Timmy Dooley (Clare, Fianna Fail) | Oireachtas source

It is welcome that the Minister is bringing this legislation before the House at this stage. As he is well aware, it has been promised for some time. The expectation was that it would have been tabled in the House towards the end of last year to allow the new company, Shannon Group, to proceed with its activities in line with the decisions the Minister had taken to make Shannon an independent airport. It is very clear that the delay in publication and introduction of the legislation has affected the company and new operation significantly, making it difficult for it to proceed as set out.

I welcome the legislation and I welcome the fact the company is now in a position to proceed as effectively as possible to take on the new challenges that are provided by giving Shannon Airport the independent status the Government policy dictates. This Bill gives effect to the decision the Government took in 2012 effectively to separate Shannon from the DAA, leaving Dublin and Cork to operate within the foothold, if one wants, of the DAA.

The legislation which led up to that dates back to 2004, as the Minister is aware. This set out an encumbrance on the Department of Transport, Tourism and Sport and the Department of Finance at the time to establish whether Shannon and Cork could operate viably in a stand-alone capacity. I do not want to go back over the discussions we had here in 2012, when the Minister moved the implementation of the 2004 legislation, but I expressed concerns at the time and I still hold those concerns. Notwithstanding that, I recognise there is an opportunity now for the new independent entity to take on significant challenges. It is recognised that the chairperson, the chief executive and the management of the company are working exceptionally effectively to take on those challenges and to try to develop a viable path for the airport, which is welcome. I have said on record that I am very supportive of what they are doing, although I still retain the concerns I had at the outset. Moreover, I still want to point out that the decision to transfer Aer Rianta International from the ownership of Shannon Airport to the DAA was a retrograde step. It is a decision that, I believe, leaves Shannon Airport and the new company vulnerable to any market shock that might come in the future or any difficulty the airport might have in achieving its business plan.

I want to reflect on the decision the Minster took to implement the 2004 legislation. This was based on the Booz Allen report which clearly stated that the viability of an independent Shannon was only possible if there was an association with the lands and activities of Shannon Development, and that an independent airport would not be viable unless there was between 3 million and 5 million terminal passengers. That begs the question of why the Minister has outlined today that there will be no cross-subsidisation between the activities of Shannon Development and the Shannon Airport Authority. The Minister relied on the Booz Allen report to allow this to proceed and effectively to make Shannon an independent entity, yet he is now suggesting it is possible for the airport to survive without cross-subsidisation or without the support of access to the activities of Shannon Development.

I have to pose the question of what has changed in the intervening period. My analysis of the business plan that was prepared at the time, which Booz Allen and various consultancy companies looked through, is that it charted projections which suggested that, in 2014, the airport would need to have reached an increase in passengers from the then number to approximately 1.9 million passengers. The Minister knows from the figures that the situation is fairly straightforward. In 2012, the decline was arrested in line with an upturn in the economy here and in Europe, together with the efforts of Rose Hynes and her management staff, and we saw a return to growth in that year. As the Minister outlined, there were 1.39 million passengers in 2013, an increase of some 5,000 passengers on the previous year, which is not a huge increase. The Minister also identified the expectation that there will be 10% growth this year, in line with the first months of the year. If that continues throughout the year, at best there will be an increase of 200,000 passengers, which brings us to 1.6 million passengers, well short of the 1.9 million that was projected in the business plan on which the Minister took the decision to separate the airport and take away Aer Rianta International.

All of this means that the cushion Aer Rianta International would have given to the activities at Shannon Airport is gone. The projections are falling short of what the Minister predicted in regard to it being a viable airport and he is now saying that the activities of Shannon Development, which were identified in the consultancy report, are not going to be available to the company to assist it in its operations. Are we to take it, then, that the airport will either have to reduce its costs at a time when it is trying to grow its market or that it will have to engage in borrowing for day-to-day activities, which would not be a healthy approach for a new company starting out? I am somewhat confused. Perhaps we will get a chance to tease this out on Committee Stage but I have concerns based on the projections, the numbers and the lack of financial support for the day-to-day activity of the airport.

I must put all of that in context. Those are my concerns but there is also great opportunity when one takes into account that, under a single management structure and governance by a single board, there are huge opportunities to exploit the potential that lands in such close proximity to the airport can give. I am well aware of the efforts of Rose Hynes, Neil Pakey and others to try to build on the level of aviation activity that is already in place in the region and to try to grow this in a way that takes account of the critical mass of activity that exists, together with an uncluttered airspace, a very long runway, good hangar capacity in the region and the potential to build more. Of course, there are also great employment opportunities. Some of that was overstated, if not by the Minister then by his colleagues, in regard to the potential for 5,000 to 10,000 new jobs in the short term. There is no real sign of that, although that is not to take from the work that is underway. I do not see the same level of Government activity that took place in terms of announcements prior to the separation in trying to make the workforce and the region believe this was the right decision. However, while I do not accept that it was necessarily correct to cut it adrift without supports, there is real potential there and we have to harness it.

