice, is a constant component of civilisation. As such it incorporates man's age old dreams of a dignified life in a society that is from the start and forever free of violence, arbitrary force and enrichment of some through plunder and the impoverishment of others ... the administrative and command system has distorted the socialist idea.

I pay a great deal more attention to the motivation behind that than I did to the statements about European leadership that I heard from the Taoiseach this morning.

Minister for Finance (Mr. A. Reynolds): I am glad that Deputy Higgins is enjoying himself as he comes to grips with the new term called Eurospeak.

The main items with which I am dealing as President of the Council of Economic and Finance Ministers during the Irish Presidency of the Council are Economic and Monetary Union (EMU), common German economic and monetary area, abolition of fiscal frontiers and various aspects of the Community budget and financial procedures and the financial services sector.

Economic and Monetary Union (EMU) is a priority item on our Presidency agenda. In the context of the rapidly evolving developments in Eastern Europe, it is especially important that the momentum in this area be sustained. [753] Indeed the special European Council meeting in Dublin last Saturday called for the preparations for the Intergovernmental Conference on EMU, scheduled to open in December 1990, to be further intensified. The objective set at that meeting is for the IGC to work rapidly with a view to ratification of its results by the member states before the end of 1992.

Ireland's approach to EMU is positive and favours the pragmatic and structural framework which is outlined in the Delors report on EMU. That report recognises the need to maintain certain balances which we would regard as essential if EMU is to be sustainable. Firstly, there must be a balance between advances in the economic and monetary areas and, secondly, there must be a balance between moves to EMU and the strengthening of the economic and social cohesion of the Community. Provided these balances are maintained, we believe that EMU can bestow significant economic, social and geo-political benefits on the Community as a whole.

The Government are aware that closer integration may pose risks for the more peripheral regions of the Community. In this context, we take the view that market forces and proper domestic management, while vital to economic dynamism, cannot, by themselves, be relied upon to correct regional imbalances. Something additional is required if we are to avoid the spectre of population flight from regions deficient in capital and technology. Within federations and, indeed, even within individual nation states, there is recognition of the fact that supporting mesures are required in order to equalise regional disparities. The precise form which these measures should take will be a matter for debate as the final shape of EMU begins to emerge.

The initial concentration of the Irish Presidency was on Stage I of EMU, which is to start on 1 July next. We had to establish the procedures to be followed at ECOFIN during this stage. Agreement was reached at ECOFIN in March on two decisions designed to strengthen the co-ordination of economic policies in Stage [754] I of EMU, particularly through more intensive multilateral surveillance. On the basis of these decisions, the Irish Presidency put forward procedural proposals for the implementation by Council of multilateral surveillance of member states' economies and agreement has been reached on these procedures. They will include regular, at least twice yearly, surveillance exercises by Ministers in very restricted session. Country examinations will be carried out by the appropriate Community bodies and the outcome of these examinations will be made available to Ministers for discussion. The results of the surveillance exercises will be reported to the European Council and the European Parliament.

Overall, it is expected that the multilateral surveillance exercises under Stage I will provide a significant intensification of the existing co-ordination of economic policies in the Community. A first trial run of this Stage I multilateral surveillance will take place under the Irish Presidency at the June ECOFIN.

The IGC which is to begin in December will be concerned with Stages II and III of EMU. The task of the Irish Presidency is to ensure that the necessary preparatory work is carried forward. The Commission had undertaken to prepare a paper setting out the costs and benefits of EMU and their proposals for the final shape of EMU. This paper was made available in March and was discussed at the informal ECOFIN held in Ashford Castle on 31 March. This meeting also had before it reports from the monetary committee on monetary union and the proposed European Central Bank system and on budgetary policy in an economic and monetary union.

It was in fact the first occasion on which Ministers, along with Central Bank Governors, had the opportunity to consider issues relating to Stages II and III of EMU in detail. The discussion revealed a considerable degree of agreement on the design of a future economic and monetary union. All delegations indicated a large measure of agreement on the ultimate objective of EMU, though one delegation, while indicating a readiness to [755] continue to participate fully in the discussions, was unable to join in the totality of the consensus.

It was agreed that there are substantial net benefits to be obtained by the Community as a whole from EMU but that individual regions might be affected differently. Ministers and Governors confirmed that they viewed EMU in the perspective of the completion of the Internal Market and in the context of economic and social cohesion; that it should be based on the principles of parallelism, subsidiarity and diversity; and that there is a need for a single monetary policy geared towards price stability in support of the general economic policy set at Community level.

A broad agreement emerged on the overall design of a system — on the monetary side, there was support for an independent and federally structured central banking institution, which is democratically accountable; on the economic side, while the system should be more decentralised than on the monetary side, it should provide for close co-operation between member states on macro-economic and budgetary policies. To the latter end, it should contain rules and procedures designed to ensure budgetary discipline including rules proscribing the monetary or compulsory financing of budget deficits and the automatic bailing out by the Community of a single member state in difficulty. At the level of the member states and the Community, the system should also embrace policies to promote cohesion, efficiency, competitiveness and integration across the Community.

It was recognised that much work remains to be done and Ministers will continue their discussions on the design of the system and the problems of transition. The appropriate committees have been asked to provide reports on three particular aspects: the phasing of Stages II and III and the operational and institutional conditions which must be fulfilled before advancing beyond Stage I; a general stocktaking of progress made in the preparations for an IGC; and the [756] likely regional distribution of the costs and benefits of EMU. ECOFIN will discuss these issues further in June with a view to reporting to the European Council meeting in Dublin at the end of June.

The developments in the relationship between the Federal Republic of Germany and the German Democratic Republic have been very rapid over the past few months. Monetary union is now set to take place at the beginning of July. Though there is no specific role for the Community to play in the discussions between the Federal Republic of Germany and the German Democratic Republic, I have ensured that the Finance Ministers are kept fully informed of developments. At each ECOFIN meeting, the German Minister has provided a full and frank outline of what is happening and a very useful discussion has taken place.

The German Minister has made it clear at all time that the events within Germany will not lessen in any way his country's commitment to the process of achieving a full economic and monetary union within the Community. He has also made it clear that the process of creating a common German economic and monetary area will be carried out in a way which does not have inflationary or other adverse consequences for the Community. I welcome these assurances and I am confident that they will be fulfilled. In fact, I expect that these developments will have positive consequences in terms of additional growth in Germany and in Europe generally, through the spill-over of increased German demand into other countries. As regards interest rates, I am glad to see that domestic analysts are increasingly tending to discount the possibility of Irish interest rates being pushed up by events in Germany, a possibility which I felt was exaggerated from the start.

The Commission proposals on indirect taxation are an integral part of the process of completing the Internal Market of the Community. To date, progress in the discussions on these proposals has been slow, but this is perfectly understandable given the extremely sensitive [757] nature of the issues involved. Nevertheless, a number of significant advances were made in Council in the latter months of 1989.

While agreement on individual VAT rates has not been reached, some progress has been made in agreeing an outline framework for subsequent specific decisions on rate levels.

The concept of convergence has also been adopted. It has been agreed that member states whose standard rate already falls within the range 14 to 20 per cent should not move out of that range between now and 1 January 1993. Members states whose standard rate is outside the range should not diverge further. Deadlines were set for the further decisions necessary on the format and level of the proposed standard rate, on the scope and levels of the reduced rates and on the products which will continue to be zero-rated from 1 January 1993.

In line with this process of convergence, I reduced the standard rate of VAT in Ireland from 25 to 23 per cent with effect from 1 March. The Irish Presidency has concentrated the VAT discussion so far on the issue of the coverage of the reduced rates and zero rates. These issues are being examined at working group level and the discussions are proving fruitful. I presented a progress report on these discussions to the April ECOFIN meeting and there was agreement that this work should continue. Apart from the VAT rates, much work has to be done on the operational framework for the VAT system. This covers essentially the question of arrangements for the payment and receipt of VAT in intra-Community trade after 1992.

An outline agreement has been reached, which is based on continuation of the destination principle, under which VAT on exports is charged at the point of receipt rather than at the point of export. We must now build on this outline. In this regard the Council is waiting for the Commission to present the necessary proposals which will enable these arrangements to be formally incorporated into Community legislation. The first of these proposals will deal with the [758] definition of the common VAT system and the modalities of the differential treatment of certain classes of transaction, such as new car purchases, purchases by exempt bodies and mail order purchases.

I have been stressing to the Commission the importance of receiving these proposals from the Commission as soon as possible. At this stage, it seems unlikely that there will be sufficient time after their receipt for any substantial progress to be made on them during Irish Presidency.

As regards excise duty rates, the Commission submitted revised proposals to Council last December. The preliminary examination of these new proposals has already started at working party level under our Presidency and this work is continuing. While we are committed to making progress on these proposals, we are confronted with a serious difficulty due to the absence of revised or new Commission proposals on structures and control arrangements. It is already clear that, unless such proposals emerge soon from the Commission, there is not much hope of early progress in the excise rates area at Council level.

Proposals from the Commission for a progressive increase in travellers' allowances were discussed at the April ECOFIN. There was no agreement on these proposals since a number of countries, including Ireland, consider that such increases must be linked to progress on the approximation of VAT and excise rates. To move ahead with substantial increases in travellers' allowances in advance of progress on approximation of tax rates could cause significant disruption and distortion of trade.

Ireland is strongly in favour of the completion of the Internal Market, including the tax harmonisation dimension. We wish to avoid long-term derogations, but our budgetary difficulties with the Commission proposals need to be recognised and addressed. The Commission has undertaken to study and bring forward measures to deal with our difficulties, and this work is under way. I hope it will provide the basis for Ireland's effective [759] participation in the process of completing the Internal Market.

A major item which is being addressed by the Irish Presidency is the revision of the Financial Perspective of the Interinstitutional Agreement of June 1988. This was an agreement between the Council, Parliament and Commission on the budgetary ceilings which would apply in each year up to and including 1992.

The Commission has brought forward proposals for a revision of the financial perspective, as provided for in the agreement, to take account of new developments. A central focus of the proposed revision is developments in Central and Eastern Europe, where the Community is already showing the necessary concern and support to assist these countries to adjust to the new situation. There is agreement at ECOFIN that there should be a significant provision for assistance to Central and Eastern Europe in the Community budget over the next few years. Already, 300 million ECU have been provided in the 1990 Community budget for this purpose and it is proposed that a further 200 million ECU should now be added, bringing the 1990 total 500 million ECU.

The Commission's proposed revision also focuses on increased co-operation with Mediterranean, Latin American and Asian countries, as well as bolstering certain internal Community policies, such as environmental policy, in the context of the Single Market.

The revision of the financial perspective has to be a joint agreement between Council and the European Parliament. As might be expected, the opening positions of Council and Parliament on the issue were far apart. I have been conducting negotiations with the European Parliament over the past two months, culminating in a meeting in Dublin earlier this week with Mr. John Tomlinson, MEP, the rapporteur for the Parliament's Budget Committee. I am hopeful that this issue will be resolved in the near future.

Earlier in the Irish Presidency, I got [760] agreement between Council and Parliament on a revised financial regulation. This regulation governs the financial procedures of the Community and the revision has been in the pipeline for a number of years. I also completed discussions at ECOFIN on the Court of Auditors report for 1988 and a Commission report on fraud against the Community budget.

In the financial services area, the Irish Presidency has been pushing forward discussion at working group level on the proposed Investment Services Directive. This is an important directive from the viewpoint of developing Ireland as a financial services centre. It is unlikely that we will be able to bring it to the point of a Council common position before the end of our Presidency but we are moving it forward as fast as possible. The Commission have just now put forward an associated proposal on the capital adequacy for investment firms, so these two proposals will now move in tandem.

The Irish Presidency has also been active in the negotiations on the establishment of a European Bank for reconstruction and development. This bank is designed to assist Eastern European countries to develop their economies and will have participation not only from European countries but also from the main non-European countries, including the US. The Presidency has co-ordinated the views of the Community members on the issues arising in the negotiations. I am glad to say that the negotiations are nearing a successful conclusion, and I expect them to be completed by the end of June.

Looking at the overall situation, I think that the Irish Presidency has made significant progress in the economic and monetary area. This applies not only to completing the normal Community business, but also to the progress being made in areas such as the preparations for the IGC on EMU and on the revision of the financial perspective. I look forward to continuing the work over the remaining two months of our Presidency.

Mr. Dukes: I have mixed feelings about [761] this debate — I am glad it is taking place but this is the kind of work this House would do very much better if it had a foreign affairs committee which could devote itself on an ongoing basis to these issues so that on occasions when we have a debate in this House on an event like last weekend's meeting, the House would be far better prepared. I intend to come back to this point later.

The Taoiseach's remarks this morning consisted of nothing more than a fairly dull rehash of the Presidency conclusions issued at the end of last weekend's meeting. His remarks did not contain one single Presidency proposal. They gave no indication of any Irish view as to where the Community should be heading. They gave no indication that this Presidency has any plans as to what the Community should achieve or what preparations should be made between now and the end of June.

It was reported last Monday — perhaps the Minister will enlighten us on this — that it is by no means clear whether the Government will table their own specific blueprint setting out in greater detail what they mean by the term “political union”, at the Dublin Summit next June. Yet it seems that five other member states are expected to prepare their discussion papers which detail their vision of what political union should mean in advance of the June meeting. It seems the Presidency is content to sit idly by.

The role of the Presidency is to lead discussions of this kind, to know what the other member states have in mind and to see to what extent the views and ambitions of the other member states can be put together in the framework of a coherent plan for the whole Community. This is not being done. It seems there is a clear onus on the Taoiseach, as President of the Council, to prepare a set of guidelines before the June meeting so that some guidance and direction can be given to the member states, their Governments and the Heads of State and Government as to where they should be aiming. This House could assist in that process by having a foreign affairs committee which could have a detailed [762] debate on the many issues that arise in this context.

It is fair to say that today has been the first occasion — I see the Minister for Finance is leaving; I was about to pay him a compliment — we were given any systematic information on what is going on in the context of the preparations for economic and monetary union. There was not a lot in the Minister's speech but I suppose within the space of 20 minutes he is not in a position to give us detailed information. He should not have to do so in that time in a debate like this. He should be in a position to come before a foreign affairs committee of the House, so that we can all know what is in his mind, what he is doing and can give him our advice, as elected representatives of the people, as to what the Government should be doing. We could do much more than that but essentially that is what should be happening. It is anti-democratic; we have a democratic deficit in here because the only information we have got officially about what is going on in the preparations for economic and monetary union are the brief series of remarks the Minister for Finance was able to deliver himself in the context of a fairly limited debate like this. That is no way to run a railroad. It is certainly not the way this House should go about preparing its participation in planning a major enterprise for the European Communtiy, one that will have the most far-reaching and, I hope, positive and beneficial effects on the lives of the people who elect us to this House.

The Council meeting last weekend was far from being the unqualified success it has been claimed to be. Major questions about political, economic and monetary union and other issues remain unanswered. In many instances cracks have been papered over rather than filled in. I suppose I would be reflecting the views of a great many people in this House if I said that there is a certain amount of wry amusement to be derived from watching the antics of the Heads of Government of various member states as they go on [763] with their ritual series of press conferences at the end of the Council meeting. Our press, as always, served us extremely well in this. One gets the impression, from reading what was said at those press conferences, that people were talking about three or four different meetings, that they were not all talking about the same one. Certainly, from what I have read the meeting described by the Prime Minister of the United Kingdom, Mrs. Thatcher, was not the same meeting described by the Federal German Chancellor, Dr. Kohl; neither of them was the same meeting as described by the Taoiseach. That lends substance to my belief that instead of being filled in cracks were papered over.

Major questions still remain to be settled. In my view that places a further onus on our Government, the Presidency of the Council, to adopt substantive positions of their own, to have substantive proposals to put forward. If they do not do that, we will have a rerun of the same kinds of difficulties in June and, God knows, but we might have a rerun again of the same kinds of difficulties at the Intergovernmental Conference in December and at the parallel conference on political union. This Presidency is simply not doing the job it is supposed to do.

