I move:
That a sum not exceeding £131,488,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1985, for the salaries and expenses of the Office of the Minister for Communications and of certain other services administered by that Office, for a cost alleviation payment and for payment of certain grants and grants-in-aid.
The economic outlook for the international economy is favourable in a number of key respects. After very strong expansion last year, economic growth in the United States has slowed to a more modest but more sustainable rate, enhancing prospects for continued inflation control. The Japanese economy continues to grow briskly with even lower inflation. Real growth in Europe has been associated with an improvement in the underlying conditions for growth — lower inflation and budget deficits and higher profits and investment. Taken together, the industrialised economies are now experiencing and economic growth rate of between 3 and 3½ per cent, much the same rate as in the second half of 1984.
It must be admitted that there are also a number of unsatisfactory features in the international economy. Unemployment is higher in nearly all countries, and still rising in many. Indeed, the OECD pointed out recently that unemployment in Europe is at its highest rate for more than 50 years. Other features which may jeopardise the upswing in economic activity include high budget deficits in a number of countries, the increased volatility of exchange rates, growing international trade tensions and a still fragile economic and financial situation in many developing countries.
The Irish economy has been performing well by comparison with our trading partners. In 1984, our gross domestic product grew by about 3½ per cent, one of the highest rates in the EC. We have clearly learned to crub inflation quite effectively, as evidenced by the results of the past few years.
The rate was over 23 per cent at the end of 1981; it was down to 6.2 per cent for the year to mid-February 1985. This rate is now lower than that of the UK our main trading partner, and close to the average of our EC partners.
The sustained growth of exports has been particularly encouraging. The growth has been underpinned by exceptionally strong growth in our manufactured exports. Largely as a result of the activities of foreign firms, Ireland's share of export markets in the new industries continued to rise sharply in recent years; other sectors have done less well.
The rapid expansion in exports, coupled with the slower growth, has ensured a continuing improvement in our external account. Indeed, our external trade account has changed from a position of substantial deficit to one of broad balance. The Central Bank has projected a modest surplus for this year.
The encouraging features on the economic front should not cause us to lose sight of problems remaining to be solved. There is no doubt that unemployment is our biggest problem. Despite the improvements in the economy, no significant dent has been made in the number out of work. Nevertheless, there have been some encouraging signs recently, with reductions being recorded in three successive months in the number of people on the live register.
Both the national plan and this year's budget have the objective of improving the climate for job creation. But our room for manoeuvre is limited. We have to continue to tackle our serious budgetary problems. We cannot continue to record high deficits on the current budget. We cannot continue to borrow indiscriminately.
There are constraints, therefore in creating a climate conducive to economic growth and job creation. The national plan proposed a number of special employment creation measures to help improve the job situation. But if a significant dent is to be made in our level of unemployment, all sectors of the community have to "do their bit". Government alone cannot create jobs, particularly if there are to be sustainable jobs.
There is need for significant employment growth in the private non-agricultural sector. As last month's OECD Report on Ireland put it "with agriculture and the public sector accounting for about 45 per cent of total employment, the employment growth in other sectors will have to be twice the likely labour force growth to stabilise the unemployment rate". The task is daunting but with the combination of the employment measures announced by Government, disciplined economic management, a controlled approach to budgetary matters and competitive wage structures, we can do a lot to stimulate the creation of new jobs and to protect existing jobs.
It is against that economic background that I introduce these Estimates.
The Department of Communications, established on 2 January 1984, is now about eighteen months in being. The total expenditure provided for in this Estimate (approximately £131.5 million) shows a decrease of approximately £2 million on the provisional 1984 outturn. While this is not a very big saving, it is significant in the sense that it represents a reduction, rather than an increase, in the level of public expenditure, reflecting the Government's commitment to reducing the burden on the taxpayer, without reducing the level of service to the public.
The present year will see many developments in the transport, broadcasting, telecommunications and postal sectors. This applies particularly on the legislative front. Already under debate in the Dáil or Seanad are the Air Transport Bill; the Road Transport Bill; The Dublin Transport Authority Bill; and the Canals Bill. These Bills will be followed in the near future by the Customs-Free Ports Bill; the Shannon Ports Authority Bill; the Rosslare Harbour Bill; the CIE Re-structurning Bill; the Transport Bill; the Sea Pollution Bill; the Local Radio Bill; and the Broadcasting and Wireless Telegraphy Bill.
This year too will see a Green Paper on National Transport Policy, the first of its kind here. This paper will have two aims, to inform and to consult. It will inform in the sense that it will describe the current position in the various sections of Irish transport and developments already decided. The paper will be consultative in the sense that it will pose for consideration possible changes of direction or emphasis in existing policy and will invite public discussion on these and on transport policy generally.
I do not need to stress the importance of making the best use of our national resources, finding for example, the right balance between monopoly and competition, between public and private transport and between the different transport modes. Developments in the EC also have to be taken into account. I will be surprised if the Green Paper does not provoke quite a deal of comment and controversy and be helpful in reaching conclusions on the course future transport policy should take.
