National Development Corporation Bill, 1985: Committee Stage (Resumed).

Thursday, 27 February 1986

Seanad Eireann Debate
Vol. 111 No. 10

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[920] Sections 16 to 19, inclusive, agreed to.

Question proposed: “That section 20 stand part of the Bill.”

Professor Hillery: Information on Brian J. Hillery  Zoom on Brian J. Hillery  This section obviously refers to temporary borrowings by the NDC. Will the borrowings be guaranteed? Regarding borrowing this is a source of concern that has arisen out of our deliberations on the Joint Committee on Commercial State-Sponsored Bodies. The Planning Board, for example, point out that the borrowing by the commercial semi-State bodies to finance new investment, current losses and some part of replacement investment constitute a significant proportion of the public sector borrowing requirement. The guaranteed borrowings of these bodies in the remit of the Joint committee exceed £2 billion. Over 90 per cent of that figure of £2 billion is made up of medium- and long-term borrowings. It seems that the State guarantee is viewed as a first-class security by the lending institutions. I want to raise the question of banks, for example, who lend on the basis of the Government guarantee without applying the same rigorous evaluation that would apply to a loan proposal from a private sector company. My suggestion is that where possible — and I include the NDC in this — the State should disengage from guarantees and let the loan applications by the State-sponsored bodies stand on their own merits. Short of that I would urge that if a State guarantee, is sought by a bank, for example, the reasons for the guarantee requirement should be submitted to the relevant Department for their consideration including the Department of Industry and Commerce in the case of the NDC. If the Department feel that a guarantee should be given then such a guarantee should be given for a specific period only. I am taking the opportunity [921] of raising that more general point in relation to commercial semi-State bodies in relation to borrowing in the context of the temporary borrowings which are provided for in section 20.

Mrs. Honan: Information on Tras Honan  Zoom on Tras Honan  I support Senator Hillery on this matter, even though I have not the knowledge that Senator Hillery has on this type of questioning. In my Second Stage contribution on this legislation I said that I had no block whatsoever about private and public sectors but that I had strong views that the private sector should be encouraged and should be allowed to succeed. They have a definite timing on their credit. The advantage of the NDC backing companies with State guaranteed money is clear. I made that point in my Second Stage speech, that the companies may be working in competition with successful private companies who have made it and who might make it if we are all sincere as people trying to protect the private sector. I totally support the public sector and indeed anyone that creates jobs. In this section I see an advantage to companies with long-term State-secured financial backing as against companies who would not have that support. This is a worry I would have. Will there be a clash of companies coming under the NDC, of whatever form, competing, because of State financial support, against smaller units who decide to stay on their own and who are also trying to develop one with the other — the public and the private — which is what most of us want. Will the companies that are backed by the NDC and State-secured have an advantage over those on the other side. I want to make it clear that I have no block against the public sector. We have to protect the people who are prepared to stay private and who have only a certain limited amount of backing in repayment as against the State which seems to have no end of money, and that, of course, is a wrong conception. I would like if the Minister would make this clear for me.

Minister for Industry and Commerce (Mr. Noonan,: Information on Michael Noonan  Zoom on Michael Noonan  Limerick East): The borrowing [922] facility referred to in section 20 is limited to a sum of £500,000 million. That borrowing is for short term finance for current expenditure in the company. It is for paying the staff, buying the furniture or laying out the office and so on. There is no facility for the NDC to borrow for capital purposes. It would be inappropriate, given the high risk nature of what they will be involved in, to allow them to borrow for capital purposes. The NDC is being capitalised with £300 million of share capital. Then it will be drawn down as required and the appropriate figure for each year will appear in the Estimates. A proportion of that money will be used in the manner specified under section 10. They do not have the power or the authority under this legislation to borrow for capital purposes; consequently the fears expressed of bad experience of borrowing and the State having to guarantee the borrowing and ultimately picking up the tab will not arise in the NDC. It is just the current side that is being referred to.

