I move: "That the Bill be now read a Second Time".
Córas Iompair Éireann is undergoing an exciting period of change and development. This Bill is a major milestone in the evolution of the board and the public transport services operated by it. The changes which I am proposing now in relation to CIE amount to an historical step equal in importance to the step taken in 1944 when legislation founding CIE was enacted. There are striking differences between the two events. The calendar alone demonstrates that the planning for the establishment of CIE was undertaken in a war time situation where all judgments were uncertain. Prophecies of what might happen in the years following the end of the war were completely speculative. The fact that CIE succeeded at all is a tribute to the planners of those far-off days.
In their thinking, it is fair to say, financial considerations took great precedence. The conventional wisdom of the twenties and thirties in the failing public transport industry was that the strong could help the weak.
Our planners believed then, and for the best part of 20 years thereafter, that an industry which through no fault of its own could no longer survive, mainly due to increasing costs and a threatened market, would be sustained and maintained by the cash contributions of strong members such as Dublin buses, and by a multiplicity of secondary elements such as line cross-subsidisation. There were further expected benefits based on concepts like economies of scale, or integration which, in the transport area, are not as relevant as many believe them to be and probably played only a limited part.
The money end worked reasonably well for nearly 20 years. It was in the early sixties that it was finally acknowledged by the then Minister, the late Erskine Childers, that CIE had to go the way of national transport systems in almost all countries and depend on a permanent rail subvention.
The management and market assumptions were less sound than the financial ones. It suffices to distinguish between those planning days 40 years ago, when there was virtually no private transport at all, and the market of today where private transport occupies an overwhelming position. It is extremely difficult to see how a unified management structure such as that which grew up between 1944 and more recent times coped at all with the increasing complexities of economic and social life and the pressures and changes internal to itself.
The complaints so often heard about CIE have originated as much in the management and market sectors, including the work of serving the market, as in any other. I see my role in relation to CIE in three aspects: (i) I have to get the subsidy right — it must never again revert to the excesses of growth that characterised the seventies. The correction process is well in hand but more has to be done; (ii) the overall direction of the undertaking has to be got right; and (iii) service of the market has to be got right. The Bill deals with the second and third points.
The financial arguments based on cross supports for holding CIE together were exposed to chill reality 20 years ago. In all respects every major activity started to head for losses. The management of CIE became increasingly pre-occupied with the financial struggle and their reputation in the market had to suffer. With the ending of the financial argument for an amalgamated system there were questions that might be asked about the system itself but they seemed to escape notice. It did not really emerge that running a railway company was not the same task as running a provincial bus service and that the demands and needs of these two were different from the demands of a major urban transport system which in the case of Ireland and Dublin had always been a self-contained and distinctive activity until the creation of CIE.
It amazes me that a relatively small central management team kept the whole unwieldy structure going at all or managed to deal on any rational basis with all the problems of infrastructure, rolling stock, supplies, staffing, industrial relations and service. The thought applies not alone to distinctive major activities on rail and road but out to the fringes of tour management, hotel operation, running Rosslare, keeping the canals passable and running ships to the Aran Islands.
The Board and Management of CIE were not invariably helped by Government. I do not wish to recite faults in government of any party. I can say, however, that this vast agglomeration could have been helped often by clear delineation of what Government expected from it, by some better financial judgments and by less interference with the revenue earning plans of the undertaking.
I have no hesitation in complimenting CIE for the benefits they did produce during what I think should now be identified as years of struggle. And I am happy to put this positive aspect against the criticisms which have been made often and which I, occasionally, found it necessary to make. I also give the highest praise to the whole hearted effort by CIE at all levels to implement and bring to fruition the changes I have already introduced. I know I can rely on a continuation of this effort to bring about this more or less final set of necessary improvements.
The Bill provides for retention of CIE as the parent of three new operating subsidiary companies registered under the Companies Acts. The new companies will have full responsibility under the board of CIE for the operations of the railways, Dublin city bus services and provincial bus services.
