The main purpose of this Bill is to provide for payment of annual subsidy to Coras Iompair Éireann, to empower the Minister for Finance to advance moneys to the Board for capital purposes, and to make further provision for payment of redundancy compensation to railway employees whose services are dispensed with, or whose conditions are worsened because of transfer, in certain specified circumstances. The Bill also provides for writing off advances totalling £1 million made to the Board by the Minister for Finance under section 13 of the Transport Act, 1963. Other matters dealt with in the Bill relate to entry to the clerical grades of CIE, the development of property by the Board, as well as some other matters of a minor nature.
Before dealing with the Bill itself and future transport policy, I propose to review briefly the results of CIE over the past five years, the reorganisation period envisaged in the Transport Act, 1958. As Senators are aware, the 1958 Act required the Board to break even by the 31st March, 1964, and provided for payment to the Board in the financial years 1959/60 to 1963/64, inclusive, of an annual grant of £1 million. This annual grant was increased to £1.175 million by the Great Northern Railway Act, 1958, which provided for the transfer to CIE as from 1st October, 1958, without capital liability, of the GNR undertaking within the State. The Act also wrote off liabilities of CIE totalling £16.6 million, representing a saving of interest of some £600,000 per annum.
To help CIE in their efforts to reduce losses during the reorganisation period, common carrier and other statutory obligations which had restricted their commercial adaptability were removed by the 1958 legislation and the Board was given complete commercial freedom in the fixing of rates and fares. The Board was also given full discretion in the termination of uneconomic rail services. Provision was also made in the 1958 legislation for recoupment by the Exchequer of the cost of redundancy compensation in respect of redundancy arising during the reorganisation period.
In the first two years of the Board's operation under the new charter granted to it by the Transport Act, 1958, hopes were high that the Board could become a viable undertaking within five years. By 1959/60 the Board's net loss had been reduced to £709,000 and in the following year it was down to £246,000, as compared with £1,950,000 in 1958/59. Unfortunately, however, this progress received a sharp set-back in 1961/62 when the Board's loss jumped to £1,696,000, due mainly to the impact of the eighth round increase in salaries and wages and associated improvements in working conditions, which represented a 20 per cent increase in the CIE wages and salaries bill which the Board was unable to recover except to a partial extent by increased rates and fares. In 1962/63 there was a gap of more than £1 million between the additional labour costs and the counteracting fares and rates increase and the Board's net loss increased still further to £1,760,000. The most recent estimate for 1963/64 shows a net loss of £1,606,000. This shows a very marked improvement over 1962-1963 when account is taken of the additional net cost to the Board in 1963/1964 of the ninth round increase in salaries and wages—estimated at £236,000 in the last three months of the year—and of the net cost of the May, 1963, bus strike which amounted to £342,000.
Over the five year period, the Board's losses totalled £6,017,000 as against the aggregate subsidy of £5,875,000 provided for in the Transport Act, 1958. The difference of £142,000 was met by borrowing from the Exchequer and is part of the £1 million being written off in this Bill. The Board have not succeeded despite far reaching reorganisation and modernisation in achieving the target of breaking even by 31st March, 1964, and for reasons I will deal with later the target can now be seen to be unrealisable in Irish conditions. Over the five years, the Board's expenditure on additions to capital assets, excluding hotels, was £5.2 million. Interest on capital and sinking fund are, of course, included in the losses of the Board.
The preponderating element in the results over the five years is, of course, the railway. The operating deficit on the railway which amounted to £1,247,000 in 1958/59 fell to £854,000 in 1959/60 and to £477,000 in 1960/61, but rose again to £1,362,000 in 1962/63 and fell to an estimated £905,000 in 1963/64. Total operating deficit on the railway over the five years was £5,191,000 as compared with a total CIE loss of £6,017,000, but the total loss included financial charges of over £4 million, of which no element is included in the deficit on railway working.
