That a supplementary sum not exceeding £1,000,000 be granted to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1957, for certain Transport Services; for Grants for Harbours; for the Salaries and Expenses of the Marine Service (Merchant Shipping Acts, 1894 to 1952, and the Foreshore Act, 1933 (No. 12 of 1933); for certain Protective Equipment for Ships; for certain payments in respect of Compensation, including the cost of medical treatment (No. 19 of 1946); and for the Coast Life Saving Service.
The purpose of this Supplementary Estimate is to provide C.I.E. with funds to enable them to meet their capital requirements up to November next.
The House will recall that provision was made in the Transport Act, 1955, to increase the long-term borrowing powers of C.I.E. to enable them to finance for the next few years capital expenditure on the dieselisation and reorganisation programme approved by the former Government in July, 1953, at an estimated cost of over £10,500,000. Delivery of substantial orders for diesel locomotives and other equipment placed under the programme is now being made and it is necessary that C.I.E. should have the necessary capital moneys available to meet contractual commitments. Conditions in recent months have not been propitious for a stock issue, nor is the summer period the best time for a capital flotation. In these circumstances, it is proposed that C.I.E. should postpone the stock issue until such time as the conditions are more favourable. On present prospects, it would seem that a stock issue is unlikely during the current financial year. Such an issue could obviously not take place while transport policy was under review.
It is proposed, therefore, to provide for an advance of £1,000,000 for C.I.E. under this Supplementary Estimate. This sum, together with anticipated revenue earnings during the summer period, will be sufficient to finance such payments as must be met on foot of the capital programme and necessary renewals and replacements over the next four months or so. The advance will be repayable eventually out of the proceeds of a stock issue. This Supplementary Estimate is, therefore, an interim measure to ensure that there will be no breakdown in the public transport system through the inability of C.I.E. to meet their obligations.
In my reply to the debate on the Estimates in June, I referred to the deterioration in working results experienced by C.I.E. for the year ended 31st March, 1956. With their high employment content and heavy fuel charges, railways are particularly vulnerable to increasing costs. C.I.E. are under a statutory obligation to balance their budget. There is, however, a point beyond which transport charges cannot go without incurring a loss of traffic, largely negativing the results of increased charges. It looks as if this point may have been reached. As the House knows, there has been a phenomenal expansion of privately-owned road transport in recent years. This increased competition, taken in conjunction with the increases in the costs of railway operation, has all contributed towards the unfortunate reversal in the progress of C.I.E. towards solvency. It has been suggested to me that some large concerns are at present considering the economics of providing their own transport. Such a development would be unfortunate just at a time when new dieselisation equipment is being delivered and when the whole transport position is about to be examined by the committee to which I will refer later. I would urge these undertakings to stay their hand, for the time being.
I mentioned in my reply to the debate on the Estimates that I had received a detailed memorandum from the chairman of C.I.E. on the present position of the undertaking. I said that it was a grim report. It is particularly grim in its conclusion that due to the expansion of privately-owned transport, there is little or no possibility of putting the railways on a self-supporting basis and that only Government action can prevent a collapse of public transport.
Some may not accept this conclusion and may still be of the view that, with reorganisation and modernisation, C.I.E. can be put on a paying footing. This was the attitude of the previous Government and, until recent developments, of the present Government as well. When the proposals for dieselisation and modernisation were drawn up by C.I.E. in 1953, it was estimated that the undertaking would be in a position to pay its way on completion of the programme. These estimates were prepared on the basis that improved services, following dieselisation and modernisation, would have enabled C.I.E. to retain their existing volume of traffic and possibly to increase it.
These estimates were based on the hope that a reasonable degree of stability in costs had been reached and that further increases in charges would not be necessary while the undertaking was being rehabilitated. I understand that dieselisation, in so far as it has been implemented, has fully realised the economies which were originally claimed for it. It yet remains to be seen to what extent C.I.E. are now likely to fall short of paying their way in the new circumstances. If the conclusion that the C.I.E. transport undertaking cannot pay its way on the present basis is accepted, the Government are faced with one or other of three broad courses. None of these courses would be palatable to the community at large, or to the particular interests they more immediately represent. The three courses open, as I see them, are:— (i) the substantial pruning of the rail system; (ii) the subsidisation of railways by the Exchequer on a permanent basis; and (iii) the introduction of restrictions on private transport.
None of these courses could be lightly embarked upon by any Government. Issues of importance to the public interest are involved. The problem is not one for a hasty decision and I am not prepared to commit myself to any future transport policy without the fullest exploration of the problem first. As the House is aware, I have already set up a committee to carry out a rapid appraisal of the position with the following terms of reference:—
"To inquire into and review the developments in internal transport in recent years as they affect public transport undertakings; to consider what measures are necessary, in the light of those developments, to ensure the provision of the transport requirements of the country on a basis which will best serve the public interests; and to report thereon to the Minister for Industry and Commerce on or before 1st November, 1956."
As soon as the investigation is completed and the report available, I can assure Deputies that the Government will lose no time in considering whether any changes are necessary in transport policy. Deputies will be afforded ample opportunity of considering the position. I may say that we have been extremely fortunate in securing men of outstanding ability, and all prominent in their specialised fields, who are prepared to give of their valuable time in carrying out the investigation.
As I have said, the report of this investigation must be awaited before considering any fundamental change in the dieselisation and reorganisation programme at present in course of implementation. Meanwhile, there are unavoidable commitments to be met and the continuance of essential services must be assured. It is in these circumstances that I ask the House to approve of this Supplementary Estimate.