May I deal with the question Mr Wilson raised regarding the financial applications. He referred to Larne and the semi-state body. Mr Irwin answered the question to a point when he stated that the port of Larne is a subsidiary of a plc. I honestly cannot speculate or comment as to how it is financing its particular investment. As Mr Irwin said, the head office sets out standard criteria on the return on capital employed, return on assets and necessary financial applications before permitting the port to make an expansion. This is only an external view. We have to deal with the Belfast Harbour issue in relation to the historical application of this. £150 million was spent on Belfast Harbour between 1985 and 1995. Effectively we no longer have the availability of aid from the European Regional Development Fund.

We were the beneficiaries of that to the extent of 50%. It follows from that sort of level - and I am talking about the substantive level - that we need to do the things we have addressed here under a vertical integrated business which would command those sort of sums. There must be availability. We do not have a plc head office - we are our own plc. The only way we can avail of those funds is through a structured finance arrangement which gives us accessibility to both equity and debt.

Mr Wilson mentioned the 50% debt-to-equity requirements of a semi-state body such as Dublin. I do not have Dublin's balance sheet in front of me, but I am fairly certain that 50% of the debt equity would not allow it to take too much debt on its balance sheet. It certainly would not be able to undertake to the level that we would consider necessary for the sort of vertical integrated business that we want. I am speaking purely on the basis of what is in the best interests of Northern Ireland, not the port of Dublin.

Mr Roche is time-pressured, so I will invite him to speak next.

Thank you, Mr Chairman. I have to go at 12.20 pm, but I wish to raise three issues with Mr Cushnahan.

First, from your argument that the vertical integration proposals are crucial to how you see the port developing as a successful commercial enterprise and the statistics on the distribution of trade between ports in Ireland provided by the Larne delegation earlier today, it seems that it is absolutely imperative that we establish the commercial success in the future of Belfast as a port.

Perhaps the best way for you to raise the finance for the vertical integration and replace the existing capital to account for depreciation is through your own proposals. Will you clarify what precisely will be required in terms of vertical integration?

My second point is in relation to competition with other ports. The submission made earlier this morning mentioned competitive factors that are crucial to competition for any port, but it was not clear to me how, for example, the public and private partnership proposals - or, indeed, any other proposal for the future of Belfast harbour - would give rise to unfair competition in relation to any other port in Northern Ireland, or specifically Larne. That was not clear to me.

Access and the differential price of fuel were mentioned as being important competitive factors in relation to any port, and I gather that, in the past, you received a differential funding from the EU, although I understand that that would simply continue if it did give rise to some competitive advantage in any future scenario. It was not specifically related to the question of how, if you change your status now, it will affect competition - unfairly or otherwise.

My third point is on the use of the land around Belfast harbour. There seems to be a fear that this land could be used for purely speculative purposes and that the funding from that could help finance your activities all of which could enhance your competitive capacity. Some people would call that unfair competition, but my view is the more competition the better.

There are three questions, and they are, in a sense, intertwined. The first asks about the extent of the vertical integration, the second about what the issues are for us in terms of the business activity and the third about whether I tend to look at the matter from a management perspective rather than from a financial one. Mr Irwin might like to respond?

This is at the core of the issue. In our presentation we said that we, as a port utility, are at the crossroads. We wait for people to come and go. We are not active in the whole transport chain, which is basically from door-to-door. A lot of things happen to products between leaving the factory door - if I may use that example - and arriving at the customer's door. Ports are pivotal in the transport chain. Port utilities, who want to be bigger players in the world of transport, can decide on a forward-going strategy, which seeks to ensure the viability of their core ports through added-value activities.

Since the national supermarkets came to Northern Ireland we have developed a number of what they would call logistic centres and what we would call sophisticated warehouses. The reality of locating those warehouses at, and locking them into, the port of Belfast is that the supermarkets are more likely to use the port of Belfast's shipping services. The fact that the warehouses are close to the ferries means that we have an emerging vertical-integration operation.

A substantial amount of warehousing is being built at the moment, and for that reason there has been a significant movement of traffic from ferries that use Larne to ferries that use Belfast. That is a fact and an example of vertical integration.

There are other integration issues. As an island economy, do we always wish to be in control of only one end of the bridge? Northern Ireland ports have had opportunities to secure a foothold in Europe and a west-coast port in Great Britain. That is vertical integration, and that will add value. On the Great Britain side you could also have all the activities that centre round a port.

We had to forego becoming seriously involved in what we call the lift-on/lift-off - not roll-on/roll-off - movement of containers. Lift-on/lift-off requires a much more sophisticated terminal and provides a direct link to the continent. That in itself leads to added value.

It is interesting to note that people who are very closely tied into that facility have now extended their vertical operations to owning a direct European shipping service and to opening up logistics centres and warehousing in Rotterdam. If a factory in Northern Ireland wants to send something to a customer in Holland or wherever, one company can monitor it from door-to-door. It now has an office in Rotterdam, which I will have the pleasure of opening in about four weeks' time.

People in the transport game can either sit and do their own little thing or not and there is a range of things that they can do. Companies such as P&O are involved in warehousing and shipping. They are a major transport business and completely vertically-integrated. No matter where you go in the European Union, you will bump into P&O companies, and I take my hat off to them. They have developed a superb strategy in which their ports, shipping, haulage and warehousing are integral parts.