The Road Passenger Department, of which Dublin City Services contribute 64 per cent of the revenue, continues to be profitable. The working surplus, before charging sinking fund for capital redemption and interest on capital, amounted to about £273,000 in 1963/64 as compared with £480,000 in 1962/63, with £511,000 in the preceding year and £764,000 in 1960/61 and surpluses of a similar order in preceding years. The steep decline in 1963/64 was due to the May, 1963, bus strike, the net cost of which, as I have already indicated, was £342,000, but with the continued growth of private transport it is possible that road passenger services may not in future be as profitable as in the past. Road freight transport has shown a marginal profit over the past few years but the trend has been downward and this continued in 1963/64. The working surplus on hotels and catering has increased considerably since 1958/59. In 1963/64 the working surplus, before charging sinking fund or interest on capital, amounted to about £135,000 compared with £44,000 in 1958/59. In December, 1961, a subsidiary company, Óstlanna Iompair Éireann Teo., was formed to operate the Board's hotels and catering service. In May, 1960, the operation of CIE barges on the Grand Canal was discontinued and the working loss on canals fell from £79,000 in 1959/60 to £51,000 in 1960/61 as a result. In 1963/64 the working loss was about £42,000. Vessels, docks, etc., continue to show losses which amounted in 1963/64 to an estimated £34,000.
It will be clear from the foregoing that the losses of CIE are accounted for almost entirely by the losses on the railways. The railway system continues to be the main problem of public transport with which the Government have to deal.
The Beddy Committee envisaged the reduction of the CIE railway system to a main line one consisting of approximately 850 miles, to which must be added 63 miles of the former GNR Dublin-Belfast line, but the Transport Act, 1958, left full discretion to the Board in the matter of the termination of uneconomic rail services and in the provision of substitute services, if any. The new Board adopted the policy of substituting road services for any rail services closed down. Between 1st October, 1958, and 31st March, 1964, the Board closed 621 route miles of railway line, which together with other reductions and alterations reduced the railway system to about 1,460 route miles. A number of lines have also been closed by CIE to passenger traffic and are now used for freight only or for freight and excursions. In addition, 218 stations and halts were closed down by the Board during the reorganisation period compared with the closure of some 317 stations and halts envisaged by the Beddy Committee. A number of other stations have been partially closed.
Before closing a branch line, CIE carry out a detailed analysis of the cost of operation and revenue of rail services on the branch and of substituting road services, and where there is no prospect of economic operation of the branch and where a "betterment" in net receipts would accrue by substituting road for rail transport, it is decided to close the branch.
It is significant that the lines closed, even though they represented 29 per cent of the whole railway system, carried no more than five per cent of the total railway traffic and that the revenue derived from the closed lines and stations had not amounted to more than six per cent of total railway revenue. CIE have informed me that only 35 additional buses and 52 lorries, together with 57 extra lorries during peak periods, were required to provide adequate and satisfactory substitute services. The 57 extra lorries required for peak periods are supplied as far as possible from the general CIE fleet and where a sufficient number is not available the gap is bridged by hired hauliers. The financial betterment to CIE from these closures amounted to about £700,000 per annum. If these lines and stations were still in operation the losses would be heavier by at least £700,000 and this loss would grow with increasing costs.
The Beddy Committee referred to the low CIE utilisation of rail passenger and rail freight capacity in comparison with other Western European countries and felt that it was a matter of urgent necessity to improve rail utilisation. Between 1958/59 and 1962/63 the number of rail cars and carriages decreased by 27 per cent and the number of seats by 26 per cent. The tonnage capacity of rail freight vehicles declined by 16 per cent during the same period. As the volume of passenger and freight traffic has been maintained, these reductions represent a significant improvement in the utilisation of rolling stock though because of our conditions it is still below the European average. Over the same period the number of diesel locomotives increased from 139 to 210 while steam locomotives of which there were 347 in use in 1957/58, have been eliminated from normal working. All railway services are now operated by deisel power.
As the reorganisation of the railway was the main aim of the 1958 Act and as the losses of CIE are attributable to the railway, a closer look at railway working is worthwhile. The passenger/ mileage figure, which is the true index of traffic, has despite the branch line closures, shown a slight increase from 326 million in 1958/59 to 331 million in 1963/64. Rail passenger traffic would probably have shown a decline but for the vigorous development of excursion traffic by CIE, including the introduction of day trips at single fares, the expansion of organised excursions and educational trips and mystery tours.
The tonnage of rail freight, excluding livestock, has also been well maintained. Ton mileage for freight of 187 million in 1958/59 has increased to 208 million in 1963/64, or by 11 per cent. There has been a steep decline in the numbers of livestock carried by rail over the years. The number carried in 1963/64 by rail was 379,000 compared with 536,000 in 1958/59. Carryings of livestock by CIE road services over the same period, however, have increased from 214,000 in 1958/59 to 320,000 in 1963/64, an increase of 50 per cent.
