I move amendment No. 1:
In page 3, line 23, after "expenditure" to insert "and the distortion of market competition".
I welcome the Minister of State to the House.
Transport (Córas Iompair Éireann and Subsidiary Companies Borrowings) Bill 2012: Committee and Remaining Stages
SECTION 1
Amendments Nos. 1, 3 and 4, inclusive, are related and may be discussed together, by agreement. Is that agreed? Agreed.
I was welcoming the Minister of State to the House. We held an interesting debate on some related matters last week. The Minister of State raised a valuable point about a matter on which he was working, namely, the empty leg of a school bus trip when the driver goes home after delivering the children to school. The Minister of State wondered whether there would be any way to use that leg in rural areas where there was a deficit in formal public transport services. He would like to develop this initiative and I commend him for his idea.
I will address the amendments, but the previous way of dealing with this issue was the rural transport initiative, which spent €9 million on 500,000 journeys, amounting to €36 per round trip. The Minister of State's proposal is an advance on this and illustrates that he is thinking outside the system.
Having run out of money in the middle of the year and needing an extra €36 million, the company covered by this Bill is seeking more borrowing powers. Two problems inform the amendments that I have tabled, of which monopolistic thinking is first. Since the 1930s, a significant amount of public money has been given to a single company and there has been no competition for those subsidies. A grant was directly awarded, but this is an inefficient system. Much to the annoyance of the then Senator Paschal Donohoe, the 2009 debate on that grant was guillotined. Even the amount of time that the then President had to read the documentation on that uncompetitive way of doing business was curtailed by the invocation of a section of the Constitution.
We need more than one instrument to realise what we seek to do in terms of transport. We also need a much higher standard of evaluation of investments. Left to itself, CIE will get into trouble again, the Minister of State and his successors will come to the Seanad looking for more money and the projects will not be evaluated.
Amendment No. 1 attempts to address these problems. As proposed by the Minister of State, page 3 of the Bill reads: "the Board may, other than for the purposes of capital expenditure". This relates to non-capital borrowing and should read "other than for the purposes of capital expenditure and the distortion of market competition". I have misgivings about non-capital borrowing. With capital borrowing, there is at least the pretence that an asset is being created.
Can we address the underlining productivity problems to which the Minister of State referred last week? There has been a 20% reduction in passenger numbers and an estimated 95% of rail freight has disappeared in a ten or 15-year period. If the lost passenger kilometres and freight tonne kilometres are divided by the number of staff, productivity has declined, despite a considerable programme of capital investment.
For what will the money be used? As the Minister of State mentioned, it will be for non-capital purposes, but it should not be used to distort competition further. The October 2011 AECOM-Goodbody review of Iarnród Éireann contained a wealth of evidence. On routes from Dublin to Belfast, Cork, Waterford and, notably, Galway, there is an active, growing, independent bus sector. For example, there are 45 frequences per day to Galway. This expansion in particular has taken approximately 45% of business from trains. The overall decline in train passenger numbers is approximately 20%, but the Galway route has lost approximately 40%. Many customers want to use that route, as the motorway has improved accessibility. They are obviously attracted to this option, as they have diverted to it. For the taxpayer, the attraction is that the companies in question do not ask the Oireachtas for money on a regular basis. Their investments must be in the marketplace and meet the criteria, which is not CIE's record.
The Minister for Transport, Tourism and Sport intends these moneys to be used to meet obligations to the National Transport Authority, NTA. The Bill reads: "for meeting its obligations and carrying out its duties". My problem with this is that there was no competitive tendering for those obligations. Through my amendment, I hope to provide the NTA with a say over the €36 million emergency funding. The increased borrowing from €107 million to €300 million should at least be used for purposes that are not decided by CIE, but by the independent NTA and, as I call for in subsequent amendments, the Minister.
