Transport (Córas Iompair Éireann and Subsidiary Companies Borrowings) Bill 2012 [Seanad]: Second Stage

I move: "That the Bill be now read a Second Time."

I am pleased to introduce this legislation which deals with CIE’s borrowing powers for non–capital purposes. Strengthening CIE’s capacity to raise credit on a sustainable basis is a key element of a wider set of measures designed to place CIE’s finances in a healthier state for the future.

The CIE group has had to confront a very difficult financial situation. As in most business sectors in the State, the current economic environment is very challenging for public transport providers. The cause of the problem is primarily the recession which has resulted in a drop of more than 20% in passenger numbers from the peak in 2007. That has been partly off-set by fare increases, but revenue is down by more than 11% from the 2008 level. The PSO subvention has reduced by 21% between 2008 and 2012 and is due to fall further by 14% over the next two years. The removal of the fuel rebate is estimated to have cost the group approximately €22 million at a time when it has had to absorb higher fuel prices.

In 2006 and 2007, as a result of the CIE operating companies expanding their network of services and the growth in the economy, CIE experienced an increase in passenger volumes and revenues. However, the impact of the economic downturn which started in 2008 resulted in falls in passenger numbers in each year from 2008 to 2011. Once the expected increase in demand did not materialise as a result of the economic downturn, CIE was then faced with an expanded network of services and reduced revenues which resulted in each of the operating companies incurring deficits in each of the years 2008 to 2011, with the exception of Bus Éireann which generated a small surplus in 2011.

While the CIE group reported surpluses in each of year from 2006 to 2008, 2007 was the only year in the period 2006 to 2011 in which the group generated a surplus when the gains from the disposal of fixed assets were excluded, that is, the sale of property. In the past three years, 2009 to 2011, CIE suffered a total loss of more than €137 million after exceptional items. Clearly, this level of loss cannot be sustained and must be addressed.

Since income began to fall in 2008, there has been a succession of measures to deal with the underlying problem, including cost reductions, fare increases, service efficiencies such as the network direct programme in Dublin Bus and similar rationalisations in Bus Éireann, and measures to make public transport more attractive such as the leap card, real-time passenger information, RTPI, and providing Wi-Fi.

The operating companies cost recovery programmes that were started in 2009 in an effort to eliminate these deficits have been undermined by continuing falls in passenger numbers, reductions to operating subvention and increases in costs such as fuel that are outside the control of CIE. While progress has been made in reducing costs and head-count to date, these reductions have not been sufficient to eliminate the deficits in the operating companies.

The 2011 annual report and financial statements for CIE and those of the three subsidiary companies were recently laid before the Houses of the Oireachtas. An unqualified audit report was issued by the group’s auditors on CIE’s 2011 financial statements. However, the auditors have included an “emphasis of matter” paragraph regarding the group’s ability to continue as a going concern. They note that funding and trading difficulties give rise to uncertainty for the business and challenge the group’s ability to continue to trade as a going concern. The board of CIE expects that these uncertainties can be addressed through a range of measures, including the realisation of non-core assets, reduction in cost base, including payroll reductions, multi-annual fare increases and curtailment of an own-funded capital programme.

I have engaged in consultations with the CIE companies and have stressed the need to respond to the PSO subvention funding challenges through further cost savings in their activities. A recovery in passenger numbers and further increases in fares could soften the impact of the reduction in PSO subvention. All concerned in my Department and the NTA must focus on identifying key public transport priorities in cities and across the country. In turn, the PSO public transport service providers will have to achieve greater efficiency and cost effectiveness in the years ahead based on a realistic assessment of the scope and level of contracted services.

Each year, funding is provided for socially desirable but financially unviable public transport services in Ireland. Funding for such services is made available under the Vote for my Department by way of a payment to the National Transport Authority, NTA, for PSO services. In recent years the total subvention paid to the three CIE subsidiaries has been reduced from a high of €308 million in 2008 to €242 million originally earmarked for 2012. On 24 July last, the Government decided to provide additional funding of €36 million to CIE to ensure that the companies could continue to operate for the rest of 2012. That would bring the total subvention for this year to €278 million, higher than the subvention level for 2010 and the fifth highest level of subvention ever. At this difficult time for the public finances it was not easy to find a large amount of additional funds. It involved very difficult decisions in terms of having to divert funding from other worthwhile and important projects and initiatives and imposing sacrifices on others. In 2013, the PSO subvention will be €226.5 million, as compared with €242 million originally allocated for 2012.

I have met regularly with the four chairs and senior executives of the CIE companies and also with union representatives. While facilitating a range of measures to address the problems, I have stressed that significant progress must be made on the development of a realistic, sustainable and robust business plan by CIE to deal with the current economic realities; cost reductions within the CIE group and employee support for same; the sale of non-core assets; and the securing of new credit facilities. Those various avenues are currently being explored. The additional funding for this year only provides a very short breathing space to CIE. It is essential that the management and staff in the CIE companies use this time productively to discuss and implement proposals to cut costs that can help to address the serious financial position in which the CIE group finds itself. In this regard, I am concerned that the current negotiations between management and unions at the two bus companies are concluded as soon as possible. In view of the difficult financial situation of CIE and the need to finalise its business planning for 2013, it is imperative that these discussions bring forward a positive outcome in the next few weeks.

CIE is progressing the preparation of a revised five-year business plan with aggressive targets that will support the reporting of trading improvements in 2013.

