We are now dealing with scrutiny of COM (2004) 139, COM (2004) 142, COM (2004) 143 and COM (2004) 144. With us from the Department of Transport are Mr. Dermot McCarthy, Ms Orla Corrigan and Mr. David Garland. Members have already received copies of the briefing notes and have requested an opportunity to discuss any of the problems that might arise from these draft regulations.
Scrutiny of EU Proposals.
I will give a brief outline. I have given a note on subsidiarity to the Oireachtas Joint Committee on European Affairs. My colleague, Orla Corrigan, will outline the subsidiarity issues.
The four draft directives are known as the EU third rail package. They are a further development of the regulatory framework for the European rail sector being pursued by the European Commission. The rail sector is seen as being of strategic importance in driving and supporting the internal market.
In 2001, as part of the first rail package, Directive 2001/12/EC built on a previous directive facilitating agreements between train operators to provide international services and provided for limited opening of the market for rail freight services. The directive established the trans-European rail freight network, a series of designated rail lines across the EU. In Ireland, the only line which forms part of this network is the Cork-Dublin-Belfast line. Under the terms of the directive, from 15 March 2003 any railway undertaking established in the EU that wishes to provide international rail freight services on the trans-European rail freight network must be given access and transit rights on the rail lines that form part of that dedicated network to allow it to provide those services.
On 16 March 2004 the European Parliament and the Council reached agreement on the second rail package of legislative measures which aims to enhance interoperability between the rail networks in member states and open up the entire rail freight market in the EU to competition. The agreed directive provides for full market opening for international rail freight services from 1 January 2006 and for all rail freight services from 1 January 2007.
At a practical level, from 1 January 2006 any railway undertaking established in the EU that wishes to provide international rail freight services between member states must be given access and transit rights on the rail networks of member states to allow it to provide that service. From 1 January 2007, any railway undertaking established in the EU that wishes to provide any type of rail freight service, including national rail freight services, must be given access rights to the rail networks in member states to provide that service.
While the measures that have been adopted and agreed to date have dealt with issues such as interoperability, safety and access to rail networks, and allow competition in rail freight services, the European Commission is now turning its attention in the third rail package to other measures to further support the integration of European railways and developing a framework for competition in rail passenger services.
The third rail package consists of four elements: the establishment of a certification system for locomotive drivers; improving the rights of passengers using international rail services; opening of international passenger services to competition within the European Union; and regulation of the quality requirements in rail freight contracts.
The draft directive on train driver certification aims to develop common rules on the certification of train drivers — somewhat similar to the car driver licence — to facilitate interoperability and improve safety on the Union's railways and also to facilitate free movement of train drivers within the European rail market.
The draft directive proposes a twofold approach to the development of a standard certification model for train drivers. A driver will have to possess a certificate issued by the railway safety authority in the member state attesting to his or her general qualifications and this will be valid throughout the Union. It will be issued on the basis of Union-wide criteria, including minimum age, professional experience and medical and psychological fitness. A certificate will also be issued by the railway undertaking employing the driver and will recognise specific training relating to the route operated, the equipment used and the operational and safety procedures specific to that undertaking.
It was proposed that the draft directive be implemented in two phases. The certification requirements will apply to train drivers assigned to international services within the timeframe 2008 to 2010 and on the basis of a report covering the first phase. The requirements should be extended to all train drivers in the second phase between 2010 and 2015.
The proposal has since been amended in the Council to address concerns raised by Sweden, Britain and Ireland to allow a member state to request a derogation from the provisions of the draft directive for drivers operating exclusively on the territory of that member state. The European Rail Agency may be requested by a member state to carry out a cost-benefit analysis and if the costs outweigh the benefits while applying the provisions of the directive, the European Commission may give a derogation of up to ten years. The Commission may request a subsequent cost-benefit analysis, depending on developments in the railway sector of the member state, which may result in a further derogation of a period up to ten years.
