Would the Minister say why it was felt necessary to put this section into the Bill? Is there any danger that, without the section, the Bill might affect the rights of the Minister for Posts and Telegraphs in relation to the conveyance of letter and parcel mail by rail?
Committee on Finance. - Transport Bill, 1958—Committee Stage.
Sections 1 and 2 agreed to.
SECTION 3.
Question proposed: "That Section 3 stand part of the Bill."
The Minister for Posts and Telegraphs thought there might be C.I.E. is being released from the obligation to carry all traffic offered to it and this section is put in to make it quite clear that does not apply to the mails, that they must carry the mails.
Question put and agreed to.
Sections 4 and 5 agreed to.
SECTION 6.
I move amendment No. 1:—
In sub-section (1), page 3, line 28, to delete "reasonable transport services" and substitute "an efficient, economical, convenient and properly integrated system of public transport for passengers and merchandise by rail, road and water."
In this section the general duties of the board are defined as the maintenance of a reasonable transport service. That is a substantial alteration in the duties of the board as at present constituted. The Act of 1950 said that it was the duty of the board to provide a complete and integrated system of public transport.
In this Bill we are giving the board certain powers, powers to abandon canals, powers to close down branch lines. We are giving them the right to shed the obligations which up to now have devolved upon them as common carriers and, generally, it may be said that the purpose of this Bill is to attenuate the board's activities as we understand them to-day. If this Bill is regarded in the light of the future forecast for C.I.E. by the committee which inquired into internal transport, one could easily visualise the possibility that C.I.E. would be shorn of many of its activities within a comparatively short period of time. It may well be that the evolution of practices here will set C.I.E. up in a new light as a national transport authority but we ought, neverthhless, to aim at keeping C.I.E. as an integrated service and place on the board an obligation to combine its road, rail and canal activities in such a way as to serve the purpose of a unified national undertaking.
I would fear that the language used in this Bill, which indicates a substantial change in the obligations imposed on C.I.E. in the Transport Act of 1950, may well bring about the beginning of a new policy in which we will have C.I.E. in the future shorn of many of its present activities, not discharging its function as an integrated transport authority but merely carrying on those activities in respect of which a financial surplus is yielded.
It would be a mistake to approach our transport problems from that angle. It would be better for the Minister if he still assigned to C.I.E. the duties which were enshrined in the Transport Act of 1950. The purpose of the amendment is to keep those obligations so far as C.I.E. is concerned, and not to approach the matter in the restricted way which it seems to me this Bill intends to do.
The Deputy will appreciate that it is made clear by sub-section (3) of the section that these words have no legal significance whatever. They do not impose upon the board any duty or liability enforcable by legal proceedings. A precisely similar sub-section appeared in the corresponding section of the 1950 Act. We could put in here the most grandiose words that human wit could devise, as a statement of the aims and purposes of C.I.E., but it would mean nothing so far as legal obligation is concerned. I dislike that procedure because it appears to me to savour of pretence.
We are setting up this C.I.E. organisation and we are saying that their job is to provide a reasonable transport service for the public. What more do we want to say than that? We do, it is true, in this section mention the preservation of reasonable conditions of employment for staffs, the requirements of national economic development, and the safety of operation, but they are just an indication of the things we expect C.I.E. to keep in mind in any event.
The purpose of this Bill is to relieve C.I.E. of the restraints that formally applied to it and it seems to me undesirable to put in words which have not effective force in the actual operations of C.I.E., which will have no legal significance except as a general indication of aims but which might imply that C.I.E. is being asked to do something it cannot do and which I do not think, in our circumstances, it is possible for them to do. It is undesirable to draw up the section to suggest that we expect C.I.E. to do a lot more than provide the country with a reasonable transport service, to have regard to national economic development, to the conditions of employment of their staff, and to safety of operation. We cannot reasonably expect them to do more than that. In any case such a provision would mean nothing and it is far better to keep this definition of the purposes of C.I.E. in as simple and as clear a form as possible.
The Minister has made clear the very grave need for our amendment. He has stated that we are not providing for our own transport needs at all. We are simply giving authority to C.I.E. to throw away from itself the obligation of providing a transport service for the country. Paragraph 2 of the White Paper says:—
"The Board may not terminate any rail service except where it is satisfied that there is no prospect of its continued operation being economic within a reasonable period."
The opposite to that just means this. Where a service is not going to be economic it can be discarded. I thought the general idea of the 1944 Act was to take one part with another, that where you had a service that was not paying its way, you would carry it on the portion that did pay its way, just as the road freight traffic or passenger service would carry the rail service where the rail service was not a paying proposition.
It is quite true that you may have a rail service, a branch line or various other services which the board may be carrying on but which are not a paying proposition in that district. But they are a national need. Is the Minister saying now that C.I.E. is to be run as an economic unit without thought or consideration for what is a national need?
I am certainly saying that the aim must be to make C.I.E., in time, an economic unit capable of being run without loss. Let Deputies have no doubt that that is the purpose this Bill is intended to achieve.
This amendment is a very important one because it spot-lights a very clear-cut departure from the duties that were placed on the board of C.I.E. by the 1950 Act. According to that Act they were charged with the duties that we are endeavouring to write into this Bill in the amendment that we have tabled. The Minister has not explained why he sees fit to change the wording which was used in the 1950 Act. This section simply asks C.I.E. to provide a reasonable transport service.
Who is to judge whether the transport service that will be provided is a reasonable one? Is it to be regarded by C.I.E. as reasonable? Are they to be the sole judges or is it to be a transport service which the Minister or this House will regard as reasonable? In conjunction with that, you must take into consideration the duties outlined in sub-section (2) of this section, where it says:
"It shall be the duty of the board to conduct its undertaking so that ...its operating expenditure... shall not be greater than the revenue of the board."
That is obviously a clear-cut departure from the duties imposed on the board in 1950. The 1950 Act envisaged that the transport concern would be run, taking uneconomic branches with paying branches, the losses on the one being offset by the other, and taking the good year with the bad. In this case, that is not so.
C.I.E. are to be the sole judges as to whether the service which they provide is reasonable or not and they will be influenced by the fact that they have very definite duties outlined in Section 2. They must pay their way. I feel they will be unduly influenced in that way. They will simply apply the yardstick of whether or not the business pays. I do not think that is wise or reasonable.
One would think it would be reasonable to take into account, in considering a matter such as this, not alone whether it is an economic proposition, but whether it is in the national good. C.I.E. are not being charged here with considering whether or not it is in the national interest to maintain a particular service. They are not being asked —and are, in fact, debarred from considering — whether or not the employment position in a certain area may be concerned. They are not asked, and are again debarred from considering, whether or not an industry in a particular area may require a rail service. They may agree that in the national interest, in the interests of employment and industry in a particular area there should be a rail service but they are bound by this section of the Bill as it stands, if the service is not economic or likely to be economic within a certain period to close it down. I would strongly urge the Minister to accept this amendment which simply substitutes for a reasonable transport service the words that were used in the 1950 Act.
The Bill says that C.I.E. shall provide reasonable transport services. Deputy Casey wants to know who is going to judge? But what is the amendment about? In addition to being a reasonable service it is to be "an efficient, economical, convenient and properly integrated system of public transport." What difference does that make? Who is going to judge whether C.I.E. is providing "an efficient, economical, convenient and properly integrated system of public transport"? What do these words mean? They are in the 1950 Act which was passed eight years ago, but, do Deputies agree that C.I.E., because these words were in the 1950 Act, has been providing the country with an efficient, economical and properly integrated system of public transport? The point I am making is that these words have no legal significance whatever. The words I am proposing to insert here as defining the duties of C.I.E. impose no legal duty or obligation on C.I.E. The words which Deputies want to insert in this Bill and which appear in the 1950 Act similarly impose no legal duty on C.I.E.