I fear that this problem will recur. CIE has a record of looking for more money and the Department has a record of not listening to alternative service suppliers, yet those services are being readily availed of in the open market, particularly on the routes to which I referred. Policy is being made in too narrow a circle. The House should not vote money to disadvantage further those people who do not ask us for subsidies and who compete openly in the market. The issue of what the money will be used for is crucial. The Bill specifies that it is not to be used for capital purposes, but I would add that it should not be used to distort competition and drive out of business those companies that pay their way.
This has been a problem for many decades. As Mr. Justice Bryan McMahon found in the Swords Express case, the Department doubly disadvantaged the applicant. Galway deregulation occurred because Mr. Pat Nestor took the Department to court. The Department has a bad record of seeking market alternatives. Unless the House and the Minister of State make a stand, this money will likely distort competition further. A company that has received free buses from the taxpayer and more than €500 million in Exchequer grants is competing against companies that pay for their own buses and never seek operating subsidies. We must ensure that this situation does not continue. I appreciate the Minister of State's wish for this money to be used to meet CIE's obligations and to carry out its duties and for them to be independently specified. This is the purpose of amendments Nos. 1 and 2. May I discuss amendment No. 3?
We are discussing amendments Nos. 1, 3 and 4 together.
I thank the Acting Chairman for his guidance. Amendment No. 4 reads: "and not for the purpose of distorting market competition". I have addressed this point and I thank the House for its indulgence.
Amendment No. 3 relates to the top of page 4. As I interpret this section, the CIE board establishes the priority of such charges. I hope my interpretation is correct. I am citing the top two lines on page 4, which read: "establishing the priority of such charges among themselves". Does this mean among board members? The board is the problem.
The guidance on how the money will be spent should include the Minister for Public Expenditure and Reform, the Minister for Transport, Tourism and Sport and the NTA and involve some independent evaluation of the investments. As such, it should be subject to section 1(1), which specifies that expenditure would be made "with the consent of the Minister and of the Minister for Public Expenditure and Reform". If I have interpreted the provision correctly, it would be wrong for the board to make this decision without referring to the Ministers.
We are trying to correct a problem rather than providing more money for the organisation to continue as it has up to now. Those comments relate to the sections regarding competition.
Is this a serious proposal? The Goodbody report from 2005 indicated that the independent bus fleet, with 4,859 vehicles, provided double the capacity of the Dublin Bus and Bus Éireann fleet, with 6,000 employees. They expanded fleets by 91% without subsidy between 1992 and 2003, with an income of €307 million in 2003, some 77% more than Dublin Bus, 41% more than Bus Éireann and 124% more than railway passenger receipts. They are big operators with a remarkable business despite the best efforts of the Department to stop them doing that business.
We should bring these operators into play because the country is short of money. If we are to give more money to today's applicant, we need new procedures, a more active Department and the involvement of other Ministers. The National Transport Authority should buy this socially necessary transport on behalf of society as a whole rather than having the strange position of having the decisions made by the board of CIE. Later sections of the Bill also indicate that decisions are to be made by the board of CIE.
As the organisation is applying to operate services for the Minister on behalf of the wider society, it is not worth handing over all the sovereignty to the board to decide on what to spend the money. This is an opportunity to act, as there is a difficulty in the public finances in this company which arose after the Dáil and the Seanad adjourned. Did the company not know it was running out of money before July and why could we not have had this discussion in the spring? The Minister of State's suggestions could have been brought forward along with mine at that stage. Much stricter controls are necessary to ensure a proper performance in the market and proper value for public money, which requires safeguards.
I welcome the Minister of State. I know he has listened very carefully to Senator Barrett's comments in the past and will do so on this occasion as well. I come from a business background where we did not understand the distortion of the market through subsidies to competitors. We can consider the example of air traffic. I have often said how we remember what used to happen with the Dublin-London route. There were two airlines, both owned by governments and subsidised. They were not run in the interests of the customer but rather the interests of the owners. The United Kingdom owned British Airways and Aer Lingus was owned by the Government. I am pleased to say that whether we were forced or encouraged by the European Union to bring it about, we grabbed hold of the issue and put competition in the sector.
