Oireachtas Joint and Select Committees
Thursday, 3 July 2014
Committee on Transport and Communications: Select Sub-Committee on Transport, Tourism and Sport
State Airports (Shannon Group) Bill 2014: Committee Stage
In accordance with Standing Order 92(2), Deputy Clare Daly will substitute for Deputy Tom Fleming. The meeting has been convened to consider the State Airports (Shannon Group) Bill 2014. The purpose of the Bill is to establish, under the Companies Acts, a commercial State company to be known as Shannon Group plc and to transfer from the Minister for Public Expenditure and Reform to this company ownership of Shannon Airport Authority and Shannon Free Airport Development Company, now known as Shannon Development. I welcome the Minister for Transport, Tourism and Sport, Deputy Leo Varadkar, and his officials to the meeting.
Amendments Nos. 3 to 9, inclusive, are grouped, and amendment No. 2 has been ruled out of order.
On the ruling of out of order of amendment No. 2, will there be an opportunity to discuss it in general terms or will I have to raise it on the discussion on the relevant section? Will we be going through the Bill section by section?
During Second Stage, I discussed with the Minister the position on cross-subsidisation between the two companies that will sit under the overarching company. The Minister was at pains to point out in his Second Stage statement that the companies would not be in a position to cross-subsidise. At the time I was somewhat confused because, as I set out for the Minister, the reason for the bringing together of the two companies was to ensure the airport would have a real chance of surviving on the basis of having external support.
Shannon Airport is a going concern and has survived up to now on revenues generated by ARI. While that was part of the group company, there was a subvention of between €10 and €12 million annually. The Booz report set out very clearly that an airport the size of Shannon Airport needs between 3 and 5 million passengers a year in normal trading conditions to survive. Notwithstanding the best efforts to create a business plan which would demonstrate the capacity of Shannon to survive on its own, it was not possible to predict or forecast that level of activity. The expectation in the minds of all was that the bringing together of the property assets of Shannon Development would be adequate and appropriate to assist Shannon Airport to become a stand-alone entity. Being cut adrift from the DAA, it would not be in a position to receive any State support. As it would be now independent, that would rightly be seen as state aid, which EU rules prevent. The Minister might expand therefore on how he sees the capacity for the airport to survive as an independent entity without access to revenues or resources other than those generated by terminal traffic or the use of its own lands. My understanding is that Shannon Development as a company will continue to manage the assets of the old SFADCO.
It is not so much that the airport needs the rent-roll from the parks around the airport to survive or cover its operations. In fact, the airport operating as an airport with an airfield can break even, which it did last year, notwithstanding that it does not have 3 million passengers. As passenger numbers continue to increase, we are confident that the airport and airfield can be profitable. The adjacent land in what will become Shannon Commercial Enterprises Limited can also be profitable, but it will be under the same umbrella with the same CEO and board. A secondary consideration is EU state rules. Our best legal advice was to keep the subsidiaries separate.
That creates some concern. Notwithstanding the fact that the airport was largely given the independent status in a debt-free way, the best advice from Booz was that if it was to be made independent, it would need external support to deal with potential shocks. I recognise the good work the management, staff and chairperson, Ms Hynes, have done in increasing the through-put of passengers. I was around in 2007 when the then Government believed the establishment of two independent entities at Shannon and Cork gave the best chance of a strong future for both airports. Notwithstanding that, the over-reliance on one particular carrier and the desire of that company to manipulate its activity ultimately put the airport in a precarious situation. I have concerns therefore that if there was to be a significant shock to the aviation sector internationally - examples of which we have seen on many occasions in the past - the airport would not have the capacity to rely on a source of revenue Booz identified as important for its survival.
I am concerned about the basis on which the legislation was first proposed which was that business plans could be put forward for both airports that showed their capacity to survive or not. In the case of Cork, it did not reach the threshold whereby it could survive on its own. The business plan for Shannon outlined the possibility of survival as an independent entity on the basis that it would have access to revenues from another source. If that were not the case, there would have been stronger objections within the region to the removal of Aer Rianta International, which has been a significant revenue generator for the entire group of companies. It was used to fund the expansion of what was Aer Rianta to assist in the development of Dublin Airport. That has been successful. It was always there and had the capacity to support Shannon in the event of a difficult patch.
What I am trying to elicit from the Minister is the safety mechanism in place for the establishment of Shannon Airport in an independent entity, recognising the vagaries of the aviation sector. What if there is a shock in the sector and a reduction based on a particular airline's future prospects? What is there to allow Shannon to trade through a difficult period? I do not see the safety mechanism in circumstances where the Minister says there is no capacity for cross-subsidisation. I accept that the section deals with the payment of dividends to the Exchequer. Of course, the Exchequer can decide in a particular year not to take a dividend where it would be perilous to the viability of the company. If it is not able to meet its basic cost requirements, Shannon faces potential difficulties.
The Booz report informed the Government's thinking, but it did not dictate or determine it. Subsequent to the Booz report, the Shannon task force modified and built on that thinking and effort. What is envisaged is that the airport will operate at break even or in profit running as an airport. Also envisaged is that IASC and the facilities around the airport will be profitable. It is of course a possibility that in some years the airport will be loss making where a downturn in aviation occurs as happens from time to time. That is true for any airport. Dublin Airport ran up losses for a good few years before going back into profit. That happens with airports all over the world. The airport has significant borrowing capacity and reserves at this stage.
The Minister is right that the Booz report was not a definitive document informing all Government thinking. It would have been wrong to suggest that any one consultancy report would form the basis for the entire thinking of Government.
The business plan I recall indicated a necessity to reach approximately 1.9 million passengers by the end of 2014. That would have taken numbers to significantly more than is projected for this year. Approximately 1.39 million passengers used Shannon Airport last year, which was an increase of approximately 5,000. Projections are that there will be an increase of 10% to 12% this year, which gets numbers to 1.6 million at best. That is 300,000 passengers short of the business plan expectation. Projections went on to require passenger numbers of approximately 2.5 million by the end of 2017. We are well off target in the first year, which is not to cast any negative aspersions on the people there who are working very hard to build on the economic activity in the State and take cognisance of what is happening internationally. They are doing an outstanding job. However, it points to the fact that the projections in the business plan which set the tone for the Government's decision to bring forward the Bill have not been met to a considerable extent. One must suggest, therefore, that there is a very obvious need for a belt-and-braces approach.
We all recognise that there are potentially negative consequences to going independent, but people are largely embracing the idea. They want to make the most of it. However, I record my concerns at not seeing the kind of protection required when one considers the importance of Shannon Airport to the wider mid-west region. While it is clear we will not agree, I want the Minister to be aware of potential issues. There is no impediment in the legislation to directing cross-subsidisation.
If one wants cross-subsidisation, I hope there is capacity there that will allow the two companies to operate in a manner that works best for both. I certainly think their interdependence is critical and is just not at board or senior management level.
I completely understand where the Deputy is coming from. Passenger numbers at Shannon Airport increased very marginally last year. We are now projecting a 10% rise in passenger numbers this year, which is a very good outcome. It will mean that Shannon Airport is about one year behind on what was a very ambitious business plan, but to be a year behind on ambitious business plan is not a bad result.
The 2012 business plan did not envisage any income coming in from the International Aviation Services Centre, IASC, which is the centre of excellence for aviation. Shannon has as much security as any State-owned enterprise. All State-owned enterprises must break even and make a profit. Shannon has as much security in that regard as any other State-owned enterprise. In an extreme situation, it is possible for the Government to inject equity into the company but we are not anticipating that ever being necessary. It is not that it would be allowed to close or anything like that. That is not even foreseen.
I have absolutely nothing in mind at the moment. It is just a standard provision in legislation to allow the Minister to assign additional functions to the group by order should it be necessary. Obviously, that order would have to be laid before the Dáil.
This committee participated in the discussion around the heads of the Bill when it was first published. At the time, we sought the views of different stakeholders. In that context, we had a number of submissions. I recall there was concern in a number of quarters about the borrowing potential, which I think is set at €100 million. The concern was that there might be a need to increase that and that even the borrowing would be with the approval of the Minister for Public Expenditure and Reform. A number of parties queried whether the potential existed to involve the Department of Finance, which tends to be quite conservative in the minds of most, about permissions in that regard. They queried the need for the Department of Public Expenditure and Reform to have a role in that regard. Will the Minister comment on that?
The €100 million limit was the limit sought by the board. It got the figure it wanted. There were initial concerns from the Department of Public Expenditure and Reform and other places that a borrowing limit of €100 million was too high.
Yes. Obviously, its job is to protect the public purse so it was doing its job in that regard. At Cabinet sub-committee level, we agreed to a limit of €100 million with which everyone was satisfied, including Shannon. It is not unusual for major borrowings to have to get consent from both the parent Department and the Department of Public Expenditure and Reform. Even something as minor as setting up a subsidiary of a State-owned enterprise or appointments to the board of a State-owned enterprise must be run by both the line Department and the Department of Public Expenditure and Reform. It is pretty standard in that regard. Perhaps it is unnecessary but the view is that line Departments can sometimes be captured by their companies and agencies and the Department of Public Expenditure and Reform is there to have a second view and to make sure the general public interest is looked after as well.
On Second Stage, I outlined my concerns about a particular group of employees of Shannon and Cork airports. They are people who from 1969 onwards transferred from the Civil Service to Aer Rianta on the urging of the Department and with the expectation that it would not involve any worsening of conditions of employment. This was circulated by way of office notice 4/68. That assertion was confirmed on a number of occasions in the Dáil by various Ministers based on questions that had arisen. Anybody taking a look at this would believe that there was a legitimate expectation that their situation would not be any worse than if they had remained within the Civil Service. In fact, they would argue, and I would find it very hard to disagree with them, that Aer Rianta was not a legal entity in company terms until 1998, that before then it had acted as an agent of the Minister, that all the legal documents from Aer Rianta had to be sent to the Department for signing, and that when the 1998 legislation was enacted, it made no reference to the company's staffing or any current superannuation conditions.
