I thank the House for the invitation to outline my policy priorities. Given the span of the brief in my portfolio and the relatively limited time at my disposal, I will use this address to focus on what I see as the key priorities. I look forward to elaborating on these in the question and answer session.
I have responsibility for policy in the areas of communications, broadcasting, energy and natural resources. As Members will readily see, this is a wide remit encompassing areas of major economic and social importance. The voted expenditure in my Department is small at €495 million in 2011 and the numbers employed have fallen to 260, down from 339 at the beginning of 2008. This presents challenges to my Department, which has a large regulatory, economic and competition policy brief. Over time, staff have shown great flexibility in reconfiguring internally to address emerging priorities and to work co-operatively with the regulators and agencies under the aegis of my Department to ensure our shared expertise is appropriately deployed.
It is self-evident that energy and communications are critical to sustainable economic and social development. Broadcasting and the media generally are important industries in their own right as well as playing key roles in our democratic, sporting and cultural lives. The Department must also oversee the regulation of key national resources such as petroleum and mineral exploration as well as our inland fisheries resource. My Department also operates the corporate governance and general oversight role of seven commercial State bodies employing 21,425 persons and of eight non-commercial state bodies employing 769 persons. In addition, three independent regulatory authorities operate under the general aegis of my Department in the areas of energy, communications and broadcasting.
The work of my Department also involves external interaction with numerous stakeholders, notably commercial private entities. The days of full State monopolies in the energy, communications and broadcasting sectors are gone. This may be a welcome development on competitive and consumer choice grounds but it results in a complex policy environment in areas which by their nature are complex. Added to this is the strong EU policy framework that traverses most of the Department. The cumulative effect is a challenging environment for policymakers. Equally, however, these are dynamic areas where one cannot stand still in policy terms. Accordingly, I intend to drive an ambitious policy programme in the various sectors. My Department has the responsibility of ensuring that significant parts of Ireland's essential economic infrastructure run smoothly and efficiently. While the global and domestic economies face such turbulence, the work we have is both more challenging and more important.
I will commence with the energy sector. The current framework for energy policy rests on three fundamental pillars: competitiveness; security of supply; and environmental sustainability. I recognise that the cost of energy in Ireland is a key element in the competitiveness mix. Contrary to some misleading commentary, Ireland's electricity and gas markets, both wholesale and retail, are characterised by strong and vigorous competition regulated by the independent statutory regulator, the Commission for Energy Regulation. The retail electricity market is now fully deregulated. The small to medium business segment of the gas retail market was deregulated from 1 October last. From now on residential consumers form the only regulated part of the gas market. As a result, business and domestic customers can increasingly avail of competitive offerings from electricity and gas supply companies active in the retail end of the market.
It has been claimed that Ireland has the highest electricity and gas prices in EU. However, EUROSTAT data published recently by the Sustainable Energy Authority of Ireland show that Irish electricity and gas prices at the end of 2010 were competitive when compared with our European neighbours. In other words, our prices are at the EU average. In the two years to the end of 2010, the two predominant trends in electricity and gas prices for domestic and business consumers were convergence to the EU average and falling prices. The reality is Ireland is vulnerable to volatile international gas and oil prices. In the past year, international energy prices have increased significantly. The wholesale gas price for the coming winter is more than 30% higher than last winter.
The recent CER decision to approve a 21.7% increase in the Bord Gáis tariff from 1 October is the first price increase for the company's residential gas customers since September 2008. It follows three successive price cuts. The increase in the price of gas internationally is also the cause of the recent increases in the price of electricity. I am acutely aware of the impact of these increases on businesses and domestic consumers. I can assure Members that I am determined, in consultation with the regulator and the energy companies, to ensure that everything is done to restrain costs which are within our own control. In the case of State-owned energy companies, I will shortly be meeting again the chairs and management to impress this imperative on them.
I am also very concerned at the impact of gas and electricity price increases on vulnerable households. I will shortly be submitting a memorandum to the Government on an energy affordability strategy. The various supports to address fuel poverty which come under the aegis of the Minister for Social Protection are very important. In addition, a fundamental element of the fight against fuel poverty must also be improving the energy efficiency of the homes of those in fuel poverty. The warmer homes scheme funded by my Department plays a key role in this regard and it is my objective to see this scheme maintained and indeed accelerated. In the longer term, energy efficient and well insulated homes are a permanent and most cost-efficient way of addressing fuel poverty.