I think it would be useful to describe in a little more detail how CIE have developed over the years. CIE were established on 1 January 1945 and resulted from the dissolution of the Great Southern Railways Company and the Dublin United Tramway Company Limited and the transfer of the undertakings of the dissolved companies to the new company, Córas Iompair Éireann. Thus, the Transport Act, 1944, brought about the incorporation of Corás Iompair Éireann as a State-sponsored transport company and the country's principal transport operator. The Transport Act, 1950, established Córas Iompair Éireann as a statutory board to replace the State-sponsored company and the Grand Canal Company.
In the Great Northern Railway Act, 1958, the Great Northern Railways undertakng within the State was amalgamated with CIE. At that time the board had responsibility for the railways, passengers and freight, bus services in Dublin and the provinces, road freight, coach and tour services and canals. Their mandate embraced Rosslare Harbour, a number of hotels and the Galway-Aran ferry serivce. Later legislation made some small adjustments to the CIE role and mandate. These adjustments included the transfer of Great Southern Hotels, then a big loss maker from CIE to CERT in 1984 and the transfer of canals earlier this year to the Office of the Public Works. However, the statutory structure of the organisation remained intact.
Over the years, CIE have adapted their services to meet the needs of the times. The early fifties brought a major dieselisation programme. Since then rolling stock has been periodically updated and the current mainline carriage programme commenced in late 1982 and involving the construction of a fleet of air conditioned carriages, is in progress at the CIE Inchicore works. As a native of Inchicore I was delighted to be able to give the final go-ahead for that programme. These new carriages and the upgrading of track and signalling systems have reduced journey times and improved very considerably standards of passenger comfort. The Howth-Bray railway has been electrified at a cost of £113 million and this development has brought the railways right up to date in technological terms — the DART service is technically among the most advanced of its kind in the world.
There has been periodic updating and replacement of CIE's urban and rural bus fleets. Since 1980 CIE have undertaken a major programme of bus replacement and since then about 800 new buses have been purchased by the board at a cost of about £100 million. Fifty new tour coaches were acquired by the board for this year's tourist season and for the CIE cross-channel Supabus services. These are major capital investments but they had to be matched with station and garage renewals and the acquisition of ancillary equipment to ensure that maintenance and support services were upgraded in line with needs. So it will be seen that CIE have had a lot of renewal in recent years.
Against their financial background, it is not surprising that down through the years CIE have been the subject of a number of in-depth studies, the most recent being the McKinsey study "The Transport Challenge" published in February 1981. When I was appointed Minister with responsibility for transport matters in late 1982 the serious situation in regard to the CIE finances and indeed in relation to the overall image and effectiveness of CIE was one of my immediate priorities. The deficit had spiralled and in the period between 1969-1970 and 1982, during which the consumer price index had increased by a factor of only 5.4, the deficit had increased from £3.234 million to £109.373 million, a factor of 33.8 — over six times more than inflation.
These facts dictated that, on coming to office in late 1982, I set to work immediately on the financial problems and simultaneously began to look at the CIE organisation in the context of the McKinsey recommendations. As a first step in tackling the financial problems, the Government approved in June 1983 a package of measures, which I proposed, aimed at not only reducing CIE's cost to the Exchequer over a five year period but also paving the way for a new operating environment in CIE. These measures included a new basis for determining the CIE subvention which now limits it effectively to one-third of the board's expenditure. This was in CIE's interest as well as the Exchequer's. The package also provided for the payment of the subvention "above the line" in recognition of CIE's social role in providing commercially unprofitable, but socially desirable services.
Expenditure restrictions were imposed on CIE as a means of introducing cash limits to contain costs. An obligation was placed on CIE to reduce the level of their expenditure in real terms by 2½ per cent per annum up to 1988 and the purpose of the formula was to obtain a reducing subvention in line with a reducing expenditure. For 1983, 1984 and 1985 I am glad to say the targets have been met or bettered and this is a cause for congratulation to all in CIE and to all in my Department. After taking account of the State subvention in 1985 the board returned a surplus of close to £7 million, that is to say that CIE beat the target set for it by £7 million. The target itself was 2½ per cent below that for 1984 after allowing for inflation whereas between 1969 and 1982 the deficit had gone up by an annual average of 17 per cent above the inflation rate. The 1985 results represent a very fine achievement and a reflection of the hard work put into CIE in the past three years. So far in 1986 CIE are again on target.