We are not inventing anything new. This is a well proven, strategic way forward for people in the transport business, and ports are pivotal to it, because they have the basic resources of water and quayage. They are a key link in the transport chain. They can either build on that or just simply provide the quayage.

If I understand correctly, Mr Chairman, Larne has said that we have obtained more grant-aid. I do not understand how that can be said as the Department of the Environment, which administers the European Regional Development Fund grant-aid, insists that all Northern Ireland trust ports receive only 50% grant-aid for roll-on/roll-off facilities and the reason for that is to maintain a level playing field. The port of Larne, as a private company, is only entitled to receive a 50% grant. So, where Larne competes with Warrenpoint or Belfast, the grant-aid, at Government insistence, is kept at 50%.

Interestingly, the other point is that the level of European Union grant aid over our period of investment also averaged out at 50%. Therefore, it is 50% in the sector where we compete with Larne. In the overall port sector - in which Larne is not very active - we also averaged out at 50%. From either perspective, I really do not understand that point.

The final point was about the use of land. Belfast Harbour Commissioners - as a port authority -is a different business from that of the Port of Larne. However, having said that, I am not clear about the statistics. The Port of Larne does have its own - what I would call - industrial or warehousing estate. Again, that is clearly another form of vertical integration within the overall P&O structure.

From our point of view there is income from non-port land. We identified that through ground rentals. There is, however, a cost to generating that income. Infrastructure in the harbour estate has to be provided and maintained. The land has to be decontaminated when the site is made available. So there is a return on an investment, although this should not be construed as a free gift - in a cross-subsidy sense - to the port. We have also said that the level of non-port rentals is about 10% of our turnover, so that is not a significant feature. I hope I have covered all Mr Roche's points - I am sure he will tell me if I have not.

I think you have covered everything. I propose to move on to Assemblyman McGimpsey, and I have other people on the list.

I want to ask you about the land, because that is something that has raised a great deal of public interest.

You have around 2,000 acres in your land holding, the non-port element now contributes 10% to your profit. You appear to be operating on an income and profit of roughly 40% on your port operation. It is comparable to Larne; is that right?. You are showing a turnover in one year of £18.8 million, and your profit after tax is £6.5 million. I assume that you are operating at around 40% on your gross, which is roughly comparable with Larne. Interestingly, despite what you have just said, we have discussed this matter with Larne Harbour and it manages to do this without the advantage of a large landbank and without the advantage of property development.

When you are talk about vertical integration such as warehousing, shipping, transport, investing in a west coast port and so on, surely that does not all have to be done by the Harbour Commissioners. You agree that P&O have a very good strategy and a good operation. However, if the land is not part of the harbour commissioners but is available and is tightly controlled - from a land-use planning strategy - these uses will come about anyway.

You will recall - and we have had this discussion at the city hall, and, Mr Chairman, I will make this documentation available to all members of the Committee - that you wrote to me in January 1998 saying that you had 2,000 acres in the harbour estate. There were 600 acres on the County Antrim side and approximately 1,400 acres on the County Down side. You then produced your brochure and, lo and behold, we discovered that those figures were not accurate.

Instead of having 600 acres on the County Antrim side, you had 440 - you had lost 160 acres. You told me previously that you had 1400 acres on the County Down side. That has now jumped to 1510 - you have managed to find an extra 110 acres in the year between producing this document, which went round members of the council and this other documentation.

We have been through this before. I have your letter saying that 440 acres on the County Antrim side and 1510 acres in the County Down side are the accurate figures, so I assume that the figures that I got from you the previous year should be discounted.

You say that a comprehensive exercise had never been undertaken by the Belfast Harbour Commissioners before, and, therefore, there are no earlier figures. It is a matter for the commissioners and your management to work out how you managed to lose so many acres - the excuse being that this was the first time a comprehensive exercise had been done.

You go on to say that the computed areas are intended as guidelines for comparison purposes rather than for definitive value. Can you give an indication of what the valuation of the land is? Presumably, since you have come this far and are now ready to make a recommendation, you know the definitive value of your land holdings. I would be interested to see that and the calculations.

You are also responsible for this brochure. Again, there are discrepancies in it. For example, you show "port" and "other users", but you are missing bits of land. You are showing all of this area as "Harland" when on this other map some of it appears as "port-related". You have left out D3 completely as far as I can see, and also, on this side, there seem to be mistakes. In the brochure all of this area has been shown as "port- related" which in this document it is a mixture of "port-related", "warehousing and distribution", and "nature conservation". There are also other discrepancies.

You seem to be developing a history of discrepancies in how you describe your land.

I am very conscious of time, but, quite apart from that, Mr McGimpsey, you have introduced documents which you say that the Harbour Commissioners and Mr Irwin in particular, are aware of. The problem is that members of the Committee do not have these documents, and the Harbour Commissioners were not on notice that you were going to refer to them specifically. I think, in fairness to the witnesses, that it would be proper to proceed to a question.

However, it might be unfair to ask them to comment on the details you have referred to without their having had an opportunity to look at them and deal with any discrepancies that there might be. Could you ask a quick question? Your question relates to valuation.

