That a sum not exceeding £34,849,000 be granted to defray the charge which will come in course of payment during the year ending on 31st December, 1975, for the salaries and expenses of the Minister for Transport and Power, including certain services administered by that Office and for payment of sundry grants-in-aid.
This Estimate, for the calendar year 1975, compares with a total of £20,629,000 shown for this vote in the Book of Estimates for the nine-month period 1st April, 1974 to 31st December, 1974 plus a supplementary estimate of £5,000,000, that is a total of £25,629,000 for the nine-month period.
The subject of energy has taken on greatly increased importance in the Department during the past two years. Prior to the recent crisis western society enjoyed a period of abundant and relatively cheap supplies of oil. The striking economic expansion and the associated rise in standards of living of the last couple of decades were to a great extent fuelled by the availability of such cheap and plentiful energy. Ireland shared in this development and, in the process, we came to rely to an undue extent on a single primary energy source.
The vulnerability of such a position was brought home to us all by the restrictions on oil supplies from the Middle East in 1973 and by the fourfold increase in crude oil prices which followed. The total increase in the cost of our annual oil imports is of the order of £130 million. This has caused an unprecedented rise in the adverse balance of payments, a problem which will persist for some years. It has also meant a considerable reduction in the purchasing power of the community, a development which has contributed to current business difficulties and to the rise in the level of unemployment.
These problems pose a very serious challenge for all consumer countries. The difficulties for Ireland are particularly acute because of the extent of our dependence on oil, because of the absence of large-scale alternative energy sources and because a rapid cutback in oil consumption could seriously impede our economic development. It is clearly essential that our future energy policy, now under review, should offer constructive and realistic alternatives to the uncertainty and vulnerability of our present position. We must reduce our critical dependence on imported oil through the further development of our turf resources, through the development of other alternative energy sources and through the rational and efficient use of presently available supplies.
Our problems in the energy sphere are, of course, a reflection of much wider international problems. As a small country whose growth is closely linked with the development of external trade, we must obviously work closely with other countries experiencing similar problems and pursuing similar objectives. The main international organs for such co-operation are the European Economic Community and the International Energy Agency, which was established in November last under OECD auspices.
When the oil crisis first developed in 1973, European countries found it difficult to make common cause and this led to some diversity in approach. Since then, considerable effort has been directed towards the formulation of a common energy policy for Europe. At a council meeting of energy Ministers on 17th December, the EEC adopted policy objectives to be achieved during the next ten years. These objectives envisage a curtailment of the growth of energy demand so as to reduce demand by 1985 to a level 15 per cent below earlier estimates. They envisage also a reduction of the Community's dependence on imported oil from the present level of approximately 63 per cent to 50 per cent or lower by 1985. It is planned to achieve these objectives by a more rational use of energy, by the development of indigenous resources and by the promotion of nuclear energy. The specific measures by which these objectives are to be pursued are continuing to receive the attention of the appropriate committees and working parties of the EEC under the chairmanship of my Department.
As a first step a meeting of energy Ministers under my chairmanship on 13th February, 1975, approved guidelines for energy policy to be put in hand, at both national and Community level, for the various energy sources. These guidelines relate to investment and pricing policies and they envisage the possibility of Community financial support in some areas. With regard to specific energy sources, the Council proposed the maintenance of Community coal production at its present level, the development of brown coal and peat production and the basing of large-capacity electricity generation stations on nuclear power, provided that safety and ecology problems are solved to the satisfaction of member states. With regard to oil, Council urged the optimum development of oil resources within the Community under satisfactory economic conditions and the seeking out of diversified and secure external sources. Other measures aimed at achieving Community energy objectives are at present under examination by energy groups under Irish chairmanship. They deal with such matters as the possibility of financial assistance for off-shore exploration, common rules for import and export of oil, measures to be taken in the event of oil supply difficulties and loan facilities for the financing of nuclear power stations. There will be a further meeting of the energy council before the end of May and I am hopeful that council will reach a decision on these and other energy proposals, which would represent a significant advance in the development of Community energy policy.
The Dáil already has before it a separate motion on the question of Ireland's participation in the work of the International Energy Agency and I do not consider it necessary to go into the matter on this occasion.
Apart from the commitments arising from our membership of the EEC and the IEA, it is essential in our own interests to conserve energy and my Department, in consultation with other interests concerned, is pursuing an active programme of energy conservation. Since the late 1950s my Department has administered a technical assistance scheme to promote greater fuel efficiency in industry. Currently the scheme provides grants of up to 50 per cent to industrialists and hoteliers towards the cost of engaging consultants to carry out fuel efficiency surveys. The scheme extends to boiler instrumentation and efficiency tests on boilers.
The Institute for Industrial Research and Standards and a number of other State bodies are deeply involved in the energy conservation programme. The fuel efficiency services of the institute have been expanded and their advisory, information and technical consultancy services considerably developed. Seminars have been organised on energy conservation for industry as well as courses for boiler-men and power-house operatives.
As an example of what can be achieved, I may mention that in the period November, 1973, to December, 1974, the institute undertook 71 major fuel saving projects and energy audits and 250 boiler efficiency tests. The savings achieved were estimated at 11 per cent of fuel consumption in the plants concerned, amounting to approximately £160,000. The institute estimates that the application of modern boiler house practice on a national level would achieve a saving of 125,000 tonnes of oil per annum. I cannot speak too highly of the work of the institute in this field.
The IDA provides grants of up to 25 per cent of the cost of machinery, equipment and building modifications aimed at fuel economies, and grants of up to 50 per cent of the cost of suitable research and development projects. The IDA, in examining grant applications for new industry, attaches significance to the rational use of energy in plant, and grants may be conditional on modifications being undertaken to achieve greater fuel efficiency.
