Seanad Éireann - Volume 96 - 02 December, 1981
Transport (Tour Operators and Travel Agents) (No. 2) Bill, 1981: Second Stage, (Resumed).
Question again proposed: “That the Bill be now read a Second Time.”
An Cathaoirleach An Cathaoirleach
An Cathaoirleach: Senator Harte is in possession.
Mr. J. Harte Mr. J. Harte
Mr. J. Harte: I would like to welcome the Minister to the House. This is my first opportunity to welcome him in this session. The events arising from his time in Opposition and as a Minister of Government will show that we can expect very serious legislation on his part. I look forward to coming in here and contributing to it.
When the Consumer Protection Bill was dealt with in this House it received an all round welcome. Very little objection to it was voiced in the course of the contributions. The position is that we have the same welcome for this Bill up to this point. There was a slight difference in the contributions but, by and large, they were appreciative of the fact that consumers must be protected and in agreement on the ways in which they can be protected. The distinction that I would draw is that the unanimous welcome in the case of the Consumer Protection Bill was based on the belief that such protection was a total and absolute necessity. People were continually being promised, in return for cash, certain things which in many cases did not exist and, if they did exist, the quantity or quality was, in fact, suspect. Consequently, a great deal of discussion and consideration was necessary on the question of consumer protection.
The denial of consumers' rights must be taken very seriously, indeed. I make no apologies for what I am about to say. If people had not been cheated and if the responsibilities of the relevant organisations  had been exercised with more stringent application and more diligence, I doubt if this Bill would need to be before the House today. It is a bad thing to be cheated, particularly out of something for which people have scraped, planned and looked forward to in advance. People looked forward to a holiday, placed their faith in glossy brochures, believing that the retail outlets they were dealing with were financially secure, and they were bitterly disappointed.
Many may say that “cheating” is too strong a word to use. What else is it? If a company know that their finances are in a bad state, that their credibility abroad is not the best, and take money from people, promising them a service which cannot be delivered, how else could you describe it? It must be described as cheating. It is a problem enough that hard-earned money is taken from people by stealth, but even worse when it is unlikely that reimbursement will be ever a reality. I make no apologies for the strong words. In the case of Bray Travel there was no innocence at all. Let us not put any cap or cloak on it. The evidence is there that the Bray Travel agents were negligent and must have known the state of their finances. Yet they took money from people, promising them a service that did not or could not exist, because of the state of their finances and their creditability which they knew in advance would come to a halt at some stage.
People can have redress through the Consumer Protection Association or the Director of Consumer Affairs but it is somewhat disturbing that people in this case cannot, in fact, be reimbursed. There may be some constitutional problem in regard to reimbursing people retrospectively. I look forward to what the Minister will say in this respect.
If we were to put the thing in reverse, where a client who had suffered a loss decided to break into the premises of the people he considered had cheated him out of his money, to try to offset his losses by getting property of some value from their premises, and in the process was caught, he would be charged and probably  convicted. I am not getting into an argument about the seventh Commandment, or whether it would be cheating or stealing, but if people know that you have been saving money, and they know that their credibility and their finances are vanishing and that, inevitably, somebody will suffer, it is the same as stealing. As far as I am concerned, they have cheated another citizen. Whether you can go so far as to say that they have stolen from another citizen is another matter. The question posed is, when does cheating become stealing?
At this point, I would like to make it clear that I am not laying blame on the tour trade as a whole. Many tour operators and retail outlets have exceptionally good records, provide a very good service and have a direct concern. However, the ITAA and the Tour Operators' Council did not take sufficient measures to monitor the actions of the members affiliated to them, or part of their structure, or with whom they were functioning and the whole trade has been slighted by the behaviour of a few of them. If it was opportune for them to take the necessary precautions and they did not do so, then the charge of irresponsibility must be laid at the door of those two organisations.
Successive Government Ministers have urged travel agents and tour operators to build up a higher level of self-sufficiency in their own interests and in the interests of the public whom they serve. Had they heeded and implemented the advice given by the previous and present Ministers for Transport, the collapse of Bray Travel in 1980 and many other setbacks would not have happened.