I am also glad to have been able to agree with the energy companies, with the approval of the regulator, that there will be no disconnections this winter provided families in financial difficulty have entered a pay plan or agree to the installation of a pay-as-you-go meter.
I have referred to our exposure to international prices. Achieving security of supply requires us to reduce our dependence on imported fossil fuels, reduce our carbon footprint and invest in our infrastructure. As regards infrastructure, there are a number of priority programmes and projects.
EirGrid's national grid development strategy, GRID 25, is of key importance both from the viewpoint of improving our infrastructure and enabling us to meet our binding renewable energy targets. It is vitally important that we recognise the national and local importance in economic and social terms of reliable and efficient energy infrastructure. For example, the east-west electricity interconnector between Ireland and the United Kingdom will be completed by the end of next year. It will improve security of supply, as well as increasing competition. The North-South electricity link from Meath to Tyrone is also a key strategic project and is critical to ensuring energy supply adequacy on the island of Ireland. In line with the commitment in the programme for Government, I have established an independent commission of international experts to review and report, within six months, on the case for and cost of placing underground all or some of the Meath-Tyrone 400KV power lines.
I expect to have the report of the commission in the near future. After consideration by the Government, the report will be published. I stress that the enhancement of the North-South link is an essential investment in the interests of both economies and all energy consumers on both sides of the Border, and I am determined to see it delivered. I will also give priority to advancing commercial development of gas facilities and enhancing our ability to respond to any oil supply shortages.
The sale of a minority stake in the ESB as an integrated utility, as agreed by the Government, is an early demonstration of the commitment by the Government to the programme for Government's objectives and its obligations under the EU-IMF memorandum of understanding. This sale will be advanced by means of a defined process involving a full evaluation of the best approach to be taken, including consideration of the size of the minority stake to be sold. That process will be progressed by a group co-chaired by the Department of Communications, Energy and Natural Resources and the Department of Public Expenditure and Reform, also including officials from the Department of Finance and availing of expertise from the National Treasury Management Agency and NewERA. Full consideration will be taken of the energy policy and regulatory framework in this evaluation, and appropriate consultation will be engaged in. The group will report back to the Government with a recommendation by the end of November.
The decision to sell a minority share in the ESB recognises the strategic importance of the energy sector to the economic and social functioning of the State, and that the State must continue to have a strong and direct presence in electricity, particularly in the regulated transmission and distribution networks. This presence must be maintained in a way that protects overall economic competitiveness and does not deter private investment. The process to analyse options for the minority stake sale in the ESB will fully reflect these principles.
I take the opportunity to formally reiterate the Government's commitment to deliver 16% of all our energy from renewable sources by 2020. This is consistent with our EU obligations. We will achieve that through our national sectoral targets of 40% renewable electricity, 12% renewable heat and 10% renewable transport. Overall renewable energy use grew by 14% during 2009 and by 15% per annum on average in the period 2005 to 2009. In 2009 alone, there was a 23% increase in wind power generation, with renewables now generating around 15% of our electricity consumption.
Increased use of renewable energy also contributes to our environmental targets. The Sustainable Energy Authority of Ireland, SEAI, figures show that renewables reduced our CO2 emissions by almost 3 million tonnes in 2009. The recent spike in gas prices show that it is wrong to predicate policy on the availability of volatile imported fossil fuels. Studies by both EirGrid and the SEAI have also indicated that wind power generation does not adversely impact on electricity prices.
Energy efficiency plays a key role in meeting our sustainable energy targets. It also reduces energy bills and helps redress fuel poverty. The Better Energy programme is central to my efforts to meet the 20% energy savings target by 2020. Over 96,000 homes have now been grant-assisted to improve their energy efficiency, resulting in economic activity of over €280 million since the scheme's launch. I was very pleased to increase the investment this year to €100 million, which means that for 2011 the scheme is supporting 6,000 jobs. Energy suppliers are also being asked to participate in the programme through voluntary energy saving agreements.
As regards energy, it is my intention that a new energy policy framework will be published in 2012. Energy policy will be reviewed in the coming months in consultation with stakeholders. The new framework will take account of developments in the past few years since the publication of the 2007 White Paper.