This Government, it seems, have now departed from a long-established Irish position which favours increasing the democratic input into Community decision-making. It is reported the Irish Government are opposed to any plans to give greater powers to the European Parliament. It is reported the Irish Government take the view that 15 MEPs have a marginal influence only, that the Government favour increased powers for the Council of Ministers rather than for the European Parliament. If that is the case it constitutes a major departure from what has been for many years a firmly established position of successive Irish Governments, not just of the Coalition Government from 1982 to 1987, but of successive Irish Governments. I should like to know why. Perhaps this present [764] Government take the view that they do not like extra powers for the European Parliament because they are involved themselves, as a party, in one of the most insignificant groups of all in the European Parliament. That might colour this Government's view of what can be achieved in Parliament. However, for those of us who take a wider view, the position appears very different.

Of course, my party are involved with the Christian Democrats group, the second largest group in the European Parliament. The Labour Party are a member of the Socialist group, the largest group in the European parliament. Between them, the Christian Democrats and the Socialist groups in the European Parliament, have conducted the affairs of that parliament extremely well. They have acted in a responsible way using the extra powers the Parliament has got, in a way that has always been — I say this without any fear of contradiction — beneficial to the interests of the peripheral regions of the Community and of the smaller member states of the Community. As long as that position obtains we can be perfectly confident that extra powers for the European Parliament will be properly and responsibly used for the people of our community.

There is more to say than that because individual members of the European Parliament, individual Irish members, have indeed made their mark. The Leader of my own group in that Parliament, Joe McCartin, a former Deputy of this House, has established quite a reputation for himself in the Parliament's discussion of economic affairs. Mary Banotti, another one of my MEPs, has been named one of the top ten environmentalists in Europe during the course of the year. Pat Cooney, again one of my MEPs, has been a powerful voice in the Parliament in the examination of the proper relationship between the Parliament itself and national Parliaments. John Cushnahan has gained a substantive reputation in the Parliament by his attention to the needs of peripheral regions and of smaller member states. I could go on with this [765] recital. I do not intend to lavish encomium on our former colleague, Barry Desmond. I am sure there is a keen appreciation in this House of the role he can play. I stress it is wrong to feel that because we have 15 MEPs only our influence is marginal; it is not; it is far from that. Christian Democrat MEPs and Socialist MEPs have a very powerful lever of influence at their disposal. They have used it wisely and sensibly. We have used that lever wisely and sensibly with our colleagues in those groups from the other member states.

I find it rather unusual to hear the Minister for Finance state, as a virtue of his plans about a European Central Bank that it will be democratically accountable and yet find that the Government are objecting to giving extra powers to the European Parliament. I recall the Minister for Finance himself has dealt with some of the functions of the European Parliament in the budgetary sphere. I had the honour of starting that whole process during our Presidency in 1984 when we made new provisions for the budgetary competence and powers of the Parliament. I am glad to say that exercise has turned out extremely well and, in my view, is a very good argument for continuing the process of giving extra powers to the European Parliament.

The reports available on last week's European Council meeting show, as I have said, that there is no evidence that the current Presidency is, in any sense, leading the debate on the future of the Community or is guiding the Community's activities. Clearly, there has been a failure of the process of close consultation on foreign policy set up under the Single European Act. That failure was most clearly marked by the recent Franco-German statement on Lithuania which was substantially at variance with the earlier, much more careful, statement made by the Twelve.

The Taoiseach takes credit for any advances made by the Community, even for the most cosmetic. On the other hand, when asked to give a lead to the Community — as he was in this House in relation to the issue of sanctions in South [766] Africa — he says it would be wrong for him, as President, to pre-empt discussions in the European Council. Those two positions do not sit very well together. If the Taoiseach is now saying to us he cannot offer any opinion about these matters because it is wrong to pre-empt what the Council will decide, when he must accept the consequences and not try to claim any of the credit for any Council decisions. Of course, what he should do is totally different. As President of the Council, the Taoiseach should be setting out guidelines, a framework for discussion of what is happening in the Council, not taking this passive, back seat he seems to take. He is not in any sense an active President who tries to mould the work of the Council; he is a passive chairman. It was clear that was his role last week end when Chancellor Kohl and President Mitterrand made all the running but a real President of the European Council has a duty to lead, not simply be blown about by the storm created by strong-minded presidents and prime ministers of other states.

The Minister for Finance made a most extraordinary statement about the discussions between the Federal Republic of Germany and the German Democratic Republic. He said and I quote:

Though there is no specific role for the Community to play in the discussions between the FRG and the GDR, I have ensured that the Finance Ministers are kept fully informed of developments.

That is an outrageous statement. First, it bears no relation to what is said in the Presidency conclusions which refer to the plans to keep the Commission fully informed and for the Commission to come forward with proposals for the transition period and other measures to the Council. The truth of the matter is that the Community has allowed itself to be sidelined on this issue. This is very wrong and very damaging for the Community. I have discussed this with Chancellor Kohl and it is a discussion which he does not like entering into. I understand his views perfectly; Germany, after all, is his [767] country but I do not believe the Community is following the right path in allowing itself to be sidelined by a strong-minded Chancellor.

The integration of East Germany into a new German state is very much a matter of concern for the European Community as a whole. Indeed, the integration of any new member state would be a matter for the Community as a whole and it is not acceptable or accurate to say that there is a difference in this case because we are reintegrating one part of a country with another. It is my view that the Presidency of the Community must insist that the Community get properly involved in all of the decisions required if German unification, which we all support and wish to see succeed, is to work properly.

It is important that we in this House look at what the objective of political union is in the Community. Why do we want political union? There are many reasons and I will deal only with some of them. Some of us want to see the Community in a position where it can play the real role in the world that a Community of soon to be 340 million people should, a role in the world economy to the benefit of everybody and a role in the development of the Third World in relation to which we need to totally modernise our thinking. We also want a Community like the European Community which is politically united to play a proper role in that, as we want it to do in safeguarding and, if possible, improving the world's environment. The countries of the European Community cannot do that on their own: the efforts of a politically united European Community can be far more effective than the sum total of the efforts of individual member states. Those are some of the reasons why we need political union but I do not see any indication that the European Council has been looking at the matter in that way. It is time it did and it is time the Presidency gave that focus and dimension to debates about European union.

It is reported that the Government are firmly opposed to the kind of common [768] security policy favoured by France, West Germany and Belgium and in the period since last Saturday there has been an abundance of fairly naive and, probably, misleading comment about what all of this is going to mean for that other sacred cow which still populates our fields, neutrality. It is about time the Presidency and this House began to look at what faces us there. Let us consider for a moment what has been happening and what is going to happen. Some time ago Mikhail Gorbachev took the world's breath away by making totally unexpected proposals for conventional arms reductions. We have, gladly, a very limited — it is there nevertheless — IMF treaty. Discussions are going on on the preparation of a treaty on longer range nuclear weapons and discussions will take place later this year on conventional force reductions. The Soviet Union will also be withdrawing some or all of its troops from Poland, East Germany, Czechoslovakia and Hungary. I do not think their intentions on Bulgaria and Romania have been stated.

The European partners in NATO consider it important that there should continue to be a substantial American presence in Europe and on that they are not quite ad idem with the thinking in Washington. Therefore on all those areas substantial change seems to be possible. Substantial changes in the balance of forces of capabilities in Europe appear to be facing us not so many years down the road. This will radically alter the security position, the political position and the kind of response the countries of Western Europe or indeed the countries of Central and Eastern Europe have to make to questions of their security.

I would like to feel that this House is going to look at the realities and will not hide behind this facile repetition of an empty formula which we have inherited from a gentleman who, as Deputy Michael D. Higgins said, was wont to look into his heart for guidance on these things rather than anywhere else. The European Community, if it is to develop in the way we want, is itself going to change the balance between East and [769] West and bring about a major change in the way the world has to look at its security. This House should be examining those issues and to do this we have to put aside these old shibboleths and perhaps if we do not shoot the sacred cow we might bring it into a different pasture where it might be fed on something more than the hot air which has been devoted to this subject for years and years.

There is one final point I want to make and this one is important. I have referred to my belief that the European Parliament should be strengthened. I would like to say in passing to my friend, Deputy Michael D. Higgins, that the principle of subsidiarity does not reside only in Quadragesimo Anno, it has been a major and serious part of the political doctrine of Christian democracy down the years and, I hope will long remain so. I am glad to see that it is now being imported into Community terminology. I also hope we will have a dose of it and that we in the reform of our Government and local government systems will apply this principle.

In conclusion, there is one gap in the preparations being made for the debates which are to take place at the end of the year and it is in relation to the involvement of the European Parliament. I approve of the Intergovernmental Conference which has already been set up on EMU. I also welcome the fact that there is to be a parallel conference on political union, and I urge the Presidency to have real consultations with the European Parliament before those two Intergovernmental conferences get down to work.

Minister of State at the Department of Foreign Affairs (Mr. Calleary): First, I think that when Deputy Dukes reaches the status of the man he talked about he might be able to make silly remarks like that.

We are now two-thirds of the way through the Irish Presidency and I am glad, a Cheann Comhairle, to have this opportunity to review the work of the Irish Presidency during what has proved to be a particularly active four months.

[770] We were very conscious when we were preparing the Presidency that the issues of relations with Eastern and Central Europe and the unification of Germany would be dominant themes during the first six months of 1990. This has proved to be the case and 1990 has proved to be a crucial year in the development of the Community, as important in many ways as, for example, the accession in 1973 of three new member states or the approval of the Single Act in 1986.

The Taoiseach has referred to the meeting between the Commission and the Government which was the first major event of the Presidency. In the course of that meeting we agreed with the Commission that a special meeting of Foreign Ministers should be held to consider developments in Eastern and Central Europe and to review the Community response. This meeting took place on 20 January. Among the important conclusions to emerge was a reaffirmation of Community support for the liberalisation process in the countries concerned, an agreement to intensify the negotiation of trade and co-operation agreements with those countries, a reinforcement of Community assistance and a request to the Commission to report on the possibility of establishing closer relations through the eventual negotiation of association agreements.

Thus, at a very early stage of the Presidency we were able to give renewed direction to the Community's relations with Eastern Europe. This approach has had very positive consequences. For example, next week the Minister for Foreign Affairs will sign, on behalf of the Community, agreements with Czechoslovakia, Bulgaria and the GDR. Thus, the network of agreements with the countries of Eastern Europe will be almost complete and the Community will give a concrete expression of its commitment to liberalisation and to the re-establishment of democracy in the region.

Additional concrete support has been evident in the establishment of the European Bank for Reconstruction and Development and various other schemes [771] put in place by the Community itself or in co-operation with other democratic countries. The response has been substantial and shows the importance which countries like Ireland attach to strengthening the new democracies.

The European Council on 28 April gave a major and substantial impetus to the Community's relations with Eastern and Central Europe. The Taoiseach has already outlined the reasons he decided to call his colleagues together. I would say that the meeting has given the Community a new sense of direction in its approach to the Central and Eastern Europe. It has provided a new basis on which we can build our relationship with those countries.

Developments in East Germany have been mentioned already in the debate. Here, too, the Presidency was very conscious of the importance of German unification to the Community and the need for a clear and considered response to developments. We have been able to establish a good basis for the Community's approach to unification as is evident from the conclusions of the meeting of the Dublin European Council.

A very important aspect of the conclusions is the clear and unequivocal welcome which the European Council has given on behalf of the Community to unification and to the restoration of democracy in Eastern Europe. It is worth remembering that the democratic ideal which finds its most direct expression in the work of Parliaments such as this House was a major inspiration in bringing about change.

The Community is grounded in the democratic ideal. Its member states are united in their commitment to democracy — some have seen democracy restored from previously repressive regimes or have resisted pressure in the immediate post-war period towards the establishment of systems akin to those which have now been rejected in Eastern Europe. There can be no doubt that the success of the Community owes much to the freedoms which its citizens exercise. There can also be no doubt that the [772] example of the Community encouraged those seeking change in Eastern Europe.

As has already been pointed out today, the developments elsewhere in Europe have encouraged the Community to consider the questions of closer economic, monetary and political integration. The Irish Presidency is carrying on the preparations for an intergovernmental conference on economic and monetary union. We have responded very swiftly to the growing demands for progress towards political union — the outcome of last week's European Council establishes the basis for work in this area. The Irish Presidency has been able to show a flexible and effective response to the rapid pace of developments in these areas and we will continue to do so between now and the end of June.

The Presidency has also concentrated on the ongoing agenda of the Community in the wide range of subjects where the Community now has a responsibility. This has involved a very high level of co-operation with the Commission and with the European Parliament.

The Commission plays a vital role in the operation of the Community. Co-operation with the Commission has been a major feature of our Presidency and this was underlined by the meeting between the Government and the full Commission in Dublin Castle on 6-7 January. This meeting which continues a recent and, we hope, a now permanent tradition enabled the Presidency and the Commission to co-ordinate their programmes. It also had the advantage of developing close personal contacts between Ministers and Commissioners from the very outset of the Presidency. It has proved its worth in the subsequent very high level of co-operation.

The European Parliament has grown in influence since it was first directly elected in 1979. The Single European Act has given the Parliament an important role in framing Community legislation. As Presidency, we have been conscious of this. Ministers have made early contact with the committees in their areas of responsibility to indicate to them the priorities of the Presidency. Ministers [773] have taken part in plenary sessions, in debates on many major issues as well as in the traditional Council question time. The Presidency has shown its willingness to co-operate fully with the Parliament in the joint task of carrying through Community legislation and in discharging our joint responsibilities.

The role of Parliament, mentioned by Deputy Quinn, will be an important issue on the Community's agenda in the months to come. I am glad, a Cheann Comhairle, that Members of this House will participate with colleagues from throughout the Community and from the European Parliament in Strasbourg in a meeting in Cork next week to consider items of common concern. The national parliaments, the Council of Ministers and the European Parliament all share a common role of responsibility to the Community's electorate and as such we all play our own particular functions in ensuring that the Community responds to the democratic will.

Earlier today, Deputy Quinn, in the course of his speech, which in the main was to the point and helpful — I ignore the political sniping and take it for what it was, party rhetoric — acknowledged the difficulties and the heavy workload the Presidency causes for a small country, and indeed paid tribute to the Taoiseach and the Government on the planning and the foresight evident in their preparations. He also mentioned EFTA and suggested that Ireland was hiding under the coat-tails of the French with whom, according to him, we share a common antiquated agricultural policy and that we should not be nice to the Germans because they have a fat cheque book and asked for a mandate for a European economic area to come from the June Summit. He should know that this Government do not need to hide under anyone's coat-tails. For his information, let me tell him that the Taoiseach stated this morning that the negotiations with EFTA countries would not and should not be overlooked and that while the establishment of the new European economic zone would undoubtedly enlarge the market and increase competition for the member [774] states the draft mandate is practically finalised by the Commission on the basis of which negotiations will proceed. However, many difficult issues still remain to be resolved.

A Cheann Comhairle, I would now like to turn briefly to a few of the areas where progress has been made by the Irish Presidency apart from those which I have mentioned. I will in the course of my remarks give a particular prominence to development co-operation which falls within my own particular area of responsibility.

The completion of the Internal Market is the most important ongoing agenda item of the Community. The establishment of the 1992 deadline and the commitment which has been shown to that deadline provided the motor which has pulled the Community out of the stagnation of the mid 1980s. In our Presidency we have maintained the momentum established over the past three years since the Single European Act came into force and this is recognised in the conclusions of Saturday's European Council.

The agriculture sector remains of vital importance to the Irish economy and it is one to which we have devoted considerable attention. The Minister for Agriculture and Food last week negotiated a prices package for the 1990-91 marketing year which responds well to the needs of the Community's agriculture as well as to the interests of Irish farmers. In the agriculture sector the Presidency has concentrated also on measures designed to complete the internal market in that sector.

The environment is, of course, a major preoccupation for us. We have made progress in this area with the agreement on the establishment of the European Environment Agency and the Directive on Freedom of Information on Environmental Issues. We would expect to make good progress on a number of other areas before the end of June.

Other important sectors where we have been able to bring about progress include research with the adoption of the framework programme for 1990-94 and in the transport sector where we have [775] established road freight quotas for the current year.

As is usual in every Presidency, dossiers prepared in the early months are brought to completion at the many Councils which meet in the last weeks. At this stage half of the Councils which we scheduled at the outset of our Presidency have still to meet. Preparatory work for those meetings is in full swing and the outcome of the remaining Councils will be at least as significant as that of those which have taken place so far.

Before I turn to development issues, I think it is important that I should mention briefly the Community's relations with the other developed countries. Obviously relations with the US are of major importance. The Taoiseach has outlned their significance and the important steps he has taken to put the relationship on a new and firm basis. Our relations with countries such as Japan are focused at present on the GATT round. It is very important for all of us that the GATT negotiations are successful and that the free trading system which has made such a major contribution to international prosperity in the last four decades is strengthened. In the context of the negotiations this is a major Irish objective — as is the defence of the position of our farming sector.

