I move:
That a sum not exceeding £141,981,000 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 Tourism and Transport, including certain services administered by that Office, and for payment of certain grants and grants-in-aid.
As this House is aware, my Department are responsible for the regulation of two very important sectors of our economy, namely, tourism and transport. They also, on behalf of Irish taxpayers, exercise a shareholder's function for four major companies in the transport field. The area covered is a vast one. Because of time constraints I will, of necessity, have to be selective in my remarks. However, my Minister of State, Deputy Lyons, will deal with those areas which I am not able to touch on, including road haulage. There is just one item in this area about which I would like to notify the House. At the EC Council of Ministers meeting on Monday last, I negotiated an increase in the quota of EC licences for Irish hauliers. Ireland's quota of licences will almost double from 341 in 1987 to 671 this year and will rise again to 940 in 1989. There is, thus, an opportunity for entrepreneurs in the haulage area to develop their business in Europe.
In the autumn session, I shall be moving a token Supplementary Estimate relating to the tourism area. I shall deal with tourism matters in detail then. Today my remarks concentrate mainly on transport and the tourism content is dealt with from a transport perspective.
I should like, first of all, to address very briefly the question of transport policy. Virtually everyone in the country has transport needs of one kind or another. Transport is an amalgam of thousands of individual decisions in relation to passenger and freight transport operations. Therefore, transport policies and issues are of direct concern to us all. Such issues arise wherever decisions are taken to use particular transport services, to purchase vehicles, to regulate their use or to invest in transport infrastructure. Yet the demand for transport is a derived demand, and therefore, developments in the sector are largely dependent on developments in other sectors of the economy.
It is also important to recognise that transport policy decisions are by no means confined to Government and that is as it should be. It is not the Government's function to legislate for the many decisions that need to be made by so many organisations and individuals in relation to their transport needs. However, it is the policy decisions of Government which set the regulatory framework within which organisations and individuals in the sector make their decisions about their transport requirements.
It has to be recognised also that the transport sector consumes a considerable amount of our national resources in enabling people to travel and goods to be moved. The fact that around 10 per cent of total personal expenditure is on transport and that around 16 per cent of gross national product is absorbed by the transport sector as a whole in Ireland, gives some idea of the amount of resources consumed by the sector. It is quite clear, therefore, that transport involves a considerable cost to the community in terms of infrastructural investment and maintenance, as well as the operation of services by organisations and individuals. There are also social costs, and externalities, arising from the adverse environmental effects of pollution, traffic congestion and accidents.
The commitment in terms of human reserves is equally significant. The sector is estimated to account for over 5 per cent of the total number of persons at work in the economy, with the State transport companies alone employing some 23,000 persons in Ireland.
As we progress towards the completion of the internal market in the EC, there are tremendous opportunities opening up for our transport sector, provided our cost structure and regulatory framework is conducive to enterprise. Our transport policies and priorities must be sufficiently flexible to enable the sector to adapt to these new opportunities, presented by the movement towards market liberalisation, not only within the EC, but also in the rest of Europe.
The transport sector must also be in a position to react to the changing national priorities. In this context we have redirected transport policy in a number of key areas. One of the most significant policy developments in the past year has been the reorientation of transport policy to serve tourism. Competitive access transport is crucial to our tourism objectives. Our potential visitors must know that they can get here easily and cheaply.
Air transport is quickly becoming the dominant access transport mode for tourism into this country. In the course of the Estimates debate in 1987 I spoke of the remarkable pace of change in recent years in the air transport sector. The momentum for change has been increasing steadily since then. Where it was in my power to do so in a national context, I have taken the initiative, while in international fora I have also actively participated in some major policy initiatives, particularly in the EC. As a result we have in the past year passed further significant milestones in the liberalisation of air transport.
In December 1987, the EC Council of Ministers adopted a package of measures on air transport as a first step towards the completion of the internal market. This package, which I played an active part in shaping, as did other Ministers, provided for the automatic approval of services on new routes, multiple designation on major routes, automatic approval of discount and deep-discount fares where they conform to specified price and fare type parameters and fifth freedom rights between inter-regional and hub to regional foreign airports, subject to a 30 per cent capacity limitation. In addition, I negotiated for Ireland a right to operate certain fifth freedom services between foreign hub airports. This was exclusive to Ireland and Portugal.
On a specific point, I must here express my total concern and dismay at the action of the Italian authorities in their failure to adhere to the provisions of the EC package of December last, by their blocking Aer Lingus fifth freedom services for Dublin via Manchester to Milan. The matter has been raised with the Italian Authorities by myself and my officials on several occasions in recent months but this has not prompted any change of heart on the part of the Italians. The EC Commission has recently indicated that it regards the Italian argument as invalid and that it has decided to open infraction proceedings against Italy for their refusal to grant the fifth freedom rights.
