Before the debate on The Way Forward was adjourned I was talking about certain undesirable elements that had crept into our political life. I was not decrying them just because they have crept into our life but because of their possible effect particularly on our young people and because, as a result of this type of politicking, there is a danger of corrosion of what I regard as — it is an oldfashioned term — a very important thing and that is patriotism. There is a spirit of generosity in young people. There is a willingness to sacrifice, if called upon. This can only be corroded and damaged by cynicism, by low standards in treating political opponents. Our adversative type of politics need not necessarily lead to that position. It is a healthy system, but there are limits to adversative criticism, the barrier and boundary of which is the truth. I am talking about the old virtue of pietas, the love of one's family, in a more extended domain the love of one's community and, finally, the love of one's country. They are part of the same virtue and it is only by virtue of the existence of that virtue of pietas that we can call upon people, as we have to in this instance, to make sacrifices and work for the common good.
We are putting a way, The Way Forward, before the Irish people. We regard it as the way, but also the truth. We have outlined corrective measures which must be taken and we have outlined the development plans which we hope will take the country out of its recession. A previous speaker this morning mentioned that we, as a Government and as a party, had — and I quote —“manifestly failed to get the public confidence”. I am oldfashioned enough to believe that the only credible way in which confidence is expressed in a Government or in a politician is in the ballot box. We in Government and in the Fianna Fáil Party are prepared to abide by the decision of the ballot box. Our antecedents in this have been challenged. In the country, we have a proverb about the jennet. The jennet is half ass and half horse. We say of him that he has neither pride in his ancestry nor hope of posterity, because he is barren by nature. The people who have been offering the criticism fill the role of the jennet in our political life — if we must examine antecedents.
A very important appendix to a chapter in The Way Forward is that to Chapter X. I do not know why, but we have been inclined to look at our problems as affecting ourselve alone. We are an island and at the edge of Europe. Nevertheless, we have had a very wide diaspora but, on occasion, this has not had the effect of making us look at what is happening in other countries. I would suggest to the House and to our citizens that we should look at the appendix to Chapter X which gives an indication, in summary, of what people in other countries are being asked to do — what sacrifices are being asked of the citizens of the Federal Republic of Germany, Denmark, France, Belgium, Luxembourg, the Netherlands, the United Kingdom and Japan. There is a list of other measures, besides those given on page 114, which are being asked of the citizens of those various countries. On occasions we have been affected, for short periods anyway, with an insularity of outlook. I never could quite understand why, seeing that the Irish diaspora had kept windows on the world for so long. It would be healthy, when people are saying that they are being asked to do the things and will not do them, to have a look at that chapter to see what the citizens of other countries are being asked to do. In fact, a general election campaign was conducted in one of those countries on the basis of sacrifices being demanded and the parties putting the strict and hard options to the people won that election. That is the kind of thinking that we require from our citizens in the serious economic position in which we find ourselves today.
Many of the measures contained in this economic programme will be unpalatable to different sections of our population. However, without the measures outlined in the plan, we will be unable to continue to borrow to the extent needed, we will have difficulty in servicing our public debt, in maintaining the present value of the punt and in continuing to import without restriction. The basic strategy of the plan before this House is one which will progressively create an economy capable of providing employment for a rapidly growing labour force, an expanding and more competitive productive sector, the possibility of reduced personal taxation and more efficient and economic public services.
The careful reading of the plan will show that 17,000 extra people will be coming on the labour market each year over the period of the plan. This amounts to about 85,000 people. This, in fact, is the major challenge of the plan and was recognised as such in discussion in Government. It is there that we hope to make the impact which will bring this country up to 1986 in a developing situation. I must point out that our economic problems are shared by so many people that we get encouragement from their efforts to solve them. Countries everywhere are faced with the need for severe adjustment and unpalatable corrective action to offset the effects of the worst and most prolonged recession to hit the world economy since the thirties. Ireland could not insulate itself, could not avoid that recession. A small economy cannot escape. It is not possible to stop the world so that we can get off.
We have special difficulties in adjusting our economy without causing excessive cutbacks in demand and output. For one thing, our population is growing at about four times the European community average. Secondly, our labour force is growing at about twice the European community rate. These facts highlight our need for greater investment and more jobs at a time when we must curtail borrowing and correct our large and unsustainable balance of payments deficit. There are some signs of hope on the economic horizon. I agree with our adversative system of politics. It keeps people in government upon their toes, it subjects all judgments, decisions and policies to a minute analysis, but at times Opposition speakers should recognise that there is a threshold below which the criticism should not go. Before I was elected to this House, whenever national loans were being floated, the leaders of all the political parties, without cavil, without making any reservations, supported the then Government, whichever Government was in office, in their efforts to provide money for the development of the economy.
Many of the international economic trends are now for the first time in three years beginning to offer us the prospect of increased exports to replace the internal demand we were forced to create temporarily at the height of the recession by internal and external deficit financing. For example, EEC imports are forecast to increase by 2½ per cent in real terms in 1982 and by about 3 per cent in 1983, following a fall of more than 1½ per cent last year. Another good sign is the continuing moderation in international inflationary pressures. It is against this slowly-improving international background that our economic strategy can now be modified progressively to remedy deep-seated defects in our economic structure.
