JOINT COMMITTEE ON ENTERPRISE AND SMALL BUSINESS debate -
Wednesday, 2 Jun 2004

Irish Road Haulage Association: Presentation.

Chairman

On behalf of the joint committee I welcome the delegation from the Irish Road Haulage Association. The delegation consists of Mr. Eamon Morrissey, the association's president, Mr. Seán Murtagh, Mr. Eugene Drennan and Mr. Jimmy Quinn. You are all welcome. I thank the committee for allowing me to convene this special meeting to hear a submission from the association.

The Irish Road Haulage Association is concerned at the increases in the price of oil. We all acknowledge the fact that road hauliers have played a major part in the creation of the Celtic tiger and we respect them for that. As one who has driven all over the country for many years, I have often said that anything earned in a livelihood of driving is dearly earned. It is a privilege for the committee to receive this submission.

We will allow 15 minutes to the members of the delegation to make their submission and members may then ask questions. We are mindful of legislation being discussed in the Dáil and Deputy Howlin, in particular, is under a strict time constraint.

I remind witnesses that while the comments of members are protected by parliamentary privilege, those of witnesses are not. Members are also reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against any person outside of the Houses or an official by name or in such a way as to make him or her identifiable. I invite the delegation to make the submission and I remind everyone, including those in the Visitors Gallery, to switch off mobile phones.

Mr. Eamon Morrissey

On behalf of the Irish Road Haulage Association I thank you, Chairman, for your quick response to our protest of last week. Many people do not realise that a fully loaded heavy goods vehicle does approximately 1.5 miles per litre of diesel fuel. There is a lack of commitment to enforcing the law on unscrupulous operators. The industry consists, in the main, of price takers and not price makers. The ease with which transport licences are issued only highlights the contempt which some operators have for our laws and our industry. In preparing for the future, who will cover the cost?

Ireland's transport industry was deregulated in 1986 with the promise of a fair operating pitch for those involved. To all appearances today, it seems to those involved that the industry has been left to run without any genuine commitment from consecutive governments as to how we ensure that a country so dependent on road transport has in place the necessary steps to ensure the existence of a strong vibrant industry. We have reached a point where hauliers find that in order to survive they are required to use any advantage they find available to them or are ultimately forced out of business.

Genuine operators face tough competition on a daily basis from those prepared to work from the black economy. If discovered operating outside the law the, inevitably mitigated, fines that are handed down when faced with prosecution will not justify the damage that has been caused to the industry. Unlicensed and unscrupulous operators are used by many companies today; some even say this is how legitimate operators are kept in line. The methods employed by these operators in order to cut costs do not appear to hold any real worries for the users of transport. Is it just an Irish phenomenon that we continue to ignore what is going on around us until it becomes a newspaper headline? Must we, with all that is going on around us today, continue to keep our heads in the sand while purporting to be unaware of what is happening around us?

The use of washed diesel fuel is now a business that is worth tens of millions of euro, without any benefit to the Exchequer. It can even be found on sale through service stations. The method for removing the colour dye from diesel has become so sophisticated that detection in many areas of the country is almost impossible. All fuel must at some point come from a legitimate source. Furthermore, how many importers and distributors which can supply the quantities of fuel required to keep these laundering plants in operation can be checked? Must we wait for the contamination of some town's or city's water supply by the hazardous waste created from washing diesel, before the Government or Judiciary realises that action is required immediately in order to deal with this lucrative but highly dangerous practice used throughout the country? The end result will only bring more hardship to hard-working taxpayers.

In February 1999, a long awaited report commissioned by the Government, A Strategy for the Successful Development of the Irish Road Haulage Industry, was published. The report produced what we considered to be some very grave results and only supported what the IRHA had been saying for some years, namely, that the industry was facing major problems. The report was welcomed by the industry and we eagerly awaited the implementation of the results. We continue to wait. The stark reality of the failure to act in regard to our industry since deregulation in 1986 must be seen in contrast with the speed with which the Government acted in regard to the taxi industry, which was only deregulated two years ago and where we can already see the changes implemented to deal with the problems that arose through deregulation.