On the more general question raised by Senator Honan concerning competition with private companies, any of these companies which will be NDC related will be private companies. The fact that the NDC are participating in a private company will not change its status because section 28 states that the NDC will not take up a majority shareholding in any company except in the most exceptional circumstances. There would not be any particular advantage when an NDC related private company would put a proposition to a bank as against a private company with no NDC involvement. The bank will still make the commercial decision on the basis of what is in front of it. The mechanism is that a company puts a proposition to the NDC, who become involved to the tune of, say, of £1 million. There is then a time-fixing mechanism, which we discussed yesterday, that they will be in for seven years before the revolving fund comes about. That will be quite clear when that proposition is put to the bank by the company if the company wants to borrow. There will be no underwriting or guarantee by the State, or a [923] majority shareholding situation, except in the most exceptional circumstances. I do not think that the fears raised will arise. Section 20 concerns current expenditure — the normal facility that a company would need for its day-to-day affairs. It is not capital.

Question put and agreed to.

Section 21 agreed to.

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

Mr. O'Leary: Information on Sean A OLeary  Zoom on Sean A OLeary  Do these famous parliamentary draftsmen ever learn? What does it take to actually educate them that a change has taken place? The Minister may not be aware of this because he was not involved in the economic area before this as a Minister. In a succession of measures which have come before this House, both measures initiated in this House and measures initiated in the other House, it was pointed out that the standard form of drafting this provision concerning membership of either House of the Oireachtas or of the Assembly of the European Communities is now almost a standard section in respect of any quango being set up by the State. It is inadequate and it fails to meet the wishes of the Members of this House or fails to properly acknowledge the legal position concerning membership of and candidature for this House and the other House.

The Minister for Health during the consideration of the Dentists Bill agreed to a series of amendments the effect of which was that on nomination as a candidate for this House one would not automatically cease to be on the board of the body which was being set up to supervise the nursing profession. I understood that it was a policy decision which was to affect all future legislation. I and others explained at the time that there is no need for this kind of drastic provision whereby a person who is nominated as a candidate for election to this House [924] should automatically cease to be a director or indeed be automatically seconded from employment. I pointed out on the last occasion that it has been judicially decided that a person had no right to prevent themselves being nominated as a candidate for election to this House. A nominating body can nominate a person as a candidate to this House and they are a candidate to this House whether they like it or not. They do not have to seek election; that is their own business.

I can understand where a person becomes a Member of Dáil Eireann or of Seanad Éireann, whether by election or by nomination, which is the way I became a Member of Seanad Éireann. I understand that when the process is complete they should cease to be a director of this corporation. I do not understand why mere candidature should automatically exclude them from being a director. I do not accept under any circumstances that candidature for election to this House, when that candidature can be imposed upon a person against his will, should disqualify him from being a director of the corporation.

I ask the Minister, in view of the commitments which were given by successive Ministers coming into this House as to the change which would be brought about in this standard procedure, to look at those changes particularly the one in the Dentists' Bill to see if he could, between this and Report Stage, consider the adoption of an amendment to give effect to the new standard position which was negotiated between the Members of this House and the Members of the other House and the Ministers of the day. I ask the Minister to have another look at this section. Otherwise, with regard to being a director of the corporation or in employment while a Member of the Houses of the Oireachtas or a member of the European Assembly, I understand that it would be inappropriate.

Professor Hillery: Information on Brian J. Hillery  Zoom on Brian J. Hillery  I would like to support the point made by Senator O'Leary. Leaving aside the rather finer point that has been decided judicially that a person [925] might be nominated without his approval, that apart, it seems that the potential conflict arises when a person actually becomes a Member as opposed to being nominated. Let us face it, in the case of this House, for example, a far greater number are nominated than are ever elected. It is more than likely in the case of some nominees that they will never be elected anyway and that the difficulty will not arise.

Mr. Ferris: Information on Michael Ferris  Zoom on Michael Ferris  I support the two previous speakers. I was rather amazed when I saw the same parliamentary draftsman's hand on this section as has been on all the other Bills particularly regarding the membership of this House. Once you are a Member of this House all this should come into play. But if you are nominated to contest, either without your knowledge or your permission, it is wrong that you should somehow be penalised for just being so nominated even if you are never elected. The principle must be accepted by the people who draft legislation that we are not prepared to accept this kind of section written in to any legislation that comes before us. The Minister now has an opportunity to give a commitment that, when he is presenting his amendment to the other House, he will have an opportunity to set this right. Otherwise, we cannot agree to the Report Stage.