CIE are on a sustained road to recovery. By 1982, there had been thirteen years of losses escalating by a multiple of the rate of inflation. By contrast, 1983 and 1984 have seen a 20 per cent reduction in real terms in the deficit. And so far in 1985 we are on target for a further reduction in the deficit in real terms.
This happy picture is even more dramatic when compared with what the deficit would have been had the trend of the previous fifteen years continued. Moreover, the fact that inflation is down to low single figures and that CIE are still beating it these past two and a half years, is a cause for much encouragement. With the new above-the-line subvention formula there is a good chance that, when CIE's accounts for 1984 are finalised, they will have broken even.
This is good news, not alone for the board, management and workforce of CIE, but also for the taxpayer who has to fund it. While there is no room for complacency, I think it right that these achievements should be recognised and I want to congratulate all in CIE for their efforts.
When I came to office. I said that my first priority for CIE was to create a new environment for it to operate within. What have we done? First, within six months of coming to office this Government decided on a new five-year approach to CIE's finances and to abandon the wishful thinking, the lack of control, the drift, which characterised Government's relationship with CIE for many years past.
The Government formula effectively provided that one-third of CIE's expenditure would be paid by the Government provided that expenditure is reduced in real terms by 2½ per cent per annum up to 1989. That these targets for two years now have been met, and without massive redundancies or cuts in service, is testimony to the wisdom of the approach. Now CIE knows well in advance what their allocation is and can plan to keep within it. Previously, a figure — often bearing no relation to reality — would be notified to CIE two or three weeks before the commencement of the relevant financial year. This lack of notice and lack of reality were constantly rewarded, not surprisingly, by being ignored. As a result CIE's finances had rockted almost out of control.
The improvement now is preceptible and real. In addition, the Government decided last year to taken on responsibility for the interest charges on DART and also to take responsibility for £30 million of CIE's short term borrowings. Provision for implementation of the latter decision will be contained in a short Transport Bill which I will be introducing fairly soon.
These improvements in the financial regime for CIE have been accompained by major investment. CIE now have a new urban bus fleet and a new electrified suburban rail system. In 1983 the go-ahead was given for 124 new mainline rail coaches, many of which are already in service. In addition, the national plan provided for the commencement of the replacement of the rural bus fleet, starting this year and to be completed in three years.
These provisions have been accompained by a major overhaul and strengthening of the board of CIE. The enactment of the Dublin Transport Authority Bill and the Road Transport Bill will be the next steps in the creation of the new environment which I have set out to establish.
A further major step is now urgent and that is the passage of the legislation to reorganise CIE into three operating subsidiaries under a parent board. The legislation is in preparation, will be enacted as soon as possible, and in any event before this year is out.
I feel I should say a few words about the reorganisation for I know that, until it is completed, uncertainty and worry will abound in CIE. This is already the case. Indeed, among some sections in CIE it is leading to resistance. It is important that it should be known that the whole purpose of the reorganisation is not to close CIE, as some pessimists fear, but to ensure its future by organising it in a way best suited to serve the customer whose support is vital to any company's success.
The completion of the reorganisation is in the best interests of the workforce and the travelling public alike. I want to appeal strongly to all in CIE to assist in the reorganisation so as to ensure that recent encouraging trends are continued in the future.
I am very happy to reiterate the Government's decision to approve an increase in CIE wages grade pensions from a maximum of £16.50 per week to a maximum of £34.50 per week. The intention is to supplement normal social welfare payments so that generally CIE workers receive a pension equivalent to two-thirds of their wages when retired. Subject to there being no sustainable objection, it is planned to make these increases payable to 3,900 existing pensioners from 1 July next. This improvement will cost CIE approximately £2 million in a full year. I am delighted that this has been possible, as I know personally many men who have given a lifetime of service to the company.
I should also mention, that in an effort to ensure the continuity of employment at the GAC bus building plant at Shannon, the Government recently decided to reschedule the CIE allocation for bus building in the period covered by the national plan; £10 million from the 1987 allocation for bus acquisition is being brought forward to 1985. This reallocation will maintain employment at GAC for the remainder of 1985.
Before leaving CIE there remains the major problem of their enormous long term borrowings, about which I am concerned and which need careful consideration. Moreover, I must repeat the need for a sustained improvement in industrial relations in Dublin city services. Strikes and threats of strikes are the ruination of the Dublin bus services. If a sustained peace pact could be agreed, I believe a big increase in passengers would be achieved.
The Vote includes an amount of £400,000 under subhead S to defray the running cost in 1985 of the proposed Dublin Transport Authority. In my Second Stage speech on the Bill yesterday, I outlined the structure and functions of the Authority, so I shall not go into detail today on the proposals. I would like to repeat, however, that it will become the road traffic authority for Dublin and will also have important functions in the areas of transport planning and funding and public transport services.
I intend to establish the DTA and to have them in operation as soon as possible following enactment of the Bill. The running costs of the Authority in 1985 will not be permitted to exceed the voted figure of £400,000. This figure is net of the costs of the traffic warden service, which will be transferred to the Authority. The timing of the transfer and the precise number involved have yet to be decided but the transfer will not, in any event, give rise to any net increase in expenditure.