I say this as somebody who works on side structures and who has to accept responsibility when things go wrong at various levels. The people in the business of tour operating are not fools. They are highly intelligent people who are operating a business to make a profit. In the course of that operation they must have known, suspected or had some indication that many high risks were being taken by some chance operations. It was in their midst and they did not take the appropriate action: consequently in this respect they have been irresponsible. I noted in  the papers recently that some efforts have been made to try to protect people for the coming season because the legislation will not yet be there to protect them. I am delighted to see that. Even though it came late, better late than never. If chance operators had been investigated more effectively, the slight on the trade could have been avoided. The protection of clients must be to the forefront. It is the tour operators' job to make them secure. They did not do so in the past. It is a pity that the legislation had to come because it was their responsibility. If a trade union takes to the street in an unofficial strike people scream about irresponsibility. However, if somebody deliberately induces people into a false situation then that is not condemned. I make no apologies for condemning that kind of action as irresponsible and hope that a lesson will be learned for the future.
There will be other problems and it is up to those two organisations to watch them from here on and not throw them back on to the Legislature when they get into serious trouble.
The Minister's Second Reading speech indicates that he is going as far as is possible. It is regrettable that the thing happened and I am not looking forward to another situation like that. It must be put on the record and people must clearly understand that, whoever else wants to accept excuses from an organisation or from a set-up for allowing this type of thing to happen, they will not get any sympathy from the Labour Party.
Consumer protection is something which needs regular review, when dealing with the whole question of a sophisticated market place. It is even more necessary when no real sophistication exists, because therein lies a great deal of inefficiency. In the Bray Travel case, we had the lovely, glossy brochures set out in a seductive way. It is a great temptation to ordinary people who have to save up, week by week, for a holiday and induces many of them to buy compulsively. They are struggling, in many cases, to get hold of money so that they can avail of the service which will give them some form of relaxation after a strenuous year. Possibly  they could afford a holiday only every three years. It is very serious to set out in a deliberate way to produce designs, glossy brochures, a very attractive background and claim to have a service that does not in fact exist. We will have to consider, on the next occasion, where travel agents and tour operators fit into the question of consumer protection. The least we owe the unfortunate people involved in this situation are proper ethical standards. Of a society which claims to be just and honest, and which claims that fair competition is the solution to all our problems the least we can demand is proper ethical standards. On behalf of the people for whom I speak, the ordinary working-class people, I am demanding that the ITAA, the tour operators and so on see to it that in future their operations will be run in a much more efficient manner in the interests of the people whom they claim to represent.
Mrs. Honan Mrs. Honan
Mrs. Honan: I sincerely welcome the Minister to this House. He was here as Minister when I might have been up around the border making sure that I got back here again. He certainly has the knack of remembering the people on the way up, and if you come down you go back up again. I sincerely congratulate him for having that magnificent style.
I support the Bill and I wonder if at this stage it is needed quite as much as we are led to believe because of things that happened. Certain sections of IATA and the Travel Agents Association have themselves done things in a very businesslike fashion. The wrong impression may be given to the House and I should like to clear it up. Two firms went out of business and I should like to put it on the record here this afternoon that they were not members of IATA. I repeat, they were not members of IATA.
There are about 20 tour operators and about 200 travel agents altogether. There is quite a screening now—that may not have been so in past years—of an agent's financial base by a properly trained staff in the office of IATA. I seldom disagree with my colleagues on the other side of the House but Senator Harte is not quite  up-to-date in regard to the association members, but there ends our disagreement. They all accept that licensing must come and they are quite happy about it.
There may be a feeling that bonding may not now be required in the retail or the travel agency side because since the summer of 1981 they have collected £80,000, and by January 1982, I understand, they will have an account of up to £120,000 in a fund to bond or to cover any type of small disaster which might occur.
A point I should like the Minister to clear up for me is whether the tour operator can put the cost of the bonding on to his charges. The travel agent cannot because of keen competition. I understand that the tour operator is bonded already with the agreement and acceptance of the Department, something I was not aware of and something to which I do not think anybody has made reference in this House. The Minister might explain that point when he is replying.
The Minister might also tell us the extent of the cost we are talking about in bonding the large tour operators and the small travel agents. I get the impression that we seem to legislate all the time in this small nation of ours for the big man. I should like the Minister to know that there are still small men who are very important but who, because of the cost of bonding, may have to opt out. I hope the Minister took my earlier remarks in good grace because I think we are good friends here, I think this House is magnificent and I do not intend to move to other places.
