I move:
That a sum not exceeding £46,397,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1973, for the salaries and expenses of the Office of the Minister for Posts and Telegraphs and of certain other services administered by that Office, and for payment of certain grants-in-aid.
At the outset I would like to refer to the notes which I have had circulated to Deputies. I hope that Deputies will find the statistical and other information in them useful in their consideration of the current year's Estimate for my Department.
The net Estimate of £46,397,000 for 1972-73 shown in the Estimates volume represents an increase of £6,416,000 on the corresponding figure for 1971-72, including Supplementary Estimates and the amount transferred from the Vote for Pension Increases and Allowances. The increase is made up of extra provisions totalling £8,677,990 under 12 subheads, offset by a reduction of £20,000 in one, and higher receipts amounting to £2,241,990 under Appropriations in Aid.
The increase shown under subhead A is £3,422,000, of which approximately £1,800,000 is to meet the extra cost during the current year of the pay awards, including the first phase of the 13th round, which were granted last year. Most of the balance is to provide for additional staff, mainly for the telephone service.
The following comments are offered on the other subheads which show substantial variations from last year's provisions:—
Under subhead B an additional £288,000 is required mainly for higher rates of travelling and subsistence allowances and increased payment to the Civil Service Commission for recruitment costs.
The extra £750,000 under subhead C is required to meet higher expenditure on new sites and buildings, the cost of additional leased accommodation, extra cost arising out of the abolition of the "half rent" rating system for Government property and higher charges for maintenance, electricity and fuel.
Subhead D is up by £188,000 because of increases in charges for the conveyance of mails.
Under subhead E an extra £508,000 is required for additional and replacement vehicles for the postal motor fleet, payment of computer rental and increased costs of postal and general stores.
Under subhead F £1,706,000 more is required to cover the cost of engineering stores and equipment and contract works, arising from expansion of the telephone service.
Subhead G, which provides for telephone capital repayments, is one which automatically grows from year to year with the continuous investment of capital in the telephone service. The extra amount required in the current year is £1,420,000.
Under subhead J £109,000 more is needed, mainly to meet the cost of higher pensions and gratuities following increases in rates of pay.
The extra £258,000 provided under subhead L.1. reflects the estimated receipts for a full year from the higher television licence fee which came into operation as from 1st September, 1971.
On the receipts side, the increase of £2,241,990 shown under subhead T arises mainly because an extra £2,620,000 making £13,730,000 in all, is being provided this year for telephone development. Perhaps I should explain that expenditure on telephone development is first charged to the ordinary subheads—principally subheads F and A and to a lesser extent subheads C and B. The cost is subsequently recouped from telephone capital funds and brought in as an Appropriation in Aid.
There has been no striking change in the pattern of development of the postal and telecommunications services. Postal traffic in general remained in 1971 on a par with that of the previous year; the telephone service continued its rapid growth; the number of telegrams handled fell away; and the telex service continued to surge ahead, to the advantage of the community and of the Post Office revenues.
As regards the quality of service given, I think that on the whole there is general satisfaction with the postal service although some complaints are inevitable, and well-founded complaints are always welcomed as an opportunity to put things right which have gone wrong.
The telex service is being given very special attention. To ensure that its progress will continue unimpeded arrangements have been made to double the capacity of the system in the next two years.
Demand for telephones during 1971-72 was 13 per cent higher than in the previous year and has since accelerated. There were 21,000 connections made in the year but the waiting list grew by 7,000 to 22,500. The fact that there are corresponding waiting lists in virtually every country in the world is, I know, small consolation to those people waiting patiently or impatiently for service.
Much has been done to improve the quality of the telephone service and to meet the constantly growing demand, but I am fully conscious of the fact that what has been done is not enough. In my Estimate speech last year I mentioned that it had been necessary in the previous year to curtail the programme of works owing to shortage of capital funds.
It is clearly essential that even greater efforts be made to meet public demand for telephones and to see to it that those who have telephones get first class service. I am glad to say that in 1971-72 the Government agreed to increase the original allocation of capital for telephone development from £9.48 million to £11.11 million, and for 1972-73 the allocation of £13.73 million has been approved. Forward commitments for major works contracts —mostly exchanges, trunk and other equipment—amounted to over £11 million at 31st March last.