The Authority will take over from the Dublin Transportation Task Force responsibility for the traffic management strategy which the task force have been pursuing in recent years. Subhead R of the Vote contains a provision of £420,000 for this work in 1985. Of this, £66,000 approximately will be incurred on the installation of the system known as Urban Traffic Control. This system involves the computerised co-ordination of traffic signals in the city centre. By optimising the signal timing co-ordination and thereby minimising vehicle stop-starts, UTC improves overall traffic speeds and alleviates congestion.
Outside the UTC area, a bus priority system known as Selective Bus Detection will be implemented on a limited pilot scheme basis in 1985 at a cost of approximately £315,000. SBD is an electronic form of bus priority, through which buses are given priority at signalised junctions. The system involves the use of electronic transponders mounted on buses and detectors located at signalised junctions. While the scope for further buslance of the type already implemented in the Dublin area has become limited, there will be a small number of buslance implemented in 1985, and a sum of £39,000 is provisionally ear-marked for that purpose.
I am sure many Deputies will have read the Road Transport Bill which has completed Second Stage in the Seanad. The new legislation will achieve the completion, on a phased basis over a period of about two years, of the liberalisation of road haulage which was begun in 1971. I am confident that the move away from present quantitative restrictions to a licensing system based solely on qualitative control will improve efficiency and thereby contribute to a reduction in transport costs. This is an important transport reform measure which I will go into in greater detail when the Bill reaches the floor of this House.
The liquidation of Irish Shipping Limited was undoubtedly a major blow to the shipping industry and to the commercial State sector generally. Every possible option was identified and examined in considerable depth before the Government took the decision not to provide additional finance for the company. The Government did not, however, have any real choice in the matter. On the basis of advice from reputable international shipbrokers on the likely trend of freight rates over the period, the total cost to the Exchequer of keeping Irish Shipping Limited going for the next five years would have been about £145 million. Furthermore, even if the Exchequer met this enormous bill, the company would still have had debts of £59 million at the end of 1989 and there were little grounds for expecting that they would be in a position to service them from their own resources.
To put this whole matter in a clear perspective, I would point out that it would have cost the Exchequer over £76,000 per job per year to maintain each job in Irish Shipping Limited for the next five years with no real expectation that the company would be viable at the end of that time. In the circumstances, it would have been economically and socially indefensible to use limited State resources to keep Irish Shipping Limited in operation at such a cost.
The problems of Irish Shipping pensioners were fully considered in the House during the recent debate on a Supplementary Estimate. Pensioners of Irish Shipping who served on Irish ships during World War II have now had the ex gratia element of their pensions restored to them; the ex gratia element had been paid by the company before the appointment of a liquidator by the High Court. I am saddened that legal and other sensitives do not permit me to be more generous with the rest of Irish Shipping Limited's pensioners and former employees.
The B & I company are in serious financial difficulties and have been in a loss making situation since 1979. During the past four years the company incurred losses of over £40 million and had become almost totally dependent on the Exchequer. To enable the company to continue their operations over this period, the Exchequer have had to provide £29 million in equity capital.
It was against this background that I recently effected changes in the chairmanship and management of the company. As Deputies are aware, I have engaged the services of a management consultancy firm for a three year period to review the business and operations of the B & I and to provide a management service for the company. This aspect of the assignment devolves on Mr. Alex Spain, who has taken up position as chairman and managing director of the company.
Mr. Spain will have the support services of the management company and it will be his task, with the agreement of the B & I board and my approval, to identify and effect the measures necessary to restore the company to profitable operation by the end of 1986. In this endeavour, account will be taken of the need to maintain Irish Participation in the provision of cross-channel passenger and freight services.
Expenditure on essential harbour works this year is expected to total £16.029 million, which compares with an outturn of £6.422 million in 1984. The total amount of Exchequer assistance for harbours, including voted and non-voted moneys, is £13.623 million, comprising £9.623 million grant and £4 million Local Loans Fund financing.
The grant allocation includes £4.8 million for the deepwater wharf at Ringa-skiddy in Cork harbour. Work on this project commenced in 1984 and is due for completion in 1986. I will be introducing the Bill to establish a free port at Ringaskiddy during the present Dáil session and I am confident that, when the free port is established and the deepwater wharf is completed, new industry will be attracted to the Cork area and increased traffic will be generated through the port. The Government have recently decided on a financial package for the Dublin Port and Docks Board. The package is comprised of grant assistance, including £3 million in 1985, a State guarantee for borrowings, a requirement for the board to take cost cutting and revenue increasing measures and to dispose of assets. The State assistance is contingent on the conclusion of negotiations which have been under way for some weeks between Dublin Cargo Handling Limited and the dock labour force. Industrial peace at the port is vital if the port is to prosper. I am confident that these measures will restore Dublin port to viability and revive user confidence. As I said on the Adjournment recently, the Government cannot save Dublin port; that is something which can only be achieved by the parties involved —management and staff.
Some time ago I met both management and unions and offered both of them timely advice. The urgency of that advice has regrettably been ignored. I was most concerned, therefore, to hear that notwithstanding the financial help offered by the Government, the negotiations between Dublin Cargo Handling Limited and the unions have run into problems. I do not propose to comment further on those problems at this stage because it would not be helpful for me to do so. All that I will say is that it is imperative that those problems should be resolved very quickly if Dublin Port is to have any future. Finally, I regret very much the opportunism, inaccuracy and dishonesty of Deputy Bertie Ahern's statement last night which is wholly unhelpful in resolving this urgent problem.