We can see how dramatic change has occurred, not just with Ryanair and other airlines entering the market but within the airlines that operated on the route, such as Aer Lingus, because they had to adjust to the market in the interests of consumers. It seems we have not come to that point in other transport areas, where competition will solve problems. Senator Barrett has outlined how the market is distorted, when a subsidy is used for the loss-making operation of a State company. The company is not being run in the interests of the consumer or its customers but rather the interest of its owners, the State and the taxpayer. Senator Barrett has made a strong case and it should not be ignored.
I thank the Senators for their comments and appreciate the spirit in which they were made. I will get to amendments Nos. 1, 3 and 4. We are in difficult circumstances. We have had a fairly thorough debate and I hope Senators appreciate the honesty with which I conduct debates every time I come here. I have probably been here on more occasions than most in discussing my areas of responsibility.
CIE was caught in a perfect storm. I am not saying that everything done by the company is perfect as I know that is not the case. Passenger numbers declined, which hit revenues, and the company was also severely affected by the necessity to change the public service order subvention. It was affected by the change in the fuel rebate and fluctuation in fuel prices as well. The combination of those factors had a major impact on the company's circumstances.
I understand the commentary but we should remember that we have one of the least subsidised public transport systems in the 27 EU countries. I remember noting that when I was an MEP. By and large, public transport does not make money, although it is a necessity for a state for other economic and social reasons. Cherry-picking certain components can lead to them being profitable but we must consider necessary integration. That fact cannot be lost.
The Government is in the process of considering bus markets but I challenge anybody to put forward a model that would make competition viable in Irish rail. It would be very challenging to bring about competition and make it profitable. We are in a challenging environment but we must work with what we have. The controls referenced by the Senators, and which are noted in the amendments I will address in a few minutes, are being dealt with by the Department. There is a hands-on relationship between the Department and the company that is necessitated by the current environment. This is relevant to the issues contained in the amendments, although there are practical reasons I will not accept them. I nevertheless accept the spirit in which the amendments have been tabled. The issue is in flux and must be managed. I welcome Senator Barrett's comments on rural transport and the operation of school bus services.
I cannot agree to amendment No. 1 as the reference to distortion of market competition is not appropriate to a general provision dealing with shareholder consent for borrowing by CIE. It is implicit that Ministers must have regard to EU state aid rules and competition law requirements, of which I am sure the Senators are well aware in so far as such matters may arise in granting consent to specific borrowing proposals.
Amendment No. 3 is not warranted. The intention of subsection (3) is to enable CIE to offer security for its borrowings. The wording is similar to that used in other legislation conferring this power in respect of the granting of security to lenders. Subsection (3)(b), as currently worded, merely provides that the priority of security arrangements may be agreed with lenders. Where such security is required, the current text provides that the terms and conditions of such security for loan finance necessitates ministerial consent under subsection (1). The Minister has the ultimate power in that regard. I do not favour amendment No. 4 as it is not appropriate to a provision dealing with security arrangements for lenders.
Coming into this Department I had to assess, with my colleague, the Minister, Deputy Varadkar, many of the options in terms of competition, its impact in regard to Bus Éireann, the Expressway routes, whether some areas have improved and so on.
We also have to examine international comparisons and I will make two general points on that issue because they may shape some of the other comments on the amendments. First, I believe there is no such thing as best practice; there is practice in circumstances. Ireland is different from Britain which is different from France and Germany. One size does not fit all. We can take practice and circumstances and we can learn from what others do but all circumstances are different and we must shape policy in accordance with the requirements of each individual state and its needs for public transport. I would do that in every other area.
