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Dáil Éireann debate -
Wednesday, 27 Nov 1957

Vol. 164 No. 7

Committee on Finance. - Supplementary Estimate. Vote 51—Transport and Marine Services.

I move:—

That a supplementary sum not exceeding £1,800,000 be granted to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1958, 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.

Deputies will be aware that the main Estimate for the Department of Industry and Commerce made provision for C.I.E. to the extent of £2,846,300. Of that sum £793,300 was voted to repay to the Central Fund advances made to meet interest on transport stock and £803,000 was voted to repay to the Central Fund advances made last year in discharge of guaranteed bank borrowings. The amount provided in the Estimate to meet the cash needs of C.I.E. was £1,250,000.

As I stated during the debate upon the main Estimate, that sum of £1,250,000 was calculated to be sufficient to meet the cash needs of C.I.E. until the autumn of this year. The Estimate was apparently prepared by the previous Government on the assumption that action on the Report of the Committee on Internal Transport, which had not then been received, could nevertheless be so effectively taken that no more money would be needed by C.I.E. this year. I find it hard to credit that the previous Minister for Finance seriously believed in that possibility. I know that the previous Minister for Industry and Commerce did not. The real explanation is that the requirements of C.I.E. were considerably underestimated. Deputies therefore will not be surprised at the appearance of a Supplementary Estimate although they may be surprised and perturbed by the amount of it.

It is now calculated that the total additional cash needs, over and above the £1,250,000 already voted to C.I.E. to the end of the year, are £2,376,000. £2,000,000 of that requirement is now being sought in this Supplementary Estimate. The balance of £376,000 will be met by temporary borrowings and carried over to next year.

C.I.E. losses are mounting every year. Their losses, after counting all charges, in 1954-55 amounted to £867,000; for 1955-56 they were £1,625,000; for 1956-57 they were £1,723,000, and it is now estimated that C.I.E. losses this year will be about £2,000,000. If the operating expenditure of C.I.E. should be further increased—and we cannot ignore that possibility—then the losses in this year would be considerably more and next year they would be greater still if nothing is done about it.

The railway undertaking of C.I.E. continues to lose traffic. Total receipts from rail freight in the last financial year, 1956-57, declined by £137,000 on the previous year notwithstanding— and this is the important fact which Deputies must keep in mind—a 10 per cent. increase in rates brought into operation last year. Rail passenger receipts increased by £105,000, due to the higher fares applied, but that increase in total receipts conceals a 7 per cent. decline in the number of passengers carried.

It is clear from the experience of last year and this year that C.I.E.'s railway rates and fares are at saturation point if indeed they are not already beyond it. Further increases in these fares would not produce any further revenue. Indeed further increases could well operate to reduce revenue by causing a severe loss of traffic. If C.I.E. is faced with higher operating costs there would be no way of meeting those higher costs except by cutting down the scale of its operations.

These facts and figures give the measure of our present transport problem. From the day it was set up as a public owned undertaking by an Act of the Dáil in 1950 until the end of this financial year, C.I.E.'s losses will have totalled over £12,500,000 and the rate of loss is increasing. I stated, when speaking on this topic during the debate upon the main Estimate earlier in the year, that it was obvious important decisions affecting transport policy could no longer be postponed. The heavy and mounting losses from railway operations by C.I.E. were proving that there was a need for a re-examination of policy and for decisions about future policy.

It is to be recognised that the subsequent developments affecting the G.N.R., the decision of the Belfast authorities to terminate the agreement for the joint operation of the G.N.R., would have forced a re-examination of transport policy in any event. Deputies are aware, however, that in April of this year there was published the Report of the Committee on Internal Transport—the Beddy Committee as it is usually called from the name of its chairman. That report aroused widespread interest. Comments upon the recommendations contained in it were received from many national organisations which were exceedingly helpful.

The national bodies who submitted reasoned representations were: The Provisional United Trade Union Organisation, The Save-Our Railways Association of Cork, the Public Transport Development Association, the National Executive of the Irish Live-stock Trade, An Bord Iascaigh Mhara, the National Fish Industry Development Association, Bord Fáilte Éireann, the Irish Tourist Association and the Licensed Road Transport Association. In addition, a very large number of submissions, 66 in all, were received from local councils, local development committees, private firms and individuals.

All of these submissions have been very carefully studied. Most of them, I think all of them, contained protests against any proposals to curtail the railway system or against the closing of a particular section of line or a particular station. But I regret to say that very few, if any, gave any assurance of local effort to expand railway traffic either generally or on the particular line or through the particular station to which the representations referred.