It is intended that the business plan will address the underlying financial challenges facing CIE so that the group’s public transport services can be provided efficiently and cost effectively over the plan period.

The decisions taken so far by the Government and the financial provisions made regarding CIE were fundamental for creating a better operational environment for the organisation. There is, however, no room for complacency. The group's future will be one of efficiency and effectiveness with regard to what the Exchequer can afford to bear. The measures which have been taken and are planned are in the longer term interest of CIE and its employees.

The resolution of the CIE financial position will involve increased borrowing facilities for non-capital purposes. CIE’s current borrowing limit is set at €107 million and it has facilities in place with banks to that limit which expire during 2013. The purpose of the increased limit of €300 million is to give CIE maximum flexibility to ensure access to long-term working capital and short-term funding facilities. In no way is the proposed limit to be taken as an indication that the group will be exposed to a massive increase in its debt position. While it is expected that the debt position will increase beyond the existing facilities of €107 million in 2013, the group is undertaking an aggressive business planning process designed to return to break-even and to achieve a sustainable debt position in the following years. It will judge carefully the range of credit facilities necessary to include both longer term facilities, as well as overdraft type facilities, to enable it effectively manage its cash flow and day to day working capital requirements.

Recent experience has necessitated a strengthening of financial management systems and a need to ensure that corporate governance arrangements of the boards of CIE and of the subsidiary companies are enhanced. A detailed review of the group’s financial systems and treasury management arrangements has been undertaken and measures put in place to strengthen those in the holding company and subsidiaries. In addition, my Department will conclude a memorandum of understanding with CIE, which will encourage the achievement of key financial sustainability targets in 2013. I will continue to engage regularly with the chairpersons and chief executives of CIE and its subsidiaries and will report to the Cabinet sub-committee on infrastructure on a regular basis over the coming year.

With regard to the provisions of the Bill, I will avoid repeating all the detail set out in the Explanatory and Financial Memorandum circulated. The existing total borrowing limits for CIE for non–capital purposes are set out in the provisions of section 28 of the Transport Act 1950 and section 3 of the Transport Act 1987 which provide for borrowing up to a limit of €50 million and €57 million respectively. It is now proposed to amend the 1950 Act provision to provide for an increase in the borrowing ceiling to a level of €300 million and to streamline CIE borrowing powers into a single enabling provision for all forms of borrowing undertaken by CIE for non-capital purposes. Separately, section 130 of the Railway Safety Act 2005 already provides for a ceiling of €600 million for capital borrowing by the group.

Section 1 of the Bill substitutes a new section 28 of the Transport Act 1950. In subsection (1) it allows the Minister and the Minister for Public Expenditure and Reform to give consent to CIE to raise or borrow money for non-capital purposes, and sub-section (2) sets a ceiling of €300 million for such borrowing. Subsection (3) enables property to be used as security for borrowings.

Section 2 provides for a consequential amendment of section 20 of the Transport (Re-organisation of Córas Iompair Éireann) Act 1986 to allow the board of CIE lend money to the subsidiary companies and for the subsidiary companies to borrow money, with the consent of the board of CIE, subject to the total ceiling for all borrowings of €300 million.

It should be noted that the giving of security for borrowings will be subject to the requirements of section 67 of the Credit Institutions Stabilisation Act 2010. This requirement arises from the provisions of our European Union and bilateral loan agreements and aims to ensure that our lenders under these agreements are given equal priority on any secured borrowings undertaken by general government. While CIE is not included in general government borrowing, Irish Rail is included. The proposed amended section 28 (3) of the Transport Act 1950 and the amended section 20 (3) of the Transport (Reorganisation of Córas Iompair Eireann) 1986 refer to compliance with the requirements of section 67 of the Credit Institutions Stabilisation Act 2010 by the board and its subsidiaries.

Section 3 repeals sections 30 and 31 of the Transport Act 1950, which provided for the State guarantee of temporary borrowings and the laying of particulars of guarantees before the Houses of the Oireachtas. It also repeals sections 3 and 4 of the Transport Act 1987, which also previously dealt with CIE borrowing powers and State guarantee of borrowings by CIE.

The goal for public transport is to provide safe, accessible and integrated services that contribute to sustainable economic and regional development in an efficient manner. Despite our economic problems and the reduced sums available for capital and current expenditure, this Government will continue to prioritise the role of public transport.

I have outlined for the House the difficulties facing CIE in recent years and touched on the effort that must be undertaken to enhance its financial stability and the commitment of the Government to continue to invest scarce resources in public transport. I have explained the background to the Bill and its provisions. While recognising that there are still many challenges facing the group and its subsidiaries, I am confident that these can be overcome. I therefore commend the Bill to the House.

Fianna Fáil is committed to a sustainable and efficient public transport system. We support this Bill in the context of CIE having a clear and viable plan for the company's future. We are deeply concerned, however, about the reduction in services being provided by CIE and we are not convinced of the Minister's commitment to public transport.

The context of the Bill is to increase CIE's borrowing requirement to €300 million. I advise the Minister, Deputy Varadkar, that it would be useful to talk to the Minister for Education and Skills, Deputy Quinn, about identifying sources of cash because I noted on Wednesday that in the education budget - as spokesperson it is my area of interest - €38 million of that Minister's €90 million in savings came from cash reserves in both the vocational education committees and the higher education authorities. That is a total of 42% of his overall budget findings for this year. After six years of budgetary adjustments, the Minister, Deputy Quinn, magically has been able to find cash reserves. It might be no harm, therefore, for the Minister, Deputy Varadkar, to talk to him to see if he can work a similar trick in regard to CIE. It is a very useful skill to have.

