Aideen Hayden (Labour) | Oireachtas source

I welcome the Minister of State to the House and I thank Senator Quinn for presenting this Bill. I do not think anyone doubts his bona fides in this matter.
Membership of boards generally, whether State boards or otherwise, is becoming a fraught issue. This is the case in particular in the sector with which I am most familiar, the NGO sector, which as Senator O'Brien said, has been rocked by recent revelations of poor corporate governance and the salaries paid. State boards have been the subject of much media criticism and accusations that parties in power, whether on this side of the House or the other side, have been appointing people through cronyism and jobs for the boys.
Senator Quinn's Bill deals with an important issue. I have served on a State board and it has been my personal experience that the vast majority of people who serve on State boards do so out of the highest sense of public duty and a desire to give something back to society and this should be acknowledged. I was disappointed when doing my research that there was extensive media coverage on the composition of State boards but not one report referred to the excellent service given by many people to the State through their performance as members of State boards. No one can argue that being a member of a State board will make one rich or famous, at least not famous in the way that one would like to have fame. As the Minister of State pointed out, the average fees paid to members of State boards are very modest, at €18,788 for a chairman of a board and €10,421 for an ordinary member.
I am very concerned at what Senator Quinn is proposing because I do not want a society ruled by the great and the good. We have had enough of that, in my opinion, in the past. If a situation is created where the only people who can serve on State boards are those who are either retired or independently wealthy or in many instances, are former civil servants, that is not a situation that we want in this country. Senator Quinn's proposal is that aside from claiming out-of-pocket expenses, nobody is entitled to any remuneration and I wish to deal with that point. What about a self-employed person such as an architect, for example? We all know that the construction sector has gone through very tough times. For example, what is the situation for an architect who is offered an appointment to An Bord Pleanála? Nobody in that situation could afford to take up that appointment and that is the reality. I do not favour that situation. In my view, State boards represent the people and as such, anybody on a State board must represent the people and therefore, State boards have to represent an inclusive society which means representing people from every economic profile. It is critical that in order to participate we are not asking people to effectively subsidise the State which is what would happen. If we do not give recognition to the time that people spend on State business it is a fake virtue to encourage people to put themselves forward and not accept remuneration. Unfortunately, Senator Quinn's Bill goes too far, in my view. It does not encourage access to participation on State boards and it does not make way for people who do not have the resources to effectively do what I am suggesting which is to subsidise the State.
I do not think the kind of fees paid to people on State boards merit derision because they are very modest. I will move on to refer to some international research on this issue. I cite the OECD paper, Corporate Governance Working Papers No.2, authored by W. Richard Frederick. He deals with the issue of remuneration and states:

Indeed, board members are motivated by their sense of duty and loyalty to country and the SOE, and the prestige of a board membership. However there are also indications that board member compensation sometimes borders on the limit of Herzberg’s “hygiene level”, i.e. that board members are not willing to put in quite as much effort in an SOE when the work is equally as demanding and the remuneration is less than in the private sector.
...The ability to find and motivate talent is critical...ultimately remuneration has to be regarded as fair and that the use of compensation to get the best people onto state boards is a critical factor.

I refer to the study by the Institute of Directors produced in 2012, entitled State Boards in Ireland - Challenges for the Future. The study asked members if members should be paid for their work as non-executive directors and whether they would agree to waive their fees. Some 77% said they would not be prepared to do so. The report stated that the consensus view was reflected in a comment:

I do not believe the existing level of remuneration is in any way excessive. I also believe that it is a good feature of all director appointments that there is some consideration paid to reflect the significance of the responsibility being taken on. Of course - [a view reflected by others] - it is open to any individual to voluntarily forgo payment and this should be a personal choice.

The issue around board membership is not what people are paid, rather it is the manner in which people are appointed. The manner in which people are appointed has to be open and transparent. I refer again to the OECD report as to what is important for the future of State-owned enterprises which states:

The Working Paper concludes that the key success factors for the public ownership function in enhancing SOE boards include a shared vision for the governance reforms that are to be achieved; clearly communicated policies and objectives to SOEs; abstaining from ad-hoc interventions in SOEs once their objectives have been defined; well-designed training programmes for board members as well as the government ownership representatives; enhanced channels of communications between CEOs, boards and the ownership function; and increased transparency around the conduct of SOE boards, management and the government ownership function.

The bottom line is the manner in which people are appointed to State boards and about how State boards do their business. We are confusing the issue entirely by focusing on remuneration.