The plan outlines measures to remedy the many defects which the economy suffers from at present. I shall first mention a few of these defects — the inability to sell competitively at home and abroad all the goods and services we can produce and the unsustainably high level of borrowing for public expenditure, including borrowing for current expenditure to finance public services. The word "competitiveness" occurs frequently in the plan. I regard that as the key word in this document because we must direct all our energies to improving our competitiveness.
In the main the plan proposes stringent measures to restore balance in the public finances. These measures will include elimination of the current budget deficit by 1986. That will, in effect, halt and reverse the trends of the last decade in public expenditure.
As less money will be borrowed to finance the current deficit, like a see-saw, more money will become available to finance the Public Capital Programme, to finance productive manufacturing industry in particular.
Other measures in the plan will involve moderation in the growth of taxation, making it more equitable. Further, the plan will help to create the competitive conditions essential for growth in employment. More significantly the plan will accelerate the productive and econiomic infrastructure investment programmes essential for development and will bring new criteria of efficiency to bear throughout the public sector.
Let me assure you that this is not a "paper plan". It is a plan of action. The Government are fully determined to adhere to the strategy outlined in this plan, whatever the difficulties involved. The plan will be monitored continuously so that when and where necessary, measures to reinforce its operation and to secure the achievement of its objectives may be expeditiously introduced. These steps will be particularly applied in the case of industrial and other sectoral developments.
While some of the measures will be unpalatable to many, there can be little disagreement about the essential objectives of the plan. Who could quibble with the objective of halting and reversing the trend in unemployment by lowering inflation and interest rates and having more moderate trends in moneys and taxation? These objectives are among those spelt out in the plan. All of the objectives have the basic requirement to create a more competitive economy in which employment can progressively increase, the grim upward trend in unemployment be reversed and the realisation of a more equitable and expanding economy ensured.
It is evident from what is said in Chapter VIII of the National Economic Plan that the Government attach a high priority to a good telecommunications service. Telecommunications are clearly an essential infrastructural service in modern times and if industry and business are to be successful, as they must to meet the aims of the plan and to ensure our survival and prosperity as a nation, then we owe it to them to help them in being successful. In getting supplies for business and industry and in marketing, use must be made of telecommunications and the better these are the more efficient can industry and business be. For far too long a period our telecommunications services did not get the attention they need in a modern State. The capital to keep them up to date and to expand them to meet present day needs simply was not made available. I do not say this in any critical sense of successive Governments; the simple fact was there were many other pressing demands, priorities, on the finances of the State to meet housing, educational, industrial and other high priority needs.
But needs and priorities change and one of the features of the economic plan is that it identifies these changing needs and their priorities, recognising that in a number of areas we have been giving ourselves higher standards than our output and national wealth would justify. New priorities are set and where money has to be provided for them, this is identified and earmarked. Telecommunications are being accorded their rightful place as services that must be given the necessary capital and attention during the period of the plan.
Telecommunications are a capital-intensive industry. This will be evident from the range of £970 million to £1,200 million given as the limits within which capital investment is likely to fall over the five-year period as set out in pages 92 and 93 of the plan. As pointed out in the plan, the actual sum needed will depend on demand for the services and this in turn is dependent on the general state of the economy, the cost of funding the capital, the cost of the service and so on. The plan envisages that the money needed will be made available to meet the stated objectives of providing efficient services to meet demand in the most cost-effective manner, developing good customer relations and adopting a market-oriented, businesslike approach. I will deal now with what is being done to ensure that these objectives are achieved.
The reorganisation of the Department into two State-sponsored companies, under the Postal and Telecommunications Bill at present before the House, is an important part of the Government's plan for the development of the postal and telecommunications services. Deputies will recall that the setting up of State-sponsored bodies to run the services was recommended by the independent Posts and Telegraphs Review Group, under the chairmanship of Dr. Michael Dargan, which concluded that the civil service was not the environment best suited to the operation and development of commercially-orientated services. I should like to record my appreciation of the help I got from Deputy Cooney and others during the Second Stage debate.
The Government remain strongly of the view that the establishment of the new State-sponsored companies will contribute significantly to the better development of the national communications services. Let us be clear that that is the object of the exercise. The aim of the reorganisation is to achieve faster development of the services, to get things done better and more efficiently and to create an environment in which the needs of the customer will be recognised and catered for more fully.
The new bodies, therefore, are rightly being given a considerable degree of commercial freedom and flexibility. At the same time, there is no question but that the national communications services will remain firmly within the public sector and the Minister will retain the necessary functions, in the areas, for example, of public policy and financial control, so enable him to meet the Government's overall responsibility for the services in the national interest.