There is no genuine commitment to recognise and act on the problems that are being created within the transport industry. It continually appears to the genuine hard-working hauliers that they will not receive any support in their effort to keep the country moving. Those who are prepared to take advantage of the inadequacies in our system appear to prosper to the detriment of the legitimate operator.

Our industry is long overdue the action that was given so quickly in response to the problems that arose following deregulation of the taxi industry. No country can survive today without a strong, vibrant and regulated transport industry.

Mr. Jimmy Quinn

It is appropriate that we are here this morning when the price of oil on the commercial market has reached a 21-year high. Those who think the industry does not have problems are fooling themselves.

The road transport industry in Ireland is universally acknowledged as one of the most important sectors of the economy. Almost 90% of goods are moved by road, compared with 45% in Germany and 60% in France. In Ireland we do not have options by way of inland waterway, pipeline or coastal shipping. Rail will have a diminishing share of goods movement because we do not have sufficiently long distances here to make rail freight attractive. Besides, most rail journeys need a truck at each end and the cost of handling containers is such that there is no net saving. The IRHA supports the policy of future rail investment in passenger travel as the losses in the freight sector are clearly unsustainable and represent unfair competition to the private sector.

Road transport in Ireland is dominated by small and medium sized enterprises. Some 70% of hauliers have fewer than two vehicles, 85% have fewer than five vehicles and 90% have fewer than ten vehicles. This statistic exposes the weakness of the sector when it comes to achieving rate increases. With full liberalisation of the licensing regime in the sector, many company vehicles were sold to drivers who had been employees. Where this took place drivers lost out on all the protection that employees enjoy, such as employment protection law, holidays, pensions and national wage agreements. To further complicate this, it is illegal under competition legislation for a group of hauliers working in a specific undertaking to discuss rates or conditions among themselves lest it contravene the Act. This was clearly not intended when the Act was written. The basis of the competition legislation was US anti-trust law where the intention was to stop big business acting in a cartel fashion to squeeze the consumer. Most hauliers are a fraction of the size of their customers. The Indecon report of 1999 confirmed that road hauliers are by nature price takers.

The present crisis has its genesis in a steady increase in fuel costs, from a low point of 56.16 cent per litre to the present day cost of 74.75 cent per litre — an increase of 18.5 cent or 33%. Many hauliers have not had a rate increase in that time. In addition, there were several increases in insurance and labour costs in that period. Road tolling has also been introduced without any attempt to re-balance the financial burden on hauliers. Many hauliers have postponed investment in new equipment until the outlook improves.

It takes 1,000 litres to fill a truck from empty. That costs €747.50. The Department of Finance takes €367, or 49% of the pre-VAT cost, from that fill. The vehicle in question does approximately 7.5 miles per gallon. The annual yield per 40 tonne articulated lorry comes to €24,809 from fuel tanks alone. If we add in road tax of €2,100, the total Exchequer contribution for that vehicle is €26,909. A ten-truck operator with annual sales of €1 million would contribute a sum of €269,000 to the Exchequer before he earns a cent in profits. Each one cent price increase costs that operator €6,760 per annum. The last budget increase cost him €27,716.

I will give a brief perspective of what happens in everyday life. It would take 1,300 litres of fuel to deliver a consignment of fresh beef to Rome or Madrid. Therefore, the tax on the export consignment is €477. Many of the committee's Dáil colleagues used to speak of the problem of "peripherality" and of being an "island off an island". Keeping this economy competitive is a difficult job in terms of logistics. The road transport industry in Ireland has done an admirable job in this regard. All this has been achieved with no State aid, grants or subventions of any kind. Road haulage is the purest form of competition. Access to the profession is as easy as falling off a bike. The British Government has, through short-sighted fiscal policies, reduced its market share of the transport sector from a high of 70% to 25%. We do not want the same decimation to occur here.

The issue of carbon tax must also be addressed. It is widely acknowledged that as diesel fuel is the essential raw material for the road transport industry, there will be no reduction in the consumption of fuel by the imposition of carbon taxes. Therefore, the only prospect for a reduction in CO2 emissions is the new Euro 4 and 5 engines, due out next year and the following one.

We are in the solutions business for our customers and provide solutions every day of the week. People phone us with extraordinary requests, for example, asking if we would have ten trucks ready to drive to Madrid in the morning. We get on with our business and do that.