During questions in the House on 6 November I promised Deputy Wilson to include in my speech today further details on the Exchequer subvention to CIE for 1985.
Before dealing with the subvention, I wish to mention the arrangements between CIE and the Departments of Defence, Education and Social Welfare for the carriage by the board of certain categories of passengers at State expense. In the case of the Department of Defence, CIE received £1.9 million in 1985 for providing travel for veterans of the War of Independence, civil servants of the first and second Dáil and certain widows. They received £20.6 million from the Department of Education for school transport services provided by the board themselves and £23.8 million from the Department of Social Welfare for travel for invalidity pensioners, recipients of the disabled person's maintenance allowance, blind adults and persons aged 66 or over. The total for these services amounted to £46.3 million. This is treated in the CIE accounts in the same way as receipts from other passengers and is included under passenger traffic receipts.
As regards the Exchequer subvention of £115 million, this is made up of £104 million for normal subvention, £8 million for interest charges on DART and £3 million to cover the repayment of principal for 1985 on a £30 million loan. The £104 million was allocated as follows: Railways other than DART, £75.6 million; DART, £7.0 million; Dublin Bus Services, £16.8 million; Provincial City Bus Services, £2.1 million; Other Provincial Bus Services, £0.3 million; Canals, £1.4 million; Galway-Aran Ferry Service, £0.8 million.
In addition to setting the financial targets for CIE, the Government also decided it was necessary to supplement the Board's mandate to ensure that the national economic situation and Government objectives were fully reflected in the formulation and development of board policies. A number of specific objectives were identified for CIE and included:—
(i) to review in depth all aspects of CIE's operations in the interests of reducing the board's dependence on State subvention;
(ii) to review the effectiveness and organisation of CIE management and to undertake any restructuring found necessary;
(iii) to regard the improvement of staff morale and motivation throughout CIE as a major aim;
(iv) to extend and strengthen the role of the financial control function so as to improve the cost effectiveness of expenditure;
(v) to review board policy in relation to capital works and proposals for new developments; and
(vi) to arrange at maximum advantage to the board's financial position the disposal of surplus assets or the development of those assets by third parties.
When the package of measures was in place it was then necessary to turn to fundamental issues. McKinseys had come to a number of conclusions based on the decline in the board's market share and projections. They recommended:
—complete disestablishment of CIE into three separate organisations;
—the introduction of one-person-operation in the Dublin city bus services; the closing of CIE road freight operations, and the elimination of the sundries rail service;
—centralising freight management to Dublin with operations limited to bulk traffic and the carriage of dangerous goods; and
—dismantling of the company's area management structure.
Having considered the future of CIE in the context of the McKinsey report, other related documents, observations furnished in response to the report and the views of the Chairman of CIE, the Government were convinced that a major reform of the CIE organisation was essential. While many of the consultants' conclusions were found to be valid, the McKinsey recommendation for the disestablishment of CIE was rejected because of the value perceived in a single board continuing to have overall control of the organisation's operations.
Another option considered was the re-organisation of CIE's responsibilities as an internal CIE matter without new legislation. It was rejected also because such a response was not considered sufficiently far reaching to give the results desired. The route chosen by the Government had a number of main objectives: first, to keep the deficit under control without major disruption to services or employment; secondly, to improve morale and the working environment generally in CIE; thirdly, to improve the reliability and attractiveness of services at the lowest possible fares and fourthly, to obtain greater transparency of the allocation of costs between the various CIE activities.
In the light of this, the Government decided that the reform of CIE must be such as to transform CIE into smaller, more compact operating organisations, with clearly defined functions; hence the provisions of this Bill.
Re-organisation is not the whole story. For clarity it was also necessary to set financial objectives for such an enterprise. As a result the Government announced their intentions inBuilding on Reality 1985-1987 in October 1984. Members of the House will recall some of the main elements of the Government decisions, which covered such matters as:
1. The requirement to reduce expenditure in real terms on the railways was extended to include 1889 and the objective was revised to the reduction in real terms of railway costs by close to 20 per cent over a five year period, an average of 3.7 per cent per annum;
2. The halving again of the 1984 deficit, itself half the 1982 deficit, by 31 December 1989 in real terms was set as the objective for Dublin city bus services. That is to say that the 1989 deficit would be one quarter of that of 1982. This aim is on target;
3. The formula for reducing costs by 2.5 per cent per annum was extended to 1989 for the provincial bus services and the services should become profitable by that time. This aim is also on target.;
4. CIE rail sundries and road freight services to be discontinued by 1 January 1986 unless they proved profitable in 1984 and 1985. I am glad to report that such is the improvement in these areas that their future is now assured.
