I will introduce my officials. They are the Secretary General of the Department, Mr. John Loughrey, the assistant secretary, Mr. Pat Mangan and Mr. Andy Cullen, assistant secretary, who is a Mister overall in the Department.
Estimates for Public Services, 1999.
Vote 32 - Public Enterprise (Revised).
I welcome the Minister, the Minister of State with special responsibility for Energy, Deputy Jacob, and their officials. The purpose of the meeting is to consider the Estimates that fall within the remit of the Department of Public Enterprise. The clerk advises me that Members have been circulated with the proposed timetable for discussion and I ask Members to keep contributions as short and as relevant as possible, as some Members want to finish by 8 p.m. The timetable provides for an opening statement from the Minister and Opposition spokesperson before a discussion of particular subheads in a question and answer session. I propose to deal with the subheads raised first by the Minister, then those raised by the Minister for State.
Do we have to stay until 8 p.m.?
No. That is just the proposed timetable. We can finish earlier.
In civil aviation, passenger traffic went from 8.8 million in 1994 to 14.7 million at Dublin, Shannon and Cork. Aer Rianta has forwarded a document to me on future strategic development and the Department has employed Warburg Dillon Read to assess that report and to come back to us on it. When they do so, probably in the middle of next month, I will report to Government.
Regional airports get marketing support and capital grants and there are essential services such as flights from Kerry, Galway and Donegal. The Department gave £1.5 million to Derry Airport as part of the North-South agreements. Aer Lingus sent us its major strategic alliance report and it has recommended British Airways and American Airlines to us. Solomon Smith and Barney are looking at this report and I will again be reporting to Cabinet on this in the middle of July.
Exchequer subvention this year in public transport is £109 million, a £1.8 million increase on 1998. The Estimates include £57 million capital grants and the outturn for 1998 is £8 million. I will not keep talking about the extra buses apart from saying that 50 of them are already there and another 50 will be introduced in October.
Regarding the public inquiry on the Sandyford-St. Stephen's Green line, Mr. Justice O'Leary has given me the report on this and I have circulated copies to every Member of the Oireachtas. We expect the light rail order for the Abbey Street to O'Connell Street line in August. Public consultation is continuing on this and I am sure public meetings are well attended. The Malahide Road and Lucan quality bus corridors are already in place and the Finglas, Blanchardstown and Stillorgan corridors will be finished this year and the remainder will be ready next year. However, the Malahide and Lucan corridors are having an impact.
The strategic planning guidelines refer to an improved DART service to Greystones and Malahide which will be introduced next year. There are 26 new DART carriages and 47 new rail carriages being purchased, some of which are already in place. There will be ten more in November. The Maynooth line is being upgraded and all the rail elements, when in place, will boost the existing development programme.
New stations are also being developed at suitable locations. The first stations are at Ashington, Lucan north, Lucan south and Monasterevan. Phase 1 of the enhancement of rail services to developmental centres, identified by the strategic planning guidelines, involves Drogheda, Naas, Newbridge, Kilcullen, Wicklow and Navan. Phase 2 involves Athy, Arklow, Kildare and Monasterevan. I share the view expressed by Deputy Bruton, and perhaps he shares mine, about housing developments, planning and rail transport.
The task force on rail safety will forward an interim report to me by the end of June. That will be an account of what it has achieved and it is ahead of schedule, particularly with regard to safety management. I will publish the report after six months. The task force envisages the renewal of 85 miles of jointed track in 1999, 41 miles have been completed. Risk mitigation work will be carried out on 70 level crossings. Interviews have been held for the two railway inspection officer posts and we will have a recommendation on that issue next week or the week after.
The DTO blueprint for 2000 to 2006 has been completed and will be based on Deputy Yates's timely Private Member's motion. It covers all methods of public transport in the greater Dublin area. The property development plan, including establishing the property owned by CIE and what is available outside Park and Ride and new stations, is being carried out by Sherry Fitzgerald. We had a limited competition which Sherry Fitzgerald won and it is at work on this matter. We should have its report in four to six weeks. We have allocated £2 billion, which is a fair amount of money, for the period 2000 to 2006. The Cabinet sub-committee, of which I am a member, has already met to deal with the capital needs of roads, rail, bus and so on.
Bord na Mona needs good weather but it does not look as if it is going to get it. The ESB has been a major success with profits of almost £200 million in 1998. We are engaged in legislation with further legislation to come. The Government has approved borrowings of £70 million for oil, giving a little comfort along the way for Whitegate. The company has significant plans. The DTR is in place and Tom Reeves will also be in place shortly.
The procedures for Telecom Éireann and the IPO are in place but we do not know how much it will cost or what will happen.
I wish to refer to the second paragraph on page 19 of the Minister's speech which states that the Government has decided to sell its entire 50 per cent shareholding in Telecom Éireann. Is this the first time this has been confirmed?