We offer a number of solutions for consideration. We are not asking for a total rebate for all of the motoring public as other bodies are well placed to do that. However, for our members who are in possession of a valid transport licence and a current tax clearance certificate, we urgently request the Department of Finance to see a way to refund the most recent budgetary increase imposed on us, 4.1 cent per litre plus VAT. We would like to see the abolition of farm diesel in both the Republic and Northern Ireland. This is especially important given the improving situation in the North vis-à-vis the co-operation between the respective governments. We suggest the Government should give farmers a rebate cheque based on acreage or usage. This would eliminate enormous Exchequer losses, washing of diesel fuel and the subsequent black economy that funds paramilitaries. It would also eliminate the dumping of chemical sludge, a process which is a menace. As Mr. Morrissey said, some day this will cause a major problem which will cost millions of euro to fix.

We would also urge a European-wide initiative to purchase oil in euro rather than dollars. The oil companies pocketed all the currency gains the euro made against the dollar and none of the reduction in costs filtered through to the pumps. The European Union currently pays many farmers to leave 5% of their farmland fallow as set-aside. If Brazil can grow sugar cane to reduce its reliance on imported fuel through a methanol programme, surely the EU could grow crops like oil seed rape or sugar beet to provide this under-utilised resource.

It is only by the adoption of solutions such as these and some long-term strategic thinking that we can get out of our current scrape. It is no longer good enough for us to sit on our hands and wait for the next crisis before putting on our thinking caps to look for alternatives.

Mr. Seán Murtagh

My brief this morning is to give the committee a feel for what our members are saying. Many of our members feel that what they say never gets to Government ears. In many ways our members are politicians' customers because they vote and are part of the democratic process.

Chairman

I remind Mr. Murtagh that only seven minutes remain for the entire submission. He should make his points quickly.

Mr. Murtagh

The pressure on hauliers dealing with fuel suppliers is similar to what happened with insurance companies in that the cost has become much higher than it was. Many people say there are parallels between what happened in the insurance industry, not necessarily because there may be a cartel in operation but because costs have become much higher. It may now be time to look at the relationship between the oil companies as a trading entity. For example, people often comment or ask whether there is a cartel in operation. It is not helpful that yesterday The Irish Times named three companies in Galway that have been prosecuted in court for price fixing. These issues make our members nervous and add fuel to the conspiracy theory.

When we were preparing the figures I calculated the increase in costs over the past 12 months as 14%. Mr. Quinn's figures are newer and the price of fuel is increasing weekly. The net effect is 5% on the cost of most companies. We know from other surveys that this 5% does not exist and we know from Revenue that it is seeing signs of a more phoenix type activity. The danger is that many people will slip back into the black economy and what we call the phoenix syndrome.

Chairman

Just to survive.

Mr. Murtagh

Exactly. I will finish on a point made by Moore McDowell, an eminent economist. He wrote in the Irish Independent, the day after our protest, that the Irish hauliers were asking the Government to do something about its plight. He automatically assumed we were asking for duty to be removed, which as a lobby group we would have to demand. We are looking for more than that. We say that if politicians enact law, there is an obligation on them to enforce that law. This is fitting in a week where we have had many high-profile resignations from the banking sector.

Approximately three weeks ago a high-profile building company in this country was prosecuted for illegal haulage. We were disappointed there was not more press coverage of that. We wrote to the chief executive of the company and asked him what the plans were to redress the situation but the company did not even feel the need to reply to us. We consider this to be a resignation issue. The chief executive of that company allowed an illegal operation to continue for a long time and was successfully prosecuted in court, yet he is still in charge. Our members are contacting us about such issues and these are the views we want to relate to the committee. I apologise if I have gone beyond my time.

Chairman

Mr. Murtagh is welcome. His reputation preceded him.

Mr. Eugene Drennan

Much of my presentation consists of bullet points which back up our arguments. However, I would like to read my opening statement. We would like the committee to bear in mind that we strongly believe there is no need for charging trucks a toll. Tolls are becoming a trend and they constitute a large cost involving all industries, particularly small ones which are of interest to this committee. We also believe that there is by far enough revenue from private cars to pay for these new motorways without charging trucks and, by extension, people who will never use the road.