It is emphasised that the railway objective needs to be achieved without endangering rail safety.
There are significant advantages in retaining the board of CIE as the parent to the three subsidiary companies. The subsidiaries would be more manageable units having chief executives with clear objectives and targets to achieve. The board will vet the plans of the companies, monitor their performance and assess their competing demands for investments and funds. The board will also be an instrument for promoting an efficient, coherent overall approach to CIE transport services generally and will determine competition issues which may arise between the companies; this will avoid a situation where the CIE companies are engaged in disruptive competition with each other. At the same time the setting up of the companies will introduce greater flexibility into the CIE organisation with each of them having their own board of directors whose objectives will be influenced mainly by the more limited mandates of the individual companies and with management closer to their staff and operations.
That in summary is the background to the Bill before the House today.
As I said earlier, already two aspects of reorganisation have been put in place, namely, the transfer of the hotels owned by CIE to CERT and the transfer of responsibility for the Grand and Royal Canals from CIE to the Commissioners of Public Works which took place on 1 July 1986. These changes were designed to allow CIE to concentrate more completely on their transport activities and to facilitate the reorganisation.
Now we must build on the financial improvements of the past few years and turn to the more fundamental reorganisation as soon as possible. This is reflected in the Bill which is not so complex as to delay its enactment but comprehensive enough to achieve the desired results. Under the Bill, CIE, I must emphasise, will not relinquish any of their statutory powers and duties or privileges but rather will use the new subsidiaries as instruments for implementing CIE policy and as the board's agents in carrying out more effectively the functions entrusted to them by the Oireachtas.
The Bill requires the board of CIE to establish three new operating subsidiaries responsible for railways, provincial bus services and Dublin city bus services and to register them under the Companies Acts. It deals with the delegation of functions and responsibilities to the subsidiary companies in respect of operational matters and for the provision of rights, duties and liabilities for the subsidiaries to allow them to carry out their functions. It sets out the principal objects of the companies and provides for the assignment of CIE staff to the new companies and the protection of conditions of employment of staff transferred.
The Bill also contains provisions dealing with certain financial matters arising from the proposed reorganisation. While I circulated an explanatory memorandum with the Bill, I would like to highlight some of the more important provisions, particularly those which involve fundamental changes for CIE. I would also like at this point to draw the attention of the House to the fact that in the course of an interesting and constructive discussion on the Bill in Seanad Éirann I introduced a considerable number of amendments to take account to the maximum extent possible of concerns expressed by members of that House as regards the doubts and fears of the employees of CIE in regard to the reorganisation. The net effect is that the Bill, as passed by the Seanad, is in some aspects different from that introduced.
I must underline, however, that the intentions behind the Bill and the fundamental principles of the original text remain unchanged. The detailed changes give more explicit expressions to some of the original provisions, particularly in the area of conditions of employment. The revised text reflects the assurances I gave to the effect that employees transferred to the subsidiaries will find their conditions of employment unaffected by this Bill.
Part I of the Bill, comprising sections 1 to 5, contains standard-type provisions of a general kind and for the repeal of certain sections of existing legislation. Section 14 of the Transport Act, 1950, which empowers the Minister to grant, by order, additional powers to the board, is being replaced by section 25 of the Bill which extends the scope of the existing provision to include specifically functions relating to the development of the assets of the board. This is in keeping with the revised mandate given to the board by the Government in 1983.
The repeal of section 35 (2) of the 1950 Act dispenses with the requirement on CIE to hold open public examinations for the recruitment of clerical staff and thus will allow greater flexibility to the board and their subsidiaries to determine recruitment policy and procedures in keeping with modern practice in major commercial and semi-State organisations. This change is something which both management and unions have been seeking for some time.
