: I move:
That a supplementary sum not exceeding £10 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1983, for the salaries and expenses of the Office of the Minister for Transport, including certain services administered by that Office, for a cost alleviation payment and for payment of certain grants and a grant-in-aid.
This Supplementary Estimate is moved to fulfil my undertaking to the House on 3 March to have a full debate on the Transport Vote which on that day was passed without debate.
This Estimate is being discussed against a background of continuing sluggishness in the world economy. Indeed, 1982 was the third successive year of international recession. The Economic Background to the Budget, which was published by the Department of Finance, indicated that in the OECD area output declined marginally last year compared with 1981, while in the EEC output was virtually unchanged. World trade — on which this country depends vitally and to a much greater extent than many other countries — showed a fall of over 1 per cent in volume. The world economy continues to face uncertainty. Many countries have been concentrating on reducing inflation and improving public finances. The clear message for us in Ireland in all of this is that we must rely chiefly on our own efforts to put things right. The framing of Estimates can no longer be based on an expectation of some dramatic upturn in the world economy which will solve our problems for us. This is not going to happen.
As Deputies are aware, the central theme of the recent budget has been the need to come to grips with the gigantic problems of the public finances. In numerous areas of the public sector we can find examples which reflect a philosophy of putting off until tomorrow the measures which should be taken today or, more correctly, should have been taken yesterday. Both sides of this House and the community generally recognise that this state of affairs cannot be allowed to continue.
For some years now CIE's deficits have been increasing at an alarming rate. Among the many disturbing features of these deficits has been the fact that since 1976 the subvention provided for CIE at the beginning of each year has proved inadequate. In some years the subvention had to be increased not once but twice by supplementary Estimates.
On coming to office I found that a subvention provision of £86 million had been made by the previous Government for CIE for 1983. This subvention, at £22 million less than the board's deficit of £108 million in 1982, called for stringent economies in the board's activities in 1983. Deputies will appreciate that in the prevailing financial circumstances, the Government had no option but to accept that provision and to express determination that it must suffice for the year. In approaching the matter on this basis the Government realised that major economies within CIE were unavoidable.
In recognition of the constraints and complexities which the limit of £86 million on the subvention for 1983 creates, consultations with CIE in relation to the strategy to be adopted for 1983 are continuing. I hope that a satisfactory strategy will be developed very shortly. There are many challenges long and short-term for the Government as well as for the board, management and work force in CIE. Solutions to the financial difficulties in public transport must be found taking into account social ramifications and the level of real demand for transport services.
The need to innovate, and above all the need to develop a much sharper cost consciousness have, I feel, not been sufficiently to the forefront in recent years. I was criticised outside the House for remarks which I made earlier this year. As I have already explained, they were intended not to hurt or wound but rather to stimulate efforts for change which I believe are called for in the present general difficult economic situation.
Part of the new approach which I believe is necessary is to give positive recognition to the fact that much of CIE's losses are not losses in the normal commercial sense. We all know that many of the services operated at a loss by CIE are clearly not justifiable on commercial grounds because of their social significance. It is unfair, therefore, to castigate CIE for incurring deficits as if the board, rather than the social obligations placed on the board, are mainly responsible for the losses involved. Recognition of the true position can best be given by the introduction of an above-the-line accounting system. Inherent in such a system is the need to express in the board's accounts the amounts received in respect of uneconomic services as revenue rather than as a deficit. The above-the-line accounting system will make a major contribution to the improvement of morale in CIE. I am determined that my commitment to introduce such a positive development will be implemented as soon as possible. It would of course be wrong if I were to give the impression that the company with new thinking or a new approach can in some way be totally insulated from the general economic environment. Obviously CIE cannot be insulated from the effects of the recession.
The immediate financial difficulties have to some extent taken the limelight off the McKinsey Report and the need to make long-term decisions about our public transport services. These are issues which must also be faced and I plan to turn my attention to these longer-term issues at a later stage.
I should mention briefly the position in relation to CIE's capital programme for 1983. As I said in reply to a parliamentary question in February last an exceptionally high allocation of £60 million has been provided in the 1983 budget for CIE. The original allocation which had been made included a provision of £3 million for mainline rail projects. This provision gave rise to doubts in some quarters about the future of the mainline coach building project at Inchicore. I am very happy to be able to confirm that that project will get under way later this year, some adjustment having been made to the capital programme as originally published. New coaches from the Inchicore plant are planned, I have been told by CIE, to go into service in April 1984.
