I move that the Bill be now read a Second Time.
The main purpose of this Bill is to provide for payment of annual subsidy to Coras Iompair Éireann, to empower the Minister for Finance to advance moneys to the Board for capital purposes, and to make further provision for payment of redundancy compensation to railway employees whose services are dispensed with, or whose conditions are worsened because of transfer, in certain specified circumstances. The Bill also provides for writing off advances totalling £1 million made to the Board by the Minister for Finance under section 13 of the Transport Act, 1963. Other matters dealt with in the Bill relate to entry to the clerical grades of CIE, the development of property by the Board, as well as some other matters of a minor nature.
Before dealing with the Bill itself and future transport policy, I propose to review briefly the results of CIE over the past five years, the reorganisation period envisaged in the Transport Act, 1958. As Deputies are aware, the 1958 Act required the Board to break even by 31st March, 1964, and provided for payment to the Board in the financial years 1959-60 to 1963-64, inclusive, of an annual grant of £1 million. This annual grant was increased to £1.175 million by the Great Northern Railway Act, 1958, which provided for the transfer to CIE as from 1st October, 1958, without capital liability, of the GNR undertaking within the State. The Act also wrote off liabilities of CIE totalling £16.6 million, representing a saving of interest of some £600,000 per annum. To help CIE in their efforts to reduce losses during the reorganisation period, common carrier and other statutory obligations which had restricted their commercial adaptability were removed by the 1958 legislation and the Board were given complete commercial freedom in the fixing of rates and fares. The Board were also given full discretion in the termination of uneconomic rail services. Provision was also made in the 1958 legislation for recoupment by the Exchequer of the cost of redundancy compensation in respect of redundancy arising during the reorganisation period.
In the first two years of the Board's operation under the new charter granted to it by the Transport Act, 1958, hopes were high that the Board could become a viable undertaking within five years. By 1959/60 the Board's loss had been reduced to £709,000 and in the following year, it was down to £246,000, as compared with £1,950,000 in 1958/59. Unfortunately, however, this progress received a sharp set-back in 1961/62 when the Board's loss jumped to £1,696,000, due mainly to the impact of the eighth round increase in salaries and wages and associated improvements in working conditions, which represented a 20 per cent increase in the CIE wages and saleries Bill which the Board were unable to recover except to a partial extent by increased rates and fares. In 1962/63 there was a gap of more than £1 million between the additional labour costs and the counteracting fares and rates increase and the Board's net loss increased still further to £1,760,000. The most recent estimate for 1963/64 shows a net loss of £1,618,000. This shows a very marked improvement over 1962/63 when account is taken of the additional net cost to the Board in 1963/64 of the ninth round increase in salaries and wages, estimated at £236,000 in the last three months of the year, and of the net cost of the May, 1963, bus strike which amounted to £342,000.
Over the five year period, the Board's losses totalled £6,029,000 as against the aggregate subsidy of £5,875,000 provided for in the Transport Act, 1958. The difference of £154,000 was met by borrowing from the Exchequer and is part of the £1 million being written off in this Bill. The Board have not succeeded, despite far reaching reorganisation and modernisation, in achieving the target of breaking even by 31st March, 1964, and for reasons I will deal with later the target can now be seen to be unrealisable in Irish conditions. Over the five years the Board's expenditure on additions to capital assets, excluding hotels, was £5.2 million. Interest on capital and sinking fund are, of course, included in the losses of the Board.
The preponderating element in the results over the five years is, of course, the railway. The operating deficit on the railway which amounted to £1,247,000 in 1958/59 fell to £854,000 in 1959/60 and to £477,000 in 1960/61, but rose again to £1,362,000 in 1962/63 and fell to an estimated £772,000 in 1963/64. Total operating deficit on the railway over the five years was £5,058,000 compared with a total CIE loss of £6,029,000 but the total loss included financial charges of over £4 m, of which no element is included in the deficit on railway working.