At present the Department of the Environment, Heritage and Local Government gets a substantial amount of money from the West Link toll bridge. If this percentage of toll was not taken by the Department, trucks could use the bridge for free. This in turn would free up Dublin and ensure the new tunnel is used. As it stands, we will not be using the new port tunnel to its full extent because of the cost of the West Link toll bridge. Furthermore, we have been advised that under EU law we cannot be forced to use this route because it forces us to use a monopoly.

I have circulated an extra page which was not in our submission because in speaking about a percentage of the toll it is difficult to get the current figures. This page sets out details of the original agreement on local government tolled roads. It will be seen that once more than 45,000 vehicles are tolled, 50% of the charge must go back to the Department. I am not up to date with the current agreement because it changed with the opening of the extension of the bridge. However, when the relevant legislation was brought into force, the envisaged traffic flow on the bridge was 17,500 vehicles a day. There are now at least that or more an hour, therefore, the committee can see the scale of the revenue accruing to the Department.

I will move now to page 5 of my presentation because the three previous pages are only bullet points backing up our arguments on the cost of tolls. I would like the committee to take account of those costings to see how expensive tolls will be for us and for the country.

Our position is that no tolls should be imposed on trucks over 3.5 tonnes. When one thinks of tolls in Ireland, one generally relates them to the use of toll roads as used by private cars, whether in Ireland or abroad. For the most part, private motorists use a tolled road once in the morning, or now and again when on a longer journey that encompasses a tolled road. To date, many people have not had to use a tolled road but, by and large, the general perception is that in payment of a toll — in Ireland it costs approximately €1.50 — drivers can travel on modern motorways with faster traffic and on routes that are free of congestion.

However, for the haulage sector and the end consumer, it is different. We pay a far higher rate and we must use these roads frequently. It is because of the frequency and high cost that eventually these costs will be passed to consumers. In a few examples, I intend to outline the high costs and how serious to Ireland incorporated tolls will be. This is the existing and planned tolls for Ireland. When added to the road user charges for Europe, there is a colossal cost to our competitiveness. This, in turn, will cost jobs in Ireland.

Hauliers in the Dublin area who transport containers to and from the docks are up in arms at the high cost. They are experiencing having to pay both East Link and West Link bridge tolls both for picking up a laden box and dropping back an unladen box — a box is a container. The cost for an articulated vehicle is €4.80 on the East Link and €5.30 on the West Link. This gives a total of €10.10 for two trucks, which amounts to €20.20 per journey. A haulier serving the south city would expect to deliver four containers a day, costing €404 a week, for a five-day week, would cost €20,200 in double taxation per truck without leaving the city limits. It is reasonable to expect three containers a day to travel to Intel in Leixlip, costing €15,150 per annum. Considering the size of the plant and the volume of goods being used, one can imagine what the cost would be.

Some years ago, we undertook a survey of a medium size haulier in the Limerick area. It was a point in time exercise. This entailed 13 commercial vehicles, taking note of which ones would have travelled the proposed tolled Shannon crossing during peak times and avoiding the route at off-peak times. This was a detailed survey and the result over a five and a half day week, for 48 weeks, was €63,500 annually. Another example was a section of work for a medium size haulier, Limerick based. His Dell Computer-related work meant he took 2,101 loads to Dublin last year. Within the next five years, that journey will be subject to three tolls. At today's charge of €31.80 for a return journey it will cost the company €66,800 annually, which is more than the total net profit from the trucks last year.

I will broaden all these figures to cover the cost on our exports. Dell Computers in Limerick exported by road approximately 12,000 loads last year. Of these, approximately 75% went via Dublin and 25% went via Rosslare. Some 75% will be going through three tolls in a few years' time and 25% through two tolls.

Deputy Howlin

The company will have to relocate to Rosslare.

Mr. Drennan

Those of us who live in the west fear that.

Chairman

I thank Mr. Drennan for his comprehensive submission. We are at an stage on the second interim report of the insurance inquiry, on which we have been working for almost two years. Does Mr. Drennan wish to make a written submission on the up-to-date position on insurance premiums for his industry?

Mr. Murtagh

We will take the committee up on that offer. Many of our members feel that while third party insurance premiums have decreased — reductions of 5% and 10% have been mentioned — the residue of previous increases, in excess of 200%, remains. There are still difficulties in regard to liability insurance, so we will be pleased to take the committee up on its offer.

