I move:
That a sum not exceeding £2,156,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1988, for the salaries and expenses of the office of the Minister for Communications and certain other services administered by that Office, and for payment of certain grants and grants-in-aid.
The net Communications Estimate amounts to £2,156,000. The gross expenditure amounts to £52,333,000 of which £50,177,000 is met from Appropriations-in-aid. Virtually all receipts under Appropriations-in-Aid are derived from broadcasting and cable television licence fees which, net of my Department's administration costs are paid to RTE by way of grants-in-aid and to An Post to cover that company's costs of collecting television licence fees. The size of the net estimate does not reflect the relative importance of the role of my Department in the activities for which it exercises responsibility.
Efficient, cost effective and reliable communications facilities are a necessity for the economic life of this country. Everywhere, worldwide significant employment growth is foreseen in service industries. These industries depend for their life blood on the availability of the communications facilities of the highest quality. In many instances the quality and cost of communications facilities is the key factor in the decision-making process affecting the location of industrial activity. In this dynamic and cut-throat environment top class Irish communications facilities are essential if the Government are to achieve their job creation targets.
The objectives set for the postal and telecommunications companies established under the Postal and Telecommunications Services Act, 1983, are demanding in a country of our size, population base and spread. An Post are charged with providing a national postal service within the State and between the State and elsewhere, and with meeting the industrial, commercial, social and household needs of the State for comprehensive and efficient postal services. Telecom Éireann likewise are charged with a similar objective in relation to the telecommunications service. Both companies, in the four years since their establishment have come a long way towards meeting the objectives set for them. But much remains to be done particularly in containing and reducing communications costs to industry. I will refer to this later.
Earlier this week we debated the Second Stage of a Private Members' Bill whose aim is to improve the public accountability of the two companies in respect of their achievement of the obligations set for them in the existing legislation. I said in the course of that debate that while I agreed with the aims of the Bill, I did not believe that the detailed proposals in the Bill would achieve the result desired by Deputy Bruton. I do not propose to go over the same ground again but I think it is worthwhile to highlight the performance of the two companies.
Since they took responsibility for the telecommunications service in January 1984 Telecom Éireann have gone from strength to strength and will report a profit for the financial year just ended. I am particularly pleased that in addition to returning a profit this year, the company also repaid, ahead of schedule, part of their indebtedness to the Exchequer. This shows the dedication of the company to their goal of eliminating accumulated losses and becoming a profitable self-financing company and reflects the contribution of the staff at all levels to the well-being of the company.
The automation of Ireland's telephone network has now been completed. With the closure of the last manual exchange in Mountshannon last year, the country now has a fully automatic telephone system. A total of 750,000 subscribers are connected to the network. All of them can dial direct to any part of Ireland and to over 84 countries worldwide. With operator assistance telephone access is available to over 120 more. The technical quality of the network has been transformed. With nearly 50 per cent of customers connected to digital exchanges, Ireland is currently among the most advanced technologically in the world.
At the practical level the waiting list for installation of telephones has now been reduced to such an extent that almost 60 per cent of applicants can be provided with telephone service within three months of application. The quality of service subsequently provided has improved to the extent that a subscriber can expect to have a fault on the line not more than once in about two years. Almost 80 per cent of faults are now cleared within two working days.
Telecom Éireann are fully conscious of the need not only to provide their customers with a service using the most advanced technology but of the need to provide that service in the most costeffective manner. To this end, they will be introducing major price reductions later this year. The call charge to EC countries and Switzerland will be reduced by 20 per cent. Calls to North America will cost 25 per cent less and a 30 per cent reduction will be effected on calls to Australia, Hong Kong, Japan, New Zealand, Saudi Arabia and South Africa. It is perhaps timely to remind the House that there has been no increase in telephone charges since April 1986. I am confident that this development will provide a welcome boost to our economic recovery.
There has been criticism of the company's relations with their customers. The Ombudsman has referred to over 2,000 complaints received by him against Telecom Éireann. This is a large number of complaints in anybody's books and I am sure the company will accept that this number must be reduced significantly. However, to put the number into perspective, on a subscriber base of 750,000 it means that well under 0.3 per cent of subscribers feel they have a grievance. Most complaints refer to the accounts issued by the company. Telecom are acutely aware of the need to improve the public's confidence in their billing system and have planned to introduce detailed billing for STD calls at a cost of £20 million during this year.