Lack of spare capacity and, indeed, overloading of exchange and trunk plant have been the cause of difficulties experienced by subscribers and callers during the year. In many exchange areas delays in taking on new subscribers are due to the same cause. Particulars of what has been done by way of providing extra trunk circuits and of the major trunk schemes in progress or contracted for are given in the notes circulated to Deputies.
A provisional five-year contract for the supply of exchange equipment has been entered into with L. M. Ericsson of Stockholm who for some years past have been successful in getting most of such orders in competitions open to all manufacturers. This contract will enable manufacture of equipment to be planned by the company well in advance and delivery and installation to be effected more speedily.
We have long felt that with the big investment being made by the State in telecommunications it would be very desirable to have more exchange equipment manufactured here if the manufacture could be the base for development of an export industry. The home market alone is not big enough to support such an industry on competitive terms even if given all Post Office orders. The IDA in consultation with my Department, invited all the principal suppliers of such equipment to submit proposals for establishment of an industry, with the attraction of a guarantee of orders for portion of the Post Office requirements over a period. In the event, the offer made by L. M. Ericsson was the most attractive and the IDA is engaged in negotiations for the establishment of the factory. Details have not been finally settled as yet.
The establishment of the factory, apart from the employment it would give, would bring the advantage of a source of supply and manufacturing expertise to the country. I should stress that the contract with L. M. Ericsson will not be exclusive—part of the Department's requirements of exchange equipment will continue to be bought by open competition. I shall return later to the general question of telephone development problems.
Data for computers can be transmitted over the public telephone and telex networks or by means of leased telephone and telegraph circuits. This service, although relatively small at present, has a considerable potential for growth. Developments in the data transmission field generally are being kept under close review. I mentioned in my speech on last year's Estimate that my Department had joined with other European telecommunications administrations in a special study of future prospects in this field. The study is in progress and a report is expected early in 1973.
Substantial progress has been made in the provision of new post office buildings and in the extension and improvement of existing buildings. New telephone buildings or extensions were completed at many centres including, Clonmel, Drogheda, Dundalk, Limerick, Longford and in Dublin at Dundrum, Nutley Park, Phibsboro and Rathcoole. Improvements in manual telephone exchanges or postal accommodation were carried out at Ceanannus Mór, Cork, Lifford and Newcastle West.
Works in progress or contracted for include a new post office at Nenagh, improvements to the public offices at Bandon, Dundalk and Roscommon post offices, a new auto-manual exchange and engineering headquarters at Castlebar, and new telephone buildings or extensions at Monaghan, Roscommon and 21 other provincial centres; and in Dublin the reconstruction of Phibsboro Post Office, a new district sorting office at Glenageary, an extension to Harmonstown district office, a computer centre at Dundrum and new telephone buildings or extensions at Crown Alley, Dame Court, Harmonstown, Malahide, Merrion Exchange, Shelbourne Road and Tallaght.
The savings services had a successful year. Details regarding new investments, repayments and totals remaining invested for the savings media with which my Department is directly concerned are contained in the notes circulated to Deputies. The notes also give particulars of the growth of Trustee Savings Bank business. I should like to express my special appreciation of the excellent work being done by the National Savings Committee in the cultivation of the savings habit.
The value of money orders issued in 1971 was £55.7 million as compared with £86.2 million the previous year. The value of postal orders issued in 1971 was £12.7 million compared with £14.2 million in 1970. The figures for both money order and postal order business in 1970 were, of course, abnormally high because of the banks dispute. Agency service payments made by the Post Office, mainly on behalf of the Department of Social Welfare, increased from £81.5 million in 1970 to £92.7 million in 1971. Post offices took part as usual in the sales of prize bonds, handling about 29 per cent of the total collected in 1971.
The Department as the employer of a staff of about 22,000 men and women is naturally concerned with the efficiency and welfare of these employees. With so big a staff in a great number of grades, problems will inevitably crop up from time to time. I am happy to say, however, that in the period under review it has been possible to solve almost all the problems that arose by reasonable negotiation. For the settlement of such difficulties there must be a high degree of trust between both sides and a willingness to see the other side's point of view.