The Road Passenger Department, of which Dublin city services contribute 64 per cent of the revenue continues to be profitable. The working surplus, before charging sinking fund for capital redemption and interest on capital amounted to £266,000 in 1963/4 as compared with £480,000 in 1962/63, with £511,000 in the preceding year and £764,000 in 1960/61 and surpluses of a similar order in preceding years. The steep decline in 1963/64 was due to the May, 1963, bus strike, the net cost of which, as I have already indicated, was £342,000, but with the continued growth of private transport it is possible that road passenger services may not in future be as profitable as in the past. Road freight transport has shown a marginal profit over the past few years but in 1963/64 it had an operating loss of about £80,000. The working surplus on hotels and catering has been well maintained since 1958/59. In 1963/64 the working surplus, before charging sinking fund or interest on capital, amounted to about £53,000 compared with £44,000 in 1958/59. In December, 1961, a subsidiary company, Óstlanna Iompair Éireann Teo., was formed to operate the Board's hotels and catering service. In May, 1960, the operation of CIE barges on the Grand Canal was discontinued and the working loss on canals fell from £79,000 in 1959/60 to £51,000 in 1960/61 as a result. In 1963/64 the working loss was about £39,000. Vessels, docks, and so on, continue to show losses which amounted in 1963/64 to an estimated £29,000.
It will be clear from the foregoing that the losses of CIE are accounted for almost entirely by the losses on the railways. The railway system continues to be the main problem of public transport with which the Government have to deal.
The Beddy Committee envisaged the reduction of the CIE railway system to a main line one consisting of approximately 850 miles, to which must be added 63 miles of the former GNR Dublin-Belfast line, but the Transport Act, 1958, left full discretion to the Board in the matter of the termination of uneconomic rail services and in the provision of substitute services, if any. The new Board adopted the policy of substituting road services for any rail services closed down.
Between 1st October, 1958, and 31st March, 1964, the Board closed 621 route miles of railway line, which together with other reductions and alterations reduced the railway system to about 1,460 route miles. A number of lines have also been closed by CIE to passenger traffic and are now used for freight only or for freight and excursions. In addition, 218 stations and halts were closed by the Board during the reorganisation period compared with the closure of some 317 stations and halts envisaged by the Beddy Committee. A number of other stations have been partially closed.
Before closing a branch line, CIE carry out a detailed analysis of the cost of operation and revenue of rail services on the branch and of substitute road services, and where there is no prospect of economic operation of the branch and where a "betterment" in net receipts would accrue by substituting road for rail transport, it is decided to close the branch.
It is significant that the lines closed, even though they represented 29 per cent of the whole railway system, carried no more than 5 per cent of the total railway traffic and that the revenue derived from the closed lines and stations had not amounted to more than 6 per cent of total railway revenue. CIE have informed me that only 35 additional buses and 52 lorries, together with 57 extra lorries during peak periods were required to provide adequate and satisfactory substitute services.
The 57 extra lorries required for peak periods are supplied as far as possible from the general CIE fleet and where a sufficient number is not available the gap is bridged by hired hauliers. The financial betterment to CIE from these closures amounted to about £700,000 per annum. If these lines and stations were still in operation the losses would be heavier by at least £700,000 and this loss would grow with increasing costs.
The Beddy Committee referred to the low CIE utilisation of rail passenger and rail freight capacity in camparison with other Western European countries and felt that it was a matter of urgent necessity to improve rail utilisation. Between 1958/59 and 1962/63, the number of rail cars and carriages decreased by 27 per cent and the number of seats by 26 per cent. The tonnage capacity of rail freight vehicles declined by 16 per cent during the same period. As the volume of passenger and freight traffic has been maintained, these reductions represent a significant improvement in the utilisation of rolling stock, though because of our conditions it is still below European average. Over the same period, the number of diesel locomotives increased from 139 to 210, while steam locomotives, of which there were 347 in use in 1957/58, have been eliminated from normal working. All railway services are now operated by diesel power.
As the reorganisation of the railway was the main aim of the 1958 Act and as the losses of CIE are attributable to the railway, a closer look at railway working is worthwhile. The amalgamation with the Board of the part of the GNR system in the State on the 1st October, 1958, following the closure of the secondary cross-border GNR services, makes-detailed comparisons difficult. Generally, the pattern is that rail passenger traffic has been well maintained; there has been a decline from 11.7m. in 1958/59 to 9.8m. in 1963/64 in the numbers of passengers carried, in part due to the withdrawal of passenger services on a number of lines, the attenuation of the Dublin surburban services and the recent bad summers.