I appreciate that. All of this documentation will be made available to members of the Committee. This is not the first time that we have discussed the matter. I want to know -

The problem is that other members are not aware of the documentation. The Harbour Commissioners have had notice of this at previous meetings but not specifically in relation to this meeting. It is a little unfair to raise the matter now, but they could come back to it later.

These are vital questions.

We should proceed with the question of valuation.

You have given evidence - I heard you say it at your previous presentation - that the privatisation cannot go ahead unless the land is lumped in on 2,000 acres. That is what I heard you say.

How can Larne operate without this huge land bank and be profitable? It can operate on a similar profit level to yourselves. What level of valuation are you putting on the land, broken down by categories? It is vital that we know how, for example, you value land for port-related activities, land given over to the harbour airport and land used for Harland and Wolff, both on a long-term lease and leases that are due to expire over the next 20 years.

If we knew those sorts of values then we would have a rough notion of what you are asking for your port operation, an operation which produce a turnover of £18 million per annum, of which only 10% is land value and of which £6.5 million remains after tax.

I appreciate the observations about the discrepancies which Mr McGimpsey has noted. May we respond formally to that?

Yes, I would like you to address the valuation aspect.

The process of moving the port into a public and private partnership would involve a significant independent land valuation exercise. That would be carried out by the Government, either by the Valuation and Lands Agency or by somebody else, and the Belfast Harbour Commissioners. It would be an extensive task, requiring independent professional assistance. We have not done that. The process of moving to a public and private partnership has stopped. All processes have stopped.

In the normal course of life, you would not obtain independent professional valuations of your land - you would ask for an independent valuation of your rents, or review them every five years. You do not keep assessing the capital value of your land, you review the income from your land. What Mr McGimpsey is talking about is the capital value. That is a valid point in the context of entering into a PPP, but it is a different exercise. If that information is needed, we could set about putting such an exercise in place, but it is not to hand.

I cannot understand how we can compare the ports of Larne and Belfast. Larne is, fundamentally, a ferry port. It operates ferry services. We operate a total port. We handle six or seven million tonnes of bulk cargoes, and are the seventh or eighth largest port in the United Kingdom. Larne is akin to a port like, Dun Laoghaire or Holyhead. For a proper comparison with the port of Belfast, you need to look at the Mersey, the Forth ports, Bristol or Hull. It is not valid to compare Larne with Belfast. We are a totally different business. Part of our business is the same as Larne's- our roll-on/roll-off ferry services - but that is not, by any stretch of the imagination, the total business of the port of Belfast.

Are you saying that the competition between Larne and Belfast is between two private ferry companies?

The competition between Larne and Belfast is the competition between P&O salesmen, Stena Line salesman and Belfast Freight Ferries salesmen. They go and knock doors and say "Will you put your container on my vessel?". Those men can adjust prices on their ships by sums of money which far exceed the charges as applied by the port authority to the shipping company. The competition is between the ferry companies operating on the Irish Sea.

With regard to the land issue, I can confirm that Mr McGimpsey's understanding is correct. Our financial advisers have given us clear advice that, without the land, this public and private partnership will not work. Our business alone is not financially strong enough to float.

I have just a couple of questions. I regret that I have to go to another meeting. When the Larne representatives were here they expressed concern about the fact that the review on the trust ports was not published in Northern Ireland. Do you agree that its publication here would have informed our debate? When Mr Irwin spoke about the impact of head office on the operations of Larne port, Mr Galway indicated dissent. When the record of our deliberations has been published, it would be helpful if those who have given evidence had a chance to express their views on other evidence.

My main concern is about the proposed flotation. Many people share my view that the valuation is greatly underestimated. If there is a surplus, do the Harbour Commissioners know whether that money can be reinvested in Northern Ireland, for example in the road infrastructure which everybody seems to be debating in relation to the port's development?

Is there anything within the terms of the flotation that could prevent one investor, let us say P&O, from taking the lion's share of the share flotation?

The first question from Mr Neeson was about the failure to publish a report in Northern Ireland. The trust port review was published in Great Britain by the Department of the Environment, Transport and the Regions. My understanding is that the review was split between Northern Ireland and GB. I do not think the Northern Ireland body has produced a major report. I guess it was waiting for the one from GB. The issues arising from that are interesting.

The review recognises that trust ports have their place. The report deals primarily with very small ports because the only major trust ports are Dover port, which is primarily a ferry port, and the Port of Tyne, which is declining. The rest are small ports, but issues such as accountability and fiscal responsibility have arisen, and it is quite clear that on the Great Britain front, DETR intends to change the whole methodology by which trust ports operate.

I think it would be helpful for the Committee to have a copy of the GB report.

Perhaps I may help Mr Neeson. That report on Northern Ireland ports is in being, but the Department of the Environment refuses to make it available.

I think that that is the issue Assemblyman Neeson raises. Perhaps we could return to it. Some members of the Committee told me some time ago that they wanted to ask questions. I regret that I may not be able to afford everyone an opportunity. Technically, we have five minutes left. I am prepared to sit until about 12.45 pm. After the next batch of questions I will take questions from as many members as possible, and they can be answered as fully as the allotted time allows.

I will quickly respond to Mr Neeson's other two points. In relation to proceeds of the sale and to what will happen if the proceeds exceed the cost of the road infrastructure programme, the Government never discussed with the commissioners what was going to happen. When the Chancellor made his statement on 12 May we had no idea that he was going to link the proceeds of the harbour to the roads programme. We just do not know.

