National Development Corporation Bill, 1985: Committee Stage.

Wednesday, 26 February 1986

Seanad Eireann Debate
Vol. 111 No. 9

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Section 1 agreed to.

Government amendment No. 1:

In page 4, subsection (1), lines 1 and 2, to delete “, Trade, Commerce and Tourism” and substitute “and Commerce”.

Minister for Industry and Commerce (Mr. Noonan,: Information on Michael Noonan  Zoom on Michael Noonan  Limerick East): This is a technical amendment. It is necessitated by the change in the title of the Minister from Minister for Industry, Trade, Commerce and Tourism to Minister for Industry and Commerce. The changes took place on 19 February. The same applies to official amendment No. 2.

Mrs. Honan: Information on Tras Honan  Zoom on Tras Honan  I appreciate that this is because of the re-shuffle last week in the Cabinet. First of all, I would like to congratulate the Minister sincerely and wish him well. I hope the Minister got the Ministry he wanted. He now is Minister for Industry and Commerce only. Last week, on Second Stage, when we put this Bill through we had a Minister for Industry, Trade, Commerce and Tourism. Whether he was too pleased about it or not I do not know, but Deputy John Bruton put a lot of this Bill through, and fair play to him. Have we now two [808] Ministers involved in this legislation? In the contributions on the Second Stage much emphasis was placed on how this Bill could benefit tourism, or where it might give more jobs. Now we find that tourism is gone away from you, Minister Noonan. Just to clear the lines, I appreciate that this is because of the change of Ministries and the change of titles. Is tourism gone now to another Minister, or where has it gone? Does that mean, then, that the parts of this Bill that might have something to do with tourism would not be under the control of your Department? I suppose your reply will be that it does not make any difference. Many contributions referred to tourism. Will they be covered at all when this board is set up, because tourism has gone from this Minister's portfolio?

Mr. Ferris: Information on Michael Ferris  Zoom on Michael Ferris  I understand Senator Honan's concern in this regard and I just want to clarify in my mind too. The reason, first of all, that we have an amendment is that with the restructuring of the Cabinet, portfolios and responsibilities, the Ministry responsible for the legislation and for ensuring that it functions is, in fact, the Minister for Industry and Commerce. We consider that, irrespective of which Department has responsibility for implementing the legislation or whether it is the Department in charge of forestry, tourism, fisheries, energy or anything else, the National Development Corporation could and should be involved in developments in such areas. I would take it that because the legislation is in one Department there is no embargo or any other Department or, indeed, any other Minister being involved. As I understand it, the function of the NDC is to stimulate equity investment from the private and public sector, and that could, and should, involve all the Departments, particularly those involved in the national resources of our country and their development. That would of course, include anything connected with tourism, fisheries, forestry and any other resource that we have.

[809]Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): I would like to thank Senator Honan for her very good wishes. I know she knows that I am a bit of a tourist myself so that I will be able to reply to any matters she would like to raise about tourism.

Mrs. Honan: Information on Tras Honan  Zoom on Tras Honan  A neighbour.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): What we have here is section 2, which is the definition section of the Bill. We have the agency, the Companies Acts, the corporation and so on down along the line until you come to the Minister. The Minister as defined, before the changes in ministerial title in my Department, means the Minister for Industry, Trade, Commerce and Tourism. So, wherever the Minister is mentioned in the Bill, up to now it meant Industry, Trade, Commerce and Tourism, because the title of my Department is now changed to its more traditional name, Industry and Commerce. Anywhere the Minister is referred to in the Bill as a matter of definition, it will now mean the Minister for Industry and Commerce. That is all that is involved here.

In so far as Senator Ferris is concerned, under the Bill it is the corporation, not the Minister or any individual Minister, who will evaluate investment decisions. All initiatives will be in the hands of the corporation, not in the hands of any individual Minister. While there are certain powers which are within the remit of the Minister for Industry and Commerce — and there are certain powers within the remit of the Minister for Finance and certain powers within the remit of the Minister for the Public Service in the Bill — none of those involve the decisionmaking process of what particular enterprise is aided by the provisions of this Bill. Those decisions are in the hands of the corporation. It will operate in that way. This is a technical change simply to allow for the fact that the Minister for Industry, Trade, Commerce and Tourism is now called the Minister for Industry and Commerce. The House is aware that the Minister of State who has been in charge of tourism in the past is still in [810] charge of tourism, but now he is reporting directly to the Minister for Fisheries and Forestry rather than the Minister for Industry and Commerce.

Senator Honan might be glad to know that in so far as SFADCo are concerned, all their functions including their tourist functions, and travel functions are within my remit.

Amendment agreed to.

Section 2, as amended, agreed to.

Question proposed: “That Section 3 stand part of the Bill”.

Mr. Harte: Information on John Jack Harte  Zoom on John Jack Harte  I want just a little bit of clarification. In section 3 (3) it states:

The Minister may by order amend the First or Second Schedule to this Act by adding the name of any body to either Schedule or deleting the name of any body there from.

It is a little bit difficult for me to try to get this point across. For example, would it be within the powers of the Minister, rather than the National Development Corporation in this case, to add something of a new nature, such as the construction industry or a construction federation or some body that might reform the construction industry? Is it within the capacity of the Minister to do a thing like that, or would it be within the capacity of the National Development Corporation?

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): It was difficult to draft precisely a definition of what a State-sponsored body actually was. Also, there was difficulty in actually defining a State-sponsored commercial enterprise. Rather than attempting a definition which would contain all of the bodies we are so familiar with in the first instance, like Córas Tráchtála, the IDA and so on, and in the second instance the State-sponsored commercial enterprises like CIE, Bord Na Móna, the ESB and so on, the advice on drafting was to have [811] two schedules, so that there would be absolutely no doubt. Rather than approaching the matter by an attempt to define, it was better to list all the companies involved. They have to be State-sponsored bodies to be in the list, either on the commercial enterprise side or on the State-sponsored side. The idea of adding a private construction company would not arise within the terms of the Bill at all. What is open to the Minister is this: if a new State enterprise or a new State body is set up, then the Minister, by Order before the Houses of the Oireachtas can make an addition; or if one of the bodies listed in the schedule discontinues its activities, and there is no point in having it there any more because it is no longer operational, the Minister can remove that from the list.

Mr. Harte: Information on John Jack Harte  Zoom on John Jack Harte  That reply is very adequate. I would ask the Minister now about the question of the power of the Minister to remove, by ministerial order, anybody from the First and Second Schedule. It would be a very serious step, for example, for a Minister by ministerial order to decide that he would take one or two things off the list, or one from either side of the list. Certainly in the nature of business if it was seen to be removed by ministerial order rather than an open debate, it could jeopardise — whether it was a private enterprise or a public enterprise — the functioning of that service or industry, or whatever it might be.

Mrs. Honan: Information on Tras Honan  Zoom on Tras Honan  It is only now that Senator Harte has talked about this. I have a holy horror of Ministers present, past and future, with due respect to the Minister and this new power. Does this provision on page 17 mean that a Minister, by a ministerial order, without coming to the Houses of the Oireachtas, could remove the Shannon Free Airport Development Company from the list? I can see now why the Minister took the ministry. As he said Shannon Free Airport Development Company would be under him. I was [812] wondering why he wanted that one, now I know. Having said that——

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): I will look after the jobs for the Senator there.

Mrs. Honan: Information on Tras Honan  Zoom on Tras Honan  I can look after the jobs in Clare myself. I do not need the Minister's help. With reference to section 3, I have a horror of Ministers giving this power to themselves and not bringing it back. We are the ones who must answer the questions. The Minister, I appreciate, is an elected person, as I am — but the people outside the House do not understand, and they accept very little now from politicians. They will not understand or accept this power which the Minister has taken to himself to remove any of the bodies mentioned on page 17. If that is so, without bringing it before the two Houses of the Oireachtas for debate, that is pretty powerful kind of stuff, with due respect to the Minister.

Mr. Howard: Information on Michael Howard  Zoom on Michael Howard  I wish to say to the Minister, as we are talking about section 3 which refers to the Schedule, that there are a number of organisations and bodies represented and listed amongst both Schedules. For example, there is An Foras Talúntais and the Agricultural Credit Corporation which would appear by their very nature, to be almost exclusively agricultural. I would like to know how they come to be included within the ambit of the Minister for Industry and Commerce.

Mr. Lynch: Information on Michael Lynch  Zoom on Michael Lynch  On a point of information on subsection (3), the Minister may by order amend the First Schedule by adding the name of anybody or by deleting the name of anybody from the Schedule. There was specific reference to bodies such as the IDA, CTT and Bord Fáilte. I would like to know how that will affect the performance of those particular bodies, as they now operate? Will it be expected to improve their performance or curtail it? At the present time the IDA or the other bodies I have mentioned are not able to cope with the ever-increasing spate of closures of factories across the [813] country at the present time. It has reached very serious proportions. As I said on Second Stage, I would prefer — and I would hope — that this House would debate some emergency legislation to add more power to those bodies as they now operate, to try to halt the slide to industrial chaos which we are on at present.