No, the Deputy was away.
I heard that the Government may sell its share but is this now definite?
The announcement was made while the Deputy was away. The figure is 50.1 per cent. An Post is a universal service provider.
I wish to cherry pick the issues which deserve special attention under this Estimate. The circumstances and the timing of this Estimate are truly historic in the context of a confluence of a number of issues. Exchequer finances have never been more favourable and we could have a current budget surplus of £1.5 billion or more. We also have the proceeds of privatisation from the £7.2 billion valuation of Telecom Éireann. These circumstances have never been enjoyed by a previous Transport Minister or Government.
Simultaneously, there are dynamic and dramatic migratory movements where one-
third of the population lives in the greater Dublin area and there is a need to develop public transport because of the unprecedented growth in private car ownership. All these circumstances require, not an incremental approach to public transport - I am pleased that there was an announcement of 50 per cent more than last year but a gigantic leap for the new millennium. Instead of cosmetic trinkets to adorn our High Streets, we need the millennium project to give people, particularly those in the capital city and on radial routes, a modern public transport network up to European standards. If the Government did nothing else but provide that network, it would do a major public service.
I am concerned that, for example, on the issue of rail safety, we identified what needed to be done and resources were allocated. However, this was primarily financed through an addition to CIE's borrowing and may also be financed from the proceeds of the sale of property. Luas was costed at £221 million and put in place by the previous Government with the help of EU funds. However, these funds were redisbursed. We now have the Anderson report on PPS.
I am concerned that the Government - the Taoiseach, the Minister for Finance - and the Department of Finance do not seem to understand the situation. There have been times when education was the priority or there was a crisis in the health area. However, there is now a public transport need which cannot be addressed by the private sector.
In its public hearings, this committee met consultants - the ESRI, public transport operators, long-term planners, the DTO and others - all of whom sang the same tune, namely, that around £2 billion needs to be invested in public transport. This is an enormous extra provision which cannot be dealt with by the Estimates. If this issue is not addressed, the economic inefficiency of gridlock and the disimprovement in the quality of people's lives because of traffic congestion and commuting, where people shudder at the thought of going to the country on bank holiday Fridays because it takes four hours to get to somewhere this side of Galway ——
This side of Kinnegad.
There is no doubt that public transport is the only solution. Better roads will provide a temporary alleviation but public transport is the only way forward because of the intrinsic efficiency of transporting 80 people by bus or train carriage as opposed to 1.3 people, on average, in a car. The Government must take control . I do not hear from the Taoiseach or the Minister for Finance, Deputy McCreevy, on this issue. We hear about the national development plan but every spending Minister has ambitions for that plan. Transport should be the No. 1 priority at a national level in terms of the infrastructural deficit. However, that is the grey area.
Ireland has developed industrially and in terms of telecommunications. The roads and ports have been developed but public transport needs to be developed. I would like the commuter services in our main cities developed initially by way of buses. Driving around the city one sees a great number of white lines painted on the streets but they are not yet bus lanes. When the bus lanes on the routes with which I am familiar - Stillorgan to town - are in operation, drivers will be furious and, unfortunately, the Minister will probably be blamed for this. People will be livid if they are delayed in traffic while the bus lane is empty.
We went through that in Malahide. Now Malahide has the buses and I am receiving calls from people saying they are sitting in the traffic and the 99 bus passes by while people are looking out the windows.
Merely to deal with existing shortcomings CIE has put forward a spending blueprint in the order of £800 million to deal with bus-suburban rail investment and this is for the greater Dublin area. During this debate we discussed all the issues, including stopping at a bus station on a QBC. I travelled on the tubes in London last week and the monitor in the station indicated that the train to Cockfosters and Edgeware would be arriving in one minute. There should be this type of proper information.
The tube has gone belly up. They have closed a lot of lines. It did not work.
It worked perfectly well. It got me around.
Edgeware is up market.
These problems can be resolved where there is a population of seven million people. I believe that when the QBCs are in place, it will get worse before it gets better. An additional bus depot, a proper information system and integrated ticketing are required. I could buy one ticket for £4.50 and have 24 hour travel on the tubes throughout London. I do not accept that CIE cannot operate such a system.
The Estimate requires that the Government should decide in the National Development Plan 2000-2006 that whatever PPS comes along, it will top up the core investment, spread out and properly invested, of a public transport provision of £2 billion. This should have nothing to do with CIE's debts, bonuses or windfalls as a result of property sales. This huge Government commitment should be put in place.