Apart from the saving of £700,000 per annum from terminating uneconomic rail services, the Board has shown considerable commercial drive, with results on passenger and freight traffic already noted. The management structure has been overhauled and decentralised and there has been a notable increase in efficiency and consequently in the public image of CIE. There have been many improvements in service such as better rolling stock, more comfortable buses, and improved passenger facilities at stations which are themselves now brighter and cleaner than ever before. The mechanisation of freight traffic has speeded up delivery and the Board claims that 85 per cent of freight traffic is now delivered within 24 hours. It has been estimated that were it not for the reorganisation carried out by the Board, including the closing of uneconomic lines, further dieselisation since 1958 and improvements in productivity, the Board's total loss would now be over £3 million per annum.
The experience over the five years has demonstrated in a practical way that the hopes of breaking even are un-realisable. The prospects have, however, been examined in a detailed scientific way in an exhaustive study made by CIE. The objectives of the study, now known as Pacemaker, included a review of the salient features of CIE, its place in the national market for transport, its activities, finances, commercial policies, engineering services and industrial relations. The two more important parts of the Pacemaker report are devoted to an analysis of the profitability of the various sections of CIE and an examination of possible alternative systems of providing public transport. Copies of the report were placed in the Library of the Houses of the Oireachtas on 9th March, 1964, and at the same time CIE undertook to make copies of the report available to the Trade Unions and, on request, to other interested parties.
I propose to give some details from the Pacemaker report for the benefit of Senators who may not have had an opportunity of reading it. I should perhaps explain that the report was prepared by the management for the Board of CIE and does not contain and was not intended to contain any recommendations for future policy.
Dealing with the railway, the report indicates that the six largest stations account for more than half the revenue and 110 stations account for 14 per cent of the revenue. A total of 410 miles of railway is wholly profitable, 300 miles are marginally profitable and the balance of 750 miles is unprofitable. In other words about half of the railway mileage is wholly unprofitable and the remainder is approximately breaking even. It cannot be assumed from this that the closure of 750 miles of unprofitable track would bring about a break-even situation. While the closure of branch lines does not generally mean loss of traffic and, therefore, shows net betterment, the closure of certain unprofitable secondary lines could, depending on the extent to which they act as feeders to the main system, have a serious effect on the remainder of the system. The discontinuance of services on all of this 750 miles would in fact reduce the railway to an unworkable unit. Nevertheless further investigation may show that it would be practicable and desirable to close further branch lines. The findings in the Pacemaker study bear out fully that the closure by CIE, during the five year reorganisation period, of 621 miles of railway line was fully justified. A further important fact revealed is that ten major traffics account for 70 per cent of rail freight tonnage and 50 per cent of rail freight revenue and are accounted for by as few as twenty firms, which means that rail freight transport is in an extremely vulnerable position.
The Dublin city bus services have overall profitability and CIE estimate that they contributed a cross-subsidy of £380,000 to the remainder of the undertaking in the year 1961/62, which represented an average cross-subsidy per passenger of 0.37 pence or 8.2 per cent of the average fare paid.
Dealing with the bus services, the report pointed out that of the total of 79 Dublin city bus services operated by the Board, 35 services operate at a loss; 8 are marginally profitable while 36 services show a profit. As few as 21 services account for about 80 per cent of the profits. There is, therefore, substantial cross-averaging within the Dublin city services. Of the 24 provincial city bus services operated, 13 are operated at a loss and 5 are marginally profitable. The profitable services are, however, sufficiently viable to enable the provincial city services as a whole to be regarded as breaking even but no more.
234 provincial road passenger services are operated by the Board and, of these, 73 services are wholly profitable, 9 are marginally profitable and the remaining 152 services are unprofitable. The provincial road passenger services as a whole are only marginally profitable in that they contribute only 1 per cent to overheads and other unallocated costs against a required 4 per cent to break even.
There are 141 road freight depots and of these almost three-quarters give rise to only 10 per cent of the total road freight revenue. The seven largest depots account for 51 per cent of the revenue. Road freight services combined — which comprise railhead, scheduled, livestock, and other services—are not fully profitable in that they contribute 11 per cent towards overheads and other unallocated costs against a required 26 per cent to break even.