Mr. McGonagle: Information on Stephen McGonagle  Zoom on Stephen McGonagle  I want, first of all, to congratulate the Minister on his appointment. I seek some clarification. Senator Harte has gone away. The Minister, in his reply on section 3, has given us clarification. I want to say that I accept what the Minister has said about the problem of defining the State-sponsored bodies. It is best that they be put down in the two Schedules. When I was reading subsection (3) there was a question of considerable power in the Minister's hands. Then I came to the conclusion that one has to read section 4 with section 3. Would I be right in saying that the power is qualified? The only question I want further clarification on is in regard to section 4 (1) which reads:

...before each House of the Oireachtas as soon as may be after it is made and, if a resolution is passed by either House...

It does not say “both” Houses. By “either” House? Will the Minister clarify that, please?

An Cathaoirleach: Information on Patrick J. Reynolds  Zoom on Patrick J. Reynolds  I think the Senator is reading section 4.

Mr. McGonagle: Information on Stephen McGonagle  Zoom on Stephen McGonagle  Yes.

An Cathaoirleach: Information on Patrick J. Reynolds  Zoom on Patrick J. Reynolds  We will be getting to it in a minute.

Professor Hillery: Information on Brian J. Hillery  Zoom on Brian J. Hillery  Could I just ask the Minister for an assurance that the deletion of one of the listed bodies in either the First or the Second Schedule will only take place if that body totally ceases operation?

Mr. Ferris: Information on Michael Ferris  Zoom on Michael Ferris  Senator McGonagle has dealt with some of the points. The first [814] question by Senator Harte was a very relevant one. The Minister answered it on the basis of the number of State-sponsored bodies and State-sponsored commercial enterprises which we have now in the country. Under this section the Government are empowered at any time to include a new semi-State body. If it was not provided for in this Schedule it would mean that we would have to relegislate in order to include it. This enabling section allows the Minister to add to it or take from it, as Senator Hillery said, if it ceases. The only way that can be done is under section 4, by debating it in the House whereby agreement would be reached. I do not want to intermingle sections 3 and 4, but it is quite clear to us what exactly the Minister wants to do. Either we legislate for what we know now with the power to add if the occasion arises, or we will be tying ourselves up, as we were originally, to the particular names, and if any technical change happened we would have to legislate again. It is difficult for the House to comprehend it, but when trying to deal with legislation it is the only way. Provided that the Minister's order, adding to or taking from the Schedules, is debated publicly here and the reasons given publicly and a vote taken, only then can that power be given to the Minister. It is confined. It is not a positive but a negative way to do it. I would prefer it to be more positive, so that before the Minister's order was confirmed a positive affirmation would be needed in the House rather than it should be dealt with under section 4. We will probably deal with it better when discussing section 4.

An Cathaoirleach: Information on Patrick J. Reynolds  Zoom on Patrick J. Reynolds  We are only on section 3. The Minister to reply to section 3.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): I think the major proposals in this Bill are in section 10. If I could refer the Senators to section 10 (1) (b), one of the powers that the new corporation will have will be “to invest, in consultation, where appropriate, with State-sponsored bodies”, etc. to the end of the section. [815] Rather than trying to define a State-sponsored body, they are listed in two schedules. We are talking about the power of the NDC to act under the mandate given in section 10 (1) (b). Where it refers to State-sponsored bodies that is spelt out in the two Schedules. That is all that is involved. The power of the Minister to add or substract from that list simply refers to the list of State-sponsored bodies that it would be appropriate for the NDC to enter into arrangements with. If a new State-sponsored body was created, you can see the need for addition. The need for substraction would only occur when a State-sponsored body would cease completely to act in a particular way. There might be a case for deleting it then, or there might be a case for just leaving it in the Schedule, if it did not do anybody any harm.

I could envisage a situation where the functions of a State-sponsored body could be subsumed in a new State-sponsored body. If one was adding a new State-sponsored body, it might be appropriate to delete a State-sponsored body that was no longer active and whose functions had been subsumed in a new one. That is all that is in question here. The mechanism for addition or substraction is in section 4, which is coming up. It does require to be placed before both Houses. The possibility is there, in both Houses, to reject that. If one looks at section 4 (2), it states that if either House rejects the proposition, then the Minister cannot act. The power of the Minister is curbed by the Dáil and by the Seanad, as is appropriate.

Question put and agreed to.

Question proposed: “That section 4 stand part of the Bill”.

Mr. McGonagle: Information on Stephen McGonagle  Zoom on Stephen McGonagle  I think the Minister has actually spelt it out clearly that it refers to a resolution passed by either House. That should be understood. It is not both Houses; it is either House. Would that be correct?

[816]Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): That is correct. Section 4 (2) states: “... a resolution approving of the draft has been passed by each such House.”

Question put and agreed to.

Section 5 agreed to.

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

Professor Hillery: Information on Brian J. Hillery  Zoom on Brian J. Hillery  Could I take this opportunity of congratulating the Minister on his appointment to his present Ministry and to wish him well?

Mr. O'Leary: Information on Sean A OLeary  Zoom on Sean A OLeary  Could I take the opportuntiy of congratulating the Minister for Industry and Commerce on his well-deserved promotion? He will always find a warm welcome in this House from this quarter. He can rest assured that he will get the same warm reception as he always got.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): When is the vote?

Mr. O'Leary: Information on Sean A OLeary  Zoom on Sean A OLeary  I did not put down an amendment, because I did not realise that you were going to be the Minister but if I had I would have, of course.

On section 6, I wonder if the Minister is satisfied with the whole procedure that has been implemented. He seems to be doing two contradictory things. On the one hand he seems to be establishing what is, in effect, a State company with certain criteria and, indeed, part of the memorandum and articles of association being laid down by an Act of the Oireachtas. On the other hand the Minister is establishing the company under the Companies Act. There seems to be a certain contradiction there. As the Minister will be aware, under the Companies Act the registrar has certain powers and duties with regard to the question of refusing to register or not refusing to [817] register a company of a particular name. What we are effectively doing is putting on top of that situation a duty on the Minister to register and presumably by implication a duty on the registrar to accept the registration of a particular company of a particular name by statutory authority of the Oireachtas. It appears to me that that could in certain circumstances be in conflict with the registrar's other duties.

We have examples of that recently. As we go through this Bill there are one or two cases where this will show up to be extremely difficult. I raise it under section 6 because under section 6 we say: that “a limited company (in this Act referred to as ‘the Corporation’) conforming to the conditions laid down in this act shall be formed and registered under the Companies Acts”. What is the position if the Minister went to the registrar and said, “I want to establish a company called the National Development Corporation Limited. It conforms with the conditions laid down in the National Development Corporation Act, 1986” and the registrar says: “Well, unfortunately it does not conform with my interpretation of my duties under the Companies Act”? We could have a situation where we had two things in conflict. I do not think we adequately covered that. There may be some section in the Bill that covers it. I do not see it. I have a similar comment to make with regard to the question of ceasing the operation or dissolving the previous agency. The Minister might like to prepare to answer queries about this point, which I will be raising again.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): The National Enterprise Agency and all its powers, responsibilities, liabilities, and so on, will be subsumed in the new company. The Government attached great importance to the National Development Corporation and decided to give it legislative backing. Theoretically it could have been instructed me, or somebody in my Department, to register a private company and proceed from there, but it decided in the first instance to bring it before the Houses of the Oireachtas, [818] because of the importance attached to it, and give it the legislative framework. Because the corporation will be in the commercial world, it will be a commercial body and it will be dealing with companies in a commercial manner. For that reason the corporation is being registered as a private limited company. Most of its activity will be involved in dealing with other private limited companies. On the question of the Houses of the Oireachtas imposing a duty on the registrar to register, that is not so. Discussions have taken place with the registrar but the registrar retains his powers and the limited company which will be set up here will have to comply in full company law and will have to operate like any other private company.

We are very interested that from the start it would be known publicly that the NDC is to operate on commercial criteria like any other private company in the commercial world. For that reason this mechanism has been devised. There are steps taken to enable the company to be formed and registered under the Companies Act and to have its memorandum and articles of association drafted. A firm of solicitors have been engaged to carry out the necessary drafting. Already, there is a draft of the memo, and articles have been prepared. These are the subject of discussions between the Department of Industry and Commerce and the solicitors I have mentioned. They cannot be finalised until the legislation has been passed by the Oireachtas. However, by having the drafting at an advanced stage it will enable the company to be formed at the earliest possible date. I take the points made by Senators in dealing with previous sections. It is important that a new initiative and a new dynamic should enter the body politic and enter the commercial life of the economy of the country in order to create jobs but the criteria here are commercial and will continue to be commercial.

