The main purpose of the Bill is to enable the Board of C.I.E. to raise the finance necessary for the rehabilitation of the railway system.
The railway system which the board inherited in 1950 had, through years of neglect, fallen into a general state of disrepair, much of the operating equipment being obsolete and ill-fitted to meet modern transport needs; no locomotives had been built since 1937 and no coaches since 1939; the number of wagons built had been far short of requirements and the permanent way had been neglected. In addition to these physical disabilities, the board were faced with the ever-growing competition from road transport which threatened the very existence of the railways. The task before the board of rebuilding the railway system to meet modern requirements was indeed an unenviable one which required a high degree of enterprise, foresight and courage for its accomplishment.
The board applied themselves with vigour to the task before them. Having carefully surveyed the overall position the board came to the conclusion that nothing less than a complete renewal of the rail operating equipment would save the undertaking from total collapse, and that the undertaking could only be put on an economic footing by an almost complete change over from steam to diesel traction. The wisdom of the board in plumping for diesel traction has perhaps been nowhere more clearly illustrated than in the recent decision of the British Transport Commission to change over to diesel traction in the very home of coal.
As a first step towards the rehabilitation of the undertaking the board prepared a programme of capital works in May, 1952, costing £2,500,000, which have already been largely carried out. Included in this programme were a number of diesel railcars which since their introduction have proved their worth both in their contribution towards the financial improvement of the board and in their appeal to the travelling public.
In 1953, the former Government approved of a ten-year dieselisation and reorganisation programme drawn up by the board, which involved an almost complete change over to diesel traction, the renewal of a considerable proportion of the existing rolling-stock and the improvement of certain stations with a view to a more expeditious and economical handling of merchandise. The cost of this programme was estimated at £10,650,000. At the same time C.I.E. were authorised to proceed with the development of a suitable type of locomotive capable of burning either turf of oil. It was proposed that, when a suitable prototype had been developed, 50 of these locomotives should be constructed by C.I.E. at an estimated cost of £1,000,000.
In addition to these capital programmes, expenditure of the order of about £250,000 per annum will arise on the provision of capital additions required for the normal development of the undertaking.
Under the Transport Act of 1950, the capital borrowing power of C.I.E. is at present limited to £7,000,000. A stock issue of £2,500,000 was made in 1953 to finance the programme of capital works drawn up in May, 1952. A further issue of stock for £4,500,000 to finance part of the dieselisation and reorganisation programme was made in April, 1955, thus exhausting the board's existing borrowing power. To enable the board to finance their capital development over the next three or four years it is proposed to increase their capital borrowing powers from £7,000,000 to £12,000,000, and provision is made to this effect in Section 2 of the Bill.
As Senators are aware, the financial position of C.I.E. has already shown a considerable improvement due largely to the introduction of diesel rail cars to the system. The board expect, as a result of the more complete change to diesel traction and the general reorganisation programme, to be in a position within a few years to meet all revenue charges other than interest on transport stock. They hope to reach a position of complete solvency within a few further years.
In view of the improvement expected in the board's finances, the payment of subsidy by the State, which had come to be regarded by many as an inevitable feature of our public transport system, has now been discontinued and it is proposed that any losses which the board might incur within the next few years should be met by short-term borrowing which may be guaranteed as necessary by the Minister for Finance.
The existing statutory limit on temporary borrowing by the board is £1,000,000 and the amount which may be guaranteed by the Minister for Finance is limited to £500,000. Section 2 of the Bill provides that the board may borrow up to a maximum of £1,500,000 on a short-term basis and Section 3 provides that the Minister for Finance may guarantee such borrowing up to a limit of £1,000,000.
The prospect of a modern, efficient and self-supporting transport undertaking will be welcomed by all sections of the community. It will be particularly welcomed by the railway employees. Their position in the tottering organisation of C.I.E. in the past has not been an enviable one. Over a number of years the collapse of the railway system had been averted only by the substantial contributions of the taxpayers. The recurring deficits of the concern could only have meant for the railway worker growing insecurity and instability of employment. The reorganisation of the system should in time bring about that secure and stable employment which can only be provided by a self-supporting concern.
The main economy to be secured from diesel traction is in fuel costs, but there is also some reduction in staff requirements. The Minister has had discussions with representatives of both sides of the industry in this matter and he has made it clear that the redundancy involved should be kept to a minimum and that the problem should be approached with the utmost humanity. He has been assured by the board that everything possible will be done to minimise the problem and to provide redundant workers with alternative employment. The board expects that a number of the redundant employees will be absorbed on the construction of the turf/oil locomotives and on the carriage and wagon programme which are part of the reorganisation scheme. I have every hope that between new work and normal wastage most of the redundant men can be absorbed.
If, however, cases arise in which the board are unable to provide alternative employment provision is made in Section 4 of the Bill for the payment of compensation for loss of employment to the employee concerned. Provision is also made in Section 4 for the payment of compensation where an employee suffers a worsening of his conditions on transfer from one position to another on grounds of redundancy. Compensation is, however, confined to permanent employees and employees with three years' continuous service with the board as is the case under the Transport Act, 1950.
On 30th November, 1949, the Dáil authorised the payment to C.I.E. (1945) of a repayable advance for capital expenditure amounting to £2,462,369. In view of the financial difficulties which the present board have been obliged to meet since their establishment in 1950, there has been no repayment of principal or payment of interest on this advance. While the efforts of the board have resulted in a substantial improvement in the financial position of the undertaking, there seems to be little prospect that they will be in a position to discharge this liability in the foreseeable future. The Government have decided that in order to assist the board in their efforts to achieve solvency they should now be relieved of this burden of debt. Section 5 of the Bill provides that the advance in question should now be treated as a non-repayable grant.
The provisions of Sections 6 to 8 of the Bill are of minor importance. They are designed to remove some legal difficulties and anomalies which have emerged in the course of the operation of the existing legislation governing the abandonment of railway lines on which all services have been terminated. I do not propose to deal with them in detail now, but if there are any matters which Senators may wish to raise in regard to these sections they can be discussed on the Committee Stage of the Bill.
In recommending this Bill to the House, I am sure that every Senator will wish to facilitate the recovery now being made by our national transport system. As I have said, the primary function of the Bill is to enable C.I.E. to proceed with their capital programme which, I am confident, will lead to an efficient self-supporting public transport system so vital to our agricultural, industrial, commercial and tourist needs.