Bord Fáilte gives grants to existing hotels and guest houses for machinery, equipment and building modifications to achieve energy conservation. The grants are available at up to 50 per cent of the cost involved, according to the tourism importance and potential of the premises.
The Minister for Local Government commissioned An Foras Forbartha and the IIRS to report on thermal insulation in houses and other buildings. An interim report makes recommendations in regard to reduction of heat losses through walls, roofs, doors and windows. This report was published for comment by interested parties and the Minister for Local Government will be considering, in the light of these comments, what measures to adopt to improve thermal insulation in the construction of grant-aided and local authority housing.
The total cost of energy consumed in the home has been estimated at £60 million for 1974. The reduction of this figure would be of direct benefit to householders but would also be a valuable contribution to the reduction of our balance of payments problem. With this in mind, I, therefore, launched, in January, 1975 a campaign to persuade people to save money for themselves and for the country through the adoption of wiser and more economical ways of using energy. The campaign aimed at drawing attention to the need for elimination of waste and conveying practical information on what the average householder can do in his own home. It involved the use of all appropriate media including television, radio, Press and print. The campaign extended to the end of March and its effects are at present being assessed.
Apart from the industrial and domestic areas, there are, of course, other energy-using activities in which there may be potential scope for savings. The increase in petrol duties introduced by the Minister for Finance towards the end of 1974 was designed to curtail petrol consumption. In co-operation with the other Departments and agencies involved, we are reviewing the position in the transport sector generally, in the commercial and services sector, in agriculture and horticulture. These efforts are being co-ordinated by an advisory committee of the Government Departments and State bodies concerned.
The need now is for a continuing programme to bring about a climate of public opinion which will frown on energy waste in any form. Avoidance of waste and increasing efficiency must be accorded high priority in this age of high costs. I know that most people are already very conscious of the high cost of heating, cooking and lighting. However, in the inflationary atmosphere in which we live, there is the danger that our determination to economise may be blunted or weakened with time. I intend, therefore, that we should pursue a broad and continuing conservation programme which will be aimed at the cultivation of a public attitude in which waste will be socially unacceptable.
One of the obligations of our membership of the EEC has been the maintenance of a 65 day oil reserve. This requirement has increased to 90 days since 1st January, 1975. There are similar requirements arising from our participation in the work of the International Energy Agency. Since the crisis of winter 1973-74 and the consequent depletion of stocks, we have again built up our reserves and we are in full compliance with the 65 days reserve requirement. A number of the major users and importers, including the ESB and CIE, have built up stockpiles considerably in excess of that level. Our present national reserves are of the order of 80 days and we are consulting with the various interests concerned about the arrangements necessary to bring our reserves up to the 90 day level. There is provision in the EEC directive for co-operation between States in compliance with this requirement.
Stocks held in one country to the credit of another may be regarded as constituting part of the 90 day reserve provided there is an inter-governmental bilateral agreement with appropriate provisions to that effect, including arrangements for inspection and verification of stocks. We have agreed in principle on bilateral arrangements with two of our fellow members of the EEC and we will, in due course, conclude formal agreements in the matter.
One of the results of the oil and energy crisis has been a revival of interest in new sources of energy. Many possibilities which were investigated in the past and ruled out on economic grounds may now appear less unattractive in the light of the changes that have taken place in the price of traditional forms of energy. There is a great realisation of the need to examine seriously any alternatives which may offer a reduction in the level of dependence on oil imports.
This renewal of interest is reflected in activity at both national and international level. I arranged with the ESB to update previous studies on such possibilities as small hydroschemes, refuse incineration, wind power, tidal power, district heating, etc. In addition, the various State agencies concerned with science and technology, including the National Science Council and the Institute for Industrial Research and Standards, are involved in the investigation of a number of these and other matters. At the international level, both the European Communities and the International Energy Agency are engaged in comprehensive research programmes into the development of new energy sources. We are contributing in a number of areas of particular interest to us and will, of course, have the full benefit of all the studies undertaken.
Consumption of electricity in 1972-73 increased by 8.2 per cent and in 1973-74 by 7.8 per cent. However, future growth is now uncertain. Following some recovery in the spring and summer of 1974 a downturn in demand has set in, and overall growth during 1974-75 over 1973 has been zero. Factors which have contributed to the down-turn in the growth rate are the higher cost of electricity, the campaign for energy conservation and, sadly, the present business recession.
In the circumstances of virtually static demand and great uncertainty about the pattern of future growth, and taking account of the need to avoid over-production and wasteful use, the ESB must keep options open in regard to their plant generation programme. The board's current programme has been designed to lessen their dependence on imported oil, and to maximise the contribution of native energy sources. The programme provides for the phasing in of additional turf-fired generators to take account of Bord na Móna's third bog development programme and new generating units to take account of the natural gas from the Kinsale Head gasfield. In addition, the ESB are undertaking a feasibility study for a major coal-fired station in the 1980s. The total installed capacity of the ESB in March of this year was 2,089.5 megawatts.
The four-year planned post development programme of rural electrification for the years 1971-75 is now drawing to a close. Under this programme, 47,000 consumers will have been connected to the electricity supply compared with the 1971 target of 28,000. Since the commencement of the rural electrification scheme in 1946, over 408,000 premises, which represents 98 per cent of all dwellings, have been connected at a cost of over £65 million, including over £27 million in State subsidy. I have under consideration at present the situation which will apply following completion of the scheme. I should say, however, that I do not envisage that the scheme now concluding will be continued in its present form.