It would be remiss not to identify and recognise the tremendous impact Shannon Development has had on the entire mid-west region. It has focused on activity in Clare, Limerick, Tipperary and south Offaly since 1959. It was the regional development agency and also acted as a tourism authority. It provided key insights, key ideas, capital investment and support for people who were starting to develop small enterprises both within the vicinity of Shannon and throughout the various different communities. I want to recognise the current board and staff but also the people who worked in the company in the past and who operated it so effectively and with such success over the years.

It is a pity the company has been obliterated in the way it has been by the Government and it is deeply disappointing that it is being effectively wound down in this way. It had a unique role in creating jobs and providing support to the companies that came to the region. It also had a transformational role in that many of the companies that started in the Shannon Free Zone and the various estates in that region in the early days have transformed the way they do business and have changed their product lines. In some cases, companies have gone and others have been found to replace them.

All of that was done because there was a key regional focus, involving people who were located in the region, whose interests were in the region and whose desire was to ensure that the level of employment was maintained. I have real concerns about the way in which the activities and functions of Shannon Development have been transferred to Enterprise Ireland and, from the foreign investment perspective, to the IDA.

Once one cedes responsibility from the local to the national, the difficulty is that the focus, unfortunately, gets lost. While more than 100 US companies are operating in the region, employing somewhere between 7,500 and 8,000 people, it is the case that as companies change and move on, one will not have that local focus. I believe this has the potential to have a long-term negative impact on employment within the region.

As the Minister knows, the activities of those companies generate about €3 billion worth of sales out of that region, with most of the activity being exported. About 90% of the goods produced there are exported, so that region has been a real success. It was part of a regional development policy going back to the years of Seán Lemass which was about trying to create a counterbalance between the east and west coasts. One had the airport and a concentration of foreign investment companies and indigenous companies working together and using that critical mass of activity to support and grow. I am concerned that anything that might weaken the potential of the activity there could have a long-term negative impact on the region. Notwithstanding that, many of the ideas that are now coming forward from the new Shannon Group have considerable potential.

I am deeply concerned about cross-subsidisation and hope the Minister can discuss that at a later stage. There is other activity that was central to Shannon Development. The Minister spoke about Shannon Heritage and the activity there. He is still leaving open the possibility that this company or its activities could ultimately reside elsewhere. He is leaving it there for the time being. As far as I am concerned, that company needs to remain part of the Shannon Group. Again, if it is to be taken away and its assets, activity and revenue stream goes elsewhere, it will further undermine the future viability of the airport, which is the central aim here.

There are a number of other aspects to Shannon Development, such as Kilrush Marina. Sadly, the decision has been taken to sell this marina. While this may be the only way to deal with it, I have met people in the region who would like have seen it remain in State ownership so that its activities could be supported, invested in and increased. Due to the fact that the focus of Shannon Development is on the airport, sadly, a facility such as the marina is not going to get the level of State support it deserves to act as a generator of tourism activity and provide meaningful employment in an area that does not have much employment other than employment on the land. I assume the National Technology Park in Limerick will transfer in line with the other assets of the company.

The Minister spoke about the superannuation schemes. He has clarified to some extent his recognition that the provision set out in section 33 is now in section 34 as a result of amendments he tabled in the Seanad. In the course of this debate, he indicated that he intends to bring forward other amendments. I must wait to see what they are and whether they address the concerns we have raised in the Seanad and the concerns I have about the potential impact on those deferred pensioners. Obviously, there is real concern among those who have deferred pensions and those who have yet to receive a pension. Any unilateral act that might happen as a result of this legislation would not be in their interests and would have been opposed by us had the Minister not indicated his desire to bring forward an amendment.

There is another category of pensioner which has often been mentioned at meetings of the Oireachtas Joint Committee on Transport and Communications and in the Dáil. It relates to a group of employees of the Civil Service, as they were then. They were employed under Civil Service pay and conditions and were asked to transfer to Aer Rianta back in 1969 when Aer Rianta took over the management of Shannon Airport. The former Civil Service staff duly transferred to the new airport company over the following years. They did so at the urging of the Department at the time and on the very clear understanding that their transfer would not in any way involve any worsening of conditions of employment. Office Notice 4/68 was issued. This was confirmed in a number of ministerial statements to the Dáil which stated that in no case would any transferred officer's pension rights be less favourable than if they had remained in the Civil Service. This was on the Dáil record of 5 July 1973. Effectively, nothing could have been clearer in their understanding. I know this has been trundling around the Department for many years through successive Ministers, so I am not making a negative political point directed at the Minister, but it is an issue that should be addressed and about which I intend to bring forward an amendment. If I do, I hope the Minister will treat it fairly and accept it.

