COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 24 Jan 2013

National Transport Authority - Financial Statement 2011

Mr. Gerry Murphy (Chief Executive Officer, National Transport Authority) called and examined.

Chairman

We are dealing with financial statements 2011 of the National Transport Authority. Before beginning the meeting, I remind members and witnesses to turn off their mobile phones. I wish to advise witnesses that they are protected by absolute privilege in respect of the evidence they are to give this committee. If they are directed by the committee to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given. They are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a Member of either House, a person outside the Houses, or an official by name or in such a way as to make him or her identifiable.

Members are reminded of the provision within Standing Order 163 that the committee shall also refrain from inquiring into the merits of a policy or policies of the Government, or a Minister of the Government, or the merits of the objectives of such policy.

This is the first time Mr. Murphy has appeared before the committee. I wish him well and ask him to introduce his officials.

Mr. Gerry Murphy

Thank you, Chairman, for inviting us to appear before the committee. We provided some information in advance of the meeting. I am accompanied by Ms Anne Graham, director of public transport services; Mr. Philip L'Estrange, director of finance and commercial services; and Mr. Hugh Cregan, director of transport investment and taxi regulation.

Chairman

I invite the Comptroller and Auditor General to introduce the accounts.

Mr. Seamus McCarthy

The National Transport Authority was established in December 2009. Its first set of financial statements covered a 13 month period ending in December 2010. Its 2011 financial statements are the subject of today's committee discussion. Clear audit opinions were issued on both the 2010 and 2011 financial statements.

The authority has responsibility for public transport capital investment in the greater Dublin area and projects promoting sustainable transport nationwide. During 2011 it also assumed responsibility for licensing of public bus passenger services and taxi regulation, as provided for in the Public Transport Regulation Act 2009. Its activities are largely funded by the Exchequer with funding from the Vote for the Department of Transport, Tourism and Sport. Some income is received from its bus and taxi licensing activities, but it has two main programmes of expenditure - capital investment grants paid to the CIE group companies, the Railway Procurement Agency and local authorities; and public service obligation, PSO, compensation payments to the three transport companies, Iarnród Éireann, Dublin Bus and Bus Éireann.

In 2011 the authority provided a total of €204 million to fund capital investment in transport. Just under two thirds of this funding - €130 million - went to the CIE companies to fund capital investment within the greater Dublin area. Most of the rest of the capital funding was provided for the Railway Procurement Agency and local authorities. The majority of the large projects funded in 2011 had already been sanctioned and under way when the authority came into being. Some of the projects funded in 2011 and earlier years have been deferred as a result of a Government decision in November 2011. Significant expenditure has been incurred on some of these projects, including metro north, metro west and the DART underground.

On its establishment in December 2009, the authority took over responsibility from the Department of Transport, Tourism and Sport for providing and overseeing public service obligation funding for the CIE group. Public service obligation services are defined as "socially necessary but financially unviable public transport services". The three CIE companies provide such services under contract to the authority. The contracts set standards of operational performance and customer service and contain penalties for under-performance. The current service contracts were signed in December 2009 and are for a period of five years in the case of bus services and ten years in the case of rail services.

The authority also has responsibility for integrating payment and information systems for public transport. One of the main projects in this area is the integrated ticketing system. In September 2010 responsibility for this project transferred to the authority from the Railway Procurement Agency. When the integrated ticketing project began in 2002, the Railway Procurement Agency planned that it would be delivered by 2005 at a cost of just under €30 million. When my office reviewed the project in 2006, it was found that the budget and project timescale were unrealistic and they were subsequently revised. In the event, the Leap card was launched for Dublin Bus, Irish Rail and Luas in December 2011. Phase 2 of the project includes the roll-out of integrated ticketing to other operators and the modification of the Leap card to take account of free travel. Work on these aspects is ongoing. The chief executive will be able to brief the committee on progress.

Chairman

Will Mr. Murphy make his opening statement?

Mr. Gerry Murphy

I believe it is appropriate to set out where we fit into the transport sector, an aspect the Comptroller and Auditor General has broadly covered. When the National Transport Authority was established in December 2009, we subsumed the functions of the Dublin Transportation Office. Later we took functions from the Railway Procurement Agency and the Department of Transport, Tourism and Sport. After that, the Commission for Taxi Regulation was subsumed into our organisation. We are responsible for public transport, as well as cycling and walking.

We have contracts with the CIE companies and are responsible for the light rail service in Dublin. We have assigned that function to the Railway Procurement Agency. We have now started a tendering process for the replacement contract in 2014 for the operation of the light rail system in Dublin.

We also regulate and license public bus services which operate without subsidy from the State. There is a wide range of services. In the Dublin area people will be familiar with Swords Express and Aircoach, but throughout the country services are provided by private companies under licence.

We manage the rural transport programme on behalf of the Department. We took over this function in the middle of 2012. It includes all of the local services that emanated originally from the rural transport initiative which then became the rural transport programme. Some of these are demand responsive services in rural areas, where people make a telephone call and the local bus picks them up.

The Leap card was mentioned. It is at the heart of the integration of public transport services. Another successful project we have rolled out is the provision of real-time information for bus services. We have also launched a national journey planner for all public transport services, both public and private. It is the first time this has been made available. One can plan one's journey across all operators in the State.

At the start of 2011 we took over regulation of the taxi sector which includes taxis, hackneys and limousines. This has been a very busy year with regard to implementing the recommendations of the Government's taxi review report. Just this month we introduced a raft of new regulations and more will be introduced when the taxi Bill is enacted by the Oireachtas.

We have a statutory planning role. The objective is to integrate land use, transport provision and consolidation of land use to make transport provision more cost effective. We do this throughout the country and advise regional authorities on their regional planning guidelines.

We have a greater depth of functions within the Dublin area. The greater Dublin area includes the four Dublin local authorities, Kildare, Meath and Wicklow. It covers 40% of the population of the State and 40% of economic activity. One can understand public transport capital investment is particularly important for this metropolitan region. We deal with capital investment in the region, as well as regional traffic planning and securing greater integration between land use and transport planning. The authority manages the capital investment programme for public transport, cycling and walking and funds the transport operators and local authorities for approved projects. We also manage the capital investment programme for the regional cities of Cork, Galway, Limerick and Waterford on behalf of the Department, while we manage the national accessibility programme which deals with access to transport services for people with disabilities.

A substantial amount of money, approximately €500 million per annum, passes through our organisation. We have been strongly focused from the start on adequate and robust financial and audit controls. We have introduced a new financial management system which has streamlined our internal processes and made them more efficient by giving us greater capacity for analysis and reporting. We have introduced a web-based grants system for all the bodies we grant aid which facilitates their submission of grant claims, our monitoring of progress and the disbursement of money to them. In any one year we fund over 300 projects on the capital side.

Chairman

Thank you, Mr. Murphy.

Deputy Shane Ross

I thank Mr. Murphy for attending. Will he tell the committee a little about himself? In the annual report and the documents we have received there is quite a lot about what he does. Will he tell us where he came from?

Mr. Gerry Murphy

I am a chartered civil engineer. I was previously chief executive of the Grangegorman Development Agency. Prior to that, I worked for eight years in the National Roads Authority where I established the public private partnership programme and the national tolling programme. Before that, I was project manager for the Dublin Port tunnel in Dublin City Council. That covers the last 15 years.

Deputy Shane Ross

All of it was in the public service.

Mr. Gerry Murphy

Yes. I worked for two years in Africa with Concern as a volunteer engineer.

Deputy Shane Ross

What is Mr. Murphy paid?

Mr. Gerry Murphy

I am paid a salary of €179,000. As it is a non-personal pension contribution, the 5% pension contribution does not apply.

If there was a pension contribution, my salary would be €189,000.

Deputy Shane Ross

Did Mr. Murphy also receive a board fee in 2011?

Mr. Gerry Murphy

Yes, but that practice has been terminated.

Deputy Shane Ross

No executive receives a board fee?

Mr. Gerry Murphy

No.

Deputy Shane Ross

How big is the board?

Mr. Gerry Murphy

There are 12 people on the board.

Deputy Shane Ross

Can Mr. Murphy tell me about the people on the board?

Mr. Gerry Murphy

There are 12 ex officio appointments, including me as chief executive, the Dublin city manager, and a senior management post within the authority which was a designated position. Mr. Hugh Creegan is on the board. The chairperson, Mr. John Fitzgerald, was appointed by the Minister and the other positions were also appointed by the Minister, amounting to nine in total. When I was the chief executive designate and chairperson designate, there was a public call for expressions of interest by the then Minister for Transport with regard to people who may wish to serve on the board. Appointments were made after that.

Deputy Shane Ross

Did people apply publicly for the board positions?

Mr. Gerry Murphy

Yes.

Deputy Shane Ross

When I look through the annual report, the names of the board members are listed but nothing else about them. Why is that?

Mr. Gerry Murphy

The annual report reflects the activities of the organisation and the board members, nine of whom were appointed by the Minister. That was the Minister's determination. Some three members are ex officio appointments.

Deputy Shane Ross

It is good practice, certainly in all public limited companies, to provide the CVs of board members. They are paid €12,000 a year. Why do we not receive information on who they are?

Mr. Gerry Murphy

We did not include it in the annual report.

Deputy Shane Ross

Why not?

Mr. Gerry Murphy

We did not feel it was necessary to include that information. The activities of the board are reported in the annual report, including attendance at meetings, costs, expenses and key items.

Deputy Shane Ross

My office rang the National Transport Authority to try to find out that information. No one in the authority has any information on the board members. They do not know anything about them. It is an extraordinary situation.

Mr. Gerry Murphy

I have worked closely with the board members over the past three years. I was not involved in their appointments and I do not know the parameters of their appointment. From their work at board level, I have a planning law expert, who is a lecturer in a university, a qualified transport planner-----

Deputy Shane Ross

Who are they?

Mr. Gerry Murphy

Dr. Berna Grist lectures in UCD in planning law and Ms Linda Saunders is a transport planner who has worked in transport in London. She previously worked in the Dublin Transportation Office and applied to the Minister as one of the public interest members. Mr. Frank King worked in bus operations in the State for many years. Two people are involved in tourism-related activities. Mrs. Margaret O'Shaughnessy is chief executive of the Foynes Flying Boat Museum and Mr. Jim Deegan runs the Railtours company. Ms Valerie O'Reilly runs a marketing and communications company and Mr. Daithí Alcorn has been a public representative. Mr. Damian Usher worked in banking and is now retired.

Deputy Shane Ross

Why does Mr. Murphy not provide a biography of these people?

Mr. Gerry Murphy

There is no particular reason. We did not feel it necessary to include in the annual report.

Deputy Shane Ross

Mr. David Alcorn is a Fianna Fáil councillor.

Mr. Gerry Murphy

He is a public representative.

Deputy Shane Ross

Is that a suitable qualification for the board?

Mr. Gerry Murphy

I will not comment on that question.

Deputy Shane Ross

Mr. Murphy described Ms Valerie O'Reilly as a public relations person. Is it correct that she was nominated by Deputy Michael Lowry?

Mr. Gerry Murphy

I am not aware of the background to her nomination.

Deputy Shane Ross

It is all over the press. It is unusual if Mr. Murphy does not read newspaper reports about his organisation.

Mr. Gerry Murphy

I am not aware of the process of nomination. It was a decision by the Minister.

Deputy Shane Ross

It is a well-known fact. Mr. Murphy mentioned Margaret O'Shaughnessy, who went before a Fianna Fáil convention but that detail did not appear anywhere. Mr. Damian Usher canvassed for the previous Minister, Noel Dempsey. Does Mr. Murphy ever look around the board and wonder whether these people are chosen purely for their expertise in transport?

Mr. Gerry Murphy

Nine appointments are made by the Minister and are not within my remit. I was not involved in the appointments. I work closely with the board and we have provided their attendance figures, their expenses and their payments. I have given the broad range of expertise brought by them to the board.

Deputy Shane Ross

Mr. Murphy sits on the board with them and works with them.

Mr. Gerry Murphy

That is correct.

Deputy Shane Ross

They are paid out of public funds. Is this a satisfactory way of selection, whereby Ministers appoint people who have political connections first and then expertise of limited value? Would it not be better if public money was spent on people who are, quite obviously, not chosen for their political colour?

Mr. Gerry Murphy

That is a decision for the Government at the time-----

Deputy Shane Ross

What does Mr. Murphy think?

Mr. Gerry Murphy

I have no comment on it.

Deputy Shane Ross

Does Mr. Murphy have no comment good, bad or indifferent?

Mr. Gerry Murphy

No.

Deputy Shane Ross

Can Mr. Murphy tell us about the audit committee? Does the audit committee have an accountant?

Mr. Gerry Murphy

The audit committee consists of Mr. John Tierney, Ms Linda Saunders and Mr. Damian Usher. None of them is a qualified accountant but they are supported by an external company, Farrell Grant Sparks. The company reports directly to the audit committee.

Deputy Shane Ross

The organisation has an audit committee with no one who is an expert in accounting.

Mr. Gerry Murphy

We have an audit committee with people who have wide-ranging expertise-----

Deputy Shane Ross

In other things.

Mr. Gerry Murphy

-----in management and administration, supported by accountants who report directly to the audit committee.

Deputy Shane Ross

Is it satisfactory for Mr. Murphy to have an audit committee that has no one with expertise in accountancy? Does that not tell us something about the appointments to the board?

Mr. Gerry Murphy

I am very pleased that we have an external company that rigorously audits our internal governance, financial controls and payments to third parties, reports to the audit committee in formal reports and attends all meetings of the audit committee. It advises the committee directly of the outcome of its audits.

Deputy Shane Ross

Does Mr. Murphy not think it essential? In every public limited company, there is always an accountant either as chairman or as a member of the audit committee. The National Transport Authority does not have that because it does not have anyone with an accountancy qualification on its board. Is that correct?

Mr. Gerry Murphy

That is correct. Mr. John Fitzgerald, the chairman, has an accountancy qualification but he does not sit on the audit committee.

Deputy Shane Ross

Why not?

Mr. Gerry Murphy

He believes it is good practice to separate the role of chairman from the audit committee, which is reviewing the activities of the organisation.

Deputy Shane Ross

There is an auditor who does not sit on the audit committee and people who are not auditors sit on the audit committee. Does this tell us something about the extraordinary selection process of these boards?

Mr. Gerry Murphy

I am quite happy with the way the process of audit works. We have had two clean audit reports from the Comptroller and Auditor General and we brought rigour to the examination of the use of moneys by the parties to whom we give funds. I am quite comfortable with auditing in our organisation.

Deputy Shane Ross

Let us get on to the role of the National Transport Authority in respect of the public service obligation and CIE. The National Transport Authority receives a large block of money from the Department and has total discretion.

Mr. Gerry Murphy

We have discretion in how we disburse the money and the allocation to each of the operators. However, this discretion is tempered by the constraints of previous patterns of funding, the level of service they provide and the losses they incur.

Deputy Shane Ross

Has the National Transport Authority made any large changes to the allocation of money to CIE?

Mr. Gerry Murphy

In 2012, we took over €2.5 million from Bus Éireann and applied it to the Dublin Bus subsidy. We considered that Bus Éireann was being over-subsidised on the public service obligation side.

Deputy Shane Ross

In 2011, the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, reduced the subsidy amount by €21 million. Was that approved by the National Transport Authority?

Mr. Gerry Murphy

In 2011, as an exercise, we considered all the capital programme projects that might be cut or deferred. There was a similar exercise in the current programme. We made submissions to the Department of Transport, Tourism and Sport about possible implications for public transport services and in the end the Government agreed at the time to seek agreement from the EU on the funding of the current programme. In that context, we contributed to the programme, but decisions on the level of cuts in the public subsidy for transport services were ultimately made by Government.

Deputy Shane Ross

The Government makes the decisions on cuts, but the National Transport Authority makes the decision on the distribution. Is that correct?

Mr. Gerry Murphy

That is correct. We get an allocation each year.

Deputy Shane Ross

The NTA works within that allocation yet within days it has granted fares increases.