I do not want to hold up this legislation. If the Minister wants a replica of what we require he will find it in the Dentists' Bill or perhaps in the Nurses' Bill. We have changed this section in legislation before us. We got a ministerial commitment that in future all other legislation coming before us involving the setting up of any boards in which the State would have an active part would take into account the unusual circumstances surrounding the actual nomination of a candidate to this House. If one is elected as a Member, it does not arise. It does arise in the event of one being nominated and not being elected and one would be penalised for that. This is something over which one has no control.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): This is a [926] commercial body which is being set up and it is not exactly on all fours with nominating to other bodies which have been referred to. In relation to the point raised by Seantor O'Leary it has been brought to my attention that one can be nominated for the House without consenting. I suggest that that is a matter for electoral law rather than trying to amend it in individual Bills. While Senators are right to differentiate between nomination and election, there is also a situation certainly in the other House and also in this House — that when an election is called one is no longer a Member of the House. You have the situation that when an election is called a TD is not a Member of the Dáil, but for all practical purposes he is perceived to be a Member of the Dáil if he is going forward for re-election. In the circumstances where somebody is seeking re-election nomination day seems to be the appropriate day rather than election day. I am not sure whether one holds his mandate in the Seanad until the new Seanad is elected. If you do, then you can see the sense of nomination day rather that election day because you are still Members. I have had that checked. It has been drawn to my attention, and I have been told by the Department of the Environment, that the electoral procedures for Seanad elections are being reviewed by the Department and they expect to put proposals to the Government very shortly. I will put your views to Government when that discussion takes place.

Mrs. Honan: Information on Tras Honan  Zoom on Tras Honan  They are not doing away with us?

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): I would not think so.

Professor Dooge: Information on James CI Dooge  Zoom on James CI Dooge  I suppose it is a punishment for being a long time Member of this House that one has year after year to listen to the same point of view being put forward in regard to this matter. I would find it hard to say when was the first time I heard the point of view put forward that the Minister has put forward here, namely, that it is a matter for the [927] legislation in regard to Seanad elections and let us wait until there is a Bill dealing with Seanad elections. That point of view is being put forward continually. The point of view put forward by Senator O'Leary, and by many Senators before him, that it does not matter how it is done, that we must get rid of this ridiculous situation where four Members of the Oireachtas or those who control the nominating power of a body on the register of nominating bodies can, in fact, remove a person from a State body or from this particular body. Because that is, in fact, what they can do — by exercising the power of nomination they can remove the person.

This has been the situation down through the years. The position was that in the lifetime of this present Government that situation has changed. It was acknowledged that it was ridiculous to wait for a Bill which was so slow in coming. Even when the Department of the Environment say that you are going to have a Bill in six months, it sometimes seems to take three years. If we have here a Bill that is on the stocks, I wonder if there is room in the Custom House for all the stocks to contain all the Bills the Department of the Environment has on the stocks.

We have had in this House a commitment of acknowledgement of the position that the reasonable thing to do was for the Government to make a decision in regard to this quite simple issue and that every Bill from that time forward would contain the new provision.

That was the position that was accepted here on the Dentists' Bill. Then we had the crazy situation that the same Minister who had proposed that solution came in subsequently with the Nurses' Bill and the old formula was still there. In other words, in taking the old legislation down off the shelf, the parliamentary draftsman had not acknowledged that things had changed, that there had been a decision that this was now to be done on the basis of being done in every Bill. I say — and I think I speak for all Members of this House — that it is the [928] determination of this House that that would be done in every Bill.

Accordingly, if the Minister is now saying that his position is that we must wait for the legislation coming from the Department of the Environment, I have to say on behalf of all Members of this House that I will put down in the name of the House, and ask the Leader of the Opposition, to second an amendment on Report Stage. This House has declared its position and this House must stick to its position on this point. Unless we get a firm commitment in regard to amendment in the Dáil, we will have to express our opinion on Report Stage. It may well be that Dáil Éireann may not agree with it, but I do not think there is any option but for the Seanad to express its view.

Mr. O'Leary: Information on Sean A OLeary  Zoom on Sean A OLeary  All the evidence we have is that Dáil Éireann does agree with us, because in respect of one of those two Bills — the Dentists' Bill and the Nurses' Bill, I forget which one — the original change was only made in relation to the nomination of a person as a candidate to this House and the second time the change was made it was made as nomination as a candidate of either House. In the Dentists' Bill I think this has been enacted into law and in the other case it is still before the other House.