This Bill changes the limits on the amount of money Córas lompair Éireann is allowed to borrow for day-to-day operations as opposed to investment. The limit will increase from approximately €107 million to €300 million, with CIE being able to charge any borrowings of the group to property held by it or its subsidiaries. In effect, CIE will be able to mortgage its property. It also streamlines CIE borrowing powers into a single enabling provision for all forms of borrowing undertaken by CIE for non-capital purposes.

The hope and intention behind this Bill is that the increase will enable CIE better manage its own day-to-day financing needs and those of its subsidiary companies. The borrowing limit currently in force was set 25 years ago in 1987 and therefore it is probably time to revise it. The Bill removes the possible State guarantee of certain CIE borrowings. EU state aid rules restrict the issuing of such debt guarantees to commercial semi-State bodies.

There is no doubt that CIE is in serious financial difficulties. Revenues at the group fell by 0.6 per cent last year to €707 million, according to its 2011 annual report published last month. It should be noted that the accounts were more than four months' late.

As the Minister is aware, CIE received more than €500 million in State funding last year for a variety of areas yet it lost €6 million. The group is again expected to record losses out to 2015. CIE auditors PricewaterhouseCoopers state that these circumstances give rise to uncertainty for the business and challenge the CIE group's ability to continue trading as a going concern.

The group exceeded its available borrowing facilities during 2012, and the excess to date has been met by advance payments of the public service obligation. Without any mitigating measures, it is expected that the group will again exceed its existing borrowing facilities in 2013. Coupled with this, the existing group bank borrowing facilities of €107 million are due to expire on various dates between January and October 2013. At 31 December 2011 the group had bank and leasing debt outstanding of €77.8 million. The maximum debt facilities currently available to the group amount to €121 million, including leasing facilities of €14 million.

This has created uncertainty in regard to the ability of CIE to continue to fund itself and in regard to the absence of measures such as increased public service obligation payments or additional borrowings. The Bill allows CIE to address the latter concern. Three major factors have impacted on the financial position of the CIE group. The public service obligation and other current Exchequer payments have reduced by €41.4 million since 2008, with further reductions proposed each year in the period 2012-14. Increased unemployment and reduced leisure and business activity have seen passenger journeys reduce by 17.5% since 2008, with a fall of €81 million in revenue. Passenger journey numbers have fallen by 45 million since 2008, from 235 million to 190 million journeys. CIE fuel costs have increased by €22 million in the past three years.

Annual operating costs for 2011 have been cut by €174 million since 2008 as CIE tries to take action to reduce costs. The size of the workforce has been reduced by 1,450, on average, during the same period. A series of initiatives, ranging from service reviews to contract renegotiations, will yield ongoing operational savings. According to The Irish Times of 15 November, a spokesman for CIE confirmed it is progressing a number of options for asset disposals to help fund finance for the business. It expected to confirm significant developments by the year end. The spokesperson said Iarnród Éireann reached agreement with staff in the summer and is now working on generating further efficiencies in the business. Dublin Bus and Bus Éireann are in advanced talks with staff at the Labour Relations Commission. Voluntary severance has been offered, primarily at Iarnród Éireann. In 2012, 77 staff have left and more than 100 others are expected to leave before the year end. This will bring staff numbers to below 4,000.

The restructuring of the CIE group of companies also involves costs that are a significant factor in the group's losses. Redundancy payments and other restructuring costs amounted to €113 million over the three years 2008-10. Management's current projections indicate the group will incur further deficits in the period 2012, 2013 and 2014, with a return to profitability expected in 2015 and 2016. The resultant cash deficits will result in a requirement for renewed facilities, other funding and measures including cost reduction and. the realisation of assets.

According to the Sunday Business Post last month, Irish Rail is close to securing a deal with a private sector buyer to sell land holdings in Spencer Dock in Dublin. According to the report, the deal is so close to being finalised that management at Irish Rail authorised the restarting of a crucial voluntary severance scheme that had ground to a halt because it could not be funded. The cost of the scheme, which is likely to be up to €18 million, will now be funded through the proceeds of the Spencer Dock property deal. The Sunday Business Post also outlined that the day-to-day cash crisis at Irish Rail became so acute over the past two weeks that the National Transport Authority, was forced to provide an extra €16 million to the firm to allow it to pay day-to-day expenses and that a well informed source said there are very serious issues with funding and that Irish Rail is looking at a funding hole of €40 million over a three-year period. Some suppliers have been refusing to do business with the company because of its inability to pay its bills. This is what the public transport provider is facing. Real differences have emerged between how the parties in government approach the future of our public transport services. The parties are well known to having differing approaches to the role of the State in public transport. I question whether the Minister of State has a watching brief for the Labour Party.