These do not grow up overnight. They require careful cultivation and both the staff organisations and management have been working together for many years to create a climate of good relations by bringing regulations into line with current needs, by improving channels of management-staff communications—and by involving staff to a greater extent in the conduct of affairs. Good staff management relations benefit both the staff and the public Staff co-operation is, of course essential for the improvement of efficiency to offset in part the effect of increases in pay and other costs.
The 13th round pay settlement for the Civil Service generally will cost the Department about £3.1 million in the current year and £4.7 million next year. In addition, as I said in the debate on last year's Estimate, claims for pay increases on an individual grade basis were being negotiated on behalf of the staff. The cost of settling these grade claims will add close on £2 million a year to the Department's wages bill. The increases granted are in harmony with the provisions of the National Employer-Labour Pay Agreement. Improvements in other conditions which have been secured by the staff will also add to the Department's costs.
I am glad to say that, as a result of an agreement last year on a staff claim at the General Council under the Scheme of Conciliation and Arbitration, a substantial improvement was made in the retirement gratuities for part-time staff and a pension scheme for full-time unestablished staff was introduced.
Arrangements for the introduction of computer working in the Department are well advanced. Delivery of the Department's own computer is expected next year, and in the meantime it is expected that much of the Savings Bank work will be processed by other computers. All telephone trunk statements are already being processed by a computer bureau. The pace at which the Department will be able to computerise its major clerical operations will depend largely on the availability of the necessary specialist staff. This staff is being built up and trained as quickly as possible. It is hoped that over the next few years most of the major blocks of clerical work in the Department will be converted to computer operation, and that, in addition, the use of computer techniques will assist in the flow of management information.
My Department has felt for some considerable time that it would be advantageous to have the Department's accounting system examined by experts from outside the Civil Service. An incidental benefit which it is hoped would flow from such an examination would be the provision of earlier and more comprehensive management information. A firm of consultants has now been commissioned to do this work. They began their assignment early in September and it is hoped that they will have completed their examination by next summer.
As Deputies are aware, the Department publishes commercial accounts which present its position as a trading concern. It is largely on the basis of these accounts that financial policy, including the fixing of charges, has been determined. The accounts for 1970-71, preparation of which was heavily delayed in the aftermath of the banks strike, were recently laid before the House.
Appendix C of the Estimates volume provides a summary of the commercial account results for the four years 1966-67 to 1969-70 and provisional figures for 1970-71. It will be seen that there was an overall surplus of £513,000 in 1969-70. The accounts for 1970-71 show an overall deficit of £1,707,000 approximately, made up of deficits of £1,608,000 on the postal service and £261,000 on the telegraph service partly offset by a surplus of £162,000 on the telephone service.
The overall deficit of £1,707,000 in 1970-71 is somewhat higher than was expected when we were discussing last year's Estimate in November. On the other hand the deficit for 1971-72 is not now expected to be as high as appeared likely at that time. Present indications are that the outturn for 1971-72 was an overall deficit of about £1½ million. Costs will rise substantially in 1972-73, mainly because of pay increases which have already been authorised or which will become due under the second phase of the 13th round. Expenditure in 1973-74 will rise further as a result of the first phase of the 14th round pay increase which comes into effect on 1st June, 1973. The financial position is being kept under review and if changes in rates of charges become unavoidable ample advance notice will be given.
I should like to make some general observations about the postal and telecommunications services. These two services present quite different problems.
As I stated earlier, the quality of the postal service is generally regarded as satisfactory. It is certainly superior to that of most countries in Europe and indeed in the world. But inflation is constantly forcing up costs in money terms while the redistribution of population causes additional expenditure in new areas without enabling economies to be effected elsewhere. In 1970-71, the latest year for which audited figures are available, staff and associated charges were responsible for 77 per cent of expenditure. The costs are only marginally affected by the volume of mails. Dublin is the only centre with sufficient mail volume to permit of any significant use of mechanical aids and even there economies to be secured are marginal.
The notes circulated to Deputies show clearly how costs are rising and the unfavourable effect on the financial position.
I do not propose to enter into the subject in any detail at this stage. The Departmental Committee which I set up in September, 1970, to consider the structure, operation and finances of the postal services, including counter services, are expected to report early in the New Year. I may mention that through our membership of the Universal Postal Union (UPU) and the European Conference of Postal and Telecommunications Administration (CEPT) the committee have available to them the result of similar studies carried out in many other postal administrations all of which are confronted with many similar problems.