The second question was in relation to any proposed safeguards, which would ensure that no single shareholder, or group of shareholders, would, in effect, control this new public and private partnership. We are suggesting that a number of safeguards could and should be included in the golden share, and let me summarise them if I may. We are suggesting that the golden share should include a clause to the effect that no single shareholder may own more than 10% of the shares in the new business. The second safeguard would ensure no concert-party voting, if I can describe it as that. This would ensure that, collectively, no shareholding could exceed 10%.

I think that that is everything in relation to Mr Neeson. Now I have Mr Hutchinson, Mr Morrow, Mr Beggs and Mr Tierney, who indicated much earlier.

I indicated half-an-hour ago.

I am coming to everybody who indicated. Mr O'Connor and Mr Morrice, please be as succinct as possible when asking your questions. The panel will attempt to answer them as best it can, given the short period of time we have left. We have 10 minutes left.

When Mr Wilson asked the first question it was interesting that Ms McLaughlin said that when they were considering the proposals, they thought that the Tory Government would pick trade sale as the best option. I want to ask about the golden share and the protection it would give in view of the fact that the Labour Government sold their golden share in North Sea oil. What I want to know is what safeguard there would be in the golden share to ensure that the port operated in a manner consistent with the best interests of Northern Ireland.

If the Government can sell the golden share, what protection is there? Parties like my own, the Progressive Unionist Party, who do not have many Members in the Assembly, will not be able to prevent the Department from actually selling it, if it so wishes. We believe that stopping this from happening would be in the best interests of the people.

Assemblyman, that is a sufficient question. I will stop you and move to Mr Tierney.

First, I do accept what you say about the land, and this land was one of the matters that I wanted to ask about. However, if we are going to have a formal reply to Mr McGimpsey's question, I would be satisfied. There is one point, however, I would ask you to clarify. You say that there are only 85 acres there, the rest being port-related or on long-term leases. However, other people seem to think that you have more land than you are telling us about. When you write to us formally, will you go into bit of detail on that?

Mine is a simple question, one which is important to a lot of members of the Committee, and you have not answered it in your submission today. Are you saying, as part of your proposal and your submission, that the proposals you are putting forward will not affect the other ports in Northern Ireland?

I am concerned that the estate - the port and also the land - should be dealt with in the best interests of the people of Northern Ireland. Earlier, you talked about your income stream and the need to have all the land included. Given that the land only accounted for 10% of the almost £19 million income in 1997, I fail to understand why all the land has to be linked to the sale.

More particularly, with this huge land bank, do you not agree that there is a real possibility that in the long term, property deals will take place involving existing lessees and any new structure? Huge profits could be made by freeing up land for property development. That profit would not come to the public but would be made by private companies.

A reference has been made to Belfast's being a total port. However, to compare Larne with Belfast is unfair as Larne could not obtain the same level of grant for lift-on lift-off services.

On what do you base you assertion that, just because somebody has his warehouse next to your port, he will use it in spite of its being £100 dearer? I fail to see the logic behind that. People use the cheapest and most competitive service and, just because they are located in your area does not mean they will actually use your service.

It was said that P&O was directing the port of Larne. Are you telling me - and I want this put on record - that Denis Galway does not have commercial freedom to make decisions about the port of Larne? I may be wrong, but it seems that the whole focus of this presentation has been on Larne, that it has been used as a sledgehammer to beat the port of Larne. I suggest that there is a difference between seeking approval to do something and being directed to do something.

I have two points to make. One has been raised by Billy Hutchinson and the other has been raised by Roy Beggs.

I would like to emphasise the point made by Roy Beggs about sitting tenants such as Shorts and Harland & Wolff. The sitting tenants are in control of a considerable land bank. Would it not be sensible, if they became shareholders in any new set-up, for them to release their leases - that would enhance further the value of the land.

My other point relates to what Sammy Wilson said earlier. The Minister said - and we are dealing here with a written reply, not hearsay - that

"while the guidelines will be concerned primarily with privatisation by trade sale, other methods are not ruled out."

This is not made up; it is there for anyone who wants to read it, and it was commented on earlier.

Secondly, if profits have reached a plateau, how do the commissioners envisage going forward from there? Diversification or development - what exactly do you have in mind?

I will keep it simple. We have stated that we wish to act in the best interests of Northern Ireland. I assume that this is the view of everyone around this table, and not just of the politicians among us. Normally one believes that the Government act in the best interests of the people. Why would a public and private partnership be the best option?

That concludes our questions. We will be as flexible - [Interruption]

Mr Chairman, the land issue seems to be one of the main areas of concern. This has been evident throughout the discussions. I suggest that Gordon Irwin bundle together the various aspects of this issue in a manner that will allow him to be as helpful as possible in his answering. Would that be helpful to you, Mr Chairman?

The land and the golden share issues are both important. Ms Morrice has also made the general point about acting in the people's best interests and how that is to be gauged.

 If we take the land situation we will be able to clarify Mr Tierney's point about the amount of land not under lease or port operational. I will not go into the detail of that here.

I have been asked why it is important to include all the land in the harbour estate when rental income provides only 10% of turnover. As we seek to develop this business in a Public and Private Partnership (PPP) and put together a prospectus, we have to demonstrate how we will maximise the value of the assets. Clearly, there will be opportunities in the future to develop land in the harbour estate.