COM (2004) 143, the draft regulation on international rail passengers' rights and obligations, aims to establish rights and obligations for international rail passengers to increase the effectiveness and attractiveness of international rail travel. It aims to improve the quality of international rail services which the European Commission considers is essential if international rail travel is to compete with other modes such as low-cost air carriers. The draft regulation includes: provisions on minimum information to be given to passengers before, during and after their journeys; the right for passengers to buy "through-tickets" for the international journeys; the information to be provided on tickets and transfer of tickets; the liability of railway undertakings in cases of accidents, delays or cancellations of services; the level of damages in the event of death or injury to passengers and compensation for damage or loss of luggage; the level of compensation in case of delay of services; assistance for persons with reduced mobility; and the co-operation of railway undertakings to achieve the aims of the draft regulation.
COM (2004) 144, the draft regulation on rail freight quality, places an obligation on railway undertakings and rail freight customers to define quality requirements and to include these quality requirements in the transport contract. The regulation lays down specific quality requirements such as hand-over times, arrival times and compensation for loss or damage to goods, delays, cancellations, etc. that must be included in the contract. The regulation will apply to national and international rail freight services.
COM (2004) 139, the draft directive on market access, provides that member states must provide access to their rail networks to railway undertakings that wish to use the network to provide international passenger services. The draft directive further provides that railway undertakings operating such international services must have the right to collect passengers at any station along the route of the international service and set them down at another station, including stations located in the same member state. This right of access can be limited, however, if services between specific locations are the subject of a public service contract that complies with Regulation 1191/69, a contract between a public authority and an operator defining public service obligations and the payments to be made for compliance with those public service obligations. The economic equilibrium of the service defined in the public service contract would be affected if other operators were given the right to collect or set down passengers on that route.
In general, Ireland has supported a more progressive approach to rail on mainland Europe as being of potential value to Irish exporters. The Irish rail network accounts for approximately 1% of the total EU rail network, it has a unique rail gauge in European terms and our island status means we share a border with only one European neighbour. There is already effective integration of cross-Border rail services, with those between Dublin and Belfast jointly operated by Irish Rail and Translink. Ireland has, therefore, adopted a pragmatic approach to EU rail directives. It has supported consensus positions that emerge among other member states and sought derogations or specific amendments where proposals might impose undue cost relative to any benefit. We tried to avoid hindering the integration of mainland European rail but sought consideration of our particular circumstances, where appropriate.
In respect of the third rail package, the derogation sought and agreed at Council in respect of the draft driver certification directive is an example of our negotiating position. The original proposal to apply the provisions to all train drivers took no account of the particular circumstances prevailing in Ireland and, as such, exceeded what was necessary to achieve the objective.
We have raised no objections to the draft directive on passenger rights and obligations, Irish Rail having advised the Department that the proposals would not give rise to significant additional costs on existing cross-Border services. However, a consensus position among member states has yet to emerge on this proposal.
The proposal on rail freight quality is proving highly controversial. Continental rail operators have lobbied vigorously against this proposal and no member state has championed it. Several member states have questioned the appropriateness of the regulatory intervention proposed by the European Commission to improve rail freight quality and the application of the proposals to all, and not just cross-border, freight services.
Opponents argue that market opening for rail freight services has already begun and will be boosted as of 2007, which should be sufficient to bring about quality improvements. The implementation of the proposed directive could lead to substantial price increases and seriously distort the market by shifting freight from rail to other modes of transport. In international freight transport, which involves several operators, the liability for breaches of contract provisions is difficult to apportion between parties involved. I refer, for example, to cases where several delays incurred by different operators add up to a breach of a quality requirement. Additional Community law in this area might cause legal uncertainty and possibly jeopardise agreements with third countries and other international organisations.
In discussions to date, Ireland has indicated that there is clearly a need for an extensive debate on the regulatory approach proposed by the Commission. No significant discussion has taken place in respect of the draft directive on liberalisation of international passenger services, even though it is expected there will be some discussion in the context of the UK Presidency in the second half of this year.
My colleague, Ms Orla Corrigan, will deal with the issue of subsidiarity, on which the Oireachtas Joint Committee on European Affairs sought information.