The Community has always attached particular importance to its relations with the developing world. In the Lomé Convention we have established a unique instrument for co-operation with developing countries. Through the aid and trade mechanisms of the Convention and through other schemes such as GSP, the Community has made a particular contribution.

This contribution will continue and will not be inhibited by the Community's new commitments in Central and Eastern Europe — it is important to emphasise that. The Dublin European Council underlined this fact when it referred specifically to the Community's special relationship with the ACP countries and to its intention to intensify its relations [776] with the countries of Asia and Latin America.

In April, Dublin Castle was the venue for a ministerial conference on political dialogue and economic co-operation between, on the one hand, the European Community and its member states and, on the other, the states of Central America and neighbouring countries.

The conference was held at a time of positive developments in the peace process in Central America. It was therefore an important opportunity for both sides to emphasise the need to pursue to a successful conclusion the peace process begun at Esquipulas. The Community, for its part, reaffirmed its resolve to support the efforts of the Central American countries in the search for peace, the consolidation of democracy and sustained economic development in the region.

The conference succeeded in achieving a remarkable level of consensus among the participants on both political and economic aspects of the dialogue. This consensus was set out in the Joint Political Declaration and in the Joint Economic Communique which were issued after the conference.

On the margins of this conference, an agreement was signed providing Community funding for a major project to revive trade in the region. It is envisaged that funding of over IR£92 million will be provided over 30 months. The conference welcomed this project as a positive step in response to the appeal by the Central American states for support for their efforts to strengthen economic integration in the region. If its objectives are fulfilled, major economic and political benefits will accrue to Central America from the implementation of this project.

Following closely on the success of the San José Conference, our relations with the countries of Central America as well as the other developing countries of Asia and Latin America will engage our attention again on 29 of this month when the Development Council will begin what promises to be an extremely important debate on the Community's future relations with these countries.

[777] The Irish Presidency has strongly encouraged the Commission since the Government's meeting with them on 6 January last to bring forward their work and their reflections on the future of the Community's relations with these countries. The Irish Presidency will initiate this debate in the Council and expects to make an important contribution to it.

In the meantime we have, under the Irish Presidency, negotiated, concluded and signed an entirely new and more comprehensive form of Co-operation Agreement between the Community and Argentina, which I had the honour to present to the European Parliament. This agreement, for the first time, provides safeguards for human rights and democracy in Argentina. We are now embarking on a similar exercise with the new democratic government in Chile.

Together with the ACP countries, which I will come back to in a moment, those in Asia and Latin America comprise virtually the entire developing world. In development matters, therefore, the focus of the Irish Presidency has been wide ranging. The Development Council under our Presidency will have a considerable agenda.

There will be major Council conclusions on environment and development, on the role of women in development, on the Community's future food aid policy and its management. We will point also to the importance of evaluation of development projects so that the recipients receive the maximum benefit from funds allocated.

Turning to the countries of the African, Caribbean and Pacific regions, the Presidency has pressed forward with the necessary measures for implementation of the Fourth Lomé Convention. The transitional measures were agreed and implemented well ahead of schedule and I am confident that we will succeed in reaching agreement among our Community partners on the internal financing agreement and the financial regulation before we hand over the chair to the Italian Presidency.

As I mentioned, the Presidency has been particularly concerned to promote [778] relations between developed and developing countries at the global level. To this end, the Community participated actively in the special session of the United Nations General Assembly which has just concluded. This session was devoted to international economic co-operation, in particular to the revitalisation of economic growth and development of the developing countries. Three broad issues were identified for consideration at the session.

(i) The main developments in the 1980s, and the challenges of the 1990s and an assessment of obstacles and ingredients to growth and development;

(ii) The reactivation of economic growth and development in developing countries;

(iii) Strengthening and enhancing international economic co-operation and multilateralism in international economic relations.

Among the specific issues discussed were the debt burden of developing countries, the flow of resources to developing countries, commodity prices, trade arrangements and the protection of the environment.

Guidelines for the Community's position at the session were prepared by the Council in Brussels and a major role was played by the Presidency, as spokesman for the Community, in negotiations in New York on the text of the final declaration of the session which was agreed by consensus.

The Minister for Foreign Affairs addressed the special session on behalf of the Community. In the course of his address he noted that the experience of the eighties for the developing countries varied widely. While for some of these countries the decade saw unprecedented growth; for the least developed countries the experience of the decade was largely negative. The Minister recalled that it was primarily the responsibility of developing countries to put in place appropriate policies to energise and steer the development effort. Developed [779] countries, for their part, had to bring about an international economic environment which facilitated sustained and non-inflationary growth. Developed countries would also be required to continue to provide substantial concessional support to the developing countries, up to one billion of which live in absolute poverty. In view of the large development tasks ahead, the European Community and its member states reaffirmed their commitment to the accepted UN target for the level of ODA, that is 0.7 per cent of GNP including 0.15 per cent for the least developed countries. The Minister for Foreign Affairs also emphasised that effective commitment to development required the access of every member of society to adequate health, education and living facilities which are the prerequisites for the creation of the human skills necessary for sustainable development.

All in all, a Cheann Comhairle, the record of our Presidency in the development area as in other areas speaks for itself in terms of achievement.

Mr. J. Higgins: A Cheann Comhairle, I wish to share my time with Deputy Garland.

An Ceann Comhairle: Is that agreed? Agreed.

Mr. J. Higgins: It is most appropriate that we should debate the rapidly changing situation in Europe, and in Eastern Europe in particular. Our Presidency of the Community has sharply accentuated our outward awareness of events on the European mainland. Apart altogether from the fact that our membership of the EC makes it an economic and political imperative that we regularly examine developments within the Community, there is the obligation on us to look at the broader stage of world affairs even when they do not immediately impinge on us as, for instance, the affairs of Eastern Europe at present.

One of the very distinctive and happy features of Irish political existence has [780] been the general all party agreement on areas of foreign policy. Thankfully, we have managed, with rare exception, to achieve consensus. Indeed all the democratically elected parties in this House have been ad idem in relation to the fundamental areas of foreign policy. However, unfortunately we had the full-blooded opposition of the then leader of the Opposition, the present Taoiseach, when he full bloodedly and opportunistically opposed the Single European Act, but we are heartened that he now embraces it, that he pursues the Euro ideal and the concept of a united Europe with the zeal of Saul after his conversion on the road to Damascus. Of course it is a very noteworthy achievement that, as President of the European Community, he rightly basks in Euro-glory with a mere two months to go.

Unfortunately, despite the fact that there has been a relatively important and successful Presidency, listening to and wading through the scripts that have been issued from the various spokespersons today, there is not the meat and substance one would expect. One would hope that, by the time the Presidency ends in the last week in June, we will have seen more meat in terms of tangible Irish input into the developments of the Community. I do not want that to sound like begrudgery but there is a lot more protocol and PR than there is real substance.

Our participation in peace-keeping has been an area of singular success of which we can be justifiably proud. It has been an indication of Ireland's preparedness to play a role, at considerable cost to ourselves, on the broader world stage. The principle of military neutrality seems to achieve broad support in this country and it is one from which we should not deviate. It is in the light of such political unanimity and consensus that one finds it increasingly difficult to fathom the stubbornness and total resistance on the part of the Taoiseach and the Government, and reiterated in this House today by successive Ministers, to the establishment of a foreign affairs committee.

We now hold the Presidency of [781] Europe. We are flaunting our badge as good Europeans throughout the length and breadth of the globe. We are at one in relation to a foreign affairs strategy. We have committees at party level and within the House, we even have a committee which looks after the organisation of the bar and the restaurant yet for some reason we cannot break down the psychological barrier to establishing a foreign affairs committee. It does not look good, it does not sound good, it does not make sense and there is no logic to it. It cannot even be described as an Irish solution to an Irish problem. It can best be described as nothing other than leprechaun logic and that, unfortunately, is how it is seen abroad.

I was in Russia recently as part of the first Inter-parliamentary Union and the people there were aghast that this country, which at present holds the Presidency of the EC, cannot see its way to breaking down the mythical barrier to the establishment of a foreign affairs committee.

Last year I had the pleasure of being present at the Humbert School in Ballina. One of the themes which was most vigorously debated was de Gaulle's dream of a united Europe from the Atlantic to the Urals. There was a marked flavour of optimism there, and that was last August. We were optimistic about the movement towards greater EC cohesion, European monetary union and establishing a more concerted, cohesive, united front within the Community, the development again of greater political union. This was tempered to no small degree by developments in the USSR where the leadership, in terms of preparedness of inward reform and outward diplomacy, gave to this western world two new words in the vernacular: perestroika and glasnost. Nobody at that conference or indeed in the world could possibly have foreseen the rapid pace of change.

The free elections in Poland, which ended the dominant role of the Communist Party and gave the previously outlawed Solidarity the paramount role in Government, were revolutionary by their very occurrence, apart altogether [782] from their speed. The rapid democratisation of Czechoslovakia and Hungary has been acknowledged as amazing in terms of speed and sheer occurrence. The overthrow of the corrupt régime in Romania will hopefully, in time, find full expression in a true Government based on people power. The unification of Germany, apart from its national and historical origins, is an event the rapidity of which was largely unforeseen this time last year. It is obvious, as has been acknowledged, that German unity will have consequences for the European Community. I disagree fundamentally with the statement of the Minister for Finance that it is largely a question for Germany themselves to resolve and that the Community would merely adopt the role or posture of observers. Apart from Ireland's role as President of the Community, we have a fundamental role in relation to supervising, being party to or being involved in the whole process of German unification.

The more we embrace a greater section of Europe into the Community, the more we consolidate the ideal of the United States of Europe. Of course there is a very natural apprehension, anxiety and an undercurrent of fear that peripheral regions of the community like Ireland will suffer in relation to the disbursement of funds, but collectively we take a considerable amount of solace from the very judicious remarks of German Premier Kohl that they are committed Europeans first and that German unity, while very desirable and understandable, is a secondary consideration in relation to the developments within the community as a whole. Inevitably other countries will apply for EC membership in due course and we must evaluate each application on its merits. If the accelerated pace of change in Europe continues in the next decade at anything like the pace in the past year, at the turn of the century we will have a greatly expanded, enhanced and hopefully more vigorous Europe than we have at present.

The key figure in all of this must [783] undoubtedly be the USSR. The bold political direction taken by President Gorbachev three years ago is something that has to be acknowledged by all fair-minded people and by discerning powers in the western world. Undoubtedly, the success of this role in perestroika and glasnost, liberalisation, the breaking down of demarcations and the whole liberalisation of a process that has been hidebound and hamstrung for so long, and that has worked within particular strictures is a very difficult and dangerous task. You are talking about introducing to the Soviet Union a convertible currency because the rouble is not now convertible, and that brings all its attendant applied and implied dangers in terms of inflation and competitiveness on the open market. There is a nationality problem. While we, as Irish people, sympathetically concur with the aspirations of the different States to have autonomy, at the same time one wonders if the pace of change should not be tempered to allow the whole process of liberalisation to take place rather than reverting to a more restrictive form of central government.

Again, we are talking about removing, State by State, from the union a particular segment with the grave danger that you remove the interlocking forces that bind an economy together. We are talking about the possibility of giving independence to various States, a number of which possess nuclear weapons. We know that the proliferation of nuclear weapons is something that not alone we disavow but that, hopefully, will become part and parcel of the general scale of degeneration of nuclear weapons over a period of time.

We have the quite understandable fear of the Soviets facing the whole new world of free market economy. Of course, there is the very understandable fear that when restrictions and barriers are removed there will be a massive exodus or brain drain in terms of scientists, engineers, doctors, artists and so on, but all those things have to be understood. We should try to reduce the perceived threat from [784] the outside in relation to the welfare of the Soviet Union.

Here, I believe, our neutrality is of vital importance. If ever any country was bequeathed the possible role of being the honest broker it is Ireland as a non-aligned military force. Over the years we have cherished our neutrality. We have managed to protect it despite various assaults and subtle inferences from the outside but, it has stood us to good stead and never more so than at present in relation to putting Ireland up front as a possible honest and trusted broker in relation to the welding together of a trust, a confidence and a friendship between the EC and the forces in Eastern Europe. As has been said, we should look at our neutrality and evaluate it, but I would not in any way favour tempering it.

Mr. T. Kitt: Hear, hear.

Mr. J. Higgins: Within the next decade we will see a breakdown of the military alliances. The old military blocks of NATO and the Warsaw Pact will become a historical past rather than a pertinent and relevant present. The NATO forces on one side and the Warsaw forces on the other will be political rather than military alliances.

I welcome the opportunity of participating in this debate. I urge the other side of the House and the Progressive Democrat component in that Government, which was so vocal in relation to espousing the cause of a foreign affairs committee, to make as much noise as possible because to be without such a committee does not make sense and is without rhyme or reason.

Mr. Garland: It is presumably safe to say that every Member of this House welcomes increased international co-operation. No one here would support an isolationist attitude to the rest of Europe or the world. Everyone recognises the need to safeguard human rights around the world. We all reject claims by oppressive Governments that how they [785] treat their own citizens is an internal matter.

The Green movement throughout Europe has been at the forefront in advocating international legislation to tackle transglobal environmental problems. This is now widely accepted as being crucial to the survival of planet earth and its inhabitants.

Existing European organisations such as the EC, the Council of Europe and the CSCE have done much to safeguard human rights in their member states. They have, as yet, done relatively little in the environmental sphere. Indeed, a common declaration appended to the Single European Act stated that the EC's environmental policy could not override member states' energy policies.

The Council of Europe and the CSCE have largely been overshadowed by the EC which has made strident moves towards integration. However, developments in the EC, particularly in recent years, have been led mainly by economic interests rather than any principled desire for international co-operation.

What the EC has introduced is not economic co-operation, which would be welcomed by all, but economic centralisation which the Greens reject. This might be excused if it could be shown that everyone would be better off for it. Quite the contrary, all the indicators are that the gap between richer and poorer regions is widening all the time. The Single Market is certain to widen it still further.

The bitter pill of economic centralisation has been sweetened by claims that the EC is pursuing a united Europe of all nations, that it is setting an example of how different peoples can work together, that it is getting rid of borders: these claims have been repeated by previous speakers today.

People outside of the EC do not see it so favourably. There has been much concern about a fortress Europe. It may be eliminating its borders within but it is reinforcing its borders with the rest of the world. Recent developments, I believe, expose the fact that this latter view, which [786] has also been the view of the Green parties in Europe, is the more accurate one.

It has been a source of great sorrow to everyone in Europe that the Continent has been partitioned for four decades. Now that the Iron Curtain is being torn down, any organisation which truly wants to embrace all of the countries of Europe should surely now be trying to find ways to facilitate the re-emerging democracies.

Instead, the EC holds an emergency Summit to accelerate integration within its borders which will undoubtedly make it far more difficult for other countries to join should they wish to do so. While the Iron Curtain comes down, the EC is pulling a new one across. So, the EC's cover is finally blown. What it is trying to achieve is an elite club of 12 which will dominate Europe and, they hope, the world. By dominating Europe they will be able to exert strong economic pressure on the countries that have so far refused to join, picking them off one by one, effectively blackmailing them into joining the Community on the EC's terms.

What we are seeing is Orwell's 1984 in the making. Granted, it is happening a few years later but then nothing moves very fast in the EC — which is something for which we should probably be grateful. Across the world trading blocks are developing, in South-East Asia, North and South America, The Gulf and North Africa. These will undoubtedly be eager to follow in the footsteps of the EC.

We will then have a world divided into continental blocks each trying to throw their economic weight around. History has shown that this is usually followed by throwing their military weight around.

What do the ordinary people of the EC countries think of all this? Well, the fact is that the Governments do not care what they think. The Single European Act was only put to a referendum in two of the Twelve member states. We need not pat ourselves on the back for being one of them as both the Fine Gael-Labour Coalition and the following Fianna Fáil Government did everything in their power to avoid it, and Deputy Barry had the nerve today to call for more public debate.

[787] Who will get to decide the next moves? Will the Irish people be allowed to vote on it? Given that the Government are reluctant enough even to allow Members of this House to have an input, in that they still refuse us a committee on foreign policy, I very much doubt that our citizens will get much of a chance. I would fully agree with Deputy De Rossa's call for an Oireachtas committee on developments in Europe.