I indicated on the occasion of the introduction of the main Estimate that I would make a statement before the end of the year on the decisions at which the Government had arrived. This Supplementary Estimate has been introduced now to make that statement possible. In considering what could be done about the situation the Government had, of course, in mind its stated aims in so far as transport policy was concerned. The Government have declared that its purpose is to maintain the publicly-owned transport undertaking for freight and passengers. The Government consider that both social and economic considerations require a decision against leaving the general availability of public transport facilities for freight and passengers to a number of private operators.

It considers also that if one Statewide service is to be accepted as the more efficient method of providing transport facilities, it is impracticable to revert to private ownership even if desirable. The question which is in the forefront of all examinations of transport policy is, however, the part that railways can play in public transport facilities. The Government accept —and I think all Deputies and all local councils and committees who have been making representations must accept— that a decision to maintain railways requires justification in view of the very heavy losses involved in their maintenance. I mean by that that those who argue for the retention of the railways must accept the burden of proving that that is the best policy. Furthermore, it must be emphasised that no decision to maintain the railways can be unqualified. We can deal now only with the circumstances that we see or can reasonably anticipate in the future. A decision affecting the railways cannot, therefore, be binding in the unknown conditions which may prevail ten or 15 years ahead. For myself, Deputies will be aware that I have always contended—and the Government agree—that the arguments in favour of the retention of the railways are strong if the losses which have been experienced in the operation of the railways could be minimised or eliminated.

I believe that but for these losses and the public attention which they obtain, the railways would be recognised as the most efficient and the cheapest method of handling traffic; that it would be accepted that from the point of view of the national economy their retention was desirable. It is, in my view, unfortunate that the advantages of maintaining the railways should be obscured by the deplorable financial results which have attended their operation. I mean by that, that, in my view, the problem we have to deal with in this connection is financial rather than technical. The view which is sometimes expressed that railways are obsolete is, so far as I know, not accepted in any other country in the world.

There is also another aspect of the matter which I think requires to be stressed. The capital expenditure in which the country would be involved if the railways were scrapped would be very considerable. The total carrying capacity of C.I.E.'s rolling stock— its passenger carriages and freight wagons—is fully utilised at some period every year. There are occasions, perhaps lasting only for a day, perhaps lasting for longer, when in order to meet the traffic needs of the country all C.I.E.'s passenger carriages are in use. There are other occasions when all their freight-carrying wagons are in use. If, therefore, we have in mind scrapping the railways and substituting road services with equivalent carrying capacity, then we have to contemplate a capital outlay on road vehicle equipment amounting to about £12,000,000.

That is C.I.E.'s estimate. That estimate has been questioned by the Beddy Committee. They did not question the accuracy of the calculation but they questioned the need to provide on the roads carrying capacity equivalent to that now available on the railways. It is that aspect of the matter which must necessarily concern us and indeed the Committee on Internal Transport disclosed in their comments on it that they also entertained considerable anxieties about it.

So far as freight is concerned there is a number of views from different commercial interests as to the practicability of maintaining business at its present volume without the convenience of railway transport. In that connection I should, however, draw particular attention to the representations received from the National Executive of the Irish Live-stock Trade who said that, in their view, the clearance of large fairs even at the present time caused some concern, but C.I.E. was always most careful to overestimate rather than underestimate the number of wagons necessary to clear every fair. They went on to say that it was difficult to see how the big provincial fairs could be operated by road services only.

It is, perhaps, mainly in regard to passenger traffic, however, that the problem of handling peak loads appears to be almost insuperable without the facility of railway operation. The view has been strongly argued that it would be impossible to provide road services capable of meeting the peak requirements of the tourist trade and the occasional peaks of special excursions and pilgrimages. An Bord Fáilte said in their representations that having regard to the vital importance of tourist earnings in the national economy and the obligations of the board to promote expansion they would be greatly perturbed by any proposal involving abandonment of the railways. The Irish Tourist Association said that, in their view, visitors would be reluctant to come here for holidays if the country was denuded of its railway services even to the extent suggested by the Transport Committee. I think we are all aware that any failure to meet peak requirements for passenger traffic even on one single day always provokes large public outcry.

We must also have regard to the number of people who are employed in railway operation. On the C.I.E. and G.N.R. services within the area of this State 14,000 workers are employed on the railways. It has been argued that the substitution of road services for rail services would not mean any reduction in the total employment. I do not believe that argument would stand up to critical examination, first, because of the fact that the workers employed in railway operation cannot be regarded as fully occupied; secondly, because the kernel of our problem is the existence here of an excess of transport facilities. But even if the argument could be shown to be sound—the contention that the substitution of road services for rail services would mean no reduction in total employment—nevertheless it is obvious that there would be very considerable dislocation with disturbing social consequences.