Ms Orla Corrigan
I wish to briefly outline how subsidiarity is dealt with in the EU treaty, Article 5 of which states:
In areas which do not fall within its exclusive competence, the Community shall take action, in accordance with the principle of subsidiarity, only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States and cannot therefore, by reason of the scale or the effects of the proposed action, be better achieved by the Community.
This was inserted by the Treaty of Maastricht. The protocol to the Treaty of Amsterdam went on to set out three tests of subsidiarity, namely: does the action have transnational aspects that cannot be satisfactorily regulated by member states; would action or lack thereof by member states conflict with the requirements of the treaty; or would action at Community level produce clear benefits.
As Mr. McCarthy stated we were asked by the Joint Committee on European Affairs to consider the third rail package with specific regard to subsidiarity. In general, we do not look specifically at subsidiarity issues when negotiating the proposals that come before us. However, I will briefly outline the results of the exercise we carried out at the request of the Joint Committee on European Affairs.
We consider COM (2004) 139, the draft directive on market access, to be consistent with the principle of subsidiarity because it deals with international rail.
COM (2004) 142, the draft directive on train driver certification, is more complicated. We thought that, as originally proposed, it could have been inconsistent because it would apply to the training of domestic, as well as international, drivers. If, however, one considers this directive from the point of view of mobility of labour, it would be fully consistent with the principle of subsidiarity.
COM (2004) 143, the draft regulation on international passenger rights and obligations, is consistent with subsidiarity because it deals with international, rather than national, transport.
COM (2004) 144, the draft regulation on quality of freight services, is partly inconsistent with the principle of subsidiarity because the proposals would apply to domestic as well as international freight contracts.
Is it correct that the proposed directive on competition for passenger services will not impact on us, except in so far as it may contribute to an improvement in transport services on the Continent? Will we be exempt from it because the arrangement in place here is between a public authority and an operator and defines public service obligations? In other words, other operators will not have the right, in the context of the third directive, to enter the market here and take over CIE's passenger services?
Does the directive relating to rail freight impact on Ireland? One would have thought that there cannot be a public service obligation in that instance. Would an outside operator be free to enter the Irish market, beginning by either operating a service outside or within the State?
There are two phases in the proposal on the liberalisation of international services. The Commission proposes that international services be liberalised in order that any operator providing an international service would be granted access to the network. That operator must meet safety requirements and access charges.
Cabotage requires further discussion. This term refers to the capacity of the operator to pick up in member states, for example, in services between Brussels and Cologne whereby people leaving Brussels might disembark at Liege and the train would proceed to Cologne. The Commission argues that this practice would be permissible in order to make international services viable. The only situation in which it might not be permissible is where a public service obligation operates between buses in Cologne and the introduction of the international service would undermine the financial viability of that service.
If any operator wishes to provide rail freight services on a commercial basis here from 2007, it would have right of access but there would be problems associated with access charges, safety, and various other factors. It would be allowed to enter the market but would have to jump other hurdles. No rail freight operator has expressed interest in entering the Irish market. We have a unique rail gauge and a limited network so there are barriers, other than those of a technical and legal nature, to entering the market.
Are there not technical, legal and safety barriers within every member state?
Yes.
Are we exempt in any way from the freight directive?
No.
Am I incorrect in stating that the third rail package is not the same for passengers? In other words, it does not offer the same level of liberalisation.
No, the third rail package involves only international services. The only permissible action on domestic services would be where one provides an international service. Then one might be allowed to collect and set down passengers as long as that activity did not impact on public service obligation services.
The primary service that would be allowed to proceed would be international in nature. To return to the Brussels-Cologne example, the purpose is to provide services between Brussels and Cologne, not Brussels and Liege.
CIE often provided train services to Paris from Dún Laoghaire, via the ferry. Does such a service technically come under this measure?
