I move that the Bill be now read a Second Time. The purpose of this Bill is to extend the existing statutory powers of guarantee vested in the Minister for Finance in respect of Córas Iompair Éireann.
Deputies will be already aware that there is provision in existing legislation covering the borrowing of moneys for capital purposes by CIE and the guaranteeing of such borrowings by the Minister for Finance.
Under subsection (2) of Section 30 of the Transport Act, 1950, the Minister for Finance is empowered to guarantee the repayment as to principal and interest of moneys borrowed by CIE under the provisions of that Act. Guarantees under subsection (2) of Section 30 of the Act relate to guarantees of borrowing for long-term capital requirements. CIE may also borrow for short-term requirements and the Minister for Finance is empowered also under subsection (1) of Section 30 of the same Act to guarantee such borrowings. The maximum amounts which the Minister for Finance may guarantee have been amended by the Transport Act, 1955, and the GNR Act, 1958. Under those Acts the upper limits of borrowing by CIE which might be guaranteed by the Minister for Finance were raised to £12m. for long-term and £1½m. for short-term borrowings.
The present Bill is intended to serve a purpose rather different from the existing statutory provisions governing guarantees by the Minister for Finance. The existing provisions empower the Minister for Finance to give guarantees only in respect of borrowings. The present Bill is designed to enable the Minister for Finance to guarantee, in addition to borrowings, the payment by CIE of moneys due by the Board on foot of contracts entered into.
CIE had received an attractive offer of extended payments at favourable terms for the purchase of new diesel locomotives. The terms of contract provided for payment in instalments over a period of five years, with interest at the rate of 5½ per cent. per annum on the balance outstanding subject to a Government guarantee. As the law stood, the statutory powers of the Minister for Finance did not enable him to give a guarantee in the terms required.
It is the view of the Government that acceptance of favourable credit terms such as were offered in this case should not be prejudiced by the absence of a statutory power enabling the Minister for Finance to give the required guarantee when the Minister for Finance is, in fact, already empowered to give a guarantee in respect of borrowings.
The existing statutory limit for borrowing for long-term purposes by CIE has been reached by the recent £2m. stock issue and it is not intended to propose a new upper limit for such capital borrowing by CIE until the position of the whole organisation comes to be reviewed towards the expiry of the five-year trial period provided for in the Transport Act, 1958. In any event, it was desired to accept the particularly favourable extended credit terms which were obtainable in the present case. A payment scheme of this kind amounts, in fact, to a pay-as-you-earn scheme which is a wholesome arrangement for an organisation faced, as CIE is, with the obligation to pay its way.
While the Bill gives general powers of guarantee in order to cover possible future cases of a similar type, it also makes specific reference to guaranteeing the payment of instalments specified in the contract already referred to. The reason for the taking of power to give this specific guarantee is to implement an undertaking given by the Government to CIE that power would, in fact, be sought from the Oireachtas to guarantee this specific contract. It was necessary to give such undertaking in order that CIE could enter into the contract and thus secure the early delivery of the locomotives which they require. I should say, of course, that the Government were fully satisfied that C.I.E.'s decision to acquire the locomotives is commercially sound. These locomotives are indeed essential for the maintenance of an effcient railway system even if the system has to be on a somewhat smaller scale than at present. The locomotives will, in addition, enable CIE to achieve substantial economies in operation and thus help the Board to achieve its statutory obligation to pay its way.
It is the intention of C.I.E. to dispense with all steam traction. The number of diesel engines that will be in commission when the 37 new engines have been delivered relates to the maintenance of the main arterial rail renewals.
The position here is similar to that in other countries. Railways provide an economic satisfactory service for long haul fast passenger traffic when the trains do not have too frequent stops, and for certain types of long haul goods traffic. They also fill a need in certain suburban areas while the arterial services are able to deal satisfactorily with special peak traffics and with the influx of tourists during the holiday period.
The order for these diesel engines indicates the confidence that a main line railway system has an important part to play in the public transport section of our economy. Much will depend on the growth of productivity within the system and on definite agreements between management and staff that an intelligent attitude will be taken on the question of increases in costs in relation to productivity.
In view of the interest which many Deputies have expressed in the future policy of CIE, I have asked Dr. Andrews to send a copy of his recent address to the Institute of Public Administration to each member of the House.