There is another practical business consideration which I want to put before the Dáil. The operating cost of substituted road services would be higher. C.I.E., in their submission to the Committee on Internal Transport, estimated that it would cost £11,000,000 per year to operate road services with a carrying capacity equivalent to that of the existing rail services and when we consider that figure of £11,000,000 as the cost of operating the substituted road services we have to take into account that the total cost of operating railway services is £8,000,000.

For these reasons the Government have reached the decision that we must try to preserve railways as an integral part of the national transport system. The aim of the policy measures upon which we have now decided, or other measures which may be approved in the future, will be to make effective that decision to maintain railways as an integral part of the national transport system by reducing the gap between the revenue and the cost of railway operation and thereby to make the whole of the national transport undertaking capable of paying its way.

There is a relevant consideration which influenced the Government's decision and which should, I think, influence the decision of the Dáil. That is that the rolling stock and permanent way of the C.I.E. system are now in very good condition. The 1953 re-equipment programme is completed or all but completed. The railway organisation of C.I.E. is well equipped by any standards and should, therefore, be capable, under suitable conditions, of achieving the economical operation.

The question, therefore, to which the Government directed its main attention was whether rail losses could be eliminated and that, I suggest to the Dáil, is the key question with which it also must concern itself. There are important factors which Deputies should keep in mind in that connection. The first is that the railways are finding it impossible to attract new traffic at their present rates of charge. The C.I.E. board say that if they could increase the traffic available to the railways by 30 per cent. the whole financial problem would be ended and the aim of the Government achieved.

It is clear, however, that, without some very considerable changes, that aim is unlikely to be realised. Wages are the predominant factor in operating costs. Fifty-six per cent. of the total receipts from railway operation is paid out in wages in the case of C.I.E. and in the case of the G.N.R. the percentage is even higher. The C.I.E. board contended in their submission to the Transport Committee and in their representations to me that the rail services now operated could be maintained without any losses in efficiency with 30 per cent. fewer workers employed on their operation.

I have already expressed the view that this financial problem of C.I.E. railways, the closing of this gap between their revenue and their operation costs, cannot be solved by any increase in the cost of rail services— by any further raising of rail rates or charges. The experience of 1956 shows that these charges are already too high. The full significance of what happened in 1956 should be realised. These charges followed on the additional cost to C.I.E. of railway operations consequent upon the 1955 round of wage increases. C.I.E. aimed to offset the higher wage cost by increasing their rates and fares. Instead of getting more money they got less money. All the indications are that in the process of offsetting the rising costs by higher charges we have reached the end of the road.

There is another aspect of this financial problem that I should, perhaps, deal with now. There is, I know, a popular belief that the financial difficulties of C.I.E. are due mainly or entirely to the continued operation of branch lines. All the information available to me would make it quite clear that the elimination of branch line operations would not make any appreciable difference to C.I.E.'s financial problem. The C.I.E. board tell me that there are 22 branch, link and secondary lines and that all these branch, link and secondary lines between them lose £100,000 per year. That loss on these lines has to be related to the overall loss of £2,000,000 on the operation of the whole system. Against that loss of £100,000 per year on branch line operation, the board claim that these branch lines contribute traffic to the system worth over £800,000 per year.

It is true that substituted road services could probably keep that contributory traffic but only at a higher operating cost. In saying this I do not want to be taken as giving all the branch lines of the C.I.E. system a reprieve. Some of them, I think, have no economic justification whatever. The C.I.E. board told me that they were proposing this time last year to institute proceedings to close down a number of branch lines but held their hand when the Committee of Inquiry into Internal Transport was set up.

There are some other considerations bearing upon transport policy to which, I think, I should direct attention before going on to deal with the recommendations in the report of the Beddy Committee and the decisions which the Government have taken on these recommendations. The first is that this country, in the present state of its economic development, cannot afford to be handicapped by an inefficient or unduly costly transport system. The consequences of trying to maintain an inefficient or unduly costly system may not be immediately apparent. We may not be able to pinpoint the advantages we are losing, such as the numerous employment opportunities that would open up for our people if that handicap could be taken away. To try to preserve an inefficient and costly transport system for the sake of the employment which it gives would be a very shortsighted policy. It would operate to deprive far more people of the prospect of employment than the number of jobs it would preserve.