As announced in the national plan, the Government have decided that a harbour authority under the aegis of my Department should be set up for Rosslare harbour. The harbour is at present owned by the Fishguard and Rosslare Railways and Harbours Company. Implementation of that decision, involving legislation both here and in the UK, will be effected at the earliest possible date. In the meantime, CIE will continue to be responsible for the management and operation of the harbour and will be pressing ahead with necessary development works. Grant assistance is being made available this year towards the cost of providing passenger handling facilities at Rosslare. In addition, a State grant of £132,000 is being made to the RNLI to cover the cost of improved harbour facilities for the Rosslare lifeboat.
Sligo Harbour Commissioners will receive grant assistance of £470,000 this year in respect of a major dredging scheme at the harbour. This project, which is being fully financed by the Exchequer and is due for completion shortly, will enable the harbour to accommodate larger vessels and will greatly improve its trading capacity. The balance of the grant assistance — £720,000 — is in respect of project at the harbours of Drogheda, Dundalk, Foynes, Tralee and Fenit. The foregoing projects do not include those being financed from the Local Loans Fund, nor do they include projects funded by commercial borrowings or own resources.
About the air companies, I am glad to report that in the year to March 1984, the total group made a profit of £8.5 million before tax. This was a very significant improvement after three years of losses. For the year to March 1985, the board of the companies expect to record a further improved financial result, which will be announced shortly.
Total passengers on the Altantic route in 1984-85 were up 5 per cent on 1983-84. In Europe, scheduled passengers were up 4 per cent but charter pasengers, mainly outbound passengers to sun destinations, were down 20 per cent. In the case of cargo, the airline recorded increased of 12 per cent in Europe and 11 per cent on the Atlantic.
In the current year, Aer Lingus are looking forward to a very good summer due to the pick up in the world economy and the strong US dollar. Overall, the airline expect to carry an extra 5 per cent to 6 per cent of scheduled passengers in 1985-86. Aer Lingus anticipate a growth of 9 per cent in the total number of visitors they will bring into Ireland, with a 14 per cent-15 per cent growth in visitors from the USA, an 8 per cent growth in visitors from Britian and a modest growth of approximately 3 per cent on continental European routes.
The results of the past two years and the growth in passenger numbers projected for the current year are satisfactory, but there is no scope for complacency. The turnaround from losses to profits was an essential first step. Aer Lingus must now redouble their efforts to earn such profits as will enable the aircraft fleet to be re-equipped. Only with a good profit record will the airline be able to attract the funding for fleet replacement.
There are a few aspects I would like to highlight. The Are Lingus ancillary activities, outside the transport of their own passengers and freight, are highly successful. Many of these are overseas such as the Dunfey hotel chain in the United States, the Tara Hotel in London and the Hotel Commodore in Paris. Other ventures involving large scale operations outside Ireland include hospital management projects by PARC and data communications projects by Cara Data Processing, while the Guinness Peat Aviation Group, in which Aer Lingus now hold a 23 per cent shareholding continue as one of the great success stories of Irish aviation.
By end March 1985, the Aer Lingus Programme of ancillary activities had contributed over £100 million net profit to the airline over a ten-year period. This has enabled the airline and their group of companies to maintain and increase total employment in Ireland, while reducing by 1,000 over five years the numbers required for air transport.
In addition to providing maintenance services for other carriers at Dublin Airport, the Aer Lingus activities division has teams of maintenance and flying staff deployed internationally, particularly in Africa and the Caribbean. Its contribution to the advancement of technology in Ireland in a wide range of activities, including the computer field, is immense. It has shown the enterpreneurship and dynamism that we need from all Irish enterprise, whether public or privately owned. With the airline facing massive challenges on the fleet replacement front — irrespective of whether replacement aircraft are to be purchased or leased — it is clear that the contribution which the ancillary activities can make will be crucial.
The second aspect of Aer Lingus I would like to refer to is the North Atlantic operation. We cannot blind ourselves to the fact that the Atlantic operation continues to incur heavy losses and is a major drain on the airline's resources. The cost alleviation payments totalling £1.5 million, of which £4 million is provided for in subhead U, will come to an end next year. No one should underestimate the difficulties of keeping the Atlantic operation going and, if we had any doubts on that score, the recent decision of Transamerican Airlines to terminate their scheduled services is a salutary reminder of these difficulties.
Aer Lingus face major challenges and board, management and staff must strive to make the airline as lean and cost efficient as their major competitors, both on the Atlantic and within Europe. My Department will be engaging with Aer Lingus in a detailed appraisal of the strategies and options open to the national airline, both in terms of the Atlantic situation and the challenge posed by fleet replacement.
In the past few years there has been a growing consumer clamour for greater airline competition and lower air fares within Europe. While this phenomenon was more muted in Ireland than elsewhere in Europe, the publication last June of the Air Transport Bill, 1984, provided a domestic focus for a welcome debate on competition and regulation in the air transport sector. I have made a number of statement in recent months in defence of the Bill and in support of the strategic need for effective Government control of airline activity.