The provision of high speed broadband is a key strategic national goal. The country is now playing catch-up for the lost years of lack of investment in broadband which followed the privatisation of the State's telecommunications network and the subsequent multiple changes in ownership in Eircom. Good strides have been made in more recent times both in regard to broadband penetration, speeds and competition. Much more needs to be done, however, to improve our national broadband infrastructure.
Commercial operators have been investing steadily in rolling out critical communications infrastructure in Ireland for several years. That investment has been of the order of €400 million and €500 million per annum. In this regard, it is important to highlight that Ireland's demographic factors present significant challenges for companies operating within network industries, including the electronic communications industry. Not only do we have considerably fewer people per square kilometre than many of our comparator countries, but it is also the case that our propensity for ribbon development of one-off housing adds to the mix of challenges.
The State has invested where it has identified market failure. Initiatives such as the metropolitan area networks, MANS, the national broadband scheme and major international interconnectivity projects are delivering important infrastructure and services to areas of Ireland which could not be served commercially. As a result of the combined efforts of the Government and the private sector, a basic broadband service will be available to all citizens across Ireland ahead of the EU target date of 2013. Meanwhile, speeds of up to 100 megabytes are now available to 500,000 households and industry investment is set to continue in the upgrading of services available.
As regards international comparisons of broadband penetration, various analyses are conducted periodically. The ComReg statistical report for the end of 2010, for example, noted that the latest OECD broadband data up to June 2010 ranked Ireland 13th of 19 EU states surveyed for fixed line broadband penetration per 100 inhabitants and third of 18 EU states surveyed for wireless broadband penetration per 100 inhabitants. A wider report on broadband services in 72 countries published in 2010 by the University of Oxford and the University of Oviedo, Spain, concluded that the broadband services available in Ireland were capable of meeting the requirements of broadband applications and overall, in terms of broadband quality and penetration, ranked Ireland 13th of the 72 countries studied.
International comparisons must be viewed in context and can present challenges. Issues such as advertised versus actual speeds, geographic spread of services, topography, population density and the number of people per household must all be taken into account when making comparisons between different jurisdictions. The important point that I wish to emphasise is that Ireland, while it may be behind the average for some measurements, is ahead on others and we have made significant improvements on some measurements in recent years. It is also the case that Ireland will meet the EU target of having a basic broadband service available to all citizens by 2013. The challenge now is to accelerate the roll-out of high speed broadband.
I am critically aware of the need to move now from the provision of basic broadband services to ensuring the widespread availability of next generation, high speed broadband. This is also a key Government priority and will be the key to delivering future economic and social development. Under the NewERA proposals in the programme for Government, there is a commitment to co-invest with the private sector and commercial semi-State sector to provide next generation broadband customer access to every home and business in the State. The next generation broadband task force has an important role in this regard. In June this year I convened the task force, which I chair, and which also comprises the Minister of State with responsibility for NewERA, Deputy Fergus O'Dowd, the CEOs of all of the major telecommunications companies currently operating in the Irish market and CEOs of some Internet service provider companies. The purpose of the task force, which will conclude its deliberations by the end of this year, is to discuss the optimal policy environment required to facilitate the provision of high speed broadband across Ireland. The work of the task force is progressing apace and that working with industry we will be in a position over the coming months to identify the optimal policy to deliver wider access to high speed broadband across Ireland.
This will require careful balancing, allowing industry to continue on its investment programmes and at the same time identifying where the State can facilitate development in areas where it is currently not commercially viable to provide an enhanced service. It will also require input from a range of public sector entities, including the communications regulator, ComReg, which will auction significant bands of spectrum in the coming months. This spectrum will facilitate the roll-out of next generation mobile broadband services while delivering significant revenues to the Exchequer.
There are also specific communications projects and programme that I wish to advance in the coming period. Earlier this year, I launched the rural broadband scheme, which aims to identify the last remaining premises in Ireland which do not have access to a broadband service. The three month application phase for the rural broadband scheme closed at the end of July and approximately 5,000 applications have been received. I expect to proceed with a procurement process for a service provider in the next two months. This programme builds on the national broadband scheme and will ensure that all citizens will have access to a basic broadband service before the EU target date of 2013.