The telephone service has quite different difficulties. The greatest of these is shortage of capital and failure to earmark sufficient capital for telephone purposes for the necessary number of years ahead. For an efficient telephone organisation, which should be able to give satisfactory service to all its customers, and to provide telephones for all newcomers who want them, it is an absolutely indispensable requirement that works be planned five to ten years ahead so that sites may be got, buildings erected, exchange equipment manufactured and installed and cables provided well in advance of demand. To do this there must be assurance that adequate capital will be available and that the capital needed will not be withheld when some Exchequer financial problems crop up.
I am sorry to say that these vital conditions have never been met for the telephone service, although everyone recognises it as fundamentally necessary for the commercial and social life of the country. My Department have had the experience repeatedly of being pulled up short in their construction programme because of lack of funds and having to devote engineering resources to make-shift and uneconomic expedients which multiply difficulties for the future. It follows that on each occasion when money is again stated to be available a fresh start has to be made and works replanned, and we have to take a place further back in the queue for delivery of equipment from manufacturers. All this would be bad enough if Ireland were highly developed telephonically but we are only at the early stages of the telephone intensity which public demand will require.
The surge in demand for telephones in recent years has taken even intensively developed telephone administrations by surprise and caused waiting lists for new telephones and congestion of calls for existing subscribers in every country. The rapid acceleration of demand in Ireland did not take us by surprise but the Department simply had not the resources to deal with it adequately. It is no pleasure to me or to the staff of my Department to be placed in this situation and we are doing everything possible to have it remedied, but the effects of past restrictions, unfortunately, will continue to be felt for some years yet even if all the capital needed is guaranteed for a long term of years, as I have some reason to hope may be possible as a result of our joining the EEC.
Financial problems are not, of course, the only ones. There are serious staffing problems also in this highly technical service but I am convinced that these can be overcome. Moreover, I am aiming at securing a substantial continuing gain in productivity by use of new improved methods and equipment which will help to reduce costs. Technical developments in telecommunications are coming fast and continuously, and I am more than hopeful that they will be sufficient to offset the financial effects of inflation in this less labour-intensive service. Happily, we have been assured by staff organisations of their full co-operation in improving efficiency.
Let me turn now to the financial side of the telephone service. Few people realise that the final figures of profit and loss on Post Office services are determined after charging not only full depreciation on a replacement basis but also interest on the entire net capital invested in buildings, plant and equipment. The entire capital is treated as loan capital. If the Department were to present figures on the basis of "operating" or "trading profits" arrived at before charging interest a very different picture would be shown.
For example, in 1969-70, the amount charged for interest on telephone capital was £3,491,000. Taking this into account it could be claimed that there was a surplus, not of £893,000 as shown but of £4,384,000. Similarly for 1970-71, in respect of which I have mentioned a surplus of £162,000, the position is that before payment of interest on capital there was a profit of £4,052,000 and we estimate that in 1971-72 a corresponding calculation would show a profit of about £4 million instead of a deficit of about £½ million.
It is a matter for consideration whether the Department should remain such an outstanding exception to the general accounting practices of the business world and whether there is not good reason to present the results of their operations in a more realistic fashion. Such a change would bring out the favourable return on capital invested in the service.
Departing from the telephone service, I wish to mention that another matter which is receiving my consideration is whether we should continue to lump in totally uneconomic services provided for social reasons with normal commercial services. For example, the telegraph service has been a financial burden on the Post Office continuously since 1922-23, and indeed for long before. Any ordinary business organisation would long since have dispensed with such an uneconomic service, provided solely for the benefit of the community and not for commercial reasons.
Similarly, there are extensive sections of the postal service in rural areas which are hopelessly uneconomic, and should be modified substantially if commercial considerations were to prevail. Many totally uneconomic telephone lines also are provided at heavy cost. I do not suggest that the Department should discontinue any of these services but I must consider, and am doing so, whether services needed more for social than economic reasons should be financed by the taxpayer rather than carried by the Department at the expense of economic services.
There are other aspects of our present accounting in regard to which we might well be accused of being over-conservative. For example, all the agency services for other Government Departments are provided by my Department at cost, with no addition for profit, although such an addition could well be justified.