Because of the major emphasis now placed by the Government on the promotion of tourism and the importance of access transport fares in this context, I made it clear in the negotiations which led to the package that liberalisation in the area of fares and particularly market access were of vital importance to Ireland. The package which eventually emerged went a long way towards meeting our needs in this regard.
On a bilateral basis, I negotiated one of the most liberal arrangements in Europe with our nearest neighbour Great Britain. I have already stated at the Council of Ministers that it should be a headline for Europe in general. On 11 March last the British Aviation Minister, who glories in the soubriquet of Tara, and I signed, here in Dublin, a memorandum of understanding on revised arrangements for air services between the two countries. The new arrangements enable designated airlines of either country to operate between any point in Ireland and any point in Britain, without any restriction as to the frequency, capacity or type of aircraft involved. Under the new system of fares approval, fares filed by the airlines may be considered as approved unless they are disapproved by the authorities of both countries within 21 days. Either side may, however, individually disapprove fares of its own airlines in order to safeguard against excessive or predatory fares.
These new developments present the Irish carriers with major challenges and opportunities. I am very pleased with the prompt and positive responses which I have received in the form of a considerable number of applications for new routes from Aer Lingus, Ryanair and Club Air. In view of the Government's commitment to the development of Irish tourism, I have decided that all Irish applications should be considered on the basis of the following objectives for Irish air transport regulatory policy: (i) to promote the needs of tourism, trade and industry by providing a wide range of reliable and regular air services at the lowest economic cost; (ii) to promote competition in order to facilitate new services and innovative fares; and (iii) to encourage the development of a soundly-based air transport industry in Ireland which can compete effectively with foreign airlines.
Consistent with these policy objectives, I have given approval to Aer Lingus, Ryanair and Club Air for the inauguration of new scheduled services on a wide range of international routes.
Clearly all the new developments I have described greatly improve our access transport infrastructure with obvious tourism benefits. While the provision of infrastructure and capacity is vital, even more vital is the question of price. The Tourism Task Force, who reported recently, identified low-cost access transport as a critical factor in achieving the Government's target of doubling tourism numbers by 1992. The Government endorsed this view and I immediately initiated a series of discussions with our air carriers in order to achieve the lowest possible in-bound fares for the 1988 tourist season.
The results of these consultations have been very positive and I am satisfied that the plans put to me by the airlines, in relation to both fares and capacity for the coming summer season, will be a significant factor in generating traffic in line with, and in many cases ahead of, the Government's targets for growth from the various tourist markets.
These developments had a major impact on two of our major State companies — Aer Lingus and Aer Rianta. The profitability of these two bodies is a credit to our State sector. My colleague, the Minister of State, Deputy Lyons, will inform the House of their financial performance. He will also give details of an Aer Lingus fleet replacement programme which is being carried out from their resources.
Although air is the dominant mode of access transport travel for tourism and individual travel, sea is still the dominant one for our merchandise trade. It is also exceptionally important for certain segments of the tourism market — particularly car and coach business.
We have had a series of discussions in this House on sea transportation policy, in so far as it relates to my Department, particularly during the enactment of the B & I Line Act, 1988. I will, therefore, be brief on this topic. Deputies will be aware that the B & I are implementing a plan of action aimed at restoring the company to viability. On the basis of this plan and its across-the-board support by the company's workforce, the Government agreed to provide the B & I with up to £11 million in Exchequer equity in 1988. We also announced that we would review the company's position not later than the autumn on the basis of detailed comparisons of performance against forecast. I am pleased to say that implementation of the plan is proceeding well and that to date the company's trading performance is in line with their forecasts.
Deputies will also be aware that the Government decided that £300,000 should be made available to the operators of the Cork-Swansea service from the budget allocation for a package of special measures for tourism in 1988. As I indicated to the House recently, in response to questions, the purpose of this grant was to assist Cork-Swansea Ferries Ltd., in marketing and promoting the company's services in the interest of increasing the number of foreign visitors to the south-west region. In consultation with the various tourist authorities of the south-east, with regard to the impact on 1987. I was convinced that it had a significant impact on the tourism numbers of that area. I must stress that the grant was an exceptional one and was facilitated by the availability of the special budget allocation for tourism development. It continues to be my policy that the Exchequer should not grant-aid the operations of private commercial ferry companies.
On the question of internal transport, as the CIE subvention is by far the biggest expenditure item in my Vote I feel I should give the House a comprehensive, if necessarily compressed account — because of time constraints of how the company are performing.