Mr. Manning Mr. Manning
Mr. Manning: We have had a very full debate on this Bill. There are, however a number of specific points we can deal with on Committee Stage. I join with other Senators in their welcome for the Bill. The measures which are incorporated are long overdue and the Bill's introduction should not have awaited the collapse of various companies with the attendant hardship for those involved, the very bad publicity which the collapses caused, and the bad publicity which attached to sections of the travel industry which are impeccable and blameless.  That publicity, by association, implicated the very many well-run and solvent operators in the business of the holiday industry. It is a pity it took all of those calamities to make the Bill necessary.
From conversations I have had with people in the tourism industry, the travel business, I know that this Bill is welcome, even though there are certain areas where changes might be made. In one sense it is a pity that the State once again has to enter into this area of regulation. I may be saying this from a slightly philosophical or ideological point of view, but we have reached a point when we should be examining carefully all areas of the economy to find areas where, perhaps, we could cut the amount of State involvement, perhaps to find areas where the State might withdraw and areas which could best be left to self-regulation or private enterprise. However, in this case it is necessary for the State to become involved and regulation is patently needed. If the State had not moved in to take this action I believe we would be leaving one large section of consumers in an extremely vulnerable position, and it is largely as consumer legislation that I see this Bill.
The broad philosophy of the Bill gets the priorities right. The emphasis on consumer protection is extremely welcome. Our consumers are probably the worst protected in any European country. This, in part, is our own fault, our natural politeness, our deference, our timidity, the fact that we do not complain when we get bad service: we do not complain enough in restaurants; we do not complain when we get shoddy service in shops or elsewhere when we are paying for services. We do not complain on occasions when public service, whatever form it takes, is not up to the required standards. We do not have the strong sense of consumer awareness which exists in other countries. It may be growing here but it could grow a lot more quickly. The public stands in need of some form of adequate consumer protection legislation and I hope it will be a priority of this Government to see that consumer protection is given where it is needed.
I hope the Government will take steps  to see that the office of the Director of Consumer Affairs will be strengthened. At present the powers given to the director leave him a toothless watchdog. I am not referring to the director personally; he is extremely competent and hardworking and a personal friend of mine. He is not a toothless watchdog: he is trying very hard, but the powers given to that office are far from adequate and I hope we will see a strengthening of this in the lifetime of this administration.
It is clear from the contents of the Bill that there has been very full consultation with the travel trade. The trade members to whom I have spoken appreciate the way in which the Minister and his officials have gone about this process of consultation. The Minister, with his usual courtesy, has listened to all points of view expressed and I know that he will continue to listen to the proposals for change which will follow on Committee Stage. Broadly, the legislation is appropriate to the needs of the present time.
Coming as it does in a time of grave crisis for the travel and tourist industry I feel the introduction of the Bill should help to focus our minds on some of the ills in this, one of our major industries. The Second Stage debate is not the time to do that, but it is clear that this country is no longer the attractive proposition it once was for the foreign tourist. After the very heavy direct progress of the sixties when Bord Fáilte's advertising, among others created an awareness of Ireland as a quality product on the tourist market, when the advertising matched the product which was being offered here, in recent times there has been a falling off in enthusiasm, the momentum, to a large extent, has been lost in this trade. The reason is very obvious. There is the increasing expense of getting here, our prices are a major factor, especially now, and it is relevant to this Bill, when holidays are offered in Florida, the US, where prices were lower, where the cost of getting there is not great, that it will be very difficult for people in the industry here to compete. There are factors like bad service, the occasional rip-off merchants in the business. For these and  many other reasons, the travel and tourism business is facing the most serious crisis in the 30 or 40 years since it became a major industry. Therefore it is appropriate that this Bill is coming at this stage to help to restore confidence in the industry. I hope for a great improvement in the marketing of Ireland abroad, for perhaps more care in finding out what tourist target we are trying to attract. These are separate matters for another debate.
There are certain areas in the Bill where I find myself in agreement with my old friend, Senator Hillery, and my new friend, Senator Honan. I refer especially to section 6, the section dealing with bonding of operators. There may well be a case for different types of bonding, and I shall come back to it on Committee Stage. I agree with Senator Honan that more care must be taken to ensure that the small bona fide operator is not discriminated against by virtue of legislation which caters largely for the major operators. I am sure this will be discussed further on Committee Stage. This is a good Bill, I look forward to Committee Stage when we can perhaps reach perfection on this measure.