I have criticised the EC's reaction to current events. Now I will outline what the Green Party-An Comhaontas Glas believe should happen. Firstly, rather than accelerating integration the EC should suspend all further moves in this area until the situation in Eastern Europe stabilises. We believe that future developments must involve all countries in Europe and should be led by a genuine desire for peace, the maintenance of human rights, freedom of movement and the tackling of environmental problems. Developments in other areas, such as economics and culture, should be primarily of a co-operative rather than centralist nature.

The organisations best equipped to deal with these aims are the Council of Europe and/or the CSCE. Both have a much wider membership than the EC. The Council of Europe is very likely to welcome the eastern countries to its ranks in the near future. I was pleased to hear the Taoiseach call today for a widening of the scope of the CSCE. I welcome the Taoiseach's recent proposal that security issues should not be taken on by the EC but should be dealt with instead by the CSCE. However, the difference may well be only theoretical as long as Ireland participates in the EC group at the talks instead of with the group of neutrals and non-aligned nations. If Ireland is to make a genuine contribution to peace in Europe this can be better achieved by co-operating with the neutrals rather than NATO members.

As regards German unification, this should primarily be a question for the German people to decide for themselves. We would of course very much prefer [788] to see a neutral, radically demilitarised Germany. But then what is good enough for the Germans should be good enough for France, the UK, the Soviet Union, the US and everyone else. Whatever happens it is entirely unacceptable for policies on German unification to be motivated by the racist idea that the Germans have some sort of natural inclination towards starting wars. This comes from an extremely selective view of recent history. It is a matter of great concern, though, that the Taoiseach made no reference today to the issue of the alignment of a united Germany.

It is decision time in Europe, but before the people of the Continent can properly determine their destiny together we must wait for the situation in individual countries to stabilise. Then we must choose if we want to take the EC's path of a centralised European union, remote from its several hundred million citizens, or a decentralised Europe of small autonomous regions which co-operate on a continental and global level and which guarantee human rights and proper representation for all their citizens. The choice is not for the people of Ireland nor the people of the EC. It is for all the people of Europe.

Mr. T. Kitt: I listened with interest to the Leader of the Fine Gael Party, Deputy Alan Dukes, who dealt with the issue of neutrality in rather colourful terms. He painted the new map of Europe as he saw it. He talked about the American presence and the Soviet military withdrawal from Eastern Europe and he said it was time to shoot this political cow, neutrality or, if not, at least bring it into different pastures. I, for one, strongly object to putting down this political cow. Perhaps a slight change of diet will be required for this animal in the next decade, but I see no reason for a shift in our principal policy of neutrality. Indeed, I welcome the fact that Deputy Higgins, who is here in the Chamber, expressed a different view and I agree with him that our traditional position will be very significant in the years ahead. I have always felt we have had a very [789] strong pivotal role to play, which we should continue, between East and West. I welcome the fact that there are different views in the Fine Gael Party and, no doubt, in other parties.

I congratulate the Taoiseach on initiating and arranging a special meeting of the European Council last week to discuss German unity and developments in Central and Eastern Europe. We have all been surprised at the pace of developments and I share with many previous speakers appreciation of the role played by President Gorbachev in bringing about these developments. We are faced with challenging times ahead.

The Taoiseach prepared for this European Council meeting very well. He toured all the EC capitals seeking the views of the leaders to establish priorities concerning the Dublin meeting and to find where there was agreement. It was to very important to establish where the consensus was and there was no point in bringing leaders together unless he was aware of their views. He did all that with extreme caution and put a great deal of time and energy into that course of action. The result was broad agreement on German unity and on rapid and steady progress towards political unity. President Mitterrand of France and Chancellor Kohl of the FDR in particular wished to accelerate the political construction of the Twelve. Now we will have an Intergovernmental Conference on political union to be held parallel with a conference on economic and monetary union. We were discussing these issues last year as if they were going to happen years down the line. Unlike some Deputies here today, I think we should look positively towards these developments as our Taoiseach has been doing, and we should become centrally involved in the formation of these new structures. It is important to get the economic and financial basis right and understand the consequences of German unity for the Community.

The European Council rightly welcomed the developments in Eastern Europe, the historic changes and the emergence of a united Europe. At [790] present we are witnessing a united Europe that will be committed to democracy, full respect for human rights and the principles of a market economy. The people of Central and Eastern Europe need our assistance. Deputy Higgins quite rightly referred to what he found when he visited there, as did many other Members of this Parliament. The Taoiseach referred to the need for patiently negotiated solutions to the various problems within our states. He welcomed German unity under the umbrella, as he said, of the EC. We have a vested interest in a smooth and harmonious transition period to contribute to faster economic growth in the EC. The FDR will keep the Community fully informed of developments and the Commission will be fully involved in the discussions.

The existing commitments to peripheral regions of the European Structural Funds will be maintained, and Ireland has a vested interest in this. It is important to realise what is involved here, that 16 million extra people will be joining us and that European unity and German union can be addressed at the same time. It is the practical way to proceed. The FDR is strong. Chancellor Kohl is saying he is not looking for aid — that speaks for itself — and that unification will not take place at the expense of others. He merely wants the Community to allow for sensible transitional measures and he and the Community and the Presidency have been talking about the three phases, first economic and monetary union; secondly, political unification; and, thirdly, the process of Community law which will eventually apply to all Germany. That is a very clear, structured approach.

We will have a new market for Ireland. Trade with Germany at the moment is on the increase. The Taoiseach pointed out this morning that exports to the FDR increased by 18 per cent last year and the number of German visitors to this country increased by 37 per cent last year. They are sizeable increases in the economic and social links between our two countries. Work on the completion of the [791] Single Market has progressed well under the Irish Presidency.

With regard to EMU, because of our economic discipline we are well placed to benefit even further from our membership of the EMS. We have below average inflation and interest rates and, to be successful in Europe, a Community of over 340 million people without barriers and restrictions, we must maintain strict budgetary discipline and proceed on the course we are adopting at present.

The issue of political union has been referred to time and time again and concerns have been expressed about it. The Irish Presidency will seek from the Foreign Ministers a range of proposals rather than one specific model of political union. The role and functions of the Community institutions will be covered. At the Dublin meeting it was confirmed and we ensured that the decisions will soon be taken on the Single Market, economic and monetary union and political union. Therefore, the Community will be strengthened and transformed.

Political union should be clearly defined. The Taoiseach refers to full respect for the principle of subsidiarity. That means those functions best carried out at national level will continue to be dealt with at that level and matters which require common action will be dealt with at Community level. The Foreign Ministers should adhere strictly to that agenda in ensuring that that principle of subsidiarity is clearly established and defined.

With regard to security, the Community partners wish the NATO alliance to continue and the US to continue its involvement in European defence, so within that forum defence and military matters will be discussed.

With regard to relations with other countries, the Community will act as a political entity. Progress towards restoration on democracy and freedom in Eastern Europe with the prospect of arms reduction, makes it necessary that we form a new framework of peace, security and co-operation throughout Europe. The CSCE will provide this framework, [792] a useful and important forum, and obviously the Community will play a major role in discussions within the CSCE. This framework will play a significant role in the years ahead and, as has been pointed out, every country in Europe, with the exception of Albania, together with the US and Canada, are members of the 35 Nation Conference.

The primary role is to build confidence and co-operation and the reference to security means more than defence and armaments. It also embraces political and economic aspects such as human rights, the environment and cultural co-operation. Those issues need to be agreed and defined. The summit meeting of the CSCE will be held before the end of the year in Paris. Possible new institutional arrangements within the CSCE will be introduced and there is the possibility of the setting up of a small secretariat. I see this as a strong force on human rights within Europe and for dealing with countries outside Europe.

I was impressed with the speed of the Community's response to the needs of developing Eastern European economies. The Council is encouraging private investment and the Commission is studying the implementation of the most appropriate accompanying measures. Already the Council has got down to the business of assisting Eastern Europe. Association agreements will be made with each of the central East European countries. These will open up the establishment of an institutional framework for political dialogue. Basic conditions for this support are that these countries should continue to establish democracies and market orientated economies. We must not alienate or ignore the important EFTA grouping. I should like to encourage our Government to promote close co-operation with Austria, Finland, Iceland, Norway, Sweden and Switzerland. We can learn a good deal from those good partners, particularly in regard to human rights. Norway has a strong policy on human rights particularly in relation to Cambodia and South Africa. It is important that we should encourage good [793] developments with those EFTA groupings.

The Taoiseach has put the emphasis on strong association with the US and has initiated regular meetings with that country. He has developed a positive and fruitful relationship with President Bush whose approach to Europe is more positive and outward-looking than that of his predecessor. He looks on Europe as an area with potential for development and with which he should increase economic contact. The Taoiseach brought an added dimension to the Presidency. Apart from the dramatic internal progress, we have established firm links with the US and have confirmed continued strong relations with Japan, Canada, Australia and other major economies. The healthy functioning of democracy depends on a proper system of checks and balances. We should look closely at the proposed changes in the institutions.

When discussing changes in institutions and political union inevitably we should examine carefully how Ireland's interest might best be served. Allowing a majority vote at Council level might be to our benefit. Our record to date at this level would suggest that. Giving more powers to the Commission may be beneficial, depending on the portfolio given to the Irish nominee. Perhaps the President should be elected. I would be very fearful of giving more power to the European Parliament as that would lead to German domination with Ireland having a mere 15 members involved. At least on the Council we have one member out of 12. The next few months will give us an opportunity to look coldly at what developments might take place in Europe in the years ahead. There is no doubt in my mind that France, with its wealth of history and culture, and Germany with its strong reputation in industry and for hard work, will have a hidden agenda. Let us not fool ourselves, we are forming a united states of Europe. One danger I see, because of large vested interests, is a tight French-German axis that will dominate the new powerful economic and political union into the next century.

Germany will dominate Eastern [794] Europe and we must be vigilant that Spain, Britain, Italy and Ireland are not marginalised. That is why we need to clarify and define political union, the position with regard to the sovereignty of individual states and project into the future. Ireland has a very respected independent position at UN level because of our neutral policy, as referred to by Deputy Higgins and others. While attending a debate on disarmament at the UN I noted the international interest in the position adopted by the Taoiseach who was addressing a special session of that body. That independent position adopted by us as a neutral country at UN level, and the independence of other countries at UN level, should be encouraged and, indeed, institutionalised in some way when forming political unity.

There is a difference between our UN involvement and our relationship within the European Community. There must be scope for our country to stand apart from the common political approach if the need arises. In particular, that should be the position in relation to human rights. For example, Sweden has from time to time been courageous on human rights issues in Cambodia and South Africa.

Ireland should maintain its independent role in extra-European affairs. We are different from other European nations in many ways. For example, we have a reputation abroad as an independent neutral nation and we have particular links with the United States and Australia because millions of our people live in those countries. We should not weaken that link through political union. There is no doubt that integration and union will not come about without a great deal of effort. I heard little reference to the relationship between European union and our Constitution. It is a complex area as the Crotty case showed when there was a challenge to the Single European Act. We should not forget that the Supreme Court found in Mr. Crotty's favour and we were forced to have a referendum. At last we are having a proper debate on Europe. I can recall the former Taoiseach, Deputy FitzGerald, [795] saying that if we did not sign the Single European Act we would be bad Europeans. We did not have a proper debate on that issue but now we are having a full debate on Europe.

The debate has, quite rightly, come down to defining our nationality and where it and co-operation with our partners will divide. Monetary union through the EMS has brought us considerable success. Being locked into Germany has brought us stability. The economic success of Europe has been largely due to the economic strength of Germany. Their commitment to monetary stability, low interest rates and low inflation has brought great gains to Europe. We must acknowledge that. The British have been urged time and again in recent years to join the EMS. I should like to issue a word of warning on this issue. If the British joined the EMS now and a second major variable was introduced into the EC economy it might have a destabilising effect. After all, Britain has massive balance of payments problems, higher interest rates than the rest of us and that despite the fact that she had a mature and industrial economy and a huge injection of cash from North Sea oil. That was, in fact, transferred to those already well-off. The poor are suffering and the British education system has not kept pace with developments internationally. The British should get their own house in order before they are brought into the EMS.

We should move towards monetary union in a structured way. We should allow Germany to sort out its own economic affairs under a European roof. We should not underestimate the task involved in bringing about monetary union. Let us take, for example, the question of the harmonisation of European tax. The proposals to harmonise corporation tax rates and capital allowances involve two issues: (1) the rate of tax and (2) the way one calculates taxable profits in so many different ways in different countries. This is an extremely complex issue and the more members there are [796] the more difficult it becomes. In our discussions and deliberations we should aim for something attainable in trying to harmonise taxes rather than crying for the moon.

The dramatic changing political complexion in Eastern Europe is to be warmly applauded and I encourage and welcome the firm recognition and support for this process given by the European Council. The move from totalitarianism and democratic centralism with such relative ease and speed to genuine democracy and free elections indicates that man's spirit and sense of justice and freedom can in the end win over repression and corruption. These people deserve our continued support, morally and financially. The rapid growth and the formation of a powerful united states of Europe is an exciting and challenging prospect. We must not merely think along the lines of internal monetary and economic development although I have no doubt that will be a major economic force in the next century.

Having provided aid to Poland, Hungary and other East European countries we must also be conscious of our humanitarian obligations to those less privileged in the world outside Europe. I am thinking in particular of countries like Ethiopia and the Sudan — indeed the whole African Continent — where thousands are starving and in great need. In the North-South divide we must not renege on our responsibilities. I am thinking of our obligation to those in urgent need of development aid in Central America and Cambodia. I welcome the Minister, Deputy Calleary's reference to the co-operation agreement under the Irish Presidency between the Community and Argentina providing safeguards for human rights and democracy. I am pleased that a similar agreement is being arranged with the new democratic Government in Chile.

We must never place vested interests before human life. The day the mark, pound or franc take precedence over human life in any part of the globe will be a bad day for the Europe of the future. Let us place our commitment on human [797] rights firmly on the record before we even contemplate any form of political or economic union.

Minister of State at the Department of the Taoiseach (Mrs. Geoghegan-Quinn): This series of statements is on recent European developments. And what tremendous further developments there have been in our Continent and in the European Community since our last wide-ranging discussing in this House on European affairs.

Pride of place must go to the now, I believe, irreversible momentum that has developed towards the unification of Germany. As a nation itself affected by division, we in Ireland can more than most others, understand and identify with the emotions of elation among the German people in both existing states. As someone who, as a Member of this House and as a Minister of State, has been involved in the intensification of German-Irish parliamentary relations, I wish to express my own deep satisfaction that German unification is taking place and that it is taking place, in the words of the Presidency Conclusions of the recent summit, under a European roof.

As the Taoiseach rightly recalled, the Federal Republic has, since our accession, amply proved itself a friend of Ireland in the Community, a partner which has shown solidarity and understanding towards our concerns and interests. I am, therefore, very happy that it is a European Council meeting in Dublin that has expressed a warm welcome for German unification. I know that this is deeply appreciated by our German friends.

The Strasbourg Conclusions set out the views of the European Council on how developments in regard to the German Democractic Republic and other countries of Central and Eastern Europe should be handled. Those Conclusions were wise and fully deserved the support we gave them, but it would be idle to deny that the momentum towards German unification had given rise to varying degrees of anxiety in different countries. I believe that the warmer tone [798] of the Dublin Conclusions reflects credit on the success of the diplomatic efforts of the Federal German Government and the concrete steps they have taken to ensure that the external aspects of German unification contribute positively to stability in Europe, something that is of vital importance to Ireland, no less than to other countries.

In regard to a more immediate Irish interest, the funding of Community structural policies, it has now been made crystal clear that the costs of integration of the GDR into a united Germany and into the Community will not in any way affect the agreements reached on the funding of the Structural Funds up to 1992. The position thereafter remains to be determined. The Commission's paper on German unification prepared for last Saturday's Summit refers to the absence of a reliable statistical basis for the application of Community structural policies once the current territory of the GDR becomes part of the Community. It says, however, that it can be assumed that it is beset by the same type of problems encountered by other regions of the Community and that it will therefore be eligible under one or more of the structural policy objectives.