This raised a legal point that was moot but serious. How could an established civil servant prior to 1998 be transferred to a trading or non-registered company back in 1969? While they had transferred in terms of employment, one would need to look at what their legal standing was during that period. It would be their view that the conditions could not have changed since they transferred to an entity that only became a legal entity in 1998.
Successive Ministers, including those from my party, have failed to address this issue. It was easy to let it go. Unfortunately, because of the way in which the pension issue has transformed over the years, there is little doubt that those concerned are at a very significant financial disadvantage in pension terms. An officer in a particular grade who moved to Aer Rianta and who has a salary in 2014 of about €52,000 has a pension entitlement of €16,000. However, a similar person who remained in the Civil Service would now have a pension entitlement of about €24,000. That is very significant issue and I do not think the Government can continually turn its back on it.
I accept that my amendment has been ruled out of order on the basis that it might put some financial burden on the State. As members of the Opposition, we do not have the capacity to do that. However, it would be helpful if the Minister could have a look at it again possibly with a view to bringing forward his own amendments that might address this issue.
I did take a look at the issue after Deputy Dooley raised it on Second Stage and asked for a submission from my officials about it. The matter had been raised and examined by other Ministers in the past, most extensively by Mr. Noel Dempsey who also sought the advice of the then Attorney General. The conclusion they came to was that the people concerned ceased to be civil servants when they signed contracts with Aer Rianta going way back.
While the office notice gave them an assurance that there would not be changes and they would be no worse off in respect of their employment terms and conditions, that assurance did not extend to future pension rights. This was the determination when it was reviewed by the then Minister, Mr. Noel Dempsey, with the support of the Attorney General. Nothing has changed since then to alter the position. While it is open to employees to go to the courts if they so wish, that they have not done so may indicate that their own legal advice is similar to that of the Attorney General.
I am disappointed that the Minister has reached this conclusion. It is not a case of the workers not believing they have a legal case. Rather, they do not have the wherewithal to take on the State with the Attorney General defending. Recognising that they are pensioners and their pensions are meagre compared with what they might have had had they remained in the employ of the Civil Service, they are not financially strong enough. They are also relatively few in number, so a small contribution from a large number of people to pay for a class action and get a decent hearing is not possible. Given how everything has changed significantly for them, they were like us in hoping for a review to address this wrong.
I have been reading about this situation for years and I am not taking a constituency point of view. I have taken difficult decisions in the House about Shannon Airport, Aer Lingus and so on where I believed they were justified. Assurances were given to these employees to the effect that the move would not involve any worsening of employment conditions, but a pension is always a condition of employment. When a comparison is made between two entities, and conditions transfer with employees, it follows that there is an incumbency, perhaps on the State, to ensure the commitment is followed through. When entering any employment that depends on a private pension, there are no guarantees about the outcome. For example, there could be a catastrophe along the lines of what happened to our economy. Given that the commitment was linked to the workers' employment as civil servants, however, their clear understanding and expectation was that they would be no worse off. For HR purposes, they were facilitating the State by transferring to the company. The handful who did not believe the political system have been proved right. They have retained their benefits and pension entitlements in full.
It is difficult to justify what the State has allowed to happen, although I do not mean that in political terms. I call on the Minister to re-examine the matter or consider entering a consultation process with representative groups. Often, it is only decades after a particular event that we realise a wrong has been committed and the State finds itself having to pay out, issue apologies and so on. One such wrong has been done in this case. The current legislation is clear, in that those who transfer from Aer Rianta to the Shannon Airport company will be given commitments. It follows that this was the express desire when people who transferred previously would not end up in a worse position. Having read the Dáil transcripts and notwithstanding the fact that the legislation itself did not follow for a long time, I do not doubt that the Legislature's intention was to ensure that all of the employees' conditions would be maintained. While I do not want to second-guess what will happen in the courts, the Minister is aware that when issues before a court grow complex, the judge or judges often read the Houses' debates in an attempt to understand what the Legislature's wishes might have been. It is clear from the debates in question that the desire was to give employees full confidence and that it was all just a method of housekeeping for the Department. For example, why remain in the Department's employ when people could move to a different entity and retain the same terms and conditions?
I am not happy to support the Government's approach. Nor was I happy when people from my party were in government and reached the same conclusion. I am disappointed that the Minister has not considered the issue more broadly.
We oppose the section on the basis that people in Cork had a legitimate expectation for an independent entity similar to what was established at Shannon. A certain part of the business community is concerned that Cork does not have the same ability to chart its destiny. Cork is a significant city and has a regional presence. There is a belief that its airport could manage its affairs well and be a viable, independent entity. That the Government is removing it as an entity completely ends the potential during the life of this Government and for some time afterwards of establishing that independent entity. Will the Minister explain the Government's thinking in effectively ruling out the notion of an independent entity at Cork?
For clarity, we are not ruling out the potential separation of Cork Airport and its also becoming an independent airport. What we are doing now is dissolving the Cork Airport Authority plc as it stands but retaining the provision to re-establish it should the conditions for re-establishment of it as an independent entity be right. Currently, the conditions are not right because of the large debt associated with the new terminal at that airport. While Cork Airport is generating an operating profit now, it iis not sufficient to pay down that debt. The debt will have to be paid down over time from profits made in Dublin and, perhaps, overseas. When it has been sufficiently paid down it may then be possible under this legislation to re-establish the company and then separate the airport.
The new management team in Cork is putting huge efforts into the development of new routes, particularly to the Nordic countries and Northern Germany and Northern Spain where currently there are no routes in operation. While it operates 50 other connections to various parts of Europe, it has none in those areas. The team is keen to provide a transatlantic service, if possible, and a Dublin connector service if they can get airline support for it. Currently, the airport manager reports directly to the CEO of the ARI. Previously, management at the airport had to plug into the middle management system in DAA, which meant HR in Cork reported to HR in Dublin and security in Cork reported to security in Dublin. This no longer happens. In practical terms, the airport now operates much more independently than in the past in that it now runs its own show and the manager now reports directly to the CEO. In addition, the Airport Development Council has been established. This comprises all of the stakeholders in the Cork region, including Cork Chamber of Commerce, Fáilte, union interests and so on who are being brought together to help drive the airport and make it more successful.
What is being abolished is effectively a shadow company - in other words, a company with a board but no assets and no real power and an extra step of management that was not necessary. In terms of what is happening on the ground, in reality Cork Airport is becoming much more independent than it was in the past. We are abolishing the shell entity. Even the directors of the board were uncomfortable with being members of a board that did not own or have any power over the airport. We are also in this legislation retaining the provision to re-establish the airport when the conditions are right.
What the Minister is saying is that the functional management structure that existed at Shannon and Cork Airports is no longer in place and that there is now more hierarchy within the organisation than heretofore.
Yes, the management structure has changed such that Cork Airport runs its own show and the CEO of Cork Airport reports directly to the top man in DAA. In the past, the CEO had to report to middle management within the company.
On the basis of the Cork Airport position within the DAA, I would have thought that like any business unit within a large multiplicity of entities it would be assigned a budget on a annual basis based on its own projections and that, if necessary, it would receive the support of Dublin in the context of the considerable borrowing referred to by the Minister which has to paid down, I presume with some level of subvention from ARI which at the end of the day is the cash cow. I would have expected that it would start out at the beginning of a training period with its own budget. If management is as stated by the Minister, and I have no reason to doubt him, that type of structure would in my view necessitate an individual budget provision on an annual basis rather than a wait and see what happens at the end of the year type approach.
During my meetings with management in Cork I saw its financials, budgets and projections in terms of airport and commercial revenues, expenditure and so on and its projected losses factoring in the interest on the debt. In that sense, it has a budget. However, it does not file separate accounts.
A view previously expressed is that Shannon and Cork Airports had been retarded to some extent in their potential for growth because of the manner in which the DAA monopolised the entire aviation activity in the country. The view was that it retained all of the activity for itself and left only a small amount of business to the other airports. The notion of independence would allow more appropriate management in that regard. If as the Minister says the decision to retain Cork Airport within the overall umbrella is purely to get it to a point whereby it could be re-established independently then I would have thought the first step in that regard would be legislation framed in such a way that moved Cork Airport in a particular direction and provided that it be retained as a separate business entity similar to that prescribed earlier in the Bill in respect of Shannon and the two companies that emerged in that regard. The Minister has been quite prescriptive in the methodology used to establish those two companies under a broader umbrella and referred in that regard to issues related to State aid rules. I acknowledge that in relation to Cork Airport there is a difference because two unique companies are not being established. However, in setting Cork Airport on a path towards ultimate independence, the expectation would have been that the entity now being formed, with the localised management structure, would have be supported by a proper budgeting regime that would show its capacity to trade independently at some point, notwithstanding the overhang of the debt, which will be met from general revenues from Aer Rianta International. I do not propose to get hung up on this point but it is an issue of which the Department should be cognisant in terms of proceeding.
For clarity, the legislative provisions to allow Cork Airport to become a separate airport are provided for in the State Airports Act 2004, which are not being repealed and do not require to be reiterated in this legislation.
I oppose this section which again proposes to substitute "Dublin Airport Authority" with "DAA". Concern has been expressed in Shannon and Cork about the entity that has effectively controlled the three airports. I know the history of the establishment of the Dublin Airport Authority. The expectation at the time of its establishment in 2004 was that separation of Shannon and Cork Airports would have come about much sooner.
Given the fact that Cork Airport still remains part of the DAA, formerly Aer Rianta, I would have thought that pending the ability to make Cork Airport independent the Minister would have created some type of umbrella name that did not define it as the Dublin Airport Authority. It is known colloquially as the DAA, but people in Cork rightly feel that this adds to the notion that everything is about Dublin, driving Dublin and creating a really strong airport in Dublin, while Cork is at the end of the tail, as it were, in Irish aviation activity. While I do not wish to get involved in deciding a name, returning to the use of "Aer Rianta" as an interim step until such time as there are two independent entities might have been an appropriate way to proceed. I am opposing this section on that basis. I could have proposed an amendment to call it "DCA" or whatever.