The Minister, Deputy Varadkar, made an intriguing speech last month and I wonder about the views of the Minister of State on it. The Minister referred to the programme for Government commitment which calls for "the need to rebalance transport policy to favour public transport" and states: "We will therefore establish a Cabinet sub-committee on infrastructure to explore the benefits to the public transport passenger of more diverse bus service provision". The Minister referred to how the National Transport Authority carried out a public and a market consultation on the post 2014 public service obligation bus market and this was recently discussed at the Cabinet sub-committee. The Minister said there were divergent views on the matter when it was discussed at Government and went on to put the case in favour of more diverse bus service provision. The Minister believes there are real benefits arising from moving from direct provision by public companies of subsidised bus services to competitive tendering. I wonder whether the Minister of State and the Labour Party agree.

Increasing fares is not the answer to the crisis facing CIE and an overhaul of the company's transport policy is needed. An overhaul of CIE's strategy and vision is also needed. The package CIE offers is not attractive to customers and this needs to change. The attempts by the company to address their problems are only papering over the cracks. CIE's long-term viability is under real threat and a comprehensive review of its policy is required to ensure its long-term survival. The company must restructure to make it attractive to customers again. If this involves an increase in the subvention from the Government in the short term, this should be accommodated. CIE has found itself in a vicious cycle of increasing fares and falling passenger numbers. It is essential to protect the public service aspect of the company. The Government needs to facilitate a new service plan for CIE and this must be done urgently to secure the company's future. However, as a public transport company, the Government must ensure it meets its policy platform of having an integrated network and providing public transport to the citizens of the State.

There is significant difference between the fiduciary duties of CIE's directors and the role of the Minister. It is not good enough to say it is up to the board of the company to resolve the issues. The board might not be in a position to do so. It must get its accounts in order as the directors' fiduciary duties require them to balance the books and meet the company's financial commitments. However, the Minister has a different role in that he must ensure we have a public transport network that is fit for purpose. We are concerned the Minister is taking a hands-off approach. The programme for Government recognises "the need to rebalance transport policy to favour public transport". We are not convinced the Minister has taken this commitment to heart.

We need a viable public transport network when we are trying to reduce the number of private cars on the road and assist the economic recovery. In the current economic environment, passenger numbers are dropping and the answer is not to dismantle services because the customers we lose will never be regained. The Government needs to ensure CIE maintains its critical mass of service. A fully operational public transport system is fundamental to any working economy. The company needs to be fit for purpose by providing a comprehensive rural service that has already been affected by recent budget cuts.

During the debate in the Seanad, my colleague, Senator Mooney, made comments I wish to endorse on the positive role of the unions. He paid tribute to the workforce and the unions and the commendable restraint they have shown in difficult times. There have been major job losses and significant changes in work practices in a company that has traditionally been deemed to be inflexible in the context of management and trade union relations. They deserve credit for how they reacted to it.

We support the Bill, with the caveats I outlined earlier, and I commend it to the House.

We will be supporting the Bill as it allows for CIE to raise more funds for non-capital projects to keep its services to a standard that serves people's needs at least as adequately as is currently the case.

In many cases, particularly Dublin Bus, CIE is providing a service which is far from desirable and increasingly worse by comparison with previous years. Many of the reasons are plain to be seen. There is, of course, less money for everything, except bankers and bondholders. The State subvention has been cut dramatically over the past four years. Passenger numbers have dropped considerably and the price of using public transport has rocketed. For people living just a short distance from their workplace, it can now cost in Dublin €4.30 to get to and from work each day. A rambler ticket for 30 days costs €115, as much as many young people in the city are paying for rent each week. That works out at €3.80 a day. The Leap card offers lower fares, but as Dublin Bus fares have been increased numerous times by the Government in its short time in office, people still find public transport very expensive.

That is just Dublin Bus, the company with which I am most familiar, as are most of my constituents. Train fares, for those lucky enough to have rail access, have also gone up to the point where it is just not an affordable option for most people. A rail commute from Tullamore to Dublin, with a monthly pass, is €297. For most people that is more than half of what they earn in a week. I know it may not seem like much to many here who may operate expensive cars and take home very large wage packets, but it should come as no surprise that working people are finding it so difficult and are coming out at the end of the month with very little, given how great a proportion of their earnings are going on just getting to work in the first place.

I do not bring up the issue of these high fares simply to beat the Government with something that is very unpopular with the people. I raise it because these fare hikes and the whole fare system is the very blunt and very useless tool of choice for the Department of Transport, Tourism and Sport to try to whip CIE into shape. I am not sure the Department has decided exactly what shape that is.

Fine Gael would, by and large, like to see the end of publicly operated transport companies and a private market free-for-all. This certainly seems to be something that has the boys in blue hot under their collars. I also imagine, given what we have seen over the past two years, that Labour will not do a whole pile to stop them, other than guard the Minister and his colleagues from any mud that might dare to splatter on them in the form of public outrage.

The idea that privatisation is a solution is only merited by the argument that the publicly owned bodies have failed. They have failed to provide a top-class service and they have failed to provide it in a sustainable way. The questions are why they failed and how it could be any different.

It can be different, but the parameters of the debate have to be changed. For one thing, the Government needs to decide just what it wants out of public transport. Does it want something that is cheap and without any of the troublesome burden of providing essential links to people in more isolated parts of the country or even our cities and towns, or does it want a genuinely world-class service that provides fast, efficient, environmentally sound transport to the majority of people who require it? The Government certainly does not seem to want the latter. The Government, like its predecessors, wants to get away with only half-providing a service.

The subvention for Dublin Bus and CIE has, historically, been much lower than in many other countries, both in the EU and elsewhere. We have one of the lowest public transport subventions. The Minister will argue that the subvention is now at an all-time high but that really does not matter when the service is not good enough and the fares are getting higher.