Second, we must understand that competition imposes other responsibilities in regard to the interoperability and integration of services. I am working hard on many integration services and whether it be the Leap card, which I had to take over to get it over the line, various other national journey planners or integration of timetables across services, they must all be borne in mind to ensure that we do not lose out wherever there is an opening up of markets. There are experiences in other jurisdictions where there are savings to the state and profit making by private operators, and fair play to them, but over the medium to long term we see that in many cases competition deteriorates. I give the example of Sweden in that regard. Those are two points to bear in mind regarding that general topic. I oppose the first three grouped amendments for the reasons stated even though I acknowledge they were tabled because of the sincere wishes of the Senators.
I support the Minister of State and we will be opposing the amendments. I understand Senator Barrett's concerns that this money may be used to subsidise routes but we must remember the emphasis in terms of this Bill. Twenty-five years ago CIE's borrowing limit was IR£107 million and its borrowing limit now has been increased to €300 million. It is important to remember also that the changes in the Bill remove the possibility of the State guaranteeing these borrowings, in other words, we cannot break European Union law in regard to guaranteeing this and, therefore, CIE must stand on its own feet in that if it borrows this €300 million it must pay it back.
CIE is in the business of public transport and as the Minister stated, public transport does not make money. Public transport must be provided for the people but for the best value and to allow the best usage. As I stated on the previous occasion, we cannot allow private companies or CIE to cherry-pick the profitable routes. Public transport is about providing services to all parts of the country - rural and urban. We may say that certain routes are profitable but they still must be provided because people in rural Ireland deserve to be supported.
Under the Minister of State CIE will be watched in terms of the way it borrows and spends this money. We must remember that in regard to CIE's many losses in the past three years. Some €113 million was spent in the restructuring of the company and there are 557 fewer employees. The Minister of State, Deputy Kelly, and the Minister, Deputy Varadkar, are making CIE a leaner, meaner, better company and I have full confidence in both of them in this matter. I will be opposing the amendments.
We also have commitments to the IMF and reference was made to the rail review and the need not to further distort competition. It is concerned about this area but I will not press the amendment because I am having a dialogue with the Minister and not in a confrontational way. It is documented in the strategic rail review that the independent bus companies have provided a service without subsidy or investment grants. Bus Éireann gets €300,000 to compete with those companies.
I always hear the Department saying the position is different in Sweden and the United Kingdom. These are independent Irish companies. They do not get any subsidy, yet they have gone on to dominate most of the routes in terms of frequency. Presumably, the Minister, Deputy Bruton, would welcome people like that in terms of innovation and entrepreneurship. That is what the economy needs. I want the maximum pressure put on CIE not to go to the Department, run out of money half way through the year or try to achieve regulatory capture over the Department, which it has, but to develop much stricter investment appraisals than it has had previously. The Minister referred to some of those on the previous occasion. The more competitive pressure it is put under, the better.
Senator Quinn mentioned Aer Lingus, which was always seeking free capital when it was a monopoly. Under the current management and board it has responded better than any other State airline to the Ryanair challenge. In our circumstances feather-bedding by any company, including CIE, is not a good idea.
The National Transport Authority, which got off to a bad footing in this House by awarding all the routes through direct award contract without competitive tendering, must act on behalf of the taxpayer. What is the point in subsidising one person with a free bus and an operating subsidy when we have not even asked any other operator? It must step up to the plate in that regard.
I may have misinterpreted but I understand "among themselves" to mean between CIE and its lenders rather than the CIE board. I appreciate what the Minister said about controls. Section 1, which amends section 28(1) of the principal Act, states that the Minister for Public Expenditure and Reform and the Minister will be involved because this is not the first time this company has been in crisis. It has a record of seeking supplementary Estimates. The Minister published the supplementary Estimate for €36 million but that money was taken out of other areas in his Department, including road safety, public transport agencies, the smarter travel and carbon reduction programme, the public transport investment programme, the maritime administration and coastguard programme, the sports grants, the national sports campus, and tourism product development. As the Minister stated, that is a lot of money and we must make the company aware that this Parliament, which would be reluctant to take money from all the other areas he mentioned, does not want this to recur. We need an institutional structure that ensures that if it cannot operate a route we immediately have some other operator come in and do so. Perhaps we should take the Minister's idea on the school bus service in that we will be able to accomplish more for less, which is one of the goals of all of us. I thank the Minister for his response. I will not press amendments Nos. 1, 3 and 4.