Deputy Casey, of course, begged the point when he said that C.I.E. might have to consider whether it was in the national good that in some part of the country a railway service should be maintained or that the prospects of employment in some factory would have to be taken into account. Of course they must be taken into account; and the Bill puts on C.I.E. the obligation of taking them into account. I have mentioned in the definition the requirements to have regard to national economic development and the words in that respect are the same as those used in the 1950 Act.
As regards sub-section (2) let it be quite clear that the aim of this Bill is to make it possible for C.I.E. in time to carry on without subsidy from the taxpayers, to get themselves in the course of five years or so into a position where they will no longer be losing money. All the provisions of the Bill are intended to make it easier for them to bring about that result. Again, the wording of the obligation placed on C.I.E. by this Bill in that respect is no different in essence from the wording of the obligation placed on them in the 1950 Act that Deputies want to get back to. It was stated in sub-section (2) of Section 15 of the 1950 Act:—
"It shall be the duty of the board so to conduct its undertaking as to secure, as soon as may be"—not within five years —"that, taking one year with another, the revenue of the board shall be not less than sufficient to meet the charges properly chargeable to revenue."
What is the difference? The aim of transport policy at all times has been to get the national transport organisation into the position in which it could earn enough revenue to meet its outgoings. It has not been able to do that, I contend, because it has been tied down through restrictions which made it impossible for it to enjoy the freedom of manoeuvre which would enable it to expand its revenue. I propose removing these restrictions from it and at the same time giving it £1,000,000 a year for five years as a subvention and taking away half its existing capital liability. For the first time, I am putting C.I.E. into a position in which it will have a real chance of fulfilling its obligations. But what difference did putting these words in the 1950 Act make, when we still had to provide £2,000,000 for C.I.E. last year and that is eight years after the Act was passed?
While I agree that the words in the 1950 Act did not impose a legal obligation on C.I.E. to discharge the duties which were set out in the appropriate section of that Act, nevertheless I think this is a matter of approach, and I think approach is important because, after all, C.I.E. is now the people's undertaking. C.I.E. is operating on the public cheque book and has an obligation to respect the views of those who are providing the money for its operations.
Under present C.I.E. legislation there is no parliamentary interference whatever with C.I.E. in its day-to-day work. We are going further in this Bill. We say to C.I.E.: "We are getting rid of the Transport Tribunal, which you never liked and the fetters imposed by that tribunal on your activities." We say to C.I.E.: "We are wiping out £16,000,000 of your liabilities. We are giving you £1,000,000 a year for five years, and, on top of that, we are eliminating your obligation to operate as common carrier." All these are substantial concessions to C.I.E. and all these concessions substantially improve the transport monopoly which C.I.E. has in respect of the activities they are now carrying on and I do not think it unreasonable for Parliament, or for the public speaking through Parliament, to say to C.I.E.: "Nevertheless, we want to give you a signpost. You should endeavour to follow a signpost and that is the signpost of thinking of yourself as a co-ordinated, integrated transport authority combining rail, road and canal."
It is quite possible that a C.I.E. board could be appointed consisting of six or seven people some of whom might be anti-railway in which case it might be their view: "Let us get rid of the railways as quickly as possible and let us keep the backbone of a railway system shedding all the limbs." That is quite possible under the section as it now stands. "A reasonable service" is what it says. A board composed, perhaps, of bus-minded people might take the view that in our circumstances a "reasonable service" might mean transport by road to the neglect of our existing railway system. We might get a board which will say: "So far as canals are concerned, we do not want to know anything about them. What we will do is, instead of having an integrated road, rail and canal service, is to get rid of the canals as quickly as possible." The board may interpret "reasonable transport services": they are the arbiters. If Parliament gives them a Bill authorising the provision of "a reasonable service" without giving a detailed signpost as to what they are to aim at Parliament parts with its power to control C.I.E. as to the direction in which it should move or the area in which it should operate.
It is important to indicate here, even if the wording cannot be made legally enforceable on C.I.E., that we believe the job of C.I.E. is to provide an integrated, co-ordinated and efficient transport system using rail, roads and canal in the best combination possible. That is important because once Parliament passes this Bill the interpretation of the Bill and of the duties it imposes will rest on six or seven people who constitute the future board of C.I.E.
I suggest to the Minister that it is not unreasonable for Parliament to indicate its views as to the objectives to be aimed at by C.I.E. That can be done more adequately by the language of the amendment than it can be done by the language of the Bill. At all events C.I.E. are quite entitled to put this interpretation on the present Bill: as there is a substantial change in the direction of C.I.E. activities under the 1950 Act as compared with this Act, C.I.E. can only interpret the change as meaning that whatever functions they had under the 1950 Act, they have not got the same functions now. If they read their duties under this Bill in the language which the Minister has just used, namely, that it is the job of C.I.E. to become economic as soon as possible——
No, within five years —"as soon as possible" was in the 1950 Act.
You may very well reach a situation here in which C.I.E. may never be economic but there are certain services which you have got to carry on in a civilised community. It may very well be that C.I.E. will have to operate for much longer than five years as a service requiring subsidy by the public in order to give it 20th century conditions of transport. If the board once get bitten with the idea that no matter how much you curtail the public service or inconvenience the public by restricting services, all that is justified in the process of becoming economic, then this House has no further effective control over the activities of the board which will direct the activities of C.I.E.
I think no harm is done to the board and no fetters are imposed on the board by this amendment, but it does give them a direction as to what they are to aim at. It is important that Parliament when giving these wide powers to the board, and at the same time giving them much greater freedom of activity than they have had up to now, should insist that the board should have some particular aim. I think, if we want to keep an integrated transport authority, that the aim is better expressed in the amendment than in the words of the Bill.
Would the Deputy say what practical difference the insertion of these words will make?
There are a whole lot of things wrong with C.I.E. which are not remedied in this Bill. You might have left this section of the 1950 Act alone and applied yourself to some of the other things.
So we are.
Even if Deputy Norton's amendment is accepted — I do not see anything wrong with it and I am inclined to agree with it — whether it is the words of Deputy Norton's amendment or the words of the Bill as it stands at present, who is to see that these services are provided? As I read this Bill, C.I.E.'s debts are paid——
We are dealing with the amendment now.
The amendment fits into this business that it shall be the duty of the board to provide reasonable transport and so on. How is anybody to see that they provide this service? It does not matter what wording is put in.
That is my point; it makes no difference.
They will be absolutely free to do anything they like. They are given the money and told: "You carry on and do what you like." I do not see that it makes any difference one way or the other. The situation is absolutely impossible.
I do not want to make a speech on this but the Minister's intervention there rather worries me. I understood the Minister to say in relation to Deputy Dr. Esmonde's remarks that it did not matter a hoot what words you put in this.
If the Deputy examines sub-section (3) he will realise what I am at.
Is the Minister's argument that it does not matter one way or another what goes into this section, that it will have no effect on the board or the operation of the transport undertaking by the board? If that is the Minister's argument the sooner this Bill goes back to his Department and is reconsidered in toto the better.
What I mean is this. This section imposes no legal obligation on the board. It is customary when we set up a statutory organisation like C.I.E. to tell them it is their business to carry on transport services, not to produce turf, run aeroplanes, generate electricity or operate a post office. The particular function of C.I.E. is to run transport services. That is all that is set out in this section: to provide the country with reasonable transport services. I think that is all we need prescribe. Using all these other words that the service must be efficient, economical, convenient and properly integrated does not alter the legal position by one iota. I object to these gradiose phrases which appear to suggest we are expecting something from C.I.E. which we know they cannot accomplish. Their job is to provide the country with a reasonable transport service in circumstances which are likely to be difficult but with the aids we are providing for them now. I do not like using any more elaborate phrases.
