I thank the committee for the invitation to attend. I am joined by my colleagues, Mr. Maher, Mr. Desmond and Mr. O’Neill. I understand the committee wishes to discuss toll increases and ongoing projects.
Before providing an update, I would like to briefly describe the legislative duties and functions assigned to TII. The National Roads Authority, NRA, operating as TII since 2015, was established under the Roads Act 1993. It is the general duty of TII to secure the provision of a safe and efficient network of national roads having regard to the needs of all users. Under the public spending code, TII is the approving authority for national road projects and works in partnership with local authorities, which are the road authorities for all roads, including national roads. In 2015, the NRA merged with the Railway Procurement Agency. The Roads Act of 2015 added the function of securing the provision of or providing such light railway, for example, the Luas, and metro railway infrastructure, as may be determined by the National Transport Authority, NTA. The latter is the approving authority for metro and light rail projects. For that reason, I have not included any details on these projects. In September 2021, TII became the approving authority for greenways.
At the committee's meeting of 29 November 2022, the motorway toll charges were to apply from January 2023 were discussed. In the opening statement I made that day, I sought to: provide some legislative and contractual context; explain why toll charges are rising; explain what toll revenue is used for; outline the consequences of deferring toll charge increases; and describe TII’s engagement with the Department of Transport in respect of tolls. The information I provided in that statement remains valid. In the interests of making as much time as possible available for discussion, I will not reiterate that information. However, I have provided a copy of the opening statement in appendix A today.
Given the elevated levels of inflation experienced in the 12-month period to August 2022 and the consequent impact on 2023 toll rates, a Government decision was made on 28 November 2022 to request TII to seek the deferral of the application of toll increases, by agreement, with the eight concession toll roads for the first six months of 2023. In the case of the M50, TII was directed to implement this discount directly in conjunction with the eFlow operator. On 13 December 2022, TII received a ministerial direction, under section 41 of the Roads Act 1993, directing TII to introduce arrangements to apply discounts to the amounts that would otherwise be payable by users of toll roads during the period 1 January to 30 June 2023 in order that the amount payable would be the same as in 2022. The arrangements were to include agreeing to make payments to the PPP companies in connection with any shortfall in toll revenue and any increase in costs, including third-party costs, incurred as a consequence of implementing the arrangements.
The Minister for Transport wrote to the Minister for Public Expenditure and Reform on 12 December, advising that the total cost of deferring the toll charge increases was estimated to be €15.2 million and confirming his understanding that the additional cost would be met through additional allocations to be provided to the Department of Transport. A report on the deferral of the 2023 toll charges to be paid by toll road users is provided in appendix B. The anticipated cost of the deferral of toll increases on the eight toll concession roads, inclusive of advisory costs and additional administration charges, is expected to be approximately €7.6 million. The full cost to TII of tolls not collected on M50 is expected to be in the region of €7.2 million. TII will not be in a position to provide final figures until such time as full traffic figures are reported for the six-month deferral period and all reconciliations completed.
The toll rates applicable for 2024 under the relevant bye-laws will not be known until mid-September. Preliminary calculations indicate that any increase in the 12-month consumer price index, CPI, to August greater than 3% will lead to toll increases for all vehicle categories, save for motorbikes, on all toll roads. CPI figures for the nine-month period from August 2022 to May 2023 currently stand at 4.6%. It is therefore considered highly likely that toll rates will increase in January 2024. Details of projected increases are included in appendix C with the projections based on inflation assumptions ranging from 1% to 6%.
With regard to the longer-term tolling and road user charging considerations in the context of climate action obligations, policy and commitments in relation to the decarbonisation of mobility are set out in the Government’s climate action plan and sustainable mobility policy, among other documents. Delivery of these plans and compliance with those policies will require behavioural change. Research by the Economic and Social Research Institute indicates that in order for change to be acceptable, the value of fairness must be adhered to. The "user pays" principle is consistent with that value. The cost of operating and maintaining the national road network must be funded. If the funding provided by tolls is reduced, the shortfall must be made up by general taxation levied from people, some of whom are not using the toll roads. To assist the committee in understanding TII’s 15 PPP contracts, an information note is provided in appendix D.