Mr. Gerry Murphy

Generally what happens is that the NTA is given an idea of the order of the cut but it depends on the culmination of the budgetary process. We would have done an analysis and then announce a fares increase. This year we announced the fares increase in advance. The multi-annual programme has been determined out to 2014 so we know the allocation for public transport subsidies, and we know exactly what we will get next year. There will be another cut of approximately 7% next year as well. The definite figures are contained in the Government programme.

Deputy Shane Ross

I am trying to establish the sequence of events. In 2011, the Minister announced a cut of €21 million and within days the National Transport Authority announced the fare increases in CIE. One of the reasons given was the cut in the subsidy.

Mr. Gerry Murphy

Yes.

Deputy Shane Ross

That seems pretty extraordinary. When the Minister cuts the budget by €21 million, the NTA seeks a fare increase to cover the expenditure in CIE. In fact the increase in the fares more than compensated for the loss of subsidy

Mr. Gerry Murphy

There are a number of factors in the costs of running transport services. For the operators, the subsidy is one of its income sources, the other major income source is passenger fare revenue. There has been a significant drop in passenger numbers on all public transport since the peak in 2008. There has been unusual increased costs, the loss of the fuel duty rebate was a major factor in the increase of that cost base. Taking all the factors in the round, the operational deficit after taking account of income and costs, we determine the appropriate fares increase. There have been fares increases each year.

Deputy Shane Ross

What I am trying to get at is that the Government must cut back and it seems sensible to cut the subsidy by €21 million but that puts pressure on CIE to get its house in order and by God it needs to put its house in order, it is a shambles. The NTA rescues CIE immediately and takes the pressure off it by giving it a fares rise. As far as I remember the NTA press release gives the reasons for the fares rise as follows: the cut in subsidy; the economic downturn; the rise in fuel costs; and emigration. It was never said that CIE is a shambles and is running itself into the ground. The NTA gave the external factors but CIE was never blamed. Does Mr. Murphy not think that CIE could have been told to cut the costs and rationalise operations?

Mr. Gerry Murphy

The reason the current programme was cut was due to insufficient money available in the Government coffers. Deputy Ross is asserting that there was a rationale to force efficiencies. We advised that public transport is one of the lowest subsidised public transport systems in Europe and any cut to subsidy would lead to a cut in services. The only way we can prevent significant cuts in services is to look at fares increases and try to grow passenger numbers through initiatives such as the Leap card, real-time information or to try to steady passenger numbers - which has been achieved this year - across all operators. Our task in applying our contract which has onerous service requirements, such as frequency, reliability and quality factors is to rigorously enforce that contract. I can say that since December 2009, CIE met all the targets and its performance moneys have been released to it, except for one minor exception for Saturday services by Dublin Bus. Each year we have strengthened the parameters in those contracts and we have disaggregated the reporting. For example, when we started the contract Bus Éireann was reporting on a global basis, we have disaggregated reporting by city, by Dublin commute and by other services. We have disaggregated reporting in Dublin Bus by corridor and brought greater depth of rigour in its own analysis of its operations.

Our function is to monitor the contracts. The contracts are operating satisfactorily. We have preserved the bulk of services in the State, notwithstanding a significant drop in public subsidy from an already very under-subsidised public transport system. By 2014, €80 million a year will have been taken out of the subsidies to public transport, amounting to a 25% drop in what was an under-funded sector. At the same time, generally bus services in Dublin are satisfactory, the rail services are satisfactory and the service on rural and city buses outside Dublin are provided. There have been service reductions but we have tried to minimise their effect. We have had fares applications from each of the operators. We have asked for increased information to support the applications. We have not accepted all the fares applications and have made significant reductions in the fares CIE proposed. At the same time in the Dublin area we have incentivised the use of the Leap card and have introduced significant differentials from the cash fares, which are the highlight fares. We have more than a 19% differential on rail, a 15% differential on light rail services and a 12% differential on Dublin Bus. If customers had moved to using the Leap card instead of cash on Dublin Bus, they would not suffer an increase in fares. There is a strategy in place.

In regard to intercity rail pricing, we have simplified the system by eliminating the anomalies resulting from the historical legacy. We now have a single journey, a day return, and an open return. We have moved to distance and corridor-based pricing, reflecting journey speed. It will take five or six years to get all the anomalies out of the system. The end objective is to get a transparent easy to pay fares system which moves to smart card payment, which reduces the handling costs and increases the frequency of buses by reducing boarding time. There is a strategy to the way we increase fares, there is a rigour to the approach we take to analysing the fares increases.

Deputy Shane Ross

I am not disputing any of that. My point is that CIE is a deeply inefficient organisation. It has real expenditure problems. This organisation before it was set up spent €500,000 on a report to outline there was corruption in CIE. CIE threw money to conduct a secret report. What the NTA is doing is getting buses to run efficiently but it is shovelling money at an organisation that is inherently inefficient and deficient in the way it handles its own funds. The evidence for that is quite clear and not just in the Baker Tilly report which found the corruption, and not just in all sorts of other areas that keep emerging. The evidence is in last year's accounts. I am sure Mr. Murphy knows what happened. Does he feel comfortable in willy-nilly subsidising this body by giving it carte blanche to increase fares by vast amounts? An increase of 15% is a significant increase and the fares have increased again this year, when the auditors find that it is not even fulfilling its obligations. In effect, the auditors qualified their accounts, but it was not a formal qualification. However, the NTA is giving CIE carte blanche to go ahead and is giving it the money as required because the operators have lost their subsidy.

I am not saying the National Transport Authority is doing a bad job but why is it giving CIE money?

What does the National Transport Authority require in exchange? Is it getting transparency from them? Does it know what is happening in the internal CIE accounts? We all know the company is a shambles and not only because it is making a loss.

Mr. Gerry Murphy

In trying to answer what our role is----

Deputy Shane Ross

One cannot give public money to CIE if it is not performing its duties. The National Transport Authority is also a regulator. Is that not the case?

Mr. Gerry Murphy

We give public moneys to CIE because it meets all its service requirements in its contract with us. That is the reason we give it moneys and it will not receive them if it does not meet its service requirements. That is the primary obligation. We only approve fare increases if we are satisfied there is a need to approve them as an alternative to cutting services because a change of costs or revenue basis would occur. That is our primary function. The primary function of the Government, as a single shareholder, is to manage the company. If we were in contract with a multinational operator from abroad, for example, we would not manage its internal accounts but its interface with us, namely, the provision of services according to contract and any applications for fare increases.

Deputy Shane Ross

Let me get this right. The National Transport Authority has €265 million to give to CIE, one way or another, and how the company manages its internal accounts is irrelevant to the authority. Is that what Mr. Murphy is saying?

Mr. Gerry Murphy

Only to the extent that it has an impact on services, fares or the discharge of the company's obligations. To that extent, of course we review all those matters and require reporting to us on cost control, staff numbers control, payroll costs, all those issues, when we are looking at a fare increase. We brought in CIE's external auditors, Farrell Grant Sparks, to devise a template reporting mechanism which we apply across all the operators on how they report their projections, costs, cost control, revenue basis and all their extraordinary costs before we consider fare increases.

Deputy Shane Ross

What is Mr. Murphy's view on the consistent failure of CIE to produce its accounts on time?

Mr. Gerry Murphy

Those matters are separate from the company's obligation to us under contract. There is no obligation to us in the contract about CIE's duty, as a semi-State body, regarding accounts, etc. There are obligations to us in the contract about the service it must provide, the provisions it must make and the information it must give us and the company has satisfied all of those obligations. We also audit the CIE's capital spend in order that we are satisfied that the moneys we have given the company on the capital side have been spent appropriately and it has proper controls and procurement systems in place. We also audit the subsidies to the company to ensure there is a proper separation of accounting from any of its commercial activities. For example, Bus Éireann runs Expressway, while Irish Rail runs Rosslare Harbour and freight. We also track back that the company has reported to us its operating data appropriately.

Deputy Shane Ross

CIE can do what it likes outside the remit of the National Transport Authority and it will be given €265 million. Is that the case? What is Mr. Murphy's view of the CIE accounts? Despite the pantomime that has been the company's accounts this year and every other year, the NTA is giving it €265 million? Why does it not refuse to give this money until CIE puts its accounts in order? The National Transport Authority granted CIE a fare increase very easily and gave it €265 million, despite the company being unable to keep its house in order and its auditors having qualified the company's accounts. The National Transport Authority is a kind of sugar daddy. What is Mr. Murphy's view of CIE's inability to produce accounts on time?

Mr. Gerry Murphy

I will not comment on the company's accounts.

Deputy Shane Ross

Why not given that the National Transport Authority is giving the company €265 million?

Mr. Gerry Murphy

The matter is not material to the giving of €265 million and the discharge of the services, as required under contract. The key questions for us, as a body coming before this committee, are do we implement and monitor the contract and do we make the payments if CIE has not satisfied its obligations. We do not make payments if it has not satisfied its obligations.

Deputy Shane Ross

Does the National Transport Authority have any role in advising the Department on this matter?

Mr. Gerry Murphy

We simply advise the Department on what might be the appropriate levels of subsidy for public transport if we want to grow public transport in the State. We did this in 2011 when the Department was looking at the programme of current expenditure over a number of years. However, the Department manages the finances of CIE, as companies, because it is the shareholder. There is a separation and we manage the delivery of services the companies provide to the State for the money they are given.

Deputy Shane Ross

The National Transport Authority gives out money for the services regardless of CIE's behaviour elsewhere and the state of its accounts.

Mr. Gerry Murphy

The primary manifestation of the companies is the performance of bus and rail services every day and in that regard they have met all their performance requirements.

Deputy Shane Ross

Those requirements must be limited and the bar must be set very low. Is the Leap card fully integrated yet?

Mr. Gerry Murphy

Yes.

Deputy Shane Ross

Is it?

Mr. Gerry Murphy

It is integrated across Dublin Bus, Irish Rail and the Luas. We are piloting it on private bus operators, Wexford Bus and Matthews Coaches, and installing it on the Swords Express. In the next two weeks, we will begin a pilot on Bus Éireann in the eastern region. I envisage that by the summer all the Bus Éireann services in the eastern region and a number of private operators will be in the Leap system.

Deputy Shane Ross

How much did the system cost? It took approximately ten years to implement. Is that the case?

Mr. Gerry Murphy

From its conception in 2001-02, it took approximately ten years to its launch. The budget set for the project was €55.4 million. The Comptroller and Auditor General-----

Deputy Shane Ross

It cost €55 million for a card.

Mr. Gerry Murphy

It cost €55 million for all the back office development, technical design-----

Deputy Shane Ross

What does "back office development" mean?

Mr. Gerry Murphy

The card has to integrate the ticketing systems.

Deputy Shane Ross

It cost €55 million over ten years to produce the Leap card.

Mr. Gerry Murphy

That is correct.

Deputy Shane Ross

What does Mr. Murphy think of that?

Mr. Gerry Murphy

I have looked at other systems. The London system, for example, cost €1 billion, while the system in Ottawa is costing a similar amount. The cost of a system for any city of the size of Dublin would be in the order of between €50 million and €100 million.

Deputy Shane Ross

It took ten years to produce the Leap card.

Mr. Gerry Murphy

As to the timeframe, I will not claim that any records were set in the delivery of the Leap card.

Deputy Shane Ross

What is Mr. Murphy's view on the timeframe?

Mr. Gerry Murphy

Six years were essentially lost. When the project started in 2001-02 an attempt was made to do a procurement for the whole package, that is, design, operation and everything else. This collapsed in 2005.

Deputy Shane Ross

Why did it collapse?

Mr. Gerry Murphy

The company could not find a satisfactory partner anywhere in the world who wanted to take on all the design, back office and integration functions and then do the operation.

Deputy Shane Ross

How much was wasted in that period?

Mr. Gerry Murphy

I cannot comment on that matter as I am not familiar with it. However, the project was reconstituted in 2007. The Department set up a non-statutory board and brought in a former Secretary General to chair the board and drive the project forward. The project was redefined and a new business case created, on the basis of which a new budget of €55.4 million was set in 2008 and the project was delivered for that sum.

Deputy Shane Ross

This is a project where there was massive waste.

Mr. Gerry Murphy

I would not say there was massive waste, although I would say there was a delay because the first concept of the project was not delivered and it had to move into a second phase.

Deputy Shane Ross

Mr. Murphy may call it a delay but I would describe it as massive waste.

Mr. Gerry Murphy

The bulk of the expenditure occurred after the project was reconstituted. The other factor was that a non-statutory body was set up. One of the reasons for setting up the National Transport Authority was to give us statutory powers, across all the operators, to require and drive forward integration. That function was moved across to us in September 2010 and I am pleased to say we delivered the project in December 2011.

Deputy Shane Ross

I will stop now. I cannot understand how the National Transport Authority can operate in this extraordinary vacuum in which it gives vast sums of money to a company that cannot even produce proper accounts. Mr. Murphy indicated the arrangement is satisfactory, although the company in question cannot produce proper accounts, wastes money willy-nilly on Leap cards which took ten years to produce and cost €55 million, operates in a secretive manner, and has been found to be corrupt by some auditors in a report that it buried and which cost €500,000. The taxpayer should be able to rely on the National Transport Authority to put up the red flag and say CIE is a shambles and we should not give it this amount of money.

Mr. Murphy is paid a great deal of money. How many of his staff are paid more than €100,000?

Mr. Gerry Murphy

I have the figures here, if members will just bear with me. We have eight individuals paid over €100,000.

Deputy Shane Ross

Eight people are paid over €100,000. Are there any people who are paid over €150,000, besides Mr. Murphy?

Mr. Gerry Murphy

No, just myself.

Chairman

On a point of clarification, Mr. Murphy said that the Leap card budget was €55 million but that is not the total cost.

Mr. Gerry Murphy

It is the total cost, yes.

Chairman

What period does that cover?

Mr. Gerry Murphy

That covers the period from 2007 to today.

Chairman

What happened to the costs from 2001?

Mr. Gerry Murphy

I am unaware of those costs. I do not have that information.

Chairman

It cost a substantial amount of money from 2001 to 2007. Is that correct?

Mr. Gerry Murphy

There would have been costs in that period, for technical development work which would have rolled into the next phase of the project, but I do not want to hazard a guess at the figures involved.

Chairman

Who would have those costs?

Mr. Gerry Murphy

Those costs would be available from the Department of Transport, Tourism and Sport.

Deputy Shane Ross

The total cost could be €100 million.

Mr. Gerry Murphy

No, it would not have been €100 million.

Deputy Shane Ross

What could it be then, in terms of ballpark figures?

Mr. Gerry Murphy

It would include staff project management costs and perhaps some legal support costs. It is definitely not the equivalent of the budget for the whole project. That is why I say it could not be €100 million because the budget for the whole project is €55 million and I really do not want to hazard a guess at a figure. I can provide the figure later. I can go to the Department of Transport, Tourism and Sport and find the exact figure. The spending occurred many years before our establishment.

Chairman

I should inform committee members that we will have the Department of Transport, Tourism and Sport before us in two weeks time. What concerns me about Mr. Murphy's organisation and others is they begin to account for themselves - and rightly so - from the date they were established but to get information on the other costs, we must go elsewhere. As the CEO of the National Transport Authority, Mr. Murphy should at least have some historical background information, particularly on the Leap card and the costs involved. I suggest that Mr. Murphy furnish those costs from 2001 onwards to this committee, even if the information has to come from the Department, so that members are fully informed. The cost is not €55 million. It is €55 million from the time of Mr. Murphy's watch but there are other costs associated with the Leap card project from 2001 onwards.

Mr. Gerry Murphy

Yes, and I will do so, Chairman.

Deputy Robert Dowds

I wish to ask one quick question about the Leap card. How many cards are being used at the moment and how successful is the system?

Mr. Gerry Murphy

To date, 210,000 Leap cards have issued and approximately 1.5 million journeys per month are being made on them. The Leap card project has exceeded targets. We had anticipated that in the first 12 months - we are now at 13 months - we would issue around 150,000 cards so we have exceeded the targets on that.

