At the commencement of Business today it was agreed that Motion No. 18 would be debated with the Second Stage of the Transport Bill.
Transport (No. 2) Bill, 1974 (Certified Money Bill) : Second Stage.
The main purpose of the Bill is to provide statutory authority for subvention payments to CIE amounting to £11.3 million in the nine-months' period ending on 31st December, 1974, which are additional to the annual grant of £2.65 million payable to the board under the Transport Act, 1964 (Section 6) Order, 1969. This is in accordance with the views expressed by the Public Accounts Committee earlier this year, in the course of their consideration of the Appropriation Accounts for 1971-72, that supporting legislation is desirable when moneys to supplement CIE's statutory annual grant are being provided by the Oireachtas. The Bill also makes certain necessary amendments to existing transport legislation arising from the provisions of EEC regulations governing State aid to transport undertakings.
At the outset, I propose to review briefly the position of CIE in recent years. The progressive deterioration in the board's financial position continues to be cause for concern. Since it was fixed in 1969, the board's statutory annual grant of £2.65 million has proved to be completely inadequate, due largely to the effects of inflation. The board's losses increased from over £3 million in 1969-70 to £11.67 million in 1973-74; the estimated net loss for the nine-month period ending 31st December, 1974, is almost £14 million. The main portion of these losses is attributable to the railway system, but the position has been aggravated by a decline into a loss-making situation of hitherto profitable road services.
As announced in March, 1974, the Government have decided that the railway system should continue to be preserved subject to further concentration and reorganisation in accordance with the general concepts outlined in the McKinsey Report on CIE, as developed in further studies made by the board, and have approved, in principle, additional capital investment to enable CIE to implement their proposals. The Government accepted that there was an acute need for modernisation and rationalisation of the railway system, particularly in the freight sector, in order to contain railway losses and to avoid a continual erosion of traffic. CIE's plan for the future development of the railways, involving modernisation of stations and depots, introduction of new equipment and handling methods and redeployment of manpower, was announced by the board last July. The plan will take six years to implement and will cost in the region of £27 million.
No fundamental alteration of the passenger network is proposed for the present, other than normal timetable adjustments. The plans for freight movement involve the introduction of new types of trains on which economic loading and high utilisation will be achieved. Twenty-two railheads throughout the country are scheduled for reconstruction and development and will provide a comprehensive freight service for containers, small freight and bulk traffics. A further 27 railheads are scheduled for major alteration and development to cater for specialised freight traffics. Freight facilities are being withdrawn on a selective basis from a number of lightly used stations, some of which have handled negligible volumes of traffic in recent years.
CIE are fully conscious of the need for adequate communication with all parties concerned in relation to proposed changes and an extensive programme of consultation with staff, trade unions and customers has taken place and it is the board's intention to keep interested parties advised of progress.
In the year 1973-74 over 12.7 million passengers were carried on CIE rail services reflecting continued buoyancy in rail passenger carryings due, no doubt, to the board's new promotional fares, the increased number of passenger trains daily and the attraction of CIE's new supertrain services. Over the past three years the number of rail passengers has increased by 23 per cent.
Rail freight tonnage at 3.7 million tons in 1973-74 was over 1 per cent higher than 1972-73. Significant increases occurred in general traffics, mineral ores and gypsum but reductions occurred in fertilisers, sugar, grain and cement traffics. There was also an increase in CIE's road passenger carryings. Dublin city buses carried 220 million passengers in 1973-74, an increase of ten million over the previous year. Sixty-three million passengers were carried in 1973-74 on the board's provincial bus services, excluding special school services, an increase of 1,000,000 over the previous year. In the road freight section, the total tonnage carried in 1973-74 was six million tons, representing an increase of 6 per cent.
Notwithstanding the fact that most of the services showed continued buoyancy, this has not, unfortunately, been sufficient to counteract the prevailing economic forces, and the board's deficits still continue to grow. The energy crisis which occurred in late 1973, while it created additional demand for passenger services and highlighted the importance of public transport in a situation of world energy shortage, nevertheless added considerably to CIE's fuel bills and adversely affected costs. Of greater significance, however, are the continuing increases in labour costs, which together with higher materials costs and increased social insurance and interest charges, contribute substantially to the board's deteriorating financial position.
The latest estimate of CIE's net deficit for the current nine-month financial period ending 31st December, 1974, is £13.95 million. Of this amount, £9.25 million has already been met by way of subvention payments to CIE, the necessary provision having been made in the Estimates for my Department. The main reason for the excess of £4.7 million in the board's deficit over the Estimates provision was the decision of the Government to ameliorate the impact of the July, 1974, increases in CIE rates and fares by limiting the increases in Dublin city bus and suburban rail fares and provincial city and town bus fares to 20 per cent instead of the 33 per cent increase proposed by CIE and approved by the National Prices Commission. This, combined with a delay of three months in the implementation of the increases, resulted in a reduction of an estimated £3.3 million in the anticipated yield from the increased charges. Other significant factors were the nine-week bus strike in Dublin city and a general decline in economic activity, resulting in heavy revenue losses to CIE.
The statutory annual grant to CIE of £2.65 million is, therefore, inadequate to the extent of £11.3 million and statutory cover for payment of this amount to CIE is provided in section 2 of the Bill. It is proposed to provide in a Supplementary Estimate for the amount of £4.7 million not already covered in the Estimates provision. Pending provision of these additional moneys, CIE with my consent, given with the approval of the Minister for Finance, have been availing of temporary borrowings to meet their serious cash deficiency.
Under EEC regulations governing State aid to transport undertakings, the existing blanket subvention arrangements for CIE are no longer appropriate and provision is, therefore, being made in section 5 for the repeal of section 6 of the Transport Act, 1964, which provided for a fixed annual grant for CIE, subject to review at five yearly intervals. Consequential on the repeal of this section, an amendment is required in section 2 of the 1964 Act and this is provided for in section 3 of the Bill. Henceforth, grants to CIE will be paid in accordance with the relevant EEC regulations and provision for these payments will be made in the Estimate for my Department.
There are three relevant EEC regulations:
(1) Regulation 1191/69 which provides for payment of compensation to transport undertakings in respect of losses incurred on services operated under public service obligations which are deemed essential to ensure the provision of adequate transport services.