It has, of course, always been the position of this Government that the achievement of economic and social cohesion in the Community is a Treaty objective in its own right, by no means applicable only for the period during which the Single Market is being created but rather a continuing imperative over the longer term. It will, therefore, be our position that there is a continuing and, indeed with the prospect of EMU, an increased need for structural policies and support after 1992 and any funding after 1992 for parts of what is now the GDR will require a commensurate increase in the Community resources devoted to structural policies and a consequential increase in the Community budget, a subject on which I shall have more to say later.

In public debate on the implications for Ireland of German unification and of the developments in Central and Eastern [799] Europe, questions have been raised, going well beyond the implications for the Structural Funds as to whether there would be adverse effects for us. As far as German unification is concerned, the Commission paper already mentioned concluded that it would have a positive effect on growth in the Community as a whole. This is an important point because in discussions on this subject there is an undue tendency to look upon the situation as a zero sum game, where if others gain, we must lose.

It is, of course, far from being this. Looking beyond Germany, to the other countries of Eastern and Central Europe, it will take some years before normal business and trade opportunities on a substantial scale will open up. However, in the medium-term, there should be a tremendously positive effect on the EC economy as the pent-up demand in those countries is, if we assume a benign scenario, made effective, under the influence of economic restructuring, currency convertibility and Western assistance, in a repeat of the experience in Western Europe with Marshall Aid and the European Payments Union. The potential for economic stimulus to the Community economy, including Ireland, must be enormous.

Already, indeed, there is scope for management and other training in many parts of those economies, for language training, for consultancy advice on techniques of promoting development in market economies, all areas in which Ireland has more recent and relevant experience than many Western countries. A small investment now could pay large dividends in the future. The Government have taken a number of specific steps to bring the opportunities concerned to the attention of Irish business. On Wednesday next, we shall be welcoming, for a working visit, the Prime Minister of the Czech and Slovak Federal Republic, with a range of Departmental Ministers and officials, a number of whom will be having separate bilateral meetings with their counterparts here.

There is, of course, no doubt that [800] countries in Central and Eastern Europe will now offer stiffer competition in the attraction of mobile international investment. However, recent decisions by major US and Japanese corporations indicate that the earlier enlargement of the Community towards the South has not adversely affected our capacity to attract major investment from those regions of the world and developments East of the Elbe should not change this situation which is based, primarily, on our young and highly educated population.

While I felt it important to bring out these strongly positive elements in the situation, there will undoubtedly be a closer focus in the Community, over the next few years, on Central and Eastern Europe and this is likely to be particularly true of Germany.

Closer relations with the non-Community Scandinavian countries will intensify relations to the North, and Denmark looks to benefit as does, for example, the Schleswig-Holstein region in Germany which is also, of course, well placed in relation to the German Democratic Republic. The Danes are talking about a whole series of new bridges to exploit the potential they see. For other reasons — basically, as one of my Community colleagues put it to me, to avoid boat people in the Mediterranean — the Community has opened a debate on substantially stepping up its support for the development of the countries on the southern littoral of the Mediterranean, the combined population of which is already 115 million, a figure which is projected to double by the year 2025. All of this raises the question: what of the West? And here I mean the West of the Community but with the west of Ireland very much in my mind.

Various studies, including in particular one by the French regional development body DATAR, of the relative prominence of 165 cities in the Community, Austria and Switzerland with populations above 200,000, bring out, once again, the heavy concentration of growth in a central megapole but with a second, increasingly prosperous area dubbed the [801] North of the South, taking in Catalonia, the French Mediterranean coast, Tuscany and Emilia-Komagna with Romagna, in Italy, and parts of the Italian Adriatic. Both these poles are characterised by density of population and of economic activity forming intensely connected networks. These elements are missing in the regions along the Atlantic coast, where cities are rather spread out, isolated from each other and of moderate weight and development.

I have outlined this perspective of economic geography, first, in order to underline the extent of the challenge confronting us in Ireland in the coming decade and secondly, as a background to what I want to say about the assignment of policy competences in the context of economic and monetary union and, indeed, of the political union now opening as a prospect with which we have to get to grips.

So far as the challenge to ourselves is concerned, we in Ireland start from a much more solid base, thanks to the policies implemented since the change of Government in March 1987. We have been closing the gap with our Community partners. On the latest Commission figures for the index of relative economic performance per head of population, with the EC average as 100, Ireland is shown on 67.3 in 1990, up 7.4 points from 59.9 in 1973, whereas Spain, Greece and Portugal are all shown as having lost ground, relatively, since 1973.

The conclusions of the European Council meetings last Saturday state:

—the preparations for the Intergovernmental Conference on EMU which are already well advanced will be further intensified with a view to permitting that Conference, which will open in December 1990, to conclude its work rapidly with the objective of ratification by Member States before the end of 1992; and

—the European Council confirmed its commitment to Political Union and decided ... that Foreign Ministers [802] will undertake a detailed examination and analysis on the need for possible treaty changes ... and prepare proposals to be discussed at the European Council in June with a view to a decision on the holding of a second intergovernmental conference to work in parallel with that on EMU with a view to ratification by Member States in the same time-frame.

Ratification of any Treaty changes would very likely call for a referendum in Ireland on necessary amendments to the Constitution.

An issue that is coming very much to the fore in both these contexts, and one that is of vital importance for Ireland, is the application of the principle of subsidiarity, according to which, as defined in the report of the Delors Committee on Economic and Monetary Union, the functions of higher levels of government should be as limited as possible and should be subsidiary to those of lower levels. That report said adherence to this principle would be an essential element in defining the appropriate balance of powers within the Community in an economic and monetary union. As specifically noted in last year's NESC report, the Delors Committee report states:

Thus, the attribution of competences to the Community would have to be confined specifically to those areas in which collective decision-making was necessary. All policy functions which could be carried out at national (and regional and local) levels without adverse repercussions on the cohesion and functioning of the economic and monetary union would remain within the competence of the member countries.

As the NESC report says, Ireland need have no difficulty with this as a principle. We certainly do not support any excessive centralisation of powers or functions in the Community. We espouse a Community in which, as President Delors said in his speech in Bruges last year, diversity and pluralism are upheld. We agree with [803] him that integration in Europe, a Community of ancient nations, has to be a sui generis process.

The report of the Guigou Group of high-level representatives of member states on EMU drawn up last year under the French Presidency also poses, inter alia, the question, under the heading, economic and social cohesion, and I quote:

In assessing progress in convergence between Member States' economies, what criteria can be used to determine which matters in accordance with the principle of subsidiarity, are appropriate for Community action.

The issue has also been raised explicitly in the context of political development and union. In an address in Brussels on 30 November last, on the theme, “Governing Europe”, Commission President Delors expressed the view that subsidiarity will have a new, vital role to play in the organisation of government in the Community, so much so, indeed, that the principle and its mechanisms will need to be defined in any new Treaty. It has also been suggested in the European Parliament that the assignment of policy functions under EMU should be explicitly defined in any new Treaty or Treaty amendments. The recent memorandum of the Belgian Government on political union which was discussed at the Summit last Saturday also proposes that the principle of subisidiarity be formally written into the Treaty and that this broad provision should be supplemented by more precise details of respective powers in sensitive areas in which national traditions frequently differ.

As I have said, we in Ireland have no difficulty with the principle, but the issue is the application of the principle. It would appear from other references in President Delors's Bruges speech and, indeed, from the report of the Delors Committee, that there is a tendency to apply the principle so as unduly to restrict the areas in which the Community and its institutions would have competence and responsibility. It is to be welcomed [804] that the President now sees a Community budget rising to 5 per cent of Community GDP but other references appear to leave to the exclusive competence and responsibility of the member states a number of policy areas where I believe, as do the NESC, that the Community should have a parallel involvement. Moreover, the paper submitted by the Commission to the informal ECOFIN, which I attended in Ashford Castle on 31 March, was less satisfactory than the Delors Committee report in its treatment of these issues.

The NESC report rightly points out that there are economies of scale, externalities and spillovers attaching to the provision of certain public activities which provide reasons these activities might be assigned to a higher level of government. Examples might be, respectively, air traffic control, environmental regulation and educational provision. They note that an additional criterion is political homogeneity or the feeling of belonging to the same political grouping and sharing the same interests and destiny. It would be foolish to suggest that the commonality of identity and interests between people from different member states is yet anywhere as strong as that which exists among the peoples of the individual member states, but I note that, again in his Bruges speech, President Delors looked to every European having the feeling of belonging to a Community which would, in some sense, be his or her second motherland, and we are now looking towards a situation to be designated a political union.

This has many implications in regard to People's Europe but if it is to happen, it will be necessary that the Community, as I have said, cherish each of its citizens equally. Certainly, the member states have, as also recognised in Article 130 B of the Treaty, their own responsibilities for their development and for the welfare of their citizens but, with increasing integration, it will also be necessary to give fuller practical expression to the Community's obligations under that Article. Here it is relevant to recall that, as NESC point out, the theory of fiscal federalism [805] strongly suggests that the redistribution and stabilisation functions should be carried out at the highest level. They reminded us in their report, commissioned by President Delors, that the Padoa-Schioppa Group expressed the view that “greater Community involvement in stabilisation and redistribution policies is the indispensable complement of the ambitious project of completing the internal market”. It might be felt that, in current circumstances, it would be unrealistic to envisage that the Community should exercise these functions. The situation should be different in an economic and monetary union, and still more so in a political union but, even there, it is scarcely realistic, or even perhaps desirable, to contemplate the Community exercising exclusive responsibility in such areas as social security or regional policy.

I mentioned fiscal federalism a moment ago. In his Bruges speech President Delors spoke of the merits of the federal approach to the further development of the Community. If we look at models such as the Federal Republic of Germany or the United States, we see that a prominent feature of such federal unions is the concurrent exercise of competences in various fields. The Padoa-Schioppa Group envisaged a greater need for policies to be shared between the Community and the member states. I am not now proposing a federal model or indeed any particular constitutional model but there is nothing against taking from the models we have the elements that are appropriate to the Community's unique circumstances. One can imagine a situation in which major parts of the responsibility for decision-making in regard to such areas as educational provision or unemployment compensation remains with the member state but where this is paralleled by an active Community role in ensuring minimum standards of provision and welfare, including, through financial support in areas such as these, going beyond the boundaries of what is covered by the Structural Funds at present. Again, there is nothing very new [806] here — some of these were proposed in the 1974 report of the Marjolin Group.

This implies a larger Community budget. Whether 5 per cent of Community GDP is enough is perhaps a question for another day. The important point of principle is that the NESC are right that application of the Delors Committee's own criterion that the assignment of policy functions should be related to the repercussions on the cohesion and functioning of an EMU suggests that the Community will need to exercise a competence, concurrent with the continuing competence of the member states, in a wider and deeper range of policy areas than is, apparently, being contemplated in some quarters. By reference to Articles 130 A and 130 B of the Treaty, the effectiveness of the functioning of the EMU must be judged by, inter alia, the effect on economic and social cohesion; and if real convergence of the different economies is retarded rather than advanced by EMU, the cohesion and stability of the union will, sooner or later, be adversely affected. The Community must have the policy competences and financial resources required in order to effectively promote such convergence.

The report of the Delors Committee states that excessive reliance on financial assistance through regional and structural policies could cause tensions. It continues:

The principal objective of regional policies should not be to subsidize incomes and simply offset inequalities in standards of living, but to help to equalize production conditions through investment programmes in such areas as physical infrastructure, communications, transportation and education so that large-scale movements of labour do not become the major adjustment factor. The success of these policies will hinge not only on the size of the available financial resources, but to a decisive extent also on their efficient use and on the private and social return on the investment programmes.

I would not disagree with this but even [807] with the most effective use of financial resources, it appears probable that, as in existing nation-states, federal or otherwise, it will also be necessary to have a system of financial flows linked to certain fiscal, economic and social indicators and not determined on a discretionary basis, if the emergence of unacceptably wide gaps between different parts of the union is to be avoided.

The size of the EC Budget at about 1 per cent of Community GDP is far too small to make a really significant impact in achieving economic and social cohesion. In 1992, the budget will still be no more than 1.2 per cent of Community GDP, even after the doubling of the Structural Funds. This falls, as the NESC report brings out, well short of what economic authorities consider necessary as a basis for progress towards a durable and stable EMU. The report of the McDougall Group, cited by the NESC, considered that a budget of 5-7 per cent of GDP, though much smaller than in mature federations, would be adequate if it was high powered. By “high-powered” they meant fulfilling to a high degree the redistributive and macro-economic functions that are to be expected of an economic union but, at the same time, aiming at minimum Community-level public expenditure and minimum centralisation in the supply of goods and services.

Some commentators on the NESC report last year picked up its own comments on the question of the degree of political homogeneity needed before there can be agreement to assign policy functions to the Community level and especially to expand Community budgetary support into fresh fields, extending beyond those concerned with structural development of the component economies. These commentators suggested that this degree of political homogeneity was unlikely to emerge in the Community in the near future and that consequently the NESC analysis and prescriptions on European integration provided little basis for practical policy purposes. But, as the NESC itself pointed out, the [808] degree of political homogeneity changes and develops over time and, as experience shows, sometimes in discrete leaps. When we look forward towards political union we are surely contemplating such a leap.

One of the aims in view in connection with possible Treaty changes under political union is, according to last Saturday's Conclusions, “enabling the Community and its institutions to respond efficiently and effectively to the demands of the new situation”. Various issues have been raised in this context: further strengthening of the powers of the European Parliament, further extension of qualified majority voting to new areas, progress towards common foreign and security policies. I do not wish to take anything from the importance of these areas when I say that, in my view, the objective I have quoted also requires that the work now to be done must also give a central place to the powers and competences to be exercised by the Community in the economic and social areas, whether exclusively or concurrently. It has been the consistent policy of successive Irish Governments that closer political cohesion must be firmly rooted in closer economic and social cohesion. This must remain a guiding principle as the Community faces into the tasks defined at the Madrid, Strasbourg and Dublin Summits.

Tá mé buíoch gur tugadh deis dúinn díospóireacht fad-réimeach mar seo a bheith againn i gcaitheamh an lae. Tá súil agam go gcuireann sé tús le díospóireachtaí a bheith againn go rialta ar chúrsaí Eorpacha sa Teach seo. Tá áthas agam a fheicéail go bhfuil an Seanad le díospóireacht den chineál céanna a bheith acu an tseachtain seo chugainn.

Minister for Industry and Commerce (Mr. O'Malley): Last week-end's Summit in Dublin was one of genuine historic significance, significant because there was unanimous agreement on the desirability of achieving German unification and full membership of the European Community of the German Democratic Republic by 1993. It was historic also because the Twelve leaders agreed in principle to advancing the cause [809] of political union within the Community. It is now the task of the Foreign Ministers to explore the detailed agenda for this highly ambitious project with a view to reporting back to the next Summit meeting due to be held in Dublin in June.

It is perhaps worth reflecting on why it is that a Summit meeting called to explore the issue of German unification should have expanded itself into the wider domain of political union. In my opinion there are at least two significant threads coming together to suggest why this is so.

In the first instance, since the Berlin Wall tumbled early in November last, the process of German unification became inevitable. The first hints of that prospect were found only weeks earlier when what was described as the “People's Revolution” in Hungary began to pull back the Iron Curtain by dismantling its land border with Germany. However, the inevitablity itself did not determine the path or pace towards unity. What emerged in Germany itself — partly under the pressure of the massive exodus from East Germany, and partly to take advantage of a benevolent climate, especially in Moscow, while the going was good — was that the Federal Republic's leading politicians, expecially Chancellor Kohl and Foreign Minister Genscher, injected enormous pace into the debate. That pace was accompanied by what at the outset appeared to many as an unfortunate ambivalence on the eastern boundaries with Poland about a United Germany. Within the European Community anxieties emerged as so much unfolded without what was seen as due consultation. That was hardly surprising since, for everyone involved, it was a leap into the unknown.

Since those early and heady days, more particularly since March 18 when the elections in East Germany produced an emphatic result, it seems to me that a more mature and reflective response has emerged. This resulted just two weeks ago in the Kohl-Mitterrand initiative which established a dynamic not just for a new Germany but also for a more coherent and, in a political sense, new Europe. That initiative ensured that the [810] worst fears and anxieties about a possible “born again” Germany were to be replaced by a clear understanding that a united Germany genuinely would be part of a united Europe.

A second thread which converted the Summit on German unification into the wider question of European Community political union relates to the more general context which has emerged in Central and Eastern Europe since last autumn. The emerging democracies in those countries have opted for free and open elections and for democratic pluralism. They have opted to found themselves on a respect for individual liberty, a respect for human rights and for moving progressively towards the perceived benefits of the mixed economy. Their role model in many respects is the European Community.