Telecom's capital allocation for the current year is £135 million compared with £127 million in 1987. The allocation will be used mainly to improve the quality of service, to provide for business growth and to exploit new business opportunities. This allocation will be funded by the company from non-Exchequer sources. The money will be found partly from BTE's own resources and partly by borrowing through the company's financial subsidiary, Irish Telecommunications Investments plc.
In addition, funds will be available to the company from the European Regional Fund and under the EC STAR programme.
The aim of the STAR programme is to foster the economic development of the least favoured regions of the Community by improving advanced telecommunications services. Ireland was allocated 50 million ECUs, approximately £38.8 million, over the five-year period 1987-1991. Of this amount Telecom Éireann will receive £33 million. The money will be spent on projects which include the extension of EIRCELL, the company's cellular radio mobile telephone network to less densely populated areas, an optical fibre link between Portmarnock and Holyhead and the provision of a new national radio paging system. To date £5.2 million has been received under the STAR programme.
To turn to postal matters, I am pleased to say that 1987 was a particularly successful year for the company making a profit of £2.776 million. The volume of mail handled by An Post continued to increase last year. Total mail volume is now 16 per cent higher than when An Post commenced operations in 1984. The company are achieving particular success in their express mail service.
Irish postal charges are high by international standards. However, there has been no increase in charges since March 1986 and as a result, those charges now compare more favourably with the postal charges of other EC countries. Our charges now occupy fourth place in the EC league table, as compared with first and second places in 1985. In real terms our postal charges have been reduced by 8 per cent over the past four years. In addition, I am glad to be in a position to state that the Irish postal charges will be maintained at existing levels at least to the end of 1988.
The level of our postage charges reflects the costs which An Post have to bear. The company's medium-term strategy is to become more competitive and to reorganise their structures to meet the challenges of the future. An Post have introduced a self-financing staff productivity scheme in which the company and staff share in the benefits. A major management restructuring was begun last year by An Post aimed at decentralising responsibilities with a view to achieving greater efficiency in meeting customer needs.
The parcel mail service has been a problem for some time, with falling traffic and significant financial losses. Last year the loss on the service was £5.6 million. An Post have drawn up a plan to resolve the problem. It is the company's objective to build a profitable parcels service that recognises the needs of customers for speed, convenience and cost efficiency. If the company should fail in their efforts, the company will be faced with no alternative but to seriously consider discontinuing the service. However, given the outstanding success of An Post in other areas to date, I am hopeful that the company will succeed in reversing the unfavourable trend and in returning the service to an economic basis.
Last year An Post carried out capital development in relation to the improvement of accommodation, the replacement of their motor fleet, the provision of security measures and the acquisition of machinery and equipment, costing £8.67 million. The funds were provided from the company's internal resources and borrowings and there was no Exchequer assistance involved. The company still has a healthy debt ratio 1:5, with their borrowings now amounting to £8.5 million.
The share capital of the company includes £4 million provided by the Exchequer by way of 5 per cent cumulative preference shares. The accumulated dividends due to the Exchequer on these shares will amount to almost £500,000 at the end of 1988. I intend to seek payment of dividends from An Post in the financial year 1989 subject to continued satisfactory financial performance in their current financial year.
At the end of April RTE hosted the Eurovision Song Contest for the third time. I have already conveyed to RTE my own and the Government's appreciation and admiration for a task carried out with the ultimate in professionalism and using technology that is at the leading edge. It is only right that our appreciation is recorded in the report of this House. I am sure my colleagues on all sides of the House will wish to be associated with my expressions of gratitude and appreciation. The production team involved radically altered the traditional format of the programme and attracted record audience levels here at home, clearly appealing to all sections of our population. They have presented an unenviable challenge to next year's host. As they say in show business, follow that. Not alone did RTE once again show the world the facility and imagination with which Irish people can handle the latest technology but they showed to the world the real face of Ireland, a face that is all too often distorted in the media through the violence that has plagued our island for far too long. I am confident that RTE's presentation of the Eurovision Song Contest will contribute enormously to the achievement of our targets for tourist business this year.
While I have highlighted RTE's achievements in televising the Eurovision Song Contest, this is in no way meant to belittle the performance of RTE radio. Through their three national services they have provided a comprehensive service over the years of high quality news, current affairs and entertainment.