The allocation in the Estimates for CIE is £113.6 million. That represents the maximum amount which the Government can afford to make available for CIE this year. It is the net amount payable to CIE after taking account of the offset of some £45 million, in respect of payments deferred in the period 1985-87, against repayable State advances of £44.5 million, which were converted into non-repayable advances by the Transport Act, 1987, and after allowing for £3 million to be raised by CIE through the sale of surplus property. As a result of these arrangements we will be entering 1989 without any deferred payments outstanding.
The board's 1988 capital allocation, which is non-voted, is £15.3 million. It is designed to allow the board to continue to invest in equipment such as rolling stock, buses, signalling and communications and in Rosslare Harbour. The allocation is based on general policy for the board's capital programmes and enables CIE to provide the resources to meet their essential transport market needs.
The CIE 1987 audited accounts will not be available for a number of weeks. However, provisional figures for that year show a disappointing net loss. This resulted from a fall in revenue, partly as a result of industrial disputes in the bus sector, the costs arising from the conversion to one-person-operated buses, an increase in operating costs and substantial third party claims in relation to road accidents.
While the results are disappointing after two years in which the board recorded profits, I know that the chairman, the board, the management and the staff are striving to improve the performance in all sectors in 1988 and are being closely monitored by my Department. The emphasis within CIE now is on marketing their services, with attractive price packages wherever possible, winning more customers and at the same time striving to meet the needs of the travelling public. This is laudable. However, we must also ensure that both management and all employees in the company are fully aware of the need to reduce costs so that the level of dependence on the Exchequer can be further reduced.
The board's dependence on the Exchequer for normal subvention has been falling in real terms for a number of years. In 1985 the board received a normal subvention of £104 million. This year the figure for normal subvention is £98.9 million. Interest payable on DART in respect of 1987 was in excess of £16 million. The amount required for 1988 has been forecast at £14 million. The other main element in the CIE subvention is the £3 million payable annually for ten years under the Transport Act, 1985, in respect of a term loan for £30 million secured by CIE in 1985.
The Government decided in October last that no useful purpose would be served in carrying out further studies on the desirability of extending the DART system. This decision was strongly influenced by the knowledge that very large sums of money would be involved in extending the system and that there was no likelihood of such sums being made available in the immediate future. It was more realistic to explore what could be achieved on the basis of much less costly options. We must ensure that the travelling needs of the public in the Dublin area are adequately catered for and, in particular, that there are proper links between the centre city and the newer suburbs. Therefore I requested the chairman of CIE to prepare public transport investment plans for the Dublin area involving only bus-based options, or diesel services on existing rail lines. I expect to have the CIE plans in a few months time.
I will conclude my remarks on internal transport by informing the House of a matter of major importance for internal transport policy. The review of the Road Transport Act, 1932, which regulates the licensing of public road passenger transport services, is now completed. I hope to initiate new legislation in the Oireachtas this year to replace and update the Act and to provide the legislative framework for changes in policy in the sector.
I cannot, in advance of Government approval, give particulars of the specific changes which I propose to introduce. However, I am satisfied that the Act no longer caters adequately for today's transport market. In reviewing policy, I have taken account of many factors, such as the need to cater for the basic transport needs of the people, especially in less densely populated areas, the demands and expectations of commercial bus operators in the private sector, the competitive environment of the transport market and its implications for CIE and the developments in the European Community aimed at completing the internal market by 1992. Al of these have led me to the conclusion that substantial changes are required to service public transport needs, which are very different from those which existed when the Transport Act, 1932 was enacted.
I know that other Members of this House have some very interesting views on this topic. I look forward to having these debated in the same constructive manner which I wish to acknowledge I have enjoyed in this House for my present portfolio.
I mentioned at the outset that I had responsibility for four major State bodies in the transport area. I also have responsibility for the State body charged with implementing Government policy on tourism, namely Bord Fáilte. I have dealt with tourism policy and particularly its complementary aspects with transport policy in the course of my speech.
I will conclude not on a policy issue but on a personal one. In February of this year Paschal Vincent Doyle died. Many tributes were rightly paid to him for the tremendous contribution he made to many facets of Irish life. However, it is appropriate to place in the report of this House our gratitude to the man who personally made the biggest contribution to the development of Irish tourism over the past two decades. He did so, not only as a board member and chairman of Bord Fáilte, but also as the founder and driving force behind the biggest and most successful private sector enterprise in Irish tourism. There is unanimous agreement that the troika which will drive Irish tourism to achieve its full potential is a quality product, strong price competitiveness and professional marketing. While Paschal Vincent Doyle did not articulate this principle, he did something much more important — he practised it. We in Government are determined to motivate many others to follow in his footsteps and generate the jobs and wealth which we all know are possible to achieve from a well developed and managed tourism sector.
Molaim an Meastachán don Teach.