The House is aware—this Supplementary Estimate brings it very forcibly to their notice—that existing losses from the operation of the C.I.E. railways are met from taxation and that taxation imposes burdens upon other economic activities and restricts their growth and employment. The losses on the C.I.E. railways and the resulting tax burdens are helping to produce amongst important sections of our people what I could describe as an anti-railway mentality—an outlook which could very easily build up into a demand to end the railways.

That significant development of recent years is something which all concerned, both management and workers, would be well advised to take heed of. If we cannot, by our joint efforts—by making such legislative and administrative changes as appear to be desirable—bring down the losses on railway operation, then it is certain that the railways cannot be preserved for any length of time. It was in the light of all these facts and considerations, as well as of the recommendations in the report of the Beddy Committee, that the Government took its decisions.

I should say a few words about the committee. It was composed of people who have established reputations for efficiency, competence and sound judgment in the particular spheres in which they occupy themselves. It is true that none of them had any previous experience in the operation of internal surface transport. The committee were set up with what I have already described as the impossible assignment of reporting within three months. They were not able to do so. They reported in eight months and, even then, they indicated in their report that they had not got time to carry out many of the inquiries which they thought to be desirable or to seek information which they thought would be helpful.

I want to pay a tribute to the work done by the members of that committee. They gave their time and their energy to the committee and to the preparation of its report, without stint. I think it is true to say that, notwithstanding the limited time available to them, they produced a very comprehensive and informative report. I would describe it as the best of the very many reports upon our transport problem which have appeared in the lifetime of this State. Nevertheless, I think it is only right to say that the report has been criticised, and severely criticised, by many of the people who commented on it. It was criticised by the C.I.E. Board both in respect of its recommendations and in respect of its interpretation of the information supplied to it. It was criticised by the executive of the Provisional United Trade Union Organisation and, indeed, by many of the national and local organisations which sent submissions to me.

It was alleged in these criticisms that some very important considerations were left out of account by the committee and that, as I said, the wrong interpretation was put upon many of the facts brought to their notice. Nevertheless, the Government have decided that, in the main, the recommendations in the report are soundly based, and, with some important modifications which I will outline, should be implemented. I want, straightway, to interpret that decision so as to avoid a misunderstanding of it. It is not to be taken as implying acceptance of the specific recommendations in the report relating to the reduction of the mileage of line or the number of stations and certainly not as accepting the pattern of the future railway system of C.I.E. which is indicated in the map published on page 186 of the report. It is that part of the committee's report which was, perhaps, most strongly criticised by the C.I.E. Board as having been based upon insufficient data of operating experience and lack of appreciation of the value of contributory traffic.

I think the committee's recommendations in that regard have generally been misunderstood. They had not in mind making the attempt to specify the sections of line or the stations which should be closed down. They gave their views in that regard by way of illustration only and would, I think, agree with the view that the actual implementation of any such policy could only be undertaken by those who had day-to-day administrative responsibility and access to all the relevant facts.

It may be that in the course of time, some picture of the C.I.E. rail system will eventually emerge which will have some resemblance to the map published in the report, but I feel that nobody is at this time equipped to dogmatise on that point. Experience in the operation of these lines with the new and more economical equipment now available is only now being gained. Consequently, it is too soon to assume that all the information that should inspire decisions is available.

The Government's view is that the responsibility for taking decisions on the reduction of railway services, on the closing of particular sections of line or on the shutting-down of stations, must rest upon the board of C.I.E. It is proposed, however, to give the board a statutory direction in a new Bill which I shall be submitting to the Dáil early next year—a direction which will be subject to its existing statutory obligation to operate the whole of the undertaking entrusted to it without loss, a direction to keep open railway lines and railway stations and to maintain railway services unless they are satisfied that there is no prospect of economical operation within reasonable time. Subject to that statutory obligation, the board will be empowered to close down any line or any station or to withdraw any service for which they consider there is no future on their own decision and without having to seek the prior approval of the Transport Tribunal.

The board, because of the statutory direction which it is proposed to give them, will be predisposed to maintain railways but they will have, nonetheless, this general statutory compulsion to avoid losses. What, therefore, we are saying in effect to the merchants and all the towns which may be affected by any decision taken in future by the board and to all the local development committees and local councils which have made representations on this matter is that the lines and the stations in which they are interested will be kept open if there is sufficient business generated at them to justify it or if there is any reasonable prospect that sufficient business will ever be generated to justify their retention.