The Minister would be incorrect if he thinks that our position is merely hanging on the electoral peculiarity that a person can be nominated as a candidate against his wishes. That is an electoral peculiarity which strengthens our argument. The thrust of our argument is that the mere nomination as a candidate to this House, even with one's consent, should not disqualify a person as a director or as an employee of bodies like this.

The original intention in regard to this House was that it would be as little political as possible. The hope was that the University Senators for example, whose attendance here today I welcome, it would be totally unpolitical. It is to the disadvantage of the House that the place has become so party political. In that context, where the desire to have an Upper House which was party political [929] to the least possible extent, it is unacceptable to have the mere nomination of a candidate to that House as a disqualification from service in the semi-State area or in the quango area of the nongovernmental bodies to which people from time to time were appointed. That point exists separately and distinctly from the point with regard to the nomination of a person as a candidate against their will which is merely an additional point. It is not the only point on which we are making our stand.

Senator McGuinness gave an example that on one occasion she had to resign from the board of the VHI as a result of being nominated as a candidate on the university panel of Trinity College. That that should happen is absolutely ridiculous. There are many examples going back over the years of Ministers who have promised that this matter would be looked at and expressed their sympathy. In the case of the Minister, Deputy Desmond, we went beyond expressing our satisfaction at the Minister's sympathy: we insisted that an amendment would be made. Certainly, the attitude of the Leader of the House would have my enthusiastic support.

Mrs. Honan: Information on Tras Honan  Zoom on Tras Honan  In case silence might be misinterpreted, I wish to say that I totally support Professor Dooge. As regards a comment made by Senator O'Leary, I think that this House has behaved in recent times in a less political way and might be nearer to what the Seanad was originally intended to be. Having said that, and speaking as a mature politician, to have this included again in section 22 here today, is a little bit surprising to say the least of it. I totally support the Leader of the House.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): First of all, I did not realise the unanimity and the strength of feeling that was in this House. It is not a matter of principle with me. I certainly think that the change should be made. I thought that the activity of the Department of the Environment in bringing a memorandum to [930] Government to change electoral procedures for the Seanad would satisfy the House. It is quite obvious now that it will not. I would be prepared to move an amendment on Report Stage along the lines of the section in the Nurses' Bill, 1984. I have it here in the Dáil Official Report for Wednesday, 13 November 1985, column 2013:

20.—(1) Where a person who is either an officer or a servant of the Board is—

(a) nominated as a member of Senaad Éireann, or (b) elected as a member of either House of the Oireachtas or of the Assembly of the European Communities, or (c) regarded pursuant to section 15 (inserted by the European Assembly Elections Act, 1984) of the European Assembly Elections Act, 1977, as having being elected to such Assembly to fill a vacancy,

he shall thereupon stand seconded from employment by the board and shall not be paid by, or be entitled to receive from, the Board any remuneration or allowances in respect of the period commencing on such nomination or election or when he is so regarded as having been elected, as the case may be, and ending when he ceases to be a member of either such House or such Assembly.

That was the latest thinking in the Dáil. I will have this checked to see if this is the appropriate format to comply with your wishes. I propose that when we take Report Stage I would put down an amendment along the lines of that section, probably that actual amendment but obviously it needs to be checked departmentally and by the draftsman.

I do not know if it is appropriate for a Minister to trade on his feet or not, but I would like Report Stage and Final Stage to go through pretty quickly. I thought we might be able to take them all today. If the House would facilitate me by taking Report Stage early next week, that would [931] give me the time to check out the amendment and would not delay the legislation unduly.

Professor Dooge: Information on James CI Dooge  Zoom on James CI Dooge  Firstly, I want to say that I am very grateful to the Minister for meeting the views of the House in this way. While it might be somewhat undignified to indulge in horse trading on the floor of this House, I will say that if the Minister is able to put together an amendment between now and next week, I would certainly be prepared to order the Report Stage next Wednesday. I am sure Members of the House would be prepared to take it then. It would be necessary, the Minister will find when he looks at it, to take into account not only the amendment which was made in the Dáil but also the amendment made in the Seanad, to which I think this was an amendment. So it really will be the composite which will cover both members of the board and employees of the board. In doing so the Minister will not only be meeting the wishes of this House but he will be strengthening this new departure. It will be interesting to see how many times this will have to be done before it gets through to the draftsman that there is a new standard procedure. I am grateful to the Minister.