Amendment, by leave, withdrawn.
I move amendment No. 2:
In page 3, line 26, after “determine)” to insert “and the National Transport Authority”.
We have covered this amendment. It concerns a role for the National Transport Authority. It is being moved separately but have we discussed it.
Amendment, by leave, withdrawn.
Amendments Nos. 3 and 4 not moved.
I move amendment No. 5:
In page 4, line 20, after “capital” to insert the following:
“and where an independent investment appraisal of the capital expenditure has been published”.
My amendment seeks to add “and where an independent investment appraisal of the capital expenditure has been published” after "the provision of moneys for meeting any expenses incurred in connection with any permanent work the cost of which is properly chargeable to capital;". I am trying to deal with the capital side. We have dealt with the current side and our concerns about competition. This is a problem the Governor of the Central Bank wrote about in his ESRI days. Far too many capital expenditure appraisals in Ireland are part of the PR industry and are prepared by the promoters of projects. The promoters of the project know very well where the Exchequer is for funding the project but we do not have a guarantee of a return.
In respect of the wider problem of the public finances, we do not need just a new Department to deal with public expenditure and reform but a central office of project evaluation that would publish evaluations, leave them for a year and at the end we could see the alternative and examine whether the calculation of costs is rigorous. This was a serious problem with Transport 21. The transport projects within it were not costed and the costings were not published individually. We knew the total bundle amounted to €34 billion. This is public money and the institutional framework to ensure it is spent efficiently is that the Comptroller and Auditor General turns up afterwards when it is all over. He acts as a coroner but we need early warning systems and we need to heed the Honohan caution that too many cost benefit analyses are done by promoters of projects.
I saw the cost benefit analysis for the Kildare route project but there are more redactions than pages in the document. With the previous Minister with responsibility for energy, I appeared on a programme with Miriam O'Callaghan on the subject of the metro to Dublin Airport. We called it the Tipp-Ex report because so many numbers were covered by Tipp-Ex. Miriam O'Callaghan felt very strongly about it and I only played only a minor part in the debate. This is not good enough. Too much project appraisal amounts to secret subsidy seeking. Projects are not published upfront. We spend money on enough projects but we do not get good projects. There is a mountain of debt in the Department of Finance, which is why we are in trouble financially.
We need stricter criteria for capital expenditure and they should be included in legislation. People ask what Parliament was doing about this but I have tabled an amendment requiring independent appraisal of capital expenditure. According to the IMF last week, even with a reduction, the capital programme remains approximately 4.2% of GDP compared with 2.8% throughout the OECD. It is an extremely large capital programme and has been captured in the past by the construction industry. The beneficiaries think it is wonderful but society as a whole pays the bill. We should be given some undertaking that the benefits exceed the costs and that there is the return from the projects. I support the Minister of State by saying we should have a strict review of capital and a greater role for the Department of Finance before we decide on capital projects such as the Kildare route project. In that case, the number of tracks doubled and the number of passengers decreased. Two additional tracks are not in use. There is a record of investments that do not yield a return and the Department must intervene. I have suggested the form in which it should intervene.
Government Members will oppose this amendment. I understand Senator Barrett's sentiments in suggesting an independent investment appraisal of capital expenditure be published but I have the utmost confidence in the Minister and the Minister for Public Expenditure and Reform. If CIE and the board want to invest in capital projects, the proposal passes through two Departments. A third body will lead to delays in important decisions on capital investment. I am not saying it would be incorrect but the independent body may decide that key investment should not be made. Where does that leave the Minister for Transport, Tourism and Sport, the Minister for Public Expenditure and Reform and the board of CIE? Where does it go for a decision on whether the money should be spent? I have the utmost confidence and I do not agree with the amendment. The Departments will be heavily involved if there is major investment. I have utmost confidence that departmental officials will take everything into account before decisions are made to agree to capital expenditure proposals.
