DeireadhFómhair | October 2014
Scéim Ghinearálta an Bhille Cuanta (Leasú) | General Scheme of the Harbours (Amendment) Bill 2014
Tithe An OireachtaIs
AN COMHCHOISTE UM Iompar agus Cumarsáid
Tuarascáil maidir le Scéim Ghinearálta an Bhille Cuanta (Leasú), 2014
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Houses of the Oireachtas
JOINT COMMITTEE ON TranSport and Communications
Report on the General Scheme of the Harbours (Amendment) Bill 2014
31TC 013Deireadh Fómhair/October, 2014
ContentsChairman’s Foreword
Membership of the Committee
1. Overview and key issues
1.1 Overview
2. Pre-legislative Scrutiny (PLS) and General Schemes of Bills
3. Main proposals of this General Scheme of a Bill
4. Legislative overview
5. Key Facts and Figures
6. Overview of the current status of Irish Ports
7. Policy Review
7.1Regulatory Impact Analysis
7.2Report of the Review Group on State Assets and Liabilities
7.3National Ports Policy (2013)
7.4The Competition Authority Report on Competition in the Irish Ports Sector (TCA)
7.5European Union Trans European Network (TEN-T)
8. Main provisions and stakeholder submissions
8.1Transfer of shareholding
8.2 Ministerial Powers
8.3 Structure and composition of port boards
8.3.3Director limits
8.4Multi –port Companies
8.5Potential for Privatisation
8.6Dividend Policy
8.7Rosslare Europort
9. References
Appendix 1: Preparation of legislation
Chairman’s Foreword
In early June, the Minister for Transport, Tourism and Sport, Mr. Leo Varadkar TD, referred the General Scheme of the Harbours (Amendment) Bill 2014 to the Committee for its views. The Committee was very conscious of the importance of the Bill for the Ports of Regional Significance and for the Local Authorities concerned While the overall purpose of the Bill was broadly supported by the Committee, it was decided to invite submissions from stakeholders Having examined the submissions received, the Committee decided that, with a view to more fully informing the Members, selected stakeholders would be invited to make presentations on the proposed Bill.
The Committee undertook these consultations with an overall objective of seeking to ensure that the proposals contained in the General Scheme of the Bill were consistent with the views of the stakeholders and of the Members. Informed by these public hearings we have prepared this short report which also provides a contextual overview and outlines the legislative process within which the General Scheme of the Bill sits.
However, the Committee believes that the transfer to Local Authority – led governance structures should not be an impediment to Ports of Regional Significance developing their facilities and growing capacity. In that regard the Committee was conscious that the largest port in Europe, Rotterdam, which is managed by the Rotterdam Port Authority, was owned by the municipality of Rotterdam.
I would like to express my appreciation to my fellow Members of the Joint Committee. The commitment of the Members to producing this Report in such a short time-frame is very much appreciated.
John O’Mahony T.D. Chairman 8 October 2014
Membership of the Committee
Deputies:
John O’Mahony (FG) [Chairman]
Paudie Coffey (FG) [Vice-Chairman]
Michael Colreavy (SF)
Timmy Dooley (FF)
Dessie Ellis (SF)
Ann Ferris (LAB)
Tom Fleming (IND)
Brendan Griffin (FG)
Noel Harrington (FG)
Séan Kenny (LAB)
Eamonn Maloney (LAB)
Helen McEntee (FG)
Michael Moynihan (FF)
Patrick O’Donovan (FG)
Mick Wallace (IND)
Senators:
Terry Brennan (FG)
Sean D. Barrett (IND)
Eamonn Coghlan (FG)
Paschal Mooney (FF)
Ned O’Sullivan (FF)
John Whelan (LAB)
1. Overview and key issues
1.1 Overview
1.1.1Background to the General Scheme
There are nine commercial State port companies established under the ownership of the Minister for Transport, Tourism and Sport and subject to the Harbours Act 1996. They are: Cork, Drogheda, Dublin, Dún Laoghaire, Galway, New Ross, Shannon Foynes, Waterford and Wicklow. Rosslare is unique among the State commercial ports as it is operated by Iarnród Éireann outside of the Harbours Act 1996.