As I have said, the Bill to set up the new companies is at present before the House. Deputies can read the figures in the graphs in the plan. The guiding principle underlying the proposals in the Bill is that the two new bodies should be established on a fully satisfactory basis, so as to enable them to realise the objectives which I have mentioned. The Government believe that the proposals will achieve this. The other primary consideration for the Government is to ensure that, in the transition from Government Department to State-sponsored companies, the legitimate interests of existing staff will be fully and adequately protected. I assure Deputies that that is the intention.
The Government regard the reorganisation as fully consistent with the development aims of the economic plan and an essential feature of it in so far as the postal and telecommunications services are concerned. As such, the Government wish to see it implemented as soon as possible. We are aiming, therefore, with the co-operation of the House, to have the remaining stages of the Bill processed quickly so that, if possible, the new bodies can be set up early in 1983.
As I mentioned earlier, the amount of capital needed for development of the telephone service over the plan period is likely to be between £970 million and £1,200 million. Until last year it had been the practice to provide all the money needed for telephone development from the Exchequer. In the present year, most of the capital needed is being raised by Irish Telecommunications Investments Ltd., the company formed to finance telecommunications development works. When the new telecommunications board have been established, the intention is that they will raise all the capital they require, just as the ESB and some other commercial State-sponsored bodies do at present.
The experience so far is that Irish Telecommunications Investments Ltd. have had no difficulties in raising the capital needed and I do not expect there should be any in the years to come. Development of the service should not suffer therefore from inability to secure the capital needed. I should mention, too, in this connection that substantial funds are being made available by the European Investment Bank at attractive rates for telephone development work and I would expect this funding to continue in the years ahead. It is an indication of the confidence the European institutions have in the basic soundness of our economy.
As will be evident from the economic plan, it is not possible to forecast closely what the demand for telephone service will be. Demand is closely linked with the general state of the economy, with the charges for the service and with the capacity to pay for the service. Telephone density in this country is low by the standards in other EEC countries — I was shocked to see how low when I took over the Department — although there are factors here, such as the bigger family size, which invalidates comparison to some extent, but it is clear that there should be a continuing high level of demand for quite a long period ahead.
The demand will obviously need to be monitored on a continuing basis and whatever adjustments are necessary made. What the economic plan does is to suggest the limits within which demand is likely to fall and to make provision for the capital needed to meet these levels of demand. The allocation of the financial resources needed to meet whatever the level of demand is likely to be, as set out in the plan, is evidence of the Government's determination to ensure that we have a high quality telephone service here equal to that in other EEC countries and that business and industry which, as the plan sets out, are to be the main springboard for providing the jobs needed over the next five years, will not be placed at a disadvantage with their foreign competitors.
The current telephone development programme was embarked on at the beginning of 1980 and we are now entering the second half of that programme. Significant progress has been made and the programme is broadly on target. A record 130,000 new connections were made in the years 1980 to 1981. The waiting list has at last begun to fall and is now below 80,000. The subscriber trunk dialling service is improving steadily and the conversion of the remaining manual exchanges and telephones to automatic working is continuing. Some 350 buildings for telephone purposes, mainly for new telephone exchanges, have been completed and a further 84 are under construction. Two new engineering training schools have been opened to, among other needs, train staff in the new technology that will be required to operate and maintain new digital exchanges that are now being installed. Is minic cú mall sona — we were lucky to have come into the development stage when we could avail of the most modern technology in this field.
The resources have been built up and meeting the connection targets set out in the economic plan is not expected to give rise to any insuperable problems. This is not to say that the targets will be met readily but I am confident that such problems as are likely to be encountered can be overcome. The trunk and local automatic telephone exchanges needed to meet the targets for quality of automatic service set are either already installed, on order or at the advanced planning stage.
The same comments apply to the trunk transmission systems and to the exchanges needed for conversion of the remaining auto-manual exchanges to automatic working. Much of the basic work involved in improving the quality of the service to subscribers has been done and the targets in the plan are realistic and attainable. When fully realised, the benefits to the country will be very great indeed.
A key factor in the implementation of the telephone development programme is having the necessary manpower available. Clearly, when the programme got under way in 1980, there was not enough staff available to carry out the programme. This was not something that could be remedied overnight. In many instances, the staff were working in conditions that were already overcrowded and the extra staff needed to carry out the programme could not be recruited until accommodation had first been provided.
This accommodation has now been largely made available by way of new buildings provided as part of the Department's building programme or, where this could not be done, by renting the facilities needed. Almost all the extra engineering staff needed has been recruited and much of the training to enable these to function effectively and make the contribution to the programme for which they were recruited has been given. Only marginal numbers remain to be recruited. The result is that my Department now have almost all the resources needed to press ahead with the programme as planned and that is what is being done. This was budgeted for by my predecessor and continued by me.
Because all the staff needed were not available the shortage had to be made good largely by working a substantial volume of overtime. There was no real alternative to this in the short term but clearly continuation of it over any extended period could not be supported. In fact, the volume of overtime, which peaked last year, is being reduced substantially this year, and will be further reduced next year. The aim will be to continue to reduce it according as the resources needed to bring it to the irreducible minimum become available. I believe that there will be general acceptance that this is the right course.