As I have already mentioned, various alternative systems of providing public transport are examined in the report ranging from the present system through a number of different combinations of rail and road to an all-road system. The report shows the operating costs for each system and the additional capital requirements for a changeover to another system. The conclusions to be drawn are in effect that no public transport system incorporating a railway can pay its way; that there is no real alternative to the present system of public transport other than a planned complete changeover to road transport; but that the capital cost of the changeover would be such as to rule it out as a practical proposition.
In considering the future legislative provisions for CIE after the expiry of the relevant provisions of the Transport Act, 1958, the Government had in the first place to consider the position of the railway. The experience over the five year reorganisation period and the Pacemaker Study disposed finally of the hope that either the railway or the undertaking as a whole would be put on a self-supporting basis. Moreover the findings of the Pacemaker Study showed that while a complete changeover to road transport could possibly yield a public transport system which could carry on without operating losses the enormous capital required and the very heavy staff redundancy would be such as to outweigh the advantages. The Government had also to consider the value of the railway system to the country. It represents a vast national investment and offers advantages many of which could not be provided by road transport. This is particularly the case for tourist traffic and for peak traffics of various kinds. The Government have decided, therefore, after very full and careful consideration, to preserve the railway system subject to such further concentration and reorganisation as may prove practicable and desirable, and to provide a fixed annual subsidy with the aid of which the Board should be expected to break even.
I should perhaps digress for a moment to analyse the fundamental reason why a railway system cannot be operated profitably in our circumstances. Of course it is a fact that railways in most other countries also show losses of varying amounts but there are special difficulties for a railway in Ireland. The main item of expenditure on a railway is the high cost of providing and maintaining fixed capital overheads. The cost of maintaining the railway line, stations, signal equipment, rolling stock etc. is very largely fixed and is influenced very little by the volume of traffic.
In Ireland we have a relatively sparse population and the main centres of population and industry are near the coast, particularly the east coast, and the country does not, therefore, yield the density of traffic in either passengers or freight which could provide a reasonably high level of utilisation of the equipment and staff. Our present mileage of railway line represents 51 miles per 100,000 population, as compared with an average in 1962 of 39 miles for twelve representative European countries. A further factor is that, principally because of the double handling involved, the railway is most effective and most economic for longer distances. We have no railway journey in this country which could be described as long by any international standards.
Further handicaps are the absence of large homogeneous traffics such as coal or ore, which are particularly suited to railways, and of the long distance transit traffic which is a feature of much continental railway operation. The number of miles of railway line in this country in 1962/63 per £1 million of gross national product was 1.8 miles, compared with 0.65 miles in the United Kingdom, 0.57 miles in the Netherlands and 1.13 miles in Italy, a country in which there are a great number of poor people. The mileage of railway line in this country in relation to the country's income is, therefore, still large.
The fixed subsidy of £2 million per annum, which will be subject to alteration in the light of circumstances at the end of five years, has been calculated after careful examination of estimates supplied by CIE. It represents what the Government considers to be a realistic estimate of the minimum subsidy with which CIE can get by, on the basis of continued effective management, increased efficiency and productivity and careful husbanding of resources. When this Bill becomes law, I shall direct the Board to make a further tremendous sustained effort to secure and retain traffic and to reduce costs, in the hope that the Bill's subsidy provisions be over-adequate. The Board accepts that the subsidy is not a permitted loss but an estimated covering of a deficit.
Between 1949/50 and 1958/59, £11 million was paid to CIE and the GNR in the form of subventions to cover operating losses. In addition, amounts totalling £5.6 million were paid in the same period to cover interest on stocks, and this gives an average of £1.66 million a year paid to the railways over the period. This figure of £1.66 million compares with the subsidy of £2 million a year now proposed. Taking into account the fall in money values over the period, the increases in wage rates and in the cost of replacing physical assets resulting in higher depreciation charges, together with the increasing competition from private transport, the proposed subsidy of £2 million for each of the next five years is not excessive in relation to what has been paid before.
In general, a subsidy to cover the difference between current operating expenditure and receipts is undesirable as it tends to encourage inefficiency. Such a subsidy is very different from the various types of capital grants given to industry by the State and is also quite different from the type of subsidy required in connection with guaranteed agricultural prices. The justification for the subsidy for CIE lies in the necessity to preserve the arterial railway system, which will continue to be essential to this country in the foreseeable future, not only to take peak traffics but to provide transport services for tourists and to undertake speedy express services for passengers and for freight, for which the road conditions in this country are not suitable. Moreover, as I have already stated, any advantages which might accrue from a complete changeover to road transport would be outweighed by the enormous capital cost and the large scale redundancy which would be involved.