Possibly what is most present in Deputies' minds just now are the increases in electricity charges which were authorised last year and the further increase in charges at present under consideration. The main point I have to make in this regard is that the ESB is an organisation which is under a statutory obligation to pay its way and, indeed, has no resources from which to meet losses. The board has been very successful in raising capital at home and abroad to finance its generating programme and a substantial or continuing deficit in the accounts which undermine the board's prospects of raising the massive capital required for further development.
Imported oil accounts for approximately two-thirds of the ESB's generating capacity. The measures to reduce that level of dependence include, as already mentioned, the provision of an additional 160 megawatts from milled peat to be produced under a new Bord na Móna development programme and an additional 600 megawatts based on Kinsale natural gas. The House will be aware that the Government have also given approval in principle for a nuclear project to be developed by the ESB, subject to reassessment before final contractual commitment. That proposal if approved by Government will provide additional generation capacity of the order of 650 megawatts.
The ESB have investigated various possible sites and have identified Carnsore Point as their preferred location. They have made application to Wexford County Council for outline planning permission in respect of that site.
The proposals of the ESB are being examined by the Nuclear Energy Board who will in due course furnish their advice to me to enable the matter to be considered by the Government, with whom the final decision rests.
The board was established in December, 1973, under the terms of the Nuclear Energy (An Bord Fuinnimh Nuicléigh) Act, 1971, and has the general function of advising the Government, the Minister for Transport and Power and any other Minister of State on nuclear energy. It has the responsibility of keeping itself informed of developments in nuclear energy and matters connected there-with, with particular reference to the implications for the State of such developments. It will have the specific functions of advising on all aspects of the construction and supervision of nuclear power stations and the preparation of safety codes and regulations. The board has appointed a chief executive to take up duty on 1st May. and recruitment of the necessary technical staff will then be undertaken.
The question of the establishment of a nuclear station and the timing of such a station are closely related to the growth rate of demand for electricity. As I have already indicated, however, the pattern of demand for the next few years cannot at this stage be predicted with any degree of confidence. The ESB are keeping the position under close review, taking account of all the possibilities for diversifying energy sources. These matters will be considered within the context of the board's future generating plant programme which will be under consideration between my Department and the board.
Turning now to Bord na Móna, weather conditions for peat production and harvesting were satisfactory during the earlier part of 1973 but deteriorated later during the vital months for the production of milled peat. This was reflected in the substantial decrease in milled peat production, which fell from 3.0 million tons in 1972-73 to 2.1 million tons in 1973-74. Production of machine turf, however, rose marginally from 865,000 tons to 920,000 tons.
Conditions over the year 1973-74 as a whole were favourable to the sale of turf fuel. Demand was moderate in the first half of the year but it accelerated sharply as a result of the oil crisis and the supply position came under extremely heavy pressure for most of the winter. Sales of machine turf on the open market rose by 13 per cent on the previous year to a record level of 480,000 tons. The scarcity and high cost of other fuels were reflected very strongly in sales of machine turf to the domestic sector which increased by 20 per cent compared to the previous year. Sales of briquettes dropped marginally from 325,000 tons to 319,000 tons but this was due to a shortfall in production rather than in demand. A large proportion of the total supply was made available for domestic use and sales in this sector rose by nearly 5 per cent, though this fell short of market requirements. Power stations, which are the main outlet for milled peat, received 2.7 million tons in 1973-74 as against 2.4 million tons in 1972-73.
There was a satisfactory 10 per cent increase in moss peat sales which reached a total of over one million bales. Exports of moss peat also increased in volume by 10 per cent to a total of 0.9 million bales. The board's overall sales amounted to £14.3 million as against £12.2 million in the previous year. On the year's operation the board had a surplus of £137,000 after meeting all their liabilities including £1.1 million for interest on their capital.
Bog development continued at various locations and progress was made in the use of cutaway bogs for grazing and silage production. The commercial scale trials of vegetable growing were continued as was also the development of the shrub nursery project at Lullymore where ornamental shrubs are grown for export.
In 1974 the weather conditions were broadly similar to those in 1973 but the tonnages of milled and sod peat harvested were marginally greater. Production of briquettes up to the end of March, 1975, is expected to be slightly above last year's figure but production of moss peat for the same period will be about 10 per cent below last year due to a fire in the Kilberry factory.
Following the fuel crisis at the end of 1973, Bord na Móna carried out a review of bog areas which had previously been considered incapable of economic development in the face of low cost imported fuel. As a result a third turf development programme has been formulated. This programme is at present under examination in my Department.
Under this programme 40,000 acres of bog will be developed in addition to the 130,000 acres which are already in production. It is envisaged that the following additional quantities will be produced annually.
The additional milled peat supplies will be used for electricity production and for briquetting. It is expected that production will be sufficient to sustain new generating plant in the range of 160 megawatts, capable of producing 700 million units of electricity annually. No decision as to the siting of this new additional plant has yet been taken. However, the existing stations at Lanesboro and Shannonbridge will be extended. Also, the lives of the Ferbane and Rhode stations will be extended. A fourth briquette factory with an annual capacity of 6.4 million bales will also be erected to satisfy the increasing demand for briquettes.
The development involved in this programme will extend over counties Tipperary, Laois, Offaly, Kildare, Kilkenny, Meath, Westmeath, Galway, Roscommon and Longford and will take about five years to complete. It should provide continuous all year round employment for an additional 1,500 men rising to about 1,800 men during the peak production season. The estimated cost of the development is £28.5 million at current prices.