No, this would be more implied. It reflects our negotiating position in respect of rail services because Ireland is an island. This is a slightly academic discussion as far as we are concerned. It is primarily aimed at where there are rail connections between mainland European states. This is why we are reluctant to drop a blocking attitude in our domestic interest, as it is primarily of interest to rail-connected continental European states. Apart from cross-Border services, this measure may not have a large impact on Ireland.
Is Mr. McCarthy saying it will not be the cause of introducing competition in rail services in Ireland?
No, not the third rail package. Unless a company decides it wants to provide services between Belfast and Dublin, it would then seek cabotage services between Dublin and Dundalk as part of this. There are many other hurdles that a company would have to overcome before this would happen.
I am sure we are dreaming them up as Mr. McCarthy speaks.
What hurdles does Mr. McCarthy envisage?
I am sure Mr. McCarthy does not want to give away any negotiating position he might hold.
Ireland has a unique rail gauge. Continental rolling stock cannot operate on Irish railways without serious modification. Entering the Irish rail freight market entails significant cost implications for a company. If, for example, a company had French rolling stock, it could not be readily converted for use on the Irish rail network. Any rail undertaking seeking to enter the Irish market will face significant costs as there is not an amenable second-hand market in Irish rolling stock.
A monopoly is allowed to continue because of the unique position of our domestic rolling stock, allowing Iarnród Éireann to dominate the rail sector. In recent times it has done away with several freight services, particularly on the Dublin-Sligo line which affects me most. Instead of attracting enough business to keep the lines viable, Iarnród Éireann seems to have run away from providing services. What can be done to ensure Iarnród Éireann continues to provide freight services in the State, rather than using its monopoly position to dump freight services on to the roads?
Thereby ensuring no other rail undertaking is able to enter the market.
The freight market, at a legal level, will be opened up to competition in 2007. From that date, it will be permissible for any rail undertaking to enter the Irish market. However, this does not mean there will be competition in the domestic rail market. I identified the other issues that may have to be addressed. The legal framework provides for an undertaking, if it so chooses, to enter the domestic rail freight market. However, having the right to enter does not necessarily mean rail undertakings will enter the domestic market.
I agree but this is where it is wrong. Iarnród Éireann controls the rolling stock and the rail lines. If the rail gauge is not similar to that available on European lines, the monopoly is then to the detriment of the domestic general freight business. Is there a way that a rail undertaking, wishing to compete in the market, would be entitled to receive a subsidisation? An indirect subsidy is already available to Iarnród Éireann. Is there a public service obligation available with regard to rail freight as there is for air traffic?
The subsidisation of rail freight is a complex issue.
It has been done in some states.
Yes, with capital investment and other supports provided by various states. In respect of rail freight in Ireland, the direct comparison with other states needs to be treated cautiously. Ireland has a different industrial base to that of other EU member states. A classic rail freight market would service high volume, low value products. Coal is the classic example of a product ideally suited to rail freight over long distances. However, Ireland's industrial base is slightly different. Some 65% of goods entering Dublin Port are destined for locations within an 80 km radius of the port. This may not necessarily be amenable to rail freight.
Taking account of the limited rail network and issues of connectivity, the contestable market for rail freight may be small. Having said that, Iarnród Éireann has made significant efforts to grow the market where it has a competitive advantage over road hauliers in recent years. For example, in the past four years it has grown its freight tonne-kilometres by approximately 100 tonne-kilometres. Irish Rail has difficulty competing in areas where road hauliers have significant flexibility.
The Department is prepared to listen to views on subvention. The Minister has met the Irish Exporters' Association and, this morning, officials met IBEC-West to discuss the issues involved. Care must be taken that significant value added was associated where we intervene in subvention. With the funds available to us, there is a significant demand for additional passenger services with an associated clear value. In the first instance, it appears that the priority and the significant value where State resources are available would be to subvent additional passenger services rather than freight services. There are several complex issues at play and unless one was sure of a result, one should be cautious in treading there. The Department's general view on intervening in this area is that it is a complex issue that requires ongoing consideration.