In a sense, therefore, it will be a matter for each local community to decide for itself whether it wants to keep in operation the railway line that serves it. We are aware that many traders in the country want the railway there as a sort of standby service to be used by them if their lorry breaks down or if they have a temporary addition to their business which they cannot handle with their own organisation. Well, we cannot keep a railway going on that basis. The only prospect of preserving many sections of the line and keeping open many stations is that there should be created in those areas the prospect of sufficient business to justify the C.I.E. Board taking the decision to maintain them.

The Government recognise that the fulfilment of this policy which I am outlining depends almost entirely upon the quality and the character of the C.I.E. Board. The committee, as Deputies are aware, made recommendations for the reconstitution of the board. These recommendations are still under consideration and the Government has not yet taken decisions on them. It is obvious that a strong and competent board is essential. We recognise that the reconstruction of the board would probably be unavoidable when the G.N.R. terminates and the amalgamation of the section of the G.N.R. in our area with C.I.E. is being effected. Whatever decision upon the character of the board, having regard to the committee's recommendations, which the Government may take will be expressed in the legislation which I foreshadow.

So that C.I.E. will have no compulsion to maintain any line or any station which can never produce enough business to justify it, it is proposed to relieve C.I.E. of the present statutory obligation to provide a substitute road service whenever they close down a line or withdraw a service or close a station. That decision to relieve C.I.E. of that existing statutory obligation involves, however, the further decision to give licences to private operators or to extend the existing licences held by private operators to provide a service for freight or for passengers wherever C.I.E. decides not to provide one.

The committee reported that C.I.E. is gravely handicapped in its efforts to expand traffic by the retention of what are called the common carrier obligation and other obligations which are expressed in a number of very old Acts, all of which had their origin in circumstances which no longer exist. It is proposed to relieve C.I.E. of these obligations entirely. C.I.E. will be put thereby in a position to pursue an aggressive commercial and rates policy. It will have under the new legislation a general obligation to meet public transport needs in a fair and satisfactory manner but no other obligation.

It may be decided to have a system of appeal—probably the Transport Tribunal could well be preserved for this purpose—to decide upon allegations of undue discrimination. I think, however, that I should make it clear that it is proposed to give C.I.E. the right to discriminate, the right, for example, to quote one merchant a lower rate for the carrying of his goods on the basis of getting the whole of his trade, than they quote another merchant for the carriage of the same goods if that merchant was prepared to give the C.I.E. only the fag ends of his trade. That commercial adaptability will, it is believed, give C.I.E. the opportunity of winning back some of the traffic which the rigidity of its existing obligations caused it to lose.

The capital liability of C.I.E. will be reduced by transferring to the Exchequer the interest and repayment obligations in respect of £11.6 million of transport stock and by remitting its obligation to pay interest on advances made to it to meet transport stock interest up to March, 1958. I have already mentioned that C.I.E., since its establishment in its present form in 1950, has lost £12,500,000. What in effect that decision means is that its losses are being wiped out and will no longer be carried as a capital liability on the undertaking.

I should, perhaps, emphasise that the position of the stockholders is not affected in any way by that decision. Everybody, I think, realises that their security for the payment of their interest and the ultimate repayment of the capital was the State guarantee attaching to the stock.

It is, of course, recognised by the Government that, notwithstanding that reduction in capital liability and the other changes that I have mentioned, C.I.E. could not quickly adapt itself to methods of working which would eliminate losses and thereby eliminate the need for subsidy. The Government have decided, therefore, to provide a subsidy by way of a fixed annual sum given as a grant-in-aid for a period of five years. C.I.E. will be expected to work within the limits of what it can earn, the limits of its own revenue, plus that subsidy during that period and thereafter to achieve a position which will enable it to carry on without subsidy.

The amount of subsidy required has not yet been determined. It is obvious that a very detailed examination of the position of the undertaking and its future financial prospects will be needed and there will necessarily have to be consultation with the board following the announcement of that decision. That decision does not imply, either, that the Government have any expectation that C.I.E.'s railway losses can be entirely eliminated in a few years. Indeed, any such conclusion would be entirely unrealistic. There are very few railway undertakings in the world making profits or even breaking level but the obligation on C.I.E. will be to put the whole undertaking at least on a break-level basis and that must involve a very substantial reduction of losses on railway operations.

The Government gave very full consideration to the alternative proposal put forward by the C.I.E. Board. C.I.E.'s proposal for solving this problem of railway losses was to impose such restrictions upon private freight road transport as would force back on to the railways the necessary additional volume of traffic. That proposal was considered by the committee and the observations of the committee on it are contained in their report. The Government accept the view of the committee regarding these proposals.