Chairman

On behalf of the committee, if Mr. Murtagh makes a submission to us within the next seven days, we will include it in our consideration and deliberations on the second interim report which will be published in July. We are very concerned about commercial insurance for the road haulage industry. We intend to delve into this matter in the second interim report. We believe we can make progress in that area. We would like the industry to feel that we are on its side and we would like to assist in any way possible.

Deputy Howlin

I commend the Chairman for calling this special meeting. It is an extremely important issue. It demands that we focus on it as a stand alone issue and not as part of our insurance overview. Having held responsibility in a Department that included road traffic, I am acutely aware of how fundamental road traffic is to the sustainability of the economy. For all our efforts transferring freight onto rail, there is an impracticability about Ireland doing so.

I note the comment about neglect by successive governments. It should be acknowledged that they poured significant sums of money into the road system, sometimes making choices to do so above other infrastructure requirements, as we tried to develop an infrastructure for the 21st century.

There are a number of extremely important points to which we would need to return. The implications of the competition legislation, which were presented to us today, need to be examined in detail. The issue which is focusing everyone's mind is fuel taxes. We need to formulate an immediate response to the matter and make recommendations to the Government virtually immediately.

I hope the committee and the representatives of the Irish Road Haulage Association will agree that we need to act now in regard to illegal diesel. This is one item from all the submissions that would have an immediate impact. It needs to be dealt with so that there is affordable fuel, a level playing pitch for everyone and so that we do not penalise those who comply with the law. There is a very serious element involving the funding of paramilitarism and a suggestion that politics itself is being funded, North and South, by the illegal washing of diesel. I am also mindful of the environmental impact of dumping the washed substance and the chemical mix.

We can deal with the tolls roads issue and the competition issue separately. In terms of the fuel issue, one of the members of the delegation might provide an indication of what would be the implications for their industry of simply abolishing the two different types of diesel and instituting a rebate system for vouched fuel used for agricultural machinery. Has any analysis been done or is there an awareness of the impact this would have other than creating a level playing field? Would it have any impact on reducing fuel costs?

Mr. Quinn

There is a paucity of a breakdown of these figures. Revenue has just a global figure for fuel. We are trying to get the exact number to the last euro of what we contribute. The single contribution for vehicles is enormous and it is very difficult to extrapolate this to get the yield and what it is worth to the Exchequer. It should be revenue neutral. As farmers are our customers and I live on a farmyard, I do not want to aggravate anyone at this stage. It should be revenue neutral because people have a history of buying fuel, whether contractors, farmers or bona fide purchasers. From an administration point of view, customs teams are calling at marts and farmers who may have 20 litres of red in a jeep. This is inconsequential given that 35,000 litres in tankers is being transported down the road to be washed on the Border. The customs teams are concentrating on the small picture while the big money is flying out the back door. In terms of administration for customs and freeing up resources, they should be more forensic in what they do. They should go into hauliers' premises and ask for diesel receipts for the previous 12 months. There is a 27% cost to hauliers.

Fuel is the biggest single cost along with labour. Everybody should have transparent costs available. We have no problem with increasing tax compliance. We are pushing for better tax compliance in our sector, for instance, we have submitted that a haulier in possession of a tax clearance certificate should not have to renew his licence because that is the greatest bogey where hauliers can go astray. It is easier to get into the business than to renew a licence, which we regard as a fundamental error.

Chairman

Deputy Howlin's point is that we need data in order to tackle this problem on behalf of the IRHA.

Deputy Howlin

The answer related to the impact on the Exchequer but does Mr. Quinn have any view on the impact it would have on the hauliers' costs?

Mr. Quinn

It would eliminate the people on the fringes who are driving us down. In the case of a supermarket operating on below cost selling, the illegal operator collapses the market. Someone who is playing ducks and drakes with the Revenue Commissioners in regard to fuel is likely doing the same with VAT and employer's PRSI and so on. That person is on the fringe. The offices of State are finding it very hard to nail the kind of people who are dragging down the entire industry.

