: I move: "That the Bill be now read a Second Time."
I am grateful to the Opposition for agreeing to take all Stages of this Bill today. The circulation of the Bill was, in fact, approved by my predecessor and I am happy to bring it before the House.
The sole purpose of this short Bill is to raise from £350 million to £600 million the limit on the borrowings and leasing arrangements of Irish Telecommunications Investments Limited which the Minister for Finance may guarantee.
The present limit was fixed by section 6 of the Irish Telecommunications Investments Limited Act, 1981, and is now nearing exhaustion. However, the company will have to raise nearly £200 million in 1983 in new borrowings and leasing arrangements to help finance the national telecommunications development programme this year. Early enactment of the Bill is, therefore, essential to the financing of telecommunications development in 1983.
Irish Telecommunications Investments Limited — ITI for short — is a wholly-owned State company which was set up by the Minister for Posts and Telegraphs on 1 April 1981 to obtain funds from the private sector, either by borrowing or leasing, to help finance the telecommunications development programme. This is in furtherance of the policy of encouraging private participation in investment in infrastructural services with a view to reducing the central Government borrowing requirement.
The company is statutorily controlled by the Irish Telecommunications Investments Limited Act, 1981, which is broadly on the same lines as legislation governing other State-owned companies. Thus, for example, all borrowing and leasing arrangements by the company require the prior consent of the Minister for Posts and Telegraphs given with the approval of the Minister for Finance.
The Act also contains an extra provision which requires the company to meet its costs from its operations in order to preclude any Exchequer subvention.
The limit of £350 million on ministerial guarantees under the 1981 Act was determined on the basis that it would be adequate to meet likely needs to 1982. It was hoped that by that time a State-sponsored body would have been established to take over the operation of the telecommunications services from the Minister for Posts and Telegraphs, the intention being that ITI would become a subsidiary of that body, which would be wholly responsible for arranging the financing of telecommunications development.
In the event, the setting-up of the new statutory body, Board Telecom Éireann, was delayed. As Deputies will be aware, the Postal and Telecommunications Services Bill, 1982, which was designed to establish the two new State-sponsored bodies to run the postal and telecommunications services, passed Second Stage last year but its progress was interrupted by the ending of the 23rd Dáil. The Government are, however, committed to pressing ahead with the reorganisation of the Department into State-sponsored bodies and I will be putting a motion to the House shortly after Easter proposing the restoration of the Postal and Telecommunications Services Bill, 1982, to the Order Paper for its Committee Stage.
Capital expenditure on telecommunications development was roughly £220 million in each of the years 1981 and 1982. Of this, the amounts raised by ITI were £92 million in 1981 and £141 million in 1982 — the Exchequer directly financed the balance. The capital programme for 1983 has been set at £226 million and, of this, £194 million will be financed by means of leasing arrangements with ITI, which will in turn finance the leases by means of borrowings or other arrangements.
The object of the Bill is, as I have said, to help in financing telecommunications development. The basic target of the development programme is to provide telecommunications services here of the standard available in our EEC partner countries in terms of quality and availability. To achieve this involves greatly improving the quality of the internal trunk service, giving all users an automatic service and extending the areas to which calls can be dialled. It also involves eliminating delays in meeting applications for telephone, telex and data facilities.
The current programme covers the five-year period 1980 to 1984, inclusive. I should say that it was acknowledged when the programme was undertaken, both by independent experts and by the Department itself, that meeting the programme targets in five years would be a remarkable achievement. I repeat this point, which my predecessors in office also stressed, because of the uninformed, although quite understandable, criticisms made from time to time that, despite the heavy investment that has taken place, the service has not been transformed. It must be remembered that the first essential has been to build up the infrastructure of the service itself in terms of buildings, exchanges, trunk systems and main cabling and this necessarily takes time. Dramatic breakthroughs over short periods were never, therefore, to be expected, nor were they promised.
But substantial progress has been made and this will be greatly accelerated this year and next year. For instance, the major digital trunk exchanges which the Minister opened in Dublin last week will provide greatly increased capacity for switching of trunk calls in Dublin exchanges and will enable many more trunk circuits to be provided to centres throughout the country which are still suffering congestion. Trunk exchanges will also be opened this year at Limerick, Waterford, Galway, Sligo, Drogheda and Dundalk. Overall, the expectation is that by the end of the year, the call failure rate on the internal STD system will be of the order of 10 per cent to 15 per cent, down from 40 per cent at the start of the current development programme. The aim is to reduce this further to about 4 per cent by the end of 1984.