Deputy Robert Dowds

That is entirely in Dublin, is that correct?

Mr. Gerry Murphy

That is right, yes. We are now looking at opportunities for an expansion of the programme to Cork and Galway.

Deputy Eoghan Murphy

I thank Mr. Murphy and his colleagues for coming in today. I wish to stay with the Leap card for the moment. Apart from the costs and the project overruns that have happened, it is a great facility to have in the city, finally. I understand it is to be extended to dublinbikes on a trial basis. Is that correct?

Mr. Gerry Murphy

Not necessarily, no. The dublinbikes system is controlled by JCDecaux, who offer it-----

Deputy Eoghan Murphy

Is that something the NTA is looking at?

Mr. Gerry Murphy

We were looking at it with JCDecaux, yes, but no conclusion has been reached on it. Indeed, Dublin City Council has not come to a conclusion in its negotiations with JCDecaux on extending the bike scheme.

Deputy Eoghan Murphy

Does the dublinbikes scheme come under the remit of the NTA?

Mr. Gerry Murphy

It comes under our remit in the sense that we will be funding the next stage of the scheme.

Deputy Eoghan Murphy

I was not aware that the NTA is funding the next stage. I know that funding was released by the Government for the pre-planning aspects of the expansion but my understanding was that the delivery of bikes and running of stations would still be the responsibility of JCDecaux. Is that correct?

Mr. Gerry Murphy

That is right. It is a propriety system so the extensions of it will be through JCDecaux. Dublin City Council is negotiating with the company about the extension. There will be insufficient advertising revenue to support the extension and that is why a State intervention is needed. That State intervention will come through funds that we will provide to Dublin City Council.

Deputy Eoghan Murphy

Has Mr. Murphy any idea how much that will cost?

Mr. Gerry Murphy

We have set aside €2.5 million this year, pending a successful negotiation. The phased extension down to the docklands and to Heuston Station will cost somewhere in the order of €5 million but we can only provide €2.5 million this year. We have set aside that figure-----

Deputy Eoghan Murphy

The NTA has set aside €2.5 million for 2013, with a further €2.5 million to be provided in 2014. Is that correct?

Mr. Gerry Murphy

Yes.

Deputy Eoghan Murphy

The negotiations have been going on for a while now. Is that correct?

Mr. Gerry Murphy

They have, yes. The way the dublinbikes scheme was set up was that advertising rights were given to JCDecaux in return for providing social and community facilities. The dublinbikes scheme was associated with that. JCDecaux developed it, provided it and has borne the cost of it, in essence. JCDecaux is not actually a bike provider but an advertiser. The negotiations have been about trying to get an extension to the project using the proprietary system.

Deputy Eoghan Murphy

I was on Dublin City Council in 2009 when the scheme was launched and within three months the council was moving to try to negotiate an extension to the scheme because it had proved so successful so quickly. We are now in 2013 and those negotiations are still going on. Does the NTA have a role in the negotiations?

Mr. Gerry Murphy

We have assisted Dublin City Council by funding some economic advice provided to it by KPMG. I do not think the council has been negotiating since 2009. The negotiations really started in earnest about 12 to 15 months ago. There was a gap and then the negotiations started again. It has been slower than we had hoped. We set aside money last year and were disappointed that the negotiations did not reach a conclusion last year. We understand that they will come to a conclusion within the next three months and we will have confirmation on whether JCDecaux will agree to an extension to the scheme or not. If the company does not agree to the extension, then we will have to examine the situation again. We may have to consider a parallel bike scheme that we will develop ab initio ourselves and fund that for Dublin City Council.

Deputy Eoghan Murphy

I am really against the idea of a parallel bike scheme because I think it will pose massive operational difficulties. At the same time, I recognise that all of the cards are in JCDecaux's hands here because it operates the existing scheme. To return to the figure of €5 million, the NTA will provide that money for the roll-out of the additional stations and so forth. Is that correct?

Mr. Gerry Murphy

That is right, yes.

Deputy Eoghan Murphy

The extension includes an extra 5,000 bikes, I believe, spread over 40 stations. Is that right?

Mr. Gerry Murphy

I cannot give the Deputy the exact figures now, I am afraid. Perhaps Mr. Creegan can answer that question.

Mr. Hugh Creegan

It is 1,000 extra bikes at 40 extra stations.

Deputy Eoghan Murphy

If the taxpayer is paying for the stations and the bikes, then the contract we are negotiating with JCDecaux is for the running of the scheme over a period of ten, 15 or 20 years. Is that right?

Mr. Gerry Murphy

We are negotiating on the remainder of the contract, which is the contract associated with the company's advertising rights.

Deputy Eoghan Murphy

I am sorry, I did not mean to dwell on dublinbikes but it just came up in the context of the Leap card.

I also wanted to mention the roll-out of the real-time passenger information and the applications for Dublin Bus and the DART, which has been excellent. I know there have been some problems and that from time to time, when I use the bus myself, the information is not to hand, but by and large it has greatly improved peoples' experience of public transport. I am sure it must have also increased the numbers using public transport.

I wish to talk a little about the Taxi Regulator. That office was subsumed into the NTA in 2012, if I understand it correctly.

Mr. Gerry Murphy

It became part of the NTA on 1 Jan 2011.

Deputy Eoghan Murphy

Did all of the staff move across as well?

Mr. Gerry Murphy

They did, yes.

Deputy Eoghan Murphy

How many staff moved?

Deputy Eoghan Murphy

At the time the office had a mixture of agency staff and permanent staff and the number was in the order of 30.

Deputy Eoghan Murphy

Were staff costs then borne by the NTA?

Mr. Gerry Murphy

Yes, they moved into our reporting and would have been captured by that year's annual accounts.

Mr. Gerry Murphy

Can I take it then that the money the Department of Transport, Tourism and Sport was paying to the Taxi Regulator's office was then paid to the NTA to cover those staff costs?

Mr. Gerry Murphy

In fact, the office was funded from the licensing income. There were no grant payments to the Taxi Regulator's office. It was funded from the licensing income and there was a taxi surplus available which was being utilised because there was a deficit between licensing income and the expenditure of the office.

Deputy Eoghan Murphy

Are we still renting the building that the Taxi Regulator occupied on Fitzwilliam Square?

Mr. Gerry Murphy

Yes, we are still renting that building.

Deputy Eoghan Murphy

What is the annual rent?

Mr. Gerry Murphy

It is €170,000. It is still being used. Only this month we moved the bulk of the staff from that office to our office in Harcourt Lane because the OPW vacated a floor in our building and this provided an opportunity to consolidate the whole organisation. Essentially, we have consolidated the organisation into one premises. At the same time, through the OPW, we have found a public sector body which will take over the Fitzwilliam Square premises from this summer.

Deputy Eoghan Murphy

Which public sector body is that?

Mr. Gerry Murphy

The National Council for Curriculum and Assessment.

Deputy Eoghan Murphy

The council is coming this summer. How big is the building?

Mr. Gerry Murphy

It accommodates approximately 35 staff. I am unable to provide the area but that is approximately what it can hold.

Deputy Eoghan Murphy

The National Council for Curriculum and Assessment will fill the building. Is that correct?

Mr. Gerry Murphy

Yes, it matches the numbers of the council well. It is currently located in Merrion Square.

Deputy Eoghan Murphy

The lease for its building is up. Is that the position?

Mr. Gerry Murphy

That lease is up. The council will be able to reduce costs by moving to our premises. We will be able to reduce costs by approximately €250,000 by renting the Fitzwilliam Square premises and consolidating all our reception, security, heating and lighting and information technology costs on our side.

Deputy Eoghan Murphy

There is a rent review every five years on the lease of the building. Is that the position?

Mr. Gerry Murphy

Yes.

Deputy Eoghan Murphy

It will be up for review in 2014.

Mr. Gerry Murphy

Yes, that is right.

Deputy Eoghan Murphy

What will happen with the rent review?

Mr. Gerry Murphy

It is an upward-only rent review lease. I do not know what will happen then. We are doing the sub-lease for the National Council for Curriculum and Assessment in conjunction with the OPW. There will be a fixed rental for either five or 11 years but we have yet to conclude the agreement. If there is an increase following the rent review, the authority will suffer the extra cost. We will be unable to pass it on.

Deputy Eoghan Murphy

Take us back one step to the OPW's involvement.

Mr. Gerry Murphy

The OPW is centrally involved in all our premises. When we were set up in December 2009, we subsumed the Dublin Transportation Office, which was located in an OPW-leased building in the Irish Life Centre. The OPW is seeking to exit that arrangement with that centre. We needed extra space because we took in staff from the Department and the Railway Procurement Agency. We approached the OPW and asked for some building in the State stock which the OPW either owned or rented and which was available. Harcourt Lane was available for us and we moved in. There is an OPW-held lease with the prime owner but we pay the OPW. Similarly, the OPW looked throughout the public sector to determine if it could find a public body to take our Fitzwilliam Square premises.

Deputy Eoghan Murphy

If there were an increase in the rent on the Fitzwilliam Square premises, the authority would bear the cost of it. Is that the position?

Mr. Gerry Murphy

The agreement we are doing with the National Council for Curriculum and Assessment via the OPW will be fixed for five or 11 years.

Deputy Eoghan Murphy

The authority will fix the council's lease for five or 11 years. Is that correct?

Mr. Gerry Murphy

Yes.

Deputy Eoghan Murphy

What if whoever owns the building on Fitzwilliam Square increases the rent?

Mr. Gerry Murphy

Then we must bear the cost. The balance is that commercial office rentals are rather cheap. The National Council for Curriculum and Assessment is aware of the value of rental properties and we have had an independent valuation carried out. The OPW is acting as a broker between the two parties in agreeing the rental.

Deputy Eoghan Murphy

Whoever are the landlords for the building in Fitzwilliam Square, have they any other buildings leased out to Departments?

Mr. Gerry Murphy

I am unable to say.

Deputy Eoghan Murphy

When it comes to sitting down and agreeing the contract, is it largely up to the landlords in terms of what they can fix the lease at? What is the break clause position for us, if necessary?

Mr. Gerry Murphy

There is no break clause for the authority. We inherited a lease that goes out to 2024 with upward-only rent reviews at five year cycles. That is what we have inherited. We have tried to manage it as best we can, offload the premises, consolidate and reduce costs.

Deputy Eoghan Murphy

If the landlords increase the lease costs on the NTA, then we are stuck with it. Is that correct?

Mr. Gerry Murphy

Yes, we are stuck with it because it is a contract that the Commission for Taxi Regulation entered into.

Deputy Eoghan Murphy

That is not a great position to be in.

Mr. Gerry Murphy

We would prefer not to be in that position and to have other opportunities but we will try to effect savings in other ways. This is a fact of life, really.

Deputy Eoghan Murphy

Do we know why that particular building was chosen by the Taxi Regulator at the time?

Mr. Gerry Murphy

I have no idea why it was chosen.

Deputy Eoghan Murphy

Would it be on record? Is there information on the negotiations, the various buildings that may have been considered or the contract negotiations?

Mr. Gerry Murphy

They may have records for that.

Deputy Eoghan Murphy

If there were records in the Taxi Regulator's office, they would now be the authority's records. Is that correct?

Mr. Gerry Murphy

Yes. I have never looked into that.

Deputy Eoghan Murphy

Would Mr. Murphy mind looking into it? I am interested in establishing how that lease came to be negotiated, why that particular building was chosen, why that particular rent was set and the various details, if they are available.

Mr. Gerry Murphy

I will see what I can find and where the background information exists. All I know is that I have the lease and the final deal. I am unsure if I could say whether there is other material.

Deputy Eoghan Murphy

Given the extent of the liability, it would be good to know how we got ourselves in this position. I realise circumstances have changed since the lease was negotiated in the first instance, but it may be worth looking back to see how it occurred. It could be helpful.

Mr. Gerry Murphy

Yes.

Deputy Eoghan Murphy

Prior to the Taxi Regulator joining the NTA, that operation was essentially self-funded through taxi licensing. Was that the case?

Mr. Gerry Murphy

It was not actually self-funding from taxi licensing. The accounts for its final year of operation, 2010, show that the commission dipped into the surplus that had been built up, when large payments were made and when there was an explosion in the industry, to the tune of €2.8 million. It was essentially under-funded from licensing income and reliant on the surplus.

Deputy Eoghan Murphy

Do we have a figure for the licensing income that comes in annually?

Mr. Gerry Murphy

Yes. The licensing income in 2011 was €6.4 million.

Deputy Eoghan Murphy

That covers public service vehicles and the associated vehicle licences. Is that right?

Mr. Gerry Murphy

That is right.

Deputy Eoghan Murphy

Is that money ring-fenced for the taxi industry?

Mr. Gerry Murphy

It comes into the authority in the same way as bus licensing income comes from our bus licensing function and it is spent subsequently.

Deputy Eoghan Murphy

The authority collects the money and then spends it. Is that it?

Mr. Gerry Murphy

Yes. I noted in my briefing paper, which was sent to the committee in advance of the meeting, that when the Department of Transport, Tourism and Sport and the Department of Finance were in negotiations on the establishment of the organisation in 2008, they agreed that when we subsumed the Commission for Taxi Regulation, we would rely on its surplus for several years. We have been under-funded administratively from the start on the basis that we would gradually dip into the taxi surplus. We need it generally for our administrative expenses.

Deputy Eoghan Murphy

That arrangement was for the initial years.

Mr. Gerry Murphy

The idea was that would be the case for the initial years because the expectation was that the taxi surplus would be gone by that stage. We have managed it and we still have €15 million available.

Deputy Eoghan Murphy

Is the authority free to spend all of it?

Mr. Gerry Murphy

No, we are not free to spend it all. Each year we keep to a minimum the amount that we dip into the surplus. The figure was €1.9 million in 2011 and in these accounts, for 2012, the corresponding figure is €2.3 million. Projecting forward, next year it will be €3.5 million because of a series of increased costs in taxi regulation and a probable drop in industry income. The surplus is gradually diminishing in the order of €2 million or €3 million per year, but it should be able to take us for a number of years and cover administrative expenses. For example, there is an under-provision for our salaries and general costs.

Deputy Eoghan Murphy

Is the authority only dipping into the taxi element of the surplus?

Mr. Gerry Murphy

It is for the organisation. In essence it is all subsumed into the organisation. We run it as one integrated organisation.

Deputy Eoghan Murphy

Who decides the extent to which the authority will dip into the surplus, whether it is €2.9 million or €3.5 million?

Mr. Gerry Murphy

It comes from our authority. We carry out a budget projection at the start of the year. We show what the income will be, including what the Oireachtas grants and the licensing income will be, the cost basis and what we will be spending it on. Then we target a budget for the year and monitor the target. It is determined at board level in the authority.

Deputy Eoghan Murphy

If the authority made a projection for the year but towards the end of the year it realised a shortfall was coming through, does it then decide to dip into the surplus?

Mr. Gerry Murphy

Yes, that is correct. That is the only mechanism we have to fund the authority. For example, in 2011 a €1.9 million deficit occurred and the money was drawn down.

Deputy Eoghan Murphy

Is that the only safety net the authority has?

Mr. Gerry Murphy

That is correct.

Deputy Eoghan Murphy

What was €1.9 million as a percentage of the total spend of the organisation?

Mr. Gerry Murphy

In 2011 we spent €512 million. It was a small portion, 0.2%.

Deputy Eoghan Murphy

I want to keep with the issue of taxis, in particular ranks and racism. One issue constantly brought to my attention is the racism arising between taxi drivers in Dublin. What is the authority's responsibility in this regard?

Mr. Gerry Murphy

Like the members, we would be shocked at any occurrences of racism. The problem is one of control and enforcement. There are lots of anecdotal reports about it but we do not know the actual level of it. Second, we do not have a regulation to cover this matter or its like. It is generally covered by other legislation about equality of treatment, etc. We do not have a regulation which deals with the racist behaviour of a taxi driver and enables us to report it.

Deputy Eoghan Murphy

What about controlling the taxi ranks? I suppose the authority has a responsibility about how these are operated.