While much progress has been made in implementing the development programme I would not wish to convey the impression that all in the garden is rosy and that there are not problems still to be overcome. There are, and I want to make it clear that my Department are fully conscious of these and to explain what is being done about at least some of them. In dealing with these I exclude the delays in providing telephone service and the extension and improvement in the quality of the automatic service which are basic to the whole development programme. Some of the matters I have specifically in mind are the less than satisfactory service in repairing underground cable faluts in Dublin, telephone billing problems, which all Members of this House have called to their attention regularly, and delays in answering persons making calls via operators.
Delays in repairing faults in underground cables in the Dublin area have persisted over an unduly long period. There have been two basic problems, the generally deteriorating standard of the cabling network and a shortage of the necessary skilled jointers. Much of the cabling network is substandard — there is no use in concealing that — and does not stand up to severe flooding which unfortunately we have had three times in the last year and which put numbers of major cables serving up to 1,000 lines or more out of service. The Department's ability to deal with this has been aggravated by a shortage of skilled jointers. The problem has now been tackled on a basis which over the next two years will deal comprehensively with it. Firstly, more skilled jointing staff have been allocated to the work, a programme of preventive maintenance has been undertaken and the bigger subscriber cables are being pressurised. The jointing force has been considerably strengthened this year but I should make it clear that it will take time before these are fully effective. Of course, skilled jointers are also needed to provide service for applicants — this is the point; this is the kind of catch-22 situation — and the demands for jointers for provision of service of applicants and for repair of cables have to be balanced. Because of the continuing unsatisfactory repair position, however, it was decided some time ago to allocate almost all the available jointers to contain the repair position which had deteriorated following thunderstorms last June. As I mentioned already, there were three exceptionally severe periods of bad weather which affected the underground cables. Repairs will continue to be given priority until the position is brought fully under control.
I am confident that the action that has been taken will bring the required results. But I should sound a note of caution that it may take up to two years before a fully satisfactory underground cable repair service is available. I know that at the very edge of technology now we have fibre-optics and that a lot of these problems will not be encountered when these fibre-optics come into use. We have used them on a very small scale only as yet — 20 or 30 kilometres in each case. I hope this too will bring an improvement, because deterioration of the underground cable has been a major headache. I should also mention that the diversion of all jointing staff to underground cable repairs for prolonged periods this year has affected our ability to meet applications for telephones. I made that point already. Priorities had to be settled between meeting applications and repairing faults and I am satisfied that the course we have taken was the correct one.
I am aware that telephone bills have been the subject of public criticism and a cause of unease to numbers of subscribers. Perhaps I should say at the outset that I can appreciate the concern of subscribers in a situation in which they have no meter available at their homes or places of work from which they can check their metered call usage although in this respect their position is no different from that of telephone subscribers in other countries. I should point out also that the subscribers meters used in this country for recording metered calls are the same kind as in other countries and are thoroughly reliable. Subscribers in other countries are complaining also about the metering of their calls. I do not know whether that is any consolation; I do not think it is. However, in a situation in which there is unease about metered call billing, clearly it behoves us to do whatever is possible to allay that. At present where subscribers continue to be dissatisfied with the number of units for which they are being billed printer meters are placed on their lines with their agreement. I must say that some people who come into my "clinic" anyway do mistake the unit call for a call. At times they talk about a charge for three minutes when in fact the basic charge is for 20 seconds, depending on the distance they are telephoning. These printer meters record all the calls made over the line in question, but not the content of the calls, and the results are compared with the subscriber's own records which have to be maintained while the checks are in progress. Clearly this is a help. Within the next few months meters will be made available for sale or rental to subscribers with which they can check their metered call usage. Digital exchanges becoming available now, to which I have referred already, will have the capacity to provide details of metered calls made. The intention is to move, over a period, to a situation in which details of all trunk calls made can be made available to subscribers. In the final analysis this is the only fully satisfactory solution and is the direction in which we propose to move. More frequent billing, which would make it easier for subscribers to pay, is also being considered. The whole question of future billing arrangements has been under study in the Department since early this year. A report on the examination, with recommendations for future action, is expected before the end of the year. I believe these measures being taken now and the further measures to be taken when the examining group reports will remove existing causes of dissatisfaction with telephone billing during the period of this plan.
The time taken to answer callers at a number of exchanges throughout the country seeking calls via telephone operators is excessive. This has been due to a number of factors, the principal one of which is that because of the planned conversion of the remaining manual exchanges to automatic working in the ordinary course there would be a surplus of telephone operating staff if action were not taken in good time to deal with it. In anticipation of this, recruitment of telephone operators was stopped some time ago. The result is that we have rather less operators at numbers of exchanges than would be needed to handle the current level of traffic. But of course staff will become available as other auto-manual exchanges are changed to automatic. However, with the spread of automation to centres that have manual service only at present, the extension of STD to Northern Ireland and Britain and the extension of international dialling, the demand for operator services will clearly drop over the next few years and the speed with which callers are answered will improve substantially over the next two years.