These State port companies act as port authorities and handle over 85% of commercial port tonnage in the State.
National Ports Policy (2013) divides these ports into three categories.[1]
Table 1: Categories of commercial ports
Ports of National Significance (Tier 1) / Ports of National Significance (Tier 2) / Ports of Regional SignificanceDublin
Cork
Shannon-Foynes / Waterford
Rosslare / Dun Laoghaire
Galway
New Ross
Wicklow
Drogheda
Source: National Ports Policy (2013) p. 23
1.1.2 General Scheme – policy objectives
Of the overall policy objectives of the proposed Bill, Leo Varadkar T.D., then Minister for Transport, Tourism and Sport, said “this is an important Bill for the ports sector, which plays a major role in the Irish economy. The National Ports Policy encourages each port, whether small or large, to develop its full potential to ensure that they can all contribute to further growth in the ports sector. Transferring the five regional ports to local authority management at a future date will be the best way to protect their future and ensure good governance.”[2]Speaking in the Dáil on 15 May 2014 the then Minister also attributed the proposed transfer of control from his Department to “the regional nature of those bodies and their move in tourism and leisure amenity”.[3]
This transfer of the five regional ports can also be placed in the higher level policy context of the Government’s plans for greater local authority involvement in various sectors of the economy, as outlined by the Minister for the Environment, Community and Local Government in a written answer to a Parliamentary Question on 12 March 2014:[4]
“Already, a significant enhancement of the local government role is being achieved through the establishment of Local Enterprise Offices to provide the local micro-enterprise support service under legislation currently before the Oireachtas. The Local Government Reform Act 2014 also provides for further significant enhancement of the local government role in economic development at regional and local levels and for alignment of the local and community development sector with local government. … It is envisaged that various central government functions, as set out in the Action Programme, will be devolved at an early date , for example in areas such as tourism, ports, national parks, and rural transport. Devolution will proceed on the basis of assurance that adequate funding, staffing and any other necessary resources will be available to enable local authorities to perform effectively any additional functions. The Action Programme also provides for central retention of existing overall responsibility for policy, funding and accountability where a function transfers to local government.
The initial devolution measures will form part of a more substantial long-term widening of the role of local government, as the measures in the reform programme to strengthen the structures, funding, governance and operational efficiency of local government take effect, and the capacity of the system generally increases.”
1.1.3 General Scheme of the Bill – stated aims
In May 2014, the Government approved and published the General Scheme of a Harbours (Amendment) Bill 2014 (“the General Scheme”). The aim of the Bill as set out in the General Scheme is “to provide the primary legislative framework to allow for the later transfer of control of the five Ports of Regional Significance to local authority led governance structures”.
In facilitating a competitive and effective market for maritime transport services, the central aims of the General Scheme are:
- to provide the legislative framework for the transfer of control of the five ports of regional significance (Dún Laoghaire, Drogheda, Galway, Arklow and New Ross) to Local Authority Control; and
- to provide for the introduction of a higher set of standards for the appointment and selection process on port company boards.
Central to the new approach is that the port company shareholder, whether that is the local authority or central government, will be encouraged to take a more active approach in the management of the ports, to ensure that the State can gain better value for money.
The General Scheme outlines two methods for transferring control to the local authorities.
1. The first method allows for the transfer of shareholding from central government to a relevant local authority (or local authorities), which would preserve the existing structures and the commercial focus of the ports, and limit HR issues because of the transfer would primarily involve just a change of shareholder.
2. The second method allows for a transfer of full control to the relevant local authority, including all assets, liabilities, employees etc. resulting in the dissolution without winding-up of the existing company.
The perceived benefits of either method of transferral are that it would increase the potential for maximising the use of shared services and reduce the administrative burden on smaller ports.