(2) Regulation 1192/69 which provides for compensation in respect of specified financial burdens borne by railway undertakings which are not borne to the same extent by other transport undertakings, for example, cost of level crossings, retirement and welfare benefits, and so on;
(3) Regulation 1107/70 which specifies certain additional circumstances in which State aids may be paid to transport undertakings. This regulation enables the grant of State aid to cover, inter alia,
(a) public service obligations not coming within the meaning of regulation 1191/69;
(b) railway infrastructure costs, to the extent that competing modes of transport do not bear their full share of infrastructure costs;
(c) balancing subventions to meet the residual deficits of railway undertakings.
These EEC regulations are merely part of a comprehensive structure which is being built up in the development of a Community Common Transport Policy. One of the aims of this policy is to eliminate disparities liable to distort conditions of competition in the transport market and for this purpose it is necessary to harmonise laws, regulations and administrative provisions relating to transport.
Proposals for a new subvention structure for CIE to comply with the provisions of these EEC regulations have been submitted to the EEC Commission and arrangements are being made for the introduction of the new subvention structure from 1st January, 1975.
The main features of the proposed new subvention structure are as follows:
(1) It is proposed that compensation will be paid in respect of the losses remaining on rail passenger services after fares increases and any possible economies in operation, on the grounds that these services are being provided under a public service obligation within the meaning of regulation 1191/69. The obligation will be subject to whatever conditions I may decide to impose with a view to reducing losses.
(2) Losses on rail freight services, in so far as they cannot be met by rates increases, economies, and so on, will be covered by a combination of payments under the provisions of Regulation 1192/69 and Regulation 1107/70 including a balancing subvention as provided for in the latter regulation. Every effort must, however, be made by CIE to operate these services on a commercial basis.
(3) Losses incurred on the board's road passenger services, including the Dublin city services, which cannot be recouped by way of fares increases or eliminated by economies in operation, will be met under the provisions of Regulation 1107/70.
(4) It is proposed that losses incurred on the maintenance of the canals will be met under the provisions of Regulation 1107/70. Separate provision will be made in my Department's Vote for losses on the Galway-Aran service operated by CIE. As regards CIE's other services, I would expect the board to operate at a profit or at least break even, taking one year with another.
The new arrangements for subventing CIE will be subject to review at regular intervals and will of course come under scrutiny each year in connection with the Estimates for my Department. I commend the Bill to the House.
This Bill is of course necessary and everybody in the House will be obligated to support it. It has to meet essential financial obligations to the national transport undertaking. However, the Minister's speech which was excellent, broadens the area of debate and I take it that outside the financial aspects we can continue to seek to discuss some interesting aspects that have been raised by him.
First of all, we are at the stage when we have to make very definite decisions as to the future of various aspects of CIE's operations. Indeed the EEC regulations mentioned in the Minister's speech make it incumbent on us to do so. I am very glad that in particular the first Regulation, 1191/69, which provides for payment of compensation to transport undertakings in respect of losses incurred on services operated under public service obligations, has been so worded. It recognises quite clearly the social obligations that exist in regard to transport undertakings. It is important from Ireland's point of view that this be recognised and implemented. Public transport is now part of the social infrastructure of the community. We tried, rightly so, to keep CIE within certain commercial parameters. While that is still desirable, especially in respect of some of CIE's undertakings, there are real social obligations.
I should like to pay tribute to the Minister and the officials concerned who worked hard to establish that regulation which recognises that public service obligations can be compensated in respect of losses incurred on services of a social service type, thereby recognising the social contribution of certain transport undertakings. This is an important regulation and relevant to the rail passenger service. The subvention structure under that regulation will deal with losses in rail passenger services.
Similarly, the Dublin City road passenger services, although not under as favourable a regulation, come within a subsequent regulation and are covered. I should like clarification from the Minister on that point. The regulations under which the Dublin road passenger service can be subvented are not quite as global or as broad an undertaking as the regulation which provides for subvention to the railways.
The road-rail freight deficits can also be met, as suggested here, by a combination of two regulations. The rail freight service must, under these regulations, be commercially viable. The EEC regulations quite clearly recognise the rail passenger service as being a social undertaking and, to a lesser degree the road passenger service, in Dublin, and the rail freight service. The future of the rail freight service is important in the commercial sense. I am glad that substantial investment is being made in setting up rail freight in key centres and improving the handling equipment there. Substantial investment plans have already been announced by the board. There can be a substantial increase in the area of rail freight provided an efficient automatic handling system, based on an overall national freight plan, can be implemented. CIE have already begun to do this.
As regards the road passenger service in Dublin, there is a strong argument for separating it. I should like CIE to develop as an overall holding company with separate specified operations. This would involve a road passenger service for Dublin, provincial passenger services, rail freight service and road-rail passenger services. If these companies are loosely associated with each other under an overall holding company but each of them with a specific subvention and special targets at which to aim, very good results could be achieved. Deficits cannot be eliminated. However, there must be some measuring rod to minimise them. How to strike the balance between social and wasteful investment with commercial commitment must be the goal of future policy in relation to our transport system. This recommendation forms a large part of the McKinsey Report, which sought to balance the social obligations with the commercial criteria.
Basically the social obligation takes precedence, particularly in the passenger field. It can be commercial in the freight field. A structure should be set up to enable the units within the CIE umbrella to be independent, yet interrelated, so that their profit and loss and social contribution position can be itemised to enable the appropriate balance sheet—not in the narrow sense but the appropriate social balance sheet as well as the commercial balance sheet—to be drawn up.
Another matter to which I should like to refer and to which the Minister referred in paragraph 4, is the delay in Government decision-making in relation to increases in fares and rates. I am well aware of the problems involved. A consistent problem has been the inability of the Government to agree to raise fares where the argument is overwhelmingly in favour of such an increase and where delay only causes further deficit.
The Minister in his speech refers to a delay of three months in the implementation of increases, which resulted in the reduction of an estimated £3.3 million in the anticipated revenue from the increased charges. These charges were recommended not only by CIE but by the National Prices Commission after a very thorough investigation of CIE's submission to that body. The National Prices Commission recommended increases in Dublin's bus and suburban rail fares and provincial city and town bus fares. The figure was reduced from 33 per cent to 20 per cent. The recommendation was delayed by the Government for three months and resulted in a loss of £3.3 million. That type of lax decision-making is inexcusable. The Minister can say that it happened when I was Minister for Transport and Power too, and I agree. The lack of immediate decision-making regarding the handling of the affairs of the country is inexcusable.