The reason for the change in name is exactly what the Deputy outlined. DAA is not just Dublin. It includes Cork and has business internationally. It is not just about airports; it has a consulting arm and a retail arm as well. It is not an authority but a company. The original intention was either to return to the old name, Aer Rianta, or to rename it by giving it a new name. When that was scoped out, the conclusion was that it would not be wise. There were two reasons: first, the DAA is now an internationally recognised name which has some value attached to it, and, second, the cost of rebranding on the previous occasion was approximately €3 million. Given that the company is really only returning to profit now and there are problems in the pension fund, which we will discuss later, spending €3 million on an expensive rebrand was decided by everybody to be inappropriate. Instead, we are moving to "daa", using lower-case letters. It will be a little like KPMG or CRH or EY, which used to stand for something but are now just letters. Nonetheless, the letters DAA have value, and it is well recognised as a company not just in Ireland but also overseas. The ideal solution would have been a renaming and rebranding, similar to Electric Ireland or whatever Bord Gáis will be called, but the cost was not justifiable in the current circumstances.
I wish to point out that there is an incorrect reference in subsection(2)(b) in this section. The correct reference is section 22(4) of the 2004 Act. I am giving the committee notice that I will table an amendment on Report Stage to correct that technical error.
I move amendment No. 3:
I gave an overview on Second Stage of the intentions behind section 34 of this Bill, particularly the proposed new section 32A for insertion into the Air Navigation and Transport (Amendment) Act 1998. I said I would table some amendments to this section to bring greater clarity to some of the provisions. I also indicated that I proposed to delete the provisions in section 32A relating to replacement schemes. These provisions were only intended to be used in a fallback situation, as an alternative to the wind-up of the scheme by the Pensions Authority in the event that the parties to the scheme could not agree on a sustainable way forward. The deletion of these provisions will also address the concerns raised by Deputies last week, namely, the power under section 32A(4) for employers in the IAS scheme to unilaterally withdraw their members from the scheme, with the latter having no say in this. I am deleting that section with this amendment.
In page 26, between lines 19 and 20, to insert the following:“Amendment to superannuation schemes
34. (1) Section 32 (as amended by paragraph 16 of the Schedule to the Act of 2004) of the Act of 1998 is substituted by the following:“Superannuation schemes
32. (1) A company may prepare and submit to the Minister a scheme or schemes for the granting or provision of superannuation benefits to or in respect of such members of the staff or former members of staff (including chief executives) of the company or subsidiaries of the company as it may think fit, and such scheme shall, if approved by the Minister with the consent of the Minister for Public Expenditure and Reform, be carried out by the company in accordance with its terms.
(2) A scheme prepared under subsection (1) may apply to one company or more than one company.
(3) Every scheme to which subsection (1) relates shall fix the time and conditions of retirement for all persons to or in respect of whom superannuation benefits are payable under the scheme, and different times and conditions may be fixed in respect of different classes of persons.
(4) Every scheme under this section may be amended or revoked by a subsequent scheme prepared, submitted and approved in the like manner as a scheme to which subsection (1) relates.
(5) Nothing in this section shall be deemed to invalidate an existing scheme.
(6) A scheme amending or revoking an existing scheme shall not be carried out by a company (save in the case of a scheme amending or revoking the IAS scheme) unless it has been approved by the Minister with the consent of the Minister for Public Expenditure and Reform.
(7) No superannuation benefit shall be granted by a company nor shall any other arrangements be entered into by a company for the provision of such a benefit to or in respect of a member of the staff of the company or a subsidiary of the company otherwise than—(a) in accordance with a scheme under this section or an existing scheme, or(8) A company may, on the commencement of a scheme prepared by it under subsection (1), establish a new fund for each such scheme, administered by trustees who shall be appointed by the company, from which superannuation benefits payable under such scheme shall be paid or provided by the application of the fund or any part of it.
(b) with the approval of the Minister given with the consent of the Minister for Public Expenditure and Reform.
(9) A scheme made by a company under this section shall make provision for appeals.
(10) A scheme made by a company under this section shall be laid before each House of the Oireachtas as soon as may be after it is made and, if a resolution annulling the scheme is passed by either such House within the next 21 days on which that House has sat after the scheme is laid before it, the scheme shall be annulled accordingly without prejudice to anything previously done thereunder.
(11) In this section, a reference to former members of the staff of a company or a subsidiary of a company, does not include a reference to such former members who after ceasing to be members of the staff of the company or a subsidiary of the company became and were members of the staff of any other employer participating in the IAS scheme, unless the company determines otherwise.
(12) In this section—
‘existing scheme’ means—(a) the IAS scheme, orand includes, where the context so admits, a reference to that scheme as amended by a scheme to which subsection (6) relates, as may be appropriate;
(b) a scheme for the granting of superannuation benefits to or in respect of any members of the staff of Aer Rianta International, cuideachta phoiblí theoranta, in operation on the passing of the State Airports (Shannon Group) Act 2014,
'IAS scheme’ means the Irish Airlines (General Employees) Superannuation Scheme in operation on the passing of the State Airports (Shannon Group) Act 2014 (including any amendments made to that scheme after such passing).
IAS scheme member joining another occupational pension scheme
32A. (1) In the event that an IAS scheme member who is an employee of a company or any other person who participates as an employer in the IAS scheme agrees to become a member of another occupational pension scheme (referred to in this subsection as ‘the other scheme’) whether—(a) in the case of a company, prepared, submitted and carried out in accordance with section 32, orthen with effect from the date the IAS scheme member becomes a member of the other scheme—
(b) in the case of any other employer of an IAS scheme member, established by his or her employer,(i) that IAS scheme member shall cease to accrue any superannuation benefit under the IAS scheme in respect of service after the date of joining the other scheme and such IAS scheme member shall be treated under the provisions of that scheme as though he or she had left service on that date with an entitlement to a deferred pension,if the consequences referred to in subparagraphs (i) and (ii) do not otherwise occur as a matter of law.
(ii) that IAS scheme member and the employer of that member shall cease to have any liability whatsoever to pay any contribution to the IAS scheme for or in respect of such IAS scheme member in respect of service after the date of joining the other scheme,
(2) Subsection (1) does not operate to limit the trustees of the IAS scheme in the exercise of any power conferred on them by section 32B.
(3) In this section ‘IAS scheme’ has the meaning assigned to it in section 32(12).
Power of trustee to amend provisions of IAS scheme
32B. (1) (a) Notwithstanding anything contained in any provision of the IAS scheme, the trustees of that scheme may make such amendments to the provisions of that scheme as they consider appropriate in the overall interests of the scheme members and with due regard to the interests of the different categories of member, having regard to such matters as the trustees consider relevant including the funding deficit of the scheme, the potential impact of the deficit on the interests of the categories of members and any other superannuation provisions made for such members or any of them, to provide—(2) Where any amendment of the IAS scheme is, in the opinion of the trustees, necessary to comply with any direction of the Pensions Authority under section 50 of the Pensions Act 1990, following an application by the trustees or otherwise under that section, the consent of the members or of a company, other employer participating in the IAS scheme or any other person referred to in any provision of the scheme is, for the avoidance of doubt, not required.(i) that with effect from a date to be decided by the trustees the accrual of benefits under, and the contribution liability to, the scheme for all or any such members and their employers shall simultaneously cease and any such member or members shall be treated under the provisions of the IAS scheme as though they had left service on that date with an entitlement to a deferred pension, and(b) The consent of the members or of a company or other employer participating in the IAS scheme or of any other person referred to in any provision of the IAS scheme shall not be required by the trustees for the exercise of the powers conferred on them by this subsection.
(ii) for such other changes as shall be necessary to give effect to, or which are consequential upon, the amendment referred to in subparagraph (i).
(c) This subsection does not limit any power to amend any provision of the IAS scheme that, apart from this section, vests in the trustees or any other powers of the trustees pursuant to the scheme.
(3) In this section ‘IAS scheme’ has the meaning assigned to it in section 32(12).
(4) Subsection (1) comes into operation on such day as the Minister may by order appoint.”.
(2) Section 9 of the Aer Lingus Act 2004 is repealed.”.
I am inserting a new section.
It is correct that those provisions did not provide for the consent of employees, but I remind Deputies that in the scenario we were discussing - a possible forced wind-up of the scheme by the Pensions Authority - employee consent would also not have been appropriate at that point. In any event, the provisions contained in subsections (3) to (10) of section 32A are now deleted from the revised new section 34 which I have tabled.
Before discussing the revised section, it would be helpful to remind Deputies of the current situation regarding the IAS scheme and how the proposals in this section are intended to assist the parties in implementing whatever solutions are agreed by them to the serious deficit in the scheme. As I said on Second Stage, the provisions of section 34 do not anticipate or pre-empt whatever solution is arrived at by the parties. This could even include a continuation of the current IAS scheme if somehow the massive deficit in the scheme were to disappear and the IAS fund were to find itself in a healthy surplus again as soon as this Bill is enacted. Almost everybody now accepts that this is not a realistic outcome, but the Bill does not preclude it.
The central problem with the existing section 32 in the 1998 Act is that it only provides for that particular outcome. In short, it provides that any separate pension scheme that the DAA may establish for IAS scheme members must have the same pension benefits and that the terms and conditions relating to those benefits must be no less favourable than those currently applicable within the IAS scheme. In other words, if the DAA were to establish its own separate pension scheme for its existing and newer employees who are currently members of the scheme, it would have to be essentially a replica of that IAS scheme, with all its problems and inflexibilities. DAA and Shannon simply do not have a mandate under current legislation to introduce any other type of scheme for their members of the IAS scheme and this is potentially a serious barrier to the implementation of whatever agreed solution emerges to the problems in that scheme. We could find, and I very much hope we have found, a compromise solution to those problems, but DAA will not be able to implement it unless the flexibilities provided in this Bill are implemented.