Mr. Morrissey

The Revenue Commissioners told me as recently as this morning that the phoenix syndrome becomes prevalent within the industry when costs are tight, that is, a company goes out of business on a Friday and reopens on a Monday. That person has a major advantage over the legitimate operator who is in business year in year out. The Department of Transport distributes haulage licences like confetti. This should not be allowed. There must be some way of telling if a person is tax compliant, if he or she is operating a phoenix system, and should not get a haulage licence.

Chairman

We are here to discuss the fuel issue. We will afford the IRHA the opportunity to come back another time to address its other problems. The fuel issue, which concerns everyone, does not seem to get any easier and cannot be controlled, regardless of who is in power because it is a wide picture. Deputy Howlin asked a valid question to which no one has yet responded.

Mr. Murtagh

All participants in the chain, starting when the oil comes out of the ground, is sold to the refinery and goes to the distributor, are able to put their costs in place because they operate in a controlled environment. Unfortunately we operate in an uncontrolled environment. The Deputy's point seems to be that we should be moving towards a compliant industry where everybody pays as they go and stays within the law. In his article Moore McDowell expected everyone in the industry to be compliant, as they are further back along the chain, to the distributors, the refineries, even to OPEC. The net gain to the economy is a more revenue compliant sector which must be more profitable for the Department of Finance.

Chairman

How much does Mr. Murtagh think has been lost to the Irish economy through the black economy?

Mr. Murtagh

I was involved in the Indecon report in 1999 with its author, Alan Gray. Everybody who spoke to him mentioned illegal haulage. I asked him as an economist if he could quantify whether it was a big issue. He said if any industry was distorted by 5%, whether below cost selling by a supermarket or illegal operation, it was enough to knock the industry off-balance. He also said that the cost to the sector is twice the level of that percentage. His report showed at that stage it was about 15%. I do not want to say it is 30% because that seems high and I cannot back it up but it is the closest estimate I can give.

Mr. Drennan

We may seem a little vague in answering Deputy Howlin's question directly as regards the percentage or the costs. It is very difficult to put a percentage on it because the wash fuel finds its way through to us without our knowing it. It comes through distributors so how much we get or not is part of the mystery, the subterfuge and the cloak and dagger behaviour inherent in this. In all my years in business one diesel pump broke down, which is unusual because they are now very sophisticated. The truck company with which I dealt sent the pump to Sweden where the company could point to my oil distributor because it was in my area. I never bought wash diesel or illegal fuel but something came into my tanks. It is very difficult to put an exact percentage on this. We have a view among ourselves regarding the percentage but I do not want to distort the committee's findings by giving it. We believe it is in the region of 10%, commercial, in our sector. It would be extremely difficult for us to quantify and prove that. That is why we are reserved in giving direct answers.

Chairman

Surely the 27% of the running cost which Mr. Quinn attributed to fuel would show up in the monthly accounts on the books of those conducting their business. Is that not so?

Mr. Quinn

There are more ways to bury money than to show it accurately. Any business that can generate invoices can create them. I could generate an invoice tomorrow for €100,000——

Chairman

I take the point.

Mr. Quinn

——and launder the cash back through it.

Chairman

It seems to be very difficult.

Senator Leyden

I welcome the president and delegation of the IRHA. When the committee secretariat contacted me last week I considered it appropriate that we have a meeting. It is far better to be inside speaking out than to be outside speaking in. I did not see much effect in the association's protest last week. This is the forum where the association should put its case, and also to the Department of Finance, from which I hope we will get a response.

There is a significant variation in petrol prices, as I noticed on my way to Dublin yesterday, when it varied from 97.5 cent per litre to €1.05 per litre. The Department of Finance is in a windfall situation because the higher the price the more it receives. If the Department stabilised it on a sliding scale and budgeted to receive a certain amount this year from fuel, it is possible that would stabilise the price. The more it goes up the more it stays at what it should have been at that point. That is simple arithmetic and could work very quickly.

Washing of diesel could and should be eliminated by whatever method, such as a refund to farmers or whatever. It seems impossible to control and is causing an imbalance in the Exchequer. Someone must find an ingenious approach to this issue. Refunds are a disaster. One must have it on direct taxation, because paper trails and refunds are difficult. It works with VAT for farmers who can claim back the VAT at the end of the year. Someone should devise a solution to that serious problem. The illegal organisations gain unreal sums of money, particularly across the Border.