Mr. O'Leary: Information on Sean A OLeary  Zoom on Sean A OLeary  I support the Minister's determination to bring this matter into the public arena. That is the correct way of doing it. The Minister is right. For a [819] company and the National Development Corporation of this size and significance it is right and proper that the establishment of the company should be discussed by the Oireachtas and decided on by the Oireachtas. I am not arguing with the Minister on that point. I support the Minister in that regard. I am not arguing with the Minister with regard to the question that it is also worthwhile that it should be registered as a limited liability company under the Companies Act. I am merely seeking to suggest that there are certain parts of this Bill, for example, which state that the name of the company shall be the National Development Corporation. I will not even attempt to pronounce the name in the first official language. That is a duty which has been imposed on the Minister in establishing this company. Therefore, to that extent alone we are pre-empting the right of the Registrar of Companies to say “I do not consider that name suitable.” I am not suggesting with regard to a matter like the name that he is going to adopt that attitude. I use it only as an example.

There are, I am sure, within this Bill many other cases where a duty is being imposed on the Minister and on those who are establishing the company which might at some time in the future conflict with the duty of the Registrar and, therefore, I would have thought that consideration would be given to some kind of a saving clause which would enable the Minister or the Registrar not to have this potential for conflict in the future. It is not the first time that this has been used in the establishment of State-sponsored bodies. Some State-sponsored bodies have been established by Acts of the Oireachtas directly; others have been established by limited liability companies under the Companies Act. Different systems have been used. It strikes me that there is a potential for conflict, which I think the Minister obviously recognises. I am not suggesting that it exists as it is in this Bill, but the potential for conflict does exist. I wonder whether it should be addressed in the Bill and the position clarified that there would not be any [820] problem in the future regarding this type of legislation. I am not pressing the Minister any further than that, but I just want to make that point.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): The Registrar of Companies is an officer of my Department. He is aware of what we are doing and he is aware of the legislation. Some discussions have taken place with him. While it is theoretically possible that the difficulties pointed out by Senator O'Leary concerning the name of the company and the registration of the company might arise, in the practical situation, with discussions taking place and having taken place for some time, I do not envisage any problem with this. It would be difficult to proceed without a name on the company. If we were to say that the National Development Corporation title gives a particular difficulty, any other title one could dream up could also potentially give a difficulty. It would be difficult to proceed without putting a name on what we are doing. I do not envisage any practical difficulty. Once the company is registered it will have to comply with the full corpus of company law the same as any other private company.

Question put and agreed to.

Question proposed: “That section 7 stand part of the Bill.”

Professor Hillery: Information on Brian J. Hillery  Zoom on Brian J. Hillery  This section refers to the vesting day. I should like to ask the Minister what his best estimate is, as of now, for vesting day. It will be evident from what I said on Second Stage that I felt that the enactment of this legislation was a step in the wrong direction. I have no difficulty with the idea of an investment agency in principle but rather I think the emphasis should be on creating a climate where investment would be possible. I argued that on Second Stage. That having been said, this legislation will for sure pass through the Seanad, be signed by the President and duly become law. Given that its primary objective is to [821] assist in relieving the grave unemployment problem facing the country and, in addition to that, given the forecast today by the ESRI that by 1990 we will still have 250,000 people on the dole, it seems to me that the vesting day is vital if this body is to work out in practice at all in meeting its primary objective. Consequently, I would ask the Minister to give his best estimate of vesting day so that the corporation can get down to business at the earliest possible date.

Mr. Ferris: Information on Michael Ferris  Zoom on Michael Ferris  We have converted you at last.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): I do not accept that the objectives of an enterprise agency, as Senator Hillery refers to the NDC, and the establishing of an investment climate in a country are exclusive, or need be exclusive, and certainly the Government do not see them as exclusive. Obviously, we are interested in and will continue to be interested in taking steps to establish the proper investment. environment and atmosphere in this country. It is also fair to say that an investment agency can play a very important role. For many years now we seem to lack the sense of entrepreneurial skill and spirit that is in other countries. There is a vacuum which the NDC will fill, and will fill successfully, provided everybody is clear that the Bill is only allowing the company to operate on commercial criteria. It has to operate on commercial criteria. That is spelt out in every subsection of section 10.

In regard to the vesting date, I would like the company to be vested as quickly as possible. There are a number of considerations, the primary one is how soon the legislation can pass through this House and be signed into law by the President. Obviously, we cannot vest before that. I am very conscious of the desire to vest very quickly. A company of solicitors are preparing in advance the memorandum and articles of association which are necessary to set up the private limited company to which I referred. There are other considerations as well, which should not necessarily delay the [822] Bill, but they have to be in one's mind when one is selecting a vesting day. For accounting purposes it might be preferable for the NDC to commence operations from the first day of a month or the first day of a quarter. Also it is worth remembering that the National Enterprise Agency might need some time to tidy up business on hands, because its functions, activities and liabilities are being subsumed in the NDC. Also a full board of directors has to be agreed and appointed. Certainly, it would be my intention to proceed as quickly as possible as soon as the Seanad passes the legislation.

Mr. Lynch: Information on Michael Lynch  Zoom on Michael Lynch  At this point I should like to apologise for not welcoming the Minister. It is not that I do not welcome the Minister. He knows the high esteem in which I hold him. I always had respect for him as Minister in his former capacity. I formally welcome him to this House.

The Minister referred to the entrepreneurs. In my Second Stage contribution I mentioned that at present entrepreneurs are handicapped in many ways by the conglomeration of State agencies that one has to go through to obtain approval for a project. I would like some assurance that the National Development Corporation will help to remove some of those handicaps. I would also like to ask the Minister to examine the report of the Joint Committee on Small Businesses. This is an excellent report and recommends the establishment of one-stop shops which would involve the agency.

An Leas-Chathaoirleach:  I am afraid I will have to bring you back to section 7 of the Bill.

Mr. Lynch: Information on Michael Lynch  Zoom on Michael Lynch  It has some relevance to this section and for my approval of the section. We would do anything to help the industrial sector in the country.

Question put and agreed to.

Sections 8 and 9 agreed to.

Question proposed: “That section 10 stand part of the Bill.”

Mr. O'Leary: Information on Sean A OLeary  Zoom on Sean A OLeary  Section 10 is a blockbuster which is hard to comprehend in its entirety. The method of debate we use means that we have to try to comprehend it in its entirety. I should like to draw the attention of the House to the fact that it can be divided into three sections. The first section, which is subsections (1) and (2), deals with the objects of the corporation. Subsection (3) deals with the powers of the corporation. There are various subsidiary sections beyond that — subsections (4), (5) and (6). There appears to be a well-established difference between what the object of a company is and what its powers are. It is important that we should see whether the objects of the corporation as stated here are drawn widely enough to enable the Minister to do all the things which he wants to do under the legislation. I have no objection to the breadth of the drawing of these objects. The difference between objects and powers could be simply laid down as follows. The objects of a corporation or company are the things for which it is established and which it may lawfully do. The powers of a corporation on the other hand gives the company the power to do something but only in so far as they are consistent with the objects.

The objects take precedence. The principal objects are laid down in subsections (1) and (2). They are the overriding authority under which the National Development Corporation will act. Certain powers are given in subsection (3) which, in so far as those powers are consistent with the objects, they can be carried out by the corporation. If any of the powers are inconsistent with the objects they cannot be done. In all the objects as laid out here the power to sell, realise or otherwise dispose of the investment, which because of this revolving fund mechanism, is an essential part of the [824] idea of the National Development Corporation — that the same money can be used over and over again to provide more and more useful employment in the public sector. This does not appear in the principal objects in a direct fashion. The principal objects merely say that you can establish, you can assist, you can invest, but it never says that you can devest, that you can sell. The power to realise is done only with the object of investing somewhere else. It appears to be inadequately laid out in the principal objects of the corporation. It is referred to indirectly in section 10 (2), which states:

In carrying out its objects the Corporation shall have regard to the general duties under section 13.

Section 13 refers to the question of the realisation of investments. It would be more straightforward and certain if a provision was included in the Bill giving the corporation, as one of its objectives, the object of realising, selling or disposing of its investments. Leaving aside the real meaning of subsection (2), together with section 13 to which it refers, nowhere within the objects clause as drafted before us in the power to sell, realise or otherwise dispose of the investments granted. The granting to the corporation of a power to do that is not sufficient to give the company that power unless it is at least consistent with the principal objects of the corporation as stated in the memorandum. Judge Ronan Keane, a distinguished High Court Judge, recently published a book entitled Company Law in the Republic of Ireland. Reference is made as follows at page 45:

Distinction between objects powers and objects

The powers of a company must be carefully distinguished from its objects. The objects clause, for example, will frequently authorise the company to borrow money; but in the case of most companies this is not an object of the company properly speaking but rather a power which it requires to achieve its objects. As we have seen, [825] in addition to powers expressly conferred, a company may also enjoy implied powers which it may require to attain its stated objects. But such powers, whether conferred expressly or by implication, may not be used for purposes which are themselves ultra vires or for an object not stated in the memorandum.

If one of the principal objects of the company is to operate the revolving fund mechanism and to invest in companies and as they come to fruition to devest themselves so that more money is available for investing in other companies, it would appear to me that it would be better draftsmanship if the object to sell, realise or otherwise dispose of the investments was included among the principal objects of the company.