Has the Minister not gone a lot further than Deputy Norton's suggestion? Does the Minister not tell the board that not only must they provide reasonable transport services but that they must do so having regard to the general picture of economic development in the country?
Quite right.
The Minister says that he does not tell them it is their business to produce electricity or turf. He goes a lot further than Deputy Norton.
I cannot understand the Minister's reluctance to accept this amendment. He says the amendment has no legal effect. Surely he will agree that even without a legal obligation on C.I.E., the inclusion of the amendment would at least indicate to C.I.E. that the Dáil expects them to provide a reasonable transport service? The very word "reasonable" is somewhat suspect. There are too many points of view in regard to what is reasonable. Deputy Norton has pointed out that the board might decide that a bus service alone was reasonable. They might decide that rail services alone were reasonable. Surely the Dáil is entitled to indicate when dealing with a national transport undertaking that, apart from the economic obligation on the undertaking, the Dáil expects C.I.E. to provide a comprehensive and integrated public service.
The Minister does not indicate anything beyond "national economic development". In parts of the country that might be a matter of no concern to C.I.E. It might even mean that the board could fail to provide services in either rural or urban areas and say: "We did so because we are satisfied we are providing a reasonable service for the country and the general public." For many years past we have been subsidising C.I.E. and we will continue to do so for five years and possibly more but we will have no way of voicing an objection because we can be given a simple answer.
C.I.E. is asked only to provide a reasonable service. C.I.E. may say that as far as they are concerned, the service is reasonable and is being run on an economic basis and, from the general overall point of view of national development, it may be reasonably satisfactory, but many Sections of the public, which will be contributing, will still not be getting the service to which they are entitled. The Minister could quite well accept the amendment on the basis that while, as he has pointed out and as has been agreed on these benches, it does not confer any legal obligation on C.I.E. it at least indicates to whatever board will be looking after the affairs of C.I.E. what the House and the country expects.
Mr. Lemass
I am sorry the discussion on this Bill should get bogged down on this very unimportant section. May I suggest to the House that we leave the matter over until we see what the House expects, on the more important sections of the Bill or, alternatively, I shall split the difference? I am prepared to put in the words "efficient" and "economical" as an indication of our hopes and desires. I am not prepared to put in the words "convenient" or "properly integrated" because, quite honestly, I do not know what they mean.
Instead of "reasonable."
Mr. Lemass
I think "reasonable" has to be there — reasonable, efficient and economical.
I am afraid the word "convenient" is rather important.
Mr. Lemass
I honestly do not know what it means.
It is important from the point of view of the public.
You have the word "efficient" and that should cover it.
Many businesses are run efficiently but they do not give good service to the public.
"Reasonable" should cover it.
Mr. Lemass
"Reasonable" should cover it surely.
Amendment, by leave, withdrawn.
Section 6 agreed to.
SECTION 7.
Question proposed: "That Section 7 stand part of the Bill."
Mr. Lemass
There is a reference here to terms and conditions contained in Statutory Rules in an Order made in 1930 which applied to merchandise carried by C.I.E. The Board of C.I.E. have suggested to me that it would be desirable to have some machinery by which these statutory rules and conditions could be altered, if alteration was considered at any time to be desirable, without fresh legislation. The position is that these Statutory Rules and Orders were made by the tribunal set up by the 1924 Act. They were published in 1930 and they got under that Act the force of law. They can be altered only by law and, therefore, I propose to bring in an amendment on the Report Stage, of which I inform the House now in accordance with Standing Orders, to provide that these rules may be altered, should the need arise, with the consent of the Minister.
Will they be laid on the Table?
Mr. Lemass
I think so.
With power of ratification.
Mr. Lemass
I would say that power of annulment is all that would be involved in it because it is mostly very technical matters that would be involved.
Question put and agreed to.
SECTION 8.
The following amendment, in the names of Deputies Norton, Casey, Kyne and Larkin appeared on the Order Paper:—
To add to the section a new sub-section as follows:—
"(6) Any Order made under this section shall provide for the payment of compensation to any servant of the board whose services are dispensed with in consequence of the making of the Order or who is transferred to another position and thereby suffers a worsening of his conditions of service."
Mr. Lemass
I am prepared to accept the principle of this amendment. If the Deputy does not mind my intervening, I will explain that I had representations on this matter from a committee acting for the trade unions and I recognise that it is necessary to provide that, where level crossing keepers are whole-time employees of the board, they should have the same compensation rights if they are dismissed for redundancy as other whole-time employees. Whole-time level crossing keepers are a comparatively small section of the level crossing keepers employed. The majority are employed on the basis of looking after the gates in consideration of free tenancy of a cottage; I think some of them get £1 a year in addition to the free tenancy. In respect of those the only practicable procedure is to provide that where the board comes with a proposal to install some mechanical device involving in consequence the redundancy of the employees concerned, the board must also submit proposals for dealing with the employees concerned. So far as whole-time employees are concerned, they will be brought under the compensation provisions in the same way as the other whole-time employees of the board. That may not be in this section. It may have to be in the compensation section of the Bill. So far as the other types of level crossing keepers are concerned, and there is enormous variety in the conditions of their employment, when the board proposes to alter the position at some level crossings affecting adversely the conditions of employment of these employees, they will have to make their proposal for dealing with these employees at the same time and they will have to secure approval for it.
The Minister will bring in an amendment on the Report Stage to meet this?
Mr. Lemass
I shall.
Amendment not moved.
Section 8 agreed to.
SECTION 9.
I move amendment No. 3:—
In sub-section (1), page 5, line 6, to delete "of" and substitute "not exceeding".
I do not know whether or not it is the Minister's intention to commit the Exchequer to five yearly payments of £1,000,000 irrespective of the economic position of C.I.E. after, say a period of three or four years. Possibly I am being a bit optimistic but, having regard to the reliefs which the Minister is now giving, it is likely that the board, with efficient and economic management, might get its affairs into balance before the end of five years. Would it not be reasonable then to relieve the Exchequer of the obligation of paying this £1,000,000 for each of these five years?
Mr. Lemass
There is provision for a Grant-in-Aid of £1,000,000 a year. If, at the end of the third or fourth year, they can save any part of it, then whatever they save can be carried forward. The scheme for helping C.I.E. as this Bill presents it contemplates this fixed annual payment for five years. It will then stop.
I said on the Second Reading debate, and I have been saying to C.I.E., that their object should be to try to get into a position where their losses would be less has £1,000,000 per year before the end of the five years so that they would have a carry-forward into the sixth, seventh or eighth year, if it should take that time to get down to economical working. Rather than that being an inducement to C.I.E. not to economise, it is the reverse.
My argument is that C.I.E. had, in fact, no incentive to seek to introduce new methods of working or better equipment or economies of any sort up to the present because if they did succeed in saving money by these methods the Exchequer got the benefit, not C.I.E., as it meant that C.I.E. got a smaller subvention from the Exchequer. If they did not, if they let their expenses run ahead, then they just came back to the Exchequer for more. When you put them on this basis, you give them a target towards which they can work and the full benefit of anything they may achieve in the expansion of revenue and the reduction of costs.
My argument on the Second Reading was that the whole morale of the company's organisation should be improved by putting them in the position that they — the C.I.E. system — and not the Exchequer will get the benefit of any improvements they introduce that will either bring in more money in revenue or reduce operating costs.
