Noel Dempsey (Meath West, Fianna Fail)

I move: "That the Bill be now read a Second Time."

I am pleased to introduce the Harbours (Amendment) Bill 2008 for the consideration of the House. The primary purpose of this Bill is to give effect to certain aspects of the Government's ports policy statement launched in 2005. In line with the objectives contained within the ports policy statement, the Bill seeks to further underpin and enhance the commercial freedom conferred on our State commercial port companies under the Harbours Act 1996. Our commercial ports have played a key role in facilitating economic growth in the State and, notwithstanding the current economic difficulties, as an island nation we remain dependant upon seaborne trade to drive economic growth. To facilitate such growth, it is crucial that our ports remain capable of responding to the commercial challenges they face.

The development of this Bill has been shaped by an extensive consultation process and builds upon not only the recommendations and proposals contained in the Government's ports policy statement, launched in January 2005, but the work carried out by the high level review of the State commercial ports in 2003 and the statutory performance audit of the port companies carried out by Jonathan Packer in 2001-2002. A number of the objectives contained in the ports policy statement require legislative change and the Harbours (Amendment) Bill 2008 is designed to incorporate these important recommendations into primary legislation. The Bill also seeks to address certain anomalies in respect of the Harbours Act, which have come to light since its enactment.

As Deputies are already aware, the explanatory and financial memorandum accompanying the Bill provides a concise summary of each section. However, I would like to take this opportunity to expand on a number of areas of the Bill that I believe are of particular importance and to refer to some amendments made arising out of the Bill's passage through the Seanad.

One of the fundamental areas for reform of the sector, as identified in the ports policy statement, was the need to enhance the commercial mandate of the port companies by facilitating improved port company board performance through the reform of board structure. The Harbours Act 1996 provides for port company boards to consist of 12 members comprising of three directors appointed on the nomination of the relevant local authority, one or two employee directors, depending on the size of the company, either directly elected by the employees or appointed by the Minister to represent employee interests, and a chief executive officer. The remaining directors are appointed at the discretion of the Minister. Twelve directors is considered excessive for the State port companies. In the case of some of the smaller companies, the number of directors exceeds the total number of employees and has the potential to create an additional financial burden on those companies. Section 8, therefore, amends the articles of association of each port company to provide for a total of eight directors on each board. This reduction will ensure that port companies are better equipped to respond rapidly in a focused manner to any commercial challenges that may arise. To achieve this reduction, section 11 amends the 1996 Act by removing the statutory representation of local authority directors on boards and by standardising the number of employee directors at one per port company.

Notwithstanding this proposed overall reduction, it is intended that all current directors will serve out their full term of office. I recognise the significance of these proposals and, in light of this, I would like to take a moment to outline to the House the rationale behind these amendments and the policy context in which they are made.

As Deputies are aware, the State commercial port companies emerged with the enactment of the Harbours Act 1996. Prior to that date, the sector was characterised by harbour boards with representatives from various interest groups, ministerial nominees and a number of local authority representatives. These harbour boards were characterised by unclear mandates, public utility ownership, a localised perspective and local monopolies.

While the commercial harbours review group, whose findings helped shape the Harbours Act 1996, recommended the removal of local authority representation and a streamlined corporate governance structure for the new companies at board level, the 1996 Act allowed for the continued statutory representation of three local authority directors on each company board. It should be noted that the port companies are alone among the State commercial sector in continuing to have this statutory provision for local authority representation. Since its enactment in 1996, the Act, and the sector, has been subject to a number of reviews, including the statutory performance audit of the port companies undertaken by Jonathan Packer in 2001 and 2002 and the high level review of the State commercial port companies in 2003. Both of these studies recommended the removal of the statutory representation of local authority directors. The developments that have occurred in the sector since the enactment of the 1996 Act have resulted in a major organisational and cultural change within the ports. While I acknowledge the substantial and valuable inputs over the years from local authority directors, I am satisfied the rationale for this continued statutory representation is no longer evident.

In line with the recommendations contained in both the statutory performance audit of the port companies in 2001 and 2002, and the 2003 high level review of the State commercial ports, I believe it appropriate to grant our port companies the same freedom as that conferred on other State commercial companies and remove this restrictive position as regards board membership. However, it is my intention to continue to appoint a local authority director from among my own nominees. This should help alleviate the understandable concerns of those who feel that this removal of the statutory provision represents an unwelcome break from tradition.

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