I thank the Chairman for the opportunity to come in here today for the first dialogue of the session. I want to update the committee on my Department’s budgetary position in 2016 and to hear the committee's views ahead of budget 2017 on funding priorities for the Department of Transport, Tourism and Sport. With an overall budget allocation of €1.74 billion this year and a multi-annual capital commitment of €10 billion over seven years as set out in capital plan, significant resources are being allocated to target investment in our transport network, to support the development of our tourism sector and to promote sport at all levels. When we last met in June, we had a very useful discussion on the 2016 budget. There have been quite a number of developments in the intervening period on which I will be happy to update the committee. In terms of expenditure across the Department, I am pleased to note that we are spending ahead of target. This is a direct result of excellent progress on major infrastructure investments such as Luas cross-city and good progress in addressing flood damage on our national and local roads. On flood repairs, I expect to be back here before the end of the year with a formal request to channel the additional €96 million for flood repairs to my Department’s Vote.
It is clear that across all five programmes there are various pressure points in terms of funding this year. It is a natural consequence as the economy emerges from the crisis that demands are growing for improvements to our existing transport system, particularly in terms of public transport provision, which is one sector that has suffered as a result of fiscal constraints. Our roads programme is still catching up with the care and maintenance requirements that have built up over recent years. I do not need to tell colleagues that the state of our roads is not what it should be, despite incremental increases in funding over recent years. The public private partnership, PPP, roads programme represents a significant proportion of our roads investment, and I am pleased at the progress being made there. The Department’s maritime programme is relatively modest, but the investment, especially in the Coast Guard and Commissioners of Irish Lights, are vital to the safety of our seas. The sports programme grew significantly this year given the additional resources required for the Olympic effort and also reflecting the significant enhancements under way at the national sports campus. Tourism has continued to deliver increased numbers and revenue this year, and the modest State investment in this vital sector represents an excellent return.
Looking ahead to the budget, we have submitted an initial bid to the Department of Public Expenditure and Reform and I am in discussions with my colleague, the Minister for Public Expenditure and Reform, Deputy Paschal Donohoe, about this. Clearly, the overall financial pot or fiscal space available to Government is not adequate to satisfy all the competing demands of my Cabinet colleagues. However, I am confident that the priorities I have identified and will identify for investment in the transport, tourism and sport sectors are required and that the budget will deliver increased funding for those vital sectors. As we discuss each of the programmes individually, I will set out some of my priorities, many of which are well rehearsed and well known. Equally, I am very interested to hear the committee’s views on funding priorities for 2017 and beyond.
It is pretty timely that I am here today because yesterday morning I and the Department had our first meeting with the Minister, Deputy Paschal Donohoe, about this. It was one of a series of pre-budget meetings that we will be having in the next week or so. If there is to be a real dialogue, I am very happy to take anything productive from this meeting to the meetings in the weeks ahead and to see if we can include them in the Estimates process.
I will address the particular speaking points I have for the land transport issue. As members know, land transport is by far the largest programme in the Department’s Vote. It represents 80% of the overall budget. A large proportion of this is capital investment. The main components of the programme are roads improvement and maintenance funding, with an overall budget of €720 million, the public transport investment programme at €347 million, and public service provision payments at €250 million. The programme also includes provision of €13 million towards the smarter travel carbon reduction programme and operating costs of the national vehicle driver licensing system at €15 million. As mentioned at the outset, spend is ahead of target on this programme, mainly owing to the final phases of construction of Luas cross-city, which is very capital intensive, and the activities being undertaken at local authority level to repair flood damage, for which we have secured an additional €96 million over and above the Department’s budget allocation.
As the economy recovers, the demand for and associated costs of increased service level and quality grows. Fiscal constraints over recent years have meant that the funding available for the land transport programme has fallen short of where it needs to be. Addressing the projected growth in transport demand needs careful planning, analysis and investment. While transport policy may be shifting towards dealing with growth rather than decline, the prudent fiscal regime in which we must operate dictates that funding for transport, like other capital hungry sectors, is likely to be more constrained than we would wish for some years to come. The existing capital plan provides for a substantial increase in land transport over the six years of the plan, increasing from €1 billion this year to almost €2 billion in 2021. This follows a significant period of underinvestment in our network during the financial crisis, which must be addressed. The additional funding provided for roads, rail infrastructure and public transport investment in the plan will enable us to reach steady State funding levels by 2020 to ensure the existing infrastructure and rolling stock remain safe and fit for purpose. Only at that point will we be in a position to begin delivering modest but important improvements to passenger transport users, the freight sector and private car users. Funds are being allocated in 2016 to facilitate the ongoing construction of the new Luas cross-city line. This major public transport project is being delivered within budget and is on schedule for completion in 2017, with passenger services scheduled to commence in the fourth quarter of 2017.
Given competing demands across the system and the continuing need for restraint, the challenge is to maintain existing levels of funding for key programmes and seek modest increases where they are justified and represent value for money. A key priority will be to ensure funding for public service obligations, including the rural transport programme, is at a level that allows the increased demand being placed on our public transport system to be met. This year’s budget provided for a 14% increase, or €28 million, to support increased public transport services. This increased funding has gone toward improving services and capacity to meet increasing demand as well as alleviating problems associated with congestion in our urban centres. We are all aware that some service improvements, such as a ten-minute DART service, have not commenced as planned. However, the additional money available to operators in 2016 has been a welcome boost and one which I hope to build upon for next year. I expect this funding will be fully spent by year end.
Following a decision of the previous Government, funding for the repair of regional and local roads has been allocated to local authorities in two tranches. The first tranche of €85 million was allocated in February to help local authorities start repairs as quickly as possible. The balance was held back and allocated in May to allow some time for the further investigation and evaluation of certain proposed works, for example on bridges. To date, €40 million has been drawn down in respect of repair works on regional and local roads already. Separately, €8 million has been allocated to Transport Infrastructure Ireland for repair works on national roads and a further €8 million has been allocated to Irish Rail for repairs to the rail network. The formal allocation of this funding to the Vote will be done by way of a Supplementary Estimate later in the year once Government is in a position to determine where savings elsewhere can be found to provide for this.
Land transport represents the largest portion of my Department’s budget. Since coming to this office, it is clear to me that despite the best efforts to find additional funding for our roads and public transport system, we are still operating well below international norms in terms of public investment in transport. The Government's summer economic statement makes it clear that capital investment in infrastructure is a key priority over the coming years. With a review scheduled next year on the capital plan, I am taking this opportunity to put down a clear marker that we require a step change in the level of investment in transport over the lifetime of this Government. A strong evidence base has been established to support this investment. It is also abundantly clear to anyone travelling the roads or rail network of the country and to anyone sitting in their cars on the M50 and other vital arteries into our urban centres that transport requires investment or it soon becomes a major impediment to economic recovery.
In that context, the key priorities for future funding for land transport are: bridging the steady-state shortfall on road and public transport, in other words, ensuring we maintain and protect the existing transport asset base and investments, particularly the road and rail networks; further improving public service obligation funding to keep pace with economic growth and enhance service provision in line with new capital investment; addressing bottlenecks and key congestion points in urban areas, particularly the greater Dublin area; and addressing the shortfall in capacity to meet emissions reduction targets by 2020 and beyond.
I will naturally be making a strong bid for additional funding in 2017, but this must be a long-term investment programme which will be sustained. While I expect some competition from other capital-intensive areas, including housing, education and others, addressing the priorities I have set out will be key to ensuring Ireland’s continued economic recovery.