On what basis was the sum of £1,000,000 a year fixed? On the Second Stage the Minister said it was proposed to write off over £16,000,000 — as set out in the Money Resolution — and transfer to the Exchequer liability for interest payments. I assume that the difference between the total interest liability imposed in the past on C.I.E. and the sum of £1,000,000 is what was formerly paid annually — that it varied up or down according as the losses increased or decreased. However, is it on the assumption that, having transferred the interest payments to the Exchequer and having absolved C.I.E. from the liability to meet these charges, over and above that, it is expected C.I.E. can operate at a sum not exceeding £1,000,000 a year?
The figure is based upon estimates submitted by C.I.E., without having regard to the reliefs given them in the Bill, the additional powers which they will have and can use to expand revenue, and prepared on the basis of their 1957 experience in regard to costs. In other words, their calculation did not take into account the possibility of wages or other costs going up during the five-year period nor does it take into account the possibility of revenue going up on account of their new powers. They calculated that, over the five years, they will require £5,000,000. They said they would require more in the first year, not so much in the second year and the smallest amount in the fifth year. I assume they will carry through the reorganisation schemes they were empowered to undertake. Therefore, it is possible that the £1,000,000 would be less than what would be needed in 1959 and more than what would be needed in 1964, on their present estimates.
The intention is that C.I.E. would be given this £1,000,000 a year. If it is not sufficient to meet their outgoings in 1959 they will use their temporary borrowing powers to get whatever they want, the expectation being that, before the end of the five years, they would be able to repay any temporary borrowings incurred in the earlier period and then be in a position to carry on without any Exchequer subvention.
Is it not unrealistic for C.I.E. or for the Dáil to assume static conditions over the next five years?
It is not being assumed: that is may point. C.I.E. gave me a table setting out in respect of each of the five years the amount by which they thought their revenue would be deficient, based upon their 1957 experience and costs. In that table, there was a different amount for each year, a diminishing amount, but the total over the five years was £5,000,000. I said: "We will give you £5,000,000 at the rate of £1,000,000 a year. If, in fact, £1,000,000 is not enough for the first year you will have to borrow to meet the deficiency." But, before the end of the fifth year, on their own table of estimated results, they should be able to repay what they borrowed in the first year. It is on the basis of 1957 wages and of other costs on the 1957 level and the revenue-earning capacity of 1957.
Surely that is an unrealistic basis although I do not know what other basis they could adopt——
There was a recent increase in wages. C.I.E. have had to face the getting-in of the money to pay that increase by increasing the fares.
Which may mean a reduction in revenue.
They have based their calculation on what the increased fares will bring in, in the light of all probable consequences.
Can we know now, in order to get the picture of the extent to which this £5,000,000 will meet the need of C.I.E., their estimate of the deficits for the first, second and third years? Can we get a picture of how far the £1,000,000 will meet their need and to what extent it falls short of their need?
It is only an estimate. It is possible, for example, that some of their costs may go down — fuel, equipment, plant replacement, and so on.
Can we get the estimate and temper it with these considerations?
You will have to take my word that the total amount they estimate they will require for five years is £5,000,000. That sum is being given to them on the basis of £1,000,000 per year for each of the five years.
The Minister says "C.I.E. estimate...", and so on. I take it, because it is in the Bill, the Minister stands over these estimates himself?
No. I could not attempt to make a personal estimate of what C.I.E. could do in regard to meeting their outgoings from revenue. That is a highly expert job. However, I took their estimate. It has not been detrimental to their point of view. In so far as I took it, I was meeting what they thought would be the situation.
Can we take it, therefore, that the C.I.E. estimate is that they will need £5,000,000 to balance their accounts over the next five years?
That is right.
Infallibility has not been an outstanding characteristic of C.I.E. estimates.
In 1954, Deputy Norton thought they could do without a subsidy at all.
I did that for the reason that the Minister deprived them of £1,000,000 in the previous year. If the Minister thought I would provide them with £1,000,000 which he said they did not need, then the Minister has some other thought coming to him on the matter. The then Minister for Finance — the present egregious Minister for Health — served notice on C.I.E. that they would get no subsidy.
It was in the Estimate but it was not paid to them.
That £1,000,000 was collared by the then Minister for Finance to try to balance the patchy kind of Budget they introduced that year.
I can produce the Deputy's letter to C.I.E.
We would do better work if we kept to the amendment.
I must correct what I as sure is an unconscious misrepresentation.
That was done in 1954. It is exactly what Deputy MacEntee set out in his Budget.
The Fianna Fáil Government of that day said, in effect: "C.I.E. do not need this £1,000,000. We will take it to balance the Budget." When the Government was changed, C.I.E. then expected me to give them the £1,000,000 which the previous Government said was not necessary. I had better uses for it than to give it to C.I.E. and they did not get it.
Did they need it or did they not need it? How did it work out?
Deputies should come to the Bill and to the amendment.
I understand now that C.I.E. say they need £5,000,000 to balance their accounts over the next five years. I take it from what the Minister said that £1,000,000 will not balance the first year and possibly the second year——
I am not accepting that C.I.E. say that. I do not say it.
But you are, when you bring this Bill before the House and then tell us you will not give us the details
If, therefore, £1,000,000 proves insufficient the first year and the second year, C.I.E. are told they can resort to short-term borrowing. However, the Minister has estimated that the total needs of C.I.E. over five years will be £5,000,000. Are we to take it from that statement by the Minister that if C.I.E. resort to short-term borrowing this year and next year they will in any case be able on their own estimate to repay any temporary borrowings within the next five years?
That is their own estimate.
They say that. Does the Minister accept that?
I go further than that. I say to C.I.E.: "You estimate your revenue deficiency for the next five years at £5,000,000. I will allow you this £5,000,000 but I expect you to do better than that, and if you save anything from that £5,000,000 it will be left in the kitty for you."
The Minister is an incurable optimist.
This Bill does give them power which they can use if they wish to expand their revenue and to effect other changes which will help to better their position. Therefore, I think there is justification for my expectation, in view of their estimate, that they should in reasonable circumstances be able to do better and have something left.
On the basis that C.I.E.'s estimate — which we have not seen, and of which I suppose the Dáil cannot get further particulars than the Minister himself gives — is based on 1957 figures which have already been altered by reason of a wage reward, and in repect of which in the first few months of the year the quantity of merchandise and the number of live stock carried are less than last year, is it not clear that it is unrealistic? Whatever about giving them power in this Bill to expand their revenue I think we have given them power to curtail their expenditure and losses. However, C.I.E. have said themselves that any increased charges, whether in respect of passengers or on goods, would likely result in a diminution in income.
The basic principle must be that transport services will be sold for what they cost. The public cannot expect to get transport services for less than the economic cost. Two things must be done. These costs must be kept down to the lowest figure that efficient organisation can achieve. The second is that the volume of traffic available to C.I.E. must, if possible, be expanded and, to enable the company to do that, we are giving this freedom of movement which the removal of the common carrier obligation involves. Reductions in the economic cost of transport may be achieved through reorganisation, and C.I.E. may have the benefit of some reductions in the price of steel. However, the primary objective must be to get the additional traffic which will enable them to expand their revenue. The essential characteristic in relation to an undertaking such as this is that it costs almost as much to carry 100 tons of goods as it does to carry 200 tons, and by carrying 200 tons instead of 100 tons they more than double their revenue. Commercial freedom must be given to C.I.E. to expand their traffic, to get back the traffic they lost to private lorries, by providing more competitive and efficient services.
I should like to ask the Minister whether he has considered the other side of the picture? I do not anticipate, if things go on as they are that there is any likelihood C.I.E. will need less per annum than the estimate which they have given. It could happen, however, though God forbid it would, that in the course of the next four or five years we would have operating here the same conditions as existed during the emergency by reason of war, by reason of another Suez crisis or something like that. The particular section which we are discussing imposes on the Minister, on the Government for the time being, a statutory obligation to make available to C.I.E. £1,000,000 per annum whether C.I.E. want it or not.