It was also suggested on Second Stage that these provisions are premature and that we should wait for the current discussions among the parties to reach a conclusion. The implication of that suggestion is that I introduce a short Bill to the Oireachtas at that stage to provide for the legislative tools to implement whatever compromise solution has been arrived at by the parties. Leaving aside the prospect that the Houses might not be sitting, as the summer recess is almost here, that would be a very inefficient use of Oireachtas time and departmental resources when there is absolutely no need for such a course of action. We can provide the necessary provisions in this Bill, which I hope can be enacted before the recess. In addition, any prospect of causing further delay to the implementation of the solution to the problem, which has been ongoing for many years, is not one that should be attractive to any of us, and it would certainly be grossly unfair to the parties involved.
The amended section 34 which I have tabled contains two subsections. Section 34(1) substitutes three new sections in place of the existing section 32 of the 1998 Act.
These are new section 32, new section 32A and new section 32B.
With regard to the new section 32, most of the provisions of this new section 32 are similar to those of the existing section 32 which it is replacing. For the most part, therefore, it contains the fairly standard provisions governing pension schemes that appear in legislation governing commercial State companies, such as power for the airport authorities to establish superannuation schemes for staff, ministerial approval being required for such schemes and for any proposed subsequent amendments to them, power to establish a fund associated with each approved scheme from which benefits can be paid, a requirement that an appeals mechanism must be provided for in each scheme, and the laying of schemes before the Houses of the Oireachtas.
I have deleted subsections (13), (14) and (15) from the previous version of this section. Those provisions were intended to give clarity around how any new DAA pension scheme would be divided between DAA employees and those of a future Cork Airport authority if and when Cork Airport is separated from the DAA. I felt that, while not essential to the Bill, these provisions would assist the administrative processes involved in a future separation of Cork Airport. However, they have given rise to a certain degree of confusion and misunderstanding and it is for that reason I am removing them.
I have divided the previous section 32A into two separate sections for greater clarity. These are now sections 32A and 32B. The new section 32A will allow IAS scheme members who become members of another pension scheme to cease making contributions to the IAS scheme. The airport authorities will be required to submit that other pension scheme for ministerial approval in the normal way under section 32, which I mentioned a moment ago. Obviously, the employer contributions to the IAS scheme in respect of such a member would cease simultaneously and no further superannuation benefit would accrue under the IAS scheme for that member. This is entirely voluntary and there is no obligation on IAS scheme members to cease contributing to that scheme unless they want to. I have made an amendment to the previous version of this provision to make it absolutely clear that the member, him or herself, must agree to join another scheme.
The problems in the IAS scheme will still, of course, remain to be resolved by the parties. However, this section addresses the desire expressed by some employees to have the option of putting contributions in respect of future service into a pension fund other than the IAS fund where there is a prospect of a better future benefit. SIPTU held a vote on this issue last February and the overwhelming majority voted in favour of withholding contributions to the scheme pending resolution of its problems. The provisions in this section provide them with that option if, on a purely voluntary basis, they wish to avail of it.
The new section 32B(1) provides the trustees of the IAS scheme with power, without the need for consent by members or employers, to amend the provisions of the scheme to cease contributions to the scheme by both members and employers and of course to cease the corresponding accrual of further benefits under the scheme. This will facilitate an overall solution to the problems in the IAS scheme, whether that is along the lines of the Labour Court recommendations of May of last year, the trustees' proposals of last February, the proposals issued a fortnight ago by the expert panel or some variation of any of those proposals. In deciding whether to exercise this power, the trustees must consider what is in the best overall interests of the scheme members. Also, they must have due regard to the interests of the different categories of member and to any other matters they consider relevant, including the funding deficit and its implications for all members. Clearly, an agreement among the parties will make the trustees' job in this regard a lot easier. The trustees of most modern pension schemes would, in conjunction with the scheme's employer, have the power to cease contributions and benefit accruals in any event. Therefore, it is not an unusual provision in that regard.
In section 34(4) I have made the operation of these provisions subject to a commencement order. This is another amendmentthat I have introduced having listened to Deputies' concerns last week, and the concerns expressed by Senators some weeks ago. Having considered the matter again, it is not unreasonable that the activation of the ability to use this power should await further progress by the parties towards an overall solution.
Obviously if the trustees freeze the IAS scheme, there would be a requirement for a new pension scheme to be established, under which current IAS members could accrue benefits in respect of their future service. Such a new scheme would be subject to ministerial approval under new section 32 which I referred to earlier. Any new scheme would also of course cater for new employees, including those 1,250 new and largely young employees in the DAA and Shannon, to whom I referred on Second Stage, who currently are not members of any occupational scheme because current legislation does not allow Shannon or the DAA to establish pension schemes that are not more or less the same as the failed IAS scheme.
Section 34(2) clarifies that the IAS scheme trustees have the power to amend any provision of the IAS scheme that is necessary to comply with a direction of the Pensions Authority, pursuant to section 50 of the Pensions Act 1990, as amended. While it may seem strange that there should be any doubt about the power of the trustees to institute rule changes on foot of a statutory direction issued by the Pensions Authority, the potential nevertheless exists, due to the inflexible nature of the scheme, for a challenge to any such action taken by the trustees. The subsection is designed to remove any doubt that there may be in any quarter that, in order to implement statutory directions from the Pensions Authority under section 50 of the Pensions Act, the trustees may make any necessary changes to the provisions of the IAS scheme without any requirement to seek the consent of members or employers.
Section 34(2) repeals section 9 of the Aer Lingus Act 2004. Section 9 of the Act is similar to the existing section 32 in the 1998 Act applying to airport authorities. It allowed Aer Lingus to set up its own replica IAS-type scheme for its own staff. However, that section was never commenced and those provisions were never used. Replicating the significant structural issues inherent in the IAS scheme does not make sense and section 9 of the Aer Lingus Act 2004 will now never be commenced. Therefore, its retention on the Statute Book is no longer appropriate.
As I and previous Ministers with this portfolio have said many times, the resolution of the funding difficulties in the IAS scheme is a matter for the trustees, members, employers and the Pensions Authority. The deficit in the scheme arose over a number of years for a number of reasons and, most particularly, because the contributions made by the members and companies have not been sufficient to match the benefits expected or promised.
The expert panel was established by ICTU, IBEC, my Department and the Department of Jobs, Enterprise and Innovation. It stressed in its report of 16 June that its recommendations represent the best possible outcome that can be achieved. It also said that it was the view of the panel that if this final opportunity to resolve this very protracted problem is not grasped, the situation facing members of the IAS scheme will deteriorate further. Since then Aer Lingus, which represents almost 70% of the membership of the IAS scheme, has stated that, subject to an overall agreement based on the panel's recommendations, it is prepared to increase its previous offer of €110 million in respect of its current employees by €36.7 million to €146.7 million, as recommended by the panel. It is also prepared to increase its offer to its deferred members of the scheme by €14 million to a total of €44 million. Therefore, Aer Lingus has indicated that it is prepared to contribute more than €190 million towards the resolution of this scheme's deficit.
The DAA has also indicated that it is continuing to review the details of the panel's report and I expect to hear positive news from it shortly. The company has said that it believes that the panel's report represents the basis for a final and complete resolution of pension arrangements. In the DAA's case, the panel recommended an increase of more than €9 million on the company's original upfront capital offer to €57.3 million in respect of active IAS scheme members. The company has signalled a revised amount in respect of its deferred members of €15.5 million, an increase of €5 million on its previous position. The ratio of payments that was recommended by the expert panel's report in respect of both companies broadly aligns with the split of membership of Aer Lingus and DAA employees within the scheme. There has also been further contact between the DAA and the deferred members' committee in recent days which I very much welcome. I understand that arrangements are being finalised for a meeting next week. I have urged all parties to grasp this opportunity to deal finally with this long-standing problem. The panel's recommendations are capable of acceptance, although I appreciate that some of the decisions necessary to achieve this will be challenging and difficult for all parties.
This part of the Bill, particularly the proposed new sections 32A and 32B, is essential in the context of the efforts to find and implement a solution to the serious problems in the IAS scheme. Those recommendations, or any solution agreed among the parties, cannot be implemented without the provisions I have included in this Bill. I apologise for being long winded but hope I have covered everything.
Section 23 was passed earlier but I will need to amend it as it still refers to the replacement scheme. We are deleting the reference here and if my amendment is passed, I will need to table an amendment to section 23 on Report Stage.
Prior to the ministerial amendments I had already tabled an amendment to delete section 34. I have seen nothing in the Minister's amendment that would negate the necessity of opposing the section. The Minister will appreciate that this is the first time the Government has sought to legislate for a private pension scheme. That creates great concern. It is well worth noting the deep concern of employees, deferred pensioners and those on a pension. The Minister said during the discussion that a committee had been established by the various stakeholders with a view to bringing forward some long-term resolution for a problem that has existed for many years. I fail to understand the need to legislate right now. I fail to see why we should be trying to second-guess the outcome of these discussions. The Minister said on Second Stage, and repeated today, that he is trying to create a framework that will allow that particular group to come forward with a decision. The Minister makes the excuse that it might be a better use of the Oireachtas's time not to be dragged back during the recess due to the cost implications of recalling the Oireachtas. This issue has gone on for many years and I think it could hold over until the House resumes in September. I would be much more comfortable dealing with primary legislation when we know what we are legislating for. I think this attempted catch-all provision is not the way to proceed.
I appeal to the Minister to withdraw his amendment. I am sure others Members of the House and I will have no problem in facilitating the Minister dealing with this legislation, in the best interests of all concerned, when we know what we are legislating for. We are being asked to look into a dark tunnel and try to create a platform from which a solution will come forward and then try to establish legislative provisions to meet any particular set of circumstances. I do not think that is the appropriate way to do business. I will oppose the section.
I too have serious concerns about this Bill. It is one thing to deal with the different entities in Shannon, but in this Bill we are dealing with significant issues that will affect the pensions of employees as well as the deferred members of the pension scheme. While the issues are interconnected, I believe they are so serious that they should have been considered separately instead of together. The pensions issue will have a major impact. For instance, people who are on deferred pensions maintain - I assume they are correct - that if a person were to go on a deferred pension now they would lose about 10% but if they went on a pension in three or four years' time they could lose half their pension. A woman in my constituency was literally crying about losing half of a pension pot worth €25,000. Her husband is 61 and has a number of years to go before he reaches the age at which he will be able to avail of the pension. This has huge implications for people in these circumstances.