I understand that this is a very technical argument. I do not expect the Minister to give an immediate answer. I would like the Minister to give the matter some consideration because I am concerned about it. It would be helpful to the Minister and to the corporation also because, in establishing a corporation like this by an Act of the Oireachtas, we are limiting to a certain extent the freedom of operation of the corporation. I am anxious that that limitation be minimal and that the maximum amount of commercial freedom be given to the corporation. I know that the Minister shares my objective and it is in that spirit that I make this observation concerning the drafting of section 10 of the Bill.

Mr. McGonagle: Information on Stephen McGonagle  Zoom on Stephen McGonagle  I am glad that Senator O'Leary has raised this point. I am rather confused about it. I am satisfied that the corporation has the power. The power is the means; the objects are an end. Having read the Bill, I came to the conclusion that the power in subection (3) (a) “to sell, realise or otherwise dispose of its investments”— and Senator O'Leary has raised a niggling doubt in my mind — that the Bill would be stronger if that “sell, realise or dispose of its investments” was making a contribution to the revolving fund, which is the [826] dynamic. The heart of the matter is in section 10. I would find it very difficult to draft any kind of amendment. If “to sell, realise or otherwise dispose of its investments” is to be transferred under the heading of “objects”, that is a legal technicality that I am not prepared to say anything about. I accept what Senator O'Leary has said. When speaking on Second Stage I said I had accepted that the revolving fund had the power and the authority to sell, use their profit margins, surplus values, or even to sell a project to realise or otherwise dispose of its investments. Now that a doubt exists as between means and ends, the power to me is a means or an instrument. I would like the Minister to clarify that now, because a niggling doubt has been raised in the legal sense.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): I should like to thank Senators for their contributions. Anything that is said by way of debate here will be carefully considered. I should like to draw the attention of Senators to section 13 (b) where there is a general duty on the corporation to carry out its objects and that shall include the realisation of investments made by it as soon as it is financially and commercially prudent etc.

Section 10 (1) (b) states:

The principal object of the Corporation shall be stated in its memorandum of association to be—

(1) to establish and maintain (as soon as practicable after the vesting day) an investment fund which shall be known as “the Revolving Investment Fund for Employment”, into which there shall be paid any moneys realised by the Corporation on investments,

The revolving fund is quite clearly stated in the objectives. The implication of paying moneys into the revolving fund is very clear there in carrying into effect the power vested in the corporation under section 13. To enable it to do so subsection (3) (a) gives the power to sell, realise or otherwise dispose of its investments. In referring to Justice [827] Keane's point which is very valid, Senator O'Leary will note from subsection (3) (i) to borrow temporarily is one of the powers and again it is in accordance with Justice Keane. It is in the powers rather than in the objectives.

Finally, I would like to point out that subsection (4) and (5) are, in effect, catch-all saving clauses. Subsection (4) says:

Nothing in this section shall prevent or restrict the inclusion among the objects of the Corporation as stated in the memorandum of association of all such objects and powers as are reasonably necessary or proper for or incidental or ancillary to the due attainment of the principal objects aforesaid and are not inconsistent with this Act.

Subsection (5) says:

The Corporation shall have power to do anything which appears to be requisite to or which appears to it to facilitate the performance by it of any of its objects as specified in this Act or in its memorandum of association and is not inconsistent with any enactment for the time being in force.

Section 13, together with 10 (1) (l), together with the powers to sell and transact as in section 10 (3) (a), and then the catch-all subsections, if I may refer to them as such, certainly will enable the solicitors who are undertaking the task to draw up a memorandum of association where the objectives of the company will be very clearly stated.

Finally, the point made by Senator O'Leary and commented on by Senator McGonagle will now be referred to the firm of solicitors who are drawing up the memorandum of association so that they can avail of the catch-all provisions of subsections (4) and (5) to make absolutely sure that the memorandum of the company will state clearly the objectives and that there will be no difficulty.

Mr. O'Leary: Information on Sean A OLeary  Zoom on Sean A OLeary  I agree with the analysis carried out by the Minister. The only [828] reasonable conclusion one could come to is that the power is there. If we are to have something as basic to the work of the National Development Corporation as selling, there should be a specific objective to sell. I do not disagree with the Minister that all these things put together can be construed as making one of the objects of the company to sell the investments from time to time and there is obviously the power to do this. There is no reason why a specific objective of that kind could not be included. I am happy with the Minister's suggestion that he will bring the matter to the attention of those who will be drawing up the additional objectives which fall within the power contained in section 10 (4).

Mr. Harte: Information on John Jack Harte  Zoom on John Jack Harte  Under section 6 the Minister will set the machinery in motion to have a limited company set up by the corporation. Having sought some advice, I understand there is no conflict between a limited company and a holding company. Subsection (1) (e) states:

to assist (financially or otherwise), manage or act as a holding company for any State-sponsored commercial enterprise...which, in the opinion of the Corporation... has reasonable prospects of profitability, development, expansion, growth or providing viable employment;

For example, does the word “otherwise” mean that the corporation, which will be set up as a limited company and acting as a holding company, would, have the authority to call in one of the State bodies such as AnCO, the Industrial Training Authority, because they think the people are not properly trained? Fóir Teoranta will be going out of existence. But will Córas Tráchtála, the Institute for Industrial Research and Standards and the Industrial Credit Corporation be within the powers of the Minister? I know the IDA cannot come into this because it is a different matter. But could the onus be on the corporation to act on their own initiative to bring in those particular matters to make it viable?

[829]Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): Section 10 (1) (e) gives power to manage or to act as a holding company for State-sponsored commercial enterprises. This refers only to those State-sponsored commercial enterprises established after the passing of this Act, so it would not apply to companies before the passing of the Act. It is a power which I do not think the company will use very widely in the immediate future, but the power is there notwithstanding this. The Government decided that the NDC should be empowered to act as a holding company for any new State enterprises established after the passing of the Act. It is intended that the NDC could provide a valuable source of advice and expertise and have representatives on new State enterprises engaged in new activities. In practice it is not envisaged that the holding company role will be a widely used power of the NDC's portfolio. It is there as a permissible power. I am of the opinion that the corporation will be better engaged in setting up new enterprises and investing in new enterprises rather than engaging in any type of holding company activity which could become a permanent burden as against the developmental role which is envisaged for the corporation. But if the corporation should decide to exercise the power then the new State body must fulfil the profitability criteria which it has in common with all the other NDC investments.

Question put and agreed to.

Question proposed: “That section 11 stand part of the Bill.”

Professor Hillery: Information on Brian J. Hillery  Zoom on Brian J. Hillery  In opening the debate on Second Stage the Minister at the time, Deputy J. Bruton, said that it was the Government's intention that members of the board of the NDC will not be appointed because of their political or ideological allegiance. I fully subscribe to that view and I will carefully watch the appointments of the directors to ensure that the Minister's and the [830] Government's undertaking in that regard is fulfilled. In addition I should like to refer specifically to section 11 (2) (d) which states:

the remuneration of the chairman and the directors (other than the managing director) shall be determined by the Minister with the consent of the Minister for the Public Service.

If the right people with proven commercial records and appropriate expertise are willing to serve on this board then they should be remunerated in a realistic way. The pittance which applies to board membership of State-sponsored bodies at present is grossly inadequate. For instance, Fóir Teoranta is named in the First Schedule. I understand that the board of Fóir Teoranta meet two days per week. That is an enormous demand on the board members and if the directors of the NDC are to make a worthwhile contribution to the affairs of the corporation then this will necessitate time and commitment. Therefore, realistic fees should be paid to them. The revision of these fees is now grossly overdue and if the right people are to be attracted with the appropriate expertise, then they should be paid accordingly for the very valuable time they will be investing in the board of the NDC.

Mr. M. Higgins: Information on Michael D. Higgins  Zoom on Michael D. Higgins  On this section of the Bill I should like to allude to a point I made in my Second Stage speech which it is more appropriate to develop now and which directly relates to the comments which Senator Hillery has been making. I agree with those who say that the board of directors must be the most efficient possible and that they should be appointed on a basis that is not one of political partisanship. This is like saying that one is against sin to some degree. I want to take it a step further and say, and here I imagine there might not be such unanimous agreement, that it is an inevitable logic from the kind of speech I made on Second Stage that the board of directors must clearly be people who believe in the capacity of the State sector. I emphasise that point because it will be [831] very difficult to find the kind of innovative intelligence that is at once combined with commercial capacity, that at the same time has that high level of public service dedication that will forego opportunities in the private sector to serve on the board of the NDC.

The NDC will be one of the major State-led and initiated corporate entities working abroad. Remember, its great strength will be the underwriting of it by the State in the end. I can give examples of that in so far as, in relation to the sale of services abroad in the Arab countries, there is every evidence that people on the one hand want to avoid direct State-run companies because of the political embarrassment involved in the changing of contracts. They want to deal with, at the same time, State-endorsed companies of a semi-State kind. In the NDC you are getting a corporate entity with an immense flexibility and the kind of guarantees that make it a very competitive bidder for international contracts, without some of the inhibitions. The very worst thing that could happen to it would be that people who are either not committed philosophically or in practice to the State sector, be appointed to its board. It would be quite wrong of such people to find a home in the NDC. There is a record of that in Ireland.