Question put and agreed to.

Section 23 to 26, inclusive, agreed to.

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

Mrs. Honan: Information on Tras Honan  Zoom on Tras Honan  Section 27 deals with staffing. Will the NDC try to attract experienced personnel to their staff, or will they recruit staff and train them over a period of years? It must be taken into account that it will take some considerable time before profitable investments will be made. The pressure to make investment within a certain period must be resisted. It is important that there [932] would be the right staff from the beginning, because this is a whole new ball game and, as some Senators from the Government side have said it has to be seen straightaway as being successful The success of the NDC will not be due to the top brass on the board; it will be the staff inside that will make it a success. If it is not a success and if the staff are not right, then investment will not come in. Therefore, I see the staff of the NDC as being very important.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): First of all, the present staff of the National Enterprise Agency will be taken on board when the NDC is set up. People who work with the NEA are on short term contracts, six or 12 months, that kind of contract. I presume that extra staff will be required. It will be a matter for the board to decide the appropriate people to take on and if they are to take them on a permanent basis or on a short term contract basis as the NEA has done. Certianly, I am sure they will keep them in mind the view expressed by the Senators, which would be my view also.

Question put and agreed to.

Question proposed: “That section 28 stand part of the Bill”.

Professor Hillery: Information on Brian J. Hillery  Zoom on Brian J. Hillery  This section concerns subsidiaries and investment in enterprises other than subsidiaries. In response to an earlier section, the Minister mentioned that it will not always be the NDC's objective to take a substantial shareholding in enterprises. The point I want to get to at this stage is that, even if it were to take a 1 per cent or 10 per cent shareholding, the relevant institutions that interact with that company that is so supported by the NDC — for example, banks, other State agencies, customers and so on — will perceive such a subsidiary as having an element of State support.

There is an historical experience that is relevant in this regard. Údarás na Gaeltachta took a minority stakeholding in a [933] number of companies that they wished to support to get off the ground. I assume the NDC will be doing something similar here. Some of these Údarás-supported companies subsequently got into trouble. The situation was eventually reached where Údarás through this support had taken a 50 per cent or even more stake in some of these organisations. The cost to the State at the end of the day when some of these companies failed was £20 million to clear the debts in these companies. I am happy to say that Údarás na Gaeltachta have turned the corner. They have adopted a very rational and systematic approach towards the treatment of subsidiaries. What I want to put on the record now is the red light, as it were, that there is important experience there which should be taken on board now in relation to the NDC.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): I fully agree with that. That is exactly why the Government have been very careful to bring in the stringent controls that are in this Bill. There is no question of the State underwriting the debts of a whole series of small companies all around the country. This particular section is an enabling section. It will be a novel feature of the NDC in having the ability to establish wholly or partially owned subsidiaries. But they are not statute-barred from having a majority shareholding.

Professor Hillery: Information on Brian J. Hillery  Zoom on Brian J. Hillery  They are not statute-barred.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): They are not statute-barred but they need the Minister's consent. That is what will be the inhibiting factor there. It is essential that this power be given to fulfil the objective outlined in section 10(1)(a) to enable them to establish enterprises of their own accord. But I fully agree with the point made by the Senator and the Minister's consent is put in there deliberately to get a stringent control into the particular enabling section.

Question put and agreed to.

Question proposed: “That section 29 stand part of the Bill.”