The main concentration at this stage must be to improve the quality of the basic telephone, telex and data services and it is to these the main resources are being devoted. However, as set out in the economic plan, the provision of new services that will be of benefit to users is not being neglected. A public mobile automatic radio telephone service for the Dublin area initially, but with the capacity to extend it to other areas if the demand justifies that course, was ordered recently. The planning of a national packet switched data network, which will greatly facilitate the transmission of data, and of a national radiopaging system is almost completed and tenders will probably be invited for these in the course of the next year. Numbers of other new services being introduced in other countries recently are also being studied to establish if their introduction here is likely to be beneficial and warranted, and a group has just been established to recommend on the action that should be taken by this country so that is can benefit to the maximum extent from the developments taking place in all forms of satellite communication. It is therefore the intention to ensure that this country is not left behind in the case of any technological developments that are likely to bring advantages to the country.
While the emphasis must clearly be on improving the basic telecommunications services, sight must not be lost of the need to keep under review all the existing services provided to ensure that they are all fulfilling an essential purpose and that their provision continues to be warranted. The telegram service is at present under review. This was once an essential service for business and was in many instances the only means of urgent communication over a distance. The service is now used largely for social purposes — sympathy and greetings telegrams — and is being operated at a substantial loss. Increasing charges is not the answer as the evidence is that the more charges are raised the less use is made of the service. The question must therefore be considered whether it should be continued — or, at least, whether it should be preserved in its existing form — and this is at present under examination.
Deputies will be aware, too, that it has been decided to issue only the home part of the telephone directory to all subscribers next year, although the second part will be made available on request, possibly at a small additional charge.
Development of the infrastructure of the telephone service itself has also to be carried out on a basis that will not impose overheads on the service that it could not bear at this stage of its development. In pursuance of that policy, the Department have deferred the provision of a number of buildings until such time as more of the essential investment already made in the service becomes revenue-earning.
I mention these only as an indication that we are not concerned simply under this economic plan with providing high quality telecommunications services — we must also ensure that it is provided as economically as possible and that costs are not incurred unnecessarily on services for which there is not a real demand or which do not pay their way, or before they become absolutely essential.
Good communication systems are indispensable for economic advancement and the value of an efficient postal service to business and commerce for the foreseeable future is obvious. Basically, we have a very well-developed postal network. However, accommodation for operations and staff needs to be improved and expanded, and mechanisation extended to improve cost-effectiveness and efficiency in line with postal developments in other countries. The financial provisions in the legislation for the setting up of the new postal board will enable An Post, the new company, when established, to press ahead with these essential improvements, while concentrating as well on service to the customer and the need for the service to be financially viable.
The main direction forward for this important service is to improve its efficiency and cost-effectiveness, gear itself more closely to the needs of its customers, develop new services which will be self-financing and regain traffic lost. It has been going through a difficult period. As a highly labour-intensive service it has been particularly heavily hit by inflation, its charges have had to be sharply increased in an effort to cover increases in costs and, mainly because of the economic recession and high prices, traffic volumes have fallen. This trend has to be arrested and reversed.
One way of doing so is by introducing new lines of business and some progress has been made in recent times in introducing some of these — the surface air lifted parcel service, which is geared to meeting mail order export business to the USA, and the postbus are two, and others such as express delivery service in the main centres of population, surface air lifted letter service and facsimile transmission are in the pipeline. But while these should be a help, they will not bring the increase in volume that would be needed and which the service could handle at little extra cost. A service which has attracted a lot of business in other countries is unaddressed mail for advertising, and this is a service to which consideration is being given here at present. I expect that when the postal board takes over the operation of the services it will devote substantial effort to marketing these new services, as well of course, as attracting more of the traditional business. As a result of conversations I have had with the chief executive, chairman and board members I am convinced they have very good prolific ideas for that type of development.
While new services can be expected to make a valuable contribution the main business will continue to be the ordinary letters and parcels and it is the reliability with which these services are given and the cost at which they are provided that will be the determining factors in the future of the postal services. The quality of the service slipped over the last few years but I am glad to be able to say that it is now much more reliable and although it has still some distance to go before it reaches the previous high standard, it is headed in the right direction. There is much spare capacity in the postal system. Most postmen on delivery work could carry much more mail, and if the public, and business in particular — the percentage of post which is purely social is very low — can be persuaded to make greater use of the post, the service should return to its former healthy state. Staff and management have an important role to play and the future of the service will depend very much on how well they perform their jobs. I know they are conscious of this and that they can be relied on for the necessary effort and to give their co-operation in the measures that are being developed to raise the level of efficiency in the postal service, thus assuring the country of a viable, high quality postal service in the years ahead.
As in the case of the telecommunications service, economy and efficiency do not consist solely of doing what we are doing well. We have to ask also whether some of the services being provided at present are necessary at all or needed to the standard at which they are being given and whether, in the interests of economy, the way in which some of them are provided should be changed. These aspects too, have been under review and, in particular, the second postal delivery in the major urban areas and the hours of counter services; the delivery of mails to roadside boxes is also under consideration. Changes of this kind are an essential feature of the revamping of the postal service and developments of this kind can be expected over the period of the plan — in the earlier rather than in the later stages.
