Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I am pleased to introduce the Harbours Bill 2015 to the House. This Bill builds on the recommendations of the national ports policy published in 2013. The Bill’s primary purpose is to provide the necessary legal basis to allow for the later transfer, by ministerial order, of the five designated ports of regional significance to local authority led governance structures. Every Senator is aware that, as an island nation, our ports are critical to our ability to trade with the rest of the world. However, every Senator will also be aware of the social and cultural importance of our ports to the communities and cities in which they are located.

The varied stories of our ports’ development are mirrored in the diversity found today in our modern commercial port network. Nine State commercial port companies operate under the Harbours Act 1996, namely, Cork, Dublin, Dún Laoghaire, Drogheda, Galway, New Ross, Shannon Foynes, Waterford and Wicklow.We also have Rosslare Europort, which, for historical reasons, is a business unit of larnród Éireann and not subject to the Harbours Acts. In addition, there is one fully privately-owned port at Greenore and there are various other local authority-controlled ports and fishery harbour centres that handle commercial freight. To give an example of this diversity, last year Dublin Port handled 21 million tonnes, 7,000 vessels and generated a turnover of €72 million while at the other end of the scale Wicklow Port handled 94,000 tonnes, 56 vessels and generated a turnover of €250,000. Clearly, different ports perform different functions and service different markets.

The national ports policy recognised these differences through providing a clear outline of the Government's strategy for the sector by categorising the sector into three tiers. The ports of national significance that come under tier 1 are Dublin, Cork and Shannon Foynes. Collectively, these three ports handle more than 80% of all tonnage handled in Irish ports in any given year. All three ports have development master plans and earlier this year I launched the first phase of Shannon Foynes €50 million quayside improvement project. Both Cork and Dublin received planning permission from An Bord Pleanála this year in respect of their projects at Ringaskiddy and the Alexandra Basin. The total outlay on all three projects is more than €350 million and all will be delivered without Exchequer contribution. All these projects have qualified for EU funding through the TEN-T programme and its related connecting Europe facility, CEF, funding stream.

The ports of national significance that come under tier 2 are Rosslare and Waterford. These ports together currently handle approximately 7% of total tonnage and offer competition to the larger ports in the economically significant unitised lift-on lift-off and roll-on roll-off trades, while both are well positioned in terms of their ability to service direct routes to Europe and both are well connected to our rail and road networks. While both ports suffered tonnage losses during the recession, there is no doubt about their potential in the context of ensuring healthy competition within those important unitised trades. I am happy to inform Senators that both ports are now recovering the tonnage lost in recent years.

The ports of regional significance are Drogheda, Dún Laoghaire, Galway, New Ross and Wicklow. These are the ports which are central to the Bill. Currently, they handle approximately 4.5% of total national tonnage, which represents a decrease of more than 30% in their collective market share when compared to 2000. Within these five ports there are very different stories, with some quite dramatic decreases in tonnage at Dún Laoghaire, New Ross and Wicklow while both Galway and Drogheda are performing reasonably well in terms of tonnage handled, albeit at a lower level than in previous years.

I recognise that there are those with particular interests which may question the need to make any change to the status quo. Some of these local interests made their voices heard during debates in the Lower House. However, at a national, strategic level we must be clear about which ports are fundamentally significant for national performance and which ports are crucial for regional performance. Notwithstanding some of the contributions made during the Bill's progress through the Lower House, I believe the approach adopted by the Government is broadly accepted by the Dáil as being one of common sense. The Oireachtas Joint Committee on Transport and Communications in its pre-legislative scrutiny report stated that the "overall purpose of the Bill was broadly supported by the Committee". In respect of the ports of regional significance, the national ports policy explicitly recognises that these five ports continue to play an important role for their regional hinterland. This is an important policy statement in respect of those ports. However, this role is not one that requires central government oversight. In line with the Government's reforms of local government, the oversight of these regionally significant ports should be devolved to the most appropriate level of government - the local authority. This devolution of responsibility will allow these ports develop as required by their regional economies and in tandem with their regional communities. The change in perspective will enrich and enhance their future development and better aligns the needs of local authorities, regional economies and the ports themselves.