The passenger/mileage figure, which is the true index of traffic over the same period, has despite the closures, shown a slight increase from 326m. in 1958/59 to 331m. in 1963/64. Rail passenger traffic would probably have shown a decline but for the vigorous development of excursion traffic by CIE, including the introduction of day trips at single fares, the expansion of organised excursions and educational trips and mystery tours.
The tonnage of rail freight, excluding livestock, has also been well maintained. Ton mileage for freight of 187m. in 1958/59 has increased to 221m. in 1963/64, or by 18 per cent. There has been a steep decline in the numbers of livestock carried by rail over the years. The number carried in 1963/64 by rail was 379,000 compared with 536,000 in 1958/59. Carryings of livestock by CIE road services over the same period, however, have increased from 214,000 in 1958/59 to 320,000 in 1963/64, an increase of 50 per cent.
I should state here quite unequivocally that I have at repeated intervals pressed the Board of CIE to improve their publicity and advertising, both in order to get more business and make known to the public the tremendous campaign of reorganisation and the closer liaison with the public effected through sales market research staff. Along with this, I have asked the Board to consider reducing rail fares by the maximum possible.
In fact, the basic fares are comparable with those elsewhere. I am bound to believe the Board when they say they have thoroughly investigated this question and that the present range of cheap fares, excursion fares, special train journey fares, children's fares and rambler ticket rates represent the maximum they can effect without markedly increasing the deficit. Note is taken of the response to well-advertised special trains and the reluctance of the public to use train services which I can only hope will diminish with time.
The results of railway operations over the five years continue to show the same trends as in previous years which were noted and commented on in the Beddy Report of 1957. Despite improvements in utilisation of equipment, and even some advance in the volume of business, the railway is unable to recoup increased costs in competition with road transport. While the Board have been unable to combat these trends with complete success the position would have been much worse but for their efforts in many directions. Apart from the saving of £700,000 per annum from terminating uneconomic rail services, the Board have shown considerable commercial drive, with results on passenger and freight traffic already noted.
The management structure has been overhauled and decentralised and there has been a notable increase in efficiency and consequently in the public image of CIE. There have been many improvements in service such as better rolling stock, more comfortable buses, and improved passenger facilities at stations which are themselves now brighter and cleaner than ever before. The mechanisation of freight traffic has speeded up delivery and the Board claim that 85 per cent of freight traffic is now delivered within 24 hours. It has been estimated that were it not for the reorganisation carried out by the Board, including the closing of uneconomic lines, further dieselisation since 1958 and improvements in productivity, the Board's total loss would now be more than £3 million per annum.
The experience over the five years has demonstrated in a practical way that the hopes of breaking even are unrealisable. The prospects have, however, been examined in a detailed scientific way in an exhaustive study made by CIE. The objectives of the study—now known as "Pacemaker"— included a review of the salient features of CIE, their place in the national market for transport, their activities, finances, commercial policies, engineering services and industrial relations. The two more important parts of the Pacemaker report are devoted to an analysis of the profitability of the various sections of CIE and an examination of possible alternative systems of providing public transport. Copies of the report were placed in the Dáil Library some weeks ago and at the same time CIE undertook to make copies of the report available to the trade unions and, on request to other interested parties.
In order to carry out this study, CIE had to devise an economic model and to assemble statistical data on a scale and of a complexity that was not available for previous studies of the subject. For this purpose numerous surveys were undertaken and an electronic computer system and manual methods were used to manipulate and classify the source of material relating to physical quantities and type of traffic, vehicles and man-power. Traffic flows were established for a base year and the cost of transport was calculated for different combinations of rail and road systems. In establishing traffic flows, a high degree of accuracy was achieved by suitably devised sampling methods.
I propose to give some details from the Pacemaker report for the benefit of Deputies who may not have had an opportunity of reading it.