Part II of the Bill, comprising sections 6 to 24, provides for the formation of the three operating subsidiary companies. It also contains provisions relating to certain financial matters, staff transfers and protection of conditions of service and other general provisions, which are features of Acts dealing with State-sponsored bodies.
Section 6 obliges the board to form and register the new limited liability companies conforming to the conditions laid down in the Bill and provides for the appointment, by order made by the Minister, of a vesting day, that is the day on which the re-organised CIE will commence operations. This order will be irrevocable except by an amending Act of the Oireachtas.
The proposed names of the new subsidiaries are listed in section 7. Since the Bill was introduced a considerable effort has been devoted to trying to find more attractive names for the companies but so far without success. I will be glad to consider any suggestions which Members of the House may wish to offer. Section 7 also specifies that the share capital of each of the subsidiaries shall be wholly owned by the parent board and prohibits the transfer or disposal of any share in the companies. This clarifies beyond doubt that the purpose of the Bill is to reorganise and revitalise a State company which will continue to remain in State hands unless the Oireachtas decides otherwise on some future occasion.
The Government's intention for continuing on a long term basis the national transport undertaking is also reflected in section 17 which enables the board to transfer assets to the subsidiary companies for the purposes of their operations but excludes from those assets land and buildings; these will remain in the ownership of the parent board.
The principal objects of the companies and the general statutory basis for carrying out their functions subject to the directions of the parent board are set out in section 8.
These provisions lead naturally into treating of the roles envisaged for the parent board and their subsidiary companies. Overall general objectives for the CIE organisation as a whole will continue to be set by the Government. The board of CIE will settle, within overall sums provided by the Government and, well in advance, the financial targets and allocations for the subsidiaries. In setting these allocations the board will consult with the Minister where necessary. The annual recommendations of the new Dublin Transport Authority on transport funding, together with the authority's objectives for public transport services, will be important considerations in deciding on objectives for CIE and their subsidiaries in the Dublin area.
It will be the responsibility of the board: to agree with the boards of directors of the subsidiary companies their annual budgets, including capital investments; to monitor the activities of the subsidiaries: to ensure that the subsidiaries achieve any financial targets set for them and to provide an assessment of the performances of the operating companies in the board's annual report to the Minister.
More generally the board will be expected to foster the development of a more commercial approach across the spectrum of the activities within the overall CIE remit. In addition to the responsibilities in relation to the subsidiaries, the board will be responsible for actively pursuing the development of CIE property and other assets, the operation of the board's International Tours Company and providing common services, such as pension schemes and computer services, etc, for the subsidiaries. I want CIE to fully utilise their many human skills and property assets to the benefit of the board, their workforce and the public generally.
I see potential for expansion here and this is something I have been encouraging the Chairman and board of CIE to pursue. This could well be a vital contribution to the financial success of the organisation in the future and to providing the outlets for these relatively untapped, but rich, resources.
The boards of directors of the subsidiary companies will be responsible under the board for the operations and activities of their companies. This will include responsibility for finances, staff and industrial relations, marketing and customer and other services, business development, operating procedures, etc. They will be accountable to the board in regard to their performances.
Specific requirements as to the articles of association are contained in section 11 which sets out particulars of the size and structure of the boards of the operating subsidiaries. The directors will be appointed by the Chairman of CIE with the consent of the Minister, and it allows for the possibility of the chairman being appointed chairman or director of a subsidiary company or companies.
Deputies will notice that I propose to limit the membership of each of the new boards to six members and to include two of the four members elected to the board of CIE by the CIE workforce as directors in each of the three subsidiaries.
Fears were expressed in Seanad Éireann about the risks which had been associated with competition between the rail company and the national bus company. In response, I agreed to introduce an amendment providing, in subsection (4) of section 11, for a majority of the directors of these two companies to be common to both companies. This should ensure that the boards of the companies will take full account of the interests of the individual companies in exercising their functions. I see these boards as executive in nature in the interest of efficiency and effectiveness and this arrangement introduces into the State sector here a two-tier type board system, which in a somewhat different format has been so successful in West Germany.
The value of worker directors in the State boards is now clearly established. In order, however, to avoid a situation which would cut across the electoral arrangements in CIE, the Bill includes a provision in section 14 to ensure the new structures maintain intact the total CIE constituency for electing worker directors to the board.