The Senator is not quite right. The £3.3 million resulted in the cutting down from the 33 per cent to 20 per cent. It was not all due to the delay.
I appreciate that. At any rate, Government delays in making decisions in such matters have, over the years, caused substantial losses in money and aggravated CIE's deficit position. There is an unwillingness on the part of the Government to face up to responsibilities and make decisions quickly. This is one of the causes of our present economic problems. We have nothing but indecision in regard to the whole future of the mining development—an indecision that is resulting in lack of investment and growing unemployment. This is just one area. Senator Russell is well aware of what I say here.
The only way in which our economy generally at all levels, be it transport, industry or agriculture, can get out of our present difficulties is to get on with the job. We must get rid of doctrinaire reasoning and pre-conceived attitudes and make decisions. The time was never more ripe for that attitude. We cannot support doctrinaire hangups in our present situation. CIE is a very big business to run. There are social and commercial implications which we have to face up to in a pragmatic way thus seeking to achieve what is right and proper in the circumstances without any doctrinaire hang-ups which have got us into sufficient trouble in the field of health and mining. The important thing at the present time is to maintain people at work and enhance our employment force.
That is what practical socialism is all about.
What about profits?
Deputy Keating dealt very sympathetically——
Senator Halligan should not interrupt Senator Lenihan.
In reply to Senator Halligan's interruptions in regard to profits, I am glad to say that Deputy Keating, Minister for Industry and Commerce, in a radio interview last Sunday—quoted extensively in Monday's newspapers—had exactly the same kind of view that I have about profits. They are essential if commercial undertakings are to succeed and maintain employment.
Senator Lenihan should not deal with irrelevant interruptions. He should not deal with interruptions at all.
That was on Senator Russell's recommendation.
Coming back to the Bill before us and the McKinsey Report on which Senator West has put down a motion, I should like to emphasise that the important aspect is the capital investment that is required to modernise and rationalise the whole system. It can best be done by breaking the system up into units. The modernisation and rationalisation of the railway system in particular is important. I feel that the rail freight system offers a tremendous opportunity. I know CIE have already gone into the modernisation of stations, depots, new equipment, handling methods and redeployment of manpower. The plan will take six years to implement and will cost £27 million. It is the most important step that has been taken by CIE. In this whole rail freight area in which I see a great future provided we get the economy moving, we were behind but we are now anticipating that over the next six years the economy will really get moving again. CIE are making the investment to ensure that this happens.
I should like to hear the Minister's views in regard to CIE in the context of the whole national transport system. I am certain that we can have a constructive debate on this because it is a matter in which there is unanimity at the moment among all political parties. There is agreement now—CIE have recognised this fact—that there are basic social obligations relating to the activities of an organisation like CIE. There is also the need to have commercial criteria applied to them. The problem that faces us is how that can be done most efficiently within the structure of the EEC regulations. There is agreement among the three political parties that we are on the right road. The main problem will be in regard to the necessary capital and finance to do the job properly and the need, where necessary, if fares have to be held at certain levels, that there is a recognition of that fact by the Government. Specific services have to be run at a certain level: it is a social need.
The argument could be put forward that far more effective use could be made in a city like Dublin of the great disbursement we have under the whole category of social welfare. Rather than giving such moneys in hand-outs to people they could be given in specifically reduced fares from certain outlying centres to enable people to get to and from work— not to meet a deficit, in so far as CIE are concerned, but as a positive, social welfare contribution to CIE for categories of people.
I am suggesting that cheap fares might be considered a very desirable sort of social welfare help for people coming to work from satellite housing areas provided it is not itemised as a deficit in so far as CIE are concerned. It should be described positively as a social welfare payment to CIE in respect of a social welfare commitment by the State to such people in respect of passenger transport. This is the thinking we should have in the future. It should be clearly itemised in the books, the units separated, and the social obligations and commercial criteria specified rather than having CIE, as it has been heretofore in my view, demoralised by hanging a deficit around its neck when, in fact, it was carrying out social obligations. CIE should not be demoralised by the Government holding up their applications for legitimate fare increases.
The Government and CIE will face up to the fact that there is this mix of the social and commercial situations. If this is properly itemised and spelled out the State and the national transport undertaking can move forward in a positive way in the future.
I think we must accept this Bill as a necessary measure to keep the national transport undertaking alive. It would be hard to say that we welcome it. I am sure it is no pleasure for the Minister for Transport and Power to bring a Bill of this nature forward when seeking such enormous funds which must ultimately come from the taxpayers' pocket.
It is interesting to consider the present rate of losses. The Minister speaking in the other House said they were averaging something like £1½ million per month or nearly £18 million a year, which is about £6 per head for every man, woman and child in the country. Earlier, in the House today some people were kicking up a row because we were talking about increasing certain contributions by £5 a year. Every worker, whether it be farm worker or factory worker, is paying on average something like £18 a head to keep CIE operating. This gives some indication of what CIE is costing the community. We must maintain CIE. I go along with what Senator Lenihan said in that regard. This latest stage in what has been a very sad saga for CIE might be regarded as having started in 1958 with the Transport Act of that year. I can remember the then Minister— the late Mr. Seán Lemass—introducing that Bill under which CIE were to get a grant-in-aid of £1 million per year for five years, and he confidently predicted that at the end of the fifth year CIE would have money in the kitty to carry on the undertaking and to make further developments.
At that time he also spoke, as we are speaking now, about the commercial and social side of CIE. Sixteen years ago it was evident to everybody —to the Deputies and Senators of that day—that CIE had a strong social element in its make-up. It is only now we are beginning to appreciate the fact that it is unfair to hang a heavy social commitment running into millions of pounds around the neck of an undertaking and hope that it will somehow pay its way or at least that it will not cost the taxpayer too much.