In tandem with the roll-out of basic broadband to consumers, I am working to ensure the roll-out of 100mbps to all second level schools. A successful pilot programme has already delivered 100mbps broadband to 78 second level schools. The national roll-out of this programme is of fundamental importance to delivering on the commitment in the programme for Government to integrate ICT in teaching and learning across the curriculum. I have been engaged in discussions with the Minister for Education and Skills on the full roll-out, including the issue of funding. Clearly finances are extremely tight but this is a key strategic project in the context of preparing our students to be part of the digital workforce and in terms of delivering innovative educational outcomes.
Encouraging digital participation by all our people is a key priority and I am anxious to see schools, businesses arid citizens make the most of the opportunities presented by an emerging digital society. I recently launched a €1.6 million "Benefit 3" scheme which is specifically aimed at targeting those segments of society that are in danger of being left behind in terms of technological advancement. These include the unemployed, socially disadvantaged, elderly and people with disabilities. It is envisaged that grants will be awarded to successful projects later this month and I expect training to commence across the country in projects under the scheme from October. This scheme will enable some 40,000 to participate.
While we continue to support infrastructure development and encourage citizens to participate in the digital economy, we are also supporting industry through the work of the Digital Hub Development Agency and the National Digital Research Centre. The Digital Hub Development Agency currently supports 77 small enterprises employing over 800 people in Dublin 8. The NDRC, which is based at the Digital Hub and whose annual report I had the pleasure of launching earlier this morning, is supporting the translation of research ideas into commercial business propositions. In the coming months I will consider the optimum model for continuing these services in the longer term, with a view to ensuring synergies with similar initiatives across the public sector.
As I mentioned, encouraging participation in the digital economy by business and citizens is an important priority. Internet security and consumer confidence is a key element in persuading citizens and businesses to make more effective use of the Internet. I intend, in the coming months, to establish a dedicated cyber security unit within my Department with a view to assisting in identifying and protecting Irish businesses from cyber attacks. My overriding key priority, therefore, for the communications area is access, ensuring the infrastructure is in place to access basic and high speed Internet services and encouraging citizens and businesses to get online and access the social and economic opportunities which the Internet brings while safeguarding consumer rights.
Turning to broadcasting, I referred to the forthcoming spectrum auction. This spectrum partly arises from Ireland's national digital switchover strategy which provides for the closure of the analogue television network before the end of 2012 and the release of the resultant spectrum with the benefits to which I alluded. I am keenly aware of the challenges this initiative brings, in particular for Irish households which are reliant on the analogue television network. All households reliant on the aerial television network will need to upgrade to digital television or they will lose access to television. To overcome the challenges that digital switchover brings, we must also assist people with information and practical assistance to ensure that no one is left behind as Ireland goes digital. I will implement a substantial information campaign providing households with information on the digital switchover and on their options for going digital. This information campaign will start shortly.
In conjunction with this, my Department is developing plans to address the particular needs of vulnerable households as they prepare to go digital. In this context, the expertise and local knowledge of the many voluntary and charity organisations around the country will be of critical importance to ensuring the success of the switchover process. I have asked my Department to ensure that to the greatest possible extent these organisations play a major part in our information and assistance campaign.
My Department is also examining the effectiveness and efficiency of the current model of television licence fee collection in light of the programme for Government and the issues surrounding the current licence model. These issues include the current levels of evasion, inequities in the system, the cost of administration and the problems being posed by convergence of technologies. I expect that my officials will be ready to provide me with a first report with initial high level recommendations before the end of the year. Based on the experience in other countries, however, it is likely to take a minimum of two years before a fundamental system change could be implemented.
Regulation of the broadcasting market is the responsibility of the Broadcasting Authority of Ireland. The State broadcasting companies are facing serious financial situations largely arising from the major reduction in advertising and sponsorship revenue. The focus must be on forensic cost control by management in these organisations and I acknowledge the work already done in that regard. I also recognise the major contribution made by the private broadcasting sector and will continue to work with them on the various issues that arise.