Overall, this Bill will meet the criteria which the Minister says it will. The licensing and bonding elements certainly will impose rigour and discipline where they are needed. Obviously no legislation can prevent all future failures, but these bonding and licensing sections will do a lot to prevent future failures. The vetting arrangements for new members are very welcome. I would stress, as everybody else has, that the overwhelming majority of those engaged in the travel and tourist trade are bona fide established companies, trading honestly. In the present circumstances it is possible for a fly-by-night operator to set up business without the public knowing the shakiness of the operation, with consequences which can be very painful for the unsuspecting and unprotected consumer. The vetting arrangements should ensure that high standards will be imposed and maintained, and the bonding arrangements will ensure there will be adequate capital reserves for those operating in the business.
 Broadly, they are the main outlines and philosophy of the Bill. The general thrust of the Bill is to be welcomed. It has come at an appropriate time. It is a pity that so many people had to suffer to make this type of legislation a priority. Nevertheless, even with those qualifying remarks, it is very worthwhile legislation and I hope it will be given a speedy passage through this House.
Mr. Mullooly Mr. Mullooly
Mr. Mullooly: I should like to join with other Senators who have spoken in the general welcome which has been given to the Bill. There is no doubt that members of the travelling public should be protected or indemnified against any losses they might incur because of the failure of tour operators or travel agents to meet what the Bill describes as their financial or contractual obligations. At the same time, we must distinguish between the large tour operator and the ordinary retail travel agent.
Sections 4 and 5 of the Bill propose that it will be illegal for a person to carry on business as a tour operator or travel agent without a licence. If, however, there is to be a fee for such a licence it would be unrealistic to expect that a travel agent operating a small business in a country town should be expected to pay the same licence fee as a tour operator with a turnover possibly of millions of pounds. I would also question whether the necessity for bonding should arise in the case of retail travel agents who are members of the Irish Travel Agents Association, as has been pointed out by Senator Honan. These people have established their own fund of more than £80,000 to idemnify the public against any losses they might incur as a result of the default or financial failure of any member of the Retail Council of the Irish Travel Agents Association. If this fund was increased and maintained at such a level as might be determined by the Minister from time to time, the interests of the travelling public would be protected adequately and the need for bonding in the case of this section of the trade would be unnecessary.
I was pleased to hear the Minister say that the Bill is an enabling one and that  the application of its provisions to retailers is a matter to be discussed and decided in due course. I agree with him also that the question of new entrants to the trade, or retailers who are not members of the Irish Travel Agents Association, is a matter which needs to be considered carefully. As the Minister said, there is no ban on entry to the trade at present and there are no criteria or qualifications which new entrants have to meet. However, I would not wish to see conditions governing entry into the travel business becoming so restrictive that the trade, in effect, will become a closed shop. I would welcome an assurance from the Minister that this will not be allowed to happen. In general, I welcome the Bill.
Mr. Carroll Mr. Carroll
Mr. Carroll: I support this Bill, which is overdue. As Senator Manning has said, it contains a thurst which must be welcomed having regard to all the tribulations of the travel business, particularly over the last 12 months, including the Bray Travel episode and others which may not have got so much publicity. I am a little disturbed — and it is probably due to lack of understanding of some of the clauses — to note the substantial emphasis running through the Bill on overseas travel. I appreciate fully that this is an area where we must have special regulations, precautions and so on because, as Senator Harte said, people who struggle over the years to collect a couple of hundred quid and then invest it in a holiday overseas need more protection than the person who might be taking a holiday at home.
It might be borne in mind — and I may have missed this point somewhere in the proposed legislation — that we have a substantial number of people enjoying holidays here in Ireland who would want to continue that, and indeed there are many of us who would wish to promote more and more holidays at home. There are those who save for that type of holiday and who are subject to the same type of restrictions on their incomes as the person travelling out of the country would be. If they were stranded in Donegal, Kerry or somewhere else, equally they might have difficulty in getting  home, particularly if they had a couple of children and they were not able to meet any additional costs arising from the failure of a travel agent or a tour operator to look after them properly. I should like the Minister to make some comment on that point. Is there any way in which the individual taking a holiday here in Ireland can have equal protection against the failure or weakness of a travel agent or a tour operator to discharge his responsibility to that person or to that family?
I should also like to refer to the licence and the conditions which will obtain. I appreciate that it is very difficult initially, especially with new legislation, to dot all the i's and cross all the t's and that the consultations which were referred to by the Minister will be necessary with those involved before he can clear his own mind as to the general level of conditions he will outline before licences can be granted. I would hate to see any discriminatory developments. It is important that in the issuing of licences the licence would have regard to the area of activity of the individual concerned, the tour operator or the travel agent and that it would also contain some provision that if the tour operator or travel agent wished to branch into a broader area of activity the licence issued would not automatically cover that additional work or responsibility unless the Minister was satisfied in advance that that agent had the adequate means to take care of the additional responsibilities he or she might undertake during a particular year.