CIE are confined in an impossible straitjacket by the 1958 Transport Act. They are being called on to modernise and rationalise their system on the one hand and on the other hand to run the undertaking generally according to commercial practices. The two things just cannot be done while, at the same time, maintaining a transport undertaking with a large social content. We have to face up to this fact. The public would accept the situation more calmly and certainly with more reservation if they knew what section of CIE was paying its way by normal commercial practices and the section that was serving the public socially. I think that the taxpayer would accept the fact that they have to pay a measure of tax to maintain CIE as a national undertaking.
It must be a very frustrating experience for any board, at the end of the current year, to have substantial increases in all sections of their business and yet find it necessary to seek aid from the Exchequer. There has been an increase in the number of passengers carried by rail, in rail freight tonnage, in the numbers carried by bus both in Dublin and the provinces and an increase in road freight haulage. This is a very fine result, indeed, in what has been an extremely difficult year. Yet at the end of all that the Minister has to come in here to seek money to keep the undertaking going up to the end of the year. In my view the board of CIE have been criticised too severely by Members of the Dáil. They should be commended for carrying on against almost impossible odds.
Among the criticisms CIE have had to bear is the failure to establish sound industrial relations between management and labour. I do not know how valid is that criticism. In my experience in the Limerick area CIE are doing a good job. Then there is failure to implement capital plans. The Minister has referred to this aspect. Capital plans are to be implemented over the next five or six years and, hopefully, they will result in providing better service at a lower cost—a cost of some £27 million. They have been criticised, too, for failure to provide dynamic and effective management. It is easy to criticise management because there are very few managers and their voting strength is not very great. All management is not perfect. We suffer from a lack of effective management in a number of areas and when we criticise management we should be fair and take into account the circumstances and the conditions under which they have to work.
CIE are being asked to do the impossible, that is, to pay their way and be a social service at the same time. This cannot be done and the sooner we realise it the better. We must face up to the realities of the situation, as Senator Lenihan has already pointed out. Various proposals have been made by amateurs like myself to improve the working, the image and the effectiveness and, hopefully, the profitability of CIE. I do not want to add to these suggestions but some things occur to me that might be helpful.
CIE are at present organised into five areas, each under an area manager. I suggest that these areas wherever practicable, could coincide with the areas covered by the regional development boards, the IDA areas or the tourism areas. There are nine of these in the country and it might be possible to arrange them in such a way that the five would coincide, say, with groups of two. The progress of CIE is intimately bound up with industrial development in each of these areas and CIE must be part of the integrated development. SFADC have an enormous amount of experience and expertise which should be harnessed to the efforts of CIE to develop along the right lines.
Mention has been made of mining. One of the successes of CIE in recent years has been the carrying of ores from the Silvermines area to Foynes. That type of development, integrated with the development of natural resources, holds out one of the best hopes for expansion in CIE. They can compete with any form of road transport in the business of long-haul bulk cargoes.
It might be worth considering the establishment of local area boards with local area managers. These boards could be of assistance to the local manager and could have representation from commercial interests, trade unionists and others who would help to bring business to the railways and also help their general development. I should like to see the establishment of a national transport council to co-ordinate development of roads, rail and canals, financed from a national transport fund to which all means of transport would contribute. There could also be a subvention from the Exchequer. We cannot have a national transport company divided into various areas. There must be an integrated system with one branch, if necessary, carrying another.
The social element of the system should be segregated and defined clearly and each area board should get a grant from the total grant to enable them to introduce some measure of competition between the areas. We tend to regard CIE as a large, clumsy complex of railways and road trucks. This complex should be divided into smaller, viable sections than the five areas already in existence. This might lead to more efficient working. Normal commercial practices should be introduced into CIE and the measure of competition introduced to which I have already referred. Competition helps to keep business on its toes and is vitally necessary for success. If this element were encouraged in CIE it might prove profitable.
As one who has had a lot to do with CIE over the years, I should like to pay a tribute both to the management and to the workers. They have a difficult task. In every area where there is a station or a railhead giving employment to local people it is of immeasurable benefit. In my area, Limerick city, any attempt to reduce the employment provided by CIE would have a disastrous fall-out effect on trade and industry. In saying that I have regard for the realities of life. If the work is not there, obviously men cannot be employed. A positive step should be taken to attract more business to CIE and I am convinced that, given the opportunities, CIE would continue to do a good job. We must preserve CIE as a national undertaking and we must not forget that during the war years from 1939 to 1945 we were very glad to have this national undertaking.
I welcome this Bill. Senator Lenihan and Senator Russell both made interesting and important contributions, Senator Lenihan mentioned the social value of a national transport company. Senator Russell suggested ways in which the commercial aspect of the company could be improved and the profitability increased.
Despite that, Mr. Lemass may have talked about a social component in the CIE make-up when the Transport Act, which gave the first subvention of £1 million 16 years ago was being discussed. The realisation of the social position is much stronger now. I should like to see a further move in this direction. I am glad that one of the two main proposals in the current Bill is to finance CIE, according to EEC regulations, which pay out money for loss-making services regarded as an essential social amenity. This is a very important concept. It is one which the company should make more of in their publicity. Instead of constantly being belaboured for having a commercial loss we should look at the same sum as a social input. The two should be balanced against each other and the money which we are giving to CIE should be looked at as an important social input to balance against a commercial loss.
The reception a Bill like this receives in the House indicates that in spite of the bad publicity CIE get people realise only too well how essential a national transport undertaking is to us. It is not enough to say that the same operation could be run by private companies if the Government were prepared to grant them the same amount of money as given to CIE. Private companies cannot be expected to break even or break even with a large subvention. No private undertakings would take up most of the CIE operation.
Senator Russell pointed out only too well the essential value of the service particularly in times of crisis. Who is to say that we will not have a crisis in 1975 of major proportions? Who would bet against a Middle East war which would cut off our oil supplies? When there is a crisis we must have a national transport undertaking. The maintenance of CIE and their services is essential. It is up to us to ensure that the money which is voted from the Oireachtas to CIE is spent in the best possible way.
One of the problems facing us as Members of the Oireachtas with very limited amounts of information on the company is that essentially we do not have the background knowledge to be able to comment on the company's deficit. We get a blanket figure of £13.5 million for nine months and we do not have enough background information to comment. I would argue for an Oireachtas body to examine semi-State concerns so that they can, with professional help, give the public and Members of the Oireachtas some background information to enable them to make judgments, behave responsibly and act not as auditors but as people who can satisfy the Members of the Oireachtas that the money is being spent properly. This would act as an important buffer between the public and the company.