Before concluding these remarks on CIE, I wish to emphasise that I recognise that the 1983 subvention of £86 million is a challenge. However, it is not a challenge to CIE alone; it is a challenge which Government and CIE must face together. I would, therefore, urge not only the Members of this House but the work force in CIE and the community in general to acknowledge our current difficulties and to recognise that they cannot be resolved without sacrifices.
Of direct interest to CIE, my Department's Estimates also include provisions aimed at facilitating public transport operations and improving traffic flow generally in the Dublin area. A capital provision of £600,000 is being allocated towards the provision of further bus lanes and other bus priority schemes and towards the modernisation of traffic signals in the Dublin area. There are now 56 bus priority schemes in the Dublin area and surveys have confirmed that, without adversely affecting general traffic, they are helping significantly in reducing average bus journey times and in limiting variations in journey times. A further 20 or more schemes will be introduced throughout the city during the present year and, by year end, the bus-lane programme will be nearing completion. The traffic signal modernisation works which are also being funded by my Department involve the computerised linking of traffic signals in the city centre area. This is designed to achieve better co-ordination of signals, thereby reducing vehicle stop/starts.
Another area where computer technology is being employed for traffic management purposes relates to the development of computer based traffic management models for the Dublin area which will be of considerable assistance in the design and analysis of traffic management schemes. A 1983 allocation of £175,000 is included in subhead A2 of my Department's Vote for development of the traffic management model.
The solution to Dublin's traffic problems lies in a change of commuting modes from private car to public transport. Bus-lanes are part of a strategy designed to bring that change about. Other elements of the strategy include the electrification of the Howth-Bray suburban rail line, the modernisation of the Dublin city bus fleet, the implementation of a parking policy which discourages commuter parking in the city centre and the rigid enforcement of that policy. Steady progress is being achieved on these various aspects.
My Department's 1983 allocation also includes a provision of £250,000 as a grant-in-aid for the Dublin Transport Authority. Drafting of legislation providing for the establishment of the authority is almost completed and I hope to introduce the Bill in the current Dáil session. Assuming early enactment of the measure, it should be possible to have the authority established later in the year. The authority will have overall responsibility for the integrated planning and operation of transport in the Dublin area and I have no doubt, that within their functional area, the authority will give a considerable impetus to improving traffic conditions as well as helping to ensure that State investment in transport is optimised.
I would like to refer now to the road freight haulage industry. Road freight transport is responsible for about 90 per cent of all domestic freight transport. The CSO survey of road freight transport for part of 1979 indicated that the hire and reward sector accounted for almost 40 per cent of all road freight transport. This is quite significant when one bears in mind that the closest comparable figure for the 1964 survey was about 20 per cent for licensed haulage and having regard to the fact that the volume of goods carried by road increased three-fold over the period.
The most recent major development in relation to road freight haulage was the overall review of the industry carried out by the Transport Consultative Commission in 1980-81 at the request of the then Minister for Transport. The commission produced a wide-ranging and comprehensive report recommending that the liberalisation of road freight transport, initiated by the Road Transport Act, 1971, be completed within a period of two years. The commission also recommended the introduction of higher standards in relation to access to the industry, law enforcement and operational practice and safety procedures within the industry.
Since the publication of the report, interested parties were given opportunities to present their views on it and since assuming office I have met personally some of the main interests and have heard their position on the various aspects of the report. I am now in the process of formulating my policy proposals on the report with a view to having them considered by the Government at an early date. I am conscious of the need to have positive decisions on the TCC recommendations, so that the industry can plan for the future with some degree of certainty and so that the freight transport needs of the community can most effectively be met.
As Minister for Transport I am also generally responsible for our international transport links, the efficient operation of which is highly important to this country, the more so because of our island location and our higher than usual dependance on international trade and tourism. Access transport requires both the physical infrastructure of the harbours and airports, together with the equipment—ships and aircraft—of the companies which use the facilities. The necessity for sound and adequate access transport links is an important consideration in the policies pursued by my Department and in the formulation of the Transport Vote. The Government have made provision this year for capital expenditure on essential harbour works of 11.6 million which compares with an outturn of approximately £8.6million in 1982. The total amount of Exchequer assistance for harbours included in this allocation is £2.9 million comprising £1.5 million grant and £1.4 million Local Loans Fund monies. The balance of £8.7 million is being provided by way of commercial borrowing or from the harbour authorities' own resources.