I appreciate Senator Barrett's strong views on the importance of robust capital appraisal of public transport investment. He has made long-standing commentary on the issue. I am not in favour of the amendment proposing independent appraisal of capital expenditure, even though I have no disagreement with him on the need for projects to be appraised to the required standard by public transport operators.
All agencies under the aegis of my Department are required to adhere to the Department's common appraisal framework, which was put in place in June 2009. I am sure Senator Barrett is aware of it. A key element of the framework is guidance on the conduct of cost benefit analysis, which is a requirement for all projects with the capital costs of €30 million or more. Furthermore, the public expenditure code of the Department of Public Expenditure and Reform, from July 2012, includes a wide range of material on the appraisal of programmes and projects, including a guide to cost benefit analysis. The code brings together all previous advisory material in order that procedures are up to speed with national and international guidelines and practices. The code strengthens procedures in order that citizens can be sure they are getting best value for use of scarce public funds. All public transport agencies will be required to adhere to these updated evaluation processes, with which I am sure the Senator agrees. I oppose the amendment.
Amendment, by leave, withdrawn.
I move amendment No. 6:
In page 4, to delete line 22.
My amendment proposes to delete "the acquisition of any other transport undertaking;". This is giving money to a company, which is short of money, to buy out its competitors. It is an utterly inappropriate use of public money. I do not want this money to be used to buy out competitors.
I have some sympathy for the Senator's view on this issue. Sections 1(4) and 1(5) restate previous provisions relating to the issuing of stock under section 28 of the Transport Act 1950. There is no current proposal for CIE to acquire any transport undertaking but, on balance, I prefer to retain the section, as it stands. I cannot accept the proposed amendment.
The section was included in 1950, in a different world. It has been pulled across to protect against something that may happen in the future, however unlikely. It is not proposed that the section would be used in any way. I do not think the Minister for Transport, Tourism and Sport, Deputy Varadkar, is proposing to nationalise the Swords Express.
Although the Deputy makes a good point, we will not accept the amendment purely on the basis that there might be some minor reason or requirement in the future to use this provision, and I do not wish to create a situation where that would not be possible and would require other legislation.
Amendment, by leave, withdrawn.
Section 1 agreed to.
SECTION 2
Amendments Nos. 7 to 9, inclusive, are related and may be discussed together. Is that agreed? Agreed.
I move amendment No. 7:
In page 4, line 39, after “fit” to insert the following:
“with the consent of the Minister, the Minister for Public Expenditure and Reform and the National Transport Authority”.
Again, these amendments relate to the safeguards we discussed. We want the consent of the Minister for Public Expenditure and Reform and the National Transport Authority. The provision currently provides that the board may lend money to a company - CIE lending to a subsidiary - to defray expenditure incurred by it for such purposes and subject to such terms and conditions as the board thinks fit. The board of CIE acts on our behalf and given the problems that arose in the first half of this year, should the Minister, the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, and the National Transport Authority not be involved? If it ran out of money in the first half of this year, should there not be stricter controls? That is the purpose of the amendment.
On amendment No. 8, line 41 on page 4 states one of the subsidiaries "may, with the consent of the Board (and subject to such terms and conditions as the Board may determine) raise or borrow money...". Is there a case that the Minister should be involved at that stage, given the track record? Amendment No. 9 relates to section 2(3)(b) which states "establishing the priority of such charges among themselves". The Minister said that is the normal format in legislation, but who are "themselves"? Is it just the board or do we have supervision of what it does?
That is the purpose of this batch of amendments.