This is the most controversial part of the Bill, which will have an impact on the living standards of thousands of citizens in their retirement. It is of major importance. Like the other Deputies, I do not accept that the Minister's amendment addresses those concerns. It is inappropriate to insert this amendment in this Bill. While the Minister has attempted to address the issue of decisions being made unilaterally and without the consent of the employees, I would argue that some of the provisions that are there are there anyway. The Minister is at pains to say that the problem is that, under the existing arrangements, the airport authorities have to replicate the IAS scheme. What the Minister is saying, in effect, is that he does not want them to replicate the perceived benefits that employees thought they would get on their retirement. That is precisely the problem. There was a reasonable expectation because people paid into a scheme over their working lifetimes in respect of which there were commitments, over which there are now a question mark. This is an attempt to corral them into accepting something less than what they thought they would get. I wish to address some of the points the Minister made in that regard.
The Minister is absolutely correct to spend most of the time during his contribution dealing with where we are, the crisis as it is and the backdrop to it. However, I do not think he has correctly identified the root of the problem. If we are to come up with a solution, then we have to identify the problem that gave rise to it in the first place. The Minister reiterated that in his opinion one of the key problems with the IAS scheme was what he called the lack of contributions by both sides, the employer's side and the workers' side. I reject that from the point of view of the employees, as the level of contribution was set by an actuary and reviewed every couple of years, with the conclusion that it was sufficient to meet the benefits as defined by the rules of the scheme. People paid into the scheme over decades. Existing pensioners have suffered as the amount of their contributions increased sevenfold, but the employer's contribution decreased. The decisions that the employers took placed a major strain on the scheme. The people who are being asked to pay the price are the pensioners, the deferred pensioners and the active members. They are still being asked to pay that price. We should be quite cognisant of that, because it is not their fault. I do not accept that they should be paying the price.
This is the one occupational pension scheme that we are dealing with in law in this way. I think that is dodgy. It is my opinion that if the present scheme wanted to cease contributions, which is one of the reasons given by the Minister, there is no reason a rule amendment could not have been implemented. As things stand, there is a superannuation committee in the IAS, but the committee has been overruled by trustees. The Minister could implement some of the things he would like to do without the need for legislation. An issue that has been highlighted, and correctly so, is how the pension scheme got into its current position. The Minister would have seen the articles in newspapers in the past about the very poor financial decisions made by the trustees in relation to the scheme. There is a question mark over whether the deficit is in fact a deficit as has been made out. That is the basis for justifying the legislation, but is it really what they say it is? I am sure the Minister saw the article in The Sunday Business Post last month which questioned the basis of the actuarial valuation in 2011. Prior to 2011, the calculations for the funding of the scheme were based on the assumption that an average male in Aer Lingus was expected to live for 20 years and a female for 23 years after reaching the age of 65.
In 2011, a couple of years later, it changed that and added an extra six years for both categories. How was it arbitrarily decided that pensioners would live that number of years longer than had been anticipated three or four years before that? The consequence of making that actuarial change was the addition of a €400 million liability to the pension scheme. Therefore, a multi-million euro problem was caused by an actuarial assessment rather than anything else. In addition, the interest rate calculations used were quite low, which meant a higher liability and deficit expressed in monetary terms. The article in the Sunday Business Post, which summed it up well, stated
It goes on state that 15,000 people and their families had an expectation which is threatened because of some of those decisions. This is a serious issue. It is not arbitrary assessments or calculations but financial decisions made by the trustees of the scheme that were at best bizarre and at worst, in some cases, of questionable motivation. I mentioned some of them on Second Stage. Decisions were made to dispose of the assets of the IASS. In essence, its property portfolio was dumped at a time when commercial property prices were escalating and everybody knew it. The five Dublin properties that it sold for €58 million within less than ten months had already shot up in value by more than €10 million compared to what they had been sold for previously, and the rental income was €6 million per year. Questions have been asked as to who are the beneficiaries of some of these decisions, and about some of the advisers. The actuarial assessment that underlay some of these calculations was carried out by Mercer, and we know that the chairman of IASS trustee is also involved in Mercer. That person also spent a long working career with Irish Life.
In summary, the members of the Airlines' Pension Fund are faced with clear proposals to cut their benefits by between ten and fifty percent, which are based on nebulous assumptions about future liabilities, ill-advised asset allocations and a now questionable re-allocation of assets into bonds at historically low interest rates.
Suddenly, a decision was made to divest the portfolio of its valuable assets for much less than their value at a time when those assets were escalating in value, and instead to invest that money in Irish Life. Some €800 million is tied up in incredibly low-yield investment in Irish Life. It does not even make sense that they would make such a decision. Why did they redirect cash from the sale of equities in commercial property to a low-yield fixed-income fund in Irish Life? That is potentially costing the pensioners, and who will pay for that? Our job should not be to amend legislation to make up for bad financial decisions made on the backs of pensioners. Why did the pension fund sell a broad selection of property, an equity portfolio, and tie it up in this low-yield fund in Irish Life? What is being proposed by the Minister arises out of that crisis. The pensioners and deferred pensioners pay for that in their living standards.
The Minister has said they will have to be consulted, but the mechanisms for consultation have not been yet been defined. Much as been said about how deferred pensioners were affected, but the pensioner group is the most excluded in this entire process. The expert panel told them it could not and would not talk to them. There is not a single mention of the pensioners in the expert panel report. Let us look at their contribution. They are the only people who have had to put moneys up-front back into the IASS to make up the deficit. They are losing about €40 per week from next January, and almost the same again if the resolution to buy sovereign annuities is implemented, in addition to the cuts they have already taken.
The Minister mentioned the amounts of money that Aer Lingus and the DAA have agreed to put into the scheme. They have not actually agreed to fund the deficit. There is no agreement to put money back into the IAS scheme. They are not doing that. It is clear from the expert panel report that they have agreed to set up separate individual funds to mitigate against future losses of active and deferred pensions. The funds belong to the individuals covered by the scheme. The 5,000 people already on a pension are excluded from this situation. If we enshrine this problem in legislation we are doubly excluding them, because no fund is set up to mitigate the losses of the pensioners. They are excluded and they are suffering. There is nothing to stop the trustees from reducing pensions further if they continue with the disastrous investment policy on which they have embarked, which I think will continue for years. The Minister's energy should be focused on addressing those issues, if we are to help the pensioners, rather than inserting a legislative provision that does not offer them a way out of the situation.
Some of the amendments I have tabled concern the replication of existing clauses - for example, the clause to protect people's pensions and pension expectations when the Department of Posts and Telegraphs broke up. There is a fundamental conflict here because the problem with the measures we are tabling is that we are trying to protect the benefits of members, whereas the Minister is trying to loosen things up in order to facilitate an erosion of those benefits. The Minister should address some of the financial problems that got us into this situation in the first place.
I will comment on a few issues which perhaps I did not cover fully in my initial remarks. The section allows people who are already paying into the scheme to cease doing so, if they so wish. This is a real issue for people. After the Dublin-Laois match a couple of weeks ago, I met a man from Swords, probably a constituent of Deputy Daly, whose major concern is that he has to pay a couple of hundred euro per month into this pension scheme even though he does not want to do that any more. He wants this provision put into law as soon as possible so that he can keep that money for himself or put it into his own investments. He was very realistic about the future of the IAS scheme and did not want to pay more money into it. This is a very positive provision that I hope people can avail of sooner rather than later.
The second issue is that the Bill allows the DAA to establish a pension scheme for its newer staff. There are some 1,250 staff in DAA and also in Shannon, who are unusual in that they work in a State-run enterprise but do not have a pension scheme. This legislation allows those companies to set up a pension scheme for their staff, which is a positive development. They often get forgotten about in this debate.
The third issue is that the Bill facilitates the resolution of the IAS scheme. I understand the point has been made that we should wait until there is agreement and ballots have taken place and then legislate. I do not agree with that approach. We can use the opportunity now to do so. I think it makes more sense to legislate first because there will be ballots of the shareholders of Aer Lingus, which will be a difficult ballot, ballots of the staff in the airports and in Aer Lingus, and there could even be a ballot of the members. It makes more sense to me that before they ballot they know the legislation is in place and that what they are voting on can actually be implemented. Many times, when it came to referendums, we published the legislation first so that people actually knew that what they were voting on could be done. I think it makes much more sense to have the legislation and the legislative tools in place first for that reason. We do not want people arguing against a solution on the basis that the legislation is not in place to implement it. It makes sense to put the put the legislation in place beforehand on so that people have certainty that this can actually be done. This is a problem that has existed for a long time. There is now a window of opportunity to resolve this issue once and for all to give more than 10,000 people certainty about their pensions and their pension rights when they retire. It gives the companies certainly about their future liabilities, which is also of particular value to the shareholders, who happen to be the Irish taxpayers. They will now have certainty about this too.
Deputy Daly is correct that we have a fundamental disagreement. It is my view and the view of most of those involved in this that the IAS scheme is unsustainable and that the only way to go now is to freeze and de-risk it and establish new sustainable schemes for the staff in the airports and in Aer Lingus. Deputy Daly's view is different and it is that we should try to rehabilitate the scheme or create a new scheme similar to the old scheme which did not work. That is the fundamental disagreement and I doubt we will convince each other on the issue.
In regard to the investment decisions made by the trustees, I am not a pensions or investment expert and I am, therefore, limited in what I can say on that. I am sure the trustee believed the decisions made were correct and it is up to him to defend them. It is standard with pension funds that when one moves from property and equities to bonds, one does so because one wants to remove the risk. It is acknowledged that the return is lower, but the move is made in order to minimise risk. In the case of personal pension funds, people tend in the earlier part of their working lives to invest in equities and properties that might rise quickly, but as they approach retirement, they move into low-yield bonds because these have a lower risk. I imagine the motivation in the case of this scheme was to remove the risk, although the yield would be lower.