The grant moneys cover works at a number of ports including Sligo, Arklow, Cork, Dundalk, Foynes, Galway, Tralee, Fenit and Wicklow. Half of the total provision of £1.4 million, Local Loans Fund moneys have been allocated towards the cost of extending the east jetty at Foynes Harbour. This project has also been allocated a grant of £300,000 this year. The balance of £0.7 million is in respect of other works at Cork, Drogheda, Waterford and Wicklow. Of the £9.7 million to be provided by the harbour authorities through either commercial borrowing or their own resources £5.2 million is for continuing work on the Dublin Port and Docks Board's capital development programme.
It is appropriate at this stage to turn to the State shipping companies and in particular to their financial situation. The B & I Company have been experiencing financial difficulties in recent years and have been returning losses since 1979. The losses were £1.1 million, £2.8 million and £7.54 million in 1979, 1980 and 1981 respectively. The estimated loss for 1982 is £9 million and significant losses are also forecast for 1983. The company received State equity of £5.4 million in 1981 and £7 million in 1982 which has been used as working capital. The company have requested further State investment in 1983.
The B & I Company have introduced a programme of economy measures since 1981 including a reduction in the frequency of services, disposal of surplus assets and reduction in personnel. On 2 February 1983, the B & I terminated the year-round Cork-Pembroke service which has been in a loss-making situation. The company will, however, be operating a summer service on the route this year from mid-June to mid-September.
The Government will be reviewing generally the financial position of the B & I shortly when the question of the company's request for further equity will be considered. I am very concerned at the continuing deterioration in the company's performance and their continuing dependence on Exchequer funding and I will be looking to the company to demonstrate that effective measures are being taken to reduce costs and improve performance.
Irish Shipping Limited are at present experiencing very serious financial difficulties stemming from their deep sea operations. The deep-sea freight market has always been subject to cyclical slumps but the company's ancillary activities were capable of generating sufficient profits to absorb losses in this area whenever they occurred. Over the past 12 months, however, the deep-sea freight market has virtually collapsed due basically to the world economic depression, resulting in a growing excess of shipping supply over demand. There has been a catastrophic decline in freight rates and the market situation throughout 1982 has been one of world-wide heavy losses by shipowners, bankruptcies, deferred delivery of new vessels and increased laying-up of vessels.
The net result is that Irish Shipping Limited are incurring substantial losses on their deep-sea operations, far in excess of the profits generated by their ancillary activities. The estimated losses for the company's financial year ending 31 March 1983 are likely to be in the region of £10 million and substantial losses are also forecast for the year ending 31 March 1984. The company's financial position is at present being examined in detail by my Department and I propose to make a comprehensive submission in the matter to the Government very shortly.
From maritime matters I will move now to aviation. A sum of £2.9 million is being allocated for construction works at the State airports for 1983. This represents an increase of £300,000 on the 1982 provision. Aer Rianta and my Department keep the adequacy of facilities at the three State airports under continuous review to ensure that any improvements necessary to cope with traffic growth, as well as with safety, security and general accommodation needs are introduced in good time.
The largest single capital project to be carried out at the State airports in 1983 will be the provision of an overlay on the main runway at Dublin Airport. Technical investigations have shown that the pavement of this runway is deteriorating. Some repair work was carried out during the autumn of 1982. In order to keep the runway in operation for a further number of years, its central traffic area is being resurfaced for its entire length with a bituminous overlay at an estimated cost of £1.2 million. Other projects for Dublin Airport include the provision of two new fire tenders, accommodation for snow and ice clearance equipment and improved fire safety facilities.
The apron at Shannon is being extended to provide an additional aircraft parking position for wide-bodied aircraft beside the terminal building. Associated with that project will be an extension to the pier building and the provision of an additional airbridge. Two new fire tenders are being provided for the airport. A new rapid intervention fire vehicle is also being acquired for Cork Airport.
Aer Rianta manage the State airports at Shannon, Dublin and Cork. Despite very difficult trading conditions, Aer Rianta recorded an overall trading surplus of close to £5 million in 1981 and their accounts for 1982 are expected to show a result of much the same order.
In looking at those results, it is, of course, important to bear in mind that, since capital expenditure at the airports is funded directly from the Department's Vote, the Aer Rianta accounts do not make provision for interest or depreciation charges. Instead, Aer Rianta make annual surrenders of their surplus to the Department. The surplus figure included in the current year's Estimates is £4.5 million, a figure which Aer Rianta are confident of achieving.