After the Second World War two Europes emerged. The one in Western Europe, the European Community, with all its faults, found its strength in solidarity, economic substance, and pooled sovereignty which stands in stark contrast to the failed entities of Central and Eastern Europe — the second Europe which has emerged the poorer and more ravaged from its post-war experience. That second Europe looks to the Community not just for aid and technical assistance but also clearly for full participation in the fullness of time. That is what President Vaclav Havel of Czechoslovakia has said. It is also what the new democratically elected leaders in Hungary have said. Herein lies the historic challenge to the European Community, to so develop and order its business as, in the medium term, to sustain the fledgling and emerging democracies in Central and Eastern Europe and, in the longer term, to embrace them fully into the European Community family.

This historic task and challenge facing the European Community cannot be met successfully without undertaking further reform of how that Community itself operates. Without reforming how itself proceeds, the European Community, as we know it, will flounder under the weight of inertia. This is so because the [811] burden of future enlargements will inevitably add exponentially to the complexity of the European Community itself. Consequently, considering the absolute desirability of ensuring that German unification is placed firmly in a process of European unification and the parallel necessity for the Community to reform itself in a manner befitting its new historic role, it is little wonder that the central issue of last week's summit became the European Community itself.

This leads me against that background analysis to praise the Taoiseach for the tremendous personal commitment and effort he has invested in this task and equally to say, as Leader of the Progressive Democrats, that the time has now come to initiate a major national debate here at home in Ireland not to do with our Presidency but rather with ourselves and our role in this wider European challenge. At the minimum that debate will need to discuss the role, functions and powers of the various European institutions, the Commission, Council of Ministers and the European Parliament. It will need to examine the principles which will govern the determination of which jurisdiction, European or national, is best suited to handle different matters of public policy. It will need to engage in a root and branch examination of the size and functions of the Community budget and it will be obliged to confront, in all its aspects, the implications which follow from the development of common security and foreign policies in Europe. That is the primary national challenge to confront us in this House which follows from last weekend's summit.

Though not dealt with by the Council on Saturday last, it is important to highlight here again that one of the major economic objectives of the Community is to ensure a successful outcome to the Uruguay Round negotiations at the end of this year. The round will set the rules for international trade for the foreseeable future, certainly into the 21st Century. Ministers from the major industrialised and largest developing countries met in [812] Mexico from 17 to 20 April for negotiations on the progress of the round. The meeting was crucial in preparing the ground for a successful conclusion to the negotiations in December.

Ireland was invited to attend as Presidency of the European Community — the first occasion on which the Presidency was ever involved in these events. As Presidency in office, my job was to ensure the fullest possible co-ordination between those member states present, the Federal Republic of Germany, France, Italy, the United Kingdom, Spain and the Netherlands, and the Commission. I suggested and oversaw procedures to ensure that the Commission would articulate the Community's position, with member states intervening in support. Cohesion was thereby maintained in all topics throughout the conference.

The meeting was significant because it was the last opportunity for ministerial discussions between developed and developing countries before the final ministerial meeting in December. Overall, there was general agreement on the importance of giving political impetus to the negotiations, with outlines of solutions in each negotiating topic to be established by the end of July.

It was quite clear, however, that a successful outcome depends effectively on agreement in the agriculture and textiles sectors. Both developed and developing countries attach importance to a substantial result on agriculture. The Community's position was maintained throughout and I took the opportunity to stress the importance of respecting European farming tradition and of maintaining a strong rural society not only in Ireland but in Europe generally in the context of any eventual outcome. As regards textiles and clothing, the Community is already committed to eventual liberalisation of textiles/clothing, but subject to the adoption by exporting countries — mainly developing — of improved GATT rules and disciplines.

Concessions in agriculture and textiles will be very difficult for Ireland because of the importance of these two sectors to [813] the economy, accounting for approximately 30 per cent of total employment. However, a successful round should bring benefits overall, increasing access to third country markets for our exporters of goods and services.

It is particularly important, however, that negotiations on agriculture between the United States and the European Community should not become over-dramatised. For this reason, I suggested to Mrs. Hills, the United States Special Trade Representative, that regular contacts between the United States and the Community would be useful. It has since been announced that talks will now take place fortnightly at official level between the Commission and the United States to ease the existing stand-off and to see how the gap between both sides can be bridged.

I have arranged an informal meeting of Community Trade Ministers in Dublin on 19 May which will focus exclusively on the Uruguay Round on the basis of a strategic policy document from the Commission. The meeting will afford Ministers a further opportunity to give political direction to the Commission negotiators. Most of all, the Community now requires this kind of direction, as we approach the final stages of the round, so that whatever outcome is achieved, it reflects an acceptable balance of interests, even within the Community itself.

In the build-up to the European Council on Saturday last there was a disquieting and inaccurate statement made by one of the participants that the Irish Presidency had allowed the process of Single Market reform to slip from top gear. This was suggested on the basis that only a limited number of measures appeared to have been approved so far during our term. I want to take this opportunity to lay this serious misrepresentation to rest, unequivocally and finally, by reference to the facts.

To anyone remotely informed about the process, it is obviously misleading to talk nowadays about numbers only as a measure of progress towards the Single Market. At this stage, it is universally [814] recognised that we are now at the point when all the easy Internal Market decisions have been taken. The time for chalking-up easy numbers has passed. What remains on the agenda, to be addressed by member states are, for the main part, the most difficult items, technically and politically. Increasingly, therefore, informed judgments about Presidencies are, to those who know what they are talking about, based on the quality rather than the quantity of measures successfully put through the system.

Let me, therefore, put the record straight about the work of the Irish Presidency so far, within the parameters of the Internal Market Council, for which I am responsible. At the outset, we have sought, as a matter of policy, to focus on key issues which up to now have not progressed satisfactorily, mainly because of their great sensitivity for member states. That is not to say we ignore the several technical matters still requiring attention. On the contrary, many of these continue to be cleared by us but, right now, I want to isolate matters of policy importance in terms of 1992.

In our February meeting, consequently, we put much effort into the Public Procurement Directive for excluded sectors, a file of considerable economic and symbolic importance, and international interest, in the 1992 context. Despite past difficulties, we achieved an agreed position on the measure and it has widely been reported since as a milestone in the Internal Market process.

In addition, at the same Council the Presidency arranged a full and new presentation by Commissioner Brittan in regard to the opening of insurance services throughout the Community. It then committed itself to an intensive programme of work at working group level to achieve significant results during our Presidency. This commitment will soon be realised in Councils later this month and in June next. Similarly in February, the Council revived discussion on some Company Law Directives — the fourth and seventh — in an attempt to give significant political direction in areas [815] where serious blockage had occurred in the past.

In the Informal Council in Ireland at the end of March, as well as considering the Fifth Progress Report on the Completion of the Internal Market, Ministers had a political discussion on the most sensitive aspects of the European company statute — which everyone will know has long been a difficult subject. It was unanimously agreed among Ministers that the discussion was helpful and that thinking had advanced significantly. Furthermore, though it was an informal Council, we agreed that the Commission should explore the possibility of introducing a new export credit insurance mechanism to help smaller member states like Ireland take advantage of the new business opportunities in Eastern Europe.

In our forthcoming May and June Councils we have arranged other opportunities to make advances in some significant policy areas and these will be fully grasped. Further to our commitment last February, three insurance directives will be before the May Council. In addition, we will initiate a political discussion, in an attempt to resolve technical blockage on the subject of legal protection of computer software, which is of significant international interest. We will be aiming for a common position on this in June. Again, in May, we will have a further political discussion on the difficult aspects of the European company statute.

The probable agenda for the June Council is very extensive and will provide the basis, we confidently hope, for the adoption of many technical measures and the realisation on common positions on many aspects dealt with earlier during our Presidency. One particularly important political issue in our June Council will be the subject of the right of residence of economically non-active persons, e.g. students, pensioners, etc. Adoption of the directives involved will be widely recognised as an important political achievement.

Generally I should like to add that it is [816] a well recognised tradition among Presidencies that towards the end of the period of office work volumes tend to balloon. This is because it naturally takes the best part of the duration of the Presidency for the bulk of priority work addressed throughout at working group level to reach Council. I make no apologies that this is the case also with the Irish Presidency, as it was with the French Presidency before it and the Spanish Presidency before that. The important thing is that Ireland continues to be committed fully to the realisation of the Single Market as a matter of policy priority. From the viewpoint of the Internal Market Council itself, for which I am directly responsible, I propose to maintain the rate of work so far undertaken and to translate that work into positive results by our last Council in June.

There are, of course, other Councils involved, in a vital way, in ensuring that progress towards the Single Market is fully maintained. For example, of the 139 proposals on the Council table 50 are in the veterinary and phytosanitary sector and 18 concern the harmonisation of indirect taxation. In the transport area also, some crucial decisions must be taken. As I say, the Councils involved in these areas are the responsibility of other Ministers but the House may take it that all Ministers are fully aware of the importance of making every effort during our Presidency to advance Internal Market proposals which fall within their area of responsibility.

I would now like to touch on our commercial relationships with those countries which, not so long ago, were known as the Communist Bloc, and in particular with our economic and trade relationships.

The countries of Central and Eastern Europe were traditionally a backwater in terms of Irish trade. However, the upheavals there in the last year changed all this dramatically. It became clear, fairly quickly, that the welcome new democracies needed to be underpinned by substantial and real economic development. This created a major political impetus in the EC to respond to the [817] economic needs of these countries. The EC response was dramatic. The EC Commission now co-ordinates all the programmes of assistance of the G24 — the group of 24 developed countries — to Poland and Hungary. This aid programme is now being extended to Bulgaria, Czechoslovakia, East Germany, Romania and Yugoslavia. The massive aid flows to these countries, coupled with internally generated wealth, will have the effect of bringing these countries to the international marketplace both as buyers and sellers.

In January of this year, the Community set itself the task of completing, under the Irish Presidency, a network of agreements on trade liberalisation and commercial and economic co-operation with all the countries of Central and Eastern Europe. These agreements represent an important stage in the development of contractual relationships between the Community and these countries. They are a tangible proof of the Community's commitment to enhanced co-operation across what was once a divide. I am pleased to say that such agreements in relation to the USSR, Poland and Hungary are in place and operational, those in respect of East Germany, Bulgaria and Czechoslovakia will be signed in Brussels next week and the negotiating mandate in respect of the proposed agreement with Romania is being prepared. Therefore, we are well on the target in terms of the task set last January.

We tend to refer to the rapid pace of developments in Eastern Europe. However, we should not lose sight of the fact that the Community is also moving very rapidly in this area. The agreements referred to above are now being called “first generation” agreements and work is in hands, at Community level, on a new form of “association” agreements which will broaden and deepen the commitments between the EC and CEE countries.

In so far as Ireland's bilateral trade with these countries is concerned, the base from which we work is small. However, the prospects for long-term increasing trade are now brighter than at [818] any time in the past. This is not to say that it will be easy for our exporters to trade there, particularly in the immediate future. I have been particularly concerned to monitor trade possibilities in Eastern Europe. My Department organised a briefing in March for the major semi-State and private sector companies trading in Eastern Europe aimed at pooling our knowledge of developments in that region with a view to identifying areas of opportunity. My Department and CTT are now engaged in developing a strategy aimed at maximising such opportunities.

A major economic conference on the subject of East-West trade was held under the auspices of the 35 nation CSCE in Bonn at the end of March/beginning of April. In addition to the normal CSCE process of developing a framework at governmental level to encourage trade and economic co-operation, this conference brought together for the first time, large numbers of businessmen from Europe, the US, Canada and from the Soviet Union and other Central and Eastern European countries.

I addressed this conference both on behalf of the Community and on behalf of Ireland and while there, I took the opportunity of having a series of bilateral meetings with my opposite numbers from Poland, Hungary, Czechoslovakia, Bulgaria and Romania. We discussed various ways of increasing trade flows between our countries. It was clear to me from these discussions that while all of these countries know exactly where they want to go in terms of economic development, the various methods of achieving this ambition were not always clear. I took the opportunity of suggesting that they consider the economic developments which had taken place in Ireland in the last 30 years or so as a blueprint of how an economy can be transformed. We have the expertise to help them achieve their economic aims, an expertise which above all, I stressed, is independent and neutral. Such bilateral trade contacts are continuing. Next week I will again meet the Czechoslovak Minister for Foreign Trade. The following week CTT have a [819] trade mission in Hungary. I am planning to visit Poland, Hungary and Czechoslovakia before the end of June.

I am suggesting that Irish companies trading with Central and East European countries will have it easy but it is important not to overlook the potential. It is important to gain a foothold in markets which can develop and become very profitable. Nationally, it is important to help develop economic stability in those countries in Central and Eastern Europe when they need it most. Neither am I suggesting that all countries in Eastern Europe, nor all of the USSR, will be profitable markets. Irish companies must be selective in their marketing approach, as they are in the rest of Europe. They might profitably concentrate in regions of Eastern Europe and not necessarily those around the capitals.

Mr. Hogan: I want to thank you for allowing me to raise this matter. Insurance costs are too high. Insurance is a heavy burden for motorists, especially young drivers. It is even more serious for employment as many firms find the cost of employers' and public liability insurance prohibitive. Recent increases in insurance rates were prompted by an increase in the number of road accidents and the resulting claims, an increase in the cost of car repairs and spare parts, higher levels of damages awarded and the readjustment to compensate for excessive rate reductions to the competitive pressures over the past two years.

It cannot be stated often enough that insurance premiums are directly and inextricably linked to claims. In large part it is action by the individual, a firm, or even the community itself which will bring about a reduction in insurance costs ultimately.

The features in the insurance industry that need to be addressed include cost, availability of insurance, competition and safe practices. Contributing to the high [820] and escalating costs of insurance is the high level of uninsured driving, legal costs, vehicle defects, the claim consciousness of the Irish public and compensation levels. We are told that the frequency of whiplash claims here exceeds that of the UK several times over. In the Republic of Ireland in the past year or so the number of people making whiplash claims as a result of accidents has increased by 15 per cent. We are fast acquiring a reputation as the greatest claim conscious State in Europe.

The Minister for Industry and Commerce recently reacted erratically to the increasing level of insurance costs. First, he singled out the Bar Council of Ireland, then the courts and recently he spoke about changing the system of paying compensation. This haphazard and uncoordinated approach to the problem in my view, is not the solution. The Minister has had time to bring forward his radical plans to reduce insurance costs, but as he undoubtedly realises, it will take a concerted action by many Government Departments to bring about a reduction in motor insurance premiums over a period.

It is disappointing that the abolition of trial by jury in High Court personal injury actions has not brought the anticipated reduction in claim costs. It appears that the new system of trial by judge alone has led to an increase in the level of damages being awarded. I suppose much will depend on the outcome of the cases now before the Supreme Court, and the attitude that court will take to levels of compensation will signal the way compensation claims will go in future. The increase in the cost of claims coupled with the appreciable rise in the number of claims has forced many companies to increase premiums in recent months. There is no doubt that we are generous in the manner in which we compensate accident victims. The public will have to accept that changes in compensation, particularly for minor or less serious claims, will have to be made in order to reduce premiums, otherwise the consumer must be content to pay the high level of insurance premiums required to [821] fund such generous levels of compensation.

We already know the reasons for the high cost of motor insurance: our high accident rate, the high cost of settling claims under our present legal system, and the high incidence of uninsured driving. I am calling on the Minister to take a major initiative to reduce the level of road accidents. This would contribute enormously to a reduction in motor insurance costs and I ask the Minister to enter into discussions with his colleague, the Minister for the Environment, to do so. In fact, he has only to examine the number of hospital beds occupied by road accident victims to know the huge deployment of State resources to deal with road accidents. The following could contribute to a reduction in road accidents: a special Garda traffic squad to strictly enforce road traffic regulations; the elimination of accident black spots around the country; compulsory testing of vehicles over four years old; and a minimum standard of driving for provisional licence holders. The implementation of these measures would contribute to a reduction in insurance premiums.

There could be a reduction in claims if we had major reforms of court practices and procedures to reduce the level of fees to the legal profession, particularly since the abolition of the three counsel rule. Indeed, it has come to my notice that in spite of the abolition of the three counsel rule, the level of fees continues to remain as high as ever. It is for the Minister to initiate legislation to set the correct amount of fees which should be levied in this case.