I oppose these amendments. We do not believe it is appropriate to accept amendment No. 7 as there are already sufficient safeguards in the legislation relating to the control of CIE's borrowing. Section 2 updates section 20 of the Transport (Re-Organisation of Córas Iompair Éireann) Act 1986 which deals with the power of the board to lend money to its subsidiaries. It is important that this flexibility is available to the CIE group. In addition, the proposed new subsection (4) provides that the amounts borrowed by the board and the companies cannot exceed the ceiling of €300 million established under the amended section 28(1) of the 1950 Act. This borrowing requires the consent of both Ministers.
I do not consider amendment No. 8 appropriate. For corporate governance reasons it is the role of the CIE board to oversee lending within the CIE group, provided the €300 million ceiling for non-capital purposes is not exceeded, as provided for under subsection (4). I am opposed to amendment No. 9 because I do not believe there is a need for additional safeguards for the giving of security for borrowings, as the overall control of the CIE borrowing ceiling is set by both Ministers.
Given that the National Transport Authority, NTA, is mentioned in the amendment, it is important to point out that the NTA is a regulator, not a shareholder. Including it in the middle of this legislation would change that role and that is not the role of the NTA. I understand what the Senator is trying to provide for but the checks and balances I have outlined are sufficient.
On the amendments, I understand Senator Barrett's concerns. However, we must oppose the amendments. CIE is really three companies - Bus Éireann, Dublin Bus and Iarnród Éireann. The Minister cannot micromanage these companies. We must have confidence in the board that is appointed. If it believes it must lend money to any of the CIE subsidiaries, we must accept its judgment in the matter. We cannot have the Minister or the Minister of State micromanaging these companies.
Page 31 of the Aecom report states that the rail safety programme between 1999 and 2013 cost €1.7 billion. Indecon looked at it and found that it had saved 123 animals. They must be the most expensive animals ever. We must see where these programmes yield a return. In comparison, the safety budget of the Road Safety Authority is €18.6 million and the budget for the Health and Safety Authority is under €20 million in a year. We have these clichéd, very expensive programmes but does anybody ever evaluate them? That is my concern. There is an immense task before the Minister, Deputy Varadkar, and the Minister of State, Deputy Alan Kelly. The companies just continue on and then get into difficulties in the middle of the year, which is why the Bill is before us. Incidentally, page 93 of that document states that non-stopping private sector services are very competitive with rail in terms of end-to-end journeys. The costs are shown on page 141. It is 12 cent per kilometre by rail and another 12 cent in subsidy, while it is 7 cent by bus, some of which require no subsidy.
There are serious resource allocation issues that were not addressed, certainly before the Minister's term of office. While we are under pressure all the time about special needs assistants, home helps and so forth, some of these programmes are apparently being flagged through without question. The Minister mentioned one of them, the Dublin city centre re-signalling project from Lansdowne Road to Malahide. It cost €290 million. That is more than the Luas cost. What type of signals are involved and is there an independent appraisal as to whether that €290 million was a worthwhile investment? What is it supposed to do? Before the Abbeylara judgment limited the power of the Oireachtas there was an investigation by the House of a signalling programme on lightly used main lines which went from €18 million to €63 million. The inquiry had to be dropped because the courts decided the House could not investigate things where people might be found guilty.
All of these programmes must be analysed. The maintenance cost for a kilometre of track is €95,000 per annum. That is way in excess of what it costs to maintain the motorways other Senators mentioned. I hope the cost base is being addressed, despite the tradition of what I would see as a total capture of the Department by CIE. That is the spirit in which I put forward the amendments. As William Attley found in a report on behalf of one of the previous Governments, there is a strong tradition of engineer dominance rather than customer service in projects in this company. That issue must be addressed also.
I have outlined the position on the amendments. The Senator makes some very valid points about the evaluation process. There was a different regime in place prior to the current Government taking office and it is probably an area that was not considered enough. There was not enough evaluation. It is a case of needs must now. It is no longer appropriate to just do good projects; we must do the best projects, and we must ensure we get the best value. Those evaluations are required and will be done. With regard to the signalling the Senator mentioned, it is a very comprehensive project. It is about increasing the volume of train paths around Dublin, which is a very important project as regards efficiency, volumes of trains, getting better and more efficient timetabling and so forth.