CIE does not have to be a profitable company. It would be great if it was, but to make this the ultimate part of the Minister's policy on public transport is to ignore the massive benefits of a public transport system that serves a wide section of the community and the country.

What on earth would be the point of taking profitable routes from CIE and giving them to private companies to cream off the most money while the State is left with providing for the loss-making routes? There is also a certain madness in giving public service obligation, PSO, routes to private companies to be subsidised by the State. There is no reason to believe this would lead to any better service. The idea that the private sector provides better services is not borne out by the facts. It is not black and white. In some cases private industry is a better method of providing a service but not in every case and not even in most cases. I do not understand people, who claim to have an interest in the people of this country, arguing for private profit and public loss which is exactly what many of the arguments for privatisation, veiled in talk of reform or deregulation, etc. are about.

We need a genuine world-class service for the benefit of our economy and our society. We can choose to structure this in a way that ensures value for money and efficiency but we cannot afford to outsource the State's responsibility to provide it. There is simply no reason to believe the private sector can provide a better service as a whole. Matthews Coaches might provide a more comfortable service to a certain town but it does not follow that it can provide a better transport system by competing with other services not in the interest of the public but its own profit.

Public transport needs more investment. Projects such as metro north, although expensive, would have created large numbers of jobs. Such projects have been left behind in the cutting of capital spending on public transport. Metro north would have provided a link between the north and south sides of Dublin and to the airport and would have created at least 5,000 jobs in construction and thousands of ancillary jobs. It is a pity we have gone down the road of cutting these projects. They are all part of the make-up of the public transport system that needs to be joined up. We badly need to join it up.

We need a proper strategy and vision, not the cutting of routes that serve people. Many areas of Dublin have seen their bus routes cut. The Nos. 19 and 19A routes are among the oldest bus routes in the country. Routes like these provide people, including the old and disabled, with the means of getting to and from shopping, work or wherever they need to go. These cuts are a tragedy.

When we talk about the sale of non-core assets, I worry about what the Minister has in mind and what is to be imposed on CIE. Will it mean selling off vital sections of our industry or our transport routes? It is clear that there will be cuts across the board.

There is no doubt that public transport costs have increased in the last while. Much of the fall in passenger numbers has been due to the selling of routes to private operators. Many areas throughout the country have lost their bus routes and people in those areas have been forced to use cars. Public transport passenger numbers in those areas have, of course, gone down. Those people need to be targeted once again. We need a better vision of how to do that.

There has been a loss of staff in CIE. No one can dispute that the staff of CIE have done a wonderful job. I have seen them provide services, even in areas where their colleagues have been attacked in the course of their work. The staff of CIE have kept the system going and have been magnificent. I do not want to see that changing. It is not in the interest of the country that it should change.

The most significant thing the Minister said in his speech this morning was that CIE, Iarnród Éireann and Bus Éireann had lodged their accounts in the Oireachtas Library in November. This Bill is an attempt to give a lifeline to CIE. We must ask why it needs a lifeline and we must ask why it lodged its accounts in November. November is inexplicably late and it is not the first time CIE has lodged its accounts late. It is a consistent defaulter in terms of being able to deliver simple accounts within a six month period, which is lenient by any standards. Admittedly the auditors are given accounts without qualification but not without reservation and they have serious concerns about CIE being a going concern. This Bill is immensely significant because it comes before the House when this company cannot produce accounts on time and its auditors have reservations about it being a going concern, yet the Bill allows the company to increase its borrowings from €107 million to €300 million. Why should we do that?

I am not one for knocking public transport but I will knock it if it is not being run or administered properly, if somewhere at the top and in the middle there is a lot going wrong. CIE has been indulged by successive Governments for far too long. CIE had what the Minister described as a surplus in 2006, 2007 and 2008 but that was a misnomer. People think a surplus is a profit but CIE does not make a profit. At that time it was getting a €300 million subsidy and the change that was left over was described as a surplus. The company has been indulged because of political influence. It has consistently taken this surplus but been unable to explain why it cannot give clear accounts on time. It is in accounting terms a semi-State basket case. It may deliver a reasonable service in various places but in terms of its commercial mandate, it fails on virtually every single count. It is worrying that this seems to be continuing under this Government.

It is only a couple of years ago that a secret report, because that is the way CIE was run, was commissioned to look into some of the practices going on inside it. It cost €500,000 and reported that there were completely unacceptable practices such as backhanders, wrongdoing and all sorts of corrupt activity within the company. Attempts to bring that report to the Joint Committee on Transport were vaguely successful; they were not totally frustrated but they were not pursued with the sort of enthusiasm expected from the Government of the time. CIE was at the time and still is politically controlled. Happily, many of the board members who were appointed by the last Government have now gone, many of them favoured friends of former Taoiseach, Bertie Ahern. The fact, however, that such appalling behaviour was discovered within CIE, and there is little evidence that corruption was not endemic, is still worrying. I would like to hear from the Minister if he is satisfied all the wrongdoing and the millions that were discovered to be lost to CIE during that period have been cleaned up. Is he satisfied the indulgence that went on in this enormously loss making company is over, and that the Cabinet and the Minister are on top of the company, which was extravagant in the extreme, loose in its controls and generous to its staff and its directors?