Nothing could have been clearer. The promised legislation was not enacted until 1998 but there was no reference to the staff or their conditions. The commitment had been given on the floor of this House but by the time the legislation surrounding it was dealt with in 1998, the provision was not there to give effect to the intention. I would contend that the people concerned transferred on a very clear understanding and that, therefore, that the State has a duty of obligation to which it must live up. If it requires legislative measures to deal with it, it can be dealt with through an amendment. There was no doubt in anyone's mind that the commitment to maintaining pension rights was unambiguous and no conditions were attached. It was accepted at face value and in good faith by all the staff. It has always been the practice to guarantee pension conditions to all public servants transferred to another State organisation, which is being done in this legislation. Some recent cases include Irish Water and the new Shannon Group provided for in this Bill. Around 25 former Shannon Development staff were given the same guarantee as the Aer Rianta staff. However, in the case of the Shannon Development staff, the guarantee was based on Civil Service staff who transferred to Aer Rianta, and I understand that they are the only group not covered by the legislation.

In the late 1990s, the Aer Rianta pension scheme, which is linked to the consumer price index, CPI, began to fall behind the Civil Service scheme due to a combination of lower CPI and increased pay levels as a result of benchmarking in the public service. As there was cause for concern, the situation was taken up with the Department of Transport in 2002. However, the claim for pension parity with the Civil Service was turned down on the grounds that staff had joined an existing scheme, which made no sense and was never a precondition in my view. Despite the submission of further relevant factors over the intervening years, they were all ignored and it appeared that no proper investigation was ever undertaken by the Department, so each and every submission was answered with the same standard reply. It is worth the Minister's time to have a look at this. The usual reply was that Aer Rianta was complying with its obligations and the Department took advice from the Attorney General on the matter. There was no indication as to the nature of the query raised with the Attorney General and my understanding is that various different efforts to use the freedom of information provisions were met with a refusal to provide the information. That is not unusual, as there is an issue as to whether the release of advice from the Attorney General is permissible under FOI, but it requires a political response and should be dealt with.

I will give the Minister an example involving members of the airport police and fire service who had worked at the airport. Some refused to transfer to Aer Rianta. They duly retired from the force and were granted and continue to enjoy a 50% pay-related pension. An officer who effectively transferred to the airport would have had a salary of £25,000 in 2000 and a pension entitlement of £12,500. The salary for that grade in 2014 is €52,000 and the pension entitlement is €16,000. The officer who remained within the Civil Service would have had a salary of £24,000 in 2000 and a pension entitlement of £12,000.

However, moving forward to 2014, if the salary is commensurate with what it was then, the pension will be €24,500. The person who transferred over would have a pension entitlement of €16,000 in 2014 while the person who continued to do the same job but remained within the employ of the Civil Service would have a pension of €24,500. That is a difference of €8,500, or more than 50%, and it is an anomaly. My understanding is that this relates to approximately 50 people in both Cork and Shannon airports. We would do everybody a service if we addressed that matter during the passage of the legislation. I intend to table an amendment in this regard.

The other provisions are relatively straightforward. We all accept dazzling is a reprehensible practice when one considers the potential impact on the safety of those on an aircraft and those who might be affected if it crashed. It needs to be obliterated. Perhaps there will be media comment on this issue during the passage of the legislation and that may help to address the sale of laser equipment, which sometimes falls into the wrong hands for such a dangerous purpose. The Minister referred to parking by-laws and other provisions and we support all of these.

I welcome the Bill and the fact that the Government, following a protracted period, has ultimately gotten its act together. It means the management and board of the new company will be enabled to get on with their important work. I wish them well, while recognising the job in front of them. However, I continue to be concerned about the potential fragility of the operation of the airport component of the new company. The original business plan and the Booz Allen report made it clear that for a stand-alone airport to be viable would require between 3 million and 5 million passengers a year. That will clearly not be the case. The business plan was accepted by the Department of Finance and the Minister's Department on the basis that the airport would generate passenger traffic of 1.9 million annually by 2014 and 2.4 million by 2017. This equates to an increase of almost 1 million, but passenger numbers needed to increase by 500,000 by the end of this year. That will not happen and, therefore, I am concerned about the impact of this on the balance sheet and operation of the company. This was recognised in the Booz Allen report if the support of a revenue stream from the activities of Shannon Development could not be incorporated. Perhaps it a technical issue that can be resolved by virtue of where the assets reside in the group rather than in the individual companies, and if that is the case we can move on with some hope that it is not as significant an issue as it might be. However, I would like clarity on that.

It is a cause for concern that the support of Aer Rianta International, ARI, is no longer available to the Shannon Group. When one considers how well ARI has performed over the past few years, with profits in excess of €30 million annually, that emphases the loss the airport has taken. Government backbenchers like to suggest that this is because of the 2004 Act. That was not the case, because the Act did not provide for the transfer of the assets of ARI to Dublin Airport. It had not been decided at the time, and a decision was taken by the current Government to provide for this in the enactment of the 2012 legislation.

I look forward to the Minister's amendments on the superannuation issue, which will be addressed on Committee Stage. I ask him to consider the case I have made regarding the employees who transferred from the Civil Service to the Shannon Airport company. I intend to table amendments on that. I will also table amendments to section 34 similar to those Fianna Fáil tabled in the Seanad. I would like to see the Minister's amendments in advance. If it transpires that they address issues on which I intend to table amendments, we can come to an agreement at that stage.

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