The second topic to be discussed is the ongoing national development plan, NDP, national roads projects. An update on delivery of the NDP national roads and greenways programmes is provided in appendix E. TII secures the provision of the NDP national road projects in partnership with local authorities, within the constraints of available funding and in compliance with the provisions of the Roads Acts 1993 to 2015. Under section 24 of the Roads Act, the Minister sets such conditions as he sees fit in relation to grants from moneys provided by the Oireachtas towards capital and current expenditure of TII. The conditions that have been set for 2023 are summarised here. The Exchequer capital allocation for new roads projects is based on the following prioritisation: first, the maintenance of existing national roads assets, keeping them to a safe and robust standard; second, progression of projects currently under construction and those close to construction; and, third, progression of the major projects at pre-decision gate 2 in the public spending code. For projects further back in the development pipeline, that is, pre-decision gate 1 in the public spending code, the focus of the remaining funding should be on progressing bypasses and other projects that will contribute to achieving town centre first objective and compact growth.
Regarding new roads, the Exchequer capital grants to be provided in 2023 amount to approximately €237 million, subject to the condition that this funding is allocated toward those projects listed by the Minister, and to ensure that key capital projects are advanced to support sustainable transport, including road-based public transport. The indicative Exchequer capital allocation for new roads in 2024, notified by the Minister to TII, is approximately €145 million. In accordance with the conditions, the allocations for 2023 provided by the Department of Transport to TII for the following projects are to meet current project commitments. I will not list out all the projects but the names are in the submission. This means that the allocations may only be provided by TII to the respective local authorities to secure the completion in 2023 of current planning and design activity for those projects and not commencing further stages. For six of the projects, the relevant local authorities have requested that the allocations for 2023 be revised to allow further planning and design to continue. TII has reviewed each request and has forwarded these to the Department of Transport for further consideration. In each case, having reviewed the local authority’s request, TII has recommended that each of the local authorities’ requests be granted. TII has confirmed to the Department that the funding for the adjustments to the allocations for 2023 can be managed within TII’s existing overall allocations. TII understands that the requests from the local authorities are under consideration by the Minister.
I take this opportunity to acknowledge the achievements of local authorities and their civil engineering contractors on the N22 Ballyvourney to Macroom project, where the Macroom bypass section was opened by the then Taoiseach, Deputy Micheál Martin, on 9 December and the N5 Westport to Turlough project, which was opened by An Taoiseach, Deputy Varadkar, on 15 June.
Both projects provide significant contributions towards improving the safety of the national road network and addressing deficiencies in regional connectivity. I had the privilege of attending both events and witnessed the appreciation expressed by people who live and work in the regions which benefit from these investments by the State. I look forward to similarly positive events in the coming year to mark the completion of the N69 Listowel bypass and the N59 Moycullen bypass, which, along with the Dunkettle interchange upgrade, are the only major road projects currently under construction.
The delivery of the transport infrastructure programme is important because it safeguards and improves the performance, reliability and safety of the overall network, enabling the mobility of people and goods across the country. City and county development plans have strategic dependencies on the delivery of transport infrastructure, including national roads. The construction, maintenance and operation of transport infrastructure needs to be paid for. Tolling is a vital part of the funding required and is consistent with the value of fairness and the principle that the user pays.
When I addressed the committee in April last year, I outlined systemic challenges that must be overcome if Ireland is to deliver on its NDP objectives for transport infrastructure. Several reforms have been put in place and these are very welcome and are making a difference for the better. In my opinion, more work needs to be done to drive out delays to the delivery of transport infrastructure. Therefore, more progress is needed in the following areas: first, ensuring alignment of stakeholders, especially State bodies and State-owned enterprises; second, further reform of the State’s standard form of contract to support the viability of the civil engineering sector; and third, ensuring a reasonably stable supply of tendering opportunities for the civil engineering sector in order that capabilities can be maintained and developed.
That concludes my opening statement. My colleagues and I will endeavour to answer any questions members of the committee may have.