Deputy Russell's amendment is designed to meet that situation as I see it. If by reason of world war circumstances, or something like that, all traffic were again taken off the roads, taken from private hauliers and so on, because petrol was not available, and pushed on to C.I.E. conditions would come into existence in which C.I.E. should be able to pay its way and make a profit without the necessity for State assistance. If the Minister leaves the section as it is, he must pay £1,000,000 per year whether they want it or not.
The Deputy is not quite right. They can carry that forward.
It could be, if those circumstances arose, that whatever Minister for Finance was there could find a very much better use for £1,000,000.
He can always borrow it back from C.I.E.
He would probably pay interest for it. It seems to me that Deputy Russell's amendment, while in no way restricting the Minister from paying the £5,000,000 which C.I.E. estimate they will require, while it would still permit that to be paid, would leave the Government of the day an opportunity of not paying if it were not required.
Personally I attach tremendous importance to giving C.I.E. a realistic target and making it clear to them that, if they do better than that target, the financial benefits will accrue to themselves and not to the Exchequer. I think that this could change the whole outlook for C.I.E. in their aim to provide transport on an economic basis. The incentive to economise and save was not there when the only effect of anything they did was to save the Exchequer money. When it is now clear that, when they save, the benefit will accrue to themselves, the incentive to do so is obviously a great deal stronger. Even if it does happen that such a crisis as the Deputy pictures arises, there will also be a post-war crisis and it will not be any harm to have C.I.E. in a financial position to handle that situation.
When I first became Minister for Industry and Commerce there was a railway crisis here. At that time the railway companies were carrying on very largely upon the money received from the British Government in respect of the operation of the railways on behalf of the British Government during the first world war. The British Government had paid fairly liberally, and the accumulation of funds which the railways had was being used even to pay the dividends for many years. I do not contemplate that this money will bring C.I.E. back to the happy position that Irish railways were in after the first world war, but if they do tend to reproduce the favourable circumstances, then C.I.E. will have a reserve fund built up which will help them to carry out re-equipment and all the rest.
I appreciate the Minister's point—
I agree with the principle the Minister is trying to achieve but I do not think he is going the right way about it. As it stands the Bill is giving £5,000,000 to C.I.E. at the rate of £1,000,000 a year. The Minister is washing his hands of C.I.E. for five years and during that time they are free to do what they like. I think the company should be placed in the position of coming to the Minister each year and getting £1,000,000 or less as they require it.
The implication from that would be that if they saved money they would get no benefit themselves.
The Minister is also relieving them of £32,000 of annual interest charges.
Those annual interest charges have to be paid.
I assume the interest charges are taken into consideration in computing their losses.
They are added to their losses.
This also gives them wide power to complete against ordinary road transport, private and public hauliers. They are being given every possible opportunity, if they can manage their affairs efficiently, to get on their feet. The Minister is doing two different things. He is giving them £1,000,000 a year for five years and that means they are not going to pay their way for five years; and at the same time, he is creating a condition of affairs in which he should enable them to pay their way, not alone in five years but much more quickly, due to the drastic capital concessions given in interest charges and in the writing down of these liabilities, which have been taken off them and which I assume will enable them to write off some of their rolling stock and so on.
I will come to that condition later on and explain the position.
I appreciate what the Minister is trying to achieve. Perhaps I am looking at it from a narrow point of view, but, as a business man, I know I would regard that as a gift from the gods, to get a lump sum payable for five years, whether one wants it or not. I am sure very few bank managers would do it.
I am greatly afraid they will want it.
The Minister has adumbrated an entirely new principle in legislation and I do not think he can really have considered it before he said it. He told us he had this estimate from C.I.E., that he would not give it to the House and would not stand over it himself. On that basis, it is outrageous to ask the Dáil to vote this money. Then he changed and said he was prepared to say that, in his opinion, they ought to have something over at the end of the period and he hoped they would.
I should be glad to have this made quite clear, as it seems to strike at a greater principle than the whole principle of transport. The whole question of parliamentary control is involved. I take it that the Minister got certain estimates from C.I.E., based on the five-year position, and these were examined. The Minister says he is satisfied that that is the maximum they should want and that, on that maximum, with the powers they are being given now, they ought to be able to manage; and that is what he is certifying to the Dáil. It is essential to have some ministerial responsibility in this matter. We cannot have a Minister in any Government saying he has an estimate from an outside body but will not tell us what it is, will not say whether it is good, bad or indifferent, but asks the House to vote the money all the same. The Minister must face up to his responsibility.
Secondly, I understand him on the later occasion to say that, from his examination of the estimates, he is satisfied that that is the maximum they should require. If he is not prepared to give an opinion, the estimates on which his request is based should be available to the House for discussion.
That is all pretentious nonsense.
If the Minister is satisfied — and certainly any experience I have would make me satisfied— that C.I.E. will require at least £1,000,000 per year on an average over the next five years, then there is a good deal to be said for saying to the board: "We will give you £1,000,000 per year and you know now what the future is like for the next five years." That is a preferable arrangement to that which has existed in the past. The whole position was one of financial torture and human torture, to try to keep C.I.E. going.
First, they came to the Department of Industry and Commerce, where a lot of conscientious civil servants of a high mental calibre pounced upon C.I.E., saying: "Do you really need this? Do you expect the Government to continue constantly filling your coffers?" By the time C.I.E. had come through that ordeal of proving the case, they were pretty well exhausted. When the Minister for Industry and Commerce was finally convinced, on winnowing out the chaff from the wheat, that there was still a substantial area of good wheat, he put on his armour and went to the Department of Finance to ask them to provide a cheque for £1,000,000 or £2,000,000 to keep C.I.E. going.
Then, in the Department of Finance, another squad of these competent civil servants tackled the case made to the Minister for Industry and Commerce, to tear it to pieces as efficiently as they could. Then a long battle ensued between two otherwise personally friendly people, the Minister for Industry and Commerce and the Minister for Finance, to try to get some agreement. Probably there was difficulty in getting agreement and then it found its way into the Government, to decide something as between the points of view of the two rival Ministers and the two rival Departments. An enormous amount of time is wasted and an enormous amount of bad temper is generated in all that process.
And finally a figure emerges and that is cut in half.
In the end, there is an element of horse trading.
What happened to the bag of wheat?
He cut the price of it, too.
If the Minister is satisfied, as the custodian of the public interest, that a case has been made for giving C.I.E. £5,000,000 over the next five years, it is better they should know that — without going through this annual auction which has been taking place for the past 30 years in the administration of our transport services. I am quite satisfied that the nation generally will be doing a good job if C.I.E. losses over the next five years can be confined to £5,000,000. Quite frankly, I think the estimate is unnecessarily optimistic; and I would like to make an appointment with the Minister for this day five years and show him the speech he has made this evening, in which he supposes that this situation will be achieved in five years' time. I frankly do not believe it.
I might, in turn, read the speech the Deputy made in 1954.
What about the speech the Minister made in 1944, and which he made at the hustings as well, as far as I can recollect?
If the Minister has any conscience—which I doubt——
The Deputy need not even doubt it.
——he should read his 1944 speech.
This concern was established in 1950 and I am not responsible for that Act.
Let the Minister read his 1944 speech on transport. It is a gem, particularly in the light of the developments since then.
That was a different horse. There has been a ringer introduced since then.
Deputy Norton has learned a lot since then.
Deputy Burke has learned nothing since then. I want to ask the Minister whether, in anticipating the necessity for giving C.I.E. £5,000,000 for the next five years, there is included in that estimate the anticipated losses of C.I.E. in respect of the administration of any portion of the G.N.R. services which will be administered by C.I.E. in the future?