However, I have also made it clear that I have been consistently in favour of greater competition, particularly within Europe. In the ongoing debate in this area, I believe that many commentators have consistently overlooked the fact that my regulatory functions, including those of fares approval, can be applied and have been applied by me to create a more competitive environment. I do not propose to elaborate in any greater detail on this subject now, as the matter is being exhaustively debated on Committee Stage of the Air Transport Bill currently before the House.
Aer Rianta's management of the three State airport has been one of the less difficult sports of recent years. The company have turned in quite good trading results and I am happy to report that this trend has continued with the handling over to the Exchequer of a surplus of £8 million in 1984, followed by a further £1 million in the early days of 1985. These results have been achieved despite rather sluggish passenger traffic trends and owe much to the success of the company in trimming their costs. However, no allowance is made for depreciation or interest charges and more careful analysis prompts the question as to whether Aer Rianta could do better.
Dublin Airport contribute some 70 per cent of the Aer Rianta surplus. In 1984 that contribution came to £7.4 million. However, traffic numbers at Dublin are static and this is a matter for some concern, particularly in the light of the substantial investment in a new replacement runway announced in the national plan.
Shannon Airport have recovered from the losses of the 1979-82 period and turned in a surplus of £3.3 million last year. The success of the Aeroflot re-fuelling facility, growth in US visitor numbers, expansion of mail order and duty free sales, and the promotion of Shannon as a technical stopping point for re-fuelling, catering, etc., have all contributed to the turnaround. Tight cost control has also made its contribution. The 1984 results from Cork were also encouraging, with losses being reduced from a 1983 level of £728,000 to £72,000. Further concentration on securing cost economies and widening of the traffic base through Aer Rianta's Cork marketing initiative should lead to a surplus at Cork for the first time since the airport was opened in 1961.
However, as I have said, in looking at the company's results, regard must be had to the fact that no provision is included for interest or depreciation since all the capital assets have been provided by the Exchequer. On the basis of national provisions prepared in my Department, such charges amounted to £4.7 million in 1984. The present arrangements do not provide an effective yardstick by which Aer Rianta's financial performance can be measured. I have, therefore, set up a small review group to consider what changes should be made in the company's status or financial structure.
I am allocating a total of £4.1 million for capital works at the State airports this year as compared with expenditure of £2.4 million in 1984. Provision has been made for commencement of work on the new runway at Dublin Airport, the largest State airport project to be undertaken for sometime.
Apart from the runway project, a number of airport constructional works and items of equipment, including improvements in passenger and cargo facilities and the replacement of firefighting facilities, will be provided.
The Estimate includes an allocation of £750,000 for regional-local airports, the bulk of which is earmarked for regional airport development at Galway. That particular project was to have commenced last year but, because of a number of problems encountered by the promoters, it has not yet started. A condition of the grant commitment for the project is that there will be a local contribution of 25 per cent of the total capital cost.
Some £12 million in Exchequer grant assistance has been provided for regional-local airport development in recent years, in contrast with local contributions amounting to only £0.4 million. In some instances there was no local contribution and I have grave reservations about the merits of some of the projects which were grant-aided. I am accordingly carrying out a detailed policy review in this area.
I am making an allocation of £3.05 million to cover the cost of electronic navigation and communications equipment for civil aviation and the marine coast stations. This equipment is required in order to ensure the safety and regularity of civil aviation and to continue to meet our international obligations. The principal new projects that will commence during 1985 are two instrument landing systems for Dublin Airport and one instrument landing system for Cork Airport. New reserve VHF air-ground communications systems will be provided at Dublin and Shannon Airports during 1985 and a consultant is drafting specifications for new operational and stand-by communications systems at both airports.
Last March an electrical fault in a component damaged the operational and stand-by communications systems at Dublin Airport. While the reserve system remained available it was decided to close the airport for half an hour until the extent of the damage had been assessed. At no stage was there a risk to aircraft.
Over the past four years the total expenditure on electronic equipment was £7.63 million; the total amount originally sanctioned was £9.28 million. This underspending, which did not give rise to unsafe aircraft operations, was primarily due to staffing problems which included staff association objections to the engagement of outside consultants. As these objections have since been relaxed it is hoped to expend virtually all of the 1985 allocation during the year. I am urgently considering how an audit might be carried out on the performance of the various aviation technical services so as to obviate past difficulties.
It is expected that the Protocol amending the Eurocontrol Convention will be ratified by all the member states before the end of 1985. When the amended Convention comes into force we will assume ownership of the Eurocontrol facilities in Ireland. In this context I would wish to tell Deputies that the replacement secondary surveillance radar facility at Woodcock Hill, Shannon, which it is hoped to have in operational service during the next couple of months, will be one of the Eurocontrol facilities to be transfered to Ireland.
As the House is aware, I introduced a licensing and bonding scheme for the travel trade in November 1983. From that date it is illegal to trade as a tour operator or travel agent without a licence under the Transport (Tour Operators and Travel Agents) Act, 1982. That Act provides for severe penalties for illegal trading and other offences. The new arrangements represent a significant development in the area of consumer protection for persons travelling abroad.