Mr. Gerry Murphy

Yes. The regulation is that people have to be within the ranks when queuing to be available for hire. These are the regulations and what the Act allows us to do.

Deputy Eoghan Murphy

Who monitors and enforces those regulations? Has the NTA a team of inspectors who monitor behaviour at the ranks?

Mr. Gerry Murphy

Yes. We have an enforcement team of nine people who are specially trained. We operate joint operations with the Garda Síochána. Last year the NTA checked out 14,000 vehicles, either when stationary or in joint operations with the Garda Síochána. We monitor taxi ranks. The monitoring of taxi ranks was a problem in 2011. We contracted some extra resources through our contractor, SGS, which undertakes our general vehicle licensing. It provides a special compliance team which monitors the key taxi ranks where there have been problems. Those ranks are monitored to ensure appropriate behaviour for proper queueing.

Deputy Eoghan Murphy

Is the taxi rank at St. Stephen's Green one of the ranks monitored?

Mr. Gerry Murphy

A range of ranks are monitored. People say that the O'Connell Street rank has caused a lot of problems. The Garda Síochána has been very actively involved in that area. It is very close to Store Street Garda station. Along with our enforcement staff, the Garda Síochána is one of the key parties in the on-street management of the behaviour of taxi people. A garda has much more effective powers when dealing with people on the street than an enforcement officer of our authority.

Deputy Eoghan Murphy

Have complaints been made to the authority about ranks stipulating Irish-only drivers and ranks stipulating foreign national-only drivers operating in the city?

Mr. Gerry Murphy

No formal complaints have been made. However, there is anecdotal talk about the existence of reserved ranks. There is talk about the O'Connell Street rank in particular. It is very difficult to get to the bottom-----

Deputy Eoghan Murphy

What is the talk about the O'Connell Street rank?

Mr. Gerry Murphy

That people who are not Irish nationals, or either that they are Irish nationals but they are not white Irish nationals, are being excluded from using those ranks. It is very difficult to get to the bottom of the anecdotal information.

Deputy Eoghan Murphy

Is the authority doing something about it?

Mr. Gerry Murphy

I do not want to claim that we are doing anything about it because our powers are very limited in that regard. I will ask Mr. Creegan to deal with that point.

Mr. Hugh Creegan

We carry out a certain amount of enforcement activities at various ranks. With eight enforcement officers covering the whole country on a 24-hour basis, there is a limit to what we can cover. The various ranks, including the likes of O'Connell Street and elsewhere, would be visited on an intermittent basis. We can deal with whatever offences are detected in accordance with our legislation. The Garda Síochána will also give particular attention to various places on which it has received reports from time to time.

Deputy Eoghan Murphy

Has the authority ever sanctioned a taxi driver for racist behaviour or investigated a taxi driver for allegations of racist behaviour?

Mr. Gerry Murphy

We need a formal complaint. We would investigate all complaints. If we had received a formal complaint we would have investigated it. It could be a complaint about their behaviour towards a customer.

Deputy Eoghan Murphy

The NTA is the industry regulator. We know that a particular rank in O'Connell Street might have particular problems relating to racism between taxi drivers. Certain taxi drivers are being excluded because of their perceived ethnicity, colour or nationality. Why is the attention of the authority not focused on O'Connell Street by having an officer present all the time to ensure this is not happening? If it is seen to be happening, if a particular taxi driver or group of them are excluding others, then they could be called in about it.

Mr. Gerry Murphy

We regulate to ensure the rank operates normally, by which is meant a taxi driver is allowed to use an available space. We pick up on that during the monitoring process. This is an oblique way of dealing with the issue. Under the Act and the regulations the NTA cannot get into the area of racist interactions between taxi drivers and their relationships with each other.

Deputy Eoghan Murphy

This is mob-like behaviour where certain people or groups of people are controlling ranks. These are meant to be ranks accessible to every single taxi driver who wants to pull up and take a passenger from them. However, they are unable to do so because it is a white-only rank.

Mr. Gerry Murphy

They can pull up. The monitoring ensures they can pull up.

Deputy Eoghan Murphy

But is the authority ensuring they can pull up?

Mr. Gerry Murphy

We are ensuring it by means of a sideways method of dealing with the issue. We are ensuring the rank is available for a taxi driver who pulls up to use the rank. Nobody can stop that taxi driver using the rank when a space is available. If our enforcement team is there, that right is ensured. What I am unable to deal with is that there may be sub-issues around the industry which may be frightening off people from going to the rank. That is a broader issue. I would not like to claim that we are dealing with it when we are not.

Deputy Eoghan Murphy

Why not try to deal with it? Why not implement a programme for improving integration between taxi drivers or for knowledge awareness? Why not provide different courses undertaken by other areas of Irish life to help with these kinds of issues? Why not take it on as a role for the authority?

Mr. Gerry Murphy

That is a fair point. We will consider it. We had considered working in partnership with Dublin City Council which has a strategy to promote fairness and equality of treatment. These issues are particularly evident in the Dublin area. I take the Deputy's point. We must see if we can develop some policy or action to encourage integration or else to work with another body which has such a strategy.

Deputy Eoghan Murphy

I would advise such action. The authority should take it upon itself and the board of the authority should discuss the matter. In my view it is a responsibility of the board to deal with this. Every time I get into a taxi or I am out in Dublin at night I see what is going on and I hear the complaints. I get complaints to my office from all sorts of people from every walk of life. It is time to be proactive on this issue. The authority should decide to regulate the taxi industry and decide to do something. A few years ago, taxi drivers were even marking their cars with notices proclaiming, "Irish taxi driver", accompanied by the tricolour to show that. They seemed to regard this as a good thing to be discriminating in that way. I did not hear of anyone from the taxi regulator doing anything about it at the time. This problem has been around for years. It is time for the authority to get proactive, to go to the Minister, look for extra funding if that is required or to look for the mandate. Otherwise, the board of the authority could take it upon itself to tackle this important issue which will lead to serious problems in the future at ranks, in my view, perhaps leading to violence.

Mr. Gerry Murphy

The Deputy's point is well made. We will see what we can do this year with regard to some measures such as education-raising measures or in co-operation with other bodies.

Deputy Eoghan Murphy

I thank the witnesses.

Deputy Sean Fleming

I welcome Mr. Murphy and his colleagues to the meeting. I will not dwell on all the meetings I have had with the authority during the year about the cessation of the bus route which served Abbeyleix, Durrow, Johnstown and Urlingford on the Dublin-Cork route and the reduction in the services on the Limerick route. This seems to be happening throughout the country. I thank Mr. Murphy for his assistance in that regard. The private bus service to replace the CIE service is still operating. However, it does not receive a subsidy so it must be in financial difficulty. It does not qualify for the public service obligation subsidy nor for funding for social welfare or travel pass customers. I hope the service will be able to continue and that people will use the service.

I have a few general questions. Is the authority subject to freedom of information?

Mr. Gerry Murphy

Yes.

Deputy Sean Fleming

Has the authority received many such requests during the year? I did not notice this heading in the annual accounts. Is there a ballpark figure available?

Mr. Gerry Murphy

I could not give the Deputy an answer to that question now. We operate a principle that it is not necessary to ask for a freedom of information request through the freedom of information process. We volunteer any information that is requested. We put a lot of information on our website. We place all the quarterly performance reports of the CIE companies on the website so that the public can read how they are performing. Before the NTA was established, the public had no idea of how-----

Deputy Sean Fleming

The website is very important.

I know that the NTA has a list on its website of every private operator in the country that has a licence but their timetables are not on the site. People with local knowledge might tell somebody if there is a bus service licensed to go from town A to town B in some province. Due to commercial activities some of those buses are not operating although they have a licence and the NTA may not know that they are not operating. Does it have a mechanism to check that when it issues a licence the bus is actually on the road? I will come to the issue addressed in the appendix of its submission about performance monitoring of the major companies in Dublin but first Mr. Murphy might tell me about putting the timetables up on the site. He spoke about the journey planner which is a bit scant. I believe the NTA needs to put a bit more energy into this in order for people to know whether the buses are running.

Mr. Gerry Murphy

The Deputy is right in that when we spoke last year about the Durrow service it was not so easy to find a timetable. The journey planner is not actually scant. There is a great deal of information on it. If the Deputy wants to find a bus from Durrow to somewhere he can click on the journey button and it will show the operator and the timetable.

Deputy Sean Fleming

Are all the timetables there?

Mr. Gerry Murphy

They are all there.

Deputy Sean Fleming

That is great.

Mr. Gerry Murphy

In launching the journey planner we went to all the private operators that we license asking for their latest timetables. We gave them a kind of amnesty by saying that if they were not operating to licence we would regularise that afterwards. Some operators do not operate to the licence and this year we are increasing the enforcement and using some of our taxi team around the country to do the licensing checks on the bus side.

Deputy Sean Fleming

That is important. I am critical of CIÉ and yesterday I listened to people from Roscommon on "Morning Ireland" whose service had been replaced by a service to Dublin Airport. Every route in the country seems to start or end at an airport and the people in between do not count. CIE has abandoned many rural areas and there will be further denuding of CIE expressway services around the country so it is important that there is a proper timetable for any alternative that the NTA licences.

My only criticism is that when the NTA receives a request for a licence for a route it is obliged to see who else has a licence on that route. It does not want to license a company to go ten minutes ahead of the existing bus because it would undermine it but the existing licence holder seems to have quite a bit of control and power or influence over the system and I am not sure where the public interest is involved in the licensing system. Will Mr. Murphy comment on that? This may be a legislative issue which we could consider when reviewing this presentation.

Mr. Gerry Murphy

We do consider who is already on the route because, as the Deputy says, there is no point licensing somebody to come five minutes before the current bus. That would lead to on the road competition and one company putting another out of business. We look to see if there are time slots available to let somebody else come in and add services to the public. Nobody has a right to the licences. Operators get three year licences but our guidelines make it clear that they do not have a permanent right to a licence. If they do not operate appropriately or if somebody comes in with a much better offer, for example, wheelchair accessible buses or much lower fares, which is better for the public, that operator will get that slot.

There are probably very few places where competition is critical but one is the intercity market which is the most lucrative for private coach operators where getting these valuable half hour slots is important. We have had very few applications for those recently. There is satisfactory provision by the companies already operating. The public interest is considered. If we did not consider it we would end up with a willy-nilly situation whereby somebody might say he was providing a very good service operating in rural Ireland at fixed times and somebody else would come in maybe on a loss-making basis, hoovering up the market by coming in five minutes earlier or something like that.

Deputy Sean Fleming

The NTA gives a figure of €265 million paid to Iarnród Éireann, Dublin Bus and Bus Éireann in public service obligation. Is any of that available to private operators or is it confined to CIE group companies?

Mr. Gerry Murphy

The concept is that if subsidies are available for public transport they can go to whomever one has a contract with so they could go to other companies. The reality, however, is that the money is needed for the services the CIE companies currently provide. Last year we tendered the Durrow service which the Deputy mentioned, on the basis that the operator would contract with us on the basis of the fares revenue. The operator advises us now that he cannot survive on that basis and that he will pull out in February. We will advertise that contract again and there will be a subsidy included in that tender competition.

Deputy Sean Fleming

That is excellent news for us in Laois and for the Roscommon people I heard on "Morning Ireland", and all over the country. Does the NTA have much of a fund for this? Rural communities would love to hear the news this morning that there is a PSO subsidy for some of these new routes. Is this new?

Mr. Gerry Murphy

Yes it is new. This is the first time we have done this. It is a modest sum and we could not replicate it across the country. We are doing it on this service because we regard these as significant towns.

Deputy Sean Fleming

The strength of the representations did this.

Mr. Gerry Murphy

The representations were strong but also the points were well made.

Deputy Sean Fleming

That is good. It is a learning experience for us all. Does the NTA issue taxi licences for the whole of Ireland?

Mr. Gerry Murphy

Yes. That is right.

Deputy Sean Fleming

Can Mr. Murphy send us information on the number of licences operating on a county by county basis?

Mr. Gerry Murphy

We could do that.

Deputy Sean Fleming

As the Chairman knows I am not normally parochial but as a typical example, a taxi driver in Portlaoise complained to me that there are 194 licences in Portlaoise. There is no livelihood for half that number. Does the NTA just continue to issue the licences? Is there any ceiling? I am not talking about going back to the old system of a ceiling. Does the NTA have a role in deciding with the local authority where the ranks should be or is that a local authority function? There are plenty of towns where there are no taxis but there may be a hackney service. I know some towns that have taxi services but maybe they are not official. How does the NTA decide whether town A with a population of 4,000 merits a taxi service or two taxis? Who decides this?

Mr. Gerry Murphy

To go to the heart of this issue the way that the Taxi Regulation Act 2003 was set up the market is open, subject to certain regulatory controls. Since 2009 when a rule was introduced that people could get only wheelchair-accessible licences because there was a big gap in the provision of wheelchair-accessible taxis there has been a big drop in numbers coming into the sector. For example, in 2011 there were approximately 80 licences issued and they were broadly for wheelchair-accessible taxis and in 2012 there were only 44 licences issued. Very few licences are being issued because they are restricted to wheelchair-accessible taxis and it costs more to provide those.

Deputy Sean Fleming

Can the NTA not process an application for an ordinary taxi?

Mr. Gerry Murphy

Not at the moment. It is not possible to get a new taxi licence.

Deputy Sean Fleming

That is extraordinary. I know we probably created that rule here in the Oireachtas.

Mr. Gerry Murphy

There are a lot of taxis in Ireland. At the moment there are 23,000 vehicle licences. We are trying to target people with disabilities because there is significant under-provision of taxis capable of carrying them.

Deputy Sean Fleming

I want to go back to my question about a town with a population of several thousand and no taxi.

Who is responsible for deciding whether these people should have a taxi service? Must a local authority provide a taxi rank if a service is to be offered? How does the system work? Some towns are seeking taxi services and I do not know what is the nature of the delay in their obtaining them. Local authorities often appear to discuss these matters.

Mr. Gerry Murphy

It really depends on the individuals who want to go into the business.

Deputy Sean Fleming

Can they bypass the local authorities and go straight to the NTA?

Mr. Gerry Murphy

They come to us for wheelchair accessible licences. If they possess the appropriate driving licence and vehicle, then they will obtain a wheelchair accessible licence. A taxi rank is not needed in the relevant town. The management of street space is the function of local authorities. In 2011 and 2012 we grant-aided the provision of wheelchair accessible taxis and we brought a further 50 to 60 vehicles into the fleet.

Deputy Sean Fleming

The NTA pays a public service obligation to the CIE group of companies, which also receives a subsidy in respect of travel passes from the Department of Social Protection. The amount of the latter is between €60 million and €70 million, which is significantly less than the NTA pays. What level of co-ordination exists between the NTA and the Department of Social Protection in the context of ensuring that CIE is not being paid on the double? I refer to the fact that the Department pays out taxpayers' money for travel passes to Bus Éireann in respect of routes that have been developed and that the NTA also pays a public service obligation to the company. In reality, all of this money is used for the same purpose. Is there a case for the two funds in question to be managed by one or other of the organisations?

Mr. Gerry Murphy

That is a good point. There is nothing which has really fallen into the gaps at present in the context of the management of it. The Department of Social Protection pays money not only to CIE companies but also to the RPA and private bus operators. The Department froze that process in 2009 or 2010 and any new people coming in with licences avail of that. A review is currently being carried out by the Departments of Social Protection and Transport, Tourism and Sport - Ms Graham sits on the relevant national committee - in respect of where we are going in the context of the subsidisation of free travel. We receive reports from the operators we subsidise of the amount of money they obtain via the subsidy component. When I mention that we know all the revenues, costs and fare increases when they come into us, I mean that we are aware of the sum the CIE companies are receiving.

Deputy Sean Fleming

In the context of its financial statement, I was intrigued to discover that the NTA earned bank interest of €534,941. Its balance sheet indicates that on 31 December 2011 it had a bank balance of over €20 million.

Mr. Gerry Murphy

Yes.