The Garda Síochána have insufficient powers and they should have considerably more powers to impound all uninsured vehicles to eliminate uninsured driving. Payments for less serious claims, which are much higher than in the UK, should be agreed outside court, and this would make it less expensive. I am particularly alarmed that there seems to be no light at the end of the tunnel in the amelioration of the present financial [822] problems of the insurance industry. Various insurance companies have made substantial losses in 1989.

I am involved in the insurance business and I have a vested interest which I declare this evening in so far as I have been engaged in the insurance business for many years. The Guardian Royal Exchange Insurance Company had a policy in giving full open driving insurance and this opened the floodgates for provisional licence holders and young drivers who had little or no experience and the company have experienced many difficulties as a result of that policy. They have now restricted the cover they had prior to 1989 and it is now very difficult to get insurance cover for young drivers; indeed, if they can get cover, it is very expensive. Other companies have put restrictions on policy holders, and it is now difficult to get public liability insurance cheaply. The Minister will be aware that some businesses find the cost of appropriate public liability insurance to maintain their existing staff levels let alone increase staff to keep the business going, prohibitive.

Some ill informed commentators anticipate that premiums for policy holders will be reduced after the completion of the Internal Market. However, nothing could be further from the truth, when one considers that 75 per cent of the Irish insurance market is operated by foreign companies. The Government, insurers and policy holders have a role to play in bringing about a reduction in the number and cost of claims, thus reducing premium levels. I am calling on the Minister to urgently launch a concerted initiative so that consumers can expect to get a reduction in insurance premiums in the future.

Mr. O'Malley: It is clear that claims frequency, the cost of claims arising and underwriting losses are increasing. Therefore, one cannot expect insurance rates to stabilise when the costs which these rates must absorb are increasing. However, one must recognise that there are signs that motorists, as Deputy [823] Hogan has suggested, are becoming frustrated, to say the least, at the level of premiums they are required to pay. This is hardly surprising given that before the recent increases, our premiums were among the highest in the world, and certainly seemed to me to be the highest in Europe. This unsatisfactory state of affairs is not just sheer chance or bad luck. Premiums are so high because our costs, and in particular, our awards are among the highest in the world.

The crunch question, I suggest which society must ask itself is whether we want a continuation of these large awards and other heavy costs and the continuation of abnormally high premiums, or do we want normal costs and awards and normal premiums? Having asked ourselves that question, we and society generally must then endeavour to answer it honestly. Up until now we have been dishonest. We have said, in effect, we want higher awards than anywhere else, we want to bring more claims, both genuine and spurious, than anywhere else, but we do not want to pay more than anybody else. We cannot live this lie any longer. It is time to begin to face up to reality. I am the person who is expected primarily to give some guidance towards resolving these apparently conflicting interests. I believe we need to take a fundamental look at the manner in which and the extent to which compensation is determined and paid to those who sustain personal injuries in this country.

A large insurer recently asserted that the average Irish third party injury claim was six times more expensive than the equivalent figure in the United Kingdom. I ask, why this is so, and thus my recent references to the need to give consideration to the establishment of a tribunal for personal injury claims. Likewise, we need to consider the possibility, as other countries have also done, of no fault liability in such claims. I am not certain that no fault liability would necessarily be more satisfactory or cheaper, but some countries have found it so. If we had a simple system of awarding compensation, would it not be [824] cheaper and more efficient than our present cumbersome and prolonged court system? We need to start debating and answering these questions.

I am grateful to the Deputy for, at least in a very brief way, allowing us to begin that debate in this House tonight.

It is necessary that the debate be broadly based and not just confined to the predictable responses of vested interests, which unfortunately has been the case since I spoke on this matter a few days ago. Let people who are representing consumer interests and general interests, and not just vested interests, contribute to it. I have put forward some suggestions and although they may not be the wisest or the best in the world at least they are positive suggestions. I believe they will do much to alleviate the appalling problem we have, a problem that we cannot continue to suffer from and one that I will endeavour, notwithstanding the efforts of vested interests, to change and improve for the benefit of the people of this country, both in terms of business users and personal or social users of the various services concerned.

An Leas-Cheann Comhairle: We must be patient because the Minister for Justice has not been alerted to the fact that the debate concluded earlier than anticipated. I would ask Deputy Fennell if she would mind waiting until he is here.

Mr. O'Malley: If you wish, I will endeavour to reply to the debate. It is within my domain of competence.

Mrs. Fennell: I would like to thank you, a Leas-Cheann Comhairle, for allowing me to raise this important matter on the Adjournment and to thank the Minister opposite for waiting to reply. Although I am disappointed, I understand why the Minister for Justice is not here for the debate.

An unprecedented situation exists at present in our prisons, in that with only one exception — Wheatfield prison —[825] there are no visiting committees meeting. This means that within those prisons there is no independent body to which a prisoner can have recourse with a complaint, a grievance or even a plea for help with a personal problem. No other Minister, as far as I am aware, has ever so long-fingered these appointments. If this is not the Minister for Justice breaking the law, it certainly is a case of treating it with cavalier disregard. In section 2 of the Prisons (Visiting Committees) Act, 1925, it states: that there shall be constituted, in the manner provided by this section, a visiting committee for every general prison, every convict prison, and every such visiting committee shall consist of such numbers of responsible persons, not being more than 12 nor less than six — as the Minister shall think proper.

This is a statutory requirement and despite numerous requests from several Members of this House in the past four months, no action has been taken. I suggest the Minister's failure in this event goes beyond a likely breach of the law. For the people living in tense conditions, such as is the case in Mountjoy, having the facility to speak freely in private with a member of the visiting committee could make all the difference in preventing an outbreak of violence or indeed a suicide. I feel a dangerous situation prevails now.

Why has the Minister left this matter so long? Does he see the committees as an irritant which he could well do without? Perhaps the delay in question is linked with, but should not be linked with, the controversy over the 1988 Mountjoy Prison report, which has been with the Minister for 14 months and has still not been published. From the leaked version of the 1988 report in The Irish Times of Tuesday last it is a critical account of conditions and events. It calls for action, as has every other prison report before it.

The people who drew up this report, the facts of which are now in dispute, are deeply committed lay people who give a great deal of their time voluntarily. They take the job of being a prison watchdog very seriously. It was, I know, only after [826] very careful reflection and consideration that they made such a frank report and included it in the allegations of the actions of male prison officers in the women's prison during disturbances there on 31 December 1986. Such an allegation would not have been thoughtlessly made, and I am told that all the members of the former committee, despite the fact that they come from different party political affiliations, are standing as one behind their claim. There are other serious criticisms in the report about prison hygiene, shocking over-crowding, particularly during hot weather, and the awful conditions in the women's prison. All of these deserve answers. As was pointed out in the editorial in this morning's The Irish Times, there is mounting public unease about the conditions in Mountjoy Prison and it makes a call for action.

I think it is hard not to feel that the Minister really does not know what is happening in the prisons. Indeed he misled the Dáil in answer to questions from Deputy Jim O'Keeffe on 13 March last. To the question about the delay in publishing the report, he said — column 2293 of the Official Report:

The publication of the report referred to has been unavoidably delayed due to staff commitments to other areas of pressing urgent work within my Department. The report will be published in the next few weeks.

What does he mean by “staff commitments”? The truth is that there was an unholy row going on and it seems any old reason was good enough for the Dáil as long as he could keep the lid on the row. A further answer, again at column 2293, Question No. 142, on 13 March on the reason visiting committees have not been re-appointed says:

I am finalising arrangements for the appointment of visiting committees to prisons and places of detention and expect to appoint these committees at an early date.

What is “an early date”? Almost two [827] months later there has been no announcement and no action. If these are the visible signs of ministerial inaction on prison policy I dread to think what the extent of the inaction in areas that we cannot see and examine is.

It is most regrettable that the matter of prison administration and prison reform has to be dragged up so tediously on Adjournment Debates like this and that responses have to be dug out of the Minister and the Department and that they are so inadequate and lead to no real solutions. Will the Minister wait until we have a serious riot like Strangeways before taking effective action?

This debate and our Adjournment Debate of 7 March are only scratching at the surface of the real problem. What is needed is the setting of realistic targets for prison reform, based on the Whitaker report, and the allocation of funds on a phased basis for these reforms.

I accept, as does the editorial in this morning's The Irish Times, that in other areas of his Justice portfolio the Minister has shown enlightenment and taken decisive action but in the prison area his style is to lie low and do nothing. I would like to assure him that those of us who raise this matter do so from a genuine concern to push reform ahead as quickly as possible. I accept that the ideal solution, as envisaged by the Whitaker report recommendations, would be beyond the possibilities of public spending at the present time, but some reform initiatives and a response to the very real problems must be forthcoming. I believe it would be in his interest and certainly in the interests of prisoners if he would see those anxious for penal reform, such as the visiting committees, Members of this House, social workers and others, as allies and not adversaries.

I would make three recommendations to the Minister for serious consideration, all of them in the Whitaker report, and none would cost exorbitant amounts: 1. Appointment of an inspector of prisons with overall responsibility for monitoring their efficient, fair and orderly administration; 2. Alter the [828] method of appointment of visiting committees. Change delegated responsibilities and improve the procedures under which they operate; and 3. Appoint a full-time, permanent medical director to Mountjoy Prison who would be responsible for all forms of therapy for offenders.

In conclusion, I would ask the Minister to end the considerable bitterness over the 1988 Mountjoy report by publishing it, by thanking the prison visitors for their three-year contribution and either reappoint all of last year's committees or by the end of the week announce the new members. Most importantly, Deputy Burke should come into this House and state what his prison policy is and give other Members an opportunity to contribute objectively and practically to a debate which could deal comprehensively with the needs of our prison population and those who work in prisons.

Mr. O'Malley: On behalf of the Minister who is unavoidably absent due to the collapse of the earlier debate, I would say that the reports of prison visiting committees are published as part of the annual report on prisons and places of detention. The annual report on prisons and places of detention for 1988, which was printed some time ago, is being returned for printing in order to include in it a statement which contains the following:

This Annual Report, in accordance with normal practice, includes reports by the Visiting Committees attached to the various custodial institutions. One of these — the Report of the Mountjoy Visiting Committee — contained material which, in the Minister's judgement, required investigation prior to publication. The Report, which is expressed to be “for the calendar year 1988” states that—

We are appalled that male officers attired in helmets and visors and equipped with riot shields should chase and baton female prisoners in [829] enclosed areas. The use of such force even to quell such a disturbance is abusive. In the heat of the moment the excitement and fear of such confrontations is increased dramatically. The use of excessive force should be forbidden and new rules introduced to prevent its recurrence.

Neither the prison authorities nor the Department of Justice had any knowledge of any incident of the kind described taking place during 1988 or indeed of any incident prior to that period in which “excessive force” had been used or allegedly used. Because of the gravity of the allegation and its potentially serious implications for offenders and staff alike, it was obviously ncessary to investigate the matter.

The Visiting Committee, when contacted, acknowledged that no incident of the nature inferred had taken place during 1988. As a result of further investigation it emerged that they were referring to an incident which took place on 31 December 1986.

The prison records show that at 6.20 p.m. on that evening offenders in the recreation area began to behave in an aggressive manner towards the staff present — all of whom were female officers. They were complaining that they had no cigarettes and were informed by the staff that cigarettes would be supplied. By 7 p.m. the offenders had become more aggressive and began throwing chairs and other items at the staff. The alarm was sounded and male officers who had earlier been placed on stand-by as a precautionary measure were then called in to restore order. The disturbance was quickly brought under control.

The report of the Medical Orderly states that eight women proceeded to cut their arms and were treated for those injuries at the prison. Two of those concerned were escorted later to hospital and returned within an hour. Three further offenders were also [830] escorted to hospital and they, too, were returned within an hour.

Disturbances among female prisoners are normally dealt with by female officers. If, however, a situation arises where these officers consider that they require the assistance of male officers, this assistance will be provided. When a disturbance is sufficiently serious — when there is a clear risk of injury to staff or other offenders as there was on this occasion — the officers may, if the prison authorities deem it necessary, be supplied with batons and other protective equipment which is available.

It appears that this equipment was supplied to staff on the night in question. The disturbance at the prison was quickly brought under control but there was nothing to suggest that the degree of force used to bring this about was excessive.

The statement goes on to deal with a number of other points in relation to the visiting committee's allegation, and finally, it includes a letter on the matter which the Minister received from the legal advisers of the Prison Officers' Association.

Incidentally the Minister issued a press statement last week dealing with the visiting committee's allegation. Copies of the statement are available here should any Deputy wish to have one.

In relation to Deputy Fennell's query about the appointment of a medical director for Mountjoy the position is that interviews have been taking place this week for the post. The Minister expects to receive a recommendation from the Civil Service Commission and to be in a position to announce the appointment of a medical director very shortly.

On the question of overcrowding in prisons generally and particularly in Mountjoy, the position is that Wheatfield Prison which has 320 cells is being filled gradually. It is already two-thirds full and it will be fully occupied within the next few months. A new unit is to be constructed in Mountjoy for prisoners suffering from infectious diseases. It is clear [831] that significant progress is being made in providing additional accommodation.

In regard to the women's prison, where this unfortunate difficulty arose, the Minister has already stated on a number of occasions recently that it is not feasible, unfortunately, to close the women's prison at present. He is satisfied that the best interim solution is to have it fully refurbished which he is proceeding to have done at the earliest possible opportunity.

Mrs. Fennell: When will he be reappointing [832] the visiting committees? Has the Minister any information on that?

Mr. O'Malley: At the moment a visiting committee is appointed for Wheatfield. The term of office of the other committees expired on 31 December. The arrangements in relation to the appointment of visiting committees to the other prisons and places of detention are now being finalised. The Minister for Justice expects to appoint those committees very shortly.

The Dáil adjourned at 7.10 p.m. until 2.30 p.m. on Tuesday, 8 May 1990.

17. Mr. Spring asked the Minister for Tourism and Transport if any studies have been carried out by his Department to examine the consequences of the Channel Tunnel for transport policy for this country; and, if so, if he will give the main recommendations of same.

25. Mr. Barry asked the Minister for Tourism and Transport if he will investigate the possibility of establishing a boat-train link between Ireland and Britain to allow exporters benefit from the Channel Tunnel in 1995.

Minister for Tourism and Transport (Mr. S. Brennan): I propose to take Questions Nos. 17 and 25 together.

My Department are continuing to monitor closely developments in relation to the Channel Tunnel. The extent to [729] which our passenger and freight movements will benefit from the advent of the Channel Tunnel from June 1993 onwards will depend on the quality of the road and rail link between the Channel Tunnel and the ports on the west coast of Britain serving Ireland. As recently as 27 March 1990 I made my concern known about the necessity and importance of good roads and fact integrated rail links within Britain for Irish passenger and freight traffic to the British authorities.

As regards specific access transport options, Deputies will be aware that a consultancy study was recently commissioned by my Department to examine how access links between Ireland, Britain and the Continent of Europe can be improved. This study will also, of course, take account of developments in relation to the Channel Tunnel and the Single Market. The Commission of the European Communities is represented on the steering committee for the study. The situation regarding the possible impact of the Channel Tunnel on Ireland and possible options for improving access transport services will be reviewed in the light of the consultants' report which I expect to be completed in four to six weeks' time.

18. Mr. J. Bruton asked the Minister for Tourism and Transport the current number of applications on hand for road freight carriers licences; the average length of time from receipt of an application to the issue of the licence; and the basis for the statement made in a letter (details supplied) to the effect that he was confident that there would be an improvement in the situation in regard to the delay in the issuing of such licences in the coming months.

Minister for Tourism and Transport (Mr. S. Brennan): The Deputy will appreciate that the number of applications on hands changes constantly — it is therefore not possible to give exact figures. However, there are approximately 600 applications on hands at the [730] present time. Of these, about 200 contain all the necessary information and backup documentation; the balance are incomplete or incorrect in some respect.

The time from receipt of an application to the issue of a licence can vary considerably from case to case depending, for example, on the complexity of the application. In general, carriers' licences being issued now were applied for around the end of 1989.

I accept that this delay is far too long — as the Deputy was informed by letter of 7 February 1990, the present backlog has arisen for various reasons, including the switch of many companies from “own account” operations using their own fleets to owner driver based operations, where such vehicle owner driver will carry for reward and thus requires a licence; the high level of incorrect or incomplete applications submitted by hauliers; and the high level of inquiries from applicants.