No. That estimate is based entirely upon C.I.E. services. It is recognised that the amalgamation of the G.N.R. in the Twenty-Six Counties with C.I.E. will add to their probable losses; and therefore the Bill which I will be introducing to effect that amalgamation will provide for an additional payment to C.I.E. in respect of the G.N.R. system over that five years.
So that the losses here, of £5,000,000 over the next five years, refer only to C.I.E. losses over the present transport system?
That is so.
If C.I.E. take over the operation of our portion of the G.N.R. we will have to provide an additional subsidy to meet the losses on that portion of the undertaking?
That is right.
I am not very clear yet whether the Minister has accepted Deputy Russel's amendment.
No, no. I am strongly opposed to it.
As I understood the Minister, he said that C.I.E. are to get £5,000,000 over five years and he states that that scheme was thought out and arranged so that they would be in a position, if £1,000,000 a year was not enough, to borrow. It might have to borrow again next year and in fact it is giving C.I.E. a blank cheque for £5,000,000.
There is no blank cheque. They cannot borrow £5,000,000. We give them temporary borrowing powers, but they are limited.
There is nothing limiting their power in this.
Yes.
Deputy Russell's amendment will at least limit the sum paid to C.I.E. to £1,000,000 a year. I understood the Minister to say they could borrow, if it was necessary and that it was hoped as time went on that conditions in C.I.E. would improve. I suggest to the Minister that there is a safeguard in accepting Deputy Russell's amendment. At least it will prevent C.I.E. from spending the whole £5,000,000 or borrowing it within a couple of years. This section makes it mandatory on the Minister to give them £5,000,000. Deputy Russell's amendment restricts them to £1,000,000 a year.
Deputy Norton mentioned the difficulty of extracting money from the two Departments concerned. C.I.E. accounts are audited by a competent firm of public auditors and it should not be difficult to present these accounts once a year and to secure this payment on the basis of those.
I do not quite follow the Deputy.
Deputy Norton mentioned the difficulty of extracting money from the Departments concerned, which I agree is a point, but C.I.E.'s accounts are audited by a prominent firm of public accountants and surely that should be a sufficiently good basis——
That is not the point to which Deputy Norton referred. At present when the Estimate for the Department of Industry and Commerce is being prepared, some calculation has to be made of what C.I.E. will need in the year to come. C.I.E. naturally try to get as much money as they can and the argument that arose in 1954 arose out of an assumption that they had included in their revenue charges certain capital expenditure which should be charged to capital account and that they had successfully done that over two or three years.
And the Department of Industry and Commerce had stood over their doing that. That was the argument of my predecessor in the Department of Finance.
Deputy Norton pointed out that that was the procedure. C.I.E. came to the Department of Industry and Commerce to secure the inclusion in the Department's Estimate for the coming year of certain sums for subsidy. The Minister for Industry and Commerce had to persuade the Minister for Finance it was a reasonable provision. As a rule, he never did it, and ultimately an Estimate was presented to the Dáil which contained the figure which it was thought C.I.E. might require. In most of the recent years, there has always been a Supplementary Estimate as the figure provided in the Estimate was not sufficient. I am not so much worried about the disadvantages of that as I am about the effect of the knowledge on the minds of those responsible for the carrying on of the C.I.E. organisation that if during the year they make any improvements in their situation, either by expanding revenue or reducing costs, they get no benefit from it, that the effect will be to reduce the estimate they will come to seek and that it is the Exchequer which will benefit. By making a grant they will be in the situation that they have the maximum inducement to improve their position because the benefits would come to them. I think that it why it should be a fixed sum paid to them by way of a Grant-in-Aid which they know, five years ahead, they can count on.
Can the Minister tell us where is the restriction on borrowing? Is it in the 1950 Act?
Yes, in the 1950 Act.
I know that there is a provision that the consent of the Minister must be obtained.
Under the 1950 Act, they may borrow on their own initiative up to a certain limit and may borrow more with the consent of the Minister.
I am trying to remember what the limits are.
At the moment it is £1,500,000. The expectation is that to meet the probable requirements of the board in the future, £1,500,000 will suffice.
By this Bill?
No; they have temporary borrowing powers. The Deputy should remember they had to borrow something like £800,000——
Is there not a statutory limit?
Yes. As I understand it, they may borrow up to £500,000 on their own intiative.
On their own?
And they cannot go beyond that without the consent of the Minister for Finance.
Is there not a top limit after they have the consent of the Minister?
Their full effective borrowing powers are £1,500,000; £1,000,000 on the guarantee of the Minister for Finance and £500,000 without it.
Is that a statutory ceiling?
Yes.
Is it proposed to raise it?
No, it will be quite adequate. Capital expenditure will be financed by raising capital and not out of revenue or by temporary borrowing.
By means of a loan?
By stock issue.
Who is going to underwrite it?
There is only one body who can. Their capital programme is almost completed.
C.I.E. had always a peculiar idea in relation to stock issues. They thought that making a stock issue when it was a foregone conclusion that it would not be taken up by the public or underwritten was something that would absolve them from any moral obligation, if you like to use the phrase. They seemed to think that that was a method of dealing with their affairs that was quite different from a mere Exchequer borrowing and of course unless the stock issue was going to be taken up, they might as well borrow it direct from the Exchequer. They have never been able to appreciate that. I found it impossible to get them to understand there was no difference in the two things.
A great part of their capital liability will be wiped out.
I want to say that it has taken us a long time to get around to the main point. This House will be relieved for the next five years of the necessity of going through the system which Deputy Norton mentioned, and I think it is a good thing, from the point of view of the Dáil, that their liability for the next five years should be known in advance. For that reason, I do not agree with Deputy Sweetman.
The Deputy does not agree with me on what?
The Deputy said that there was some contempt towards the House involved in this provision, that the House was being asked to vote a sum to C.I.E. that was not proved to the satisfaction of the House.
I never said anything of the sort.
That is what I gathered.
I want the Minister to say that he has examined these estimates and he will not tell us what they are.
In my opinion this whole business is unrealistic. We have accepted that a publicity owned rail, canal and transport system is essential in this country. I think that in five years' time, if C.I.E. fail in their efforts to limit their debt to the £5,000,000 and if they come back to this House, we shall be voting a similar sum all over again. The hope is that C.I.E. will make the effort over that period so that we shall be able to see at the end of that time that we have saved something out of the £5,000,000 or that we shall not require any more than that £5,000,000. Personally, I have grave doubts about it. We should postpone discussing the matter until we see how the thing operates in practice.
I do not think that Deputy Seán Flanagan is correct when he refers to this Bill as enabling the House to know in advance what the liability will be. This Bill and this section does not limit the liability. All this section says is that, whether C.I.E. want it or not, we are to give them £1,000,000. Deputy Seán Flanagan is a lawyer and I think he, as well as myself, can argue—I think correctly—that that means C.I.E. will get at least £1,000,000. It does not mean that C.I.E. will get only £1,000,000.
It means only.
If it means only, why not accept Deputy Russell's amendment which says that they get a sum not exceeding £1,000,000?
No. Deputy Russell's amendment contemplates their getting less.
I appreciate the Minister's argument with regard to the building up of morale inside C.I.E. I think that is an argument which must have some weight. I do not know that it will have sufficient weight to outweigh the disadvantages that I see in allowing the section to go through without the amendment proposed by Deputy Russell. Rightly or wrongly, as I see the position, the section, as it stands at the moment, does not limit the grants which this House may make to C.I.E. to £1,000,000 a year. It says we pay them £1,000,000 a year. It does not say we will not pay them more. If it meant they would get £1,000,000 a year only, there is no justification for not accepting the amendment. I do not think Deputy Seán Flanagan is correct.
