The purpose of this Bill is threefold: first, to extend the limit on CIE's borrowing powers for capital purposes, secondly, to extend the limit on the board's temporary borrowing powers and, thirdly, to extend the powers of guarantee of the Minister for Finance in relation to borrowings or contract arrangements for the provision of goods and services entered into by CIE.
CIE's capital expenditure is financed from the board's internal resources, mainly depreciation provisions, and from borrowings either from the Exchequer or from such outside sources as may be found attractive. At present, the aggregate amount of CIE's capital borrowings at any one time may not exceed £55 million. CIE have now reached the limit of their capital borrowing powers, most of the outstanding borrowings being represented by Exchequer capital advances on which interest is paid by CIE.
It is, therefore, essential to extend CIE's capital borrowing authority to enable the board to proceed with a number of capital projects and to undertake any new projects which may be approved.
The major projects which the board have in hands at present are the electrification of the Howth-Bray suburban rail service, the acquisition of 124 mainline carriage units and the renewal of the board's urban and provincial bus fleets. There is also, of course, the provision of a commuter rail service linking May-nooth and intermediate points with Connolly Station, but the provision of this service, which is scheduled to commence operations in a few months, does not require large scale capital investment at this stage.
The electrification of the Howth-Bray suburban service will, on its introduction in 1983, represent a major improvement in public transport services for people on the eastern side of the city. Since the late sixties passenger demand on the Dublin suburban rail services has been increasing—daily carryings on the Howth-Bray section have increased from about 12,500 in 1970 to 34,500 in 1980. The services are at present operated with dieselhauled refurbished carriages which are due for replacement. In the consideration of the CIE proposal for electrification, account was taken of the need to upgrade the existing service in order to attract as many passengers as possible and so make the maximum contribution to the relief of traffic congestion. Considerations which favoured electrification were the desirability of achieving a reduction in dependence on oil, and the environmental benefits offered by an electric system which is pollution free and less noisy than a diesel system.
The electrification project, on which over 200 people are at present employed, is now nearing the halfway stage. It involves the provision of an electrical supply along the line, the provision of new signalling and depot facilities, the opening of two new stations at Sandymount and Salthill and the acquisition of new rolling stock specially designed for commuter needs. The new service will bring about a substantial improvement in the existing service in terms of frequency, speed and passenger comfort. Day-long services will be provided, serving 25 stations on the line, with trains operating at five minute intervals during peak periods reducing to 15 minutes off peak. It is intended also to extend the catchment area of the railway line by the provision of feeder bus services to selected stations. CIE estimate that by 1985 passenger numbers will have increased from the current average of 34,500 per day to about 80,000 per day.
Major improvements of this nature cannot be made without substantial capital investment and in the case of the Howth/Bray electrification scheme the latest estimate of capital cost, largely based on contracts already placed, now stands at £66.4 million at April 1981 prices. This represents a substantial increase on the estimate available at the time the project was approved, which amounted to £46 million approximately at early 1979 prices. While there have been, of course, inevitable variations between actual contract prices and the indicative pre-contract estimates on which the original costings were based, the increase in the capital cost is very substantially attributable to the effects of inflation and currency fluctuations. I should add that it is proposed, in accordance with normal practice, to capitalise interest charges until the project is completed, after which interest will be charged to the revenue account. The total amount of capitalised interest charges is estimated at £16 million at current prices.
I am particularly anxious to ensure that with this project every effort is made to maximise the Irish input of components and services. So far, I am glad to say, it has proved possible to ensure that, apart from the rolling stock, over 50 per cent of the remaining requirements for materials and services is coming from Irish sources.
The second major railway project at present on hands is the provision of new carriages for mainline passenger services. Approval was given earlier this year for the acquisition of 124 mainline carriage units, comprising 94 standard carriages, 15 catering cars and 15 generator vans, to be assembled at the Inchicore works in Dublin. These carriages are needed to enable CIE to provide mainline rail facilities of an acceptable standard of comfort and convenience for all rail passengers. It is expected that over the life of the project employment will be provided at the Inchicore works for an average of 165 men. Every effort will be made to ensure that the maximum possible use will be made of Irish sub-contractors for the supply of goods and services and that the Irish input generally will be maximised. Planning work on the project has commenced and it is hoped that the first carriages will be available to be put into service in 1983. The capital cost of the project is estimated at about £36 million, exclusive of VAT.