Deputy Sean Fleming

In light of the shortage of money in the country, it is fabulous that in 2011 the NTA had €20 million sitting in the bank earning interest. What rate of interest applies in respect of money the NTA has in the bank? I was also intrigued by the fact that the authority incurred bank charges of €67,692. I do not understand how an organisation with €20 million in the bank - earning deposit interest of €534,941 - is incurring bank charges. How did such charges arise?

Mr. Gerry Murphy

Essentially, a 3% interest rate applied in respect of the moneys in question. The taxi surplus of which we were availing had fallen to €17.6 million by the end of 2011 and the moneys we were holding from that fell to €15.4 million by the end of 2012. It is gradually depreciating.

Deputy Sean Fleming

So the NTA had over €30 million at one point?

Mr. Gerry Murphy

No. In broad terms, that money would have been the taxi surplus and perhaps some other money that was there, on a cashflow basis, pending a payment out.

Deputy Sean Fleming

I might help Mr. Murphy in respect of this matter by stating that the NTA's balance sheet indicates that it had €20 million cash in hand in the bank at the end of 2011. It also refers to €17 million in the authority's expenditure account and indicates that this was money from the Taxi Regulator. It appears to be an additional amount. So the NTA's balance sheet indicates it had €20 million sitting in its account in the form of cash in hand and that it also had €17 million in unspent moneys from the Taxi Regulator. Added together, this means that the NTA had €37 million sitting in its bank account.

Mr. Gerry Murphy

Mr. L'Estrange will clarify that matter for the Deputy.

Mr. Phillip L'Estrange

The cash deposit was of the order of approximately €20 million. At a high-level split, we had €17.5 million which was residual cash from the taxi surplus.

Deputy Sean Fleming

That is additional.

Mr. Phillip L'Estrange

No, that is within the overall amount of €20 million. If I was to break down the €20 million, €17.5 would relate to the taxi surplus - which was assumed into the accounts of the NTA on 1 January 2011 - and the other €2.5 million is essentially working capital that we manage. We get money in and we then pay it out to creditors. We also pay out grants and so forth. The €2.5 million is committed money, while the €17.5 million is the taxi surplus we carried forward into 2012.

Deputy Sean Fleming

So the NTA is still a cash-rich organisation. In the past year, a number of third level institutions have come before the committee. Those institutions are always screaming out for money but it has emerged that they have tens of millions in their bank accounts. People complain about taxi fares, the cost of transport, etc., and it now emerges that the NTA, which is the regulatory authority, has €20 million sitting in its bank account. It appears that tens of millions are sitting in the bank accounts of various agencies at a time when the country is strapped for cash. Our guests will understand people's view that this is somewhat unusual in light of the tight financial situation in which we find ourselves.

Mr. Gerry Murphy

The Deputy asked about bank charges. This is an important matter with which Mr. L'Estrange will also deal.

Mr. Phillip L'Estrange

The Deputy will see from our accounts that the bank charges increased quite steeply between 2010 and 2011. The reason for this is because we assimilated the Taxi Regulator. There are many transactions which go through the taxi-licensing business. For example, when those in the industry renew their licences, etc., they pay licence fees and so on. If they pay by credit card or whatever, we incur merchant fees with the banks. The average fee we would pay would be 1% on each transaction that was made. The bank charges do not relate to the bank balance rather to the transaction charges relating to the taxi industry.

Deputy Sean Fleming

The NTA spent €17.8 million on new buses for Bus Éireann during the year. How many buses were purchased?

Mr. Gerry Murphy

Over 60.

Deputy Sean Fleming

What was the cost of each?

Mr. Hugh Creegan

Approximately €330,000.

Deputy Sean Fleming

Were those double decker buses?

Mr. Hugh Creegan

They were a mixture of double and single decker buses and they were all for public subsidised services.

Deputy Sean Fleming

How much does a double decker cost?

Mr. Hugh Creegan

Approximately €300,000.

Deputy Sean Fleming

Is the cost the same for the single decker vehicles used on the Expressway service?

Mr. Phillip L'Estrange

We do not fund the Expressway ones. However, the single decker would be somewhat cheaper. The approximate cost of each is somewhere above €200,000.

Deputy Sean Fleming

There is an unusual ratio used on page 46 of the NTA's accounts. The Comptroller and Auditor General's fee was very modest, at €17,613, but, as Deputy Ross stated, internal fees amounted to €84,742. This means the authority spent five times the amount on its internal audit function as it did on the external audit function. The ratio in this regard appears very high.

Mr. Gerry Murphy

Our internal auditors perform our external audit functions, besides that performed by the Comptroller and Auditor General. All of the audits which must be carried out in respect of local authorities we grant aid, transport operators - in the context of their capital and PSO considerations - and organisations such as An Taisce, which we fund through the green schools programme, are performed by the same company.

Deputy Sean Fleming

I suggest that the NTA should recategorise the position in this regard because anybody examining the accounts would assume that the amount involved relates to the internal audit function. The accounts should indicate whether inspection, verification or consultancy fees were paid.

Mr. Gerry Murphy

That would explain it better.

Deputy Sean Fleming

I would have assumed that the amount in question related to the internal financial audit. I am pleased to discover it does not, particularly as the figure involved is so high.

There are one or two other small points. Would Mr. L'Estrange explain the last line of page 52 of the accounts, that there is outstanding VAT repayable to be offset against future integrated ticketing scheme capital expenditure of €494,379. Why is there an outstanding VAT repayable amount? What does it mean?

Mr. Phillip L'Estrange

It is rather complex. In relation to the integrated ticketing scheme, the RPA was carrying out some development work for the NTA and on those invoices they charged VAT as it was a VAT applicable activity. The NTA then was entitled to recover that VAT and we had it as a repayable position. In fact, rather than keeping it as cash for the NTA, we offset that VAT repayable against the grants that the Department ultimately pay back to the NTA. It is a VAT repayable amount due to the NTA and we recognised that. That is our asset. It is to be offset against future grants from the Department of Transport.

Deputy Sean Fleming

On page 49, there is a figure to do with the NTA's pension scheme. It is a figure at which in this day and age people will be intrigued. They give a detailed description of the NTA's defined benefit scheme on page 49, and the entire pension scheme is based on expected future pensionable salary increases of 3.5% per annum. I certainly hope staff did not get a 3.5% increase last year and I hope they do not get one this year. We cannot afford that at present when there are cuts across the board. Why is the NTA's pension scheme based on the assumption that staff were paid a 3.5% increase last year and will be paid a 3.5% salary increase this year and next year? That assumption cannot be correct.

Mr. Gerry Murphy

On the salary increases, our organisation is structured on public sector grades. We have a mixture of two types of grade. They are either the local authority grades because the bulk of those in the transportation officer are on those or Civil Service grades for some staff who moved into our organisation. It is structured public sector pay grades that make up our salary base.

On the issue of the FRS17 accounting,-----

Mr. Phillip L'Estrange

This note is generally required to be consistent with what is called Financial Reporting Standard 17, which is a generally accepted accounting principle, and we are following that accounting discipline.

In terms of the 3.5%, this is an actuarial-type calculation to forecast what the pension charge should be noted as in the accounts and what the ultimate liabilities might be in the long term. In summary, the actuaries build some assumptions into their long-term forecasting model around what the pension charges ultimately will be for the NTA and what is appropriate to recognise in the current year. These are more modelling assumptions for longer-term pension liabilities as opposed to indications of what we expect salary increases to be.

Deputy Sean Fleming

The model must be based on what they assume will happen.

Mr. Phillip L'Estrange

Yes. They need to factor in some assumptions because pensions, of their very nature, are long term. The actuaries build-in these assumptions and they are industry-acceptable.

Deputy Sean Fleming

If there was no increase last year or this year in the public service, they are budgeting for a 7% increase in some other year. If there was zero increase this year and it is average of 3.5%, Mr. L'Estrange is assuming there will be a 7% salary increase.

Mr. Phillip L'Estrange

That 3.5% would be an average over the long term.

Deputy Sean Fleming

Given that there was zero increase last year, the year before and this year, that 3.5% is an average figure. If there was zero increase for several years in a row, the NTA must be assuming 7% some other year to make up the average of 3.5%.

Mr. Seamus McCarthy

My understanding is that the actuaries would look back over a long period as well. They would be looking back over what the increase has been over 20 years and then projecting forward. It is something of a concern for me. These assumptions are relatively standard. There is some variation and there is no particularly obvious reason there would be variation. There should be standard assumptions used and the assumptions should be based on a reasonable expectation of what is likely to occur in the future. Certainly, in the current climate, one would question the idea that in the long term there will be a 3.5% increase in pensionable salary where one is talking about a 1.5% real increase and 2% inflation over the projection of 20, 30, 40 or 50 years. It is something to which I drew attention in relation to the Social Insurance Fund projections. It is probably something we will talk about on another occasion.

There is an issue. There may be an element of overstatement of pension liabilities but we are satisfied that the authority has followed FRS17 correctly.

Deputy Sean Fleming

Is it the underlying assumptions that are the issue?

Mr. Seamus McCarthy

There is an issue to be addressed in that regard.

Deputy Sean Fleming

On page 50 of the accounts, there is a detailed note on the integrated ticketing system. Earlier we spoke about the cost of it and the Chairman asked Mr. Murphy to send the committee a note. It is intriguing that the cost of the integrated ticketing system in the accounts on 1 January 2011 - on page 50, it is a separate item which is depreciated each year - came in at €40.592 million. That was the opening value of the expenditure. Earlier Mr. Murphy mentioned a figure of €55 million. I ask him when providing the information to tie in the figure of €55 million mentioned here to the figures in the financial accounts.

I have two last quick points.

Mr. Gerry Murphy

Can I interject there? I have just been advised - a message was passed to me by Mr. Tim Gaston who was the project director of Leap from its inception in 2001 - that the €55.4 million includes all expenditure.

Deputy Sean Fleming

Going back to 2001.

Mr. Gerry Murphy

Since the beginning of the project in 2002. I am sorry I did not know that earlier.

Deputy Sean Fleming

The NTA has a role in seeing whether all of these companies providing a proper service. The appendix to the NTA's accounts contains figures on the DART, Dublin Bus and Bus Éireann. The intriguing one is that for the Luas service, on page 59. The NTA has standards of punctuality and delivery of service. The accounts states that Luas measures punctuality in terms of the total number of minutes lost due to delays and that there is no contractual target for punctuality, however the operator pays a financial penalty for every minute of delay. The accounts state that on the Red Line, the average delay recorded over the quarter was 545 minutes, which I estimate at approximately six minutes a day. On the Green Line, it was a smaller figure. Would Mr. Murphy explain how that works and how much financial penalty Luas paid?

Mr. Gerry Murphy

I think it is that they state there is no contractual target for punctuality, but they pay a penalty for every minute of delay. I suppose it ends up-----

Deputy Sean Fleming

How much did they pay?

Mr. Gerry Murphy

I do not have that figure.

Deputy Sean Fleming

Would it be significant?

Ms Anne Graham

It is relatively significant all right. We could certainly easily get that figure for the committee. We just do not have it to hand today.

Deputy Sean Fleming

I ask Mr. Murphy to flesh out that for us. It seems to be six minutes. How is it calculated? On the following page, there is more about Luas which states that there is a penalty if a service does not run. If they miss a service and they know they will incur a fine, is there an incentive to run one at an odd hour merely to state that they ran a service. Would they explain how that works?

Mr. Gerry Murphy

We will do that.

Deputy Sean Fleming

My last point relates to something that was not touched on at all. On the final part of the appendix, the NTA has a role in regional planning guidelines, local planning and land use in transport. Anybody who has been involved in a local authority will be aware that public transport is an issue. I note that in the year under review the NTA made submissions to approximately 30 develop plans - regional plans, county development plans and town development plans. Has the NTA a big planning section? There seems to be a great deal of work for a body to make 30 submissions. Draft development plans are sizeable documents. Has the NTA a standard one the cover of which they change when sending it off to each local authority or does much work go into that? It is an important issue for the public.

Mr. Gerry Murphy

I will pass on to Mr. Creegan to finalise the reply. There are two areas in which we work with the local authorities. We work through the issues with all of the local authorities in the Dublin area prior to them doing these development plans and then we work with the regional authorities on a lot of their submissions and the preparation of their guidelines. There is a lot of preparatory work and liaison work done with them. We have a significant planning quotient of staff which reflects our national obligations. Perhaps Mr. Creegan would pick up on that.

Mr. Hugh Creegan

We have a small unite of experienced planners to do a number of functions.

We invest a lot of effort in working with local authorities to try to integrate transport into land use planning at an early stage. If we do not get the integration right from day one, in so far as we can, we are playing catch up every year afterwards. A small unit is involved. We work actively with the various local authorities and the regional authorities and we do not copy the submission each time. They are individual.

Deputy Sean Fleming

Does the authority deal with roads as well or is it just rail and public services? What is dealt with in conjunction with local authorities? Is it just public transport?

Mr. Hugh Creegan

We focus on the full transport quotient. One must look at the full picture in order to see what the needs are in roads or public transport. As the Deputy is aware, our remit on roads is limited. Nevertheless, we have a close liaison with the NRA on national roads wherever there is an interface.

Deputy Sean Fleming

Issues such as park and ride are important. It is fabulous when park and ride facilities are provided at train stations for commuters but if CIE can treble the parking rate for a week from €1 a day to €3 or €4 a day, it defeats the purpose. Does the authority have a role in agreeing the CIE fees to be charged in its park and ride facilities and car parks? It has a role in terms of the fare. The rate one must pay at the station, in effect, is part of the fare for one’s journey.

Mr. Gerry Murphy

We do not have a formalised role but we are aware of all the changes and plans that are introduced by CIE. Car parks operate through the CIE property section. We are not contracted with CIE property, as such, but we are aware of the balance between car parking cost and encouraging people onto public transport. We do not have the power within our contract but we work with CIE on the plans it has.

Deputy Sean Fleming

The authority has some planners in the organisation. Does it have many accountants, not to deal with its accounting function, but to deal with the financial effects of the type of issue I raised, for example, when CIE proposes a fare increase? Does the authority have to hire a consultant for the purpose or does it accept the figures given to it blindly? Are there financial accountants to assess requests for a fare increase?

Mr. Gerry Murphy

We have a number of accountants in our organisation. We had an economist, whom we lost to another public body, and we have just received approval to recruit another one whom we will also use for analysis of fares and trends in public transport.

Chairman

I wish to clarify issues with Mr. Murphy that were raised by Deputy Ross. At the end of last year it was reported that Irish Rail was close to securing a deal with a private sector buyer to sell land holdings at Spencer Dock in Dublin. As part of the problems for the company at the time the report indicated it required €16 million in order to allow it to pay for its day-to-day expenses such as till rolls and toilet rolls. Did the NTA step in to provide the €16 million?

Mr. Gerry Murphy

I understand that Irish Rail realised €20 million from the sale of property at Spencer Dock, which went to defray the major deficit and partly helped cashflow. In 2012 the Government provided an extra subsidy of €36 million which we disbursed to-----

Chairman

Could we focus on the €16 million for the moment? Did the NTA intervene in that respect?

Mr. Gerry Murphy

It was more than €16 million. A total of €36 million was made available in an extra subvention last year. There was a sum of €16 million and then the sum of €20 million was provided. A first block payment was made of €16 million and then a second one of €20 million.

Chairman

My question is whether that is the role of the NTA.

Mr. Gerry Murphy

That is correct. What happened was the Government made an additional subsidy of €36 million available.

Chairman

What were the conditions of payment? I accept the other money was there. I will return to that in a moment. A total of €16 million was made available as part of a bigger amount. Does it have to be repaid or is it gone?

Mr. Gerry Murphy

It falls as a subsidy.

Chairman

A subsidy.

Mr. Gerry Murphy

Yes, in the same way as we spoke of a subsidy of €250 million. It was an extra subsidy in that year.

Chairman

Irish Rail got a subsidy of €16 million and it realised €20 million from the sale of property. It had to sell the property because it could not meet day to day expenses. In spite of realising €20 million on the property sale, it still got €16 million of taxpayers’ money as a subsidy.