It was fortunate that the scheme was in operation in 1984, which proved to be a very difficult year for the travel trade. Capacity for overseas holidays greatly exceeded demand and, in an effort to stimulate traffic growth, some members of the trade resorted to the sale of holiday packages at uneconomic rates. In terms of earnings the results were disappointing and cash flow problems were experienced.
A total of five travel firms were unable to meet their obligations to their customers under overseas travel contracts during the second half of 1984 and the statutory rescue arrangements had to be brought into operation. Happily, the arrangements worked out satisfactorily. In that regard my Department received ready help and co-operation not only from the travel trade itself but also from airlines, the bond guarantors and other interests. I owe a word of praise and thanks to all concerned.
Over 2,000 people whose holidays might otherwise have been seriously disrupted were enabled to complete their holidays. In two cases, the bond moneys were inadequate so recourse was had to the Travellers' Protection Fund established to supplement the rescue funds available under the bonding arrangements.
Bond moneys totalling £243,000, supplemented by £82,000 from the Travellers' Protection Fund, were disbursed to date. The final costs of the rescue arrangements are not yet known, as processing of a number of claims has yet to be finalised. The amount in the fund at a recent date was in excess of £1.3 million.
The travel trade is naturally very anxious to avoid a recurrence of last year's problems and is aiming to ensure that available capacity will be related more closely to market demand. This problem was discussed with the Spanish Civil Aviation Authorities last January and both sides agreed that a 10 per cent cutback in 1985 on the excessive capacity provided in 1984 to Spain, the biggest market, was necessary. Subsequently, the airlines agreed on their respective levels of participation in the market for 1985. Further voluntary capacity cutbacks to Spain have since been made by the airlines, as a result of which capacity in 1985 will be at least 30 per cent below that of 1984. I am hopeful that these cutbacks will eliminate in 1985 the instability which characterised tour operators' activities last year.
The Meteorological Service have plans for the replacement over the next five years of some of the larger items of their computer and technical equipment which is now nearing the end of its useful life. A start on this programme is being made this year.
An Post, the semi-State body with responsibility for the operation of the Irish postal service, is just over a year old. The company is one of the largest employers in the State, providing employment directly or indirectly for nearly 11,000 people spread over 95 main offices and 2,150 sub-post offices. The strategy adopted by the company, and to which I have assented, is one of growth within a cost-containment programme, involving vigorous marketing with moderation in postal rate increases. The overall objective of the company is to make the post more competitive with a view to increasing postal volumes and achieving financial autonomy for the postal service at the earliest possible date.
From the outset, An Post have caught the public imagination through a series of well planned marketing initiatives such as the Penny Post operation and the St. Patrick's Day card ideas. Other initiatives which have helped to heighten the corporate identity of the new postal company include the new publicity post scheme for unaddressed advertising material, the special 17p Christmas stamp and the love stamp scheme for St. Valentine's Day.
The accounts for the first year of operation of the company have just been published. They show a loss of £5.37 million for the year, before allowing for the £5 million Exchequer grant provided in 1984. This was a creditable performance and better than had been forecast and I congratulate the company on it.
The long-standing financial target of the postal service was to break even, taking one year with another, and that was broadly achieved in the period up to 1978. Thereafter, following the prolonged strike in 1979, heavy losses were incurred. However, following the very steep increases in charges in 1981-82, and a slowing down in the rate of pay increases, the losses in the service were brought more under control. Provision was, neverthless, made in the 1984 Estimate for payment of a £5 million grant to An Post and this was duly paid.
The financial performance of the postal service in recent years and its prospects were reviewed in the context of the national plan and the Government decided that, in the light of these and of the difficult position of the public finances generally, financial support for the postal service over the period of the plan should be limited to the provision of £4 million equity capital in 1985 and £3 million in 1986.
Irish postal charges have been regarded as high by international standards, although they are becoming less so as a result of having been kept unchanged between April 1982 and February 1985. An Post are aware of the importance of maintaining this Government's policy of moderation in postal rate increases so as to increase the volume of traffic carried and so make maximum use of their resources.
A balance must, therefore, be struck between price moderation and the achievement of financial autonomy. With these objectives in mind, I approved of proposals by An Post for adjustments in the postal tariffs structure with effect from February last. The principal attraction of the new package is that the basic letter charges at 22p and 26p, which affect the bulk of postal users, will remain unchanged for the fourth year in succession—something I have been insisting on since I became Minister—while postage to other EC states will actually be reduced to domestic levels in the interests of trade and business. Increases—where they occur — are concentrated in letters over 20 grammes, non-standard items and parcels. In rationalising rates and bringing them into line with pricing structures in other EC countries, some charges had to be increased substantially, but this was inevitable and reflected the cost of handling the types of mail in question.
An Post have clearly shown their capacity to innovate. This will be an essential requirement for the future as the postal service will face competition from alternative message transmission system such as electronic mail and from new electronic fund transfer systems. I know that An Post have under review what action they should take within their overall legislative mandate to counter these threats, take advantage of the opportunities they present and expand business generally. I expect the results of that consideration will become evident over the next year.