Professor Hillery: Information on Brian J. Hillery  Zoom on Brian J. Hillery  Section 29 relates to accounts. It is true in the case of commercial semi-State bodies that for the most part the accounts are approved by the directors within a reasonable period of time. But I cannot say the same in relation to the said report and accounts being put before the Houses of the Oireachtas. All too often there is a serious delay there and that of course relates to this section. Since we are in a green field situation here, starting from scratch, as it were in the case of the NDC, could I make a plea to the Minister that in the case of the NDC and for that matter the other State-sponsored bodies over which Deputy Noonan, as Minister, has control like NET, and Irish Steel, that every effort will be made to speed up the procedure from the time the report and accounts are approved by the board of directors to the point at which they are laid before the Houses of the Oireachtas. After all, any delay at that stage only adds to the historical aspect of these reports and accounts. Any remedial measures or changes that may be necessary at a political level will be delayed in the process too.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): Yes, I take the point. This section is the usual provision in legislation for State-sponsored bodies. It provides that the corporation should keep accounts of moneys received and expended by it. The form of accounts to be kept will be subject to the approval of the Minister with the consent of the Minister for Finance. In addition, however, the corporation will be obliged to keep a profit and loss account and a balance sheet. In addition, they will be obliged to maintain in such form as the Minister may direct any special accounts as the Minister may from time to time direct. That is the general position within the section. Yes, I think the Senator is right. Procedurally rather than legislatively we should work to make [935] sure that accounts are presented pretty soon after the end of the financial year. The delay is too long in certain companies and it inhibits the exercise of the checks and balances that are in the legislation if the people responsible for operating the checks and balances have not got up-to-date information. I do not think it is a matter for amendment because it might be dangerous to write it into the Bill. It could lead to other difficulties, but certainly I take the point.

Question put and agreed to.

Section 30 agreed to.

Question proposed: “That section 31 stand part of the Bill”.

Mr. O'Leary: Information on Sean A OLeary  Zoom on Sean A OLeary  This is a catch-all which is normally put in to enable the Minister to issue general policy directives, whatever they are. It is very hard to see how this would actually work in practice. I understand that subsection (1) makes it quite clear that the Minister cannot issue a general policy directive or a general directive with regard to day-to-day operations. Similarly, he cannot issue such a directive with regard to an individual investment, because subsection (4) of this section says:

Nothing in this section can be construed as enabling the Minister to exercise any power or control in relation to any particular investment with which the Corporation is or may be concerned.

Therefore, a little bit of vagueness is left as to what the Minister could do. The Minister might help me in that regard. Could the Minister issue a directive which would say that the National Development Corporation are to invest 50 per cent of their money in computers, 25 per cent in agriculturally-based operations and it is generally to have 25 per cent available for the rest of the economy. Are they the kind of policy directives [936] which the Minister feels — I am not suggesting that percentage — would be within his power. If so, is it intended that the policy and the objectives or general directives — as distinct from advice — issued by the Minister should become a matter of public record? Is it intended that it should become a matter of public record as to who is actually making the policy decisions in broad terms? If the Minister is interfering in a policy decision, would it be wise that that would become a matter for public record? I would like the Minister to identify the parameters that he sees section 31 fall within, and secondly whether he thinks the general directives issued pursuant to section 31 should be public in nature, more or less like the directives issued to RTE under the appropriate legislation, when RTE are told to do something it is a matter of public record that they are so told.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): Section 31 (5) puts an obligation on the Minister within 21 days of giving a directive to cause a copy of the directive to be laid before the Houses of the Oireachtas, so it would be a matter of public record. As to the parameters of the power vested in the Minister in section 31, I would suggest it would run along the following lines. First of all, it would be inappropriate for the Minister to get involved in any particular decision or in anything to do with the day-to-day operations of the company, apart from the fact that if a particular investment proposal exceeds £1 million, then it needs the permission of the Minister; or £2.5 million would need the permission of the Government. But other than that the Minister should not be involved in the decision making process on a day-to-day basis.

The objectives of the NDC under section 10 are very wide-ranging. It would be proper that the Government should indicate particular policy areas where it would like to see activity in the first instance. My predecessor said either here or in the Dáil in reply to a point that there was nothing to prevent the NDC from getting involved, for example, in [937] the retail trade, that he did not think that this was appropriate although theoretically they would have the power to do so. That may be an appropriate area for a directive that the NDC are to operate in the traded section of the economy and it is not to get into the retail business. Another area where the Government would be concerned, for example to develop, say, State forestry in the country. It would be appropriate for the Minister to issue directives to the NDC saying we are very interested in progress being made in economic activity related to forestry. That would be an appropriate policy directive, whatever way it would be framed. It would be inappropriate for the Minister on the other hand to say: I want to get involved with that company in developing the timber industry in Kerry, Cork or whatever. It would be along that line. If you go into the manufacturing side then it would be appropriate for a Minister to say, for example — and I do not mean this by way of commitment, simply by way of example — that we would like more activity in the software end of the computer market. The NDC should give priority to that area of activity. Again, it would be inappropriate to say: you get involved with X company to do it.

Question put and agreed to.