Mr. Gerry Murphy

It did. To be precise, it got €31 million last year.

Chairman

It got more.

Mr. Gerry Murphy

Yes, it got more. The Government made the money available to us and then we had to look at whether we were over-compensating the company for the services it provided. The net effect at the end of 2012 was that Irish Rail’s operational deficit for 2012 was still €22 million. The deficit of Dublin Bus was approximately €7 million for 2012. We made a payment of €31 million to Irish Rail from the additional subsidy that was provided. We made a payment of approximately €5 million to Dublin Bus but the net effect is that the companies were still in deficit. Bus Éireann had a projected deficit of €500,000 for the end of 2012 and there was a good period in December so we did not make any payment to it.

Chairman

Deputy Ross referred to the accounts. I will do likewise. In July 2012 the Government approved a bailout of €36 million for CIE. Will Mr. Murphy tell us about that? Was it paid? Has it been drawn down?

Mr. Gerry Murphy

Yes. It was paid through us as a subsidy of €31 million and €5 million.

Chairman

Was it fully drawn down?

Mr. Gerry Murphy

Yes. It was paid in November and December 2012.

Chairman

Will they account for the €36 million to the authority?

Mr. Gerry Murphy

That is correct.

Chairman

Therefore, it comes under the remit of the Comptroller and Auditor General because we examine the authority’s accounts.

Mr. Gerry Murphy

Yes. The issue is whether they discharged their contractual obligations and if they were over-compensated for the discharge of those obligations.

Chairman

The accounts were published in late 2012. Probably the most significant information was that PwC warned about the ability of the company to continue as a going concern given its level of liabilities. Concerns were expressed over its future trading prospects. The company said it would not come into profitability until at least 2015. The backdrop to all of the companies is continued subsidy and massive amounts of taxpayers’ money being paid into them. The NTA gives the money in various ways to the companies and it sets the fares. Is that correct?

Mr. Gerry Murphy

The Chairman is right, but I do not agree that massive amounts of money are involved. A significant amount of money is being paid in continued subsidy but public transport is under-subsidised in this country.

Chairman

It is a massive amount of money for a company whose accounts show that it has trading difficulties and that it will not come into profitability until 2015. That is a huge problem for the NTA, the State and the company. The situation for the travelling public is that all of the money is going in through the NTA, which sets the fares. Mr. Murphy said this morning that the authority only sets the fares based on the company’s contractual obligation to the service. Once it provides the service, the NTA – I accept the money comes from the Government – has the job of continuing to put the money into it. Is that correct?

Mr. Gerry Murphy

Yes.

Chairman

Mr. Murphy said the NTA looks at cost controls in the company in connection with the accounts and that it gets €265 million a year. If the NTA is looking at cost controls and it is also approving capital expenditure, does it look in detail at what the money is being spent on, and whether it provides value for money and if that continues to be the case? Is that part of the NTA’s remit?

Mr. Gerry Murphy

Yes.

Chairman

CIE bought passenger carriages for several million US dollars and put them into service, but it did not get value for money because it did not use them as intended. Is that something that concerns Mr. Murphy and that he will investigate? Has it come to light within the organisation?

Mr. Gerry Murphy

Yes. We are aware of that.

Chairman

What can Mr. Murphy tell us about it? Is it $9 million?

Mr. Gerry Murphy

No. It is significantly more than that. Of the rail fleet it bought since 2004 - some 234 rail cars - about 21 of those are unused because of the drop in passenger demand. They amount to a value of €44 million that it keeps in storage.

Chairman

I want to be clear about this. What was the cost of the overall contract?

Mr. Gerry Murphy

There were three different contracts, with Mitsubishi-----

Chairman

Is that the American company?

Mr. Gerry Murphy

No. It is a Japanese company. The contracts were for 234 rail cars and if one says that they were €2 million each that would have been a €500 million contract in three tranches. The last tranche was a contract awarded in December 2008 and 51 cars were delivered from that contract. The net effect of all the rail car purchases - there were 21 unused because passenger demand has gone down and the extra services have not been provided - is that those are in storage. Those contracts-----

Chairman

Mr. Murphy is saying that the 21 carriages that were purchased that are not in use are worth €44 million.

Mr. Gerry Murphy

That is correct.

Chairman

They spent €44 million on carriages that it currently has in storage. Does the storage cost anything? I presume it has some sort of-----

Mr. Gerry Murphy

They are stored in its normal rail storage. It recycles them in and out of the storage, put them into use and then maintain-----

Chairman

At any one time 21 of them are not used.

Mr. Gerry Murphy

At any one time 21 of them are not used - surplus.

Chairman

What does Mr. Murphy think of that?

Mr. Gerry Murphy

Obviously, the projections were wrong and the basis on which the contracts were entered into. All those contracts were entered into before our time. We ended up paying out some residual payments in each of the years since we have been established as the delivery and the final payments for those rail cars.

Chairman

What year are we talking about for the orders?

Mr. Gerry Murphy

The last one was December 2008. Orders were made previous to that in 2004, 2005 and 2007. There had been a growth trend and work was done by Irish Rail at the time in submitting its application to the Department of Transport on what it projected passenger numbers would be over a 13 year horizon. Goodbody, the economic consultants, came in and did a review of the business case and a trend growth was anticipated. Many of the lines would have doubled or tripled over a 13 year period of passenger demand but there was a 17% drop in passenger volumes from 2008. Not only did they not increase on a pro rata basis, it started to haemorrhage passenger numbers.

Chairman

Who did that analysis?

Mr. Gerry Murphy

Irish Rail did the original work and Goodbody did a review of the business case.

Chairman

How can Mr. Murphy believe Irish Rail in particular or the CIE group of companies when their accounts are in such a mess? Essentially, that is the point being made this morning. That is a massive loss of taxpayers' money, and it is a huge amount of money. A company in the private sector would be broke if it did that and here is this company showing gross inefficiency and poor quality in terms of information on which it would base its projections and purchases and Mr. Murphy, as an organisation, and this is no disrespect to Mr. Murphy - I am just trying to get my head around the idea that all of that can be almost ignored - increases the fares instead of saying to the company, "I am sorry. There will be no future increases in fares until such time as you get your house in order. You are squandering taxpayers' money. You are grossly inefficient. You are providing a poor service and I will not increase your fares."

Deputy Kieran O'Donnell

The resale value of them-----

Chairman

Can Mr. Murphy not take that position on behalf of the travelling public because he is a regulator in a sense? That was the essence of the earlier exchanges with Mr. Murphy. I cannot fathom why Mr. Murphy cannot either do this to the company by way of putting a stop to the carry-on taking place in CIE or that he makes some extraordinary submission to Government calling a halt to all of this unnecessary spend. Can Mr. Murphy answer that for me?

Mr. Gerry Murphy

I will attempt to answer it. It is a difficult area. The complexities of having State operators in place, and the public transport services are reliant on these big operators providing services-----

Chairman

Can I stop Mr. Murphy there? They are not because many of these services can be provided in the private sector but CIE bullies people off the pitch. That must be acknowledged. I have seen numerous reports from private bus operators in particular that contend that that is the case. I will not go into it now because it is not Mr. Murphy's remit but it is impossible to get to the end of the school transport system, and it is costing the taxpayer an enormous amount of money in terms of the way it is managed. To go back to my question because I do not want to lose the-----

Mr. Gerry Murphy

What I was trying to say is public transport services at any point in time must be provided. We are contracted with the operators. The operators are reducing their costs year on year and when we look at their fares increases, it is in the context of whether we want to maintain services, the drop in subsidy, the drop in patronage revenues and their cost control. For example, Iarnród Éireann has reduced staff numbers from 6,000 to 4,000 in the past eight years. Bus Éireann has driven down its costs, and Dublin Bus has driven down its costs. We are seeing cost reduction plans in the organisations. We are seeing growing efficiencies. In the Dublin area, where Dublin Bus is the biggest carrier of public transport in the State, we have seen a fundamental reorganisation of its services and its network direct. It is much more efficient. We have reorganised the services for Bus Éireann in the regional cities. In Galway, we are seeing a 20% increase in revenue from that and we are now reviewing all the services in rural areas throughout the State. There are efficiency measures in place. When we get the fares increases and look at the diminishing subsidies, we must also take account of whether we want to keep the network of public transport services operational in the State.

We have separately reported to the Minister on the bus market and it is no secret that we have recommended to the Minister that there should be an opening of the bus market in 2014. It is a matter for the Government to consider that item and it has to come back to us. We have met with the Government's economic committee and we have been told to wait until we get a response. We have identified that savings could be made by some graded opening of the market. We believe that could work well. It could also work well for the existing State operators because they will see benchmarking of a private operator doing a similar business.

We are conscious of all these matters but I come back to the fundamental point that the organisations are not grossly inefficient. Deloitte was commissioned by the Department of Transport in 2007. It did a review of the operations of Dublin Bus and Bus Éireann and said that in general they were comparable with international standards. That is not to say that we cannot achieve cost savings. They are not grossly inefficient, therefore, and there are opportunities for efficiencies but they are under-subsidised. They also have the perfect storm as the subsidy is dropping, passenger numbers have been dropping across all operators and because they are reliant on the revenue as well as on the passenger numbers they have been hit by that double whammy and the triple whammy of fuel duty rebate being gone. All those factors have come about to create the cash flow problems for the CIE Group, the need for €36 million to come in and our fares increases but we have reserved our position. We have said we will only consider a fares increase annually on the basis of projections of cost savings, revenues, the services they will provide and the quality of what they have delivered in the past year.

Chairman

I disagree with some of the points Mr. Murphy has made and I will come back to them in some other way but I want to ask a final question.

Has Mr. Murphy a comment on the cost of the CIE board and chairman? Has he considered this?

Mr. Gerry Murphy

I would not have a comment on that.

Chairman

What about the resale value of the carriages?

Mr. Gerry Murphy

Faced with the existence of the surplus carriages, we commissioned a report by Jacobs Engineering, which has expertise in the rail area. We asked what one should do with the rail carriages. The firm's view was that it would be inappropriate to sell them on as there will be growth in passenger demand in the coming years. Jacobs Engineering asked that we consider the most cost-effective means of storing the rail cars. It has reviewed the whole rail fleet and said one should not dispose of it now because, if one did, one would face further capital investment in the future. The fleet has a rail life of 20 to 30 years. Cost-efficient storage would be the best approach in the public interest. There will be a growth in passenger numbers.

I could not make a projection because the numbers are so volatile. If there were growth in passenger numbers, there would be more revenue to allow us to have more services. We would be able to increase the frequency of services on lines that have inadequate or sub-optimal services at present.

Chairman

It the context of Mr. Murphy's opening statement, does he not believe he should have told this committee about the €44 million investment in 21 carriages?

Mr. Gerry Murphy

In my opening statement, I tried to be as brief as possible and to summarise. It is a question of whether the detail should have been in the annual report. Perhaps the Chairman's point is taken in that regard.

Chairman

Forty-four million euro is not an insignificant sum.

Mr. Gerry Murphy

No. Bearing in mind the amount of information we provided and the transparency of our operation, it is not our general policy as an organisation to keep details hidden. I take the Chairman's point on a matter as important as the one in question.

Deputy Kieran O'Donnell

I welcome Mr. Murphy and his colleagues. What is the resale value of the 21 carriages that are unused at present?

Mr. Gerry Murphy

I could not tell the Deputy the resale value.

Deputy Kieran O'Donnell

Why not?

Mr. Gerry Murphy

I have not looked into it because a recommendation from the consultants we employed was that they should not be resold. Therefore, I did not pursue the market value of the carriages.

Deputy Kieran O'Donnell

The context is that €16 million in taxpayers' money was invested in Irish Rail at the end of last year. I assume the investment in the carriages was in the order of €44 million, which is more than double €16 million. It is certain that €16 million in taxpayers' money was invested but there is uncertainty regarding the future growth of Irish Rail. Mr. Murphy stated the carriages have a life span of 20 to 30 years but they are sitting doing nothing. It is like a racehorse owner holding onto 20 yearlings in the belief they might win a few races in three or four years although his business cannot sustain this decision. I am not certain CIE can sustain retaining 21 carriages worth €44 million if they are idle in a carriage graveyard.

Deputy John Deasy

Does Mr. Murphy have a cost for storage?

Mr. Gerry Murphy

I do not have a storage cost.

Deputy John Deasy

Mr. Murphy has neither a resale value nor a storage cost.

Mr. Gerry Murphy

There is no particular storage facility built or devised for them. The are caught within the normal storage-----

Deputy John Deasy

How does one make a decision if one does not have that information?

Mr. Gerry Murphy

I know there was no bespoke storage facility created for the supplementary rail carriages so they are captured within the normal storage cycle.

Deputy Kieran O'Donnell

Can we go back to the main point?

Mr. Gerry Murphy

Yes.

Deputy Kieran O'Donnell

I would have believed a telephone call would have established the resale value of the carriages. Let us assume they are worth half the original value - €21 million, at worst. If they had been sold, no subvention would have been required for Irish Rail last year. Can we take it that Mr. Murphy will find out the resale value of the carriages and advise the committee thereof? Furthermore, I ask him to find out the cost of storage.

As a user of Irish rail, I wonder about the measurements used regarding the final subsidy. CIE and its staff do a very good job and the trains run on time; I have no qualms about this. Broadband and mobile telephony coverage are a joke, however, and the food on the trains is of Third World quality. One can get nothing more than a cup of coffee and a sandwich. Eating habits have changed. If Irish Rail is trying to encourage businesspeople to use rail services, it must ensure telephone coverage and the availability of broadband of an adequate speed. Are these factors included in Mr. Murphy's measurements?

The service provided by Irish Rail staff to customers is excellent but I refer to infrastructure. I have taken trains on which there have not been enough carriages, the result being that passengers had to stand. Clearly, cutbacks are affecting the number of carriages per train. This strikes me as poor planning. Does Mr. Murphy take the measurements I have described into account? Rail travel is probably the most efficient and nicest form of travel, yet the infrastructure does not seem to be in place for those who want to use rail.

Mr. Murphy refers to 21 carriages sitting idle. I have contacted Irish Rail about this because I feel strongly about the provision of adequate rail infrastructure and am a believer in public transport. It is a contradiction that the 21 carriages are not being used when, in many cases, there are not enough carriages on trains. Despite this, Mr. Murphy cannot tell us the value of carriages, bearing in mind that there was an investment of €16 million in taxpayers' money in Irish Rail at the end of last year. If one takes care of the small things in life, the big things invariably work out. Could Mr. Murphy guarantee that, as a matter of urgency, he will revert to us with the resale value of the 21 carriages and the storage cost? Can we take that as a given?

Mr. Gerry Murphy

Yes.

Deputy Kieran O'Donnell

Can Mr. Murphy explain to me the measurements he uses to determine the rate of subvention? Does he consider aspects other than time? While punctuality is beyond reproach and the service provided by staff in the various stations is excellent, I need an explanation regarding measurements.

Mr. Gerry Murphy

We monitor the quality of the service. We receive a report from a third party, an independent party, on cleanliness, the presentation of information in stations, timetable information and website information. We track all the complaints, the number of complaints and the categories under which they fall.

Deputy Kieran O'Donnell

Do any of Mr. Murphy's staff members travel by train?

Mr. Gerry Murphy

We in the authority have a policy of using public transport to get to all our meetings or engagements unless it is impossible to do so.

Deputy Kieran O'Donnell

I have no doubt that if some of the staff used Irish Rail, perhaps over the course of three or four intercity journeys, they would know what I am referring to. Has Mr. Murphy asked why broadband and mobile coverage are so poor? Has he asked why the food menu is so limited in this day and age?

Mr. Gerry Murphy

On the Wi-Fi side, we are looking at the whole Wi-Fi offering across Irish Rail at present. I believe that to be correct.