It is our opinion that whatever temporary advantage further and drastic restrictions upon private road freight operations might bring to C.I.E., these restrictions would not provide any permanent solution of C.I.E.'s problem, and we are convinced that such a decision would in time build up pressure of public opinion for the termination of the railways altogether. Nevertheless, it is essential, and the Government accepts that it is essential, that illegal haulage for hire should be eliminated. We are all, I think, aware of the extent to which the aims of existing road transport legislation are being defeated by the practice of illegal haulage. We believe that that can mainly be eliminated by administrative measures which are under consideration. However, we are accepting the recommendation of the committee for minimum fines and for the non-application of the Probation of Offenders Act in respect of second and subsequent convictions.

In the event of the agreement relating to the G.N.R. being terminated—and as the House is aware, we have been told that it is the intention in Belfast to terminate it—then the parts of the Great Northern system within this State will be amalgamated with C.I.E. It is not necessary at this stage to elaborate upon that aspect of our problem. It is obvious that very many problems of detail will arise in bringing about that amalgamation, but there are already joint working parties set up to deal with these details. They have indeed been working now for some months so that most of the problems have been isolated and action towards dealing with them is in progress.

I want now to deal with the position of railway workers. The House is aware that under existing legislation relating to C.I.E. there is a right to compensation given to every worker who loses his employment or whose conditions of employment are worsened by reason of the closing down of railway lines, the withdrawal of services or because of the dieselisation programme. It was never expected that these provisions would be called into play to deal with any general reorganisation of the C.I.E. system. In the case of the dieselisation programme, the insertion of compensation provisions was largely an assurance to railway workers, because no redundancy was anticipated, and I do not think that in fact any redundancy arose.

The Government have decided that the proposals for legislation which will be produced will provide for compensation based upon these existing statutory scales but subject to abatement where a displaced worker finds full-time employment either with a Government Department, with a local authority or with a State-sponsored body. It will provide also that the compensation will continue, where it takes the form of a pension, until the worker reaches 65 years and make the necessary arrangements to ensure that a worker receiving a compensation pension will remain in credit under the pension scheme and qualify at 65 to receive the full retirement pension.

I mentioned here during our discussion last week that the compensation provisions for the G.N.R. workers employed in railway operation are far less generous and far more restrictive in their scope than in the case of C.I.E. The G.N.R. Act of 1932 was, as the House will remember, an agreed Act. Legislation in identical terms was passed simultaneously here and in Belfast. Under that Act, only workers who were directly employed on the terminated service have a right to compensation. Legislation which we will introduce will make provision applying the C.I.E. compensation provisions to all G.N.R. workers transferred to C.I.E. employment.

In the event of a general reorganisation it is possible that the cost of these compensation measures will prove very considerable. The Committee on Internal Transport estimated that the full implementation of their proposals would involve compensation payments amounting in the aggregate to about £8,500,000, starting at around £500,000 per year and continuing on a somewhat diminishing scale thereafter. The committee recommended that in order to make funds available to pay that compensation, there should be a levy charged upon existing motor vehicle duties. The arguments which they advanced in support of that proposal for a levy on motor vehicle duties are set out in the report.

The Government have, however, rejected that proposal. We consider it to be objectionable on very many grounds, but we recognise that C.I.E. revenues cannot be burdened with the cost of compensation. They are not capable of supporting it, and to give workers a right to compensation against an employer who has not money to pay it would be an unjustifiable procedure. We have decided, therefore, that there should be set up a special fund from which compensation will be paid, and which will be financed by annual contributions from the Exchequer.

What is to be the position of workers who lose their employment, not because of any decision to close a line, withdraw a service or because of the dieselisation programme, but merely because the volume of business available to the C.I.E. railway system continues to fall? The existing legislation provides for compensation for a worker rendered redundant through the withdrawal of a service or because of the deiselisation programme. I have been trying to emphasise that the real problem confronting us, the real kernel of our transport crisis, is the continuing decline in C.I.E. revenue because of the continuing decline in the volume of traffic available to it. The aim of policy must be to make possible the recovery of that traffic by the reduction of freight charges. I have mentioned already that the C.I.E. Board estimate that 30 per cent. of the workers employed on the operation of the railways in its system are surplus to actual requirements.

I have emphasised my view that part of the problem of railway rehabilitation is how to reduce the present high level of costs. This is a problem which I should like trade unions catering for railway workers to consider. It is my view, and I have expressed it before on many occasions, that the whole atmosphere surrounding railway employment would be improved and a feeling of security of livelihood given to railway workers if this problem could be solved. I therefore believe that it is in the interests of the workers, and particularly those who advise them, such as the trade union leaders, to consider how it can be solved. I appreciate that the scheme of compensating workers who lose their employment on a scale calculated in relation to the workers' length of service might involve cutting across the last-in first-out rule which is embodied in existing agreements with trade unions.