I must admit that when I first took office one of the things that surprised me was the amount of money that has been spent on the railway safety programmes. It is colossal. The Senator's point is valid. Much of it relates to line improvements and issues relating to speed, signalling, gates and their management.
However, the Senator needs to bear in mind a number of things. First, we need to meet certain EU standards that affect cost. Second, we are talking about the future of CIE and how to minimise costs. In order to do that it is necessary to make an investment in automation and other areas to minimise future costs. It is not all just going out and not coming in; there is also an improvement in quality. While it might be stating the obvious, safety is clearly paramount.
The European Commission is considering a new railway package, which will come up during our Presidency. This may have other impacts on us when it comes to railway safety. That is something we need to monitor quite strictly given that this is an island surrounded by water. While there will be issues with the requirement for the interoperability of trains across Europe, we will not need to address those given that we are isolated. That is a matter I have already started to address in Brussels. I oppose the amendments.
Page 143 of the Aecom report states that it could cost between €90 million and €290 million to take 800 passengers a day from the Dublin to Galway buses that operate without subsidy. We need to look at those investments. A further €75 million would be required to take 300 passengers from J.J. Kavanagh & Sons, which runs the bus service without a subsidy. We need to consider whether these investments are worthwhile from the overall national point of view. I appreciate what the Minister of State has said and I support him. However, this was not done in the past and some horrendous numbers have appeared.
Amendment, by leave, withdrawn.
Amendments Nos. 8 and 9 not moved.
Section 2 agreed to.
SECTION 3
Government amendment No. 10:
In page 5, between lines 22 and 23, to insert the following:
“(b) section 2 of the Transport Act 1955;”.
This is a technical amendment which I hope the House will support. It will delete section 2 of the Transport Act 1955, the requirement for which has now been superseded by subsequent legislation concerning CIE borrowing, namely, section 5 of the Transport Act 1964 as amended, which deals with borrowing for capital purposes. I urge Senators to support the amendment.
I support the Minister of State.
Amendment agreed to.
Section 3, as amended, agreed to.
Sections 4 and 5 agreed to.
Title agreed to.
Bill reported with amendment and received for final consideration.
Question proposed: "That the Bill do now pass."
I commend the Minister of State for the work he is doing and wish him well.
I agree with Senator O'Sullivan's sentiments. I thank the Minister of State for his interest in the House and his openness to our ideas. It is a pleasure when he comes to the House. I wish him well in all his reforms in the Department.
I agree with the previous speakers and congratulate the Minister of State on his work, especially his work on the rural transport initiative. On his last occasion in the House he asked who had Leap cards. I can reveal to the House that I have a Leap card, which I used recently.
That is three now.
There are a few and I am sure there will be a few more the next time he is back in the House.
I thank the Minister of State for coming to the House. He has always been proactive in bringing legislation to the Seanad. The Department of Transport, Tourism and Sport under the guidance of the Minister, Deputy Leo Varadkar, and the Minister of State, Deputy Kelly, is in good hands. We have seen how proactive they are in introducing legislation to make public transport and all transport safer and, I hope, better run. I congratulate the Minister of State on getting the Bill through the House. I know that we in the Seanad will be more than willing to help in giving any further support we can.
I thank all the Senators for their contributions and kind words. It was my intention to introduce this Bill in the Seanad and I appreciate the constructive way Senator Barrett outlined his amendments. I appreciate the contributions of all the Senators on the various Stages. It is a topic that can give rise to discussion on many different areas. There are varying views on the mix of possible solutions. I appreciate that Senators put forward their views in the best interest. They should not think that I, as Minister of State with responsibility for public transport, do not take them on board. I always take them on board.
Question put and agreed to.
Sitting suspended at 12.50 p.m. and resumed at 3.30 p.m.