Steps have already been taken to improve the situation. The staff in the licensing section have been reorganised into more efficient units. Specific staff have been designed to deal with the public, thus freeing their colleagues to get on with the job of processing licence applications. Telephone inquiries in the section have been restricted to public office hours. Incomplete applications are no longer accepted. Additional staff have been authorised to grant licences. These measures have already signficantly improved the situation. Until very recently the number of applications being received exceeded those being granted. This has not been reversed.

Much more importantly, however, regulations are now being prepared which will provide for a significant change from the present time consuming method of processing a licence to a system involving spot checks whereby applicants will submit an affidavit from an accountant or solicitor to the effect that all of the required documentation is in order. These regulations, which I expect to make within the next few months, should bring about a major reduction in the time taken to process a carrier's licence.

[731] At a recent meeting which I had with the Irish Road Haulage Association, I outlined these planned changes. I suggested to the association representatives that they should organise a seminar for their members at which a senior official from my Department would explain the proposed new system in detail. I am pleased to say that the Irish Road Hauliers Association have acted on my suggestion and the seminar is planned for later this month.

21. Mr. J. Mitchell asked the Minister for Tourism and Transport if he will consider the appointment of an independent, statutorily backed, accident investigation officer for air traffic accidents.

Minister for Tourism and Transport (Mr. S. Brennan): As is the case in relation to many aviation matters, the general framework and procedures for the investigation of aircraft and air traffic accidents is set by ICAO — the International Civil Aviation Organisation.

Under the provisions of the Air Navigation (Investigation of Accidents) Regulations, 1957, I, as Minister, may appoint an inspector of accidents to carry out an investigation into aircraft accidents and incidents. I am also empowered to appoint experts to act as advisers to the inspectors of accidents. There is also provision, in the regulation, for me to direct a competent person to hold a public inquiry into the accident.

The present Irish regulations need to be updated in the light of current requirements of ICAO and, following consultation with the industry and with IALPA in 1989, my Department are actively processing revisions to improve the procedures in relation to accident investigation legislation.

The question of the need for an independent investigation officer under the legislation will be considered in that context.

[732]

22. Mr. Barry asked the Minister for Tourism and Transport if he will discuss with the European Commission the possibility of treating a free roll-on roll-off ferry between Cork and a French port as infrastructure in order that Irish exporters will not be at a disadvantage after 1 January 1993.

23. Mr. Kenny asked the Minister for Tourism and Transport if his attention has been drawn to port cost differential and ferry charge differential to exporters from the Twenty-six Counties using the Larne/Stranraer route as against Dublin port; if his attention has further been drawn to the serious disadvantage which this represents to Irish based exporters; his proposals to deal with this; and if he will make a statement on the matter.

Minister for Tourism and Transport (Mr. S. Brennan): With the permission of the Ceann Comhairle, I propose to take Questions Nos. 22 and 23 together.

As I said in response to a similar parliamentary question in November last, it has been recognised for some time that Irish exporters are at a disadvantage vis-à-vis their Northern Ireland counterparts in relation to overall transport costs, including port and shipping charges. These and other factors such as frequency and capacity of shipping services and lower costs of Northern Ireland hauliers, have resulted in a loss of traffic to Northern Ireland ports.

The Government are aware that the quality and competitiveness of our access transport services must be improved if we are to take full advantage of the completion of the Single European Market in 1992. In that regard, the current consultancy study into sea and air freight access transport services, which I commissioned earlier this year and which is being carried out in conjunction with the European Commission, will examine, inter alia, existing and proposed shipping services from all our major ports, including Dublin and Cork, and will contain proposals for improving those services. It [733] will also examine any factors in the Irish transport sector which impose excessive costs on Irish exporters. I expect to receive the consultants' report within four to six weeks, following which discussions will take place on their findings with the European Commission. Pending receipt of the consultants' report, it would be premature for me to speculate about what action should be taken in any particular area.

24. Mr. Quinn asked the Minister for Tourism and Transport if he will outline the extent of activities between Aer Rianta and the Soviet authorities; the value of same to Aer Rianta; the extra jobs which have been created; and if he will make a statement on the matter.

Minister for Tourism and Transport (Mr. S. Brennan): Aer Rianta have a long standing commercial relationship with the Soviet Airline, Aeroflot, which operates air services from the USSR to South America via Shannon Airport.

In 1979 Aer Rianta entered into an agreement with Aeroflot to construct a special aviation fuel storage facility at Shannon which enabled Aeroflot to import Soviet fuel for their aircraft using Shannon Airport. This led in 1983 to a barter arrangement whereby Aer Rianta receive Soviet aviation fuel as payment for airport charges in respect of the Aeroflot aircraft using Shannon Airport. This aviation fuel, as well as fuel purchased from Aeroflot, is sold by Aer Rianta to other airlines at Shannon Airport. These arrangements are of considerable importance for Shannon. Last year, Aer Rianta's revenue from the sale of Soviet aviation fuel amounted to £5.5 million.

In addition Aer Rianta established at Shannon in 1988 a facility for the painting and refurbishing of Aeroflot aircraft. This project has led to the creation of 50 jobs and had a turnover of almost £5 million in 1989.

Aer Rianta's joint venture activities with Aeroflot in the Soviet Union commenced in 1988 with the opening of duty [734] free shops at Moscow Airport. Since then Aer Rianta's range of activities in the Soviet Union has expanded considerably and extends to: the operation of duty free shops at Leningrad International Airport which opened in mid 1989 — a bar was opened later in the year; the provision of in-flight duty free sales on all Aeroflot international flights out of Moscow; the management and sale of advertising space at Moscow and Leningrad Airports; and the operation of a downtown shopping centre in Leningrad.

I am informed by Aer Rianta that agreement has been reached on similar joint venture projects at other locations in the Soviet Union and a number of these will commence business in 1990. The joint venture projects in the Soviet Union generated turnover of just over £20 million in 1989 and gave rise to the creation of about 120 new jobs for Irish workers at Shannon and in the Soviet Union.

In addition to the direct employment created by all of these activities, there are other positive spin-off employment effects for Irish suppliers of goods and materials and also in the building and design sectors.

27. Mrs. Taylor-Quinn asked the Minister for Tourism and Transport if he will arrange for more direct flights between Shannon and the United Kingdom and mainland Europe, in light of recent developments; and if he will make a statement on the matter.

Minister for Tourism and Transport (Mr. S. Brennan): On the basis of the liberal arrangements which have been concluded with the UK and with our other EC partners, there are no regulatory constraints on the establishment of direct air services between Shannon Airport and points in the UK and most points in the rest of the Community.

The development of air passenger traffic at Shannon is being actively pursued by Aer Rianta and SFADCo and last March the two organisations jointly [735] launched a major new initiative called “Shannon Airport Marketing” with the task of increasing the range of scheduled air services serving Shannon airport over the next decade.

I can assure the Deputy that this initiative is being taken with my full support and encouragement.

28. Mr. L. Fitzgerald asked the Minister for Finance when a tax rebate will be paid to a person (details supplied) in County Wexford.

Minister for Finance (Mr. A. Reynolds): I have been advised by the Revenue Commissioners that, as the tax-payer's estimated income for the current year, 1990-91, is unlikely to exceed the relevant exemption threshold of £3,750, she is entitled to exemption from income tax. As amended certificate of tax free allowances granting exemption was issued to her on 30 April 1990. Any tax deducted from her county council pension since 6 April 1990 is refundable by the council on operation of this certificate.

The inspector of taxes has written to the taxpayer for the details required to carry out a review of her liability for 1989-90. Any tax found to have been overpaid on completion of the review will be refunded to her.

29. Mr. Hogan asked the Minister for Agriculture and Food when payment of a milk cessation scheme grant will be paid to a person (details supplied) in County Kilkenny.

Minister for Agriculture and Food (Mr. O'Kennedy): Payment of this year's instalment of the premium under the scheme has recently issued to the person named.

[736]

30. Mr. Hogan asked the Minister for Agriculture and Food when payment of a special beef premium and a calf premium will be made to a person (details supplied) in County Tipperary.

Minister for Agriculture and Food (Mr. O'Kennedy): Payments to this applicant under the 1989 special beef premium, calf premium and suckler cow premium schemes are being processed and will issue shortly.

31. Mrs. T. Ahearn asked the Minister for Agriculture and Food when land (details supplied) in County Tipperary which was purchased by the Land Commission will be sub-divided; the reason for the delay in this allocation; and if he will make a statement on the matter.

Minister for Agriculture and Food (Mr. O'Kennedy): This estate will be divided shortly.

32. Mrs. T. Ahearn asked the Minister for Agriculture and Food when an installation grant will be paid to a person (details supplied) in County Tipperary; and if he will make a statement on the matter.

Minister for Agriculture and Food (Mr. O'Kennedy): The grant in this case cannot be paid until the applicant satisfies certain requirements of the Land Registry.

33. Mr. Bradford asked the Minister for Agriculture and Food if the Government have discussed and finalised Ireland's submission regarding the extension and reclassification of disadvantaged areas; and if this submission has been sent to Brussels.

Minister for Agriculture and Food (Mr. O'Kennedy): The Government have discussed these proposals with a view to an early submission to the EC Commission.

[737]

34. Mr. Hogan asked the Minister for Labour the result of his inquiries under the Minimum Notice and Terms of Employment Act, 1973, and Unfair Dismissals Act, 1977, regarding a case (details supplied) in County Kilkenny; and if he will make a statement on the matter.

Minister for Labour (Mr. B. Ahern): The case referred to by the Deputy is currently before the Employment Appeals Tribunal, which is an independent statutory body. A hearing of the case will be held later this month.

35. Mr. Durkan asked the Minister for Social Welfare when investigations will be completed to enable full entitlements in respect of disability benefit contributions in the case of a person (details supplied) in County Kildare; and if he will make a statement on the matter.

Minister for Social Welfare (Dr. Woods): At the request of the person concerned investigations were initiated into the insurability of her employment during the period May 1988 to June 1989.

The investigations currently being carried out by a social welfare officer are near completion. However, the results of this investigation will not affect her entitlement to disability benefit which she claimed for the period from 4 September 1989 to 25 December 1989.

Entitlement to disability benefit for the period claimed is based on the 1987-88 contribution year and the person concerned had no contributions paid or credited in that year.

[738]

36. Mr. Durkan asked the Minister for Justice if he will allocate extra gardaí to the various stations in County Kildare with a view to assisting in the fight against crime having regard to increases in population and demands on the gardaí in general; and if he will make a statement on the matter.

Minister for Justice (Mr. Burke): Population is one of a number of factors which have to be considered in the allocation of Garda manpower but I do not accept that the level of manpower assigned to any particular area should be directly proportional to the population of that area.

The Garda authorities inform me that the current Garda strength assigned to stations in County Kildare is adequate to meet present policing needs and that manning levels in the county are being kept under continuing review.

37. Mr. Yates asked the Minister for the Environment when a new house grant inspection will take place for a person (details supplied) in County Wexford; if his attention has been drawn to the fact that such inspections are taking five months to complete; his views on whether this practice is acceptable; and the proposals he has to improve the situation; and if an appointment card will be issued to this person prior to the inspection.

Minister of State at the Department of the Environment (Mr. Connolly): An inspection of the house has now been carried out. Generally speaking, delays of the duration mentioned by the Deputy do not arise though a longer than normal period may occur in particular circumstances. The position is continuously monitored and, where necessary, steps by way of redeploying inspectors etc. are taken to minimise delays.

[739]

38. Mr. Connor asked the Minister for Health the reason he has failed to issue the circular letter to all the health boards clarifying the respective functions and duties of environmental health officers and veterinary officers in relation to meat inspections consequent to the Abbatoirs Act, 1987; and if and when he will issue this circular.

Minister for Health (Dr. O'Hanlon): Discussions are currently being finalised between my Department and the Department of Agriculture and Food in relation to this matter and I would expect that the circular would issue in the near future.

39. Mr. Farrelly asked the Minister for Health when costs of £409,000 incurred by the North Eastern Health Board as a result of the flu epidemic which ocurred in the first quarter of 1990 will be paid to the board.

Minister for Health (Dr. O'Hanlon): Last February I acknowledged in this House that the exceptional activity in our acute hospital service in December and January last involved additional cost to health agencies. I further indicated that the cost of the additional activity would be met by my Department in such a way that there would be no intrusion on planned service levels in 1990 and that the overall level of hospital activity would be maintained at the levels obtaining in the latter part of 1989. Discussions with the health agencies, including the North Eastern Health Board, to agree the relevant costs are ongoing.

40. Mrs. T. Ahearn asked the Minister for Education if she will classify a school (details supplied) in County Tipperary as disadvantaged; and if she will make a statement on the matter.

Minister for Education (Mrs. O'Rourke): The request of the school in question for disadvantaged status is one of a number of requests received from schools throughout the country in this regard.

My Department is at present carrying [740] out a review of the existing disadvantaged areas funds scheme and all of these applications are being considered in this context.

Accordingly, I am not in a position to make a statement in regard to this specific application at this time.

41. Mrs. T. Ahearn asked the Minister for Education the criteria under which a primary school can be classified disadvantaged; and if she will make a statement on the matter.

Minister for Education (Mrs. O'Rourke): The selection of schools to benefit from the special measures to assist national schools serving disadvantaged areas has been made hitherto in consultation with the Department's inspectors who are familiar with the particular circumstances of the schools in question. The inspectors submit recommendations to the Department based on the difficulties affecting the schools in question and taking account of the many educational, social and environmental factors relevant to each case.

However, a special working group was set up some time ago to review the criteria for identifying schools in disadvantaged areas.

This group has now submitted a report which is being examined at present. When this work is completed I will be in a position to make a statement on the matter.

42. Mr. Durkan asked the Minister for Education the extent to which psychological assessments are available in national schools throughout the country; the extent to which such service is required in these schools at present; and if she has any proposals to improve the degree of psychological assessments available to national schools; and if she will make a statment on the matter.

Minister for Education (Mrs. O'Rourke): Where authorities of individual national schools consider that a pupil [741] requires psychological assessment the matter is referred to the local director of community care of the appropriate health board. It is then for the director of community care to make arrangements for such an assessment to be carried out.

As the Deputy is aware, I have initiated pilot projects on the establishment of a psychological service for primary schools. These projects will operate in two areas of the country, one of which is located in an urban area and one in a mainly rural area. Experience of these projects should provide improved information on needs in relation to psychological assessment.

43. Mr. Durkan asked the Minister for Education if any funds are available in 1990 for an extension of facilities at Meánscoil Iognáid Rís, Naas, County Kildare; the full extent of proposed facilities; if current proposals will meet population requirements; if it is intended to provide these facilities when required; if they will be provided in the current or next terms; and if she will make a statement on the matter.

Minister for Education (Mrs. O'Rourke): The capital provision for school building is made on a global basis and no specific amounts are allocated for individual projects. As indicated in my reply to a previous question on 6 March 1990 the proposed extension to Meánscoil Iognáid Rís, Naas is being reviewed in the context of demographic trends affecting pupil enrolments in both the short term and long term. This review has yet to be completed and, therefore, I am not in a position to indicate the nature of the provision which will be made or when construction will commence.

[742]

44. Mr. G. Mitchell asked the Minister for Tourism and Transport the steps which have been taken since the Mayo train derailment of 1989 to improve safety at rail-crossings; and if he will make a statement on the matter.

Minister for Tourism and Transport (Mr. Brennan): The Board of Inquiry appointed by Iarnród Éireann in connection with the passenger train derailment near Claremorris, County Mayo, on 24 September 1989 has been examining the possibilities of eliminating and reducing hazards in the operation of accommodation level crossings.

I have been informed by CIE that the board's review of this matter is nearing completion and I expect to receive proposals from the company shortly in relation to additional measures or changes in existing procedures that may need to be implemented to improve safety at rail crossings.

In the meantime, Iarnród Éireann have at my request contacted the main farming organisations regarding the safe use of accommodation crossings by farmers. In addition all known users of such crossings have been visited by railway personnel and instructed on the safe and proper use of the crossings. A media campaign has also been launched and advertisements have appeared in the farming press and at marts and there has been a series of spot radio advertisements.

Finally, a national liaison committee consisting of representatives of Iarnród Éireann and the farming organisations has been established to discuss safety-related matters. Arising from this, regional committees representative of the company's local management and local farming interests have been established to ensure improved safety standards and procedures.