I am pleased that the Minister has talked about the new freight plans, the comprehensive service, the liner trains, the bulk trains and particularly the new developments at the freight yards around the country. I would commend to the Minister's attention the problem of publicity. It is easy for the Press and the media to criticise CIE every time there is a deficit. The company should put positive publicity out. I am glad to see the displays all around the countryside at the stations which are scheduled for major development. The display cabinets there give an opportunity to the public to see what exactly is the forward planning in the freight yards. I commend to the Minister the idea of publishing a newspaper, The Travel Express. This is important publicity. Operations like the rail sale, cheap winter fares are good publicity. Educational tours may not make the company a lot of money but they are worth a lot in publicity terms. The Minister should encourage the Cabinet to travel by train more often. Nobody in a senior position seems to travel by train. It is regarded as demeaning to travel by train unless there is an oil crisis and, therefore, good publicity.
In a conversation with the late President—everybody knows his addiction to the railway—he confessed that he felt he was the only member of the last Administration who travelled regularly by train. There is no member of the current Administration who travels regularly by train.
I was on the 6.30 train going home last Friday.
Good for the Minister. If other Cabinet Ministers travelled by rail it would be an important psychological boost for the railway and would also show that the mania for the use of the State Mercedes is non-existent. We have a State transport service and people should use it. I would not object to the Minister travelling first-class any time. It would give the service a tremendous boost and would provide a lot of good spin-off publicity. It is only now that the company are beginning to realise how important publicity is and are beginning to get into the league as far as publicity moves are concerned. The public will respond to these moves.
There are some specific questions I should like to raise. The first is the social costing that McKinsey did. It is a pity that this debate has taken so long to come to fruition.
We did have an opportunity in 1972. Senator Lenihan who was then in the seat had given me an assurance that we could have the debate next day but he flew off to Paris on a late call taking McKinsey with him. It took another three years before we got the debate which means the actual costings are out of date. I felt at the time—and I said this before—that McKinsey's social costs were too low. This is a matter of judgment. Economists would not agree. I do not think economists are in a position to agree, and who can estimate the sort of problems we face? No economists in 1971 would have foreseen the present oil prices which will certainly discourage private transport, but it will underline the necessity for a public company. Their estimate was that if the railways were closed down the cost of redundancy compensation at that time spread over 20 years would be £70 million. That was only redundancy compensation and they tried to cost for the length of time that people had to spend in their cars in the Dublin commuter area and so on. The costs were staggering. The sums of money we are talking about are not enormous when you take social costs into consideration.
CIE should make more of these social costings and point out to the taxpayer who is paying for the service what it would cost him in actual terms if these services were curtailed or terminated altogether. This would make people realise what the position is. The new rolling stock which was advocated at that time is a success. It cost some money, it was a pity that it could not be assembled in this country, but I think it is a success. It is working very well. The long distance stock has got praise all round.
I would like to ask the Minister what the policy is on the permanent way. It is important if our rail service is to remain modernised and if it is going to compete that we improve our permanent way. The permanent way, with the exception of, say, the main line between Cork and Dublin, is not as good as it should be, and it certainly will not stand up to the fast freight and fast passenger demands of the late seventies and the eighties. What is the Minister doing? Is he talking about or thinking about continuous welded rail? If he is not thinking about continuous welded rail, what is he doing to modernise our rather problematical permanent way? Is the signalling system to be replaced by signalling with coloured lights throughout the country? That is another question I would like to ask.
I would like to ask about the position in regard to commuter rail traffic. The commuter rolling stock in Dublin is out of date. The old push and pull trains are not the thing. We need new rolling stock, sliding doors, and more seating. The Minister knows that the commuter stock must be replaced. Perhaps the programme has started, but I would like to know more about it. We need higher frequency and greater acceleration than we can get with the push and pull units. These are essential if the present trend of considerable increases in commuter numbers using the service continues. I would regard this as a much more important factor than the actual profit or loss on the service. If you do your social costings you get a colossal benefit in CIE's favour. We need to update our commuter stock, and this needs to be done as quickly as possible.
I would like to ask if any progress has been made on thinking vis-á-vis an underground—the Heanue Report and the Dublin Transportation Plan. Are the projected costs putting it out of the market all together? What are we going to do about transportation? Are we just going to sink down into the morass of multiple inter-change overpass under-pass sort of problems the European, American and British cities are now rejecting for the road solution? It is not enough just to build these huge roads. The destruction and the deprivation and the change of character in a city is too much. The argument for an underground is very strong, but I would like to hear what the Minister has to say about it.
The Minister must be involved in the traffic plans for our cities. I am very much in favour of the idea of more pedestrian areas. We are far behind in this regard. We have had a couple of experiments and I think they were warmly received by the populace. What is CIE's thinking? It affects the whole transportation in the city centre. The more of the city centre that can be preserved traffic-free the better. This does affect the service. It might be necessary to run a free minibus service with the main traffic routes going round the outside of the pedestrian area. Of course there are problems here, but it is important to know what the Minister's thinking is. I feel that we would make a great mistake if we tried to dispose of the permanent way at any stage. The Harcourt Street line was an obvious example. I hope that even if trains cease to run on any specific stretch of line the company will think twice before they dispose of the actual ground. One never knows; one might want to turn the old lines into bus ways; one might want to re-develop the railway with rail cars or something else. The actual ground in which the permanent way is laid should always be preserved and held in the company's hands in case of future developments.
Our whole thinking has changed so much in the last ten years that no one knows how much it will change in the next ten years. Certainly it looks as if our big conurbations are going to develop, and we shall want faster and faster traffic between the conurbations, both freight and passenger traffic. This is best provided by rail. It may even come to the stage when legislation will have to be passed restricting the routes of the heavy lorry especially with the size of these European monsters that are now tearing up the roads, and the legislation may have to be in the form that certain traffics must go by rail. I would be in favour of that.