The successive Governments examining the affairs of the public transport service have always tried to frame legislation based on the hope that the entire system might pay its way even if its capital was largely unremunerated. The second reading speeches attending all the CIE legislation clearly indicate this. Until Pacemaker was published, CIE in common with a great many other railways, had not devised a system of cost computation which would truly present an objective picture of railway and road transport economics and the CIE report together with some other similar reports are in advance and pioneering in a relatively new field. The arrangements in this Bill ensure that there will be no running down of the main arterial system but on the contrary ensure the maintenance and improvement of the system. The decision has been made that a railway is essential in this country even at a heavy cost to the taxpayer. No private operator would take on the obligation—that is certain.
It is for the management of CIE, the staff and the public to justify this subsidy and to ensure that there is no catastrophic fall in revenue in the next decade or thereafter which would demand a further examination of the position. The subsidy, which amounts to about 10 per cent of last year's total revenue from all sources and almost 25 per cent of rail revenue alone, is high by European standards. Taking 15 European railways, I find that in 1961, the latest year for which figures are available, the average ratio of income to expenditure was 1 to 1.13, the minimum ratio being 1 to 0.93 and the maximum ratio being 1 to 1.38. In the case of CIE the corresponding ratio for the railway alone in the year 1962/63 was 1 to 1.24.
If the hopes of every Minister in charge of CIE, whenever a new Bill was provided, that the system would pay have been dashed in the past it is to be sincerely hoped that this large subsidy will be sufficient and that the subsidy payable after 1969 will be proportionally less, if at all possible, as the country grows in prosperity.
The members of the House are entitled to ask what will happen if there is a very marked deterioration in the position. My answer is that the Government have made certain assumptions as with all future planning. These are that:
(1) It is hoped that the Board, supported by the entire staff, will induce more efficiency and retain existing traffics.
(2) It is hoped that the railway will gain traffic from the growth in the general economy.
(3) There is recognition of the fact that the huge staff of CIE will and should receive increases of remuneration applicable to the whole economy and that future increases as a result of the advice of the National Industrial Economic Council will be based on national productivity growth on a basis clearly set forth by the Taoiseach and the Minister for Finance.
(4) No doubt the staff and management will recognise the special characteristics of the railway finances, the dependence on 20 important customers and on courteous punctual service.
(5) It is to be hoped that the staff while securing better remuneration as the nation advances will recognise the need for examining any changes in work procedures whose effect would be to jeopardise the whole future of the railway. A subsidy of ten per cent of the revenue is at a level which the public can reluctantly accept.
The moral of this is obvious. The Government have given a new lease of life to the railway section of CIE. The Board and staff must meet the challenge presented to them. The public might also recognise that a public transport system is essential but that it cannot be starved of traffic. There are many private companies who have not even yet permitted CIE to calculate package deal comparisons. They might now reconsider their present attitude.
No doubt there will be changes in the future, the rail and road services will be tailored by need, but the proportion of losing services is complete proof that CIE does not underestimate the need as compared with the economics of service.
As it is now established that CIE cannot pay its way the provision of finance by means of public stock issues is no longer appropriate. Provision is made in the Bill for the issue of capital requirements from the Exchequer. These issues are interest-bearing but the subsidy takes account of the need to pay interest to the Exchequer and provide for sinking funds on the sums advanced. Apart from book-keeping considerations it is desirable that the subsidy voted for the purpose should reflect the true revenue loss of the undertaking. The £6 million capital borrowing provided for is an overall estimate of the sums required for approximately five years. The issues for actual expenditure each year will have to be considered on their merits and no firm estimate of the period for which the £6 million will be adequate can now be given with any certainty. Further capital requirements will necessitate further legislation. The Government's intention is that sufficient capital must be provided to enable the railway to be maintained in efficient operation while avoiding expenditure of an uneconomic kind which may not be strictly essential. The Board is directed, therefore, to confine capital expenditure to essential works or to remunerative projects.