The problem in semi-State bodies of this sort, and CIE is the worst offender, is that it starts at the top. I note what the Minister did, and he has done some good things about CIE. The appointment of almost an entirely new board was commendable and the way it was done was to be recommended; although it was not perfect, it was an improvement. That, however, is countered by the fact that a large number of those appointed by the outgoing Government in its final days are still there. Why are they still there? They were appointed because they were protegees of Fianna Fáil or the Green Party and they should have been removed forthwith. They were not.

On top of that, the Minister and new Government, in accordance with the policy which it had promised when it entered power, not only appointed new chairmen, but had them appear before a committee. This was apparently a great reform but they did not go before the Joint Committee on the Environment, Transport, Culture and the Gaeltacht to be ratified, because the appointments had already been made; it was a showpiece. Four of them went in one day before 27 people for an hour and 50 minutes. That was it. It was a farce.

If the Government is sincere about appointments to these bodies, those people should be interviewed for suitability by all-party Oireachtas committees and should explain their vision for the semi-State in question. Then that committee should be allowed to ratify or not. In this case, from memory, Vivienne Jupp, who was put in charge, was given three minutes to give her vision for CIE, part of which was that she lived close to a DART station and so knew a lot about it. She was then subject to a few questions before the committee moved on to the next person and the next. She was thanked and off they went. It was derisory. The appointment was already made.

If the Government is serious about reforming semi-States, it will start with the chairmen and subject them to serious scrutiny, asking them to be ratified and then it may start to tackle the problems within organisations like CIE.

CIE, certainly two years ago, was rotten to the core. I do not know if it is unprecedented, but four auditors holding such strong reservations about it being a going concern should make us think twice about throwing €300 million in its direction and saying it is all right. In July because it hit a crisis the Minister, quite wrongly, said that yes, it was a basket case but it would be given another €36 million. Greatly to his credit, in October he said he would not give it the money because it was not up to scratch in terms of what it was doing.

We need an inquiry into the company. We need to know whether the €278 million it is now getting is really going to subventions. The accounts, which I have read, are very opaque and give little detail on the transfer of this money to particular routes. We need to know that the massive subvention is actually being spent on those routes that are not profitable and whether it should continue. We know very little about where these subventions go. We know that politicians are frightened of challenging them, which is understandable. We know that politicians are frightened of challenging public transport because they feel they are threatening a service that is serving the people in a necessary way. I am not opposed to subsidising services that are necessary. However, I am opposed to throwing money at a rotten company that has been found to be corrupt in the past three years unless we get an assurance that those practices are now over and that the cover-ups that were going on previously have now ended.

I have no problem with what Deputy Ross has said about the accountability of the board of CIE. In recent years many boards were abused through the cronyism of Fianna Fáil in putting its people on boards and there was little accountability of those boards. All boards should be accountable to committees of these Houses and there should be transparency in showing what happens to all money being put into the company. That is not a problem but it is a different argument from providing a public service in our communities and whether it should be run for profit. I believe Government has an obligation to provide that public service. To date the unions have co-operated to a point with the changes required with Dublin Bus's Network Direct project and they have tried to accommodate productivity increases on the cross-city routes. There were objections to many of those routes, particularly the No. 19 bus which went from my area in Inchicore over to Finglas, as Deputy Ellis mentioned, because of the effect they has on communities. The bus service is not there just to get people to and from work as if we human beings are just products of our labour. It also provides a service to get the elderly to go to shops, hospital, etc. It serves people with young children in prams getting from A to B and getting into town to do shopping. Public transport provides a very important social service. I will do all in my power to support such a service in our community.

We also had a problem with the change to the No. 150 bus service. In the past three weeks Dublin Bus has again reduced the frequency, which has an impact on the level of service to the community. If a service becomes less regular, people tend not to use it as much. When the No. 150 bus came every ten minutes, I knew I could jump on it and get into town, to Crumlin hospital or up to the Ashleaf shopping centre. However, with a service every 20 minutes if that did not come, I could be waiting another 30 minutes for a bus. So the regularity of the service is very important. Any cutback in the service now will affect people's thinking in how they link in with their bus service around the city.

I contacted some union members in Dublin Bus who wanted me to make a particular point. The reason this Bill is before the House is the reduction in subvention to CIE by the Minister for Transport, Tourism and Sport, and his flip-flop decision on emergency funding until hard-pressed staff subsidise public transport with cuts in their terms and conditions. With one of the lowest subvention levels in Europe, the loss of the rebate in excise duty on fuel and recently Dublin Bus being forced to pick up a €5 million tab for the introduction of the Leap card, the two public transport bus companies are in a no-win situation against multinational and indigenous for-profit private operators. The Minister has let his own personal feeling be known in many interviews most recently in the Sunday Independent on 2 December. He advocates privatisation and is doing it by stealth.

Dublin commuters faced an average increase in Dublin Bus fares of 17% at the same time as staff members are being squeezed with draconian cuts in their terms and conditions by Dublin Bus management. The latest round of cost cutting is on top of €58 million in annualised cuts already given by staff since 2009. The current negotiations the Minister mentioned in his speech have severe impacts for the workers. They include cuts in conditions and pay so severe that it is proposed new drivers will start on contracts that would mean they work late only at weekends for a basic pay of €10.18 per hour, which is only €1.53 per hour above the minimum wage, this for a driver of a large public service vehicle in a safety-critical job. These buses carry hundreds of passengers every day and because of Government actions, the proposed pay for new entrants is less than a burger flipper in McDonalds.