The current figure of £1·8 million in rental income will increase. Land regeneration is already happening. For example, Sydenham Business Park has 85 acres to develop. By the end of this week that will probably be down to 80 acres, because there is a tenant who wants to come in.

Land will continue to be available for lease. Business is going on in the harbour. I am not sure whether the harbour exchange development will proceed, but if the planning permission comes through, that will come on stream in a few years' time, and add to the attractiveness of the overall business.

Mr Beggs made the point, if I picked it up correctly, that Short's and Harland & Wolff could become shareholders and release their leases. I cannot believe that the boards of Short's and Harland's would give up such valuable documents. They have leases on serious amounts of land; I cannot imagine that they would give that up. Should they ever want to get out of the harbour estate, I can imagine that they might want to sell their leases or do other things with them. There is a claw-back provision in the legislation.

We have said in our submissions that if the Assembly were to allow the PPP to go ahead, it should seek to use that provision to punish any property speculation by the PPP - we totally agree with that - but should seek to encourage urban regeneration of the land.

I cannot go into the details here, but it is a basic point. Over the years, the port has been good at urban regeneration in those areas where land was not leased to other people. We cannot go into areas of land that are derelict - and we can all see them - if they are under lease to Harland's. We cannot trample over its property rights.

Somehow or other we are going to have to work out a deal on that. It does not matter whether we are the lessors or somebody else is. Harland and Wolff is the lessee, or Short's is the lessee, or somebody else is the lessee with a piece of paper saying "I have this land for 110 years and provided I pay my ground rent and comply with the covenants in the lease you will not trample over my property rights." You may want urban regeneration, you may want things for Belfast, you may want things for the Province, but if the lessee is not prepared to play ball, you cannot walk in and trample all over him.

There are three other ports to consider. If you are going to look at what can impact on ports in Northern Ireland, you must not stop at the border. You have to say "What is Drogheda doing? What is Dublin doing? What is Dún Laoghaire doing?" That is a fact of life.

In terms of the Northern Ireland ports, clearly there is a competitive scene with Larne between the ferry operators. They are in the marketplace competing. Londonderry is a substantial distance away from Belfast, and it has no unit load services. It is in the business of bulk cargoes, and the cost of moving bulk cargoes by road haulage far exceeds the cost of importing them by sea. In Londonderry, they are closer, obviously, to their natural marketplace. Road haulage and proximity to the customer are much more important than any cost reductions offered on port charges.

The port of Warrenpoint is in a slightly different position. It is on the eastern seaboard caught between Larne, Belfast, Drogheda, Dundalk, Dublin and Dún Laoghire. And which of those ports is going to have the hardest impact on it? Geographically, from the point of view of the port scene, it is in a very competitive part of Ireland.

By the way, we have all been in the competitive scene. I do not think we have all been lying sleeping. People should not assume that up to now it has been a cosy club which is suddenly going to be broken up.

We compete today, and we will continue to compete tomorrow. Most importantly, and this was on the news last night, one cannot act unfairly - the Competition Act 1998 does not permit that. One can be fined up to a level of 10% of annual turnover for doing that. Our particular view is that competition will continue. The fact of becoming a PPP will not alter that.

Thank you, Mr Irwin. May I deal with the question from Mr Hutchinson about his concerns over the golden share and with Ms Morrice's comments on why a PPP is better and why we should support it.

 Mr Hutchinson is quite right. In our scheme we have suggested that the Government or their nominee hold the golden share. We have presumed that that might be the new Department of Regional Development. He is also quite right in saying that while it is held by the Department, it can be released. That would be up to the Minister and the Department. When we considered the scheme we had to consider who might hold the golden share. In previous privatisations of ports the share has been held by a Government Department at Westminster. We ruled that out. We feel that there is a greater chance that it will be held on to if it is held locally. It will be in the hands of our new Minister.

I want to respond to the final question which Ms Morrice posed. That is the key question: why is what we are suggesting better than what we have now? Why do we feel that it is in the best interests of Northern Ireland? Sitting here today the commissioners are very clear that the PPP is not only in the best interests of the port of Belfast but in the best interests of the Northern Ireland economy.

As commissioners we have no vested interest in the port; our businesses are not in the port, and we have nothing to gain financially from suggesting that this scheme go forward. If anything other than what was in the best interest of Northern Ireland was being suggested, my colleagues and I would have left long ago.

Why is it better? It is better for a number of reasons. It would give the harbour a chance to develop and grow. It would give us a chance to build a very strong Northern Ireland based-company, and we need more of those here in the new climate. It would give business access to the capital which is needed over the next decade if there is to be continued growth and investment in Northern Ireland.

With the golden share held by the Department of Regional Development - the shareholding which we are suggesting - very strong safeguards would have to be put in place. We are suggesting that the Department of Regional Development hold 20% of the shares and have representation on the board. That would give local people a very clear input into the future direction of the business.

The golden share also offers protection for the Northern Ireland economy. We have mentioned, in answer to earlier questions, the issues of share-holding and limits on share-holding which would ensure that there was no concert-party voting and that no one party dominated the business. We also referred in our golden share to safeguards for the artefacts in the Harbour Office and to safeguards for port users on charges. If I may sum up by saying that we firmly believe that this PPP is the best way forward - in fact, we believe that it is the only way forward for this business.

