The irony is that the State bodies to which the motion refers were set up in the main by Sean Lemass, who would turn in his grave if he knew the position his party's spokesman is taking in relation to State bodies. Those bodies were set up as commercial State bodies. I emphasise the word "commercial" because that is what they always should have been and must be if they are to survive in an era of increased competition and deregulation, driven from Europe in the best interests of consumers.
The second substantive point I want to make about these bodies is that they were set up as corporations or companies to ensure their independence from Ministers, Departments and politicians in their day-to-day operations. All Governments have adopted a "hands off" approach in dealing with commercial issues in State bodies and even more so in dealing with industrial relations matters within them. There are institutions and machinery of State for dealing with industrial relations matters in all companies, including State bodies. Even though Deputy Brennan may not have noticed it when he was a member of a Government, it has been the tradition of successive Governments to encourage employees in all companies to avail of this machinery to solve industrial relations problems. I intend to keep to that tradition. In this spirit, I am glad management and unions in all three CIE operating companies are using that machinery.
Political intervention would only make the atmosphere more fraught. The "hands on" approach which Deputy Brennan advocates from the safety of the Opposition benches is something to which Fianna Fáil Ministers for Transport rightly displayed a marked aversion in the past. For example, Deputy Cowen deployed the "masterly inactivity" principle to good effect when a national rail strike was threatened during his period in the office I hold.
All State bodies, with the exception of CIE, have had to deal with the effects of EU deregulation on their sectors. For some, such as Aer Lingus, it is already full blown deregulation, while for others, such as Telecom, it is partial deregulation now but with the prospect of full deregulation soon. Management and trade unions in these bodies accepted the inevitability of change and agreed on measures to manage it. It was not easy to achieve this agreement, particularly as it impacted on work practices and, consequently, on employee earnings, which had developed over decades under monopolistic shelter. Employees in these bodies and their trade unions realised that they had to adapt or die in the new competitive environment they were facing. I am glad to say that they adapted and used the Labour Relations Commission and the Labour Court to help them do so. I acknowledge the tremendous work done in this area by the Irish Congress of Trade Unions which has shown a much greater grasp of the reality facing us than Deputy Brennan.
Land transport is the last of these sectors to have to cope with deregulation. The pace of deregulation has been slower than some member states of the EU would wish but there is no gainsaying that the process has already commenced and will accelerate over the coming years. CIE management is already on record as saying it is not afraid of deregulation, nor should it be, and has informed me of its very clear strategic policies to cope with it as it comes. These strategies are essentially investment driven, with substantial financial support from the EU and Exchequer.
It is the shared vision of CIE management and trade unions to make CIE a profitable customer focused company, delivering high quality public transport services at competitive prices to its customers. This was clearly set out in a joint communiqué from CIE trade unions and management to all CIE staff last September. Deputy Brennan would do well to read that communiqué. I will quote some passages from the communiqué for the Deputy's delectation; it might encourage him to read all of it.
They [trade union officials] and their members saw at first hand the effects of these and other changes in CIE's Markets [referring to deregulation]. They were concerned that these were not being addressed in a more urgent manner.
The Trade Unions noted new pressures which are exerting themselves.
The threat of deregulation driven by European integration.
European restraint on State Aid.
Public Procurement policy changes.
Government is becoming intolerant of poor performance in some parts of the State Sector and is insisting on the adoption of more commercially focused performance criteria by these companies.
The CIE unions accept that in order to meet the new competitive pressures and to survive in the new changed economic environment in which they will be required to operate CIE, like all Commercial Semi-State companies, must undertake the same type of re-organisation and restructuring as was embarked upon by both private and public companies over the past decade. This has involved:
Significant changes in management style
changes in industrial relations processes
changes in worker and union attitudes to meet the challenges ahead.
There is much more in the communiqué in which Deputy Brennan will find a far more enlightened attitude and insight into what faces the CIE group of companies now, than anything he has said here tonight.
I seek to build on and develop the positive legacy of programmes and policies on public transport which I inherited from my predecessors. I have no difficulty in acknowledging the positive contributions, both in practical and in policy terms, which have been made in public transport by several of my recent predecessors. It is a pity to see those worthwhile contributions devalued by the kind of cynical political opportunism engaged in tonight by Deputy Brennan with his motion. It is a pity to see the notable achievement of Deputy Cowen, when he was Minister for Transport, Energy and Communications, in setting up the operational programme which is the framework for a major part of the investment programme now being engaged in by CIE, being devalued by Deputy Brennan.
As a result of recent positive and progressive policies on public transport which this Government has developed and pursued with great vigour, the CIE group is undertaking levels of capital investment which would have been undreamed of ten years ago. The projected investment programme for public transport between 1994 and 1999 amounts to more than £735 million and represents an unprecedented commitment by the Government to renew and develop public transport. CIE has already received £50 million in EU aid under the current round of Structural and Cohesion Fund assistance and significant further transfers will follow in line with the Operational Programme for Transport until the end of the decade. In addition, CIE receives annual subvention from the Exchequer which has been running at approximately £100 million in recent years.
That CIE investment programme, which is well tailored — I pay tribute to all those involved in setting it up including Deputy Cowen, the management and the unions in CIE — makes maximum use of EU Structural and Cohesion Fund assistance. However, neither the European Union nor the Exchequer can fully support CIE's investment needs. The CIE group must find a significant proportion of the necessary investment from its own resources. If it cannot provide the required matching finance, it will not be in a position to draw down all of the funding available from European Union sources. In addition to EU funded investment, CIE is also committed to substantial capital expenditure which will have to be funded entirely from its own resources. For example, £90 million of the planned £275 million mainline rail investment programme will not benefit from EU co-financing. The company's bus fleet replacement programme must be funded entirely from CIE's own resources. The CIE group is not in a position to fund investment through increased borrowing. The group's borrowings now stand at approximately £200 million. Servicing that level of borrowing is a serious enough burden on the group's finances and the CIE board has rightly decided that borrowing above and beyond that level cannot be undertaken. In addition, Members of this House and outside groups are constantly pressing for further worthwhile projects which are not included in the investment programme simply because all the available funding has been taken up. That is not a criticism of the projects but there is a limit to the resources that are available.
CIE's financial problems cannot be resolved by providing extra State subvention. The idea that the Exchequer could provide additional subvention of £40 million to £50 million every year on an indefinite basis is both unrealistic and undesirable. If CIE is to become competitive, it must reduce its costs. More State funds now to subsidise operational inefficiencies or restrictive work practices would simply postpone the necessary cost reductions, and at a considerable waste of scarce taxpayers' money.
The continuing need for restraint in public expenditure, arising from the Maastricht convergence criteria to which we are told Fianna Fáil also adheres, rules out any open-ended commitment to extra State financial support to fund an ever-increasing gap between CIE's expenditure and revenue. Having said that, the 1997 subvention to CIE has increased by more than the rate of inflation for the first time in many years. At £105 million, it is more than £5.5 million more than last year's provision. This will provide a good basis on which to proceed with the introduction of public service contracts between the State and CIE.
The other obvious quick fix would be to increase bus and train fares substantially. I doubt if even Deputy Brennan is so native as to advocate that as a solution.