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

Mr. O'Leary: Information on Sean A OLeary  Zoom on Sean A OLeary  The position on section 32 is that under subsection (1) it is proposed that the National Enterprise Agency Limited, which is a company registered under the Companies Act, should be dissolved. This gives rise to a number of problems. I wonder if the Minister is aware that there were problems, I understand, when a similar provision was made with regard to other companies which had been taken over like this and had been dissolved by the implementation of a section of an Act on a particular vesting day. The problem that could arise is that there could be a responsibility on the directors of the [938] company to do certain things, a statutory obligation of them, for example, to sign accounts. That is just one example of a statutory obligation that would be on them. If they did not have their accounts signed, you would then have a situation where they are no longer directors because the company no longer exists. The company has one out of existence. It has not fulfilled its obligations under the Companies Act and it has no way of fulfilling its obligation under the Companies Act. I do not know why this is becoming a standard provision, why we do not put in that it would be liquidated in the normal way — appoint a liquidator and it would be terminated and tied up that way. I support completely all the remaining provisions of section 32.

There are certain continuing commitments which a limited liability company has. To interfere with the normal operation of the Companies Act and to say that “I am going to dissolve that company”, means that the people who were in the position of being directors of the company might fail as a result of the lack of power to meet statutory requirements which were put on them by other Acts of the Oireachtas. The Minister should consider that. There should be retained, at the very least, some residual power for the directors to do whatever is necessary in order to properly wind up the affairs of the National Enterprise Agency Limited.

Mrs. Honan: Information on Tras Honan  Zoom on Tras Honan  Section 32 of this Bill dissolves the agency. Because we are now finishing with the National Enterprise Agency, I would like to go on record as paying a tribute to the persons involved in that agency. It is right and proper that I should do so.

Section 32 dissolves the agency and vests all its property assets, liabilities and so on in the new corporation. Minister Bruton told us on Second Stage that this was a streamlined way of eliminating any difficulties that might arise in the transfer or responsibility, and that it ensured that the corporation may step directly into the shoes of the agency. For some reason unknown to me the agency has been replaced and the NDC will take over [939] 25 or more projects at present aided or assisted by the National Enterprise Agency as well as profits. I have a horror of new outfits. Why could we not have gone on with the agency? I believe this section is loose. I have already paid a tribute to the persons involved in the agency now defunct. I do not know what faults the Department saw in it that they decided to get rid of it and set up this marvellous NDC, which is going to create thousands of jobs around the nation. I understand that the National Enterprise Agency had no statutory remit, but that could have been provided. Because it has been said that the agency was inhibited by a number of factors, we should see to it from day one that the NDC will not be inhibited by the same factors that seemed useful to get rid of the agency. I will not go political on this, as indeed some of my colleagues did. In regard to this transfer — my good colleague, Senator O'Leary, is much more experienced in dealing with these matters than I am — I would like to see section 32 tightened up. If mistakes were made in relation to the NEA — I am not convinced they were and I should have liked to see the agency continued on — we would want to ensure that they would not be made again in the NDC. I do not think section 32 is still tight enough, but perhaps the Minister will watch it after the legislation becomes law.

Mr. Ferris: Information on Michael Ferris  Zoom on Michael Ferris  I feel that section 32 is exactly the kind of section that we need for this type of legislation if we are going to do a clean job on it. The actual vesting day is the operative thing. The Minister for Industry and Commerce has already said that the projects being dealt with by the National Enterprise Agency will not be interrupted by the vesting day. It is important that there would be a smooth transfer from one to the other. I do not accept for a moment that there would have to be a liquidator, as Senator O'Leary suggested, because the wrong impression might be given to enterprises which have been stimulated by that agency.

Like Senator Honan, I want to pay [940] tribute to the people who have been involved in the National Enterprise Agency. They have done everything it was possible for them to do within the remit that was given to them. Certainly, the corporation is a whole new ball game compared to the National Enterprise Agency. It is because of the limitations of the NEA that we suggested that a development corporation was the appropriate vehicle to play a dynamic role in the generation of jobs assisting the private and public sectors together. There was nothing wrong with the agency, just that it did not have a broad enough remit to be able to do the job in the way we wanted them to do it. If the two were to exist in parallel, then you would have a problem. I would accept that there might be some doubt as to the remit of one or the other. Therefore, it is important to have a clean break and by legislation we are setting down on the vesting day that the dissolution of one will take place and the responsibilities — which include all the responsibilities they may have — will then be transferred to the corporation. I see no other way of doing it correctly. I would not feel that any director of NEA should have any power to make decisions after this corporation is set up. I envisage that the corporation will have all those powers. The vesting day is important and the transfer should be done in a way that will not disrupt any existing projects that the NEA might have coming on stream or otherwise.