Mr Cushnahan do you want to say anything very very quickly?

My questions have not been answered.

I am sorry. We really have run out of time - I have been as flexible as I can.

Mr Chairman, I want it recorded that the commissioners refused to answer my question.

I am sorry, Mr Chairman, may I interject here? I cannot have that comment on record.

They had the opportunity, Mr Chairman, and they did not address them. I want that on record.

If your Chairman gives us the opportunity, Mr O'Connor, we will address your questions.

I will give you one minute to do that.

If I remember correctly, Mr O'Connor, you suggested that people in logistics and warehousing are not tied in to the adjacent shipping services. You feel that they will move to other ports and shipping services to follow the money. They will move to Warrenpoint, or Dublin, or Larne, and that by having the logistic centre there -

Whatever is most commercially viable for them.

Well, one of the things that is commercially viable for them is to be right beside the shipping services. We have proof from our own business that this is a fact of economic life. That is the reality for the people with whom we deal - it is a proven fact of business.

Those who are not doing this are not customers of ours, and I cannot comment on them. But it is what our customers are doing, and I am quite happy to have that recorded.

Mention was made of Larne investment decisions. I know of very few satellite companies or subsidiaries able to spend £10 million, for example, on a piece of port infrastructure. Will that decision be made totally, autonomously and independently in the town of Larne, or will it have to be referred to the head office of P&O?

With respect, that is not what you said at the time -

I am not going to permit any further discussion on this issue. I am going to ask the Chairman of the Harbour Commissioners to make a succinct concluding remark. Thank you very much for your patience.

Mr Chairman, from one Chairman to another I realise that you want to get this over and done with therefore I do not wish to add to what has been said. We are glad to have been here, and we have done our best in all sincerity to answer the questions put to us. If by any chance there is any other information which Mr Tierney would like, we would like to respond to him. We will deal of course with the issues raised by Mr McGimpsey. If there are others who would like to talk to us - and I mean any of the people here today - we will do our best Mr Chairman, to get in touch with them.

Thank you very much, Mr Cushnahan, Ms McLoughlin and Mr Irwin. This has been a very useful session, and I am sorry that time has beaten us.

On behalf of the Committee, I welcome the representatives of Harbour Users Group. Mr McAree, perhaps you could give your presentation, after which members of the Committee will put questions to you.

I am Michael McAree, secretary of the Belfast Harbour Users Group. Our chairman, Mr Ian Webb, is unable to attend and has asked me to make this presentation of our group's views. My colleagues are Leslie Murray, the group's deputy chairman, and David Malseed, who is a committee member. We appreciate this opportunity to make a presentation to the Ad Hoc Committee. If we run out of time I shall be happy to respond to written questions from any member of the Committee.

Belfast Harbour Users Group has 24 paid-up members, more than 1,000 direct employees and over £135 million of fixed-asset investments in Belfast harbour. Belfast harbour development over the past two centuries has been based upon the dues paid by both harbour users and ship owners.

Apart from European Regional Development Fund grants, which came on stream in the 1980s, the port receives no public funding. Those grants go some way towards offsetting the considerable disadvantage inherent in not having a tunnel or bridge connection to Great Britain or to the continent. ERDF grants have been used in part to enable port charges to be set at levels which give the peripherally located industries of Northern Ireland some chance to compete in the single European market on a more level playing field.

Like every other interested party, Belfast Harbour Users Group feels that, as yet, insufficient detail has been put on the bones of the Harbour Commissioners' proposals. In particular, we are unclear about the fundamental rationale of the suggested public/private partnership scheme. The first question that needs to be answered is why does Belfast harbour need this change? It is reasonable to ask the Commissioners to make a clear and detailed statement about what they perceive to be the advantages that may accrue to current and future users from a public/private partnership scheme.

An obvious question that must be answered by anyone seeking to alter the status of Belfast port relates to its ownership. The sale of the port, by whatever means, will introduce shareholders into its affairs. That raises the likelihood of financial institutions in London making decisions about Belfast port in the interests of their shareholders rather than in the interests of the current and future port users or, indeed, of the Northern Ireland economy more generally.

The Ad Hoc Committee will need to consider the potential impact of the Harbour Commissioners' proposals on other local trust ports and, particularly, the possibility of a privatised Belfast harbour competing unfairly with Larne, Warrenpoint or Londonderry.

Our fundamental message to the Committee is that there are alternative options. The Harbour Commissioners' proposals are currently the only option on the table, but a discussion about the future of such a key economic asset should consider in some detail other possible ways forward.

In trying to examine the issues in the wider context of the Northern Ireland interest, the Belfast Harbour Users Group questions whether selling one of the primary assets that remains in public ownership in Northern Ireland sends the correct signal to outside investors.

The IDB is continuously looking for inward investment for Northern Ireland, yet the proposal suggests that the people of Northern Ireland have no faith in a commercial enterprise which is critical to the Northern Ireland economy. We must also be aware that the sale of Belfast harbour would be an irrevocable step which should be taken only after detailed analysis and comprehensive debate.

It is unlikely that the intrinsic value of the business will diminish over the next five years, and if it was still felt then that privatisation was the only way forward, the business could be sold at that later time.