Deputy Howlin

It is making a big hole in this country's economy.

Senator Leyden

In the past when I met the IRHA the main issue was roads and damage to trucks. At least that is not on the agenda, apart from the question of tolls. There has been a major improvement. Two years ago when I dealt with one of the association's drivers who was caught and jailed in Greece I wondered if the association spent enough money working with its drivers and helping them to know the whole system. It seems one can get into a truck at 23 years of age, drive to Greece and land in prison, as this man did when the manifest was not in order, and there were 6.5 million cigarettes in the back of the truck about which he knew nothing. I felt at the time there should be a proper training system for the drivers.

That is aside from the issue today. I suggest that the Department of Finance be contacted on the basis that the increase in fuel resulting from world trends should not directly benefit the Department, the savings should come down through a sliding scale to reduce the cost. It is difficult to get the Department to consider it that way. The hauliers will pass on their costs to the consumer who ultimately pays if prices go up. The hauliers are so crucial to the economy that I am pleased they are here and presenting their case, which is a good one. I hope the Department can meet their needs in some way. Enforcement is a key point.

Chairman

I ask members to confine their questions to fuel tanks because we must conclude at 11.30.

Deputy Callanan

We are delighted to have a delegation from the IRHA present and have learnt a great deal. I thought the washing of diesel was long gone but it seems to be an even bigger problem than we thought. It is alarming to think some service stations are selling it. The law should be implemented to try to wipe this out. Being a farmer I would be nervous about the refund to farmers, it would be unfair to them to have to pay out the full cost first and recoup it later. It would be helpful if there was a better way to proceed, but controlling the activity is another day's work. If the same diesel was in the yard, some people might have trucks while others might be farmers, making if difficult to control. The legislation on washing diesel should be fully implemented. That should be the starting point.

Deputy McHugh

It is not possible to deal fully with this submission this morning. Could the delegation give us an idea of how many people have been forced out of business recently as a result of the difficulties facing hauliers? I know from talking to individual hauliers and my own experience that people have gone out of business because they could not survive. Is it true that the only response the IRHA received to its pre-budget submission to the Minister for Finance seeking more generosity towards road hauliers was a 5 cent per litre increase in the cost of fuel? Has the IRHA made this submission about the elimination of farm diesel to the appropriate authorities and, if so, what kind of response did it receive, or is this the first time it has been mentioned? How will the carbon tax affect the haulage business?

Deputy Breen

The haulage industry, especially the small haulage companies in the west, provides valuable employment. Unless something is done to reduce the costs they will be forced out of business which will put many families on the bread line. I am here to support the hauliers and to hope that the committee will deliberate on their case and that some relief will be forthcoming when it submits its report to the Department of Finance.

Deputy T. Dempsey

I apologise for my late attendance but I was watching the discussion on my monitor. As Deputy Howlin has said, haulage is very important in Wexford. I empathise with the IRHA which is going through very serious difficulties. We hope to help it. The omens are not good for the price of oil, with the war in Iraq and its effect in Saudi Arabia. These are difficulties we must attempt to address on behalf of the IRHA.

Mr. Morrissey

The Department of Transport has issued 12,000 licences which suggests there are 12,000 licensed hauliers. However, this is not so. There are 4,500 licensed hauliers, so where are the remaining 7,500, since deregulation in 1986? We might assume that it is easy to put a method in place to handle washed diesel but we could be wrong. All the fuel in the south and south-west comes from Whitegate. I am sure all the fuel in Dublin comes from one major distribution point in the port. The oil that is going to be washed is not emerging in small quantities of 1,000 or 2,000 litres distributed to a farmer. It comes out in tankers and must come from a legitimate source. There is no other way to get oil. Is there any way of keeping an eye on the distributor or the supplier and make him responsible for where his oil goes or how he is paid for it?

Mr. Quinn

We prefer to deal with Departments face to face. We do not want to demonstrate on the streets. Last week's protest was a token. We could have filled the city centre to the point that one could not turn a skateboard in it. We prefer diplomacy. The French and the British have demonstrated and it is sad to have to go to those lengths to be treated seriously. If we are removed from the equation the economy stops. After three days there will be no bread on the shelves and no petrol in the station forecourts. Nothing will happen. It is an invisible force. Our traditional reaction in the past to a cost set-back was to work harder and knuckle down but we cannot carry any more weight. The working time directive is coming in so we cannot work harder and there are health and safety issues we must observe. There are no efficiencies we can further mine.