Deputies will be already aware that the Government have agreed to assist the Dublin Gas Company by means of a guarantee under the State Guarantees Act in respect of a loan of £1.2 million over the period in mid-1976. This measure was necessary because of the financial problems created by increased costs experienced by the company. In view of the financial liability thus assumed by the Exchequer, four new members including the chairman have been appointed to the board on the basis of nominations made by me with the agreement of the Minister for Finance. To enable these appointments to be made four of the non-executive directors volunteered to resign their seats.
The company provides a vital service in the Dublin area and I am sure that the House will appreciate the importance of ensuring the continued supply of gas service for the 160,000 users involved. A separate motion will be moved in the House in the near future to provide the necessary statutory authority for the guarantee and this will provide an opportunity for Deputies to discuss the position. In the circumstances, I do not propose to go into detail on the subject on this occasion.
Following the announcement by Marathon Petroleum Ireland Ltd. that natural gas had been discovered 29 miles south-east of Kinsale, consideration was given to the uses to which the gas might be put. The estimate of the quantity of the gas involved was 1.14 million million cubic feet, capable of supporting a daily flow rate of 125 million cubic feet for 20 years. While the find is relatively small by reference to commercial finds in the North Sea, it is, nevertheless, of significance from the point of view of our existing overdependence on high priced oil imports. The projected rate of production represents about 12 per cent of the nation's overall energy consumption in a recent year.
Following a study of the possible utilisation of the gas, the Government decided that the most practical uses to which this find could be put were (1) feedstock for the production of ammonia and urea for a nitrogenous fertiliser industry and (2) generation of electricity. Allocations of the natural gas were therefore granted to Nítrigin Éireann Teo, and the ESB. It is expected that the gas will commence to come ashore in early 1978.
I am well aware that the use of gas for electricity generation is not ideal in normal circumstances. There were, however, a number of other important considerations to be taken into account. There was firstly the great need to diversify our sources of electricity generation in the light of the oil crisis. There was also the need to develop a market capable of absorbing and utilising the flow of gas from the time it would begin to come on stream in 1978. Demand from existing industry and utilities in the Cork area could not absorb more than a small fraction of the amount of gas involved. On the other hand, we have in the case of the ESB and NET, projects which are vital to the economy, which are capable of using the gas and which require the greatest possible security of supply. In the particular circumstances, I am satisfied that the allocation of the Kinsale Head deposit to NET and ESB represents the best allocation of this particular find.
While the final contract terms for the supply of the Kinsale gas have yet to be settled, I have had under consideration the arrangements which should be made in regard to the delivery and distribution of gas from the Kinsale field and from any further commercial finds which may be made. To this end I have arranged for a study to be undertaken of the uses to which further finds of gas could be put. I will be looking at all possibilities, including the provision of a national grid and the question of use as town gas.
In this connection the Government have decided that a national gas board should be set up. This new board will be responsible for the internal distribution and marketing of natural gas and for that purpose will construct and operate the necessary pipelines and associated installations. It will be responsible also for advising me generally on matters arising in regard to natural gas. The establishment of the proposed board will require new legislation at a very early date.
In the meantime, a steering group comprising representatives of the Government Departments concerned as well as the Electricity Supply Board and Nítrigin Éireann Teo., have been dealing with the principal matters in connection with the Kinsale find, which have required attention. These include the negotiations with Marathon on a contract for the supply of gas, and consideration of the arrangements for financing of the onshore pipeline. A stage had been reached at which it was necessary to have a more formal legal and financial framework than could be provided by the steering group. I accordingly decided that a company, Bord Gáis Éireann Teo., should be formed to function on an interim basis pending the enactment of the legislation for the establishment of a national gas board. This company have recently been incorporated and are now handling the matters involved.
The energy resources on which we have been replying are not inexhaustible and sooner or later the problems which we are now concerned with would have had to be faced. It may be that the low price of oil had encouraged an unjustified complacency. It may be too that the availability of cheap energy removed the incentive for the investigation of alternative sources. If so, there is no doubt that the events of 1973 and 1974 have brought a realisation of society's earlier improvidence. Recent events have increased very significantly the importance of the energy function in my Department. I am very conscious of the vital importance of the new and extended responsibilities now arising in this area and I assure the House that they will continue to have my close attention during the coming year.
The position of CIE was discussed in detail in the House as recently as December last in the course of the debate on the Transport (No. 2) Bill, 1974. I do not consider it necessary to deal further with the board's affairs at this stage. If, however, any Deputy wishes to raise any additional points in relation to CIE, I will endeavour to deal with them in my reply.
International road transport is an area which has developed significantly in recent years, particularly since our accession to the EEC. The importance of a well organised international haulage sector within the Irish road haulage industry cannot be overstressed and I am pleased to report that there is a growing awareness of the opportunities available to Irish operators in this field.
Ireland's participation in multilateral licensing arrangements, which are operated under the aegis of the EEC and ECMT, that is, the European Conference of Ministers of Transport, has been of considerable assistance in that it has afforded the holders of these licences full freedom to operate not only between Ireland and the Continent but also in tramping business between other member states. Ireland's allocation of multilateral licences for 1975 totals 63, of which 50 are issued under the EEC Community quota scheme and 13 by the European Conference of Ministers of Transport.
The increase in vehicle capacity and of area of operation of merchandise licences introduced by the Road Transport Act, 1971 was the first major step towards the liberalisation of road freight transport for reward.
I have already announced that I am anxious to introduce this year further measures of liberalisation in road transport legislation with due regard to the existing rights of licensed hauliers. I hope, in this way, to create eventually the conditions under which the haulage industry will become more free and flexible and better adapted to the needs of the economy.
In relation to tourism, Deputies will note that the allocation to Bord Fáilte for the nine months 1st April, 1974 to 31st December 1974 was £6,232,000 and this is increased to £9,725,000 for 1975. The provision for the nine-month period under subhead F.1.1. from which the board's promotional activities are funded, was £4 million against £7,100,000 now being provided. This increase indicates the priority which attaches to the board's marketing efforts at present. It is the most that can be provided in present financial circumstances.