I am not too sure from the proposed legislation whether the licences would be issued on an annual basis or on some other basis. This might be determined by the size of the operation or by some other factors which we do not have in mind at this time. When the Minister or his Department officials will be consulting with those who have knowledge of the industry I hope that an organisation like Bord Fáilte will be to the force in these consultations because they have special expert knowledge in this field and it would be very useful to consult with them as well as with practitioners.
 I will deal briefly with the appeals machinery through which the Minister may decide to revoke a licence for various reasons. I notice that there is a right of appeal, and rightly so. An individual may appeal to the High Court if he does not like the Minister's decision, and the High Court decision is final unless, on a point of law, when the Supreme Court could be utilised.
Section 10 is excluded from the appeals area. I can understand the reasons for that. I hope that we will not get into a situation where there can be some type of overlapping or some messing between section 10 and section 8. It will be very important to ensure that not alone will this legislation, when it comes into being, be seen to be fair but that we can be satisfied it will be as fair as it possibly can be at any time. I may be reading this incorrectly, but section 10 states that “Where, owing to the failure...” and so on, an agent cannot do what he should do. The word “failure” has a literal interpretation, a dictionary interpretation. I can understand inability to mean you do not have the money. You might not have the staff or the facility but I am wondering if there is a time factor which will determine how one interprets or defines “failure.” I am not saying that in a carping way but, knowing that there are cowboys in this business as in every other business, there may well be holes that they could find for themselves to get lost in until we get around to dealing with the problem, and in the interim many unfortunate innocent people not alone would have lost their holidays but may well have lost their hard earned savings. I make these points in the hope of clarification on Committee Stage — that would be a more appropriate time to discuss them.
Minister for Transport (Mr. Cooney) Patrick M. Cooney
Minister for Transport (Mr. Cooney): I thank Senators for their welcome for this Bill and their contributions to the debate. I regret that I was not here to open the debate: I had a commitment abroad last week. I have had the advantage of reading the record and listening to the debate so far today.
This Bill presented a certain amount of difficulty in its preparation. The problem  to be dealt with is a fairly new problem, but the way to deal with it turned out to be slightly more complex than one would have anticipated at first sight. The first difficulty to be resolved was balancing the need to protect the consumer without at the same time imposing undue and contra-commercial restrictions on the trade. I should like to think that the package we have constructed has been built carefully to achieve that end — to protect the consumer without imposing any undue restrictions on the trade.
Many Senators made the point that they were generally alert to this dilemma that had to be resolved, and were appreciative of it and approved the methods set out in the Bill for resolving the problem. Many Senators made the point that they would be worried that the Bill might be unduly onerous where agents are concerned. I think it is a common case with everybody that the provisions as far as tour operators are concerned are desirable and urgently needed. They wondered if the provisions so far as the agents are concerned are really necessary and altogether fair, if a blanket provision covering the entire business would be alotgether fair, bearing in mind the vast differences in the size of business conducted by agents in different parts of the country.
I gave this point much consideration in advance of the Bill and came to the conclusion that we would not succeed in achieving our fundamental objective to protect the travelling public unless we include agents. Because the Bill is essentially an enabling measure to be implemented by way of regulation, there will be power in the drafting of the regulations and room at that stage to make provisions for the particular difficulties of the travel agent. I take Senator Manning's point that legislation by regulation is not altogether desirable but in this instance it would not be possible to have the details that will be in the regulations spelt out in the Bill. Regulations give a certain amount of flexibility. They will provide for changes to be notified to the House in due course. They give more flexibility than if it was a question of amending legislation.
 We have been careful at all times to consult with the Irish Travel Agents Association which represent the great majority of the people in the travel trade, both operators and agents. I would like to place on record the assistance which the association have given to me and my officials in preparing this legislation. I would like also to put on record their enthusiasm — it is hardly too strong a word — for the measure because the vast majority of the people in that trade are conducting the business properly. They are people of integrity and are operating according to high commercial standards. They are as embarrassed as the rest of the population by the failures because those failures reflect discredit on the entire trade. They are anxious to see an end to hardships arising from failures. The resulting contumely then adversely affects them and their image with the public. They have been enthusiastic for this legislation, even realising that it will impose restrictions on them. I had to devise a Bill that would have teeth but would not be draconian. That principle has been accepted by the trade and I have had full co-operation in the drafting of it.