I asked the Minister a question earlier. It is accepted by him—he has given the reasons for it—that once this section, whether C.I.E. want the £1,000,000 or not, goes through, the House is bound every year to give them that £1,000,000. A situation may arise where, for one reason or another, C.I.E. do not want the £1,000,000, where possibly they do not want anything at all, or possibly £500,000 would be sufficient. Every future Minister for Finance for the next four or five years will be bound by this legislation to give C.I.E. £1,000,000 whether they want it or not. A plea will be made for old age pensions and the Minister for Finance will have to reply that he cannot give old age pensions because he has to give C.I.E. £1,000,000 which they do not want. That situation may arise and we may have to face it.
How much did they get last year?
£2,000,000, all going to capital.
£2,800,000.
£2,794,000.
I shall not argue.
Of which £2,000,000 was capital.
The Minister will agree that there could be circumstances in which that situation might arise. If those circumstances arise, the Minister's hands are tied. He is typing the hands of future Ministers for Finance. Deputy Norton, in particular, detailed the procedure which was there heretofore when C.I.E. wanted to get money or a subsidy from the Government. It was a colourful picture but remember that the civil servants of high mental calibre to whom he referred, the Minister for Industry and Commerce to whom he referred and the Minister for Finance to whom he referred are paid for doing a particular job. If they do their job well, why should we complain?
Is it not their job to see that money voted by this House is not to be given away unnecessarily or is not given away if it is not wanted? I appreciate the argument made by the Minister and underscored by Deputy Norton that there is an advantage from the point of view of morale in C.I.E. having some certainty as to what they are to get. I do not believe that the advantages which will ensue from that are sufficient to justify this House in saying now that for the next five years, whether C.I.E. want it or not and no matter who else will do without, we are to give £1,000,000 per annum.
Is it not obvious they will?
Let me bring this discussion back to reality. I shall make this offer. If within the next three years C.I.E. save anything on the £1,000,000, I will insist on their standing this House an excursion in the Radio Train to Killarney. We shall all be singing there and back, we shall be so happy about their achievement. I want to say this to Deputy Sweetman. In connection with temporary borrowing, they had, under the 1950 Act, these temporary borrowing powers up to £1,500,000. They utilised that to the extent of £800,000 in 1956.
I had to repeat it.
They have been stopped from borrowing that money. One of the sections of this Bill has the effect of restoring their full temporary borrowing powers.
That brings it back to £1,500,000. Assuming that Section 9 is passed in its present form, am I correct in thinking that, once that section is passed, statutory authority would not be necessary for an additional sum to be put in the Book of Estimates?
I should not like to answer that. That is a question upon which I would consult some Minister for Finance. I presume that money can be voted in an Estimate and confirmed by a Finance Act which is an Act of the Dáil that amends any other.
The Tánaiste is there 19 years. He ought to remember that money voted on Estimate is never confirmed in a Finance Act but in an Appropriation Act.
I accept the Deputy's correction.
The argument used by the Tánaiste against Deputy Russell's amendment is either of two things, either £1,000,000 or no more. Surely the one million is not the right way? The Tánaiste to be logical should provide in the statute £1,000,000 and no more.
Could the Minister say what will be the capital liability of C.I.E. after the State has accepted responsibility for the payment of £16,000,000?
£13,500,000. The position in that regard is that C.I.E. are being released entirely of all capital liabilities carried on from the pre-1950 company or the old G.S.R. The only capital liability they will carry in future will be the actual outlay on new capital equipment incurred by the present C.I.E. organisation since 1950.
Will the Minister say what will be the annual charge on C.I.E. in order to meet that £13,500,000 capital liability?
I would require notice of that.
Perhaps the Minister will get the information and we can come back to it again.
C.I.E. is a national undertaking and it is bad principle to guarantee under this arrangement any payment, it does not matter whether it be £1,000,000 or £500,000, five years ahead without the national undertaking at least coming to the Minister and justifying payment. I share the Minister's view that £1,000,000 may not be sufficient. Having regard to C.I.E's past history and even with the reorganisation under this Bill, it is quite likely that £1,000,000 may not be enough. I suggest that the guarantee is bad principle. I do not agree with the Minister that it is conductive to ensuring that the Board will be keener to save. That is not my personal opinion. Do we apply the same principle to Aer Lingus or Irish Shipping or any other body? Perhaps they are on a different basis. If one once applies this principle even to a national undertaking with a statutory basis, I do not see why it should not be applied anywhere else.
The Deputy is missing another point. Let us be optimistic and assume that C.I.E. will not require £1,000,000 in any year. Does the Deputy really think that it would be practicable for them so to complete the reorganisation that they would not require something in the sixth year? What I hope is that C.I.E. will have something to save which will enable them to taper off their requirements in the way of subvention so that there will not be an abrupt change in the fifth year which will create financial difficulties.
Deputy O'Higgins referred to the fact that whether or not they require it they will get it.
That is right, and they can build up a reserve. Would it not be a good thing to see them with some sort of financial reserve?
The Minister, who is adept at parliamentary debate, says that if C.I.E. succeeds in saving anything out of this £1,000,000, he will arrange an excursion for us all to Killarney in the new musical train.
I said in the third year. I would even go with the Deputy.
In the name of Providence, why should the board save anything, or does the Minister imagine that the board will be let save anything, when there is provision in sub-section (2) of Section 9 that the board shall utilise such payments, so far as may be necessary, to defray the interest on its transport stock and may apply the balance for the purposes of its undertaking in such manner as it thinks fit? If you were dealing out money to Michael the Archangel and said to the Archangel: "After you have met the commitments necessary to defray the interest on your transport stock, you will have the remainder of it with discreation, either keeping it in reserve yourself and tapering off your demand later on or refunding to the Minister any balance that lies in your hands——"
The whole point is that they do not have to refund. It is a Grant-in-Aid.
Does the Minister seriously believe that, in the circumstances of a public undertaking of this character, with the demands that will be made upon them, they will be allowed to accumulate a reserve? Under Deputy Russell's proposal, if to defray their interest charges and to meet the charges that come in course of payment in a given year they have to lay out £850,000, they could only get from the Minister the £850,000 and they would have to come back to the Minister if they wanted to get the remaining £150,000. Therefore, if there was some extravagant demand made upon them they would say, "There is no source from which we can meet your demand except by going back to the Minister and he will not give it to us for that purpose." But, under this arrangement, suppose they do save £150,000 and it is lying there for all the world to see and the prospect is that in the second year they will save another £200,000 and they now have £350,000 in the heel of their hand, with the prospect of getting £1,000,000 a year in the following three years, does the Minister seriously believe that they would be let get it?
I do not believe they will have it in that form, that they would be foolish enough to have it in that form.
Either case can be chosen. One is that the whole £1,000,000 would be handed to them and would have to be spent within the year. The other is that there would be a margin over which they will be allowed, under this section to retain. All Deputy Russell proposes is that they will have to come back each year to the Minister and, if the happy prospect of our all getting this trip to Killarney in the musical train should eventuate, the board will be in the position that, instead of drawing the money out and improvidently expending it in a given year and possibly making permanent commitments in response to pressure put upon them, in view of their circumstances in any given year, they will, in fact not draw the whole £1,000,000 from the Minister and be in a position to say, "If we went to him for that balance, he would not give it to us for this purpose." What disadvantage is it to have the proposal that Deputy Russell puts in, that before they draw the money they will have to satisfy the Minister as to the propriety of the purpose and have a year by year review which will fortify the board against the concession of unreasonable claims put upon them by influential customers who want special concessions in regard to freight? I do not refer to other forms of pressure, but other forms of consideration which may also be pressed upon them.