In general, deficits are calculated using the minimum funding standard. The OECD conducted an interesting report on the minimum funding standard in Ireland and determined that if anything, we may underestimate our deficits. If, for example, we used the German standard for calculating pension deficits, we would have bigger pension deficits. I have heard the argument that we are overestimating our pension deficits trotted out a few times. The Minister for Communications, Energy and Resources and I are interested in this and we met the pensions regulator to go through this issue to see how the deficit is calculated. The OECD looked at comparisons of how other countries do it and, if anything, we are on the side of underestimating deficits in comparison with other countries. I assume whatever calculation was used to calculate the deficit of the IAS scheme used the minimum funding standard, but I am not certain about that.
Looking at pension funds in other State-owned enterprises, they usually project life expectancy to be approximately 89 or 90. I do not know what age is used for the IAS scheme, but 89 or 90 is fairly standard for semi-State bodies and State-owned enterprises and the type of fund needed is calculated based on this. Perhaps people will not live that long as life expectancy now is approximately 86 years. However, over time people have tended to live longer. While life expectancy has not increased in the past five years, it had been increasing up until then. Therefore, it makes sense to assume people will continue to live longer and that people now in their 30s or 40s may live into their 90s.
I welcome the Bill in general, but like colleagues I have concerns about section 34. Many of these concerns have been allayed by the amendments put forward by the Minister on Committee Stage and I welcome those. Unlike Deputy Dooley, I believe there is a need for this Bill and that we need to deal with the separation of Shannon Airport legally. However, I share his view and that of Deputy Ellis that we do not need to deal with the pensions issue now.
To me, the Minister seems to be a bit like a market trader, where he has a few nice apples he wants to get rid of, but has a couple of not so nice apples he also wants to get rid of, so that when someone comes in to buy a bag of apples, he sticks in one or two the person would not choose. I see no need for the pensions issue to be dealt with now when the urgent issue is the separation of Shannon Airport. I accept the analogy regarding the referendum, that when people vote they know exactly what they are voting for. However, there have been referenda where people welcomed in principle the concept being proposed by the Government, but rejected it because of the detail published in the Bill. The referendum on committees is the most recent example of this and it is slightly ironic that we are sitting in Committee to discuss this issue.
On pensions in general, are pension rights part of working conditions? Former workers in Shannon Development have a guarantee in section 18 of this Bill that the transfer of ownership shall not operate to worsen the scales of pay and conditions of service applicable to the staff of those companies immediately before the Shannon Airport transfer. This is of limited comfort to them, as there is no similar guarantee with regard to pensions. Unfortunately, there is precedent in this regard. In 1968, when staff were assigned to Aer Rianta from the Department of Transport and Power, under official notice 4/68 they were guaranteed that accepting the transfer to Aer Rianta would not in any case involve any worsening of conditions of employment. While there was no worsening of conditions of employment, there was a worsening of pension rights.
For example, in the case of the officials here with the Minister, presuming they are officials of the Department of Transport, Tourism and Sport, when they retire, their pensions are linked to the pay of those in the positions. However, in the case of workers in Aer Rianta, their pension was no longer linked to those in the positions they held previously but was a defined benefit scheme. Of course, nowadays a defined benefit scheme looks very attractive relative to what is on offer with a defined contribution scheme, but nevertheless it was a lessening of pension rights for these workers. This is something the Minister should address, particularly in regard to Shannon Development workers. He should guarantee they will not be any worse off than they were, not just in regard to the conditions of service, but also explicitly to pension rights.
If the Minister wanted to right a wrong of the past, he might want to look back as far as 1968. I know he has had correspondence from some people who have pointed out the situation. The Department seems to have formed the view that the Dublin Airport Authority, formerly Aer Rianta, has complied with its obligations with regard to pension entitlements with regard to the terms agreed at the time these workers accepted a contract of employment with Aer Rianta back in the 1970s. However, this flies in the face of what was in a circular in 1968 and what some of the Minister's predecessors would have said in the Dáil in 1973.
Turning to more specific issues, I have looked in detail at the proposed amended section 32. The Minister proposes to substitute this for section 32 of the 1998 Act, which was in turn amended by the 2004 Act. There is nothing new in this proposed section 32.
I speak of the provisions that are to be taken out, sections 13 to 15, inclusive. Now that those provisions are to be taken out there is nothing in section 32 that was not previously in the former section 32. Even from a draftsman's perspective of the Statute Book, I wonder why this is being done.
The proposed sections 32A and 32B relate to the discussion, or dispute, that was described in detail. I do not see why these issues must be dealt with in the context of the formal separation of Shannon Airport from the Dublin Airport Authority. It was mentioned that discussions are ongoing and I think all Deputies hope they will be successful. The discussions must be genuine and inclusive and must include deferred pensioners who feel they have been excluded up to now. They have a legitimate concern in the outcome of discussions.
I wish to respond to remarks made by the Minister. I fully appreciate how my constituent feels and his desire to cease contributions to the scheme. I make contributions to the same scheme and am fully aware that at the moment it is a black hole for active members. It has been so mishandled to this point that at the moment we would not receive back what we have put in, never mind what the company put in.
The necessity of this legislation in allowing workers to cease contributions has not been explained. There is no reason a rule amendment could not be implemented using the existing structures of the Irish aviation superannuation scheme without legislative change. Legislation is not needed to allow workers cease their contributions.
The need for a freeze and de-risk strategy to save the scheme was raised by the Minister, Deputy Varadkar, as if this points the way forward in giving certainty to workers and pensioners. What sort of certainty does this provide? The only certainty facing pensioners at the moment is that they will be €40 per month worse off from January. If the freeze and de-risk strategy continues and the predicted returns ensue, pensions will be cut further. There is no fund to mitigate losses for pensioners and nothing to stop trustees from introducing further cuts, so I do not think this is the kind of certainty people need.
The Minister said certain investment decisions were made on the schemes to remove risk but the facts do not back this up. Serious analysis of the financial elements of this scheme is required. Some €667 million of equities were disposed of at a time when equity prices were rising and this is not a strategy to lower risk; it is lunacy. There was a prime property portfolio in Dublin that could not be acquired now, such was its value. It included properties such as the Passport Office on Molesworth Street. This property was sold at a very poor price for Aer Lingus shareholders, although it was great for those buying it. Those involved in buying the properties included organisations like Jones Lang LaSalle that operated as property advisers and selling agents to the IASS and gave valuations to buyers. Jones Lang LaSalle occupies offices that will be redeveloped in that building. Is this not strange?
The trustee who decided to shore up €1.4 billion of money belonging to pensioners from Aer Lingus, the DAA and other airport authorities in an Irish Life fixed income fund with a minuscule return worked in Irish Life for 30 years. Is this not strange? I find it strange because the average return on this is 1.27% per year and an annual management fee reduces this further. This has tied up pensioners' funds and contributed to a huge risk. Remaining assets have been invested in sovereign bonds and this is also a problem because the 15 year return on those is actually negative, that is to say, money is being lost on this investment. According to EU statements last week, interest rates will remain low for some years and this means bond returns will remain low too. Meanwhile commercial properties have risen in value and these have been divested. The freeze and de-risk strategy has accumulated massive losses that endanger the living standards of pensioners. It does not give certainty and nor does this Bill.
I think the issues I have raised are worthy of a separate investigation. People want to know whether the €800 million invested at Irish Life is insured and what return it got in 2013. Does the Department know the annual management fees on that fund? These issues are the real reason for the funding crisis. It was stated that the scheme was unsustainable but I do not believe this. I believe very poor decisions, especially those made by the two employers remaining in the scheme, have contributed to this problem. People were allowed to exit and this increased the strain, along with an insufficient employer contribution. The workers are paying the price.
The Minister said this legislation is required to allow those who are currently not in a pension scheme and are employed by the DAA and Shannon Airport to join a pension scheme. I do not think the legislation is necessary for that purpose. The Aer Lingus pension scheme for new employees involved the formation of a new company, Aer Lingus (Ireland), and the new employees are now members of a defined contribution scheme. The reason new staff in the airport authorities are not in a scheme is a decision was made not to allow them do so. There is no legislative impediment but a decision was made to deny them the benefits of a defined benefit scheme. They could, like Aer Lingus, set up a new scheme for new employees but what has this to do with existing members of the IASS? This amendment relates to members of the IASS. A new scheme could be set up for those who are not members of the IASS. Legislation allowing for a new DAA (Ireland) or SAA (Ireland) need not impact on the IASS.
As I said, the section 32 introduced by the Minister does not contain anything that was not there previously. One of the provisions that is restated but was always there has affected Aer Rianta international staff. The provision I speak of says every scheme to which subsection (1) relates shall fix the time and conditions of retirement for all persons to or in respect of whom superannuation benefits are payable under the scheme. Aer Rianta International is now part of the Dublin Airport Authority and it has gradually moved to Dublin Airport since the 2004 Act. It now recruits in Dublin, rather than Shannon, but some members of staff are still based in Shannon. They fear how this could be used, although I do not sense a conspiracy.
The provision is already included in section 32, but their fear is that it could be used to fix their retirement age and benefits or incentivise them to leave their employment at Shannon. There seems to be movement within Aer Rianta International to transfer as many operations as possible from Shannon to Dublin. Will the Minister give them some comfort or allay their fears?
I have tabled amendment No. 7 which deals with the appeals mechanism but particularly deferred members because there is a fear that any restructuring arrangement will impact disproportionately on them. It also seeks to have such an appeals mechanism established by regulations that would outline the manner by which representatives of deferred members would be selected and recognised for the purposes of appeals. It is sensible to make that request and include it in the Bill by way of an amendment, especially if the Minister agrees that there has to be an appeals mechanism. I ask him to consider it.
I will try not to be repetitive because Deputy Clare Daly has covered some of my concerns arising from the Minister's last comments. Regarding a comment made by Deputy Michael McNamara, lest there be any doubt, I do not have an objection to the passage of the Bill, but, like him, I do have an objection to section 34 which I do not believe is necessary or wise at a time when we do not have clarity on a final resolution of this protracted issue.