Overall, the operations of An Post in their first year have vindicated the Government's decision to entrust the postal service to a new State-sponsered body. My impression is that there has been a perceptible shift of public opinion in favour of An Post in recognition of the work and initiatives undertaken by the new company, and they are to be congratulated on their achievements.
In the period since their establishment in January 1984, Bord Telecom Éireann have pressed ahead with improving the telecommunications services. Last year was a record one in terms of provision of service to customers. Over 70,000 telephone connections were made, and the waiting lists were greatly reduced, particularly for data services. The position has now been reached where telephone service is freely available over most of the country, the main exceptions being parts of Dublin and parts of the Sligo region; the waiting lists in these areas are being reduced progressively.
Improvement of the STD service and repair service, the conversion of manual exchanges to automatic working and expansion and development of the network were also continued. A new high speed data service was introduced and an automatic telephone service for use in cars in the Dublin area will be available shortly.
I would like to congratulate the board, management and staff of the company on their achievements in the first year. But the job of providing a high quality telephone service nationally is not yet finished and upgrading and expansion of the service is a continuing process, particularly when technology is developing so quickly.
The company have also been striving to make the business more customeroriented and have made a number of improvements, for example in the customer billing area where a Freephone service has been introduced to make it easy for customers to get information about their telephone bills. The company are also ordering equipment to enable detailed billing of automatic calls to be provided where customers require that.
The legislation establishing the company envisaged that the company's monopoly would end at a terminal point in the subscribers' premises and that there would be competition in the supply of equipment beyond that point. It is the intention to implement this change on a phased basis over the next year or so.
When the terms on which BTE was to be established were being settled, it was decided that £355 million of the debt capital made available by the Exchequer for development of the services should be converted to equity. This was on the basis that, over a period of ten years from vesting, the company would pay dividends on the capital equal to the annuities that would have been paid if it had continued to be treated as debt capital. In practice, of course, the Exchequer has to continue to service this debt.
When drawing up the national plan last autumn, the Government were faced with the alternatives of increasing taxation to service this debt or requiring BTE to make the necessary contributions in a situation where Government expenditure had already been trimmed to the maximum, prudent extent. Having weighed these alternatives the Government concluded, reluctantly, that BTE should be required to make the necessary contributions. In coming to that decision, the Government believed it was more equitable that telephone users should meet these costs in the short term rather than the public at large, and I believe the public generally will agree that this was the proper course.
The company will be given full credit, at current net value terms for these contributions against the debt capital taken over by BTE from the Exchequer. The net effect for the company is that, over time, they will be fully compensated for these payments and they will cost the company nothing. Much of the publicity about these contributions has been ill-informed and the former chief executive was wrong to so consistently enter into public controversy in a manner that would not be tolerated in any private sector group.
As a result of the heavy investment in the service in recent years, at a time of high costs, telephone charges in this country are high by international standards. However, there was no increase in charges between April 1983 and April 1985 and the increases, averaging 7½ per cent from last April, were well below the level of inflation. The aim of the company is to keep increases within the rate of inflation and I would hope they will be able to do this consistently and so make charges here more competitive.
The company's accounts for the first 15 months of their operations are not yet available but it is expected that, after allowing for interest and depreciation, they will show a heavy loss over the period as they have done in recent years. With the development period coming to and end, however, the company should move steadily into profits. Telecommunications are a growth service and I believe they have a very encouraging future.
Overall, on the telecommunications side, much has been achieved but there is still some way to go before the service and all its facilities are in the satisfactory state the chairman of the company and I would wish. However, I have no doubt that BTE's future is a very bright one.
In the major statement on broadcasting matters I issued last March, I reviewed most aspects of broadcasting, both radio and television, and developments in prospect. I also touched on a number of these in the course of debate in the House in March. I do not propose, therefore, to dwell in detail on them at this stage but it might be helpful to Deputies, however, if I were to refer briefly to them.
The changes and developments I envisaged then were as follows: a much greater availability of frequencies over the next six years; the establishment of an interim Local Radio Commission; the introduction of a Local Radio Bill; the introduction of a Wireless Telegraphy Bill; the publication of the Cable TV Systems Report; receipt of recommendations from the the inter-departmental committee on the allocation of a satellite franchise, and arranging a consultancy examination of RTE. I propose to comment only on those matters where there have been developments since then.
An interim local radio commission, under the chairmanship of Dr. Colm Ó hEocha, has been established to prepare the way for the speedy introduction of legal local radio when the legislation is enacted. The commission is a highly competent one and it has been active in undertaking the task entrusted to it. I have every confidence that the interim commission will do a first-class job. As the Taoiseach has indicated in replies to questions here in the Dáil, it is the intention to proceed with the Local Radio Bill within the next few weeks and I would hope that it will be possible to have it enacted before the summer recess. Some indications have been given publicly of the form the legislation is likely to take but, as it has not yet been approved fully and circulated, it would be inappropriate to be speculating on its terms at this stage. Moreover, the House will have the opportunity of debating the proposals fully when the Bill is under discussion.