In general, I am in favour of competition. However, I am not sure how suitable it is for the Irish rail sector. If the liberalisation of the domestic market is not visited upon us by the EU because of different rail gauges, it is then within the Government's competence to introduce competition, should it so desire. It is not fair to simply blame the EU. Am I correct that Mr. McCarthy is saying that we are happy for Europe to proceed with this measure as long as it does not bother us?
I would not put it like that.
What he is saying is that we do not have to express concern about this measure.
We would express concerns over issues such as the proposal on driver certification. We have sought a derogation of this because it will only lead to significant additional costs being added to our rail system, with no benefits forthcoming. Ireland accounts for only 1% of the overall network, it is an island and is, therefore, not connected. This is a more significant issue for mainland Europe. Ireland will follow a consensus position among member states and seek appropriate derogations prudently.
That is big of us.
Was Mr. McCarthy a member of the diplomatic service?
I am concerned at members' comments on competition. Before we rush headlong into the idea of competition on the railways, we might learn a few lessons from the British rail experience. People seem to think that competition per se is good. If one considers experiences in other countries, in some instances, particularly transport, it has been a disaster.
What are the implications of the second rail package for domestic rail freight? I take the Chairman's point that he would like to see improved rail freight services, as would Iarnród Éireann if it were adequately funded. Understandably, given the inadequate funding currently provided, it concentrates on passenger services but would be very interested in becoming involved in rail freight.
Regarding the economics involved, the sums can clearly be done in different ways. If one is directly comparing the cost of road freight with that of rail, the latter may be more expensive. If, however, one considers the external costs in terms of wear and tear on the road system — which is quite considerable with regard to HGVs — the social impact in towns and villages of heavy loads passing through, etc., the sums can look quite different. I wonder how the Department does those calculations.
When the committee previously considered this matter, it discovered that in many other European states there are various incentive schemes, such as tax breaks, to encourage the movement of goods by rail. There are no such incentives in this country. What is the current situation regarding the directive, under the second package? Is there concern about those incentives and whether they might distort the market? Mr. McCarthy referred to the likely implications of that second package for Ireland. What is the position regarding private concerns operating rail freight services in Ireland? The provision of such services would not necessarily be a bad thing and would probably be welcomed by Iarnród Éireann. What is the legal position regarding access to the rail tracks?
I would also like information about the safety elements in the third package. Almost two years ago the committee dealt with the Railway Safety Bill, which was stalled on Committee Stage. We are still waiting for it to return to the Dáil for Report Stage. Is the package fully in compliance with the directive or will any further amendment be required on Committee Stage?
With regard to the negotiating position of Ireland, the second paragraph on page 4 of the summary document states, in respect of the third rail package, that the original proposal to apply the provisions to all train drivers took no account of the particular circumstances prevailing in Ireland and, as such, exceeded what was necessary to achieve the objective. Can Mr. McCarthy explain exactly what that means? Is he speaking of the points he made earlier, with regard to Ireland being an island nation? What are the particular circumstances to which he refers?
Regarding the proposal on rail freight quality, Mr. McCarthy says that no member state was leading the campaign in this area and that the proposal was going nowhere. Why is that the case? I would have thought there would be some concern with regard to safety. Why is nobody taking it up?
Regarding the reference to not taking account of our unique circumstances, our concern was that fewer than 5% of Irish Rail drivers are involved in cross-Border services. The requirement in terms of driver certification is quite specific with regard to training. For example, there was a requirement involving the driving of electric trains. We have the DART, so most Irish Rail drivers would not require that training. We were concerned that, given the relatively small pool of drivers and the fact that they would not be involved in cross-Border services, we would have imposed on us training requirements which bore no relation to the actuality of domestic rail drivers providing services in Ireland.
In light of the nature of service within Iarnród Éireann and the fact that drivers remain in one company for significant periods, the issue of mobility would not necessarily arise. We were concerned that the directive, if applied to all drivers, would significantly change the training protocols within Iarnród Éireann and place significant additional training requirements, which bore no relationship to the reality of driving on Irish railways, on the company. That is why we sought the derogation.