The rule to which I have just referred means, in effect, that the workers with the highest compensation entitlement are retained when redundancy arises and that the workers with the lowest compensation entitlement are allowed to go. I do not know whether consideration of this matter in present circumstances might complicate our examination of the main problem. Within the general scheme of reorganisation covering the existing working rules imposed by the trade unions—a scheme of reorganisation designed to contribute to the reduction of unnecessary cost—the Government would consider an extension of the scope of these compensation arrangements or the introduction of alternative compensation provisions in order to facilitate desirable changes.

What I am suggesting is something in the nature of a package deal which would facilitate the improvement of the economics of railway operation and at the same time give security to railway workers whose employment is obviously threatened by the continuing decline in railway traffic and the eventual threat of the disappearance of the railways altogether. I invite the unions catering for railway workers to consider that suggestion and discuss it with the C.I.E. Board. If they have any proposals to make arising out of it I shall, of course, be available at any time to meet them and receive the proposals.

I find it difficult to say anything precise regarding the further capital outlay by C.I.E. upon the improvement of its system, upon the improvement of locomotives, rolling stock and other items. It is clear that the board's capital programme will require to be reassessed in the light of proposed reorganisation. If the need should arise for C.I.E. to dispose of any surplus rolling stock, regard will be had to the requirements of the G.N.R. system when that is absorbed by C.I.E.

Deputies will appreciate that many of the recommendations of the committee do not fall to be implemented by legislation. There are recommendations bearing upon the administration of the undertaking which will be brought to the attention of the board who will be requested to address themselves to them and to deal in a similar way with any current problems that may arise. There was a recommendation in the report in favour of the withdrawal of C.I.E. barges from the Grand Canal. We are not prepared to accept that recommendation now without further inquiries in view of the observations on the recommendation which we received from the C.I.E. Board.

We have considered also the views expressed by the committee regarding the operations of licensed hauliers and have considered the recommendations which we have received from the organisation representing these licensed hauliers. We recognise that, in the event of any curtailment of the C.I.E. railway system, existing licences must be adjusted so as to enable any licensed haulier within a limited area to include the nearest railway station within his area, and we have decided in favour of giving licence facilities for the transport of sea fish when the need for that is established.

In regard to the recommendation on external motor coach tours, that has already, in part, been implemented. There is a proposal by the committee for the establishment of a consultative council. I, personally, can see no value in that recommendation which has not been accepted. I may say that a number of the organisations who made recommendations regarding the report of the committee considered that the establishment of such a council was not important.

The Government's decisions, therefore, involve a combination of legislative and administrative action to secure the improvement of the railway system by means of concerted efforts to expand traffic and to cut costs. For the purpose of assisting towards the expansion of traffic and of revenue from traffic, we are giving C.I.E. freedom from the restriction to which they have hitherto been subjected, putting them in a position to secure increased traffic by competitive methods, and we hope to see them in a position eventually to secure additional traffic by reducing their charges.

The implementation of that policy under the reconstituted board will be achieved over a five-year period. For the purpose of reducing costs we are giving the board power, in their own discretion, to eliminate lines and stations where they are satisfied that there is no prospect of remunerative business arising. We are removing a substantial part of their existing capital liability and releasing their revenue, therefore, from the charge in respect of interest on that proportion of its existing transport stock issues. We propose to provide a fixed subsidy by way of grant-in-aid for a period of five years, and the advantage of a fixed subsidy paid in that way is that the board can work towards economies, understanding that any economy they achieve will redound to the advantage of the undertaking and not merely to the advantage of the Exchequer. They will have clear limits in which to plan the scope of their activities.

As I have indicated, I am suggesting an arrangement involving the payment of compensation out of a fund established by law and financed by the Exchequer contributions towards reducing, over a period of time, the staffs employed in the operation of the railways to that number which is required for their existing operation.

Are these measures likely to prove adequate to save the railways? I do not think anybody can give a confident answer to that question. For the reasons which I gave at the beginning of my statement, the Government has decided that we must try to save them. We hope to do so with the full cooperation and support of the management of the undertaking, of the workers employed and of their trade union leaders and particularly and essentially with the help and support of all the merchants who carry on business in the areas served by the railway and, I hope, with the backing of these many organisations which in the past few months have been sending protests to me against the proposals for the curtailment of railway operations set out in the committee's report.