Agents had to be included because if one excluded agents anybody could enter the travel trade, hire the necessary premises, design and print the necessary attractive brochures and start up in business. That is where many of the causes of the present difficulties lie. There had to be a restriction on entry to the trade, and that restriction was applied to the retail side as represented by the agents, and the restriction will be imposed by virtue of the licensing arrangements.
If the protection were to apply to the operators only, there would be the real danger that members of the public, knowing this, would by-pass the agents. If they were not included in the Bill, there would be a risk and they would deal with the operators. This, of course, would be to the detriment of the agents. It is in the agents' long-term interest that they should be included. We will ensure in the regulations that measures to be applied to them will not interfere with their commercial viability or make it impossible for them to trade profitably.
 Senator Hillery wondered if there could be different sorts of licences for the differing sorts of risk. I do not think that would be feasible. It could lead to bureaucratic complexity and a lot of extra paper work. There will just have to be the one type of licence for both the operator and the agent. The licence will ensure that proper persons — proper in the sense of their experience, their standing and their financial background — will come into the trade. The actual protection thereafter will be the existence of the bond and the fund. At that stage there may be some differences which would take account of the differing roles and the differing sizes of businesses being carried on by the various people in the trade. The size of the bond which will be sought eventually and, indeed, the nature of the bond, will be teased out. Senators will notice the way a bond is defined in section 13 provides for a lot of flexibility when the regulations come to be drafted.
On the general question of the criteria for entering into the trade, one prime requirement will be the financial standing and the financial organisation of the person seeking the licence. That person will have sufficient capital to fund his operation and his financial procedures and his accounting methods will be adequate to stand up to the strain of running the business efficiently.
I take the point made by Senator Whitaker who raised the analogy with the banks. The Central Bank, if I take his point correctly, had a certain discretion when the licensing was introduced originally to give people time to come up to the scratch mark set by the banks. That is a point well taken and obviously it will be taken into account when the financial structure of a particular company has been submitted with an application for a licence with the last “t” crossed and the last “i” dotted, financially speaking. If I am satisfied that they will be crossed and dotted in due course and that there is no danger in the interim, then there is no reason why a licence would not be granted to such a person. As I say, a good financial base and a proper accounting system will be prime criteria before licences  are issued.
Senator Hillery also expressed concern about the cost of administering the fund and though the cost should be limited to the interest-earning capacity of the fund I share his concern that we should not let any bureaucratic monster of great expense grow here. Obviously we would not want to put a burden on the travel industry of having to pay a huge cost for administering the new system. It will be one of my objectives to keep the procedures as simple as possible, subject to the constraints of making them effective.
During the debate doubts were expressed by Senators about the availability of bonds and the desirability of ensuring that bonds could be procured at competitive rates. I will preface my remarks on this topic by again drawing Senators' attention to the definition of a bond. It need not necessarily be a bond in the traditional insurance company sense. In most instances that is the form of bond that will be provided, but there is no particular requirement in the Bill to have it in that form. As long as it meets the requirements of section 3, that is adequate. In so far as most people will seek the traditional type of bond from a financial institution, more than likely an insurance company, my Department have been having consultations with the insurance industry and with the main banking groups about bonding. At this stage I can say that I am confident that bonds along the lines required by the Bill will be available from Irish sources. I do not think there is any danger that lack of competition in the field of providing bonds will lead to a sort of closed shop situation where unduly high premiums will be demanded. In any event, under the EEC we would not be confined to having to accept bonds from Irish financial institutions.
Senator Kiely raised the question of an operator using customers' money for other purposes and said there should be inspection powers to deal with this. I agree, and there are powers of inspection. They are given in section 11 where, if necessary, auditors can be sent in to get a speedy statement of affairs. In the case of any operator where suspicious circumstances  were coming to light and where customers were having cause for worry and those worries were conveyed to me, there is that power of inspection.
One matter which very understandably concerned many Senators was the position of the victims of the Bray Travel collapse. Naturally I am very alive to the expectations of those people that this measure might have provided compensation for them, but it was not possible to make the compensation fund retrospective in its application. The fund is to provide for cases which will arise in the future and, of course, the fund will be provided by the customer. Payments into the fund are being made by the customer on the understanding that they will provide for future collapses, should those undesirable events take place. My opinion, and I am so advised, is that it would be contrary to that understanding and to the implied trust which that understanding brings with it, that the fund should be applied retrospectively. Indeed there might very well be constitutional problems if any attempt were made to apply the fund retrospectively, or if I were to seek to have some discretionary power to apply it retrospectively.