Senators will note that the Bill is flexible enough to allow for either the continuation of the existing company and a transfer of the ministerial shareholding to the local authority or a dissolution of the existing company and a physical transfer of all assets, liabilities and employees into the local authority. This flexibility in primary legislation is, I believe, entirely appropriate. I have been clear throughout the debates on this Bill that for some of these ports the requirement that a separate statutory company oversee and manage the port may no longer be appropriate. Equally, for other ports, the continuation of the corporate model and the recognition of an entity enshrined in company law could well be the best fit. My Department has made funding available to local authorities for due diligence in respect of all five companies. The results will inform the model of transfer ultimately chosen for each particular port.

I will turn now to the key provisions of the Bill, which are found in parts 2, 3 and 5. Part 2 deals with the first of the two possible transfer methods, that of a transfer of shareholding in the existing company. Section 8 provides the power to transfer the shareholding in a port company. Any order will be made by the Minister for Transport, Tourism and Sport with the consent of the Minister for Public Expenditure and Reform, as the other current shareholder, and the Minister for the Environment, Community and Local Government.

Section 9 provides a potentially interesting new dynamic to our commercial ports sector. It allows for the local authority chief executive, subject to the consent of the elected members of the council and the Minister for Transport, Tourism and Sport, to consider a divestment of shares in a transferred port company to the private sector. The section ensures continued public ownership of the port through limiting any such disposal to 49% of the shares in the company. This represents a new potential method of funding for future development in these transferred port companies, one that is not currently a feature of the sector.

Section 10 provides for a general ministerial power of direction to the transferred port companies in respect of the national ports policy. The section requires the Minister for Transport, Tourism and Sport to consult both the Minister for the Environment, Community and Local Government and the chief executive of the local authority prior to issuing any such direction. This requirement for consultation addresses a concern the Oireachtas joint committee identified with regard to its potential unilateral use and possible interference in company operations. The section explicitly restricts its use to general policy matters only and cannot be used to direct a company to act in a particular manner in a particular instance.

Sections 11 to 27 lay out the administration of the transferred companies under the new local authority shareholding arrangements. It is important to note that the Harbours Acts will continue to apply to any company which transfers under this transfer of shareholding model. As the Harbours Acts contain a number of explicit provisions relating to the ministerial shareholding, these sections require amendment to reflect the fact that the shareholding has transferred. The exercise of these shareholder functions will primarily be one for the chief executive but the Bill also provides for a number of important oversight functions for the elected members of local authorities.Section 11 lists the 17 sections of the Harbours Acts that will no longer apply to a transferred company. These sections require an active role for the shareholder in consenting to something. Obviously, as the shareholding has changed, these particular sections can no longer apply and amended versions of these sections are instead included within sections 13 to 27, inclusive. Many of these sections are routine in nature such as section 14, which requires any change to a transferred company’s memorandum and articles of association to be approved by the local authority chief executive.

I will instead, therefore, focus on a number of the more substantive sections and also on the role of elected members generally in the oversight of these transferred companies. Where the transfer of shareholding model is chosen as the transfer method, the company structure remains in place, as it exists today. An important consideration in the model is to ensure the appropriate balance between the commercial freedom of the company and democratic oversight. The Bill achieves that balance through providing for a number of specific oversight functions for elected members of a council. First and foremost, section 23 requires the chairperson and CEO of a transferred company to appear before the council, if invited, and account for the administration of the company. Second, section 22 provides that a proposed chairperson of a transferred company shall appear before the elected members prior to his or her formal appointment. This mirrors the current practice of prospective chairpersons appearing before the Joint Committee on Transport and Communications. The Government introduced this practice and it has proven valuable in allowing elected representatives question prospective chairpersons on their vision and ambition for the company. In many ways, the power that will be afforded to local authority members is similar to the power Oireachtas Members have by virtue of their membership of the committee.