On Second Stage Senators were quoting all sorts of examples of successful people all round the place who are available to be chosen to serve on the board of directors, which is specifically mentioned in section 11 of this Bill. May I say that the semi-State and State sector in Ireland is replete with examples of people who were appointed, not only perhaps — and we can all argue about this — on a basis of political partisanship, but who did not believe in the concept of the public and State sectors. They certainly did nothing at all in relation to making the case for there being a large public acceptance of a State role in legal investment, even in such matters as the provision of utilities.

The board of Córas lompair Éireann is a clear example of this. It had a clear [832] disability in relation to a number of people who served on that board who were not committed to doing either of two things, either enhancing and expanding the State transport sector or if you were on the board and you wanted to look at it from a board perspective and you wanted to make the case for both increased capital sums and current expenditure, it behoved you to try and separate out how much of the provision was being made for social purposes and how much was being made for economic purposes. You had to do this if you were to try to beat off an approach which said that State and semi-State companies had to operate on purely commercial criteria. You had this tweedledum and twiddledee saying they are there for social purposes, which they are when something is being closed down, and they are there for commercial purposes when they are making a profit. I very much agree with those Senators who are expressing concern here.

I want to place it on record that I want to see on the board of the NDC, people who are committed and who will commit themselves to the innovative idea and minority view in Ireland, that the State is doing something totally new, that it believes in the State sector, that it believes in a State sector that will trade abroad, that it believes in developing research and development that has been developed by the State in turning it into a commercial, remunerative enterprise. It is not a matter of which persons are on this board, it is the kind of person.

I do not agree that it is a terrible mistake to think that people will only be motivated by high salaries. I certainly think if people are doing something, as so many of them will need to do, if they need to work seven days a week, as many of the people who are involved in this kind of enterprising activity in the past in other countries have, and if they are required to travel abroad, and if they are required to make great personal sacrifices, I think they should be properly remunerated for it. Of course, I agree with that. I am saying that the history of these type of boards in every country shows [833] that what is most important is the mental orientation of the people involved. That is what should govern things.

I certainly do not see where all these successful people are all round the place who have been selling services abroad in a private capacity and who are waiting to lend their skills if only they can be remunerated. If they are patriotic why are they not offering to do so now? Where are the projects they are sending in to the State? Where are their public statements in this regard? There is a great deal of huff and puff about all of this. There is a notion in the country that the person who could do the trick at the races for himself might eventually be someone who could run a horse that would save the fortunes of the parish. I object to the crudeness of all of that.

Section 11 is most important. What is important in it is that competent people — who go beyond the prejudices, ignorance and backwardness of the traditional thinking sector in Irish business — would have a management orientation that is way beyond theirs. We will have difficulty getting such people who are committed to a time scale and investment and have the sophistication to work abroad and trade successfully. We should work very carefully. May I tell you something? If a person was an activist in your own party anywhere, if you said to me that a person was a prominent member of Fianna Fáil and at the same time that the person was committed to the kind of innovative idea that this corporation has, if I was in the Minister's position I would not hesitate for a second in appointing such a person to the board. Rather than a political orientation and membership being a disqualification, it could well be a qualification given that the person had the right attitudes. It would only be tribalistic to exclude a person on those grounds.

Mr. O'Leary: Information on Sean A OLeary  Zoom on Sean A OLeary  I would like to support what Professor Hillery said in regard to the necessity for ensuring the adequate remuneration of both the managing director and the other directors of the board as outlined and as being established by the passing of section 11 of this [834] Bill. I know what Senator Michael D. Higgins is getting at, but we do live in the real world as well. We cannot successfully write into the legislation a test of ideological purity which must be passed before appointment as a director of such a board. His general thrust I must disagree with in one respect. In my experience people who serve in the public sector, whether or not they come from the public or private sector, by and large and overwhelmingly, once they do serve they become committed to the concept of the operation of that public company in the best interest of the public at large. Rather than there being a natural prejudice among the people of the country or indeed even among the business people of the country against State enterprise, all the indications are that there is a natural inclination to accept a level of State enterprise which is unique in western Europe. There is an acceptance of that in Ireland, even among the business community, which is unqiue in western Europe.

The level of acceptance which there is by many succesful companies — and I hope there will be more successful companies operating in the State area — indicates that there exists within the country a large core of people who would more than adequately meet the criteria for appointment to the board as set down by Senator Higgins. I have no doubt that there are many such people. They exist in public, semi-public and private employment at present. I do not think any difficulty should be found in that regard. There will be difficulty with regard to the question of remuneration because it is all a question of the level of commitment. I do not know the level of commitment which you can expect to give if you are a director of Fóir Teoranta but if it is two days a week, obviously only a very élitist group of people could give the level of commitment and not be adequately remunerated for it: a person who was involved in some public enterprise where their money was not too dependent on attendance at their work on a particular day or a particular length [835] of time; alternatively those who are independently wealthy and have other people working for them. The way to avoid that and spread our wings much wider is to get a cross section of people who themselves might not be independently wealthy but might have the capacity to manage and the innovation necessary to serve as directors of this company. For these reasons, I certainly support what Professor Hillery said in that regard. In so far as what Senator Higgins says sets down worthwhile criteria for the establishment of directors, I support him too, but not his pessimistic view on the existing situation in Irish society with regard to people and the public sector.

Professor Hillery: Information on Brian J. Hillery  Zoom on Brian J. Hillery  With regard to the point made by Senator O'Leary I think Senator Higgins might find the following somewhat reassuring. In the course of research that the Department of Industrial Relations at UCD have conducted into worker directors and their relationship with other board members in the designated State enterprises, the worker directors told us that they were agreeably surprised at the level of support they got from other directors — that is the nonworker directors — who themselves, of course, are political appointees and many of whom have business backgrounds. Another surprising thing they found was the emphasis on consensus in decision making as opposed to pushing issues to a vote and therefore dividing on policy issues at board level. The worker directors made a further point to us that this was contrary to the view on the shop floor. There was a very high degree of co-operation and not a splitting on ideological grounds at board level.

Mr. M. Higgins: Information on Michael D. Higgins  Zoom on Michael D. Higgins  I will not delay again on section 11, but let me repeat the thrust of the board dividing on ideological grounds. I repeated that last day something which I believe passionately to be true on the basis of empirical evidence, that the most complete ideological set of attidudes that could constitute an ideology in Irish business are those that are [836] hostile to direct State-led investment. There is this idea that somehow or another those of us who are in favour of State-led investment and directors who would fill that purpose are somehow suffering under some illness that is called “ideological orientation”. Some people use phrases like “ideological purity” and so forth. There is a very comprehensive ideology that there is no such thing as a successful, innovating, State enterprise. It is as simple as that.

With the greatest of respect to Senator O'Leary the phrase “ideological purity” has indeed a meaning in current Irish business circles and discussion and public debate. What it means frankly is that people are willing to take from the State in relation to the promotion of industry, training, research and development, marketing, the hiring of staff for the retraining programmes, the writing off of machinery costs and so forth, and to imagine at the same time that there is not a heavy State involvement in industry. That is not only ideological in its tone, but it is blindness because one is saying that they are private initiatives. There are people who take risks, and I supported them the last day on Second Stage when speaking about the banking sector and so on. It is very important for us to be unemotive in our language about this but the point we are making is there is no great ideology in it. A State company that will be involved like this one — its board will be reflected and constituted as section 11 suggests — means that you must have the capacity to think differently. It is the difference between riding a bicycle and driving a car. There are different skills involved. That is all I am saying. With the greatest respect in the world, you could be driving a bicycle with your legs, which might not be of much use in a car. The consequences on the road if you were to try and accommodate that method of learning on the job that Senator O'Leary seems to favour would be dreadful. So I wish that he would not be as suspicious of people who might be motivated towards State involvement.

[837]Mr. McGonagle: Information on Stephen McGonagle  Zoom on Stephen McGonagle  I have already pointed to the fact that I regarded section 10 and all its subsections as the keystone of the Bill — a progressive experiment by the State. The State is using State abilities and private entrepreneurial ability. A synthesis I called it on the last occasion. Section 11 deals with the people we are looking for who will now put the machinery into operation. What kind of attitudes should they have? One, proven business ability. It would be a mistake to exclude politicians. High calibre people with high calibre business ability may be politicians. Because a politician is appointed it does not necessarily follow that it is “jobs for the boys”. People who are looking at the appointments will have to look at the number one qualification, the business calibre of the people so appointed.

When I was speaking on the last occasion I stressed that the field of operation was particularly narrow. Neither the State nor the private entrepreneur has ventured into this field so far. Therefore, it is narrow and presents serious difficulties. The question of remuneration should not be regarded as that kind of incentive. Obviously, as a trade unionist, I believe the people have to be properly remunerated. I must say that and agree with Professor Hillery, but this has to be dealt with with some sensitivity. The idea of a patriotic duty is the overriding consideration rather than remuneration. That is the qualification I would offer to what Professor Hillery said.