It is also considered that the ability to raise finance through the possible sale of an equity stake in the port companies (as provided for in the General Scheme) may facilitate local and regional economic activity.
1.1.4 General Scheme – major themes
The policy context within which the General Scheme sits includes divergent opinions as to the optimal structures for the port sector in general, and whether the focus should be on privatisation, multi modal ports, and/or, as proposed in the General Scheme – the transfer of control to local authority structures.
It may also be worth considering Ireland’s stated position to date in relation to the forthcoming EU TEN-T Regulation; where Ireland proposed that all existing ports in the Greater Dublin Area (GDA) (Dublin, Dún Laoghaire and Drogheda) be included within the Dublin ‘core’ port.[5] This position raises questions about the future of the ports in the GDA, which would be altered by the proposed transfer of control of the ports of regional significance to local authority led structures. The General Scheme does not, for example, provide an explanation as to how different ports, led by different local authorities would function as part of one Dublin ‘core’ port. It is not clear from a review of secondary sources how the development of a Dublin ‘core’ port on the basis mentioned above would be consistent with the position of the Competition Authority, which notes that any further mergers of ports within or close to the Greater Dublin Area could limit the scope for inter-port competition.
1.1.5 Approach taken by the Committee
As part of the pre-legislative scrutiny (PLS) process, the Joint Oireachtas Committee on Transport and Communications (hereafter referred to as ‘the Committee’) was requested to review and consider the General Scheme and Heads of Harbours (Amendment) Bill 2014. The Committee received a number of submissions from stakeholders including the Irish Exporters Association (IEA); Irish Congress of Trade Unions (ICTU); Association of Maritime Pilots Ireland (AMPI); Chartered Institute of Logistics and Transport (CILT); Dún Laoghaire - Rathdown County Council; Galway City Council; Wexford County Council; Dún Laoghaire Harbour Company; Drogheda Port Company; and Galway Harbour Company with a view to scrutinising the provisions of the General Scheme.
This report, accordingly, attempts to identify a range of possible key issues relating to the above General Scheme which have been brought to the attention of the Joint Committee or have otherwise been identified as being potentially relevant. In particular, the report attempts to analyse and set in context (through secondary research) some of the concerns expressed by stakeholders in their submissions to the Joint Committee.
Section 2 of this report provides a general overview of pre-legislative scrutiny (PLS) and general schemes of bills. Included is a summary of the process followed in Ireland in respect of PLS.
Section 3 provides an overview of the five main parts of the general scheme of a Harbours (Amendment) Bill 2014. Section 4 provides a historical overview of the legislation relating to Irish ports and details the major legislative changes since the Harbours Act 1946 and their significance. Section 5 outlines some of the most important facts and figures in relation to tonnage handled and vessel arrivals at each of the ports. Section 6 provides a brief statistical summary of each of the 10 major Irish ports over the past 4 years 2010 – 2013.
Section 7 provides a description and analysis of the main policy documents relating to this General Scheme.
Section 8 examines the main provisions of the general scheme together with an in-depth analysis of the stakeholder submissions pertaining to each of those main provisions.
1.2 Key issues are now listed in the order in which they occur in the body of the report.[6]
It should be noted that some of the key issues refer to specific Heads within the General Scheme. Other key issues may refer to the general policy context within which the General Scheme sits.
Key issues identifiedKey issue 1 (Section 8.1 of this report refers)
On the basis of the Regulatory Impact Assessment (RIA) to the Draft Heads of the Bill, and in the interest of improving transparency, the possibility of clearly outlining which individual ports will fall under a particular transfer process could, perhaps, merit greater consideration. For example, the Bill could highlight which Head of the Bill, 7 or 12, will apply to each of the five named Ports of Regional Significance, enabling those port companies to have clearer direction as to their future ownership and governance structures.
Key Issue 2 (Section 8.2 of this report refers)
A statutory obligation on the Minister of Transport, Tourism and Sport to consult with the relevant local authority in advance of making an order under Heads 11 and 12 of the Bill could be considered.