CIE has issued an ultimatum to staff that from 1 January no sick pay will be paid for the first three days of illness. Such conditions belong in 19th century Victorian workhouses, not in 21st century Dublin. What is proposed by Dublin Bus management is akin to industrial apartheid. This whole process is being given a legitimate air by the recent public consultation process announced by the National Transport Authority. This follows on from the same process in 2006. While this particular process predated the Public Transport Regulation Act 2009 and the formation of the DTA - later to become the National Transport Authority - the union's primary concerns of employment sustainability and public transport provision remain at the top of its agenda in responding to issues such as the 2014 public bus service contracts.

The focus of the 2006 discussions with the Department was twofold - the maintenance of the existing Dublin Bus fleet network and its ability to be competitive in a future market expansion. The unions were assured by the Department, during both the lead-in period and in the aftermath of the implementation of the legislation giving the DTA its remit to licence public transport operators, that its concerns were addressed by the inclusion in the legislation of the "direct award" clause with regard to the existing services and network of both Dublin Bus and Bus Éireann. The compensation element of the direct award under section 52 of the Act is consistent with and complies with Regulation (EC) No. 1370/2007.

The unions were given to understand that the recent route changes within the network of both Dublin Bus and Bus Éireann was conducted in co-operation with the NTA and underpinned by a report commissioned by the previous Minister. This report by Deloitte acknowledged that both companies' performance in terms of efficiency ranked among the highest in the EU and that the level of subsidy to both companies is among the lowest in the EU. The report found that the PSO funding received by Bus Éireann is 12% of total revenue. This compares with Connexxion in Holland which gets at 49% of revenue, Post Auto in Switzerland which gets 51% and TEC in Belgium which gets 78%.

Any proposal that would effectively lead to a defragmentation of the networks would serve to contradict the principle of providing separate and distinct processes and procedures for public service obligation contracts and licences issued for commercial public bus services leading to a blurring of the line between a public transport imperative and one based on ideological grounds. In this regard the recent admission by the Minister that the Government was powerless to block slots owned by Aer Lingus at Heathrow being used for routes other than to Ireland is a salient reminder to those whose ideology blinds them to the potential repercussions of the loss of vital State infrastructure.

It is one thing to provide taxpayers' money to a taxpayer-owned company but it is an entirely different matter giving funding to a company whose raison d'être is shareholder dividend and profit.

In the opinion of union members, the optimum assurance the authority can obtain is one where quality of service is inserted as a condition of the contract and where the new public service bus contracts can ensure the integration of the public bus service with the wider public transport network by encouraging relationships between the State-funded public service obligation provider and a commercial sector where service to the customer is primary. The best value for the taxpayer is an assurance that their money is going to one of the lowest subsidised companies in the EU. This value for money is further underpinned by the ability of members to provide for themselves and their families without recourse to funding from other Departments in such areas as family income supplement and rent allowance.

The Government, through the National Transport Authority, has a duty to provide a reliable, punctual, comfortable, clean and customer service-orientated public transport bus service for the citizens of the State. This service requires the ability to encompass ticket integration, passenger information and ease of transfer. While market forces and the requirement to make a profit for company shareholders may derive from conditions facilitated by the provision of modern infrastructural enhancements, the essential social needs of the community, for example, public transport, are the responsibility of Government. It is the role of the Government of the day to provide affordable public transport for its citizens, not to line the pockets of private transport providers and turn semi-State employees into economic slaves.

We are debating this issue today because there will be a requirement to increase the limit on non-capital borrowing for CIE. Not doing so means we will not have a public transport service next year. In many ways, we do not have much choice but some issues relating to the filing of accounts and the delay in doing so and a business plan are of key concern because it is taxpayers' money and it is essential we make sure this company is run in a way that is transparent, efficient and delivers the best possible service for the money available.

The managerial and funding difficulties cannot be disconnected from the general economy. Indeed serious losses have been posted since 2008. In 2009, there was a loss of €77 million. People have lost jobs and there are fewer people using public transport. There has been a not inconsiderable increase in the price of fuel by almost 25% since 2008. It is a very difficult thing to balance at a time when subventions are being reduced. The troika spoke to us about the cost of living but the cost of public transport is directly related to the amount of subvention that can be made. It is quite difficult in a country with such a dispersed population to provide a service in an economical way.

We are paying the price for the way we have allowed our settlement strategy to evolve with land rezoned based on who owned it rather than a good planning model that looks at linking land use and transportation. If anyone thinks there is no economic and opportunity cost in terms of services being provided, they should think again because that is at the heart of much of the unsustainability of delivering a public transport system. I had to laugh when I heard a Fianna Fáil contributor criticising the Government. The Deputy may have been right in doing so but it is a case of the pot calling the kettle black when they talk about favouring road over rail and other forms of public transport when that has been the case for many decades.

If one was to look at how we can make CIE viable, one initiative, which is major and costly, would have long-term returns. The Minister can probably guess the one I will pick out. It is the interconnector. If we can network these services, for example, our rail services in Dublin, we make the services viable outside the city because the surrounding counties, where there is good rail transport, become viable in both directions. I campaigned for the doubling of the Maynooth rail line for many years and it now functions very well and gives a solid return because it has a peak in both directions. It is not just one area that would benefit from something like the interconnector. It would deliver the kind of game changer we need to bring the kind of income into the company that would then be able to deliver services in areas that are less commercially viable otherwise. There is a potential all-round gain and I hope this can be looked at again because there is such a strong business case for that one project. Although it is a large investment, it would make all the difference.