This is the way things are going to move and the way things are moving in Europe. Our situation is not quite the same. We have not the same population densities. I would like to know the Minister's thinking on this. It makes for the development and maintenance of our rail services. When one talks about CIE and subventions there are other parts of the services as well which are extremely important—provincial buses, city buses, the waterways, the Aran islands, the Naomh Éanna from Galway. The main loss-making service, the service which comes in for the most criticism, is the railways. It is essential to maintain them and I would join with Senator Russell in commending the Board of CIE on the efforts they are making. His suggestion about a local area committee to work with the local area manager is an excellent one. I like to see the commercial approach. I like to see CIE attempting to serve as many people as possible. It worries me that sometimes the middle and top management in CIE seems to change over rather too quickly, and when they get somebody who really is oriented in this way and really has ideas, they do not remunerate him enough. I would like to see the people in jobs at the top of what is a very important operation for the whole of the State being properly remunerated. An increase in salary would help to retain the more talented managers in the CIE system, and we need them. One could go on talking for a long time about the problems which the service faces. I do not intend to do so. I am glad of this opportunity to raise some of the problems which the McKinsey Report touched on. I feel I am echoing the feeling of the general public when I say that if CIE put their case to the public about the real position the public will continue to support them.
I welcome this Bill. I agree with Senator West that no private company would take up the CIE operation.
The McKinsey Report revealed something which 95 per cent of the people realised—that the greatest enemy of a public transport company is the growth of the private car. There are too many cars in the country. That is progress we cannot stop. The Report pointed out that the rail section was losing money. We must ask ourselves if the advantages and the benefits of the rail service justify this subvention. There is the question of national prestige. As a modern European country we might lose that prestige if we lost the railway. I believe the majority of the people wish the rail services to continue to be maintained.
CIE are a public transport company and their priority must be the passengers. The best service should be maintained to attract passengers. People travelling on long journeys find the trains comfortable. The rail service has a great record of safety. That in itself is a very important aspect of any passenger journey. If we reduce rail services what will be the result? We will bring more cars and lorries on to the roads, roads which were never intended for such traffic. I wonder if we make that decision will we have to call in another study group to work out a solution for the roads. Senator West said the social aspect was underestimated. I agree with him. There are 10,000 people employed in the rail section of CIE. It is a fair estimation that those 10,000 are responsible for the livelihood of 50,000 people, including children.
The closing of branch lines was a wrong decision. To worsen the position the railway tracks, which could be very useful today, have been taken up. I see no choice but to return again to the railways.
I should like to commend the management and staff for the wonderful job they are doing. They are working on a very tight rein. Freight traffic has increased and bus passenger numbers have also increased but despite these increases they have lost money. If we could get a breakdown of those figures we might have a better idea of how things stand. I am not suggesting that the management are not doing their best but there is an incentive to canvass traffic? What action would a shopkeeper take if he increased his turnover by £6,000 but, in the following February, was told by his accountant that he had lost £2,500? What action would he take?
I hope the staff of 10,000 will be maintained. If 30 new factories opened up and guaranteed that they would employ 10,000 men on a permanent basis I am sure any figure within reason would be voted.
I should like to welcome this Bill but perhaps "welcome" is not the correct word since neither the Minister nor anyone else can welcome a situation in which CIE, year by year, suffer increasing losses on their operations. One must accept that once these losses have occurred one must initiate an increase in the subvention required to pay for them. I agree with many of the comments on the social aspects of the operations of the transport services.
The Minister said that the loss suffered by CIE in the last financial year, 1973-74, was £11.67 million. This has gone up in the present nine-month period to £13.95 million. This is equivalent to a loss of £18.7 million in a 12-months period. The question arises, under these circumstances, what kind of financial return will CIE have in 1975? On the basis of the increases that have taken place and the inevitable increase in prices of perhaps 20 per cent and allowing for the extremely intensive labour nature of CIE's operations it seems that CIE will lose £25 million. I would be surprised if it were lower than that; it will, perhaps, be higher. If £19 million was lost in the current 12-month period, allowing for the returns of previous years it seems that a loss of £25 million can be expected.
I am not at all clear why the figure in the Book of Estimates for 1975 only provides for £17 million to be allotted to CIE for losses under the three headings. It seems to be that that is £8 million, or perhaps more than that, lower than the likely losses that should have been suffered by CIE. There is a discrepancy here which calls for explanation and I would be glad to have the Minister's views on this.
Getting down to the more general aspects of the Bill we can agree that the social aspect of transport, in this and other countries, is becoming increasingly important and we probably have reached the stage now where it is unwise even to talk in terms of losses on transport. After all, we do not talk about losses on health services or on various other Government services necessary for the benefit of the people and we must therefore accept that transport is necessary as a social amenity.
While I can accept completely that saying to a company like CIE that they need not think about losses anymore would entail risk of further depreciating their technical operating efficiency, nonetheless we should be realistic; we should accept that these ever-increasing sums are not really losses in the ordinary sense of the word. An ordinary commercial company would not ruin many of the services CIE run because everybody knows they will never make a profit —they will make large losses—and the fact that CIE run them shows that they are obeying Government instructions to carry out a social service.
This is particularly true in the present energy problem. A number of speakers have referred to CIE as a social amenity. More and more the Minister and all of us must think in terms of the energy situation. One aspect of the matter has been dealt with particularly by Senator West— the suburban train services in and out of Dublin. I mention these not because, as a Dubliner, I am particularly orientated towards Dublin but because it seems to me that these services, unlike the other train services, lend themselves to very large and rapid increases in traffic. I have no doubt but that in five years one could double or perhaps treble the numbers travelling on the Dublin suburban train services. Even on the Minister's excellent service to Cork I do not think it would be possible to expect anything like that increase in traffic in a comparable period.
I am convinced that if satisfactory, modern trains, such as Senator West suggested, with sliding doors such as one finds on suburban trains all over the world, were provided on the suburban services in Dublin and at frequent intervals, which is a vital point, one would enormously increase the numbers using the trains. The great problem with suburban services at the moment is one needs to have a timetable. If there were frequent services —perhaps at quarter-hour intervals or even more frequently at rush hours —from Howth, on the one hand, and Bray on the other there would be an enormous increase in traffic.
This operation would be expensive. It would cost the taxpayer a considerable amount of money, but it would have a beneficial effect on our balance of payments. The energy problem is so great and the cost of oil is such a burden that in all our transport services we must think in terms of energy all the time. It is ludicrous, when we are desperately trying to pay enormous increases in the price of oil year by year—and this is likely to continue indefinitely—that we should have the roads lined with cars. In the morning and evening each car carries only one or two persons at the most. They are using a scarce commodity at great cost to the community. I do not think this should be allowed at a time when we have parallel public services capable of carrying a great many passengers.