They are the reasons why no specific provision is made in the Bill for those unfortunate victims of that collapse. I am sympathetic to them. The position is however, that their interests are now being attended to by the proceedings going through the courts, involving the winding up of the affairs of the company concerned and associated companies. When those proceedings are terminated one would expect, having regard to various offers made by one of the principals involved, that there will be funds to compensate the victims of the collapse. It is only right that, following the collapse of a private commercial enterprise, compensation for private people should come from the normal sources. It would be only when those sources were shown to be inadequate that one might consider in a case of suitable hardship that the State might possibly intervene. I do not have to spell out to Senators the door that would be opened if interventions were to be made in this  particular case. I appreciate that there are certain circumstances about this case which perhaps take it out of the ordinary run of the mill. I assure the victims of that debacle that they have not been forgotten. That there is no provision for them in this Bill is due to the nature of the protection being provided and to the fact that the court proceedings have not yet concluded.
The Bill provides that the proposed protection fund will be collected from tour operators only, but that the resources of the fund can be applied both to the victims of an operator's collapse or an agent's collapse. Some Senators have queried the rationale behind this. In effect, the fund constitutes a levy on operators because the levy will be passed to the individual customer. If it were to be paid both by the agent and the operator a double levy would be passed on to the customer. As in effect the customer will be paying it, it is only necessary to make it collectable through one source, and the source is the operator through whom all travellers proceed. Again, if it were to be paid on the double, the effect which I mentioned earlier would be to drive people to avoid the retailer and go direct to the operator. That would be to the commercial benefit of the agent.
Senator Whitaker was worried about the investment methods proposed for the fund. Obviously in an inflationary period one would share his worries. It is something we can consider to see whether we should take powers to provide for more flexible methods of investment. I doubt that we will get a perfect answer. This does not answer the point entirely, but we will reach a stage where the fund will stop growing. It will reach a certain level and, if our experience here is similar to that of the UK this will happen pretty soon because the licensing and entry requirements into the trade will ensure that incompetent people will no longer practise this business. If they are eliminated, the danger of collapse is thereby eliminated and, consequently, there will be no demands on the fund. If there are no demands on it, it should grow quickly into a substantial amount of money and then it can be left untouched. I agree  that, even then, it is important to make sure it is invested so that its value will not be eroded by inflation.
Senator McGuinness raised a number of points including the position of transport carriers, the circumstances in which the consumer might claim under the Bill, and the provision to refuse a licence on fitness grounds under section 6(3) (b). It is not intended that carriers should be licensed under the measure. The definitions indicate that more is involved in tour operating than just carriage. Most of the carriers, of course, are national flag carriers, or State trading companies, and there is little or no risk to the consumer. In practical terms it would be difficult, if not impossible, to impose the licensing and bonding requirements on carriers. It would have international implications because people coming here with air services do so on foot of bilateral air services agreements. Likewise our carriers going into other States do so under the same type of agreement. I could see great difficulty if one were to try to include carriers as such. One would have to assess the risk of a carrier going out of business and thereby causing loss to holidaymakers. In that situation many different circumstances would arise. If we had our protection fund I do not see any reason why it would not be available to meet the burden which would fall on the operator who would have been prejudiced by the collapse of that carrier, and his customers would have been prejudiced also. If any carrier has a tour operating subsidiary, as happens in the case of Aer Lingus, that subsidiary will obviously have to comply with the licensing and bonding requirements. Of course, the definition would exclude any danger of an operator trying to present himself as a carrier and thereby avoid the provisions of the Bill. The definitions are constructed to ensure that.
A number of speakers said that the whole purpose of the Bill seems to be to protect people who are going abroad on their holidays, and very properly raised the desirability of encouraging people to spend their holidays at home. The number of Irish people spending their holidays  abroad now represents a significant invisible export. Everything possible should be done to encourage as many people as possible to stay at home. I spoke to the Irish Travel Agent's Association last weekend on the occasion of their annual meeting in Limerick and I made the point that because of their widespread network of retail outlets and staff the travel trade can assist Bord Fáilte significantly by encouraging people to take holidays at home. I have no doubt that the trade, which has shown itself to be entirely responsible in its approach, will listen to that plea and will co-operate with the board in the campaign they are planning.