Section 14 of the Bill also provides for the transfer of staff of the board to the companies and for the protection of their existing pay and conditions. It empowers the board to designate existing employees for employment by a company and it obliges staff so designated to transfer to that company. It also allows flexibility for the transfer and promotion of staff between the companies within the group. This provision highlights, yet again, the continued coherence of CIE. This is underlined by section 15, an important provision, which enables the board of CIE to continue to organise and operate existing pension schemes for both the staff of the board and those of the companies. It provides for service with any of the companies to be treated as employment with the board for pension purposes. This should further facilitate intercompany transfers of staff in the future. Other important provisions in relation to staff are contained in section 11 (2) (f) which requires the companies to set up negotiating machinery for the purpose of negotiations concerned with pay and conditions of service and for every reasonable endeavour to be made to reach agreement with the trade unions concerned on that important issue.
The escalation of CIE's losses between 1969 and 1982 was all the more disastrous when it is considered that overall employment in the board fell by nearly 4,000 in that period. I am glad to be able to tell the House that I have been assured by the chairman of CIE that any further reductions will be achieved through natural wastage or where necessary by using the existing arrangements agreed with CIE trade unions concerning redundancies.
The principal financial provisions of the Bill are contained in sections 19 and 20. Section 19 is based on the usual formula for the accounts and audits of State bodies. Section 20 outlines the borrowing powers and procedures to be followed in the case of the subsidiary companies. I envisage, as I hope is clear from the text of the Bill, a vital role for the parent board in regard to control of borrowings by new companies. The powers to borrow for capital purposes are being retained by the parent board because of their overall responsibility for the CIE group.
Subsection (3) of section 20 prohibits the giving of State guarantees for moneys borrowed directly by the companies. This will not hinder the subsidiaries in obtaining their capital needs as the board of CIE will be able to on-lend to their subsidiaries. They will therefore be able to carry out their capital investments in line with the capital programmes agreed by the parent board. The guaranteeing by the State of borrowing by the CIE board is not affected.
The existing statutory borrowing limits and controls will continue to apply to the new organisations as a group. All capital borrowings will continue to be subject to the approval and control of the Ministers for Communications and Finance, subject to the overriding statutory limits determined from time to time by the Oireachtas. The Bill empowers the companies to borrow temporarily, with the consent of the board, for day to day operating purposes subject to existing controls and within such statutory limits as may be determined from time to time.
Section 21, on the disclosure by directors of certain interests, and section 22, on the prohibition on unauthorised disclosure of information relating to the CIE groups, resulted from suggestions made in Seanad Éireann.
Section 23 of the Bill was drafted before the decision to disband the National Prices Commission was announced because experience had shown that the extent to which CIE could raise fares and rates was strongly influenced by what the market could bear and that was invariably less than what would be permissible under the national price control criteria.
CIE fares and rates will, however, continue to be subject to approval by the Government. The new Dublin Transport Authority will have a role in the approval of CIE fares increases for Dublin bus and suburban rail.
Part III of the Bill, comprising sections 25 to 31, contains a number of provisions relating to CIE and the subsidiaries. The statutory obligation imposed on the board by the 1950 Act to appoint a secretary and a general manager is being replaced by section 30 of the Bill which will allow the board greater flexibility in the appointment of officers and servants. This flexibility is desirable in the situation where the chairman holds office on a full-time basis and where the organisation is undergoing a period of major change and restructuring.
A large organisation such as CIE have need of continuous review so that they can adapt to the various challenges as they appear. In transport, changes can arise from many influences, including changes in technology and equipment, barriers to travel and trade, the relative competitiveness of the various transport modes and the transport preferences of the customers.
The proposed re-organisation of CIE and the financial measures which I have outlined are designed to put the board's finances on a firmer footing and to secure the future of CIE, having due regard to what the Exchequer can afford, the interests of the taxpayer and the need to provide reliable services for the public. The Bill is designed to ensure and strengthen the future of the organisation.
The re-organisation now proposed is, I am convinced, in the best interests of the travelling public, the CIE workforce and the Exchequer. The smaller units should be susceptible to more effective management in a manner which is not possible in the case of very large and diffuse organisations and should, I hope, contribute greatly to improved industrial relations.