Of all the resources available to the Department its most important resource is of course its manpower. There is a wealth of experience, expertise and talent there and the primary task of my Department will be to ensure that it is effectively and harmoniously harnessed towards achieving the goals set out in the plan in relation to the telecommunications and postal services. I believe that the staff of my Department will not be found wanting and that the effort and co-operation required in the attainment of those goals will be forthcoming.
It is appropriate in the context of this discussion on the economic plan to consider the role of the semi-State bodies under the aegis of the Department of Transport. The efficient operation of the transport facilities provided by the State transport companies is vital to the smooth operation of the economy. This is especially so in our case since the livelihoods of so many of our people depend on trade and, therefore, ultimately on the smooth movement of both passengers and goods within the State and to and from our trading partners.
The plan refers in chapter IV to the need to improve the financial performance of commercial semi-State bodies so that investment by them generates an acceptable return. As most Deputies will be aware, the present financial position of these bodies is very bad. The latest published results of these bodies show that in general they are unable to generate out of profits sufficient finance to meet these needs in the normal commercial manner.
A major purpose in setting up our semi-State bodies was that they should undertake essential business relating to national development in an enterprising and developmental way. In the main, these bodies have to operate in the commercial market place. Their success or failure must be measured on the basis of the quality of service they provide and the financial results which they return. In recent times considerable public attention has been paid to the disappointing performance, particularly in financial terms, of a number of semi-State bodies. In fact a Committee of this House was established to examine the operations of some bodies.
In looking at financial performances, we must, of course, bear in mind the present general economic difficulties, which are marked by slow growth, depressed foreign markets, a high rate of inflation and unfavourable trading conditions all round. Public enterprises — like those in the private sector — have been severely affected by these problems. Do these external factors fully explain the present difficulties of the State-sponsored sector? Some critics of public enterprises have suggested that State bodies are shielded from market forces and thus lack strong commercial motivation. There have been suggestions of over-manning, of over-investment. Are these fair criticisms? Why has our system of State-sponsored bodies, which was previously held in respect and even pride, become the subject of so much criticism?
All our State-sponsored bodies were originally established with a fairly clear purpose in mind. Over the years, however, we appear as a community — either explicitly or implicitly — to have tacked on additional objectives. In the last few decades the State has become a major agent of economic growth and this has led us to view State-owned enterprises as a means of increasing national output and as an instrument for generating or preserving employment. It goes without saying that we expect State enterprises to conform to general economic objectives such as the reduction of inflation and the purchase of Irish goods and services. In addition we have, in the transport area particularly, a need to maintain services which are not economic in the full sense but which are deemed necessary in the public interest, whether for social, strategic or other reasons.
All these developments have, I believe, contributed to a degree of ambiguity on the part of the community as a whole in our approach to State bodies. There is a dichotomy which leads the public to demand the maintenance of uneconomic transport services while at the same time deploring the losses which are incurred in providing them. We criticise public enterprises for being inefficient or over-manned but feel free to protest at the redundancies or other consequences of remedial measures. We demand investment for infrastructural or regional development needs but complain about the lack of strict investment criteria. This does not, of course, absolve the State bodies from responsibility for their problems. I have no doubt that in a number of instances State bodies have been happy to live with an imprecise view of their role and their objectives. They have not been required to give such a high priority to profitability and have escaped the full discipline of clear performance measurement. They have enjoyed a degree of protection from the harsher winds that have blown so severely and caused so many casualties in the private sector.
These and other issues have been addressed by the Government in the National Economic Plan. In future all significant investment proposals will be submitted to the most rigorous and, where necessary, independent financial and commercial assessment before they are allowed to proceed. Unless the proposed investments are judged capable of achieving an adequate rate of return on capital employed, they will have little hope of approval.
A similar approach will be taken in regard to proposals for the financial restructuring of semi-State bodies. The ultimate aim of each commercial semi-State body should be to give a rate of return at least equal to the cost to it or to the Exchequer of borrowing funds so far as its commercial activities are concerned. I should point out to the House that studies done in this area have shown that the present rate of return to the Exchequer on its investment in such bodies is only 4 per cent compared to current domestic interest changes of about 15 per cent on long-term borrowing.
A clear definition of policy objectives and overall financial targets will be set for each commercial semi-State body and their performance will be monitored on a continuous basis. The task of adjusting the targets of the State-sponsored bodies and the investment criteria which apply to them will be carried through without impairing their autonomy or the sense of enterprise which has served them and the country so well in the past. When the balance is being struck a great deal will depend on the exact role of each body, the cost of discharging that role and our expectations as to results.
At both national and local levels we had come to expect too much from the State sector. We looked to the State enterprise to fulfil all our aspirations and solve all the problems in their respective fields of activity. We felt free to rebuke them, sometimes quite harshly, when they were unable to provide ideal solutions. We have subjected some of them to unfair criticism.