Other State-sponsored bodies which are my concern and which are themselves indeed part of the tourist industry, will be incurring expenditure of about £5 million in the present year on encouraging tourists to come to Ireland. Aer Lingus, for example, have permanent staff and offices at over 40 locations abroad devoted to selling traffic to Ireland and the airline undertake joint promotion campaigns with other tourist agencies, with other carriers serving Ireland and with the travel trade. B & I maintain a substantial team of sales representatives in the market and the company are mounting a national advertising campaign in the British Press and trade publications in the first half of this year at an approximate cost of £150,000. CIE maintain a number of offices in the US and UK and are represented in other markets by general sales agents, all engaged in selling coach tours, conference and incentive travel facilities and Great Southern Hotels. Much valuable tourist promotion work is also carried out by SFADCO and Aer Rianta.
Deputies will also be aware that other Government Departments, notably the Department of Lands and the Office of Public Works, are committed extensively to works with a high tourism content.
I have no hesitation, therefore, in affirming the confidence of the Government in the tourist industry and in saying that Government confidence is accompanied by Government backing.
The success of our efforts for tourism are exemplified by the results for 1974. Despite the troubles in the North and the impact of other outside economic forces, Bord Fáilte have announced that a preliminary estimate of earnings from tourism in 1974 shows an increase of 19 per cent at current prices or a revenue increase in real terms of about £2 million.
In 1975, Bord Fáilte have estimated that tourism revenue will increase by about £7 million in real terms, despite the difficulties I have mentioned. While these difficulties are very real, we must not blind ourselves to our own shortcomings in the tourism field. In some quarters, the complacency which existed during the "golden days" has been replaced by a sense of fatalism, by the belief that outside factors alone were the cause of the downturn in tourism revenue in recent years. This is but part of the story. As a nation we need to pay more than lip service to the protection of the environment, the cornerstone of Irish tourism. We need better trained and more efficient management, a greater commitment to giving value for money, a basic appreciation of the importance of hygiene and a recognition that competition is going to become keener. Unless these home truths are acted upon—and I know Bord Fáilte are doing all they can to bring about the necessary improvements—much of the expenditure on tourism promotion will go for naught.
In present circumstances the major effort by Bord Fáilte is, and must be, in promotional work abroad and it is for this reason that the largest increase in funds is being provided in the current year under subhead F.1.1., from which promotional expenses are met. Promotion is essential but it is difficult to measure results. For that reason I have been anxious to assess the situation at first hand as far as I could. Since last autumn, therefore, I have undertaken promotional and fact-finding tours of the British, American and continental markets with the chairman and senior staff of Bord Fáilte. I have seen the operations of Bord Fáilte on the ground and I have met and discussed the problems of tourist development with a wide range of people concerned.
On the basis of this first hand experience, I must say that I have been greatly impressed by Bord Fáilte's promotional activities and I am satisfied that maximum promotional effort is achieved with the funds allocated to the board.
In Britain the main impression made on me was that our chief hope for increasing traffic lies at present with Irish people or people of Irish descent living in Britain. The major difficulty in the way of developing this traffic appeared to be the high cost of travel, particularly air travel and especially for families. This was a constant note in the representations made to me.
I am glad to say that Aer Lingus have introduced, with my approval, new cross channel promotional fares which include an attractively priced family fare available in both directions and an air-surface combined facility from the UK to Ireland based on CIE main line rail or coach services. Aer Lingus have also introduced on an experimental basis an air-coach facility between Dublin and London using air transportation on the Dublin-Liverpool sector. As regards North America, I am very hopeful that this market will develop considerably in the years to come. Bord Fáilte's effort there is extremely vigorous. On the Continent there is a growing interest in Irish holidays which augurs well for the future of our promotional efforts in these markets.
The affairs of Ostlanna Iompair Éireann also come up for discussion in the context of tourism. Like most other sectors of the industry OIE were affected by the recession in tourism in recent years. In 1972-73 the group operations of OIE showed a net loss of £424,000 and the results for 1973-74 show a further deterioration in the group's financial position, with a decrease in retained earnings of £715,000, which was partly accounted for by a writing off of acquisition costs relating to the company's Northern Ireland subsidiary. Ways and means of bringing OIE back to profitability are currently under examination.
I also have responsibility for the activities of SFADCO, in so far as they relate to tourist promotion and the development of traffic in Shannon Airport. The numbers availing of the medieval banquets continue to increase. However, the numbers taking the one-day medieval tours show a decline and the company are now placing more emphasis on inclusive tours and special interest holidays, in particular in the North Atlantic market.
I now turn to the field of civil aviation. For most of the world's airlines, the past few years have been fraught with severe stresses and major economic difficulties. The main causes have been the scaling down of economic activity in many of the world's major markets, intense inflationary pressures and the uneconomic level of North Atlantic fares. In addition, airlines were particularly affected by the energy crisis and the greatly increased cost of fuel.
For us here in Ireland these problems have been accentuated by the continuous widespread publicity accorded to the Northern Ireland situation. In spite of these difficulties, passengers carried by Aer Lingus and Aerlínte rose by 7.5 per cent to 1,803,000 in 1973-74 and cargo carried increased by 12 per cent to 66,200 tonnes. In all the circumstances this was a very creditable performance by the air companies.