In traffic terms, 1982 was a difficult year. Nevertheless, a total of over four million passengers passed through the three State airports, representing an increase of 2 per cent over the 1981 figure. In financial terms, the performance of Shannon last year was particularly noteworthy. In that regard, it is pleasing to record that, after a number of years of fairly high deficits, Shannon returned to profitability in 1982. This turnaround resulted primarily from increased transit traffic, with the Aeroflot refuelling movements forming a substantial part, the hardening of the US dollar, a good year for the mail order business and a resurgence of charter traffic also helped.
Cork, despite high costs and poor traffic, was not too far off the target set by Aer Rianta, though it continues to record losses. The performance at Dublin was steady, with the duty-free shop in particular continuing to turn in a very good result. A noteworthy aspect of Aer Rianta performance in recent years has been the company's success in generating sizeable surpluses on commercial activities, such as the duty-free outlets, the mail order business and so on. These surpluses help to keep down the costs to airlines using the airports and, in turn, the costs of travel for the public. That is not to say that Aer Rianta can ignore their operational costs. On the contrary, the company must intensify their efforts to achieve economies and improve productivity while at the same time striving through aggressive marketing to increase traffic levels.
The year 1983 will clearly be another difficult one. Nevertheless, Aer Rianta are reasonably confident that the company's overall trading performance will match that of 1982.
In line with this Government's desire to ensure the safety and regularity of civil aviation and to continue to meet our international obligations, a provision of £3,100,000 is made in the Vote for my Department for expenditure in connection with the provision, installation and maintenance of electronic equipment for civil aviation and the marine coast stations and for power supplies. In addition to essential maintenance for existing aviation and marine installations, it is planned to replace equipment at the airports and coast radio stations and to provide new equipment in connection with the development of the marine coastal VHF network. A marine VHF communications service is now in operation through a VHF station located at Crockalough on the Inishowen Peninsula and remotely controlled from Malin Head coast radio station.
This station is the first of a pilot scheme of four VHF stations, remotely controlled from the existing coast radio stations at Malin Head and Valentia, to come into operation. The pilot scheme itself is the first step towards the establishment of a national maritime VHF communications network.
Apart from distress and safety communications, the new service will enable radio-telegrams and radio-telephone link-calls to be sent to and from vessels at sea. The range of VHF cover provided is in excess of 60 nautical miles from the station. The new service will be particularly useful for fishing vessels, pleasure boats and other vessels fitted with VHF equipment only.
In the light of the very difficult budgetary situation I decided to reduce the allocation for regional and local airports, as published in the Public Capital Programme in November 1982 from £4 million to £3 million. The bulk of the £3 million will be spent on meeting contractual commitments in relation to the Connacht Regional Airport with the remainder to be spent on grants towards minor planned developments at other local airports, including Sligo, Waterford and Abbeyshrule.
I dealt comprehensively with the position of Aer Lingus in the course of the recent debate on the Air Companies (Amendment) Bill, 1983. I would, however, draw the attention of the House to the fact that the Estimate for 1983 includes under a new subhead — subhead S — provision for the cost alleviation payment of £5 million to Aerlínte which forms an integral part of the financial restructuring package being put in place for the national carrier.
A development on the aviation front that has occurred since the Dáil debate on the Air Companies Bill has been my decision authorising Irish carriers other than Aer Lingus to initiate services on cross-channel routes. I refer to the decision which I announced on 16 March authorising Aer Arann to operate a number of services from Shannon and authorising Avair to expand their services from Dublin and Cork.
The Aer Arann project, which envisages the location of its operational base at Shannon will, I hope, lead to the successful development of a commuter operation centred on Shannon. The development can, I believe, add a further dimension to Shannon's operations, providing in the process greater flexibility of travel options for the Limerick-Shannon based executive, while at the same time providing new opportunities for the generation of additional transatlantic traffic from points such as Belfast and Manchester for Aer Lingus.
Avair have played a significant part in the development of internal air services, operating as they do services between Dublin and Derry, Dublin and Belfast, Dublin and Cork and Dublin and Waterford. They have also been authorised to operate between Dublin and Sligo. Since last year, Avair have been operating on the Dublin-Isle of Man route and my recent decision will enable the company to expand their operations, by serving the Dublin-East Midlands (Derby), Dublin-Blackpool and Cork-Jersey routes.
In referring to the aviation commuter scene, I must also mention Aer Lingus's recent decision to acquire a Shorts 330, 30 seater, aircraft. I welcome that decision both from the point of view of the opportunity which it affords Aer Lingus to continue serving routes such as Dublin-Liverpool which were becoming unprofitable in terms of jet operations and also from the point of view of the breakthrough in industrial relations which the development marks for the airline.