What we are aiming to do in the State sector is get our expectations right both within the enterprises themselves and in a nationwide context. Indeed, almost everything in the plan relates to expectations. Nationally our expectations have been too high for the amount of effort we were willing to devote to realising them. This is related to my opening remarks with regard to sacrifice and with regard to dedication. The new plan identifies expectations for the future which, while remaining high, are also capable of being realised under the programme of action set down.
The National Economic Plan points the way forward. It provides the main economic and financial framework for our development over the next five years. There is now a strategy before the Irish people which can ensure a satisfactory economic and social future for our growing population.
Of course, many of the decisions which will have to be taken within the framework of the Plan will not be easy. The decisions involve moderation of income and welfare expectations. They require some sacrifice and acceptance of some new burdens. These burdens are necessary because if we do not reshape and restructure our economy we will lose out in the new competitive conditions being created by our trading partners.
I would now like to deal with some other dimensions of our transport arrangements. I will first deal with CIE. Over the past decade we have seen an alarming escalation in the losses being recorded by CIE. In the current year the deficit in the board's operations is estimated at over £100 million. For longer than perhaps was wise we were prepared somewhat complacently to accept rising deficits in CIE as a kind of testimonial to our social concern. Complacency, however, is a luxury we can no longer afford. We must now set about quantifying the social elements in our transport system. Criteria will have to be developed for the payment of subventions in respect of payment of essential public services which cannot be made self-supporting. The Government, as the paymaster for such social services, must take a more active role in the determination of the level of such services. This means that we must now decide whether the present structure and organisation of our public transport services are the best suited to our future needs.
The whole question of the existing structure of CIE will shortly be considered by the Government in the context of the recommendations in the McKinsey Report. Equally, stricter controls will be necessary in relation to capital expenditure projects. The position which has arisen in relation to CIE arrangements with the Bombardier bus-building plant at Shannon highlights the deficiencies in the present system of control of public capital expenditure.
CIE's original arrangement with Bombardier envisaged a production at a rate of more than five buses per two weeks. However, because of a backlog of bus replacement requirements, CIE permitted an increase in the production rate to five buses per week, a rate which could not be sustained by CIE long-term requirements. This might have been acceptable if substantial export orders were assured which would have absorbed the excess production capacity. This, of course, was not the position, and the problems this created came to a head in 1982 when the allocation of public capital for bus building purposes was limited to £20 million. A letter from the then Minister, my predecessor Deputy Cooney, indicated that £20 million was the allocation for 1982. While this was a very sizeable allocation it was not enough to sustain production at the rate of five buses per week, which had been developed at the latter part of 1981. CIE represented that this would involve a substantial cutback in staff or closure of the plant from July.
With a view to minimising disruption of production at the plant and to provide for an orderly transition to the agreed reduced rate of production, the Government agreed to allow an additional allocation of £5 million for buses in 1982. However, it appears that CIE, despite warnings to the contrary, had proceeded on the assumption that yet more money would be made available to enable the maximum rate of production at the plant to be maintained throughout 1982.
To my mind this approach by the board seemed to indicate a reluctance to accept the constraints of straitened public finances. Obviously CIE and other State companies must be made amenable to the very real financial difficulties facing the country.
Turning to the Dublin Transport Authority I would like to be in a position to introduce legislation before the Christmas recess providing for the establishment of the Dublin Transport Authority. The proposed functions of the authority in the areas of transport, planning and budgeting, public transport services and traffic management and the administrative improvements which the authority will bring about in these areas are set out in the Government's plan.
There is ample evidence to suggest that there are inadequacies in existing administrative structures in so far as transportation in the Dublin area is concerned. The Government are satisfied that the only remedy for these inadequacies is a single body with responsibility for the integrated planning and operation of transportation in the Dublin area. It is the Government's intention that the Dublin Transport Authority will have the necessary powers to enable them to tackile Dublin's growing traffic problems and to ensure the co-ordinated assessment of the priorities between capital and non-capital expenditure and, within capital expenditure, of the priorities between road and rail infrastructure, very much needed rationalisation so that road development will not progress without any reference to what is being done in the rail section.
As I see it, the activities of the Authority in the traffic management field will be of the utmost importance. The need for a properly balanced and well-enforced traffic management strategy cannot be over-emphasised. The effects of congestion in terms of delays, fuel wastage and vehicle wear and tear represent a significant waste of resources at a time when this can be least afforded. The Dublin Transportation Task Force has been acting as a forerunner of the Authority in the traffic management field and their achievements, particularly in securing the successful introduction of more than 50 buslanes in the past 18 months, have been considerable. With the establishment of the Authority it is envisaged that the traffic management strategy currently being pursued will be continued and intensified.
I would like now to deal with the subject of road haulage. Road freight haulage in Ireland has been operating within a restrictive licensing system which goes back to the early thirties. An important change came with the liberalising measures implemented in 1971 and 1978 but these were initial steps limited in scope and aimed in the main at easing restrictions on licensed hauliers to facilitate development of their businesses in preparation for more general liberalisation. The Road Transport Act, 1971 helped licensed hauliers by removing the restrictions on the areas of operation in general merchandise licences and abolishing the weight restriction on the vehicles used. The Road Transport Act, 1978 increased six-fold the number of vehicles which each licensee could operate under a licence.