Financially, the companies also performed well in 1973-74 turning in a combined operating profit of £3.7 million as compared with an operating loss of £327,000 in 1972-73. After allowing for interest on capital, the companies turned a net loss of £2.3 million in 1972-73 into a net profit of £1.1 million in 1973-74. However, this upsurge was short lived. The likely outcome for 1974-75 and prospects for the current year are not good. All the adverse factors which I have listed are still with us and, indeed, many of them are much worse now than they were a year ago.
We are all only too well aware of the current world-wide inflation and of soaring costs. The airline industry is particularly vulnerable in times of economic recession. Foreign holiday travel is one of the first things to be retrenched in periods of stringency. Until such time as inflation is brought under control and the world's economies recover, there is little prospect of profitable airline operation world-wide.
In this very trying situation, it is likely that the air companies will return their worst ever operating results although the impact of the operating loss will be substantially cushioned by the damages recently awarded by the US courts in the litigation against American Airlines. Deputies are aware of the recent successful outcome of the litigation initiated by Aerlínte in the US courts against American Airlines. The background to this award is that in 1968, Aerlínte signed contracts with Trans Caribbean Airways involving the leasing of two Boeing 747 aircraft from Aerlínte during five winter seasons beginning in 1970-71.
American Airlines, a US international carrier, subsequently acquired Trans Caribbean and claimed that the lease agreements were invalid because, under a long standing law, the Federal Aviation Administration would not permit foreign-owned aircraft to be flown in domestic US service. Following a decision of an arbitration panel in favour of Aerlínte and consequent protracted court action, Aerlínte were recently awarded $9 million in damages. This award is unlikely to be sufficient to wipe out their net loss for 1974-75. However, the air companies are resolved to achieve a significant reduction in the net loss figure during the current year by seeking every opportunity to earn extra revenue and by exercising stringent controls on routes.
During the financial year ended 31st March, 1975, the associated activities of the companies continued to make a significant contribution to the overall position of the air companies. As Deputies are aware this is a programme of investment in associated activities, financed by external borrowing. The main aim of the programme is to act as a stabilising force in the cyclical swings which are characteristic of airline business and thus reduce the effects on airline profitability and employment of downward swings. These activities fall into the following groups: services to other airlines, financial and computer services, hotels and catering, travel services, leisure centres.
In their annual report and accounts published for the year ended 31st March, 1974, the air companies give such information concerning these activities as is possible consistent with normal commercial prudence. This practice will be continued in the present and future years. In the year ended March, 1974, the combined ancillary activities then in operation contributed a profit of £2.9 million before charging interest and certain other central services on a capital investment of £14 million. This was a very valuable contribution to the financial position of the airlines.
Some of the ancilliary projects are as yet at the development stage and some by their nature must be regarded as longer term investments. Like all enterprises, these activities will be affected by fluctuating economic conditions. The air companies continue to apply rigorous criteria in the selection of projects and the board assure me that the programme will fulfil its main aim and help significantly in stabilising airline operations and the level of highly paid employment provided in the difficult years ahead.
It is of course an intrinsic part of the strategy that the ancilliary investments should not deflect the companies from their main function of providing air services.
The boards and management of the companies remain as committed as ever to the objective of serving the needs of the travelling public and, notwithstanding the enormous difficulties at present besetting the industry, I am confident that with the full co-operation of all, our airline will ride out the present storm.
On the question of airport management the House will be aware that in 1969, as a preliminary to the setting up of a statutory airports authority, it was arranged that Aer Rianta would assume responsibility for the management of Shannon and Cork airports on the same agency basis as the company already managed Dublin airport. This arrangement continues to operate.
My Department had almost completed preparation of the necessary draft legislation to establish Aer Rianta as a fully fledged airport authority when airport finances came under pressure because of increasing costs and lack of growth in traffic. The resulting deterioration in the financial position of Aer Rianta has necessitated the deferment of the legislation.
Aer Rianta's operations are, of course, closely related to the fortunes of the air companies so that a temporary disimprovement in the company's position had to be expected.
Aer Rianta had an operating surplus of £944,000 in 1973-74 compared with a surplus of about £1.5 million in the previous year. These surpluses do not take into account depreciation or interest on capital. This downward trend can be attributed mainly to the fact that, while operating costs continued to rise steeply in step with increases in wages, salaries and materials generally, airport charges could not be increased pending the outcome of litigation in the Supreme Court about my powers to levy charges.
As a result of the Supreme Court judgment on 6th March, 1974, my powers were confirmed, and increases approved by me were introduced on 1st July last.
The increases themselves were quite substantial but because of the continuing increase in costs and lack of growth in air traffic the increases are not likely to be sufficient to restore the financial position of the company. I am at present examining proposals for further increases by the company.
Details of the passenger traffic at the three airports are given in the notes circulated.
Total passenger traffic at the three State airports after a fall of 4 per cent in 1972, increased by 2 per cent in 1973 from 3,148,000 to 3,213,000. The figure for the year 1974—3,269,000 passengers—shows an increase of 1.75 per cent over 1973. Having regard to all the difficulties I have referred to earlier, and traffic experience elsewhere, these figures cannot be regarded as discouraging.
Deputies will recall that the reduction in traffic at Shannon Airport in 1973 and the decision of Pan American Airways to cease the operation of scheduled services to Shannon gave rise to some apprehension. Traffic trends at Shannon should allay this.
Terminal traffic declined by 5 per cent in 1973 as compared with 1972 but the rate of decline was reduced to 3.6 per cent for the year 1974 as compared with 1973.
Total traffic, that is, terminal and transit, at the airport showed an increase of 11 per cent in the year 1974 as compared with 1973.
On 1st May last, following the settlement of the Dublin landing rights issue, TWA commenced scheduled operations through Shannon to Dublin.