The carbon tax is relevant. We are far down the pollution list, after industry and agriculture. Someone said that more carbon dioxide comes from the mouths of dairy cows than from trucks. We have invested large sums of money in Euro 1, 2 and 3 engines and that is based on electronics. The metal is the same. Trucks today have the same components they had 20 years ago, except for the fuel injection systems and the new exhaust systems. We are as clean as we can be and the statistics we have given the committee provide a brief run down of achievements and so on. We are here today due to pressure in our ranks to make a serious statement. We do not want e-mails going to the four corners of the world from producers in Shannon, Galway or Westport saying they cannot ship their exports because they have no trucks. This is a serious issue and we cannot fool around any longer. It was difficult to contain last week's token protest. Meekness should not be seen as weakness in this instance.

Chairman

I commend the association and the committee must acknowledge that it conducted itself in a very organised and respectful way when the protest came to the Kildare Street gate of Leinster House, as I said when I met the protesters. The responsible way they conducted themselves led to the invitation to appear before this committee to see what help we can give.

Mr. Drennan

My colleague, Mr. Quinn, covered the remarks about us coming in from outside. It took us being outside the gate to get in here. Another indication of this is that a sub-committee of the Joint Oireachtas Committee on Transport is discussing tolls but did not think of inviting us to make a submission until it saw us outside the gates. It is a serious matter that our association, licensed by the Government, was not invited to a committee that directly concerned us.

Chairman

My committee did not receive a submission from the IRHA so that does not hold true for us.

Mr. Drennan

As regards being outside the gate or coming in to speak inside, it was a controlled——

Chairman

The association members are represented by Deputies here and are very close to one member present. Let us call a spade a spade.

Mr. Drennan

I am calling a spade a spade.

Chairman

We are here to look after the association's industry. We are the politicians and the delegates are the industry so can we please keep it at that level?

Mr. Drennan

Yes, but the issue was mentioned and I wanted to clarify it.

Chairman

I understand.

Mr. Drennan

In response to Deputy McHugh's question on collapses, an indication in the Shannon area was the collapse of four large haulage firms in the last three years at a cost of approximately €15 million, between freight forwards and trucking.

Mr. Murtagh

Deputy McHugh asked two questions which have not yet been answered. One was about our budget submission last year. This always centres on fuel because it is our raw material and is a large percentage cost. We submitted six requests, for want of a better word, to none of which the budget adhered. The adjustment on fuel was negative. The view of the association was that the loan we got the previous year was returned.

Regarding washed fuel, we have made a proposal to Revenue, which has pointed out some technical difficulties. The proposal is not ready to go to the Government but we are working very hard on trying to reduce consumption.

When we last appeared before this committee, Senator Leyden mentioned training. To reiterate what I said that day, there are proposals coming from Europe regarding training for drivers. We are actively involved with the Department of Transport in that area, trying to refine the training needs for the industry. Driver training is something with which we as representatives of the industry have considerable involvement.

Chairman

I thank the delegation from the IRHA for attending and for its very informative presentation. The IRHA works hand in hand with this committee, which is the watchdog on behalf of the consumer in this area. Some 40% of all our deliberations on European regulations come before this committee from the 14 Government portfolios. The matter which has come before us today is very serious and a major challenge to the industry. We arranged this meeting with the IRHA to let the industry know that.

With the permission of the association, committee members will pass on this submission to the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, who has responsibility in the area. I also ask the Clerk to give a copy of the submission to the Minister for Finance. Is that agreed? Agreed.

I thank the IRHA president and members for attending and I look forward to them assisting us further, particularly with regard to the insurance inquiry. We will do whatever we can. I ask members of all political persuasions from both Houses of the Oireachtas who have attended this meeting to be mindful of the difficulties the industry is experiencing, difficulties which have been expressed to us. Anything earned by means of driving is dearly earned.

The joint committee went into private session at 11.32 a.m. and adjourned at 11.37 a.m. sine die.