One option is to allow Belfast harbour to continue developing as a trust port, but with wider powers. The Department of the Environment, Transport and the Regions review of ports in Great Britain makes it clear that trust ports can be as effective in economic generation as privatised ports.

Even if Belfast harbour were to continue as a trust port, it could still be given increased powers which would allow it to make a substantial one-off contribution towards generating the cash that is needed to fund some of the road schemes proposed by the Chancellor.

The Belfast Harbour Users Group opposes the separation of the port's operations from its landbank. However, in extremis, it would be preferable for the commissioners to mortgage or even sell part of their non-operational land rather than introduce shareholders whose interests would be very likely to conflict with the interests of the Northern Ireland economy.

If it were ultimately decided that a PPP scheme represented the best way forward for Belfast harbour, it would be appropriate to consider the extent to which a privatised port should be regulated.

The Belfast Harbour Commissioners have suggested that a golden share would be adequate to protect the interests of the port users and the wider Northern Ireland community. The Belfast Harbour Users Group is emphatic in not believing this to be the case. We would favour a regulator with responsibility for safeguarding the public interest.

In addition to being able to prevent a resale, a regulator could be empowered to require continued maintenance and improvement of the port, to set charges, to prevent the creation of new charges and to ensure fair competition between Belfast and other Northern Irish ports.

We welcome the Committee's inquiry and hope that it will consider options which have been rejected by the Harbour Commissioners. We suggest that it would be possible for Belfast to continue as a trust port and still generate the revenue needed for the Westlink over the next few years.

Except as a last resort, port operations must not be separated from the landbank as the harbour estate provides a vital commercial core for Belfast and Northern Ireland. If the Committee recommends the PPP proposals, those proposals must be modified to provide the effective regulation that is normal for privatised utilities.

I thank the Committee again for inviting us here. I hope that this brief oral statement has clarified what we regard as one of the most important issues. We suggest that the Committee re-examine the Harbour Commissioners and probe their proposals much more closely than it has been possible to do so far.

You introduced yourself as the secretary of the users group. How many people does the users group represent?

The users group has 24 paid-up members, representing approximately two thirds of trade through the port. There is a list of the member companies at Appendix 1. These are the core businesses that operate within the confines of Belfast harbour, and they generate most of its revenue.

I am interested in the users group's attitude to the suggested PPP scheme. I can understand your reservations about the port being put in the hands of financial institutions in the City of London. To get to the nub of this concern, what would the partial privatisation of the port mean? Is the users group concerned that there would be, ad nauseam, continual price hikes? Would that follow on from your concern about financial institutions?

Belfast harbour handles 60% of Northern Ireland trade by volume. It is a very important artery for the economy. If there were unfettered private ownership of what is really a quasi-public utility, we would run the risk of someone's deciding to increase the costs of using that port.

The costs of going through the port are borne by the companies who do business there, but eventually those costs are passed on to the consumers in Northern Ireland. It is like hiring a taxi: whatever the actual cost of a taxi, the price just gets added on. If the cost of using the port of Belfast increases, over a period of time those costs will filter down into the economy generally. Our key point is that the peripherality of Northern Ireland within the European Union puts us in a weak situation, and, as a result, industry in Northern Ireland cannot really bear any extra costs.

One of the reasons that the ERDF grant system was put in place - and a lot of that money was spent in the port of Belfast - was to reduce the extra costs of Northern Ireland's distance from European markets. If that were worn away over time, we would still be left with the peripherality of Northern Ireland, but we would no longer have the cost advantages that were envisaged in the grant system.

I want to be clear on this. Is it the case that your concern about possible, you might say inevitable, cost increases for the port users lies behind your concern about partial privatisation? If that point were addressed in some way, would there still be an interest in partial privatisation?

This is a quasi-public utility and, therefore, as is the case with a public utility, some regulation would be appropriate.

Looking at the matter from another aspect, we have not seen any suggestion that the management of Belfast harbour have been doing a bad job; in fact, we think they have been doing a good job. We have a successful port - one of the most successful in the British Isles. It is a trust port; it is working well, and, so far, no one has told us that there is anything wrong with it. So, why do we need the change?

Belfast Harbour Commissioners are saying that they need shareholders and the services of financial institutions in order to obtain money for future investment, but this port has developed over 200 years without any of that. Investment in the Port of Belfast was based on the business going through the port and was paid for by the people who used it - whether land-based companies or merchant shipping. This has been successful for 200 years. We are not entirely sure what benefits would accrue by introducing a new class of "shareholders" who would have to be paid for the money which they would be putting into the business. They are not going to invest in Belfast harbour for altruistic reasons; they would be putting money in because they believed it would be a good investment.

Thank you. That was a concise, interesting and useful presentation. I have three questions.

First, how much consultation was there between you, the users of the port, and the Harbour Commissioners before they decided to take this option forward? Secondly, you said that the sale of the port indicates a lack of confidence in Northern Ireland plc. Could you develop that point and explain why you think that that is so? The last question follows on from the one asked by Gregory Campbell. The harbour obviously needs cash; it has had major injections of European funding, but the aim is to replace that funding by other means such as shareholders. In the absence of European money can you suggest ways of getting additional cash for investment?