I have some experience in the field. I was a director of the Management Development Services in Northern Ireland. I was a director of Comhlucht Siúicre Éireann Teoranta in the Republic. It is proven business ability and men of that calibre we are looking for and it is going to be a very difficult task. I do not know what kind of tests will be put or what kind of volunteers may come forward or what kind of list is to be drawn up. I would hasten to disagree slightly with my colleague, Senator Higgins. I would not be compelled to say that the directors should all give an oath of allegiance to State enterprise — no way. If I were on that [838] interviewing board I would appoint people who can actually implement and move into operation the machinery required to make this Irish progressive experiment a success. People will be watching from other countries, especially those with low capita performance; high unemployment rates. They will be watching with some concern and possibly admiration. That is why the men to be appointed must be of the highest level and why section 11 is so important, probably more important than section 10. These are the people who will be moving the levers in this experiment.

Professor Hillery: Information on Brian J. Hillery  Zoom on Brian J. Hillery  Just by way of conclusion I want to clarify what I was getting at. I understood the Minister, Deputy Bruton to say that just because people have a particular political allegiance or a particular ideology that is not adequate in itself for their appointment. It is quite likely that the people who will be appointed will have an interest in politics. What I would oppose is appointments solely on political allegiance, perhaps to the relative exclusion of the business expertise which Senator McGonagle rightly underlines. The business acumen is absolutely vital, given the imperative of the commercial approach that would be necessary for this organisation.

No matter what the Minister says, and I hope he will make some positive comment about improving the £800 a year or whatever it would be for directors' fees under the normal circumstances. Even if he were to treble that it would not be adequate because we would still be relying on directors' spirit of public service. But some movement on existing fees is essential.

Mr. Ferris: Information on Michael Ferris  Zoom on Michael Ferris  You will have recognised a certain concern by the Labour Party Members of the House about the calibre and ability of the board of directors and of the chairman. Senator Higgins has been at pains to explain that we have absolutely no interest whatsoever in the political affiliations of anybody on this board, particularly the chairman. We are saying to the Minister, who will be [839] responsible for the appointment on the recommendation of the Government, that the Labour Party consider that an essential component of the qualifications — they will not be political but we would not rule out people with any political view — is that there must be a commitment to the type of concept involved in this corporation because it is a State-sponsored and directed corporation. It is being promoted by the State, but that does not rule out the involvement of the private sector or otherwise. It involves all of that, but it is an instrument of the State. We need people to believe that the State can direct its energies in that area to stimulate employment. What we need is commitment. You can have people committed to transport, but you could not appoint a bus conductor to be the captain of a ship. We are disregarding political affiliations because they are irrelevant. This concept is a major development for this country, and for this Government. It is one that we have been fighting for years as a Labour Party. We need a commitment by the people on this board to the whole concept of involving the public sector to provide a stimulus for the development of the economy and creating jobs. It could be a Fianna Fáil, a Fine Gael or a Labour Party person that would have these qualities. Whoever it is let us have the qualities, and let it be seen when the appointment is made that those are the qualities that count.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): I thank the Senators for their contributions. I cannot see anything that I profoundly disagree with. The argument falls into two parts. Whom to appoint? What type of person to appoint? How they should be paid? Section 11 deals with the number of people to be appointed. Section 27 deals with remuneration. I presume that, once we have dealt with it here, it will not be discussed more fully again. I accept most of what has been said. We need honourable people who are public-spirited and have a sense of initiative, innovation and creativity, who are committed to the objects of the National [840] Development Corporation as stated in this Bill and will be stated in the memorandum and articles of of the company.

It is a major advantage that we have proceeded by way of legislation through both Houses in setting up the NDC. Anybody now who is invited to be a member of the board will know, not only from the text of the Act itself but also from the debate in both Houses, the kind of commitment that we are looking for and the kind of person that we want to serve on the board.

On the question of people being appointed because they carry one particular party affiliation or another, I would not like a situation to develop in this country that, because dedicated business people commit themselves to the democratic process and support any one of our parties, this should be used as a disability against them either in their private capacity or in their fitness for any type of public office subsequently, and I include in public office appointment to State boards. It will be a sad day for democracy here if a businessman is afraid to support publicly a political party because this can be brought against him subsequently. I fully agree with what Senator Hillery said. I would like to reaffirm the commitment given by my predecessor Deputy John Bruton. People will not be appointed to the board of NDC simply because they carry a particular party tag. I would also like to point out the fact that somebody who is good, dedicated, committed and suitable for the board will not be ruled out because he is the supporter of any particular party.

These things seem to operate in a kind of reverse perverse logic at the moment. It is almost taken now that if a Government appoint one of their own supporters to serve on a board it is assumed that he has been appointed because he is a supporter of the Government rather than because he has particular abilities which could be used to greater effect on a board. I am quite happy to reaffirm the commitment given by my predecessor. I hope that we will be able to get good committed people, committed to the ideals and objectives of the NDC as set out in the [841] Bill. If they are committed to the public or private sectors as far as I am concerned as long as they are committed to the objectives of the NDC and are prepared to work hard to implement the mandate given under section 10, then they are suitable people to serve on the board. We are prepared to get the best possible people to serve.

On the question of remuneration, there is one key office and that is the office of managing director. He will not be appointed by the Minister or by the Government. He will be selected by the board. He will be a full time executive officer. He is the man whose salary scale we will have to watch. It is quite obvious that the Bill does not come within the remit of the Devlin committee as previously instituted. It is not going to be retrospectively put within the Devlin remit. An appropriate salary for the managing director will be arrived at by discussion between the board and the Minister for Industry and Commerce, with the permission of the Minister for the Public Service. I take the points made. We obviously have to get the best person possible regardless of cost to act as managing director of the NDC if we are to get the kind of talent, of motivating force and dynamism we on all sides of the House consider necessary. That is the key office as far as I am concerned in terms of remuneration.

I take the points made about the members of the board. It is difficult to expect, in the case of people working and spending one or two days a week and getting £1,200 or £1,300 a year as a kind of honorary remuneration, that that alone would motivate them. I do not accept that people who join State boards are motivated by the small fee that they get. The people we want are the people who have a sense of public commitment and who are excited by the challenge of the times, by the social and economic problems we have. They want to become active soldiers in the fight to get employment for our people, especially our young people, and they want to be committed to the objectives of the NDC. I do not think that it is a matter of motivation by [842] whether it is £800, £1,200 or £4,000. I understand that this matter of fees to directors of semi-State companies is under active consideration by the Minister for the Public Service with a view to bringing proposals to Government shortly. I accept the points raised by Senators. I will bring them to the Minister's attention. The board is part time. The chairman of the board is non-executive. The key figure is the managing director, who will be appointed by the board. His remuneration will not fall within the Devlin remit and consequently an appropriate salary for such a person can be negotiated.

Professor Hillery: Information on Brian J. Hillery  Zoom on Brian J. Hillery  I welcome the Minister's indication that the salary for the managing director of the NDC will not in fact be subject to the Devlin restrictions. Could I make a further point, and I have made it in a number of debates here? My particular interest in this appointment in the State-sponsored body arises for two reasons — one is that I am a member of the Joint Committee on Commercial State-sponsored Bodies and the other is that I worked for several years in State-sponsored bodies before I joined the staff of UCD. I have a long standing interest in the area. I just want to make one further point. I think it is important that the managing director of this body and indeed for any other State-sponsored bodies where the occasion arises should not be appointed for life but rather for a limited contractual period renewable if his performance justifies it.

Mr. Harte: Information on John Jack Harte  Zoom on John Jack Harte  I just want to say that I agree with the Minister. It will not make any difference to us what the person's political affiliation is and it should not be a condition that somebody belong to a certain party. If he has the analytical and planning skills there is no reason why he should not be appointed. I also agree with the question of the remuneration. In case there is any confusion about what the Labour Party attitude is and the argument of ideologies, by and large the Labour Party does not, for example, attack the possession of the means of [843] production. What they attack is the social authority that property takes on to itself. We do not attack individuals with skills who can go in and do a job whether it is public or private.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): On the question of not employing a managing director for life, there is a Government decision to the effect that a short term contract will be offered. It will be renewable on the basis of performance. We are thinking of about four years. I take Senator Harte's point also.

Question put and agreed to.

Section 12 agreed to.

Question proposed: “That section 13 stand part of the Bill.”

Mr. M. Higgins: Information on Michael D. Higgins  Zoom on Michael D. Higgins  There is one point that bothers me in this. It is just a clarification. When you read through the long enabling provisions of section 10 which set out the principal objects of the corporation it seems that there is in the clauses dealing with investment an inevitable time-scale involved that will differ with projects. Some projects will realise their potential much quicker than others. My question specifically is as to whether or not section 13 (b) is not perhaps inhibiting the realisation in full of some of the provisions of section 10 which might require a medium to longer time scale. In other words, are you not inhibited by the idea of selling on. Paragraph (b) states:

to carry out its objects, which shall include the realisation of investments made by it as soon as is financially and commercially prudent, in such a manner as to enable the Corporation to earn a reasonable return on any investment made by it and ensure that funds are available in the Revolving Investment Fund for Employment.