RTE's total output is comparable in quality with the best in the world and is achieved at a fraction of the cost of that of our nearest neighbour. I have no doubt that RTE will be able to meet with total confidence the challenges presented by forthcoming broadcasting developments.
A provision of £43,858,000 has been included in my Department's Estimate for the payment of a grant-in-aid to RTE in respect of net receipts from television licence fees. This again represents an increased grant-in-aid over 1987 and reflects an anticipated improvement in television licence sales by An Post. Subhead G of the Estimate provides for a payment of £5,062,000 to An Post in respect of the cost of collecting the licence fees. The task of issuing television licences, collecting television licence fees and detecting and prosecuting licence fee evaders was delegated to An Post following the establishment of the company in January 1984. An Post and RTE liaise closely with one another in an attempt to secure the maximum possible number of licence sales. Ambitious targets for licence sales have been set for An Post over the past three years and I am glad to say that they have managed to achieve the required number of sales each year. Sales have increased by 100,000 per annum since An Post took over the work in January 1984.
Nevertheless evasion continues at an unacceptably high rate. Estimates suggest that the evasion rate in recent years may have been of the order of 20 per cent. However, An Post's performance in 1987 should have made inroads on that figure. The completion of the computerisation of householders' records by An Post and the enactment of the Broadcasting and Wireless Telegraphy Bill, 1987, which substantially increases the penalties for TV licence evasion, will help to combat evasion in the future.
RTE's financial results over the past couple of years have been very encouraging. In particular, the posting of a surplus of £9.5 million in the 15-month period to end of December 1987 is a tremendous achievement and all at RTE must be congratulated. RTE must continue to show good profits, however, if they are to provide for their capital requirements and meet the programming needs of their audience. The broadcasting environment in which they have to operate is becoming more and more competitive. Additional services on cable and satellite are all contributing to a more competitive situation for RTE and they have responded well.
The station very quickly identified the way forward as being the introduction of more and more home-produced programmes in their schedules. This goal was tackled with an intensity and enthusiasm which augurs well for the station. The popularity of RTE's home productions proves that the national broadcasting organisation can meet the challenge presented by the proliferation of new services.
Subhead F2 provides for a grant of £1,740,000 to RTE in respect of net receipts from licence fees on cable television systems. The estimate was prepared on the basis of a licence fee of 15 per cent. I have recently made regulations reducing the fee to 5 per cent. The reasoning behind this decision is to provide a modest financial boost to the cable industry to encourage the investment necessary to upgrade systems to be able to carry a greater range of programme services. In accordance with the general thrust of the recommendation of the Cable Systems Committee, the receipts from cable licence fees will be retained by the Exchequer from 1990 onwards.
Deputies will all be aware that the Sound Broadcasting Bill, 1987, has been introduced to this House and that the Second Stage debate on the Bill has concluded. I have circulated amendments to the Bill, the main thrust of which is to provide for the establishment of an Authority to select radio station operators and to oversee and regulate the programme services provided by the operator. The Authority will be known as the Independent Radio and Television Commission and their ambit will embrace the selection of the programme contractor for the new independent television service and the regulation of its output. Extensive amendments are required to give effect to these changes. These amendments have been circulated together with an informal document setting out the text of the Bill as it would look if these amendments were accepted by the House. I would stress that this document in no way prejudices any decisions the Dail may take in relation to the Bill as passed on Second Stage. As the House will have an opportunity to debate the issues involved fully next week I do not propose to take up the time of the House on this matter at this stage.
At EC level discussions have been taking place with a view to drawing up a directive laying down minimum standards in relation to programme content and advertising to facilitate the free flow of television broadcasts between the member states. The need for such a directive stems from the development in recent years of broadcasting services which are clearly targeted at international audiences and are delivered via satellite. The number of such services will grow in the future and it is clearly desirable that all such services should be required to meet minimum standards.
The Council of Europe is working on a draft Convention with a similar intent which would apply to the wider membership of that body. My Department, in consultation with RTE, are actively involved in the deliberations of both bodies on these issues.
I would like to conclude by expressing my appreciation to the boards and staff of the three bodies under my aegis and to the Secretary and staff of my Department for their commitment and dedication to achieving the tasks set and I look forward to their continuing success in the years to come.
I commend the Estimate to the House.