I will take the questions in order. There was no real consultation with the users - the customers who provide the revenue streams for Belfast harbour. We were not consulted as to whether privatisation was a good idea. Indeed, at one of our first meetings, my colleague Mr Malseed asked Belfast Harbour Commissioners to provide us with five good reasons why the port should be privatised. What was this going to do for us as users or customers of Belfast harbour and for the general population of Northern Ireland? After having had four meetings and one presentation we are not entirely sure what benefits will accrue to the users or the general population.

As to the sale indicating a lack of confidence, the point I was making is that we have a very successful, well-run business - as I have said, Belfast seems to be one of the more successful ports in the British Isles - and the trust port status can still work in the future. If you were thinking about selling a business, it would possibly be because you were intending to retire. If this had been our family business and we needed £75 million for some development - say a road or something else - we asked ourselves if selling the business was the only option or was there an alternative strategy? We do not, of course, own the business; the business is considered to be owned by the people of Northern Ireland, and, looking at it from that perspective, we thought that selling the business was an indication that there was no confidence in that at all.

As regards future investment we have had meetings with the Harbour Commissioners. We listened attentively to the presentation, but we were taken aback by the notion that the harbour is strapped for cash and would not be able to borrow money to fund future development. Obviously we are not privy to all the details the harbour commissioners have in mind, and we do not know what finances are available to them, but someone should be asking challenging questions about this concept that the only way forward is to introduce equity participation.

Absolutely.

May I comment on that? The harbour users have been the main source of income for 200 years and the lifeblood of the harbour. Nothing has changed over the years and we have £135 million invested in the harbour. If the harbour fails, we all face a very difficult time as a lot of money is invested in its infrastructure. We, the harbour users, own all our infrastructure in the harbour - an infrastructure largely constructed with our money. We have a very large interest in the harbour, but our interest is also Northern Ireland plc's interest in the harbour. There should have been consultation much earlier than this. We had to press to be allowed to make representations. The Harbour Commissioners have probably spent a couple of years and a lot of money on consultancy agencies to provide them with a plan.

We have been presented with a copy, as I am sure you and others have, of that plan, but has there been any independent audit of what has been happening? What is the value of the landbank? What are the alternative methods of raising funding? I am not sure. We are told that this is the best way forward. We are not unintelligent people. Are there alternatives, and have they been properly examined? We are not saying a strident "No" to everything or "You must look after the harbour users". There is a lot at stake for Northern Ireland here and for the harbour users, and an independent audit is necessary. Again, what is the value of land?

Two houses were sold on the Malone Road yesterday for £1 million. According to the estate agent they were worth half a million. What is an acre of land on the harbour estate worth? I do not know. How would privatisation affect the value of the harbour? Are there other ways of generating funds and running the harbour? These are our prime concerns.

There are one or two points that I would like to raise with you. The first of these concerns the land. I see from your submission that you think that the land and the port should not be broken up. According to the Harbour Commissioners, the 2,000 acres attached to the harbour would have to be included in any sell-off. However, they also told us that there are only 85 acres available for development and that the income from the land represents only 10% of their earnings. This seems to be a contradiction. I would like you to comment on your suggestion that the land and the harbour and the port should stay together. Dennis Galway of Larne Harbour was frankly incredulous that you said that you needed to have such a huge landbank to make the port work. I would like you to explain that first.

Secondly, you say that the golden share does not work. Many of us are a bit unclear about the golden share. You suggest having a regulator in the event of the port's being privatised. How would that work? Your third, and most interesting, suggestion is to develop the harbour as a trust port, but with wider powers. What would these wider powers be? How would they affect the port's ability to borrow money and to spend money where it was required? I understand that the Harbour Commissioners have over £20 million in the bank. They tell us that they cannot use this money, and yet they say that they are strapped for cash. This strikes me as a major contradiction. If you could address those points, I would be grateful.

Part of our reasoning and rationale is based on the fact that the port has been very successful. That success is partly due to not only traffic but the landbank, including the reclaimed land, that has built up. We see no real reason to naturally separate the landbank from the port operations unless that is seen as the only way forward. We say that we should not go down that route just yet but should first examine all the alternatives.

My colleague Leslie Murray spoke about current property values. If it was decided to sell the 85 acres at the harbour at auction next Wednesday, all that that would establish is the value of that land on that day. Its worth in two, five or 10 years time would remain unknown. My understanding is that the other parts of the landbank are on long lease - like Harland & Wolff - and that under current circumstances neither the tenant nor the landlord can make much use of that land. I further understand that if the port of Belfast were privatised there would be time-limited provisions for clawbacks if land were sold and windfall profits were to accrue. There might be a five- or 10-year time limit.

A commercial operator could ensure he did not sell any land and create windfalls until after the expiration of the time element. Under privatisation, the new landlord could approach the tenant, who could have a long lease on the land, and suggest a joint operation to develop the land and share the profits. If that is what a privatised entity might do, why not take that idea back into the trust set-up? My understanding is that Belfast, as a trust port, cannot develop property. If the powers of the trust port were widened to allow it to develop the property, that would avoid some of the land lying idle because of the tenant's restrictive lease and the fact that the landlord cannot do anything because the tenant is there. Widening the powers would enable the trust port to enter a partnership with the tenant to develop the land and release some of that value back into Belfast harbour. That is one of our reasons for saying that not separating the landbank would be the right approach.

My colleague Mr David Malseed will comment on golden shares because he has some experience of them.

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