Ms Anne Graham

One of the issues Irish Rail has-----

Deputy Kieran O'Donnell

Do the witnesses agree with me about the lack-----

Ms Anne Graham

There undoubtedly are issues with the Wi-Fi but Irish Rail's issue is that it is a rail service and is relying on the services that are provided by the telecoms operators along that line and it has difficulties in getting a service in certain parts of the country because of the service offered by the different telephone operators. The broadband has been very successful. It has been very successfully used on Irish Rail and the demand is very high.

Deputy Kieran O'Donnell

I am sorry but-----

Ms Anne Graham

That then has an impact on the quality of the service.

Deputy Kieran O'Donnell

-----I am a user. At times, the broadband and the Wi-Fi do not work and service is exceptionally slow when it works. If one seeks to attract the business person who is paying to come on board, one must provide the service. Ms Graham must take it from me that what I am telling her is fact. Does she believe there is no issue with the Wi-Fi?

Ms Anne Graham

I have not said that. I stated there are issues because of the quality of the service that is received from the operators. There are issues associated with certain parts of the country not having coverage and if the rail line passes through those parts, there is an issue in respect of the broadband falling out. That is a difficulty for Irish Rail to take up with the telephone operators. When broadband is used on the railway line, there also is an issue regarding its slowness for users because of the demand. It is very popular on rail lines and as such, that has an impact on the service. However, Irish Rail is very much aware of it, as are we, and we want to do whatever we can to improve the service.

Deputy Kieran O'Donnell

The problem is that Irish Rail effectively is competing in a national transport market. If it is not providing the service and it is very difficult if someone can use a bus and get far better Wi-Fi coverage. I would have thought it to be an imperative for Irish Rail that it ensures Wi-Fi and mobile coverage and I ask the National Transport Authority to take it up with the company. My final point pertains to the offering it provides. The provision of such coverage would encourage significantly more people to travel by Irish Rail because it is far easier to get work done when one is travelling on a train and these are practical measures we do not talk about. Does the authority take into account those measurements when allocating funding?

Ms Anne Graham

In terms of funding allocation, it basically comprises looking at the high-level costs associated with running the service and what passenger revenues the company gets in. The subvention then is the difference between the two. As for the general management meetings and the ongoing performance meetings we have with Irish Rail, we look across all the customer service issues, including what services it is providing for business customers. Irish Rail is very much aware that it has lost business customers on rail lines.

Deputy Kieran O'Donnell

Which is a pity.

Ms Anne Graham

It is. Moreover, it recognises that it must improve the service for its business customers. That is a segment of the Irish Rail customer base for which it wishes to improve the offer and we are working with it to try to do this.

Mr. Gerry Murphy

I was just going to make the point that Irish Rail's focus on the customer has strengthened over the past 12 months. It has appointed a commercial director, whose task is to look at this entire issue of marketing and the customer offering, to move away from simply considering operations and capital and to actually give a focus. The engagement we have with that commercial director has proven to be highly positive. He has grown the student market substantially and he now is looking at these other niche markets to ascertain whether we can get the offering right.

Deputy Kieran O'Donnell

Students have the same requirements in terms of broadband.

Mr. Gerry Murphy

Yes.

Deputy Robert Dowds

I thank Mr. Murphy and his colleagues for their attendance. I will ask a general question first, which is on the extent to which the National Transport Authority is directive in terms of rolling out developments in transport, both in the area of the delivery of day-to-day services and in terms of capital investment projects.

Mr. Gerry Murphy

Is the question how directive we are?

Deputy Robert Dowds

Yes. Does the National Transport Authority have a policy role in respect of, for example, the delivery of day-to-day bus services in Dublin?

Mr. Gerry Murphy

We do. If one takes it at the broad level, we have defined in the contract all the services that are meant to be provided. Each change of service must come through us and we can mandate changes in service. However, taking that broad role, there are 10,000 employees across the CIE group and we have 80 people in our organisation. Consequently, we must keep our directive engagement at the level of the contract, key strategies and key areas where we wish to improve. We cannot get down to the day-to-day operation of services but we process hundreds of change service applications and mandate changes to services where we see a need.

Deputy Robert Dowds

For example, if it was discovered that there was a need for a bus service between two suburbs in Dublin that do not have a linkage at present, the National Transport Authority could direct Dublin Bus to provide a service there.

Mr. Gerry Murphy

We could direct Dublin Bus to put on a service there or we could advertise a tender for a service there. The question, however, is whether there is money to so do. While the Network Direct project was very successful in respect of better corridor management, better frequency, better use of quality bus lanes and better integration of services, both the National Transport Authority and Dublin Bus are aware that in many areas of Dublin city, the consequence of the drop-in subsidy with regard to local services or links between the orbital towns in Dublin is that we have not been able to do what we would like to do. That has been parked a little bit. We would like to do more in that area and to reconfigure those services and links.

Deputy Robert Dowds

Does the authority have knowledge or how would it acquire the knowledge as to whether there is a need for a good link between one place and another? I happen to represent Clondalkin and Lucan and there are very poor linkages between those two suburbs even though they are quite close together. At times, it means people are obliged to go towards town and to take a bus out if they wish to make that journey. To what extent is the authority on the look-out for such needs and how would it make such a decision?

Mr. Gerry Murphy

In 2013, our target is to examine the reconfiguration of some of these local and orbital services and to consider the areas of demand. We have very significant and unique tools within our organisation and have a transport model for the region that goes into incredible detail. We can look at projected passenger demand or at the census returns and have conducted a national household travel survey to pick up travel demands, other than going to work and to education. Consequently, this year we are undertaking a project to examine local and orbital services in Dublin to ascertain what reconfiguration is needed and what is being unmet. The constraint is whether we can manage to do it within the available subsidy and passenger revenues and that will be the challenge. Rather than defining the service, the challenge is to provide the service.

Deputy Robert Dowds

I will consider the other end of that point, which probably is easier to examine. I refer to existing public services of which there is very little usage. Both examples I have in mind concern rail. My impression is the local rail station in Clondalkin, for example, is barely used and if the witnesses have figures to hand in that regard, I would be interested to learn what they are. One wonders as to the value of that investment. Another example that has been brought to my attention concerns the extreme lack of usage of the Limerick to Athenry train. If the witnesses have to hand figures on that service, I would be interested to have them but anecdotally, I am told that something like five or six people use it per train journey. Moreover, I am told it is quite difficult to use the stations if one wishes to leave a car there. I recently was informed of a case in which someone tried to leave a car at Ardrahan station. The personnel there insisted on the obligation to pay for the car to be parked there and then the machine was not working. Consequently, in the end the person in question felt it was not worth it and simply drove on.

If the NTA finds that something is not being used, does it have a role in suggesting to Irish Rail or a bus company that perhaps the service should be either dropped or delivered by a cheaper method?

Mr. Gerry Murphy

We do have the power to tell them the service should be dropped. There is the matter of having the powers and what one wishes to do with public transport. The fact is that much public transport is actually loss-making.

Deputy Robert Dowds

I understand and accept that it has to be.

Mr. Gerry Murphy

That is right. Then there is the issue of accessibility to public transport in rural areas. We realise that some services are very poorly patronised; however, we are aware that if we withdrew those public transport services, the 50% of people in rural Ireland who do not have a car would be disadvantaged. We also know that 50% of adults over 18 in Dublin do not own a car. It is a socially necessary service that is being provided, in some cases, with a very high subsidy.

Deputy Robert Dowds

As I say, I absolutely accept that. However, sometimes perhaps a minibus might do the job of a train.

Mr. Gerry Murphy

Forgetting the minibus and the train, there is a question of the use of large and small buses. Let us take that point. Because we have taken over the rural transport function which operates on a small bus model in a local area, we want to look at how much that could be extended for serving isolated areas and connecting them to the bigger bus services that we are providing through the Bus Éireann contract. There is no doubt that there are many rail services that could be provided alternatively by bus, but the fact is that there is a rail asset, there is an infrastructure and there is a journey associated with rail that is different from the bus.

On the issue of cutting services and closing lines, we did that on the Rosslare-Waterford route because it was just unsustainable, and we were able to establish replacement bus services, but we are cautious about the issue of lightly used rail lines. They are lightly used and heavily subsidised, but there is also a need for people to travel there. If we can get the companies to trim costs generally and increase their markets in that way, then the more heavily used lines can subsidise the lightly used lines to a greater extent.

Deputy Robert Dowds

I entirely accept that public transport will generally operate at a loss, but what about where it is operating at a gross loss? Mr. Murphy may not have the figures on this, but I would be curious to know, for example, what it costs to run the Limerick-to-Athenry line on a yearly basis and how much money the company takes in from customers. My guess is that probably under 5% of the running costs would come from customers. Would I be correct?

Mr. Gerry Murphy

Deputy Dowds is correct. There is a significant subsidy going into that corridor.

Deputy Robert Dowds

Mr. Murphy is stating the subsidy on that route is approaching 95%.

Mr. Gerry Murphy

We are just finalising our own review of that corridor to see what can be done to better utilise it - for example, whether we can establish better bus links to it and whether we can do something about the timetabling. However, in essence, one is talking about a recently built capital asset that is being under-utilised. Passenger demand has generally gone down in the network. The numbers have not materialised as expected. There are a range of rail services that are heavily subsidised.

What we are also going to do this year is to look generally across the rail network at the strategy for providing services - that is, where should we concentrate the subsidy money - but I still come back to the point that one would be loath to cut public transport services in the State, whether they be bus or rail, because our services are under-provided across the State. We need to increase public transport services. People in rural Ireland feel they are not well served at all by public transport.

Deputy Robert Dowds

I do not want to be misunderstood. For example, I note Deputy O'Donnell made the point that he supports public transport, as do I. It is important that we have a good public transport service. I have no doubt that the Cork-to-Dublin rail line, for example, is also run at a loss, and I would in no sense advocate that it be terminated because it is serving a significant number of people. Where the scale is so great in terms of subsidy, it might be better to put the subsidy into an area where, perhaps, more use would be made of the service. I suppose it is inevitable, given that I am a Dublin Deputy, that I would focus on this, but I am aware that there is significant demand for inter-suburban bus services in Dublin, which would make some people's lives much easier. Such services would probably still run at a loss, but I doubt they would run at a 95% loss. To the extent that NTA has a policy position, I would appreciate if Mr. Murphy could direct it at where it is assisting a greater number of people.

Mr. Gerry Murphy

I understand Deputy Dowds's point.

Deputy Robert Dowds

If the NTA came back to see us in a year's time, would Mr. Murphy be able to show any developments in that regard?

Mr. Gerry Murphy

In a year's time, I expect that we will have completed our western rail corridor review, we will have completed our public transport reviews of all the other regions in the State - the rural areas outside the regions' city pockets - and we will have completed a review of local services in Dublin. Then we will have the scale of what we would like to provide and the scale of what we can provide, and we will ask what changes we can make. I definitely feel that a block of work will be done that could help me to better answer Deputy Dowds's question in a year's time.

What we have done - we have only been in existence for three years - is to work closely with Dublin Bus on the reconfiguration of Dublin Bus services. We have substantially reconfigured city services in the four cities. We have now taken over the rural transport function and we are looking at how we can utilise services better across the State to fill the gaps. There has been a lot of work done but I acknowledge there is other work to be done.

Deputy Robert Dowds

On capital investment projects, obviously, as the authority has been existence for only three years, it will not have been involved at the earlier stages of some of the light rail infrastructure planned for Dublin, most of which has been shelved because of the current economic situation. It strikes me that a great deal of money will have been wasted in those areas. Perhaps some of it is not wasted in the sense that these projects may come into play in the future. For example, to what extent does the NTA have a role in deciding which Luas-type project is prioritised in the greater Dublin area? It strikes me that certain projects are much more important than others - for example, the interconnector from Heuston Station to the DART line.

Mr. Gerry Murphy

I suppose the primary decision in all this is ultimately for the Government, but if there were one authority that was the primary adviser and recommender, it would be ours. We are supposed to strategise, analyse and assess the relative merits of the infrastructure and recommend the projects we think should progress. In that regard, there is a five-year capital programme to 2016. We know the perimeters of that. That will deliver only the Luas BXD. The key issue after the period of the capital programme - there is work ongoing at present - is where the next tranche of investment should be in the region and in the State. We are advising the Department on that. The way we do that is by carrying out an analysis of the needs, an assessment of the costs and then a cost-benefit analysis.

Deputy Robert Dowds

How much has been spent so far, for instance, on the interconnector project between Heuston Station and the DART? There is nothing on the ground yet.

Mr. Gerry Murphy

Substantial amounts of money have been spent on both the interconnector and the metro north projects. In the case of the metro north, a statutory railway order had been obtained. It is a complex process. In that case, €162 million was spent before the project was deferred and mothballed. A total of €44 million was spent on the DART underground line.

Deputy Robert Dowds

Would Mr. Murphy repeat that?

Mr. Gerry Murphy

A total of €162 million on the metro north-----

Deputy Robert Dowds

Did he say €44 million was spent on the interconnector?

Mr. Gerry Murphy

-----and €44 million on the interconnector.

Deputy Robert Dowds

What about metro west?

Mr. Gerry Murphy

The figure for metro west is €19 million.

Deputy Robert Dowds

How much has been spent on the Lucan Luas proposal?

Mr. Gerry Murphy

I do not have that information.

Deputy Robert Dowds

Approximately €200 million has been spent on projects that are a long way from delivery.

Mr. Gerry Murphy

That is correct.

Deputy Robert Dowds

I presume the previous Government made the relevant decisions in regard to progressing the projects.

Mr. Gerry Murphy

Those projects were progressed on the basis of preliminary business cases for expected economic and demographic growth and passenger demand. In the case of the DART underground and metro north, a key consideration was the ability to use the public-private partnership mechanism to spread the cost over the 20 or 25 year horizon of the projects. They were being progressed on that basis. However, as the Government has insufficient funds to pay its portion of the cost and the PPP markets are broadly closed to that scale of project, the two projects were deferred. Both projects were taken through full design and statutory order approval. I understand a challenge has been taken to the rail order for DART underground but if that had been resolved both projects would be ready to avail of all the design and preliminary environmental work done to date. Post-2016, there will be another significant capital project in the Dublin region. The question is which one it will be.

Deputy Robert Dowds

Does Mr. Murphy share my view that we should simply focus on the project that will be most productive in terms of assisting passengers to get from A to B?

Mr. Gerry Murphy

I agree. The project should be the one that has the best business case, fits within affordability parameters and delivers most to the public transport system.

Deputy Robert Dowds

From the perspective of my own constituency it appears wiser to invest in the interconnector than in metro west, even though both projects would be advantageous to the area. I presume this could be determined on a scientific basis.

Mr. Gerry Murphy

I do not disagree that the DART underground and the interconnector are more valuable public transport projects than metro west. In respect of a number of the projected light rail lines there is possibility for meeting demand through a bus based system. For example, bus rapid transit has become more popular globally. Essentially this would involve a kind of Luas on rubber tyres and the system has less need for infrastructure development in advance of providing services. We have already identified a need to look more closely at bus based options for some of the more local and orbital light rail lines. DART underground provides significant additionality to the Dublin region. It interconnects lines and allows great opportunities for commuting to the Dublin area and linking key parts of the city by rail.

Deputy Robert Dowds

If I could change direction, an allegation about the management of Bus Éireann was recently brought to my attention. It was alleged that attempts to save money were put onto the drivers even as the same level of top management was maintained. Is there any truth in that allegation? How many senior managers are employed in Bus Éireann and has the figure changed over the last five years?

Mr. Gerry Murphy

I cannot provide a figure for the number of senior managers or comment on that general view. In our interface with them on the contractual side, we recognise that Bus Éireann is quite stretched at management level. They carry a huge workload. A number of initiatives are currently underway, such as Leap Card, real time information and the reconfiguration of cities. It is my anecdotal view from meeting them that they are not over served at management level. We see the same people dealing with multiple projects and they are very stretched at management level.

Deputy Robert Dowds

I ask Mr. Murphy to provide that information in writing because it would clarify matters in terms of how management has changed and overall staffing in Bus Éireann over the last five years.

Chairman

I ask Mr. Murphy to provide a general note on it.