The position of the CIE staff under the new provisions of course merits explanation. CIE is the largest employer of labour in the country. Total staff at 31st March, 1964, is estimated at 20,148, of whom 10,947 were railway employees, 6,402 road passenger employees, 2,675 road freight employees and 124 canal employees. Salaries and wages in the year 1963/64 amounted to about £12.9 million and accounted for 63.6 per cent of the operating expenditure and 65.7 per cent of operating revenue. In addition CIE contributions to their various pension schemes in that year amounted to £648,000, to which must be added the Board's contribution of £238,000 under the Social Welfare Acts making a total contribution of £886,000. The cost of the Board's Welfare Scheme, which is in the region of £96,000, is additional to the foregoing. CIE as a whole, therefore, and the railway in particular, provide a livelihood for many thousands of families and this fact as well as the dry economic statistics and the services rendered to the community must be taken into account in any consideration of our transport problem.
The Beddy Report of 1957 foresaw that a reorganisation of the undertaking on the lines recommended would involve very considerable staff redundancy. The report considered that in determining the staff necessary for the efficient operation of the undertaking a suitable balance should be preserved between younger and older men. During the debate on the Transport Bill, 1958, the Taoiseach, then Minister for Industry and Commerce, appealed to the Unions to relax the "first in, first out" rule so as to enable the staff reductions to be carried out on an ordered basis which would not impair efficiency. Provision was made in the 1958 Bill for the extension of railway redundancy compensation to cover redundancy arising out of the general reorganisation of the undertaking over the five year period provided for and the cost of the redundancy arising therefrom was made a charge on the Exchequer. These special provisions were intended to facilitate the once and for all major reduction in staff which was expected to be necessary if the planned reorganisation was to be carried through effectively and in the expectation that this reorganisation would enable CIE to achieve solvency.
Up to 31st March, 1964, 1,771 CIE employees were retired on redundancy compensation. Of these, 1,699 received annual sums and 72 short-service employees received gratutities. In addition 837 employees received lump sum compensation for worsening of their conditions of service. The cost to date amounts to some £1.8 million but payments will continue on a reducing basis for many years and the ultimate aggregate cost is estimated at over £7 million. The net reduction in staff from 22,051 in October, 1958, to 20,148 at 31st March, 1964, amounted to 1,903. This figure was made up of a reduction of 1,861 in rail staff, 310 in canal staff and 136 in road passenger staff, offset by an increase of 404 in road freight staff.
When account is taken of normal wastage, which in an undertaking such as CIE would average about 3 per cent per annum, or a total of 3,000 in five years, the size of this reduction of 1,903, which was secured only by retiring 1,771 employees on compensation at a cost of over £7 million to the Exchequer, is disappointing. While it is obvious that gross wastage cannot be fully utilised to effect ordered staff reductions arising out of planned reorganisation it does seem that normal wastage should have facilitated staff reduction to a greater extent. In the 5 years from 1953 to 1958, CIE staff, excluding the Hotels Department, was reduced by normal wastage and without resort to statutory redundancy compensation from 20,050 to 19,032, a net reduction of 1,018, including a reduction of 1,271 in rail grades.
Analysis of the statistics of staff retired on compensation shows that 51 per cent were over 60 years while a further 18 per cent were over 50. The high level of railway compensation which is based not only on pay but also on other emoluments which, following the findings of the standing arbitrator, include overtime, travel concessions, gratuities, car allowances, out-of-pocket expenses, etc, is in general more attractive than normal retirement pensions for older men. Staff redundancy has been effected by CIE on a planned basis in consultation with the trade unions, with whom they have to agree the extent to which redundancy will be met by transfer, planned wastage and retirement with compensation, respectively. As the figures I have quoted reveal, there has been a strong tendency for older men to seek retirement on compensation in advance of normal retiring age. The result has been that much of the redundancy has been at the expense of normal wastage, which would have come about in due course, or of transfer with lump sum compensation. For this reason and because older men qualify for a higher level of compensation the cost to the Exchequer has been very much higher than was ever anticipated. The total cost of over £7 million represents an average cost per redundant of approximately £4,000.
The extension of railway redundancy compensation effected under the Transport Act, 1958, and the placing of the cost on the Exchequer were, as I have already stated, wholly exceptional measures to facilitate the rapid and major reorganisation then foreseen. It was not intended that these provisions would be maintained after the period of reorganisation. The Minister for Industry and Commerce when speaking on the Transport Bill, 1958, was crystal clear in his declaration that the same type of redundancy terms would not be perpetuated. Leaving aside the heavy cost, these measures have achieved to a large extent their main objective—that of enabling CIE to undertake certain major reorganisation schemes for which they could not otherwise have expected to receive full trade union co-operation.