In the year ended 31st March, 1975, TWA carried 15,607 scheduled passengers to Shannon as compared with 12,827 in the year 31st March, 1974, an increase of 21 per cent. Additionally they carried 8,551 passengers to Dublin in 1974-75.
It is not possible at this stage to say to what extent the increased TWA carryings arise out of diversion from Aerlínte scheduled services, the transfer from former Pan American services or the generation of new traffic.
Shannon continues to provide excellent facilities for crew training.
With the withdrawal of British Airways the volume of training at the airport has dropped but Aer Rianta continues to promote the airport vigorously as a training centre and some major airlines including KLM and Swissair carry out training programmes there.
The problem of hijacking and other threats to aircraft and airport installations has created a need for greatly increased security measures, including the screening of passengers and their baggage.
My Department co-ordinate matters relating to security of international air transport and co-operate fully in the exchange and dissemination of security information with other member states of the International Civil Aviation Organisation.
We have had local airport security committees established at each of the three state airports and the measures recommended by the International Civil Aviation Organisation are being followed at our airports by Aer Rianta and by Aer Lingus.
I have also established a national Civil Aviation Security Committee which co-ordinates the activities of the airport security committees and the various agencies concerned.
On the legislative front it is my responsibility as Minister for Transport and Power to ensure that the offence of hijacking of aircraft is amenable to Irish law.
The Air Navigation and Transport Act, 1973, gave effect in Irish law to the Tokyo Convention on offences and certain other acts committed on board aircraft and to the Hague Convention for the suppression of unlawful seizure of aircraft.
A third convention dealing with acts of violence and sabotage was drawn up in Montreal in 1971 but has not yet entered into force.
The text of a Bill to give effect to this convention will be circulated shortly.
The principal commercial harbours are managed and operated by harbour authorities set up under the Harbours Act, 1946. Members of the authorities are elected every year in which there are local elections and the various boards were reconstituted last year. These boards are representative of users of the harbours, local authorities, commercial and labour interests. Some members are appointed by me. My powers in relation to harbour authorities are somewhat similar to, but not quite as far-reaching as, the powers exercised over local authorities by the Minister for Local Government.
State policy in regard to harbours envisages that they be operated as commercial undertakings and be self-supporting. However, in exceptional circumstances it is necessary to assist harbour authorities by way of State grants. In 1973-74, £450,000 was provided for grants towards various harbour works, mainly to meet new requirements at Drogheda, Cork, Arklow, Waterford and Fenit. The total amount provided, however, was not all taken up, primarily due to work on the Arklow scheme, which commenced late, progressing more slowly than expected due to unforeseen technical difficulties. For the nine months April to December, 1974, I provided £280,000, the major portion of which was spent principally in respect of the Arklow scheme and also to finance the ports study being undertaken on my behalf by An Foras Forbartha. For 1975, I am providing £285,000, mainly to assist improvement work ar Arklow, Waterford and Cork.
Harbour improvements completed in the last three years or on hands include the building of container and roll-on/roll-off terminals at Dublin and back-up facilities for the increase in traffic these improvements have generated. With the construction of the roll-on/roll-off facility at the new South Quays, which is almost completed, the port will have three roll-on/roll-off terminals in operation. The Tivoli industrial estate at Cork has been completed. The Cork harbour development plan envisages the provision of a port-based industrial estate at Ringaskiddy in the lower harbour complete with the essential harbour infrastructure. I am concerned that adequate harbour facilities be available there for the requirements of any industries that may be established in the area and I hope to be in a position at an early date to authorise the Harbour Commissioners to proceed with preliminary drainage works. The extent and phasing of the harbour work necessary to meet the actual needs of foreseeable industry will be determined later.
Waterford Harbour Commissioners are extending their cross-channel and continental container facilities. Both Galway Harbour Commissioners and Tralee and Fenit Pier Harbour Commissioners have improved their container facilities by the installation of new container cranes. A major improvement and dredging scheme at Dundalk has been completed. Work on the Arklow harbour development scheme, which will revitalise the harbour, is well advanced. Work by Drogheda Harbour Commissioners on re-building the port's quay walls and roads is almost completed. A working group is examining the harbour commissioner's plans for the port's future. At Limerick, the harbour commissioners have implemented a decasualisation scheme which has much increased the port's efficiency. The three scheduled harbour authorities in the Shannon estuary have presented proposals for their amalgamation under one authority and the necessary amending legislation is in course of preparation.
A working group was set up in 1972 under the aegis of my Department to carry out a study into port facilities. In late 1973 I requested An Foras Forbartha to carry out a study under terms of reference suggested by the group with the object of assessing the adequacy or otherwise of existing portal facilities in the light of projected trade for the next 15 years. The study commenced last July. The consultant's report has been submitted and is now under examination in my Department.
Following on the major oil spillage at the Gulf oil terminal in October, 1974, I announced on 29th October, 1974, that the Government had decided to set up a controlling authority for Bantry Bay. There are a number of options open to me in relation to the establishment of such an authority and legislation is necessary for any option. I have consulted all interested parties about their views on the nature and membership of the authority to be established. My Department are preparing proposals for amending legislation and it is my intention to introduce such legislation at the earliest possible date.
Irish Shipping Ltd. was set up during the second world war to meet the urgent need for national shipping facilities. The company's mandate since then has been to provide and maintain a minimum fleet capable of meeting the nation's strategic needs in times of emergency. At present the minimum strategic fleet requirement stands at 150,000 tons deadweight. Having achieved a fleet of this size, the company now acquire additional tonnage purely on commercial criteria. The company's fleet at present comprises ten ships totalling 233,711 tons deadweight. The average age of these vessels is approximately four and a half years.
