Thank you. This is the second meeting of this committee on the Baker Tilley report. I will outline again the genesis of this report. It needs to be stressed that larnród Éireann — and larnród Éireann only — identified the problem at its North Wall operation, which involved the activities of some middle and junior level operatives. As a result, larnród Éireann activated certain procedures. It terminated the employment of the three people involved. It recovered €100,000 from one of the operatives. It instituted proceedings against an external contractor. It alerted the Garda Síochána, which has since prosecuted the three former employees. It revamped its procurement and internal control procedures. It requested Baker Tilly Ryan Glennon to test the robustness of its procurement and internal controls system.
This process is exactly what would be expected of any good management and it was duly executed within the larnród Éireann structure. Regrettably, this specific issue seems to have been blown out of proportion and a generalisation has been made. We note that, since our last meeting, there has been a continuing refusal to withdraw some of the untrue allegations in regard to the Iarnród Éireann workforce being rife with fraud and collusion. This is regrettable. However, we are happy once again to put on record our confidence in the honesty and integrity of our workforce. In addition, there has been an attempt to give the impression that we cannot manage projects and are inefficient. Some facts need to be considered to contextualise the operations over the past nine years.
From 2001 to 2009, the Government entrusted Iarnród Éireann with an investment portfolio for the railways of the order of €2.7 billion. As a result, in those nine years 450 miles of track has been replaced, 570 level crossings have been upgraded, 300 bridges have been built, 14 new rail stations have been opened, DART stations have been upgraded, 35 other stations have been upgraded and refurbished, accessibility works have been carried out at 35 stations, ticket validation works have been completed at 11 DART stations, the DART fleet increased by 56 vehicles, modern commuter trains were added to the fleet with 116 new vehicles, intercity railcars were introduced, intercity carriages were introduced, new routes have been opened, including Docklands and Midleton, and Ennis to Athenry will soon be opened, and the Drogheda railcar service centre has been completed, as has the Laois train care centre.
It should be noted that there is a structure for undertaking investments which ensures money is well spent in compliance with Government guidelines. All major projects are submitted to the Department of Transport for Transport 21 funding with a detailed business case which is reviewed by the Department and external economic consultants to establish compliance with Department of Finance guidelines. Audits of physical progress with selected major projects are undertaken quarterly by external consultants on behalf of the Department of Transport. To date in the period 2001 to 2009, Iarnród Éireann has officially closed out 263 Transport 21 related projects and, of these, 97% came in on time and under budget. The net total under-expenditure on the 263 projects was more than €40 million. I suggest that in this case we have a management team and workforce that is without peer in terms of delivering major capital projects.
Supporting this viewpoint, Iarnród Éireann as a semi-State body is subject to periodic audits by the Department of Transport. In recent years, several reports have been produced which have concluded that Iarnród Éireann is operating in an efficient and effective manner. For example, an audit report by consultants commissioned by the Department of Transport concluded that the railway safety programme 2004-08 was good value and had delivered the investment projects and achieved the objectives set for the programme. A consultants' report by Booz Allen Hamilton, published by the Department in 2007, confirmed that Iarnród Éireann provided value for money to the public as a result of State subvention. The overall conclusion of the report was that Iarnród Éireann used its subvention to improve efficiency which, according to the consultants, indicated that the company was doing the right thing. Crucially, the report found that there are social benefits for the country arising from the subvention that go far beyond purely financial considerations. Without the subvention, the rail service would be dramatically less attractive and less comprehensive. In addition, subvention to Iarnród Éireann is among the lowest in Europe.
While completing the huge number of projects, Iarnród Éireann has at the same time expanded its operations in terms of passenger journeys and service levels. For example, hourly services were introduced on the Dublin to Cork route, there are eight services per day on the Sligo route, there is increased frequency for Limerick, Galway, Westport, Wexford and Waterford, DART capacity increased by 100%, and there has been expansion of commuter services, including Clonsilla to Docklands, and expansion of outer commuter services, including from Gorey, Kilkenny-Carlow, Athlone, Portlaoise and Longford. As a result of the investment and service changes, Iarnród Éireann became the fastest growing passenger railway in Europe in the period 2001 to 2007.
While the challenge of lifting the railway into the 21st century has been a significant one, prior to the advent of the current recession Iarnród Éireann acted to reduce its costs and cost reductions and efficiencies have been effected since 2002. At a time when passenger numbers increased by 30%, there has been a reduction of 1,600 staff, or 26% of the workforce, generating significant cost savings of approximately €100 million in today's terms. Such reductions in labour costs and other efficiencies have resulted in the application of new technology in signalling, communication and maintenance. This requires upskilling of our staff. While we expanded services and reduced our staff levels, there has been no official strike during this period. It was good planning and implementation that led to Iarnród Éireann reducing its cost base during the Celtic tiger period — one of the few companies in the State to do so — while at the same time increasing its customers and services.
In addition to our submission to the previous meeting of this committee and to clarify some points of information from our previous attendance, my board colleague Mr. Kiely will shortly address the handling of these issues from a board audit committee point of view. As I have detailed, having a company of the size and complexity of Iarnród Éireann and the wider CIE group brings many challenges for management. I have demonstrated for the committee that, far from the erroneous impression some would seek to create of an unfocused management at the head of a dishonest workforce, we have had a genuinely transformational era in Iarnród Éireann. It has renewed its fleet and infrastructure, developed services, and identified and addressed problems and issues as they arose.
I would like to make one further point before I conclude. My colleague, Mr. Paul Kiely, is present to explain the process of the CIE audit committee and how the board was informed. However, I should rectify my statement at the last meeting that the Baker Tilly Ryan Glennon report was circulated to other CIE board members. It was not.