Key Issue 3 (Section 8.2 of this report refers)
It may be beneficial if statutory guidance was provided to the new port company. It could perhaps, for example, give greater clarity and direction to the Local Authority, were there in place appropriate legislative guidance on corporate governance of the port companies in advance of the proposed transfer of control.
Key Issue 4 (Section 8.2 of this report refers)
Consideration could be given to stipulations that would ensure the financial consequences of any proposed direction from the Minister would be taken into account.
This could offset the current potential imbalance whereby a Minister may make a direction to a port company without having to provide any funding in respect of any financial costs of that direction.
Key issue 5 (Section 8.3 of this report refers)
The prohibition in respect of appointment of port users to port boards would appear to have a clear basis in regional ports where there exists the possibility of there being only a very small number of port users.
However, the Irish Exporters Association (IEA) considers that this prohibition (in the context of larger (tier 1/2) ports) may be too prescriptive and may limit flexibility by failing to recognise that there may be a larger pool of eligible talented/experienced individuals available amongst these port users.
Key Issue 6 (Section 8.3 of this report refers)
Consideration could be given to the provisions in Head 19 of the Bill limiting Director terms in years rather than in terms.
Because of the commitment in the National Ports Policy to stagger board appointments, situations could arise whereby a Director is limited to 6 years in office, which could perhaps, be considered overly restrictive.
Key Issue 7 (Section 8.4 of this report refers)
In light of the continued decline of port traffic and throughput for smaller ports (globally and in Ireland) together with recommendations in the Report by the Review Group on State Assets and Liabilities (McCarthy Report) concerning the restructuring of state-owned ports into several competing multi-port companies, and the Irish position in relation to the proposed European Commission’s revised TEN-T Regulation, that all existing ports in the Greater Dublin Area (Dublin, Dún Laoghaire and Drogheda) be included within the Dublin ‘core’ port; greater consideration could, perhaps, be given to the impact that any proposed transfer of control to differing county council structures would have on any future amalgamation of ports.
Key Issue 8 (Section 8.4 of this report refers)
Greater clarification on the policy position being taken with regard to the future status of European Commission-defined ‘core’ and ‘comprehensive’ port status, could, perhaps, be of benefit for the future planning of Irish ports.
This is especially relevant to the ports in the Greater Dublin Area (GDA).
Such clarification with regard to policy direction may also be relevant in the context of the proposals within this General Scheme to transfer two ports in the GDA to local authority control.
Key Issue 9 (Section 8.5 of this report refers)
Although Head 8 allows flexibility to new shareholders in considering future methods of infrastructure funding, including, for example, through the sale of an equity stake, consideration could, perhaps, also be given to whether or not there is any potential for privatisation of some of the ports of regional significance.
As the ports sector does not receive any exchequer funding, the development of the ports sector is more dependent on private sector investment. Privatisation has been suggested in the Report by the Review Group on State Assets and Liabilities (McCarthy Report).
Key issues 7 and 8 above are closely related.
2. Pre-legislative Scrutiny (PLS) and General Schemes of Bills
It is important to draw the distinction between the General Scheme of a Bill and the Bill as it will be presented at first stage in the parliamentary legislative process (which is known as “initiation”, i.e. publication). Most Government departments have their legislation drafted by the Office of the Parliamentary Counsel (OPC)[7] by supplying Heads of a Bill which broadly set out policy objectives. Typically, a General Scheme can be considered to be in draft format and as such is still subject to the legal advice of the Office of the Attorney General. It may include an explanatory note to accompany each Head unless the Heads are self-explanatory (see Appendix 1 for further details on the preparation of legislation).
It is important to note that the General Scheme has no legal effect and the proposals it contains may well evolve over time as the legislative process progresses. Draft legislation will be prepared on the basis of these proposals, for presentation to the Houses of the Oireachtas and, ultimately, enactment (if approved).