Mrs. Honan: Information on Tras Honan  Zoom on Tras Honan  I accept that the Government have decided to get rid of the NEA. It is gone.

Mr. Ferris: Information on Michael Ferris  Zoom on Michael Ferris  It is still there.

Mrs. Honan: Information on Tras Honan  Zoom on Tras Honan  It will be gone when the Labour legislation before us here today goes through.

Mr. Ferris: Information on Michael Ferris  Zoom on Michael Ferris  That is a compliment.

Mrs. Honan: Information on Tras Honan  Zoom on Tras Honan  It is a fact. What I was saying before I was rudely interrupted at another time was paying tribute to the [941] NEA. The two bodies are not going to go on together, with all due respect to Senator Ferris. I am not so far removed from the legislation before me as to need Senator Ferris's advice that they are going to go on together, they are not. Rather than bringing in this new NDC I thought I would pay tribute to the body that was being pushed aside and take it from there.

Mr. Ferris: Information on Michael Ferris  Zoom on Michael Ferris  Senator Honan might be misrepresenting what I said. I also paid a tribute to them. I feel they have done a very good job within the remit that they were given. I feel that that remit was not good enough. That is why we have the NDC. I complimented the members of the agency. I do not need Senator Honan to say I did not either.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): I do not want to get involved in a debate on the principles of the Bill. The principles are disposed of. I am rather like the pilot who, once the destination has been selected, has taken over flying the plane. I do not propose to change destinations. What it comes down to in this section is: is this the most appropriate way of subsuming the NEA in the NDC or is there a better way of doing it? This is not the first time that a situation analogous to this has arisen. There are similar provisions found in section 19 of the Fóir Teoranta Act, 1972, and section 35 of the Gas Act, 1976, which provided for the dissolution of Taiscí Stáit Teoranta and Bord Gáis Éireann Teoranta respectively and the formation of Fór Teoranta and Bord Gáis Éireann. This type of section has operated in the past and has worked effectively in the past, I am informed.

The question that arises then is, is there a better way of doing it.? Senator O'Leary suggested a liquidation and I suppose a voluntary winding up of the NEA is what he has in mind. That would cause certain difficulties. Certainly there might be a problem of confidence. There might be a particular problem where the NEA have equity in small companies in various parts of the country. The equity obviously would be part of the assets of [942] the NEA and if you were to liquidate, what kind of position would that put the small company in? I can see a problem there. What we are doing here is the most effective and most appropriate way of doing it. My predecessor and his officials and subsequently I myself have been conscious of the possibility of a problem arising along the lines that Senator O'Leary has suggested. Officials of my Department have discussed the issue with directors of the NEA to ensure that what is statutory and necessary and what is administratively appropriate will be done prior to vesting day.

Theoretically we could have a section here which said the NDC will come into operation as soon as the Minister appoints the board subsequent to the passing of the Act. That kind of action would certainly not give the flexibility which might be required. Because the nomination of a vesting day is a matter for the Minister, by order, we can ensure by direct contact between my officials and the directors of the NEA that no problem along the lines which Senator O'Leary rightly points out will emerge.

Question put and agreed to.

Section 33 agreed to.

First and Second Schedules agreed to.

Government Amendment No. 2:

In page 3, lines 6 and 7, to delete “, TRADE, COMMERCE AND TOURISM” and substitute “AND COMMERCE”.

Amendment agreed to.

Acting Chairman (Mr. Browne): Information on John Browne  Zoom on John Browne  I have to report specially to the Seanad that the Committee has amended the Title to read as follows:

An Act to provide for the promotion by the Minister for Industry and Commerce of a limited company to [943] invest in and to secure the establishment and development of industrial and commercial enterprises and to provide for other connected matters.

Title, as amended, agreed to.

Bill reported with amendment.

Report Stage ordered for Wednesday, 5th March 1986.


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