Also we are continuing to make financial provision for depreciation of buildings although many business firms, having regard to the inflationary rise in building costs regard such depreciation as unnecessary.
One could reasonably argue, too, in respect of services provided by the Department at a loss for social reasons, that the capital employed should be written off, as it has been on a generous scale for other less economic organisations.
Still in the accounting field, I have mentioned that the Department's whole capital is loan capital. This clearly is an artificial situation which would not be permitted to exist in any efficient privately-owned business. We must keep in mind, especially in connection with the development of the capital-intensive telephone service —essential as it is to the community and profitable to the Department— the possibility of securing an injection of equity capital and eventually arriving at a reasonable balance between loan and equity capital.
I have adverted to these subjects as some of the matters engaging my attention where I feel there may be justification for radical changes. But my present intention is not to reach firm conclusions about radical accounting changes before receiving and considering the report of the committee examining the postal service and the report of the consultants who, I have stated, have been engaged to examine the Department's whole accounting procedures.
As in previous years my remarks on broadcasting will be confined to the more important aspects and to matters in which, as Minister, I have a statutory function.
Statutory authority for paying RTE grants equivalent to the net receipts from licence fees expired on 31st March, 1972, but pending the passing of fresh legislation the grant for the current year has been calculated in the normal manner. Accordingly, provision is made in this Estimate for a grant of £3,463,000 to RTE in respect of licence fees. Provision is also made for a grant of £180,000 in respect of capital expenditure by the authority on Radio na Gaeltachta.
RTE's annual report for 1971-72 will be available in a few weeks and I understand that the accounts will show a very modest surplus of about £9,000.
The Wireless Telegraphy Act, 1972, which was passed before Easter is aimed at reducing to a minimum the evasion of payment of licence fees on television sets. Plans to implement the new Act are going ahead but progress has not been as fast as I had hoped. My Department have had consultations with representatives of the dealers' organisations about details of the arrangements for furnishing information regarding transactions in television sets and some further consultations will be necessary before decisions are taken on the various points. In the meantime my Department have arranged for the holding of a special campaign, which started on 30th October, to detect television set holders who have failed to take out licences.
RTE's capital expenditure on new works during 1971-72 was about £1.75 million. This includes £711,000 on wired television development, which is being financed through banks, and £295,000 on Radio na Gaeltachta, which is being financed by means of special Exchequer grants. Approximately £748,000 was spent on general broadcasting works, mainly the new radio building and equipment at Donnybrook. During 1971-72 a repayable advance of £600,000 for capital purposes was made to RTE from the Exchequer in respect of general broadcasting works. Apart from a small capital advance for the Ballymun multi-channel communal aerial system, this was the first Exchequer advance made to the authority since 1963-64.
RTE's capital programme for 1972-73 provides for a provisional expenditure of £700,000 on general broadcasting works, £180,000 on Radio na Gaeltachta and £200,000 on wired television development. A repayable advance of up to £500,000 under section 23 of the Broadcasting Authority Act, 1960, has been authorised this year for certain general broadcasting works. The total amount which may be advanced to RTE under section 23 of the Broadcasting Authority Act, 1960, as amended by the Act of 1964, is £3 million. If the full advance of £500,000 authorised for 1972-73 is taken up £2.951 million will have been made available by 31st March next.
The opening of Radio na Gaeltachta, which commenced broadcasting on Easter Sunday, 2nd April, 1972, is a significant development in the broadcasting history of the State. At present the service is broadcasting for about two hours per day. RTE intend to consider extending the number of hours of broadcasting at the end of this year when all studios are fully operational. At present the service is available in the western Gaeltacht areas on both VHF and medium-wave. Reception on VHF is available west of a line roughly from Derry to Cork and it is expected that VHF reception will be extended to the rest of the country next spring.
The Broadcasting Review Committee, which I set up in June, 1971, to review the progress of the television and sound broadcasting services and to make recommendations regarding these services, are pursuing their studies but I am not yet able to say when their report will be available.
Finally, I gladly take this opportunity of expressing my appreciation to all the staff of the Department for their services in the period since the Estimate of my Department was last debated. The Department and the public are fortunate in the staff at their service.