Regarding freight quality — I do not want to go too far in terms of speaking for other member states — it appears that this is a Commission proposal. The argument it makes is that there is a mismatch between the negotiating position of contractors with rail freight providers and that the latter do not provide quality incentives. The example given is that, in 1999, 7% of cross-border rail freight in continental Europe was up to 24 hours late. Member states are concerned that this may have the effect opposite to that intended, and that the Commission is interfering — if I can so describe it — in a contractual relationship, that the delays associated with freight, for example, could have a variety of reasons unrelated to the actual operator and that draconian measures would be imposed in respect of freight providers and would add cost to rail freight, drive more freight on to the roads and not achieve the results sought by the Commission. Accordingly, no member state is in favour of the proposal. We wait to see what changes will be made in the proposal over time.
Regarding the impact of the second rail package on Ireland, once the directive is transposed any private rail freight operator could legally enter the Irish market. Two years in advance, there does not appear to be any great interest, although we may be surprised and someone may enter the Irish market. However, it appears that not many people are expressing interest in providing private rail freight services on the Irish network. Any such operator would have to be licensed by the Railway Safety Authority in the first instance in order that various safety requirements be met. Agreement would also have to be reached with Irish Rail in respect of access to the network and when the trains would be operated. One would not want someone claiming the right to provide a freight service along the DART line at 8.30 a.m. and shutting down the line for two hours before and after that time. There is a framework for addressing those access issues. At present, it does not seem that anyone is interested in offering the service but we may yet be surprised.
What is that framework?
The operator would have to be licensed by the Railway Safety Authority.
What is the framework for getting access to the track and coming to an agreement on a timetable?
Operators would have to come to an agreement with the infrastructure manager, who would allow them access to various slots. As the manager is Irish Rail, operators would have to negotiate with the company regarding the provision of a rail freight service between, for example, Galway and Dublin and negotiate appropriate slots and fees. As there are already extensive rail freight services on the network, it would be important for any operator to access the services in a manner which is safe and consistent with the other services provided on the network. For example, most of the Irish rail network is single track, with double tracks operating only in respect of services to Cork, Dublin and Belfast. Therefore, one would have to be careful about trains operating on a single track.
Certain European countries provide incentive schemes for rail freight and the Department is open to a case being made in this area. However, we have a different industrial base to that of other European countries so direct comparisons may not, depending on individual circumstances, be appropriate. Rail freight tends to be high volume, low value and that is where it generally operates on the Continent. In light of demand, there is a clear value in subventing, as required, additional passenger services. If we were to subvent rail freight services, it could have a knock-on effect on passenger services. We would need to be sure of the value added as a result of intervening in the freight market.
The Department has met the Irish Exporters Association and is discussing the connectivity associated with the ports with the Department of Communications, Marine and Natural Resources. We are willing to listen to the various views on this issue but it is complex and requires careful consideration.
I am not responsible for safety issues. As there is a separate rail safety division within the Department, I cannot offer an opinion on an area for which someone else is responsible.
I am interested in the issue raised by Deputy Shortall, namely, access to the rail infrastructure in the event of a competitor suddenly arriving on the scene. Mr. McCarthy stated that the infrastructure manager is Iarnród Éireann, which leads to obvious difficulties if another carrier enters the market. Who appoints the infrastructure manager and is there a review process or is the post permanent? I am aware that the situation is hypothetical but difficulties could arise.
The position is not the same as in other countries, where the infrastructure manager is a separate entity and distinct from the rail operator. In the UK, for example, the infrastructure manager is Network Rail and in Germany, Deutsche Bahn is a separate entity from the rail operator.
I am using the aviation parallel, where the infrastructure manager is the Irish Aviation Authority. Is that scenario likely to happen with rail?
It could be considered. There is a provision under the first rail package which would allow the Department to appoint a separate infrastructure manager, if required. However, the issue would have to be considered in the round.
The separation of Irish Rail into operational and infrastructural divisions was mooted in a discussion paper produced by the Department in 2000 in the context of the general reform of public transport. In 2001, the review body, while analysing a variety of issues concerning Iarnród Éireann, also considered this question. The body's view was that there were significant issues within the Irish Rail market as it stands. Our rail network is limited and significant investment is required.