Let us be realistic about this.
Yes.
The board will require every penny of this £5,000,000 during the five-year period and it is probable that the £1,000,000 will not be enough in 1959 or, possibly, in 1960 and that during those two years it will have to resort to temporary borrowing to meet revenue deficiency. The hope is that by 1961, 1962, or 1963, they will be able to get a surplus of revenue which will enable them to repay that temporary borrowing and, if they achieve that, they will have done as much as we, looking forward at this stage, can regard as reasonably probable.
Amendment, by leave, withdrawn.
Question proposed: "That Section 9 stand part of the Bill."
Would the Minister explain what is sub-section (3) of Section 30 of the Act of 1950?
The Government has guarantee the payment of interest upon transport stock and that sub-section maintains the Government guarantee. If C.I.E. do not pay, the Government has to pay. In other words, the Government is not defaulting in its obligation to the stockholders under the guarantee of the repayment of their interest and capital.
I thought that under Section 10 the Minister for Finance was taking over liability for these stocks?
No, only of the 3 per cent. stock. There are other stocks issued which are still the liability of C.I.E.
The remaining ones —yes.
Question put and agreed to.
Section 10 agreed to.
SECTION 11.
Question proposed: "That Section 11 stand part of the Bill."
When do we discuss the change in the balance sheets?
I suppose Section 10 is the section which effects the main change in capital liability by wiping off the 3 per cent. 1955-60 stock. The total capital liability of that stock is £9,889,083. That liability is being removed from C.I.E. and becomes a liability of the Minister for Finance, and consequently will not appear in the C.I.E. balance sheet as a liability of theirs in future.
If you take that out of the capital liability side of the balance sheet what will they take out of the other side?
The C.I.E. argument is that there was nothing on the other side. The argument they put up was that they could never pay their way because they were carrying a load of liabilities on capital account which was represented by the decrepit assets which they took over from the old G.S.R., and which had to be scrapped and replaced. The effect of the change is that C.I.E. are being relieved entirely of all capital liability accruing before the establishment of the present company in 1950. The only capital liability attaching to the undertaking in future will represent investment which they have incurred since then in the new rolling stock which is as up-to-date as it could be.
I see that, but does the Minister say that £9,000,000 ought to be taken out of the balance sheet altogether?
That is right.
Then something will have to come out of the other side.
They will write down the fixed assets.
That is the point I mentioned earlier. If they write down their fixed assets they will write down the depreciation charges, too.
The assets which that capital liability represented have been scrapped anyway.
I am not making myself clear. We are at a disadvantage in that we have not got the latest accounts for C.I.E. The accounts I am looking at are a year out of date but my point is this. At that time there were losses of nearly £7,500,000. They will go out presumably and that will leave a balance over and above of £7,000,000 or £8,000,000. Will that come off their fixed assets?
It will be entirely a matter for themselves. The construction of the balance sheet will be their concern.
The committee of inquiry recommended to relieve them of these obligations. They could write down some of their fixed assets and thereby reduce their depreciation charges.
That is right.
If that is taken into consideration in assessing their losses over the next five years, depreciation charges will be lower than they have been up to now.
Railway depreciation is on a different basis from ordinary commercial undertakings and the calculation of all the C.I.E. losses largely depends upon what you assume should be the proper depreciation provision. That depreciation provisions is very hard to extricate from their maintenance expenditure. It is an expert job to understand the finances of railway undertakings of that kind, and I would not attempt to explain it here. One of the arguments which is always going on between C.I.E. and the Government is the extent to which the depreciation provision is actually used for maintenance or used for replacing capital assets.
Is this write-off not made on the basis of the recommendations of the Beddy Report?
The Beddy Report said: "Write off £11,500,000," and that is the liability which is not now represented by assets.
It is done on that basis?
That is the precise basis they recommended, but we got the same figure by another method.
C.I.E. have been frequently castigated in this House because of the condition of their balance sheet. However, it is only fair that something should be said for C.I.E. in respect of the capital liabilities which are now being written off. C.I.E. could never meet these capital liabilities. Anybody who will examine the balance sheet can see quite clearly that there never was any real prospect that these liabilities could be met by C.I.E. except by borrowing from the State and owing the State a substantial sum of money which they could never repay.
This has to be said and should be said for C.I.E. When C.I.E. took over the old G.S.R. it took over in a very large measure a collection of transport junk. The rolling stock was in a wretched condition. The permanent way was dangerous over large sections of the country. New wagons had not been built for years. The engines were old and on the traction side there was a long period since any rolling stock was purchased. C.I.E. took over a transport undertaking which was in such a condition as not to constitute an asset at all either from the point of view of its balance sheet or even its break down value.
To what date does the Deputy refer?
I am referring to 1948 or 1950.
1944.
Yes, 1944.
There would be no expenditure on capital assets between 1944 and 1950.
In 1944 they took over the G.S.R.
Yes, but the same locomotive wagons were there in 1950.
The locomotives had longer service than many of the older members of the staff. It was quite an antique transport system.
They had not been pensioned off.
C.I.E. took over that undertaking which was enough to cause perturbation to very stout and daring hearts. They spent a considerable sum of money in the renovation of the permanent way, in the modernisation of the undertaking generally, and in the replacement of rolling stock. All that has undoubtedly involved C.I.E. in very heavy capital expenditure, but C.I.E. at present cannot be blamed for the ramshackle undertaking which they took over. It was essential in the public interest that C.I.E. should spend money in trying to give the community a modern service and in that respect they did a good job. I do not think they have sold on their own behalf to the community the value of the job they did in that field, but that has to be said for them in all fairness.
I have been critical of C.I.E. from time to time in certain respects but I would be less than fair and just if I did not pay a tribute to them for the way in which they have managed to transform this disreputable, out-ofdate transport equipment which they inherited from the G.S.R. In so far as they incurred capital expenditure doing that it was inevitable, and in similar circumstances the same expenditure would have to be undertaken no matter what body of people were responsible for the administration of C.I.E., having regard to the supposed assets which they took over from the G.S.R.
I should like to question the Minister's figures. As I understand the position, under sub-section (1) of Section 10, £9,889,000, and under sub-section (1) of Section 11, £5,600,000, were being wiped out and taken away from C.I.E. out of their balance sheets. That amounts to £15,500,000. The Minister said a second ago that it was £11,600,000 that would be written off. I do not think that is right. Paragraph 409 of the Report recommended that £11,600,000 should be written off the balance sheet, but the figures in sub-section (1) of Section 10 and sub-section (1) of Section 11 are cumulative. They do not overlap.
The write-off of capital liability is the £10,000,000 of the 3 per cent. 1960 Stock, the £803,000 of temporary borrowing which was repaid by the Exchequer, and the £1,000,000 advanced last year out of voted moneys for capital purposes. The balance of £5,600,000 is the amount due by C.I.E. in respect of interest paid upon the Transport Stock by the Exchequer in C.I.E.'s default. The total write-off relief is approximately £16,000,000 but only £11.6 million of that is expressed as a capital liability, money advanced to C.I.E. for capital purposes.
But the £4,820,000 is in the Profit and Loss Appropriation Account in the books of C.I.E.
Yes. This is money which is due from C.I.E. because the Exchequer had to pay the interest.
And this is in paragraph 409 of the Tribunal's Report as being in the Profit and Loss Appropriation Account, £5,719,000.
The Deputy is correct. The total write-off is £16,000,000.
Progress reported; Committee to sit again.
The Dáil adjourned at 10.30 p.m. until 10.30 a.m. on Thursday, 29th May, 1958.