Senator Carroll was worried that the Bill does not apply to holidays at home, that essentially it deals only with collapses which occur in the case of foreign holidays. Of course, the reality is that there is a significant difference between being stranded in Miami and being stranded in Donegal, although from what one hears at the moment it might be difficult to get out of Donegal. I do not think a bonding system would cure that at the moment having regard to the current difficulties in the Lough Swilly service. Very few package holidays are sold on the home market. The only one I can think of offhand is sold by CIE. We can trust CIE. For that reason, home holidays are excluded essentially from the operation of the Bill.
I accept the point made by Senator McGuinness about the need to define the circumstances in which the consumer would be entitled to claim under this Bill. The Senator's point could be covered by including a definition of the term “inability or failure”. Senator Carroll referred to this as well on section 2. We are looking at that in consultation with the Attorney General's office and we will go into it in more detail on Committee Stage. Senator McGuinness also raised the question of refusing licences. For example, on fitness grounds there will be, to some extent, an element of subjective judgment in some cases. Obviously one will have to be very careful to have full regard to the principles of natural justice before anybody will be refused on those  grounds. There is this safeguard of an appeal to the courts, so there would be a second look at such a case. The requirements of natural justice would be complied with by virtue of that procedure.
Some Senators regretted the delay that will ensue between the passing of the Bill and the bringing into force of the regulations. I must say I share their concern. I and my officials are working as diligently as possible to ensure that the interval will be as short as possible. The time scale given by Senator Harte was realistic almost to the point of being pessimistic. It is often better to be realistic and pessimistic rather than be unreal. Hopefully, having set an outer limit, the Bill will be implemented before that.
Senator Carroll asked whether the licences will be annual. They will be annual licences. Bord Fáilte have been consulted because, of course, their knowledge of the trade is very widespread and they can give useful advice to the Department in this whole matter.
Senator Honan asked if the tour operator could put the cost of the bond on the customer while the travel agent cannot. I do not think the cost of the bond will be put specifically on the customer. It will be part of the overheads of the operator. The protection fund levy, I imagine, will go specifically onto the customer because it will be a levy per head of persons travelling. The premium for the bond will be a single lump sum figure. It will be part of the overheads of the business. Indirectly it will be reflected in the cost of the holiday. It will not be a separate item in the bill the customer will get.
Senator Honan raised a question — I was not quite clear on this — on the Department's role with regard to operators who have themselves bonded. I am aware that out of their own sense of responsibility some operators have bonding and protective arrangements on an entirely voluntary basis and they should be commended for that. The Department have no role with regard to whether or not anybody operating as a travel agent at the moment has any bond or has any protective devises set up. There is a misunderstanding on the part of some members of the public who think the Department  have a role to play at the moment. The Department have absolutely no right to require anybody operating in the travel trade at present to have a bond or to set up any financial protection for their customers. Nor have the Department any right to interfere, inhibit, or stop anybody from setting up in business as a travel agent or as a tour operator. Because the Department have absolutely no such powers this Bill is being enacted. I should like to make this clear because I know that this misunderstanding exists from correspondence and messages we have got following collapses from members of the public asking why we allowed this to happen, and why were these people allowed to put up their plates so to speak. People were not aware that we could not stop them. They have the commercial freedom to do so as the law now stands. Senator Mullooly expressed apprehension about the small agents, and I have covered that position.
As I say, the unfortunate events of the past 12 months have brought the travel trade much more into the public limelight. Notwithstanding the misapprehension on the part of some members of the public about the Department's powers, I think the majority of the public are aware that the trade is uncontrolled at present, and there is very clearly a widespread public demand for this Bill. I have no doubt that, when this Bill is passed and implemented, the arrangements for the protection of the Irish traveller will be equal to, if not superior to, those pertaining in any neighbouring or other European jurisdiction. The very existence of these protective measures will give a boost to the trade, and will ensure that a higher quality of service will be given. I have to say that in the knowledge that much of the service given will result in foreign holidays. I have no doubt that the trade will heed the appeal which I make once again that, in this year particularly, pending the implementation of the regulations holidays should be taken at home. I am grateful to Senators for their welcome for the Bill.
Question put and agreed to.
 Committee Stage ordered for Wednesday, 9 December 1981.
Seanad Éireann 96 Transport (Tour Operators and Travel Agents) (No. 2) Bill, 1981: Second Stage, (Resumed).