Tom Parlon (Laois-Offaly, Progressive Democrats)

A number of advisory groups have advised Government on future policies and strategies over the years, including various groups devoted to industrial policy, competitiveness and aspects of social policy. In addition, groups such as the National Economic and Social Council have helped by giving advice and have contributed to overall development. This Bill would deprive us of access to knowledge and experience that is needed in the public sector and that has proven useful in the Public Appointments Service in State companies.

I also point out that once a prospective board member accepts an offer of a position on a board, he or she is subject to the requirements of a range of legislation and guidelines, most notably the Ethics in Public Office Act and the code of practice for the governance of State bodies. The code of practice sets out guidelines to seek to ensure that public bodies are run to the highest possible standards. It is not a prescriptive list as to how the body should be run but rather it seeks to guide bodies and their boards to ensure that best practice is followed and that the requirements of other guidelines or legislation are adhered to.

In October 2001, the Minister for Finance issued the code of practice for the governance of State bodies to his fellow Ministers for promulgation within the various State-sponsored bodies under their aegis. The purpose of the code is to provide a governance framework within which the internal management and internal and external reporting relationships of State bodies is to take place. This code was formally approved by the Government, which had decided that it should be binding on all State-sponsored bodies. The code consolidates the various initiatives, both within the Irish public sector and more generally, which had been taken between 1992 and 2001, to enhance corporate governance.

The framework within which boards must operate is effectively set by the code. It sets out clearly the Government's expectations in this regard. It also provides board members with an invaluable instrument against which to measure their actions. The code of practice is far-reaching in its scope and stresses the need for appropriate codes of conduct for directors and employees and that these should be in written form. A template is set out in the code to guide bodies in this regard.

It also requires that in respect of internal audit, all State bodies must have a properly constituted internal audit function or engage appropriate external expertise. The code also refers to the procurement and disposal of assets and states that competitive tendering should be normal procedure in the procurement process of State bodies and that national and EU public procurement rules applicable in the public sector should be complied with. The code also provides that the disposal of assets above €70,000 must, as a rule, be done by competitive tendering or auction. As with all the provisions, any exceptions to this procedure must have the consent of the board.

The code also deals with how diversification of activities, the establishment of subsidiaries and acquisitions by the body should be dealt with. In such cases, the establishment of subsidiaries and the acquisition of shares are subject to the relevant Minister's approval given with the consent of the Minister for Finance. As for value for money, it places an emphasis on the need for appropriate investment appraisal and requires that all State bodies must comply with the guidelines for the appraisal and management of capital expenditure that were issued by the Minister for Finance.

Moreover, in respect of remuneration and directors' fees, the code requires that all State bodies must implement Government policy on the remuneration of chief executives, managing directors, directors and other staff.

Strategic and corporate planning is also mentioned and requires that annual rolling five-year plans be produced. The plans, reflecting the shareholders' objectives and strategic mandate, are to be approved by the board. The code requires that all State bodies should be tax compliant and not engage in any offensive tax avoidance transactions. The code also sets out a framework for best practice for corporate governance in State bodies and principles for quality customer service.

Extensive though this list may seem, it cannot deal with all situations which may arise. Directors and employees of State-sponsored bodies and their subsidiaries are advised in the code that it is primarily their responsibility to ensure all their activities, whether covered specifically or otherwise in the code, are governed by the ethical and other considerations implicit in the code.

Membership of the board of a State body is not a sinecure. It is a demanding role. The stringent requirements imposed by the Government under the code of practice bring with them significant responsibilities for all directors. This means a high degree of accountability is associated with board membership which is as it should be.

In the area of corporate governance and public bodies generally, I would like to say a few words on the developments that have taken place in the last number of years. The Government's commitment to enhancing overall corporate governance, including within the State bodies that have company status, is evident in the legislative and structural changes that have been introduced since 2001.

The Office of the Director of Corporate Enforcement, established in 2001, has a mandate to improve the compliance environment for corporate activity in the economy by encouraging adherence to the requirements of Companies Acts and bringing to account those who disregard the law.

The Standards in Public Office Commission was also established by the Standards in Public Office Act 2001. The commissioner is responsible for supervising the implementation of the Ethics in Public Office Act 1995 and the Standards in Public Office Act 2001 as they apply to office holders such as Ministers, the Attorney General, special advisers to Ministers, senior civil servants and designated directors and executives of prescribed State bodies.

The Ethics in Public Office Act 1995 and the Standards in Public Office Act 2001 also have implications for directors. The ethics Acts require the directors of these public bodies to provide annual statements of interests to a nominated officer of the body, such as the chairperson of the board or the company secretary. The statements of interests must also be given to the Standards in Public Office Commission.

The type of interests disclosed include details of occupations, shares, other directorships, land, travel or accommodation services provided at less than the commercial price, public service contracts and gifts. Directors can also voluntarily disclose other interests not listed in the legislation.

If a director needs to carry out a task and discovers he or she has a material interest in this task, the director must inform the other directors of this interest. The director must not perform the task unless compelling reasons exist to do so. If this is the case, the director must inform other directors and the standards commission of the compelling reasons.

The standards commission is also responsible for the publication and distribution of codes of conduct. The codes are drawn up following consultation with the standards commission. A code of conduct for designated directors and holders of designated positions in the wider public service is being prepared. Consideration is being given to developing separate codes of conduct for the commercial and non-commercial sectors.

The standards commission acknowledged concerns at the proliferation of different types of codes, statutory and administrative, which are emerging in this area. State bodies are subject to the code of practice for the governance of State bodies, published by the Minister for Finance in October 2001, which includes a code of ethics. In addition, some statutory bodies were established under legislation which provides for codes of conduct specific to those bodies. The danger of confusion as to the relevant provisions of such competing codes, and even the possibility of conflict between the codes, is evident.

The standards commission notes that section 10 of the 2001 Act provides that a code of conduct drawn up under the Act shall indicate the standards of conduct and integrity for the persons to whom it relates in the performance of their functions and with regard to any matter connected with or affecting or likely to affect such performance and with regard to such other matters, if any, as may be specified in the code.

Tonight, we are asked to adopt this Bill as proposed by Deputy Boyle. However, the Bill is not workable, necessary nor adds value and indeed it fails on all those aspects. The fact is that the current system works and has done so over time. It may not be a perfect system but no system is. The Bill proposed is heavy handed and bureaucratic and would make it difficult to recruit appropriate people to State bodies and advisory groups.

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