The new Broadcasting and Wireless Telegraphy Bill, providing for the updating of existing penalties and the introduction of some new ones, has been drafted and will be circulated at the same time as the Local Radio Bill. When these bills are both enacted, it will enable firm action to be taken to stamp out once and for all illegal broadcasting, and to have order restored to the airwaves.
The consultants to whom I referred in the statement issued last March were duly appointed and began their work on 6 May. It is expected that they will complete their assignment next September.
A new RTE Authority was appointed recently for a five year period beginning on 1 June 1985. In discussion in the House last March, the Taoiseach made it clear that appointments to the new Authority would be based on the merit and not on political acciliations. The appointments bear this out and have been accepted by the public as such.
There should, of course, be no question of debarring those involved in politics from appointments to State boards simply because they are engaged in politics. That would not be in the national interest or fair to those involved in politics. But what is critical is that persons should not be appointed to State boards simply because of their political affiliations and without regard to whether they are the most suitable available for these jobs. Suitability for the duties involved must be the determining factor and this was the criterion applied in the recent appointments to the RTE Authority, as it has been in other State board appointments by this Government.
An acting Director General was appointed in RTE last April for a period of six months. It is expected that the consultants will have reported and conclusions will have been reached by then on the future corporate structure of RTE and it should be possible to decide what are the qualifications needed for the top post in the organisation in the years ahead and to make a longer term appointment. The Government and I were accused last March of acting for political reasons when I asked the Authority not to nominate anybody for a long term appointment pending the completion of the consultancy study. It was said at the time by the Opposition that the reason for this action was that the Government man would not be nominated by the Authority. I want to make it clear, beyond any possibility of misunderstanding, that neither the Government nor I had our "own man". My concern then was and my concern now is and in the future will be, to discharge my statutory obligations by ensuring that the person most likely to be able to discharge the onerous duties, of Director General of RTE is appointed, in the interests of the future of broadcasting.
I would hope that, when the recommendations of the consultants have been considered and acted upon and when the Authority then seek my consent for a long term appointment of Director General, I will be able to give my consent to the person proposed by the Authority. I very much regret that this sensitive appointment, which should clearly be seen to be above party politics, if the occupant of the post is to be able to discharge the duties to maximum effect, should have been brought into the political arena by the Opposition. As long as I am Minister no political interference, from any side of the House or from outside it will be allowed to infiltrate RTE.
The report of the Cablesystems Committee which was chaired by Mrs. Margaret Downes was published last February and interested parties were given three months in which to make their views on the recommendations in the report known to the Department. That period expired on 31 May and the various recommendations will now be studied and action taken on them. The report, as expected, raises a number of fundamental issues in relation to the transmission of programmes over cable systems, which could have major financial, industrial and social implications. It is likely to be quite some time therefore before conclusions are reached on the major recommendations in the report.
The interdepartmental committee established to oversee the invitation of tenders for a direct broadcasting satellite (DBS) system and to examine the proposals received submitted their report to me recently. I expect to submit the matter to the Government for decision shortly. I do not propose therefore to comment in detail on the matter at this stage, but it is only fair to Deputies to let them know that there has been a slowing down worldwide in the provision of DBS systems and that the euphoria associated with DBS some two to three years ago has been replaced by the legislation that DBS is a very expensive, high risk venture.
It will be clear from what I have said that, apart from the services provided by my Department, I also have general responsibility for seven of the commercial State bodies. These bodies employ about 60,000 people, have a total turnover of nearly £1,500 million and total capital employed of over £1,900 million. It is obviously of prime importance that resources of this magnitude, both in terms of personnel and assets, should be used to the best advantage. That is the policy I have been following since I became Minister.
I have not interfered in operational matters and I have ensured that only people of the highest calibre have been appointed to the boards. I have improved communications with the State bodies by regular meetings with the chairmen, initiating a series of twice yearly meetings with each board, and arranging to have regular reports from each State body throughout the year. These arrangements supplement the system of five-year corporate plans and new investment criteria which the Government have introduced for all commerical State bodies.
I am firmly committed to the maintenance and expansion of public enterprise. But I want to make it clear that I do so only on the basis that it is operated efficiently: public enterprise is not, and cannot, be a licence for inefficiency, restrictive practies or disregard for customers' needs.
There is, of course, no fundamental reason why public enterprise should not be as efficient as the private sector, but some appear to think that public enterprise is there for the benefit of those working in it, without having to give value for money or ensure that the customer comes first. So far as I am concerned, if there are restrictive practices, failure to provide uninterrupted service, lack of effort or disregard for the customer, continued public ownership of the particular enterprise must come into question.
The best way to ensure continuation of public enterprise is to have it efficient. Under the arrangements I have outlined, I am confident that we will have an efficient and expanding public enterprise sector that will serve the best interests of the nation.
I commend these Estimates to the House. The signs of this efficiency are there in all the State companies for which I have responsibility. CIE's losses have fallen for two years in a row and are destined to fall again this year. Aer Lingus, having been in losses, were back in profit last year and expect increased profits this year. Aer Rianta's surpluses have increased. An Post have halved the losses of the preceding year and Bord Telecom are doing well. That is the way I intend to keep the companies for which I am responsible.
