Dáil Éireann debate -
Wednesday, 3 Mar 1993

Vol. 427 No. 3

Ceisteanna — Questions. Oral Answers. - Culliton Report Recommendations.

Desmond J. O'Malley

Question:

8 Mr. O'Malley asked the Minister for Transport, Energy and Communications if, in view of the urgent recommendations in the Culliton report concerning the need to reduce industrial costs, he will take immediate steps with the bodies under his control to effect a speedy reduction in freight costs on the Irish Sea and between Ireland and the Continent, an immediate reduction in the excessive cost of overseas telephone calls, and an immediate reduction in the cost of electricity for large industrial consumers so that the competitiveness of Irish industry may be improved and employment increased.

Desmond J. O'Malley

Question:

11 Mr. O'Malley asked the Minister for Transport, Energy and Communications if he will make a statement in relation to the Government policy on international telecommunications costs in view of the pressure from Irish business to have the uncompetitive cost of international calls from this country reduced to more competitive levels.

Paul McGrath

Question:

28 Mr. McGrath asked the Minister for Transport, Energy and Communications if there is scope for reducing the cost of electricity, natural gas and oil over the years from 1993 to 1995; the way in which a reduction can be made; and if he will make a statement on the matter.

Theresa Ahearn

Question:

42 Mrs. T. Ahearn asked the Minister for Transport, Energy and Communications if he intends to establish a more open, transparent and competitive energy sector; and if he will make a statement on the matter.

Andrew Boylan

Question:

43 Mr. Boylan asked the Minister for Transport, Energy and Communications if there is scope for increased competition in the energy sector which would reduce costs without damaging supply security; and if he will make a statement on the matter.

Mr. Cowen

I propose to take Questions Nos. 8, 11, 28, 42 and 43 together.

It is my intention as Minister for Transport, Energy and Communications to co-operate fully with the Government in implementing the thrust of the recommendations of the Culliton report within my area of responsibility.

On the matter of reduction in freight costs on the Irish Sea and between Ireland and the Continent the position is that the private shipping companies operating the services are not under my control. I understand that the vessels require upgrading in order to become more efficient, to increase frequency and ultimately to reduce costs. To that end my Department has been pressing the EC for grant aid. The programme for Government states that grants will be sought for access transport, especially mobile assets with special reference to investment in direct shipping services to continental Europe. In regard to air freight services, events have now superseded the Culliton recommendation on EC deregulation of air transport. Policy is now directed towards ensuring Ireland has an open and competitive air transport system which takes account of Ireland's needs for reliable and regular, commercial air services for Irish tourism, trade and industry, at least economic cost.

The position in regard to cost of overseas telephone calls is that the Government is committed to making the telecommunications service as competitive as possible and recognises the need to rebalance all its charges to meet competition. Telecom Éireann has submitted detailed proposals for such a rebalancing of charges to secure a firmer long term basis for its revenue. These proposals are being examined as a matter of urgency at present in my Department.

In regard to cost of electricity, a reduction in price was effected a number of times since 1986 and the ESB considers there is no scope for any further reduction. In fact, I have an application before me from the ESB for a price increase due to rising costs. I am very conscious of the need to keep industrial costs as low as possible and this will be reflected in my analysis of ESB's needs.

It is Bord Gáis policy that gas prices will remain competitive with alternative fuels. Gas prices to the industrial and commercial sectors, therefore, are governed by tariffs or contracts which track the price of oil. It is not possible at this stage to forecast what the price of gas will be over the period. Oil prices are currently low and further reductions, if any, are likely to be relatively insignificant. The board has recently given a commitment that prices in the domestic sector will not be increased before the end of 1994.

The oil market in Ireland is largely a private sector market. The operation of the Whitegate Refinery has a small impact on the consumer price of petrol and gasoil and it is the intention of the Government that investment in Whitegate will take place to reduce and, if possible, eliminate that impact.

Mr. O'Malley

I apologise for the fact that I missed the beginning of the Minister's reply. That was due to the fact that my office is so far from here. May I ask the Minister in regard to telecommunications charges if he recalls that the previous Government made a decision in January last that there should be an immediate reduction in the cost of overseas telephone calls as that factor was seen as a major and unnecessary impediment to Irish business? In view of that decision, which was to be conveyed to Telecom Éireann straightaway, and which I am sure it was, and given that our overseas telephone calls, the ones most relevant to industry and business, are, on average, about 35 per cent higher than the Europe average why has there been such a long delay in implementing that proposal?

Mr. Cowen

The question of tariffs is a complex one. It is necessary to ensure that any rebalancing proposals approved constitute the best possible solution. I must make it clear to the House that any rebalancing proposals approved by me will, broadly speaking, have to be self-financing.

The financial state of Telecom Éireann, given its high level of borrowings and the emergence of competition in what were formerly monopoly areas, does not make it possible for the company to reduce charges without being satisfied that it will recoup the loss elsewhere. In considering rebalancing proposals I must consider what is best in the overall national interest while at the same time ensuring that the revenues of Telecom are protected.

Mr. O'Malley

Is the Minister aware that the Irish Sea is described frequently as the most expensive piece of water in the world and that while it is only about 60 miles wide between the various main ports the cost of transporting goods across those 60 miles is greater than it is across any comparable stretch of water in the world? Indeed, it is more costly to transport goods across those 60 miles than it is to transport goods 600, 1,000 or 1,500 miles in other parts of the world. Can the Minister take specific steps to ensure that this huge cost impediment to Irish industry is removed and that normal levels of tariffs or charges will be incurred in future on the Irish Sea?

Mr. Cowen

I take the point that any development or improvement in infrastructure within Ireland can be very much negatived if we do not improve access from our ports to the markets. As I said in the early part of my reply in regard to the reduction of freight costs on the Irish Sea and between Ireland and the Continent — the Deputy may have missed this — the position is that the private shipping companies operating the services are not under my control. The vessels require upgrading in order to become more efficient and ultimately reduce costs. To that end my Department has been pressing the EC for grant-aid, not successfully thus far, I have to say. The question the Deputy raises is an important factor in determining our competitiveness, now that the internal market has been completed, and it is one which has a high priority in my Department for funding under the National Development Plan which is presently being prepared by my colleague, the Minister for Finance.

Mr. O'Malley

Would the Minister agree——

An Ceann Comhairle

I want to dispose of the remaining priority question, No. 9. Perhaps Deputy O'Malley would be brief.

Mr. O'Malley

I will, Sir, certainly. Would the Minister agree that one of the other factors contributing significantly to the high costs relating to shipping and exporting from this country is the level of port charges in this country, especially in Dublin? I think the port charges in Dublin are four or five times greater than they are in Larne with the result that a surprisingly high proportion of exports from the Republic go out through the port of Larne. Can the Minister take steps to have Irish port charges reduced and, in particular, the Dublin charges which are extraordinarily high given the very bad level of service through Dublin port?

Mr. Cowen

I think the Deputy will agree that the situation at Dublin port has improved in recent times and that improved work practices are now in place. Clearly, one of the most practical methods of ensuring that Dublin port becomes far more competitive with Larne and other ports, such as Waterford, in the Republic is to make further infrastructural investment at the port conditional on the cost base being right and competitive vis-à-vis other ports in the country.

An Ceann Comhairle

The time for priority questions is fast running out. Let us have a reply to Question No. 9, please.