To clarify some of the matters that have arisen out of the public discussion [844] of this, it would be useful if the Minister clarified perhaps that a number of options are possible in this regard, that when sale on or the realisation of investment is envisaged, it need not be to the private sector. For example, in relation to an integrated timber industry or an integrated mariculture development and so on, that an independent State entity could come into existence or alternatively a project sponsored and turned to commercial viability by the corporation could be sold on to another Government company or agency. Even further any of such could take on a corporate form in future that would be of the shape of a co-operative, for example. Many such are indicated — for example, if you wanted something in the downstream development of the wool industry where one could envisage a cooperative of people who were supplying the basic raw materials. I would like clarification of those two points. One relates to the flexibility in regard to the time scale required in innovative, perhaps new technology-related, ventures. The second is in relation to the interpretation of this clause and particularly the words “realisation of investments made by it as soon as it is financially and commercially prudent”.

I see some dangers perhaps in the interpretation of the phrase “financially and commercially prudent”. If you take, for example, the preceding section 13 (a), it states that it should be “the general duty of the corporation to assist in the creation of the maximum amount of viable employment in the State.” In regard to the history of State companies, I am very glad that we had the benefit of Senator Hillery's contribution. I am sure that he would agree with me that part of the difficulty in making their case to Government of whatever sort has been the difficulty of separating out, both in terms of current funding capital and borrowing requirements required for their social purposes and for their commercially traded purposes. One of the difficulties in evaluating the performance of these companies is the form of accounting which would consider, for example, that it is a valid purpose to create employment [845] and that the longer term sustenance of so many jobs which requires us to trade in such a time-span is quite different from the criterion of commercial trading or the selling of services in the short term. Perhaps the working is deliberately like this so as to envisage all of what I have said. I would like an assurance in that regard rather than thinking that any of these measures that I am suggesting are precluded by a narrower interpretation.

Mrs. Honan: Information on Tras Honan  Zoom on Tras Honan  Minister Bruton in his speech to this House and also Senator Higgins spoke about the duty to assist in the creation of the maximum amount of viable employment in the State and to earn a reasonable return on any investment made by it. How is it proposed to ensure a turnover of investment? How will the NDC sell a minority shareholding in a private company and who will buy it?

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): First, I think it is worth looking at the principle, the conceptual stage of the revolving fund. Any state, or any company also no matter how vast the resources at its disposal is limited in some respect. Given though the NDC will have a share capital of £300 million, there will be a limit on the amount of money at its disposal. It is supposed to act as a dynamic within the economy to innovate, to create viable jobs, to fulfil the objectives of section 10 (1). When it has done that at some particular point it is also an objective of the legislation that the wealth created be realised by the company so that they could reinvest subsequently in new enterprises, and this is the concept of the revolving fund. Under section 13 there is a duty imposed on the NDC, especially in 13 (b), to carry out its objects, which shall include the realisation of investments so that the revolving fund can be set up and so that money will be available in the revolving fund to fund new enterprises down the line.

The discretion on how and when to realise the assets and realise the wealth created is totally in the hands of the board of the NDC. If you were to look at section [846] 14, you would see that the corporation has an obligation to inform the Minister in writing of each investment made by it, the time limit fixed by it for its involvement in that investment and any subsequent decision to extend any such time limit. It is quite clear from section 14 that there is absolute discretion and absolute flexibility in the hands of the board. They get three propositions. They decide not to go ahead with one. They decide to go ahead with (b) and (c). In the case of (b) they fix a time limit of eight years because of the particular circumstances. In the case of (c) they fix a time limit of 12 years. If at the end of the eight year period the company is successful, the duty under section 13 then obligates the corporation to act, looking at what is financially and commercially prudent. At the end of eight years if it were seen that a particular company was going very well and that the particular product it was marketing was two years away from maximum capacity, then it would be financially and commercially prudent to extend the time of the company for a further two years before one would attempt to realise the asset by sale. That is the way it would operate. It is in the hands of the corporation and it is in the hands of the company which will be set up under the corporation. There is absolute flexibility given there to the corporation to do that.

The actual form of realisation of asset has been raised by Senator Higgins. It is open to the corporation to dispose of the asset in a variety of ways — they have the flexibility to do this — and as long as the revolving fund is used and the duty under section 13 is complied with I do not anticipate any difficulty arising there. I take the point made by the Senator.

As regards the issue that Senator Higgins raises about what is financially and commercially prudent, the situation is as I have stated: it may be prudent to sell one year and it may not be so to sell the next year. This adds to the flexibility of the company rather than reduces it.

Senator Honan raised the question of when it comes to the point of sale and who would buy it. One of the simplest [847] rules of all is that if something is profitable there is no shortage of buyers, and if something is loss making there is a shortage. If the company is successful people will be queueing up to buy it. Proposals are being considered in my Department to enable companies to buy back shares in a joint venture situation. The Stock Exchange will shortly establish a small companies market to facilitate the buying and selling of shares. I do not see a difficulty even at present and there should be none when the Stock Exchange provide that alternative counter of opportunity for trading in small companies' shares. I should like to stress that under section 13 — if you look at it together with section 14 — the discretion is left to the board to operate within the Act to fulfil the objectives of this act, the objectives of the NDC, and to allow them the flexibility to comply with the duty imposed on them under section 13 to set up the revolving fund and to act commercially and financially prudently.

Question put and agreed to.

Question proposed: “That section 14 stand part of the Bill.”

Mr. M. Higgins: Information on Michael D. Higgins  Zoom on Michael D. Higgins  I should like to mention one point briefly relating to the interpretation of section 14 (1). Information, in the nature of things, flows both ways. The wording stresses that the corporation shall inform the Minister in writing of each investment made by it, the time limit fixed by it for its involvement in that investment and any subsequent decision to extend any such time limit. Section 16 deals with the exercise by the Minister for Finance of his rights by virtue of being the holder on behalf of the State of a certain proportion of shares. Can I presume that what will be sought from the company is information that will go to the Minister, rather than the Minister offering what might be called highly directive advice, coming down the other way along the information channel? [848] Secondly, if this is the case, if it is just by way of keeping the Minister informed to establish the principle of accountability, how then does the enabling provision of this section relate to the powers which are possible in relation to section 16?

Professor Hillery: Information on Brian J. Hillery  Zoom on Brian J. Hillery  Since we are talking about objectives, I should like to get clarification on the objective of submitting this information to the Minister. I would like an assurance from the Minister that such information will not be used to politicise the affairs of the corporation in any way.

Mrs. Honan: Information on Tras Honan  Zoom on Tras Honan  Is this not very serious? On reading the section we find: “the Corporation shall inform the Minister, in writing of each investment made by it”. When dealing with section 11 we spoke of the persons that were going to be put on the corporation and so on. Is that not again severe? Is it right at all, when we are going to have this confidence by the people in the NDC, that each investment has to be sent to the Minister in writing?

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): First of all, there is a public interest consideration that the Minister should be informed of what a semi-State company is doing on a regular basis. The public interest demands that. The Minister for Finance is the shareholder in the company and the Minister of the day, as shareholder, should be informed of its activities.

Individual Senators will probably be more interested in the powers vested in the Minister for Industry and Commerce under section 31 rather than in any other powers. Under that section the Minister can from time to time give the corporation such general directives in writing as to policy and operation in relation to all or any of the objectives stated in the memorandum of association of the corporation as he considers appropriate. That section allows for the two-way flow of information. As you can see from the way it is drafted, the board has absolute discretion over the day-to-day running of the company. The board has absolute [849] discretion over the evaluation of the particular projects that are put before it. The board has absolute discretion about the time limit fixed. The board has absolute discretion about the sale of the assets to get a flow of moneys into the revolving fund. On the other hand, the Minister has certain powers in relation to the objectives of the NDC as laid down under section 10 and from time to time he may give policy directives to the NDC. I think that is the proper balance. I can assure Senator Hillery that it will operate as the Houses of the Oireachtas have decided in enacting the legislation. It will be done in accordance with law and on no other basis.

Question put and agreed to.

Question proposed: “That section 15 stand part of the Bill.”

Professor Hillery: Information on Brian J. Hillery  Zoom on Brian J. Hillery  This section states that the corporation shall not, without the prior permission of the Minister, invest in an enterprise an amount or amounts exceeding in the aggregate £1 million. If reference is made for sums in excess of £1 million, is the idea behind it that the civil servants in the Minister's Department would then evaluate on a commercial basis these proposals that are submitted? I have not the slightest hesitation in saying that I have the highest regard for the ability and the integrity of civil servants; I have had contact with them in a variety of capacities over many years. My concern relates to a statement in the Government's White Paper on Industrial Policy that the Department of Industry and Commerce did not have the people to monitor the progress of industrial policy which, presumably, included the State-sponsored bodies under the political control of that Department, namely, Irish Steel, NET and Ceimicí Teoranta. As I have stated, I have no difficulty in putting on record my regard for the ability of civil servants. My point [850] rather is this: do they have the commercial training and ability to evaluate complex commercial proposals which at the heel of the hunt they need if they are to advise their Minister on the approval of the £1 million or more?