I have questions in respect of the sale of the asset around Spencer Dock. It is important for us to know how it is intended to use the income from that. There is clearly a very large pension deficit of approximately €175 million. It is a bit ironic when one considers that more than €1 billion was put into the pension fund of the banks when there was no obligation to do so, yet we see companies like Aer Lingus and CIE with very large pension deficits where there would have been an obligation because of their connection to the State. It strikes me as both strange and ironic.

The issue of fares is very important. We have potentially reached a tipping point. People talk about fares being a serious cost in getting to and from work. As Deputy Joan Collins noted, it is not the only reason people will need or want to use public transport but it is off-putting at a time when people's incomes are being diminished. There is a real focus on the cost of transport in most households.

It would be useful to hear the Minister's overall plan for the public transport system. If one looks at wholesale privatisation in, for example, the UK, one can see there were very poor outcomes from the privatisation of the rail service, while bus services disappeared from areas outside big cities. This is what is likely to happen here if we see the cherry-picking that inevitably takes place when services are privatised. The idea behind the founding of CIE in 1926 lay in the chaos caused by the range of private services competing against each other. The person who wanted to use public transport did not get a coherent service. The service must have coherence. The lack of a central terminus in this city is something one does not see in other countries where there are thought-out transport systems and people automatically know where the service starts and finishes. The lack of this has not helped. The introduction of the Leap card has been an improvement in recent years.

Transport connection is just as important an issue. It could be demonstrated in a real and substantial way which would provide a return not only for the years immediately after its introduction, but for decades to come through the construction of the interconnector. I hope this issue can be revisited because it would be central to making public transport commercially viable.

I call Deputy Anthony Lawlor who will share time with Deputy Frank Feighan.

The Bill will provide an increase in the overdraft facility of a company of up to €300 million for its day-to-day running. If a private company went to a bank and sought to increase its overdraft from €107 million to €300 million, the door would not even be opened. One must analyse it from the perspective that it would not be tolerated for a private company without a proper business plan or strategy. Therefore, CIE should come here on its hands and knees and be extremely grateful for what we are doing in this legislation.

I have several questions with regard to the overall management of CIE and that of Iarnród Éireann, Bus Éireann and Dublin Bus. In the past ten years CIE has received €3.25 billion and one must ask on what has it been spent and question the management and workers. Over the years the management of CIE has failed to deliver the value required by the customer. The customer should ask these questions because it is the customer who pays increased fares and subsidises many of the work practices and the poor and bad management which exists in CIE. Would it be worthwhile to bring its board and management before an Oireachtas committee? The management makes decisions which cost the State, taxpayers and users of the company the money to be paid.

Is CIE fit for purpose? In answering this we must examine what is happening in CIE. Fare increases were recently introduced across the board. If one removes the public service obligation and examines the routes on which the companies actively compete with private companies, one sees a significant difference in the fares charged. I will be a little parochial with my example. One can travel from Naas to Newbridge at a cost of slightly more than €5 with CIE. One can make the same journey with a private bus company for €2. This private company does not receive any subsidy or subvention from the State, but CIE cannot compete on an equal footing and one must ask why. This brings one back to the management and workers.

I always welcome capital spend by CIE on improving the quality of the facilities used, including the rail tracks and carriages and buses. However, private companies do the same but receive no subvention. I welcome the real time passenger information display signs which are now beginning to appear in counties close to Dublin. Last night, a tragedy occurred on Dawson Street which meant a curtailment of services. Shortly afterwards the display boards showed a notification that buses would not be running. However, after 8 p.m. everything went blank and people did not know what was happening. No information was available. A tool was available to provide information to customers but management failed to use it.

The town of Kilcock was bypassed and most public and private buses do not go through it, but we will vote on increasing CIE's overdraft facility to up to €300 million and we have increased its subvention this year by almost €36 million. The taxpayers of Kilcock pay to help keep the companies operating but receive no service. Kilcock is a small growing town and if the number of bus services were increased, people would use them. They feel they are not getting value for the money they pay in tax because it goes to CIE but they receive no benefit from it. Deputy Catherine Murphy welcomed the increase in services to Maynooth, but three miles down the road a rail service operates on a single line.

I have my reservations about increasing an overdraft for a company which has not proved it is justified. As I stated, if it were a private company going to a bank seeking an increase in its overdraft facility on a day-to-day basis, it would not be entertained. One must question at all stages the management of the company and whether it uses taxpayers' money in the proper and right manner and whether it gives a proper account of where the money goes. In future, we need further and improved scrutiny of where our taxpayers' money is being used. I have received many e-mails today from people with regard to the respite care grant. All they seek is €22 million and we are giving in increased subvention of €36 million to CIE. One must question where one puts one's money and if one does not receive proper value for it, one doubts whether it is worth investing.

On a point of order, a number of speakers from the Opposition spoke about the importance of public transport but I note for the past ten minutes no member of the Opposition has been in the House to discuss this important Bill and the future of public transport in Ireland. Therefore, I wish to call a quorum.

Notice taken that 20 Members were not present; House counted and 20 Members being present,

Debate adjourned.