As I pointed out when I brought the postal Bill through the House before the summer recess, the postal sector worldwide has evolved significantly in the past decade. Some 90% of letter post is now business-related and this has implications for how postal service providers, including An Post, must position themselves. An Post must look afresh at its relationships with its customers, and its competitors, and adapt accordingly. It must actively seek to meet the needs of its users, look at ways of harnessing the potential of electronic communications and incorporating them into its product offerings and grow its business accordingly.
An Post faces serious challenges, especially as its core mail revenue continues to decline. It is also heavily dependent on State contracts to generate revenue. On the plus side, An Post has many genuine strengths, such as a dedicated workforce, a trusted brand and a strong visible presence in every community in Ireland on every working day of the year — a presence that very few, if any, competitors will be in a position to replicate. An Post and its staff must play to these strengths and ensure that its resources are aligned with the needs of its users. To do so will involve significant change. This is already under way but it must be strongly driven in the light of the challenges the company faces. Above all, it must reduce its overall cost base and successfully innovate to attract the core revenue it is losing.
In relation to the procurement process for a national postcode, the House will be aware that this is under way and is being managed on a ring-fenced basis by my Department. The final decision to proceed with the implementation of a national postcode will be one for Government and will be based on appropriate financial, technical and operational considerations.
The development of policy, legislation and oversight of the petroleum, minerals and inland fisheries sectors are important objectives in the natural resources sector and I intend to bring forward a significant Bill to modernise and consolidate the legislative code for mineral exploration and extraction.
Completion of the development phase of the Corrib gas project is of critical strategic importance for Ireland. Production of gas from the Corrib gas field will significantly strengthen Ireland's energy security of supply as it will reduce our reliance on gas imports and help to encourage further exploration in the Irish offshore. At peak production the Corrib field will provide over 60% of Ireland's natural gas needs. Unless further commercial discoveries are made in the short term — many people are helping me in that search; they are out there every morning — Ireland's energy security will begin to weaken once peak production from the Corrib field has passed. For this reason it is of critical importance that Ireland can encourage an immediate increase in the level of exploration activity in the Irish offshore and in particular an increase in drilling activity.
To achieve this and because at this time Ireland does not have the capacity to establish a State oil and exploration company, Ireland needs to maintain a realistic fiscal regime that reflects our relative attractiveness as a place to invest in petroleum exploration. We also need a regulatory framework that is appropriate in terms of its transparency and effectiveness. I recognise the need to promote public confidence that exploration for petroleum will be carried out to high standards in terms of ensuring safety and protection of our environment. I have recently written to Members of this House who represent areas where onshore exploration drilling might be proposed in the future, to set out for them how any such proposals would be subject to detailed scrutiny.
We must also be realistic when we consider how Ireland might benefit from its natural resources. Talking about potential resources that we do not know are actually there, as if they are resources we can bank on, is not helpful.
Measures for the conservation and exploitation of the inland fisheries resource contribute to the economic and social fabric, in particular of rural and coastal communities. In adopting policies for this sector my Department aims to ensure that such measures should maximise the social and economic return for these communities and the State.
I wish to conclude with a brief reference to public sector reform. I have alluded to the major reduction in staffing levels in my Department in recent times. As I indicated during the Estimates discussion in July, I have some concerns in this regard in terms of its impact on achievement of our wide and ambitious policy programme. Given the complexity of the policy environment, it is important that the Department maintains the necessary expertise to discharge its policy advisory and other roles. My Department also has a small but crucial technical cadre in areas such as exploration, mining, energy, communications and the Geological Survey of Ireland. These are key roles in terms of protecting the State and public interest and it is important that they are adequately resourced.
My Department has set out a strong programme of reform under the Croke Park agreement. In particular, it has embraced the concept of shared services with the IT function now administered by the Department of Agriculture, Food and Fisheries and the payroll function now administered by the Department of Finance. These measures are expected to yield almost €500,000 savings in a full year. This is additional to some €2 million in payroll savings since 2008 arising from the reduction in numbers to which I referred. The Department has also realised savings on the non-pay administrative budget side of almost €1.5 million.
I will continue to ensure that my Department contributes fully to public sector reform. Given the scale of the Department, at 260 staff, this is most likely to be in the form of increased shared services, employment of specialists and interns and joint procurement initiatives with other Departments.
In this address, I have touched on some of the key areas of my brief. I look forward to attempting to answer any questions colleagues may have.