I would like to make a suggestion to the Minister in this regard. Where civil servants need—and in many cases they do need — commercial experience the Minister and his Department should facilitate them in every possible way. This could be by way of subbatical leave or a greater emphasis on or commitment to training courses, or for that matter university degrees. This is not a plug for UCD, but we have an undergraduate programme — Bachelor of Public Administration and a Masters Programme in Public administration as well. The syallabi are there to see. They provide a considerable body of knowledge and a range of skills that would be appropriate for this type of role in the Civil Service. Thankfully, a number of civil servants are attending these courses in UCD and elsewhere. A lot needs to be done beyond current training and educational programmes.

Mr. Harte: Information on John Jack Harte  Zoom on John Jack Harte  If a greater investment was called for than the figure laid down, would immediate discussions not take place with the staff and the civil servants of the NDC who have the planning and analytical skills and not just with the directors? I presume the staff, when recruited, will be people with analytical and planning skills, together with the directors and the chairman. There may have been a problem in the past over this, where there was not enough control and people went off on sprees and got into difficulties. I can see the need for a measure of control. At the same time, I appreciate the problem of over-interference and I accept the point about the need for the development of skills.

Mr. O'Leary: Information on Sean A OLeary  Zoom on Sean A OLeary  I have two matters to which I would like to refer in relation to section 15. One is the matter which was already referred to by Senators — the [851] question of the Minister's prior permission being necessary in the case of an investment of an aggregate of £1 million and the Government's permission being necessary in the case of an aggregate investment of £2½ million. I can understand why the Minister would include something like that and it would have my support. I think that ultimately investments do get to the size where they need to be monitored by a third party. I think that whether or not I have confidence in a particular Minister — though I do in this Minister — and whether or not I have confidence in civil servants — even though I am sure that they are excellent civil servants, though it is probably not in order for me to say they are excellent, as it would not be in order for me to say that they were not excellent — nevertheless, whether or not any particular group of civil servants or Minister has the capacity or the interest to take an involvement in that, I think it is necessary that the duty should be put on them.

I wonder would the Minister consider putting the duty on them in a slightly different way. Would the Minister consider giving the authority to the corporation to grant approval subject to a veto by the Minister; in other words, it goes through unless the Minister says so. In other words, let the assumption be that it will be all right and let the Minister, if he has any doubt, make a decision and say: “I do not agree with that investment. Stop it, do not make the investment”. The same system of notification would be necessary.

What one might have as a result of that is inertia. To have a situation where somebody within the NDC wants to make the investment and is engaged in a kind of negotiation with the Department as to what condition will bring it within the ambit of what the Minister would approve, is I think dangerous and I would much prefer if there was a bit more pressure put on the Minister, give the Minister the right to say no. The Minister can say yes or not. The Minister can veto it; otherwise it goes ahead. It is a negative [852] veto so to speak rather than seeking positive approval, because I feel the problem with seeking the positive approval of the Minister is that the Minister will have to be involved in these things from the very start and will find him- or herself with the Department involved in the day-to-day operation of such decisions to a greater extent than is otherwise envisaged by the Bill.

That might be overcome by saying to the NDC, and writing it in here, that where they have a proposal to make an investment of £1,000, £1 million or £2½ million, as the case may be, they have the power to do so, and the Minister has a certain period of time within which to refuse permission with regard to that: otherwise it goes ahead. If the Minister does nothing, it goes ahead; or if he does not positively say no it goes ahead. I think that is a different way of approaching the same problem, on which I would like to hear the Minister's views. I am certainly not very hung up on it but it might be a better approach to keep the day-to-day operation of this corporation out of the hands of the ministerial helpers in the Department.

I would like the Minister to deal with another point for confirmation. I presume that the Minister intends that the word “invest” in subsection 1 means to invest by way of equity plus loan. I think that is the way it would be read when you read subsection (3). I would like to have it on the record that the total of the investment means the amount invested by way of equity plus the amount invested by way of loan.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): Yes, it does mean equity plus loans, but as the Senator is aware the NDC will be expressly forbidden to give grants, so it is equity plus loans.

On the general point at issue here, this section brings about a situation where the permission of the Minister is required if amounts exceeding an aggregate of £1 million is involved, the permission of the Government is required if amounts exceeding an aggregate of £2.5 million is involved. I have sat in Government for [853] three years and I have seen — and it is public knowledge — the results of very bad decisions made in the board rooms of public, semi-State and private companies. I think all Senators remember Irish Shipping. I think they will also remember ICI. Those of us who are elected to the Dáil and the Seanad and those of us that have been appointed to Government must protect the public interest and there must be checks and balances in any legislation such as this to protect the public interest, particularly the taxpayer because public money is involved. The parallel situation is the case of the IDA. Any grant aid by the IDA in excess of £2.5 million must go to Government by way of memorandum and the Government must make the decision on it.

It is proper that in regard to this new body the Minister for Industry and Commerce, at a certain level, should have to agree and at another level, sums are big enough and the matter is important enough, it should be a matter for Government agreement. Whether we should do this by positive or negative action is a matter for debate. Senator O'Leary suggests that a veto might be the appropriate way to do it. If we become private citizens and think of ourselves in our own family situation £1 million is a lot of money. When we are in here and when debating Estimates, we string noughts together as if it was confetti when we talk about current budget deficits and public borrowing requirements and so on but £1 million is still a lot of money.

If you put it in context, the NEA that is being subsumed into the NDC, last year spent £2.7 million in total. I hope that the National Development Corporation will get involved in a lot of activity which will bring about a situation where it will call down quite a lot of the share capital which is at its disposal, so that it can act as a dynamic within the economy. Still, a decision to spend £1 million in a particular enterprise is still a big decision.

If it were to be done by veto I think the following situation would occur. The board of the NDC with its staff would have got into negotiation with Company [854] X and arrangements would be made to the satisfaction of both sides. It would be a matter of public knowledge. It would certainly be a matter of knowledge outside the NDC that such an arrangement had arisen and I think that the Minister then in an attempt to exercise a veto in the public interest would be subject to all sorts of political pressure. Now what we do not want here is a political decisionmaking process. This can only work if the decisions are decisions made on commercial criteria, and if decisions are made on political criteria this will not work. It is much better that the NDC are mandated to negotiate, but if the money exceeds £1 million then they submit it to the Minister and the Minister can then get the commercial advice available to him to evaluate the proposal.

Senators have raised the question of the advice being available. First of all, the NDC will proceed to inform the Minister by way of memorandum, as the IDA would do at present. The corpus of knowledge and argument within the NDC at the decision making process will be available to the Minister when it is submitted to him.

Secondly, the Minister will have at his disposal the abilities of the civil servants in his Department. I worked in a different Department and I worked very closely with not only the Department of Justice but with the Department of Foreign Affairs in the Anglo-Irish Agreement. I take the point Senator O'Leary makes. I think we are out of order in praising civil servants in the House. We cannot talk about their excellence, but if I were allowed to talk about their excellence I could tell you that the ability of the civil servants in Ireland in recent years has been underrated and understated. There is a great pool of ability there. Apart from the career civil servants, who come in in the normal process to the Department of Industry and Commerce, there are also professional people employed by the Department who have the professional skills to evaluate propositions such as this. They do it in the case of the IDA when it is a grant aid situation rather than an investment. They advise [855] the Government in that capacity in monitoring the IDA investments, which are far larger than the kind of sums of money we are talking about here.

Thirdly, it is within the remit of the Department to bring in outside consultants if a particular project needs outside evaluation. I would propose that while I am there I will avail of this if I think it is necessary and if I need outside advice.

The mechanisms are there. I think we are going the right way about it, first of all, to have the checks and balances in in the public interest to protect the taxpayer. We have experience in the past of the need for this. Secondly, I think the advice is there and I propose to avail of the advice. Thirdly, I think that ultimately it is better to have it as proposed in section 15 rather than have an arrangement by veto which would expose any Minister to the kind of political pressure which would cast a doubt on the validity of the decision making process and one would wonder in certain cases whether the decision was made on a commercial basis or not.

Question put and agreed to.

Professor Dooge: Information on James CI Dooge  Zoom on James CI Dooge  It was agreed earlier that we would suspend from 5 o'clock to 6 o'clock this evening as we had two hours remaining on Private Members' Business. I propose that we now suspend the sitting until 6 p.m. It is proposed to resume on section 16 tomorrow when the Courts Bill has been dealt with.

Progress reported; Committee to sit again.

Sitting suspended at 5 p.m. and resumed at 6 p.m.


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