There is the constantly worsening traffic problem in Dublin. Even allowing for a certain slowing down inevitable because of the annual increase in traffic, there is no doubt but that one of these days on some Friday afternoon the traffic in Dublin will just seize up and nobody will get home for about two days. The prognostications are for a further enormous increase in the number of cars and it is quite clear Dublin streets will not be able to take it. The Minister should think in these terms. He said that CIE will spend £27 million on a capital programme over the next six years. This is nothing like sufficient; it is only just over £4 million a year. I do not know what it is going to be used for, but it is in no way adequate.
Senator West referred to the state of the rail track. He said it is quite good between Dublin and Cork but on other lines it is dreadful. These lines are not adequate for anything more than about 50 miles an hour and, when a train is doing 60, 65, or 70 miles an hour, it sways in a most alarming manner; it is most uncomfortable. There are many drawbacks of this kind on the railways that need to be dealt with.
There is also the question of freight. CIE freight has a very bad name. The problem is that it has to run at fixed periods whether or not the lorries are full and CIE are often accused of inefficiency as a result. In order to obtain some element of independence a very large number of companies run their own transport. One can understand why they prefer to do this. A company wishing to deliver material rapidly prefers to have its own lorry available at a moment's notice. In the present energy situation can we afford this any longer? Should the Government not gradually develop a situation which would make it more and more difficult for companies to run their own transport? Companies which run their own transport have lorries making a one-way journey empty but even when the lorries are carrying goods, they are often only half full. This seems a very great waste of scarce materials. Even though it may seem dictatorial, we may have to try and put more freight on to the State or some kind of central transport and stop this wasteful carrying of materials in private lorries.
I want to stress what was said about the social aspect of the matter. Even though it may seem expensive, more and more stress should be laid on public transport, both freight and passenger. We should not think in terms of losses. The Government should think in terms of what is the best way of dealing with the situation from the national point of view and consider assistance merely as a Government subvention and not a loss in the normal sense of the word.
I shall be very brief. We all realise that, if CIE are to be kept going, they must receive an injection of capital. I would ask the Minister to advise CIE to try and dispose of as much of their assets as possible. When I speak of assets I mean old buildings, dwellinghouses, parcels of land, harbour-masters' dwellings, stores and so on. There are many stores still in their possession all over the country. They could profitably dispose of those in an effort to raise more capital for CIE. The canals are a liability and, sooner or later, a decision will have to be made regarding them. They are a menace to the farming community because of their location. They are a menace to local authorities because they cannot negotiate satisfactorily with CIE the construction of new bridges. These are all matters worthy of consideration. They may not be completely relevant to the Bill, but I would ask the Minister to take them into consideration.
It is essential that this Bill should pass all Stages before the end of the financial year which, of course, will be three months earlier than normal.
I am grateful to the Seanad for the way they treated this Bill. I am particularly grateful—and this point was recognised, too, in the Dáil; perhaps Senator Lenihan would be better able to answer it than I would myself—that it shows a change of heart on the part of public representatives, a realisation of the role of public transport in this State. Senator Lenihan said that social objectives must be basic in the passenger field. I think that is the word he used. I agree with that suggestion. Senator Yeats, Senator West, Senator Russell and Senator O'Brien also made the same point and I agree with them.
CIE cannot just decide what their social role is. They must operate within commercial confines. If the Government decide that certain things must be done by CIE, then the Government should pay for that service. This has already happened in two areas. For instance, school transport is not operated by CIE in the way the Dublin city bus services are. CIE merely act as an agent for the Department of Education who say how the services should be run, what children should be picked up and at what points. CIE then submit their bill to the Department of Education who pay that bill.
The same applies to the Department of Social Welfare in the case of free passes for old age pensioners. This service cannot be carried out in the same detailed way as it is for the Department of Education, but there is a sum which CIE charge the Department of Social Welfare for carrying old age pensioners free of charge on buses and trains. This is one area in which specific Government Departments and, indeed, municipal authorities could see where they wanted services to operate and have CIE act as agents for them or pay them a fixed sum for operating these services. This would be the way I should like to see CIE develop in the future. I would certainly not agree —and Senator West referred to this point—with the closing of branch lines. I said in my introductory speech that the Government have decided that the railway system should continue to be preserved subject to further concentration and reorganisation in accordance with the general concepts outlined in the McKinsey Report. That would be my philosophy about the rail services of CIE. There should be no further lopping off of branch lines.
Obviously, in the interests of commercial objectives the company would have to look at each station from the point of view of picking up quantities of goods which would make economic loads, palletisation, fork-loading units and specific carriages for bulk loads. They probably could not continue to service all the stations that are now being serviced. They would have to draw back on that end of the service, but not by lopping off or closing further branch lines. When they announced their rail plan in the middle of this year, I said that I did not wish to see any further branch lines closed, and I repeat that here. I would hope that CIE could work towards commercial objectives, particularly in rail freight, which is one heavy loss-making sector. Somebody said here tonight that CIE could compete with private hauliers on the road in this sector.
I would put that even more positively. If they were properly organised and had the proper capital injection to handle these goods, the private hauliers could not compete with them in the freight sector. There is a very big future for CIE in that end of the business, but they must be given the capital—the Government have given it to them this year—to modernise and handle container traffic. They have made a very good start on this already and a number of stations are being modernised and up-graded to enable them to handle large quantities of goods. This will continue over a six-year period and, at the end of that, I would see very significant increases in the amount of goods being carried by CIE. This will be of benefit not only to CIE but also to the various local authorities who will have this heavy traffic taken off their roads. From an environmental point of view this will also be important. This is another area where, perhaps, CIE could be given a subvention. There would be a saving to local authorities on road building to carry heavy goods if these heavy goods could be transferred to rail.