About 92 per cent of subscribers have automatic service at present and well over 100 of the remaining 400 manual exchanges are scheduled for conversion this year. Now that the necessary trunk and local exchange capacity for more automatic traffic is coming on stream, the way is also clear to speed up this part of the programme.
For some years past, Belfast was the only area in Northern Ireland to which calls could be dialled from here, and Birmingham, Glasgow, Edinburgh, Liverpool, London and Manchester were the only centres in Britain to which subscribers could dial calls. It is possible now since late last year for subscribers to dial calls to all areas in Northern Ireland. I would hope that this will make a real contribution to bringing the two parts of Ireland closer together both for business and social purposes. From the end of this month it will be possible for subscribers on Dublin exchanges and in Cork to dial calls to all parts of Britain, and this facility will be extended to the rest of the country over the next few months. It is also possible now for up to 70 per cent of our subscribers to dial their international calls to some 70 other countries. All this is solid progress.
The other main objective of the programme is to get into a position by the end of next year where applications for telephones, telex and data can be met promptly. Again, steady progress is being made, though unevenly in different parts of the country. By the end of this year, we expect that in virtually the entire Cork, Limerick, Waterford and Portlaoise districts, four of the eight engineering districts, waiting lists will have been cleared and all applications will be capable of being met promptly. Progress will also be made in this direction in the remaining four districts, but it will take up to the end of next year before the target is fully achieved there. By the end of this year also the waiting list for telex and data will, it is planned, be virtually eliminated.
It would be very far from my intention, however, to give the impression that the various targets I have mentioned will be reached easily, or that we are or can be complacent. On the contrary, I wish to dispel any such idea. I do not have to remind Dublin Deputies in particular of the problems in regard to underground cable repairs and delays in getting telephones. There is clearly much work still to be done and an all-out effort will be made to meet the objectives of the programme. I am very conscious of the importance of good communications facilities for all types of businesses and of the need, in terms of solving the unemployment problem, to assist businesses large and small in every way possible. For this reason my Department are at present concentrating, in the Dublin area on providing telephones for business applicants. Clearly, one essential requirement is that the necessary finance should be provided and that is the purpose of this Bill.
From a financial point of view, the present is a difficult time. Substantial investment has been made in the infrastructure of the services and this should largely meet requirements for many years ahead. The scale of the necessary investment and the attendant high interest charges naturally weigh heavily on a capital-intensive service such as telecommunications. Largely because of this, there have had to be substantial increases in charges in recent years. With the increases announced in the budget, it is expected that the service should move into modest surplus this year and make some contribution towards past deficits. In the years ahead, when the current programme has been completed, it will be possible to add many more subscribers to the system and to handle a greatly increased volume of traffic with relatively small additional increases in resources. The financial performance of the service should therefore improve steadily and it should be possible to contain increases in charges well below the rate of inflation. I am satisfied, therefore, that the investment in the telecommunications development programme, apart from being essential for the economic and social well-being of the country, will also be financially rewarding.
Judging by its performance to date, Irish Telecommunications Investments Limited can be expected to continue to play a vital role in financing telecommunications development. However, as I mentioned earlier, the company will become a subsidiary of the State-sponsored body to be set up under the Postal and Telecommunications Services Bill, 1982. It will be primarily for the board of the new body, Bord Telecom Éireann, to decide on the precise role of ITI after the change over.
The provisions of the Postal and Telecommunications Services Bill, 1982 would apply to any subsidiaries of Bord Telecom Éireann as well as to the company itself. For example, borrowing and guarantee limits would apply for the Board and its subsidiaries as a group. Accordingly, the financial activities of Irish Telecommunications Investments Limited will be subject to statutory control whether it is retained as a subsidiary of Bord Telecom Éireann or is wound up. When the Postal and Telecommunications Services Bill is enacted, there will not be any further need for the Irish Telecommunications Investments Ltd. Act, 1981, or for this amending Bill and both will be repealed.
While not wishing to inhibit the scope of this debate, I would be most grateful if Deputies could agree to leave over until another time discussion of general issues related to the operation of the telecommunications service.
I commend this short Bill to the House.