Mr. Gerry Murphy

I will do so.

Deputy Robert Dowds

Mr. Murphy stated that there are 23,000 taxis in Ireland. How many of these are in Dublin?

Mr. Hugh Creegan

The figure of 23,000 refers to the number of small public vehicles, including hackneys and limousines. The biggest cohort is taxis. I do not have an exact number but I believe it is in the region of 12,000.

Chairman

Perhaps we could have a breakdown by county, including the individuals or companies which have a number of licences.

Deputy Robert Dowds

There was a terrible free-for-all for taxis in the sense that we went from one extreme to another. Previously the availability of licence plates was extremely restricted but this changed to a regime in which almost anybody could get a licence plate or, as the Chairman noted, multiple plates. Is there any evidence to suggest that the number of taxis on the road in Dublin is declining? It would be useful if the numbers declined because serious problems arise in terms of taxis accessing ranks. Deputy Eoghan Murphy referred to the issue of racism, which is to some extent sparked by the economic pressures on people who are trying to earn a living from driving a taxi.

Mr. Gerry Murphy

The number of taxis has decreased significantly. The peak was in June 2009 and the number of vehicle licences has since decreased by 15%, while the number of current driver licences for taxis has decreased by 28%. The movement of people out of the industry has been significant.

Deputy Robert Dowds

That is welcome provided there are sufficient taxis on the roads. As somebody who favours public transport I agree it should be subsidised, although it should be combined with transport companies that operate as efficiently as possible so that money is not wasted. What percentage of Dublin Bus's revenue comes from subsidy? I would be satisfied with figures for its overall revenue from fares compared to overall running costs.

Ms Anne Graham

State subvention in 2011 was €73 million and total revenue was €178 million.

Deputy Robert Dowds

Does that mean the actual intake from fares was €105 million?

Mr. Gerry Murphy

Yes.

Deputy Robert Dowds

In our current circumstances the subsidy is not going to increase but how would Dublin Bus compare with the level of subsidies provided to transport companies in similarly sized cities overseas, such as Lisbon?

Ms Anne Graham

We do not have a detailed analysis, but a certain amount of work was done by Deloitte in terms of investigating different levels of subsidy. It is difficult to compare them across European cities but Dublin is generally seen as being comparatively low on the range of subsidies. Transport companies generally try to recover 50% of their costs through fare revenues but we recover approximately 65%.

Deputy Robert Dowds

I understand that the CIE group of companies are in a parlous financial state. Can the witnesses comment on that?

Mr. Gerry Murphy

Besides the operational deficit, which is decreasing, there is also a cashflow problem within the group. The issue also arises of its loan facilities. The €36 million invested in 2012 was intended to manage that issue. It is working through a cost reduction programme and I understand it will renew its loan facilities by the end of the year. With the reduction in the deficit, the voluntary severance programme and the development of new loan facilities, it will be fine going forward. All of the companies in the group have targets for reducing operational deficits. By next year the deficit for Dublin Bus should be down to €2 million and Bus Éireann may have a positive balance. However, Irish Rail will require four to five years to return to current year operational balances.

Chairman

Deputy Dowds asked about capital investment and expenditure from day one on a number of projects that are now parked. I ask for a complete list of these projects, their costs to date and, if possible, an indication of the loss to the State as a result of this expenditure. Some of the money may not be lost, such as expenditure to purchase properties which could be reused. What is the likely loss to the State in each of the projects, relative to the money spent to date? In respect of projects where the money may not be completely lost, I ask for an explanation of why this is expected to be the case. I ask that we be provided with that information in due course.

Deputy John Deasy

I was going to start with a variation of the Chairman's question. A figure of €200 million was cited for the projects that have been commenced around Dublin. How much are we spending on the rural transport system per annum?

Mr. Gerry Murphy

The rural transport initiative currently costs approximately €9 million. Expenditure has decreased this year.

Deputy John Deasy

I feel I am in some kind of rural-urban thing. We are spending €9 million on a rural transport system. We spent €200 million on an urban transport project that may never materialise. The Chairman's question is relevant. All one needs to do is take those two figures to put everything in context. I am reminded of the debate on blood alcohol limits. When a public representative from an urban area of my constituency was asked what people who lived in rural areas were going to do as a result of the reduction in the blood alcohol limit he suggested that they could take taxis. That sums up the lack of knowledge that exists about rural areas and the lack of transport links.

I am not an expert on the issue of carriages and I have not done a great deal of digging into the ins and out of it. Who is Jacobs Engineering and why did the authority select that company to carry out the analysis?

Mr. Gerry Murphy

A number of years ago we ran a procurement competition for capital advice across public transport infrastructure and Jacobs Engineering won it. It is a major multinational company with the capacity to advise on bus, rail and light rail fleets. We commissioned it to do the work as part of that framework agreement.

Deputy John Deasy

I understand that the potential requirements for bespoke storage of carriages were not outlined in detail, but surely some sort of discussion took place as to the costs arising.

Mr. Gerry Murphy

On the general issue, the report recommended against disposing of them but it alluded to disposal and suggested that material could be sold to another operator or leasing company. It stated that the resale value would be considerably constrained by the fact that the vehicles have been designed to Irish rail gauge, which is only used in Ireland, Brazil and parts of Australia. Significant modification would be required if the vehicles were to be used elsewhere in Europe and a potential buyer would need to take account of the cost. The report suggested, therefore, that it was unlikely that temporary reassignment to another European administration would be feasible in an economic sense. Any such reassignment would have to be permanent and new requirements for rolling stock would incur the cost of new procurement.

Deputy John Deasy

The potential for resale of the stock was incredibly limited because of the gauge.

Mr. Gerry Murphy

It would be necessary to take the carriages off the gauge. A buyer would incur costs in adapting them to another gauge system. The report suggested that consideration should be given to putting some of the fleet into long-term storage rather than short-term rolling storage in order to escape the maintenance and operation costs associated with moving them in and out of service until such time as their use could be justified. The cost of preparing secure storage and returning them to service would need to be considered as part of a business case. That is the current situation.

Deputy John Deasy

Based on what Mr. Murphy said, the account is incomplete and needs to be fleshed out for the committee in terms of the storage costs and the entire story of the consultants' recommendations.

Mr. Gerry Murphy

I do not disagree. I can revert to the committee with answers on whether any particular or unique storage costs arise, but the strategy for the storage cost, based on what the consultants recommended, would take more time. We would have to scope out the costs of particular facilities. I can revert with initial answers but we would also like to investigate further to find the right answer.

Deputy John Deasy

That is fair enough. With regard to heavily used lines subsidising lines that are not as heavily used, Mr. Murphy stated that people are disadvantaged when services are withdrawn. He cited the specific example of the Rosslare-Waterford line. We discovered this week that Waterford is to lose a further four train services. He clearly has a role in this regard and is probably aware that the unemployment rate in Waterford and the south-east region is touching 19%. It is the worst in the country. The unemployment rate in Waterford city is approximately 25%.

Rail services are being cut. Irish Rail claimed that the Waterford-Limerick Junction line had the lightest use in the country. I will not argue with that, but two Dublin services were also cut. The numbers are quite good on the other two services. A policy issue arises in regard to taking services from a city such as Waterford. It has an effect on the economy and the people who live there. I ask Mr. Murphy to comment on the continual reduction in services when it comes to the city of Waterford.

Mr. Gerry Murphy

I do not disagree.

Chopping a public transport service for a major conurbation like Waterford in the end completely disadvantages it. The challenge we face is that we have the short-term issue of the costs and maintaining the companies' ability to run services, and then there is the question of what we want to do for Waterford. In that regard - Ms Graham might pick up the point - we are trying to look this year at strategising on rail services, rather than short-term cuts.

Deputy John Deasy

Yes.

Ms Anne Graham

What we have been doing up to now, I suppose, is reacting to requests for changes to services from Irish Rail, particularly with regard to rail services, but also on the bus side. What we want to do this year is to look towards what we want in terms of a rail service in the immediate future, but also in the longer term, so that we do not make decisions now that will undermine what we might require in the medium term. That is the type of strategic review we want to do across all rail services. In terms of the reductions in service that have happened across the rail network recently, they have been quite limited and very carefully chosen to have the least impact. Most of the lines have suffered service losses; it is not just the Waterford line. It is in that way that we want to provide a bit more strategy in terms of what rail services we want.

Deputy John Deasy

That is fair enough.

Ms Anne Graham

We also have to match it with what funding is available.

Deputy John Deasy

There needs to be cognisance of the economic situation in a city such as Waterford. Some people might say cutting three or four rail services has an insignificant effect, but it has an effect on a city that is suffering badly in this economic climate. The NTA is the only organisation that can check Irish Rail when it cuts, as it continually does, rail services to and from Waterford city. It mentioned the possibility that the rail travel times between Dublin and Waterford would be reduced, potentially, by 18 minutes on some of the services. Is that the witnesses' understanding?

Ms Anne Graham

Correct. The timetables are altered to take that into account.

Deputy John Deasy

When can we expect that to occur?

Ms Anne Graham

The new timetables have been operating since, I believe, 20 January.

Deputy John Deasy

Fair enough. Anyhow, the witnesses will take my point with regard to the economic situation and the effect of these cuts in rail services.

The NTA's briefing made specific mention of rural transport at the end. My constituency has a very well developed rural transport system. It has worked very well and is well managed and administered, and people use it. There has been talk of a model system throughout the country whereby we integrate services in different areas. Ms Graham mentioned taking the rural transport system and integrating it with existing bus lines. There is also the potential for links with health care services. How is this model system working? What is expected to happen in the next year or so with the rural transport system?

Mr. Gerry Murphy

I will start and then Ms Graham, who works very closely with it, will pick up. There are two strands to the work that is ongoing at the moment. First of all, there was a value for money review of the rural transport programme. It was found that there were excessive administration costs and a proliferation of groups - notwithstanding the great commitment of the groups - and that these costs need to be trimmed because there are cuts going into that rural transport system each year, like everywhere else. What we are looking at is how we can rationalise the administration of the programme, keep the services and keep the local knowledge. We have made some recommendations to the Department of Transport, Tourism and Sport, which is considering them and discussing them with the Department of the Environment, Community and Local Government. The idea of aligning with local government is partly at the heart of it, with local government doing more in this area.

The second strand is to consider how we can integrate services. One may have rural transport buses and one may also have buses or minibuses providing health care attendance or hospital attendance. Ms Graham is chairing a national group on that and she might tell the Deputy the progress to date.

Ms Anne Graham

We have been asked to look at how we integrate those services. There are a number of services being provided across different Departments - school transport services, health transport services and the core rural transport services. Is there a way to integrate those in a better way which will result in an overall saving? Then there is the possibility of extending those services, because if one can accrue savings, one might be able to expand those services. Initially, we were looking at the barriers to integrating services. Now we are trying to work through those barriers to see where we can actually try out different scheduling of services. For example, there could be a school transport service early in the morning, a health-related service later in the morning and a rural-----

Deputy John Deasy

I get the concept. Where I live we have been talking about this for a long time. I am wondering about its status. We have spoken about integrating school, health care and regular transport services for years. I understood some counties were to be picked as models to begin this process. Is that the case?

Ms Anne Graham

The idea is not to pick counties as such, but to pick particular areas. We would like to look at the interface between the rural transport services and the school transport services initially. There are two separate providers and funders of those services, so there are issues about how one would combine procurement and how they would operate in a way that would actually make sense for an area.

Deputy John Deasy

Where are we?

Ms Anne Graham

We are trying to locate schools in rural areas with value in a return school transport trip, and we are getting into a lot of detail. If there is a rural school that has a school bus, the return journey from that rural school could be used as a more general kind of transport service.

Deputy John Deasy

Again, I get the concept.

Ms Anne Graham

We are working through procurement issues such as joint procurement. While it is technically feasible to this, we have to work out what the issues are from a legal and procurement point of view, but we are working through those.

Mr. Gerry Murphy

On the Deputy's point, what he will see in 2013 is some piloting of how to do that. He will not see it across the country. There will be a number of pilots to see how it is working and what the response from the market is. The question is whether we can we tap in at a low cost to additional services, because we also need to run within a pot. However, it has to run in parallel with and stay within a change programme. We will see a change programme - a rural transport programme - probably by the end of 2013, but there will only be piloting of this other aspect, which is better integration.

Deputy John Deasy

I can well imagine the kinds of issue about which Mr. Murphy is talking. I was a councillor and have been around long enough to understand the difficulties that might arise in that kind of situation. Will Waterford be part of the pilot?

Ms Anne Graham

If we can find a school - particularly one on the school transport service - that suits those criteria, yes, we will try to pilot it, certainly within the south-east regional area. I think we looked at an area around New Ross, where there might be a school that would suit.

Deputy John Deasy

That is no good to me.

Ms Anne Graham

Definitely, within the south-east regional area, there would be a pilot of that type of system.

Deputy John Deasy

In my home town of Dungarvan - it just so happens that the lightening-rod issues are where I live - €7 million is being invested in smarter travel over five years. It is working really well. As petrol gets more expensive, people have taken to the entire programme. One issue has arisen, although it is not a huge issue. Of that €7 million, approximately €1 million is allocated to marketing. Some people have asked whether we need to spend that much on the indoctrination of people into the system. There is a view that we do not and that the town council would probably do that. So much administration is not required. We would be better off spending a percentage of that money on the infrastructure to be provided.

While that is a view, generally, there is nothing but positive vibes from this.

Mr. Gerry Murphy

I hate to say this, but it is one of the few programmes we do not manage. It is managed directly by the Department. We manage the smarter travel workplaces programme-----

Deputy John Deasy

The specifics.

Mr. Gerry Murphy

For large businesses.

Deputy John Deasy

My presumption.

Mr. Gerry Murphy

We manage a programme for schools also. These programmes are enormously effective at very little cost. Because of the level of buy-in by people who change their travel patterns, carpool, cycle or walk, they are enormously effective. I do not want to comment on the Dungarvan scheme because it is a direct departmental programme.

Chairman

Representatives of the Department will be here in two weeks time.

Deputy John Deasy

My main point concerns the economic situation in which a city such as Waterford finds itself and the impact of cutting rail services. I do not believe Irish Rail takes into account the overall effect this has on a city suffering a 25% unemployment rate. It is very significant. We have seen an alarming number of jobs and services leave the city in the past ten years and this needs to be taken into account by the NTA.

Mr. Gerry Murphy

I am pleased to say we have a grants programme for traffic management in Waterford. It involves improvement of the quays and the provision of real-time information. We have a structured five year plan with the local authorities for our investment. I agree with the Deputy that the provision of rail services is a larger issue.

Deputy John Deasy

It is one on which the NTA needs to keep an eye because it is of real concern. When I pick up the local newspapers and read about more train services being cut and the justification for it, I might think it is fine in some cases, but it has a long-term effect that must be taken into consideration.

Chairman

Mr. Murphy will give us a comprehensive note on the 21 unused carriages. Will he ensure we get the information right from the beginning in the case of Jacobs Engineering and in terms of the procurement process to indicate how we arrived at this position? The particular points raised by members were on the operational costs of the carriages and, in particular, the cost of maintenance. The story needs to be clarified. I have a picture in my head of a train setting out from Kilkenny and someone deciding to add two of the carriages. I do not think that is what Mr. Murphy means, but will he explain what is meant by it and whether they can be leased to other operators? He has mentioned the gauge, but who has examined the options?

Will Mr. Murphy let us have a note on the sum of €91.58 million to be drawn down by local authorities and delivery agencies with reference to note No. 20 on the financial commitments involved? I do not want to pursue the matter now because it is late in the day, but if the money is available for local authorities and other delivery agencies, what is it for? How does one apply for it and who has applied for it? I will come back to Mr. Murphy in writing on the private bus operators, about whom I have some questions.

I propose to members that we do not sign off on the 2011 annual accounts of the authority until such time as we meet the officials of the Department in two weeks time. We can tie it all together when we meet them.

The witnesses withdrew.

The committee adjourned at 1.35 p.m. until 10 a.m. on Thursday, 31 January 2013.