It was not considered prudent — from the point of view of safety and other issues — to separate Irish Rail horizontally between infrastructure provision. There are examples where such action has not worked very well. It was also considered that such action would take the focus off what was required with regard to the Irish rail network, which is to increase capacity, quality of service and various other matters. At this stage, we consider it prudent that Irish Rail should continue to be the provider and infrastructure manager. Should circumstances change, the issue may be worth reconsidering. On the whole, however, we do not think the separation of infrastructure and operations within Irish Rail is a wise option.
It came to my attention recently that there have been a number of break-ins in railway stations throughout the country. Is anything being done about that? There appears to be no security and money is left in the stations overnight and is not kept in safes. Several thousand euros have been taken.
That is a matter for Iarnród Éireann. We can write to the company to find out what is being done about it. I do not think it is a departmental issue.
I do not think the Department is aware of it. It is an issue that must be addressed. Considerable sums of money have been taken on consecutive weekends. It is clear that there is a security problem.
We can put that on the agenda for the meeting with Iarnród Éireann next month.
Many stations will be wiped out before the end of the month if criminals realise that there are no security systems in place.
Mr. McCarthy might respond to my question on how the calculation of the cost of rail freight is arrived at and how it compares to the cost of road freight. What costs are included in the calculations?
Does the question relate to the possibility of subvention?
Yes.
On the Continent, the traditional way the argument for subvention is supported is that there is an environmental benefit associated with rail transport.
That is not the question I asked. I am interested in how the Department compares the cost of rail freight with that of road freight transport.
That is something that is only done by those who need the service. The Department of Transport has nothing to do with that process.
Surely the Department measures the externalities.
Various statements were made on the basis of the premise that rail freight is more expensive, which, on the surface, is true. However, if the issue is examined more closely and all of the costs to the State of both rail and road freight transport are included, it is not necessarily the case that the rail option is more expensive.
When the calculations are being made, are all of the external costs taken into consideration by the Department? For example, are issues such as wear and tear on the road network, social costs and accident costs factored in? Such costs can be quite significant and should be included in any analysis of road and rail freight costs.
I do not think I ever said that rail freight is more expensive than road freight and there may be circumstances where transporting freight by rail is cheaper than doing so by road. I argued, however, that the issue of an intervention by the Department in terms of a subvention is quite complex. The key difficulties that Irish Rail has in terms of competitiveness are the lack of flexibility associated with the company, the nature of the industrial base in the country and various other issues.
The Department has not carried out a calculation comparing road costs with rail freight costs. The argument in the past — referred to in the report, Iarnród Éireann: The Way Forward, in 2001 — is that there are environmental benefits associated with rail transport. That is an issue of some debate, however, in terms of what would be those benefits. The Department has indicated that it is willing to listen to arguments associated with the question of intervention where there is a clear added value demonstrated.
Would Mr. McCarthy accept that road haulage is significantly subsidised by the State through the provision of the road network?
The State also invests in the rail network. The key issue with road haulage, which I accept, is that road hauliers and road users do not pay fully for the costs associated with the infrastructure. That, however, does not solely apply to road hauliers, it also applies to road users in general. It is a complex issue and dealing with it is not straightforward because of the fact that many parties use the road network.
The State also invests significantly in rail infrastructure; it does not only invest in the road network. The key difficulty is the nature of the industrial base in Ireland, where significant flexibility, just-in-time delivery guarantees and so forth are required. Road haulage provides that kind of flexibility, which is difficult for the rail system to match. We must be careful with the arguments, given the nature of our rail network.
As there are no more questions, I thank Mr. McCarthy, Ms Corrigan and Mr. Garland for coming before the committee to explain the regulations. I do not think they will cause major problems for Ireland or Iarnród Éireann.
The joint committee adjourned at 3.30 p.m. until 2.30 p.m. on Wednesday, 18 May 2005.