With the considerable State investment in regional airports, I see a clear need for the building up of efficient commuter-type services by Irish carriers and I hope that my decisions in respect of Aer Arann and Avair services, coupled with Aer Lingus's moves into turbo-prop operations, will all be helpful in that regard.
Last year all sides of the House welcomed the passage of the Transport (Tour Operators and Travel Agents) Act, 1982. The Act is an enabling one to provide for measures to regulate the travel trade and to protect the interests of the travelling public. I recently made the necessary implementing regulations and they have been laid before both Houses of the Oireachtas.
The regulations provide for the introduction of a statutory licensing and bonding scheme for the travel trade with effect from 1 November 1983. The six month lead-in period is necessary to ensure that there is ample time for the submission and examination of applications, the negotiation of bonds and the issue of licences in good time before the scheme comes into operation.
The new scheme is basically a consumer protection measure. It is being introduced against the background of a number of business failures in the travel trade in recent years, which gave rise to a growing amount of public unease. It is to the credit of the travel trade that, as a consequence of the public unease and pending the introduction of the statutory scheme, the Irish Travel Agents Association instituted a voluntary scheme for the travelling public. As Deputies will appreciate, that scheme covers only members of the association.
The new statutory scheme is a three tiered one. Firstly, all tour operators and travel agents will be required to hold licences. Secondly, as an essential prerequisite to the grant of a licence, each existing and prospective tour operator or travel agent will have to enter into a bonding arrangement to protect his clients in the event of inability or failure to meet overseas travel contractual obligations. A bonding level of 10 per cent of the projected turnover will apply to tour operators; in the case of travel agents there will be a 4 per cent bonding level. Thirdly, a travellers protection fund, to be financed by contributions by tour operators, will be established as a supplement to the bonding arrangement.
This means that from 1 November next a tour operator or travel agent trading without a licence will be acting illegally and will be subject to prosecution. The legislation provides for severe penalties for illegal trading and other offences.
The launching of the new scheme marks the culmination of a significant amount of work carried out by my Department in close association with the Irish Travel Agents Association and other sectors of the travel trade and other interests. A feature of the work was the constructive attitude taken by the travel trade and other interests, for example, the banks, insurance companies and the Director of Consumer Affairs in giving assistance and advice. I want to take this opportunity to record my deep appreciation of their valuable contributions in bringing this new measure to fruition.
I have decided in principle to set up a small advisory committee representative of the travel trade and the other main interested parties to advise my Department in the administration of the new scheme. The precise functions and membership of the committee have yet to be settled.
To finish, I have a few general remarks about the transport industry. Transport operates over water, in the air and on land. Centuries of rights of passage and navigation, along with the traditional major contribution of private shipowners, have given transport on the sea and even inland waterways an independence and freedom which are rare in today's highly regulated world. In the air it is different. For a variety of reasons including economic, strategic and safety considerations, all Governments maintain strict control over the airspace over their territories, and regulate both the operation of commercial air routes and the use of the supporting ground based infrastructure. The railway is unique in having its own exclusive infrastructure reserved in virtually all countries to State-owned railway undertakings; the road, on the other hand, is in one manner or another open to everybody and is more or less total in its national spread. The needs of transport users vary enormously. A pensioner living in the country area, a city commuter, a manufacturer who need to have bulk chemicals carried by road tanker, an American tourist, an exporter of perishable goods, an importer of coal, all differ from each other. And every demand problem is confronted by its mirror-image on the supply side, in the range and volume of equipment, from specialised to multi-purpose required to meet those needs.
The effect of the mix of media, modes, demand and supply is to create not a single transport market, but a vast number of separate markets or sub-markets contained within the overall transport sector.
It is difficult to imagine a single approach which could effectively be applied to all these sub-markets.
This is particularly the case at the present time, given the range and diversity of problems in the transport area. My present priority is to get to grips with the immediate needs in the different areas I have touched on. But I am conscious also of the need to develop a general view of the role of transport in the economic and social life of the country and of the policy needs and investment implications that arise from that. I hope during my term of office to develop and implement the policies which will adapt the industry to our needs as they vary henceforth in terms of volume and character.
I commend these Estimates to the House. When I took office I was advised by my Department that never before had any Minister taken office when so many crises in the transport area arose together. There are crises in shipping, in air companies and in CIE. These crises are arising at a time when the Exchequer is itself in crisis and least able to help. Therefore, in that context, the problems facing us are very formidable. I hope we will have the goodwill and help of all sides of the House in confronting and overcoming those problems.