The implementation of the re-organisation provided for in this Bill is, of course, a matter for the board of CIE in the first instance. As I said in my opening remarks I am confident that I will have the full backing of CIE management and general workforce in carrying through the new arrangements which are so necessary for their future. The board and management are dependent on the support of all CIE employees in order to effect a smooth transition. The future success of the new CIE will rest squarely on the shoulders of the parent board, the subsidiary boards and the workforce. CIE and their employees have shown in recent years what it was possible to achieve in regard to CIE finances. This inspires confidence for achieving objectives set for CIE by the Government in the years ahead. It is relevant that in 1985 CIE have had their best year for many years.
General public confidence in the transport services provided must be increased. This will be achieved mainly by improving the quality and especially the reliability of the services. In that connection there is hardly need to emphasise the importance of a stable industrial relations climate. I have spoken on a number of occasions about industrial relations in CIE, particularly in the Dublin City Services. My more recent references were rightly devoted to improvements in that climate.
Recent experiences are quite positive and augur well for the future. The introduction of one person operated buses and DART feeder buses in Dublin, following agreement between the board of CIE and the unions, happily brought to a satisfactory conclusion that long drawn out saga. The new structures with less remote management should also contribute to good industrial relations throughout the organisation. Transport services which arrive on time and which are not prone to unpredictable stoppages should bring increased passenger numbers, and hopefully in time, cheaper fares.
While I have set tough targets for CIE in the past three years and for the next three, I have also given a very substantial commitment to the board. For 1986 the subvention, based on the subvention formula, comes to £104.5 million. In addition, since I came to office, provision has been made for the Exchequer to take on board directly the interest payments on DART which is the correct approach for infrastructural projects of this kind. Moreover, the problem of CIE's short term borrowings has been addressed and £30 million is being remitted by the Exchequer over ten years, having commenced in 1985.
The capital provision for 1986 is £34.4 million mainly for new railway carriages, signalling and communications and the acquisition of buses for CIE Supabus and tour activities. These represent a very big investment, without which the CIE services would inevitably run down. It will be readily clear, that the renewal of CIE which this Bill seeks to bring about has been accompanied by very large investment to give them the modern tools to do the job.
The Green Paper on Transport Policy and the publication of the national plan raise a number of very important issues which have a bearing on the longer term future of the new CIE group.
In so far as the railways are concerned, the new organisation and management structure, together with the investments made in the railways, give all concerned an opportunity to prove the worth of the railways and thereby guarantee their long term future.
The many views on the Green Paper which have been furnished, for which I am grateful, are currently being assessed. The conclusions which we will draw from the contributions on that paper will be taken account of in a White Paper now in preparation.
The problems in relation to the structure of CIE which we are tackling here have been ventilated freely in the past few years. A certain negative approach which is based on so called privatisation has been imported into the discussion. I do not wish to say anything about privatisation in connection with this Bill for the simple reason that privatisation has nothing to do with the Bill and is simply a red herring in the debate. There are also arguments based on what is seen as a threat within CIE — the threat of competition between rail and road services. This seems to mean that there must be no competition, irrespective of cost to the taxpayer or service to the public, as between CIE's rail and provincial road services. I utterly reject that approach. There must be some competition to ensure that each new operational company will be kept on its toes, that each worker in each company will identify with the public entity to which he or she is attached, work to further its aims and take pride in its new identity.
The board of CIE will still retain their powers and responsibilities. The board will guard against reckless or ruinous competition between the subsidiaries. Indeed the proposed structure gets close to the optimum. It maintains the overall framework of the integrated approach which many see as essential to our transport system. It allows also for specifically identifiable sharing of services and supports where sharing is necessary — another argued benefit of integration.
National transport issues such as CIE and their services provide a basis for a very broad debate covering a very extensive field. I have endeavoured to give the House a comprehensive statement on the background to the changes proposed in the Bill, the motivation and the objectives. It goes without saying that there may be some issues which Deputies consider relavant but which I have not touched on. Omissions are inevitable in a situation like this. I will, however, endeavour to reply to any such points in the course of my reply to the debate.
I commend the Bill to the House.