The third major item in CIE's capital programme at present is the renewal of the board's city and provincial bus fleets. The renewal programme had earlier fallen into arrears because of the time lag between the termination in 1977 of CIE's arrangements for the supply of buses with Van Hool McArdle and the establishment of the new Bombardier bus building factory at Shannon. The new factory, at which production commenced last August, is now giving valuable employment to some 300 people. CIE have already taken delivery of 20 single-deck buses for use on the provincial services, 30 coaches for the board's tour operations and the first of the 135 doubledeck buses to be delivered this year for use in the Dublin city area. There have been some initial teething problems with the new buses but I understand that these are relatively minor and are being quickly resolved. Because of the backlog in CIE's bus replacement programme the board's requirement for new buses for a few years will be unusually high. The total capital allocation for new buses in CIE's capital programme for 1981 is £18.5 million and CIE's forecasts for the years immediately ahead envisage expenditure continuing at a high level.
The three projects which I have mentioned, combined with the board's normal capital programme, clearly require a substantial revision of the limit applicable to CIE's capital borrowing as the board's depreciation provisions would fall far short of the expenditure involved. It has, therefore, been decided to set a new limit of £180 million in respect of capital borrowings that is an increase of £125 million on the existing limit. In addition the Bill provides for an increase in the limit on the guarantees which can be given by the Minister for Finance under the State Guarantees (Transport) Acts in respect of contracts for the provision of goods and services entered into by CIE. This will allow greater scope for exploring alternative arrangements for the financing of CIE's programme, for instance, leasing of equipment, which might provide worthwhile opportunities for financing investment in transport.
The increased borrowing and guarantee arrangements provided for in the Bill will enable CIE to proceed with the projects I have mentioned in the years immediately ahead and to undertake any new projects which may be approved. Additional finance may have to be authorised in a few years time and the introduction of the necessary legislation will provide an opportunity for further review of CIE's capital programme by both Houses of the Oireachtas. Furthermore, the intervening period will give time within which consideration of the McKinsey Report on CIE can be completed and a start made on implementing whatever decisions arise from that consideration.
I should make it clear that the Government are very conscious of the necessity for adequate and efficient public transport services for economic and social purposes. It is, of course, essential that these services should be provided in the most cost-effective manner possible, taking account of the social and economic needs of the community as a whole. It is on this basis that the Government will be considering how public transport services can best be organised.
As I indicated at the outset, the present Bill also provides for an increase in CIE's temporary borrowing powers which at present are limited to £5 million under the Transport Act, 1974. This figure is now insufficient in the light of the inflation which has occurred since the 1974 Act was passed. CIE's expenditure on operating account has increased from £65 million in 1973-74 to £200 million in 1980, while the Exchequer subvention increased from £10.75 million to £70 million in the same period. It is proposed, therefore, to increase CIE's temporary borrowing powers to £20 million so as to provide a safeguard to tide the board over any short-term cash difficulties such as unforeseen losses in revenue or increases in expenditure. The inadequacy of the figure of £5 million has been evident on a number of occasions in recent years and Supplementary Estimates have had to be introduced for CIE at short notice to ensure that the board would have sufficient cash to meet their requirements.
Before concluding I should like to say that while this Bill provides the means for improvement of the facilities available to CIE for the operation of bus and train services, these facilities will not, in themselves, guarantee a service which will meet the needs of the public and on which they can rely. The provision of facilities must be accompanied by the necessary degree of commitment and co-operation by CIE management and staff. In particular, there must be a determined effort by all concerned to avoid the type of disruption of services at present being experienced and which, unfortunately, occurs all too often.
Serious hardship is being caused especially in Dublin to many thousands of citizens. Business in the centre of the city is being adversely affected to a point when the jobs of those working in these businesses are at risk.
I cannot imagine that the strikers and the other CIE workers who will not pass their pickets want deliberately to inflict hardship on fellow citizens or put any of them out of a job, but they must recognise that they are doing both so long as the present strike continues.
In particular I am at a loss to understand why the workers who are not in dispute have failed to answer the call from the Congress of Trade Unions to pass the pickets. I would appeal to them on behalf of all who are suffering through the absence of buses to answer the call of their own congress to go back to work and thereby show solidarity and sympathy with their fellow citizens. By doing so they would also recognise that it is the tax contributions of these citizens now deprived of bus transport that are contributing towards the massive subvention, currently £74 million, that is keeping CIE workers in their jobs.
The debate in Dáil Éireann on this Bill last week indicated a widespread wish for a fundamental review of CIE and of transport policy generally. This is a matter which is already being pursued in the context of the McKinsey Report on CIE and which will be one of my principal priorities in the months immediately ahead. I commend the Bill to the House.