The Rosslare-Le Havre car ferry service, operated by Irish Shipping Ltd. with Scandanavian partners, after two seasons has been exceeding its targets to such an extent that cargo roll-on/roll-off vessels have had to be chartered to supplement freight capacity and a further increase in schedules has been announced for next summer.
In view of the promising outlook for oil and gas exploration in Irish waters, Irish Shipping, together with Fitzwilton and P & O have formed a new company, Seahorse Ltd. which will become engaged in the servicing of the offshore exploration industry. Initially most of the work of the new company will be of a planning nature and methods applied in the North Sea and other offshore areas will be studied to determine the most suitable system for Irish waters.
In 1973-74, the last year for which audited accounts are available, the company's net profits amounted to £1,285,878 after tax. This very creditable result compares with £411,304 profit the previous year.
The company have forecast a profit of not less than £1 million for 1974-75.
The B & I Company was acquired by the State in 1965 to ensure effective Irish participation in the cross-Channel trade, while at the same time operating on an entirely commercial basis without State subsidy. At the time of acquisition, it was found necessary to embark on a process of modernisation involving radical changes to cater for the new concepts in shipping which were rapidly gaining momentum. Inevitably, the company's modernisation programme involved heavy financial commitments and considerable weakening of the company's position, financially, to the extent that the company incurred considerable losses. Civil strife, devaluation of the £, strikes at Liverpool, low freight rates, all have added to the company's troubles.
The most recent audited accounts which are available are those for 1973, which show a loss of £1,180,000 compared with a loss of £614,000 in 1972. The company have shown a profit of approximately £280,000 for 1974 and it is hoped that when measures to improve the company's financial position have been fully implemented, the B & I Company will be able to maintain their renewed viability.
My Department have as one of their main aims the encouragement and promotion of a soundly based Irish merchant fleet which will contribute to the national economy and trade balance by earnings abroad and the saving of foreign currency, as well as stable and well paid employment for Irish seamen and officers. Attractive tax concessions are available in respect of new capital investment from Irish shipowners apart from the favourable credit terms and interest rates which are made available through the Ministers for Finance and Industry and Commerce to persons ordering ships from Irish yards.
My Department are responsible for the control of oil pollution of the sea by ships. Ireland has taken an active part in the preparation of a number of international conventions on the prevention of such pollution and on provisions to establish liability for oil pollution damage and to ensure adequate compensation. The Oil Pollution of the Sea Acts, 1956 and 1965, which give effect to an international convention of 1954, enable prosecutions for oil pollution to be brought by me or by harbour authorities. The main international convention on oil pollution—the 1954 convention—has been tightened up in recent years and legislation to give effect to the changes is in an advanced stage of preparation.
Meanwhile, a comprehensive new international convention entitled the International Convention for the Prevention of Pollution from Ships, 1973, has been drawn up and will, it is anticipated, in due course, replace the earlier convention. This new convention covers not only oil but other noxious cargoes, as well as sewage and garbage emanating from ships. In addition, separate conventions have been prepared in order to deal with the specific problem of deliberate dumping or disposal at sea of noxious chemicals and industrial residues, and legislation to implement the latter conventions is well advanced. Conventions have also been drafted making special provision for the payment of compensation for oil pollution damage, and it is hoped to secure approval in the near future for the preparation of legislation to give effect to the provisions of these conventions.
A considerable body of legislation relating to merchant shipping and fishing boats is administered by my Department, and various aspects of the legislation are constantly under review. The legislation governs such matters as standards of ship construction, the marking of load lines on vessels to prevent overloading, the certifying of the adequacy of life-saving, fire-fighting, radio and signalling equipment carried by vessels and the examination and certification of the competence of sea-going officers, seamen and fishermen. At the principal ports mercantile marine offices are maintained to supervise the engagement and discharge of seamen and to deal with matters affecting discipline aboard ship and the health and accommodation of seamen.
My Department have overall responsibility for the national sea rescue network. Involved in this are the Coast Life-Saving Service, the Naval Service, the Air Corps, the Garda Síochána, the Royal National Life-boat Institution and the Commissioners of Irish Lights. On the occurrence of an emergency at sea the co-ordination of all or any of these bodies is effected by the Marine Rescue Co-ordination Centre based at Shannon Airport. In certain circumstances the centre can call upon private helicopters, if necessary, to supplement the existing helicopter coverage of the west and south-west coasts, provided by the Air Corps for marine rescue purposes.
The RNLI are an independent body financed by voluntary subscriptions. Last year they celebrated the 150th anniversary of their foundation. They have operated in this country since their foundation. A grant of £20,000 is paid annually by my Department towards the costs of their operations in this country, which are normally only partially covered by the subscriptions raised here.
My Department also provide pensions and allowances to seamen disabled in Irish ships due to warfare during the 1939-46 period, and to widows and other dependants of seamen who lost their lives during that period. These pensions and allowances in pursuance of an undertaking given at the commencement of the war, are maintained at the same level as the corresponding British pensions.
This completes my review of the principal areas covered by my Department. If there are any aspects of these matters on which Deputies would like further information, I shall endeavour to deal with them when replying to the debate. I have given the House a review of the various sectors coming within the purview of my Department. There is, however, one further area which I should like to mention before I close.
Deputies may not realise that out of a total staff of about 1,200 in my Department almost 1,000 of these are employed in the technical services provided by my Department. These services are the meteorological service, air traffic control service, the aviation and marine radio service and the marine survey service. The staff of these services provide a 24-hour round-the-clock service on 365 days a year. Their work is very often unnoticed by the general public. Very few air travellers are aware of the contribution which these services make to their safety and I should like to take this opportunity of paying a special tribute to these staff for the services they so faithfully provide.