The Government consider, as the Committee on Transport did, that it would be wrong to decide now against the railways. Whether it will be equally wrong so to decide in ten or 15 years from now will depend on the success of the effort about to be made.

Before I conclude this statement, I think I should refer to one of the sub-heads in the Supplementary Estimate relating to the Sligo-Leitrim railway line. Deputies will be aware that following upon the decision of the Belfast authorities to close down the G.N.R. line through Enniskillen, the Sligo-Leitrim line ceased to operate. We have no particular obligation or responsibility in regard to that company. It is a Six-County company with its registered head office in Enniskillen, but we do recognise that many of its employees were persons domiciled within our State. These employees have no statutory right to compensation. The company has just gone out of business, and, even if there was a statutory right to compensation, it would not be much use to them because the company has no money, anyway. It is expected that the proceeds of the sale of the assets of the company will not be sufficient to meet prior claims. There is no pension scheme. In these circumstances, we are asking the Dáil to vote money ex gratia to enable payment to be made to employees of that company who are resident within our territory and who have not been taken over and reemployed by C.I.E.

I understand there are about 95 such persons. The basis of payment will be one month's pay for each complete year of service with a maximum of 24 months' pay. It will cost £40,000. There is a saving on other sub-heads of the Estimate of £5,000 so that the amount required for the purpose of putting the Sligo-Leitrim company in funds to make these payments is £35,000.

Before progress is reported may I, at this stage, ask the Minister a few questions to help in the clarification of the situation so that we can then see the statement in the light of that clarification when we resume the debate?

The Deputy may put a question.

Personally, I would prefer not to proceed by way of question and answer. This debate will be resumed and Deputies no doubt will get an opportunity of raising any points——

I do not want to discuss the subject at this stage; I merely want an answer to one or two questions. I gather from the Minister that C.I.E. is being exempted from liability to pay interest on transport issues up to 1958?

No; the Deputy misunderstood me there. When C.I.E. fails to pay interest on transport stock the Government pays it and then eventually that amount is recovered by Vote of the Dáil, but the amount by which C.I.E. defaulted becomes a liability of C.I.E. and that liability itself carries an interest obligation which has accumulated over the years. It is being released from the obligation to pay interest on that amount in respect of which they are in arrears.

In other words, it is being exempted from liability to pay interest on the amount by which it has defaulted?

The amount of money paid by the Government on their behalf up to March of next year.

And that applies in respect of previous defaults up to next year?

And it also goes for defaults which have accumulated up to date?

In respect of the capital liability which C.I.E. has accumulated by reason of this liability to pay interest there is no change except this change to take the £11,500,000 liability off them, but there is also on C.I.E. this liability in respect of interest and that is the matter I was dealing with.

It is therefore on that last portion on which it is being exempted from paying up?

The Minister talked about creating a State fund out of which pensions would be paid. I take it that refers only to what might be called compensation pensions, not to ordinary pensions?

Do I gather that when the Minister talked about the possibility of altering the scheme of "last in, first out" he had in mind the provision of compensation which would attract people to retire when their jobs were in danger?

Yes. Here, I think it was necessary for me to say that we would not be opposed to any alteration in that scheme which would mean that the older men would retire if redundancy occurred rather than younger men, even though it would mean a much heavier compensation bill. At the present time the trade unions have this "last in, first out" rule and it is one which has——

A long history.

A long history, and has many advantages from the trade union point of view. The company has no interest in fighting that rule either because the operation of that rule means its compensation obligation is reduced through its operation. If there is any desire to have a change in that situation and alter the practice so as to deal with the special problems arising from it, I would not oppose it merely on the grounds that it would mean the compensation bill would be higher.

Would the Minister make it more attractive to those persons who have long years of service to retire?

So it is. The existing scheme provides for the addition of years after a certain number of years has been served.

That is what the Minister has in mind?

There is one last point I want to clarify. The Minister said that where C.I.E. closes down a branch line they were to be exempt in future from the statutory obligation to provide an alternative road service. Was it contemplated that existing carriers might have the character of goods which they could carry extended or the area of operation extended? Is that only to apply to licensed hauliers?

No. It applies also to passenger services.

Is it only to apply to licensed hauliers and not to persons——

I should not like to suggest it will apply only to existing licensed hauliers. In certain circumstances it might mean an addition.

You might have new licensed hauliers in consequence and is it intended to give licences to carry for reward to persons who at present carry their own goods?

No. In so far as the main principles of the Road Transport Act are concerned we are keeping them untouched.

Progress reported; Committee to sit again.