The continued growth in the importance of road freight transport over the seventies led to the in-depth study of the industry which the Transport Consultative Commission were invited to undertake. The commission's comprehensive report was presented to my predecessor in July 1981. The commission identified a need for measures to enable road freight transport to become generally more efficient, flexible and competitive so as to yield not only benefits to the road transport industry but also to the economy generally. They found that restrictions on access to the professional haulage industry had served as a brake on development in standards and quality and had contributed to the situation where as much as two-thirds of road freight activity are still undertaken by "own-account" vehicles. The own-account sector operating with vehicles and equipment, which are not used to maximum capacity, need to take a hard look at their investment in transport and to assess the advantages of using the professional haulage sector.
The main recommendation of the commission's report is for completing the liberalisation of the system of road transport merchandise licensing on a phased basis: this would result in general haulage licences being freely available to all qualified applicants after a period of two years. The recommendation embraces "own-account" operators who are suitably qualified. These developments are linked to recommendations on improved enforcement of road transport and road traffic legislation and higher standards of quality controls.
As a prelude to the Government coming to a conclusion on the commission's recommendations, the report was examined in my Department taking into account the views, written and oral, of the many interests who responded to the invitation to examine and furnish their observations on the recommendations in the report. I personally met the major interests concerned in order to have a first hand account of their views and concerns in the matter.
As indicated in The Way Forward the Government have decided that the longer term development of road haulage lies in following the approach recommended by the commission. The Government will decide on implementation of the recommendations very shortly and I believe that the new legislation, which will be necessary, will help to strengthen the position of professional road freight haulage within the whole transport sector and influence the general quality of road freight facilities.
I wish now to turn to access transport. The section of the plan dealing with access transport indicates that Government policy towards Aer Lingus will be based on the review of their commercial and financial position carried out earlier this year. Legislation will be necessary to give effect to the Government's decision on the future financing of the air companies and I propose to bring that legislation before the House during the current session. That will provide an opportunity for a full-scale debate on the activities of Aer Lingus and I will accordingly refrain from commenting in detail on the affairs of the air companies in this debate.
As regards sea access transport, I would first like to refer to the B & I Line. This company have been encountering serious financial problems in the recent past. Over-ambitious investments have burdened the company with high interest payments and capital charges which they cannot meet. A stagnant market, rising costs — fuel in particular, but also wages — together with price competition has led to severe financial difficulties. The B & I — like Aer Lingus — are in direct competition with foreign-based operators and it is now clear — as indicated in the plan — that a radical retrenchment and rationalisation of B & I's operations is necessary. This is the inevitable consequence of loss of competitiveness in world markets but, more important, it is also a pre-requisite to the restoration of the competitiveness which the plan has identified as a necessary condition for the revival in the economy. The Government identify in the plan the necessity to ensure the economic operation of the B & I Company's services together with a reduction in the company's cost overheads.
I turn now to Irish Shipping. It is unfortunate that the plan must report a deterioration in the performance of Irish Shipping to the extent that the profits generated by the company's ancillary activities will no longer cover losses incurred in the deep sea shipping market. The present slump in tramp shipping is the worst that Irish Shipping have had to contend with. But Irish Shipping is not unique in this regard. I note from a recent edition of the London based Economist that the whole shipping industry is in its worst depression for 50 years. The Economist quoted industry analysts' estimates that there will be no improvement in shipping before late 1983. Accordingly, there is little hope of a short-term improvement and the plan has accordingly identified the need for Irish Shipping to take stringent remedial action.
Tá fhios ag an Teach gur chuir an Rialtas iad féin faoi gheall leis an plean náisiúnta eachnamaíoch seo. Mar sin, beidh timpeallacht i bhfad níos fearr le haghaidh pleanála fadtéarma ann. Ina theannta sin, beidh na treoirlínte agus an frámaíocht ann i gcóir na cinntí eachnamaíocha, na cinntí airgeadais agus na cinntí beartas shóisialta a bhaineann leis an cúig bliain atá le teacht. Féachann an Rialtas ar an ré pleanála mar ghníomhréim riachtanach agus mar rud a chuirfidh ar fáil an léargas leathan a bhféadfar faoina chuimsiú meas a thabhairt ar chlár infheistíochta na tíre.
Faoi dheireadh, caithfidh mé a rá nach féidir leis an Rialtas gach rud a dhéanamh le feabhas a thabhairt ar chúrsaí eachnamaíocha. Má tá an Rialtas le pleanáil go rianúil don am le teacht, caithfimid é sin a dhéanamh le comhoibriú ó dhaoine agus cuidheachtái san earnáil phríobhaideach agus san earnáil phoiblí. Caithfimid go léir obair le chéile a t-slí go mbeidh a lán iomaíochta i dtionscal agus i gnólachtaí. Caithfimid roinnt iobairt a dhéanamh idir an dá linn ionas gur féidir fostaíocht inmharthana a chur ar fáil. Tá súil agam i gcónai go n-éireoidh linn.