Redundancy compensation provisions have been a feature of Irish railway legislation since 1924 and prior to the Transport Act, 1958, the cost fell on the railway companies. Compensation is at a very generous level. Staff with more than five years' service are entitled to compensation pension for life, which is reduced by one-quarter at 65 years. Provision is made for added years and a man with 30 years' service may retire with a pension of two-thirds of his retiring emoluments, which, as I have indicated, may in many cases include much more than pay. This level of compensation is not, to my knowledge, equalled anywhere in the world.
Under the arrangements for compensation of British Railways staff retired on redundancy arising out of the implementation of the Beeching proposals, the dismissed employee receives a lump sum payment amounting to two-thirds of the standard weekly rate for each year of service, plus a weekly resettlement payment, while unemployed, at two-thirds of the standard weekly rate, less unemployment benefit at a single man's rate. The resettlement period over which this weekly payment may be made varies with the length of service and is subject to a maximum of 52 weeks.
Under these arrangements a man with 45 years' service, earning £10.8.0. per week, would receive a lump sum of £312 and weekly payments, while unemployed, which over the maximum resettlement period of 52 weeks would amount to £211, giving him a total of £523. It has been proposed that, in addition to the foregoing, redundant men of 60 years of age or over, with at least 30 years' service, should on expiry of the resettlement period continue to receive half the standard weekly pay, less unemployment benefit, until they find work or reach 65 years of age.
The provision of compulsory compensation by legislation and the generous level of compensation was a recognition of the special problem of a public service which was seen to be contracting and whose permanent staff, having regard to their location and specialised training, would, particularly in former years, have had great difficulty in securing reasonably paid employment elsewhere. Entitlement to these statutory compensation provisions came to be regarded as part of the conditions of employment of railway staff and helped to secure and retain the services of good staff. Though no further major reduction in the railway system is now foreseen and though prospects of alternative employment are better than they were, the Government consider that statutory redundancy compensation provisions similar to those which existed prior to the 1958 Act should be retained.
There is no justification, however, for the payment of the cost by the Exchequer but the cost of possible future redundancy has been taken into account in settling the level of subsidy. Compensation for redundancy arising out of the automation of level crossings, which is analogous to the closing of railway services, and which was first provided for in the 1958 Act, is retained.
The Government do not consider that statutory redundancy compensation provisions are either necessary or deirable to cover redundancy arising out of contingencies other than those provided for in the Bill. The extension of redundancy compensation in 1958 to facilitate the reorganisation of the whole undertaking was a temporary and exceptional measure to meet exceptional circumstances which have now passed. The special drawbacks of railway employment arising out of the possibility of contraction of the system do not apply throughout the undertaking. Many sectors are more likely to expand than contract and many workers, especially tradesmen, could easily secure good alternative well-paid employment.
No special measures are necessary, therefore, to protect their position other than the existing legislative provision under which CIE are obliged to settle the conditions of service of their staff in consultation with the Trade Unions.
In so far as CIE wish to implement measures to secure greater efficiency or productivity and which would affect the level of employment in particular departments they will no doubt negotiate, as hitherto, with the trade unions in order to settle how any redundancy arising would be dealt with. The cost of any redundancy compensation or severance pay which might be agreed would, of course, be a proper charge against the savings to be secured from the increased productivity.
The remaining matters in the Bill are of minor importance. CIE are being enabled to use modern selection methods in recruiting clerical staff but the principles of open competition and competence in Irish are being retained. The Board are being empowered to be represented by officials at certain meetings rather than by directors as required by the somewhat obsolete legislation governing the affairs of the Irish Railway Clearing House and the Fishguard and Rosslare Railways and Harbours Company.
Provision is made for retention by CIE staff transferred to Óstlanna Iompair Éireann Teo., the new hotel subsidiary, of compensation rights to which they may be entitled. Section 10 deals with the position of a person who may have been dismissed on redundancy, later re-employed, and after a period again dismissed. The section also clarifies the position regarding abatement of redundancy compensation. Section 11 enables the Board to develop land or property not required for its own purposes.
Senators will have noticed that this Bill does not touch on road transport legislation. There are aspects of road transport legislation and indeed other matters, but of a minor character, affecting the affairs of CIE which call for review. Further investigation and examination is, however, necessary before a decision can be reached as to the extent and character of such further amending legislation as may be necessary.