The remark made by Senator Lenihan in opening his speech has been repeated in this debate and was also made in the other House. It has come too late to be recognised from the staff morale point of view. It is that we cannot eliminate deficits in CIE. If this had been faced up to ten or 15 years ago and if it had been seen that CIE had other benefits, and that deficits would continually occur and that Ministers for Transport and Power would have to come back to the Oireachtas looking for extra subventions for CIE, then, I think, the morale of the staff and the management of the company would be far higher and, over the last number of years, they would have benefited and been better able to cope with the increased traffic which seemed to be moving their way. An illustration of this is the effect of the success of the Supertrains on the morale of the staff of CIE. There are 20,000 people employed by CIE. They are one of the biggest employers in the country. If their morale is high and they are out hungrily looking for business and anxious to serve their customers, this will have its effect on the increased amount of traffic they will get to carry, both passenger and goods traffic.
Senator Lenihan also mentioned the Dublin city services and asked how they could be subvented under the EEC Regulations. Regulation 1191 does not apply to the road transport services of railway undertakings, but there is provision in Regulation 1107/70 for compensation in respect of public service obligations not covered by the 1191 directive. Compensation in respect of the Dublin city services will be covered by Regulation 1107/70. He also referred to separating the different elements of CIE and breaking them down into different categories—provincial bus services, city bus services, road freight, and various services like that, and identifying each one of them from a subvention point of view. These services are already broken down and are separately managed and appear separately in the Company's accounts. If we could identify these and break them down further and if the Government would pay for various services which they would commission and get CIE to act as agents for them, this would help the morale of the staff of CIE and is something on which I would place great importance. For two years the public and politicians had an attitude towards CIE employees as if they were a drag on the economy, whereas it was quite the reverse. They had a very positive contribution to make to the economy and we should have recognised that a long time ago.
In relation to the fares and rates increase, it was not a delay but a postponement of the increase by the Government. Even though Senator Lenihan does not appreciate this— and CIE certainly did not, the fare-paying public possibly did appreciate a three months' delay.
Senator Yeats referred to the £17 million subvention in the 1975 Estimate. This is the amount the Government have fixed for CIE subvention in 1975. As he pointed out, there is a very high labour content in CIE and it would be measly to expect that there would not be an increase in fares and rates during the next financial year. That is quite true. Senator Russell said that CIE should not be criticised and that is the point I have been making and he spoke about the long haul of bulk goods. He said that CIE are very capable of carrying these. It is one of the areas in which they would be seeking to extend their influence and extend their dominance of that market.
A number of suggestions were made by Senators which are, perhaps, more appropriate to the board of CIE than to the Minister but I will certainly take them all to them. Senator Russell made two of these points. One referred to local area boards which seem to me to be of some benefit and the other one related to the redrawing of CIE areas to coincide with the health boards, the regional development organisation and the tourism organisation. There may be something in that and I will ask the board of CIE to have a look at that.
Senator West suggested that a select committee of the House should look into the affairs of CIE. I presume he meant more than CIE; he meant all the State companies. As I said in the Dáil I am sympathetic to this and I would like to see this happening. From a Minister's point of view, and from the companies' point of view, and, of course, from the public's point of view whom the Senators and Deputies represent there would be benefit in it for everybody. I do not want to infer that there has not been an informed discussion here but there would be a more deeply critical discussion of the affairs of semi-State companies if it had been thrashed out in private with the managements of the various companies by a committee of the House. I am sympathetic to this. The whole question is being examined by the Department of the Public Service and the Department of Finance.
Senator West wanted to know how the breakdown in the loss of £13.95 million was arrived at. As most Senators know, there was a £10 million loss on the rail services. The Dublin city services lost £3.3 million. Other bus services, that is provincial bus services, lost £250,000; road freight lost £210,000; the canals lost £110,000. Senator Keegan, in his contribution, thought the canals were a liability but I do not agree with that. They may be a nuisance to some travellers in various counties but from the tourism point of view they are not a liability but a tremendous asset.
I was referring to canals which are not being maintained by CIE. They are a nuisance and they are an eyesore. They are overgrown with weeds and bushes.
Certainly, they are a great asset from the tourism point of view and the general amenity point of view not just for the tourist but for the people living in the area. There can be tremendous amenity there. I would hate to see them closed up in any way. In fact, I would prefer to see local authorities with CIE and Bord Fáilte developing the canals and developing an inland waterway system.
I am out of order now when I talk about tourism. But there is a tremendous potential for the development of our inland waterways. We could have with the extension of a few of our canals one of the biggest inland waterway networks in Europe and there is undoubtedly, a demand tourist-wise for this type of market. This market is undoubtedly in demand on the Continent. It does not have to be sold; it is almost self-promoting. As long as I am Minister and as long as I have any influence over CIE, the canals will not be closed but will be developed.
Senator West and Senator Yeats spoke about the Dublin suburban railways. I mentioned in the Dáil that in January, 1974 an announcement was made that the Government had given approval in principle to major proposals for the development of the Dublin rail commuter services. The development of these services would involve the provision of new rolling stocks, signalling systems and stations in the existing north-south lines with subsequent extensions of Blanchardstown and Clondalkin. This is the subject of an examination by CIE with the help of consultants who are also going into the feasibility of constructing a short underground railway in central Dublin. I expect this examination to be completed in the new year and it will be submitted to CIE and through them to me and to the Government. We should wait for that.
The signalling system I refer to here is not part of the £27 million I referred to in my speech but the £27 million does allow for a new signalling system all over the country. The laying of permanent way rails is extremely expensive and CIE have made a start on this but, because of financial problems, the amount they can do in any one year is limited. They have made a start.
What is the general policy about?
Certainly on the trunk routes they will be moving towards continuous welded rails. I hope I have dealt with all the points raised. Points made by Senator O'Brien, Senator West and other Senators are matters for CIE and I will bring them and the subject of the debate to the attention of CIE. There are many points they will be glad to note and examine. A number of Senators here have had dealings with the board and management of CIE and I am sure they have found that they are not an enclosed order that one cannot get at without ringing bells. They are anxious to talk to people and from the point of view of the modernisation of the stations announced last July, they are anxious that the people in the various localities should understand what they are trying to do. They have been taking pains with the Members of the Oireachtas, in particular, to see that they are informed. They have, as Senator West has said, erected models in stations that are going to be upgraded and modernised. They will be taking advantage of the various media ways of informing the public of what is going on. I hope that the new attitude which I detected in the House, and in the Seanad, towards CIE will extend to the public in general and that they will be proud of CIE in the future years.