The Minister said he had met somebody coming out from a match who was indicative of a certain cohort of people who would like to have the opportunity not to contribute to the pension fund. It was the wish of almost all parties in the House that we try to encourage people to remain within pension funds to cater for a time after work; I would not have thought, therefore, that we would be trying to facilitate their exit from or non-participation in a scheme. Those people in society who have private health insurance often wonder what the benefit is. I do not want to speak for the individual whom the Minister met coming out from the match, but the people I meet who find it difficult to continue to make contributions are looking at it in terms of what is in it for them. If they were to see a more proactive approach by the Government to try to resolve the issues with the pension fund, they would be minded to remain within the fray, so to speak, of a private pension scheme. Those under the age of 30 years and some under 40 often do not see the benefit of contributing to a pension scheme, but as we all progress through life, we start to focus on the benefits. I would not like to think we are legislating to facilitate somebody's exit from a scheme but rather that we are trying to find a way to encourage him or her in that regard.
The Minister went on to say the provisions set out facilitated the 1,200 people at Dublin and Shannon who did not have a pension scheme. I do not object in principle to addressing that issue and take Deputy Clare Daly's point that the Minister may not need legislation to provide for those who do not currently benefit from a pension scheme. If he were to bring forward an amendment to that effect, I would support the section.
The essence of my amendment in opposing the section is based on the serious impact on the lifestyles of those still employed within the respective companies, those who have deferred pensions and those who have retired. I set out in the early stages what I saw as the reduction in the pension entitlements of those individuals that in the late 1960s transferred across from the Civil Service to the airport company and in doing so identified the figures for the Minister. One individual is on a pension of €24,000, another on €16,000. I gave these figures as examples to address the question of the loss to those who believed they had a natural entitlement to the same terms and conditions. It also indicates the poor pension entitlements of many of the people who have since retired. We can see that their pensions are relatively low and there is provision for further reductions based on what may emanate from the talks.
It is ludicrous to expect us to support the provisions in this legislation - I refer only to the provisions relating to the current pension fund, not the people who are not facilitated by having a pension scheme - in advance of knowing what the final deal is. We are not serving our constituents well if we seek to provide what might be referred to as enabling legislation when potentially we are close to a decision being taken or a resolution being brought forward. I urge the Minister to withdraw his amendment, to accept our proposal to delete the section from the Bill, to allow every other provision to proceed and to be prepared to come back with what might even be largely the same legislation which we could debate in the fullness of time when we have all of the facts.
Lest there be any doubt, everyone in the Government wants to encourage people to contribute to pension schemes. What has arisen is a ballot by staff who wanted to be able to withdraw their contributions because they did not want to continue paying money into a black hole, as Deputy Clare Daly described it. It is not that we do not want people to invest in their own pensions.
I understand that for a rule amendment to be made to the scheme the agreement of all members is required. Essentially, a small number of members can veto a rule amendment. That is the reason legislation is required on that point.
On the 1968 issue raised by Deputy Timmy Dooley, I have reviewed the papers. The issue was examined in great depth at the time by the former Minister, Mr. Noel Dempsey, with advice from the Attorney General which stands. When the people concerned signed contracts with Aer Rianta, they moved from being Civil Servants to being employees of Aer Rianta and did not carry pension rights with them.
On investment decisions and so on, to the best of my knowledge, the Department does not have in-depth details of the investment decisions made by the trustees. We are not members of and are not party to the funds. We do not have that type of information.
The key difference between the new section and the old one is the removal of the provision to allow the employers to involuntarily remove staff from the Irish airlines superannuation scheme, IAS, and place them with new pension funds. That is the main difference between the old and the new sections. We are removing that provision-----
Yes. The section passed by the Seanad contained a provision to allow the employers to involuntarily remove staff from the IAS and include them in a new scheme. That provision is being dropped by this amendment.
On the 1,250 staff who do not have access to a pension scheme, it probably is the case that there are potential dissolutions. The Deputy is correct that their employment could be moved to a new company; that a new company could be set up. It would be a cumbersome way of solving the problem, but that is probably the case, or we could do it by a separate amendment. That amendment is not on the table, but, technically, the Deputy is correct in that regard.
When it comes to the pensioners, under the Pensions Act there is a limit to the amount by which a pension can be reduced for someone who is drawing a pension. It allows for no reduction in any pension less than €12,000, a maximum reduction of 10% in a pension between €12,000 and €60,000 and 20% in the case of pensions above that amount. It is not provided for in the Pensions Act that there can be a greater reduction in anyone's pension.
Deputy McNamara asked about ARI scheme. Section 34 does not have any implications for the ARI's existing defined contribution scheme. Allowing the DAA and SAA to establish their new pension schemes for their staff will not affect the existing pension arrangements for the ARI staff. I am happy to give that assurance.
It does not have an impact at all. Any proposal by the DAA to amend that scheme - we are not aware of any - would require ministerial approval under section 32(6). That is nothing new. It is not envisaged.
With regard to Shannon Development, it is important to bear in mind that Shannon Airport Authority staff will remain as Shannon Airport Authority staff, and the staff in Shannon Development will remain as Shannon Development staff under a new name, Shannon Commercial Enterprises Limited.
It is actually quite different from what would have happened with P&T or even ARI. The staff are actually staying as employees of their existing employer. It does not arise that we could have a repeat of the circumstances of 1968.
On the appeals mechanism, I do not propose to accept the amendment. It is a matter for national pensions policy than for one pension fund. Under trust law, trustees are required to treat all classes of member fairly. It is important to understand that within the IAS scheme, trustees are treating active and deferred members in exactly the same manner in the restructuring of their past service benefits. However, to the extend that any member believes the trustees have treated them unfairly, they obviously have the right of recourse through the courts. In addition, members of any pension scheme have recourse to the Pensions Ombudsman under section 131 of the Pensions Act. The Pensions Ombudsman can be asked to rule on complaints by members, including deferred members that they have suffered financial loss occasioned by an act of maladministration by the trustee or be any dispute of fact or law that arises in relation to an act done by the trustee. As far as I am concerned, therefore, an appeals mechanism already exists, either through the courts or Pensions Ombudsman.
On the cessation of contributions and whether a legislative change is necessary to facilitate it, I still do not necessarily accept what the Minister is saying. My clear understanding of it is that, under the existing rules, the only people with power of veto are the employers. The employer actually can veto any rule changes. The idea that one has to get absolutely every other member, apart from the employer, does not fit with the rules as they stand. I refer to circumstances where one person would be obstructing the whole process. If one examines the recent rules changes that were proposed, one notes the superannuation committee of the IAS scheme, which as a role in terms of both the trustees and the rules of the scheme, was ignored in discussions on rule changes that took place recently. I understand this legislation would undermine its role even more. Ironically, the committee comprises four representatives of the active group, the deferred pensioners and pensioners, and currently elections are under way in respect of the system. When we talk about consulting people and hearing their voice, we should note this is the first time where they have had only one nomination for membership of the scheme. Such is the demoralisation that has been occurring in this regard.
I am glad the Minister accepts the point that this legislation is not necessary for airport authority workers to go into a new pension scheme. That is separate. Our concern is not about that. I, too, would contend a worse pension scheme is better than none. If the proposal were just to set up a lesser pension scheme for new staff, I might have an objection, but it would still be better than nothing. The problem is that the Minister is interfering with the arrangement for existing members of the IAS scheme.
My last point is on the pensioner group. It is not a comfort to say there is a limit to how much they can be cut and that they should not really worry about it too much. The reality is that the group has taken many income cuts. The group is the only one that paid in full for an unco-ordinated pension. Some paid over 45 years, with seven increases in the contributions. They, more than anybody, can say their paying gave them a reasonable expectation of an outcome. It is now being eroded. That there is a floor applying to the extent to which they can be cut is not really a comfort. We must be very cognisant of that.
In essence, the Minister said the ceasing of contributions is not really necessary. I have not been shown definitively that this cannot be done by a rule change. New members do not constitute a reason. Therefore, I do not believe there is any valid basis for this at all. We would be much better off leaving it out.
The Minister said he was not aware of the financial ramifications or details of the investment decisions of the fund, which is fine, but it is a matter of the public record now. Some of the information has appeared in the national press. It is of a very serious character. Would the Department be interested in equipping itself with better knowledge as to some of these decisions, which are, at best, bizarre?
The briefing note I have states a rule amendment requires the support of all the members. With regard to providing a pension fund for new airport workers, the legislation is necessary to provide an alternative pension fund for the new airport workers. I accept there are other ways it could be done, for example by a different amendment on Report Stage or some convoluted means of moving people to the employment of a different company. This is the only amendment on the table today to allow this.
The operation of pension funds, etc., is not my Department's remit. The Department of Social Protection is responsible for pensions policy. The Pensions Authority and Pensions Ombudsman are responsible for complaints and regulation. My Department does not want to get involved in the intricate detail of any pension fund not under its remit. It is within the remit of other bodies.
I move amendment No. 8:
May I discuss the amendment in terms of the overall section?
In page 31, after line 42, to insert the following:“35.The Air Navigation and Transport (Amendment) Act 1998 is amended by inserting a new section 32A as follows:“32A.The IAS scheme shall not be allowed to close its pension scheme except where the scheme has reached a minimum 90 per cent funding standard.”.”.
I move amendment No. 9:
In page 31, after line 42, to insert the following:“35.The Air Navigation and Transport (Amendment) Act 1998 is amended by inserting a new section 32A as follows:“32A.(1) A healthy company or companies under section 32 shall not be allowed to close its pension scheme except where the scheme has reached a minimum 90 per cent funding standard.
(2) For the purposes of this section a healthy company means an employer that—(a) has positive net revenues, or
(b) has a parent company with positive net revenues.”.”.