Section 19 requires the annual audited accounts of the transferred company accompanied by a report on the year to be laid before the elected members. While ultimately a matter for the relevant local authority, there is an obvious link between the submission of these accounts and the power of elected members to require a chairperson and CEO to appear before the council under section 23. The consent of the elected council will also be required where the disposal of shares in the transferred company to the private sector is envisaged. With regard to board appointments to these transferred companies, I am clear that the improvements to the board appointment process generally must also apply to any transferred company. Section 22, therefore, mirrors the improvements introduced in section 39 to those companies remaining under ministerial shareholding. Directors will be selected through the State board appointment process launched last February. The Bill requires that certain skill sets must be present on the board including maritime transport, financial, legal and commercial skills. The Bill also indicates a further set of skill sets which might be considered for board level representation such as infrastructure planning or environmental management. The local authority chief executive will formally appoint the persons recommended by the Public Appointments Service. The maximum total service of a director will be ten years, which will allow for both the development of board level experience and also provide fresh thinking which is a necessary feature of any board. The central oversight of the Department of Public Expenditure and Reform as regards board fees will continue. The CEO of a transferred company will, as of today, be appointed by the board of the company following consultation with the local authority chief executive. The central oversight function of the Department of Public Expenditure and Reform in respect of the terms and conditions of CEOs will be maintained. These are the key issues addressed in Part 2.

However, the legislation also provides for a second transfer method within Part 3. This model is called "transfer and dissolution of companies", and it is outlined in sections 28 to 33. These sections are based on existing precedents generally and provide for the dissolution of the company as body corporate and its complete integration within normal local authority structures. The port would be administered as a functional area of the local authority. All employees would transfer, as would all property, assets and liabilities of the company. The legislation provides for the continuation of any harbour and pilotage limits.

Part 5, covering sections 37 to section 49, comprises technical amendments to the existing Harbours Acts which are being made on foot of submissions made during consultations or on foot of experience gained in the years since the previous amendments. Three important elements to this Part further improve the overall corporate governance culture within the ports sector. Section 39 amends the board appointment process through introducing mandatory skill sets and introducing overall term limits of ten years. Section 40 introduces a new statutory provision regarding the accountability of a chairperson and CEO of a port company to elected representatives. The section requires that the chairperson and CEO appear before the joint Oireachtas committee, if invited to do so, and account for the administration of the port company. Section 42 extends the current prohibition on Deputies, MEPs and Senators serving on the boards of port companies to councillors. This will apply equally to companies whose shareholding remains with the Minister and those where the shareholding transfers to a local authority shareholding model. National ports policy is clear that the boards of port companies must comprise individuals with the necessary skills required of any commercial company. I am legislating for that in sections 22 and 39. There have been instances in the past where councillors serving on port company boards have had to absent themselves from discussions at board meetings and from council discussions on topics due to potential conflicts of interest. When people elect their local representative, they obviously do not want to see his or her contribution to local democracy restricted in such a manner.

As I hope is clear to the House, the Bill is an important step in the development of the commercial ports sector and represents an important contribution to the further devolution of responsibility from central to local government. The changes introduced will enhance the ports’ role as centres of their regional economy, deepen the economic development role envisaged for local authorities and improve the corporate governance and democratic accountability of the sector overall. Our ports sector is critical to our nation and to our economy. As an island nation, we need to ensure our ports sector is positioned to deliver cost effective and efficient services, irrespective of whether their significance is national or regional. The amendments the Bill proposes in respect of board structures will enhance the corporate performance of our ports and ensure they continue to fulfil their vitally important role as facilitators of our economy. During the past year, I have had the opportunity to visit and meet the boards of almost all our ports and to appreciate at first hand the necessary and vital contribution they make to our economy and growth within our country. It is frequently understood that they make such a contribution to our export economy but what is less frequently understood is the role they play in respect of imports whereby products such as oil and petroleum, which are vital to the functioning of our economy, are brought in through our ports, along with other raw materials.Value is added to them in our country and then they are exported again. I am very clear that how we support that sector in future will be an increasingly important part of how our country prospers. This Bill will make an important contribution to the even better governance and corporate leadership of this sector in the years to come. It is for those reasons I commend the Bill to the House.