The effect of amendment No. 9 would have been to create a new section 35. The intention was to address the funding position of the Irish Aviation Authority scheme in the event of its being wound up. My view, which other Deputies share, is that there should be a provision to ensure that until it has reached a minimum of 90% funding, there should not be the capacity to eliminate it or close it. For that reason, we are disappointed that the section that deals with it, largely section 34, did not have the capacity to address this important factor. We were concerned that there was the capacity to close the pension scheme with a funding standard of less than 90%, which would have a detrimental impact on all those who participate in the scheme, including employees, retirees or deferred pensioners. The amendment would have been an appropriate way, in advance of any solution coming forward to the negotiation that took place, to put such provisions in the legislation rather than what we have discussed. I am disappointed the section is proceeding as it is. It looks like there is no plan by the Department, Minister or Government to address this important matter.
We were all caught up in the argument over pensions and deferred pensions. I elaborated on how a healthy company should be defined. Companies should not be allowed to close their pension schemes. Certain standards should be in place. In this case we are specifying a standard of 90% funding, which is reasonable. In section 2, I defined a healthy company as one which has positive net revenues or whose parent company has positive net revenues, and it was fair to include it. Maybe the Minister could take on board our suggestion regarding a company being viable.
I am not sure the Minister would be greatly opposed to the gist of the amendments.
My understanding is that a commitment was given to the workforce of Shannon Development that notwithstanding the fact that some employees worked in different areas of the company such as the tourism side, they would all be redeployed. Some remain within enterprises that remain operational. For example, some of the job creation activity performed by the company is largely similar to the work carried out by Enterprise Ireland and IDA Ireland and the staff doing this work transferred to these agencies when the functions transferred across. My understanding was that all employees in these areas would find appropriate postilions in the entities taking over their responsibilities. I further understand there are at least two employees who are still in the employ of Shannon Development and who I assume will transfer, as set out in the transfer agreement of rights and obligations to the Shannon commercial enterprises, but who have no active role to play where they currently reside. I seek clarity on this issue. What is the intention in dealing with these two individuals?
That does not pertain to this section. As I understand it, two Shannon Development staff are on the redeployment panel and the company's board and management continue to make every effort to accommodate them and ensure they find suitable employment through redeployment opportunities in the public service and the Civil Service. This effort will also include seeking secondment opportunities with Shannon Development continuing to pay their wages.
Is all the Minister providing for in this section is that what is in existence will remain in existence, notwithstanding the fact that staff are not connected with it anymore? Does the superannuation scheme transfer to Shannon commercial enterprises?
I move amendment No. 10:
The section makes it an offence to deliberately or recklessly dazzle or distract a pilot or other relevant personnel such as air traffic controllers. It is intended to combat the increasing instances of persons using a laser to dazzle or attempt to dazzle a pilot of an aircraft, in particular. By making it a serious offence and providing for substantial penalties, including imprisonment, people will think twice before engaging in such irresponsible behaviour which could have potentially catastrophic consequences. Occasionally, outdoor laser light shows associated with concerts or similar public events can constitute a hazard to aircraft. That is why the section provides for more substantial financial penalties to be applied to corporate bodies. This is a technical amendment to remove the reference to "prison term for a body corporate" because it is not possible to send a corporation to prison. The intention was to make a corporate body liable for a fine of up to €250,000 only, but I am removing the reference to imprisonment.
In page 37, lines 21 and 22, to delete ", or to imprisonment for a term not exceeding 5 years or to both".
Existing legislation deals with minors who use lasers and so on. Does the age have to be defined in this case? Young kids aim lasers at aeroplanes. Is it necessary to specify that somebody must be of a certain age?
I move amendment No. 11:
This is a technical amendment which removes an unintended reference to ministerial consent in the establishment of parking facilities at non-State airports.
In page 39, lines 13 and 14, to delete "or, with the consent of the Minister, an airport which is not a company,".
I move amendment No. 12:
The purpose of the section is to update and restate the powers of authorised officers at airports. Under the Airports Acts, authorised officers are members of the Garda and persons appointed by the airport authority such as the airport police. The powers of authorised officers were set out in several Acts between 1973 and 2004. Some of the language used in them does not reflect modern usage and needs to be updated.
In page 39, between lines 35 and 36, to insert the following:
"Powers of authorised officers at airport
48. (1) An authorised officer, in the interest of the proper operation, or the security or safety, of an airport, or the security or safety of persons, aircraft or other property at an airport, may do all or any of the following things:(a) stop a person at the airport;
(b) require a person at the airport to—(c) require a person—(i) give his or her name and address and to produce for inspection other evidence of his or her identity,
(ii) where he or she is driving or in control of a mechanically propelled vehicle (within the meaning of the Road Traffic Act 1961), produce his or her driving licence or learner permit (within the meaning of the Road Traffic Act 1961) for inspection,
(iii) state the purpose of his or her being at the airport, or
(iv) account for any baggage or other property which may be in his or her possession;(d) arrest without warrant a person—(i) who refuses to produce for inspection other evidence of his or her identity, or, if he or she is driving or in control of a mechanically propelled vehicle, to produce for inspection his or her driving licence or learner permit,
(ii) who refuses to state the purpose of his or her being at the airport,
(iii) who refuses to account for any baggage or other property in his or her possession,
(iv) who gives a name or address or states a purpose of his or her being at the airport which is known, or is reasonably suspected, by the authorised officer to be false or fictitious, or
(v) whom he or she knows not to have, or whom he or she reasonably suspects of not having, a lawful reason for being at the airport, to leave the airport, or any part of it, or he or she may remove (using reasonable force) such person from the airport, or any part of it, or he or she may arrest that person without warrant;(2) Where an authorised officer, who is not a member of the Garda Síochána, arrests a person under this section, he or she shall, as soon as is practicable, deliver the person into the custody of a member of the Garda Síochána to be dealt with in accordance with law.(i) who assaults, or whom he or she reasonably suspects to have assaulted, another person at an airport,
(ii) who commits, or whom he or she knows to have, or whom he or she reasonably suspects of having committed an offence under—(I) section 2A (inserted by section 65 of the Act of 1998) of the Air Navigation and Transport Act 1973,(iii) who commits or whom he or she reasonably suspects to have committed an offence under section 15(9) of the Act of 2004 in respect of a contravention of bye-laws made under subsection (3)(a), (c), (d), (e) or (g) of that section insofar as the alleged offence relates to the safety or security of the airport, airside operations or aircraft or persons using the airport, or
(II) section 29 (in relation to a contravention of section 19), 41 or 43 of the Air Navigation and Transport Act 1988,
(III) section 47, 48, 49, 50 or 51 of the Act of 1998, or
(IV) section 44 of this Act,
(iv) whom he or she knows to have, or reasonably suspects of having, a stolen article in his or her possession.
(3) Where a person is arrested under this section the person shall be taken by the member to a Garda Síochána station and may be detained there or arrested and detained there in accordance with section 4 of the Criminal Justice Act 1984 and, accordingly, the reference in subsection (2)(inserted by section 9 of the Criminal Justice Act 2006) of that section to “an offence to which this section applies” is to be read as including a reference to an offence referred to in subsection (1).
(4) Where an authorised officer has reasonable grounds for believing that there is evidence on a person or in a vehicle of an offence committed under the Airports and Aviation Acts 1936 to 2014 or that a stolen article is in the possession of a person or is in a vehicle, the officer may without warrant—(a) search or cause to be searched the person and, if the officer considers it necessary, detain the person for such time as is reasonably necessary to carry out the search,
(b) search or cause to be searched the vehicle and for the purpose of carrying out the search, if the officer thinks fit, require the person in control of the vehicle to bring it to a stop and when stopped to refrain from moving it or, where the vehicle is already stationary, to refrain from moving it, or
(c) seize and retain or cause to be seized and retained anything found in the course of a search under this subsection which any such officer reasonably suspects to be something which might be required as evidence in proceedings for such an offence or to be a stolen article.(5) Where an authorised officer decides to search or cause to be searched a person under subsection (4), the officer may require the person to accompany that officer to a place for the purpose of being so searched.
(6) An authorised officer may stop a vehicle at an airport and may require it to be moved for inspection to such place as he or she directs.
(7) Where an authorised officer arrests a person pursuant to the powers conferred on him or her by subsection (1)(d)(iv), he or she may retain in his or her possession any article which he or she knows to have been, or reasonably suspects of having been, stolen until it has been established whether or not the article was stolen.
(8) A person who was required by an authorised officer to leave an airport or part of an airport, or who was removed from an airport or part of an airport by an authorised officer, shall not, on the same day, without the permission of an authorised officer, return to the airport or the part of the airport which he or she was ordered to leave, or from which he or she was removed, as the case may be.
(9) Any person who obstructs, impedes or assaults an authorised officer in the exercise of any of the powers conferred on him or her by this section, or who fails to comply with any lawful requirement of an authorised officer under this section, commits an offence and is liable on summary conviction—(a) in case the officer is obstructed or impeded, to a class C fine, or
(b) in case the officer is assaulted, to a class A fine or to imprisonment for a term not exceeding 3 months or to both.(10) A person appointed as an authorised officer under section 48 of the Act of 1998 may be appointed as an authorised officer generally for the purposes of the Airports and Aviation Acts 1936 to 2014or for specified purposes.
(11) Sections 33, 42 and 48 of the Air Navigation and Transport Act 1988 are repealed.”.
The section outlines considerable powers of arrest, search and so on. Would it be appropriate to provide for powers to search aircraft that breach our neutrality, considering authorised officers should be doing this? I did not know that the Minister was introducing this amendment and, therefore, will table an amendment on Report Stage to add to their powers and responsibilities which are being beefed up.
However, they never do, as we know from repeatedly asking the Minister at every ministerial session. So it might be nice to remind them in this piece of legislation. They have many of these powers already as well, but we are not including them in the Bill. It would help to focus their attention on their international responsibilities under our neutrality and other agreements. Would the Minister consider that for Report Stage?
If the Deputy wishes to table an amendment on Report Stage, we will certainly consider it if it is her intention to restate their existing powers. I would not be in favour of requiring them to search all aircraft or something like that.