I want to refer to the future of Aer Rianta and of the Great Southern Hotels Group. I am concerned about these eight hotels. The Minister was supposed to be meeting SIPTU and various other representatives. The Anderson report said that Aer Rianta was to exit from the hotel sector but the chairman said they did not want to do that. Then there is the question of CERT's role, the single entity and employee status and security. Will the Minister advance the issue as to where we are and perhaps give a commitment that the group will not be split up? If this requires retaining its shareholding, this should be done.
I am slightly confused about the position relating to post offices. As is our wont approaching election time, there were great announcements that matters would never be better for the post offices. I welcome the Government's social welfare contract roll over. I assume there is no change in this proposal. It is one thing to get the contract but it is another to get it at the same price. Of the 1,800 local post offices, approximately 600 have not been automated. Therefore, one could have all the zany bill-paying methods one likes for every organisation, but if they are not automated the vulnerable ones will not be any better off.
The Minister comes from a rural constituency and will be aware that one of the last bastions of the identify of a village, the half parish or parish, is the sub-post office. In some cases the only shop in a village is a general factotum shop, including a sub-post office. If the revenue from the post office is taken away, the shop would be in jeopardy. In some cases a pub is involved. There is an important social role for sub-post offices.
I understand the Postmasters and Postmistresses Union is lobbying to have them upgraded. Fianna Fáil gave very explicit commitments during the last general election campaign that they would upgrade all post offices. There is a decline in some rural areas in terms of population and this commitment must be followed through. We must remember that since some pensioners do not have the mobility to travel to big towns, services in villages need to be upgraded.
Aviation, telecommunications and electricity are entering the brave new world of competition. I know of no case, notwithstanding excesses and so on, that has not produced more gains than losses for the public through orderly competition. However, the bus sector continues to be caught in the Road Transport Act, 1932, time warp where unlicensed operators run travel clubs to and from the city. I have called for the equivalent of an Independent Radio and Television Commission to be established. Deputy John Bruton, contacted a senior counsel to obtain legal advice as to whether the interpretation by the Department of the 1932 Act to refuse a licence to a second operator, whether private or public, was correct. The senior counsel believed this was contrary to the Treaty of Rome and that if there was a constitutional court challenge the present ruling would not be upheld. I ask the Minister to refer the interpretation of this matter to the Attorney General's office. We are always one forum or one review body away from action. Successive Governments have been involved in this. I am not talking about rabid competition. I am talking about licensed people who are already competing with Bus Éireann. I am talking about developments in Dublin through public service contracts and getting value for the subsidy. If someone can run a night service from Finglas for X amount of public money, that would getting value for the subvention.
Perhaps the Minister would update the committee on TV deflectors. Some progress has been made. Etain Doyle said that she will bring forward regulations. I raised the matter last year and I would like to know when will interim licences be introduced.
In relation to the strategic alliance for Aer Lingus, I support the One World alliance proposal. I understand there were already strategic alliances and co-chairing between Aer Lingus and KLM, Aer Lingus and Sabena and Aer Lingus and Air Delta. I also understand there is an 180 day rule whereby they call off their bets. Is there a possibility there will be an interregnum whereby Aer Lingus will lose out on certain routes? Will the Minister update the committee on this matter?
The main points I raised were that there should be a massive investment in public transport, both bus and rail and it should not do it through CIE borrowings. I want the Minister to clarify the position in relation to post offices, bus competition, the TV deflectors and the Aer Lingus strategic alliance. I will raise other specific questions as we reach them.
I regard the examination of the Estimates for the current year as a futile exercise because the money for 1999 has been well and truly earmarked and spent. I welcome the Minister's statement which is mainly about the future. It is an excuse to talk about the future rather than the Estimates about which we cannot do anything.
I wonder when will the Minister of State's speech be delivered. It covers areas which the Minister's speech does not.
We separated the two items.
I will take up the refrain, which I am sure the Minister supports, of public transport. The Department and the Minister have been unable, as we can see from the Estimates, to get any substantial increase in the subvention for public transport. It stands at £109 million - a 1.8 per cent increase. That is not dealing with the problem and the Minister knows it. She identified about £2 million worth of required investment to deal with the problem. We need to know from where and when the money will come. Speaking about joint ventures and public and private investment is not good enough. We need to see a plan with money attached and a timetable for its implementation. We are good are producing plans but what we are missing is the money to implement them. I would like to see a timetable for the implementation of the £2 million plan in this area which, while affording it urgency, will be on a phased basis. That is essential if we are to progress.
The futility of arguing with the Department of Finance over money every year is unbelievable. We are the only city in Europe that has a commercially driven public transport service. Though operated in the public sector and owned by it, the buses in Dublin have to pay their own way. That is the main criterion. Very little of that £109 million is provided for bus transport in Dublin. That is where the main problem lies.
Increasing fares as a solution to making up the shortfall is not a good one. It will drive people from public transport. We need to attract them to public transport in the interest of State and public finances. We need to encourage people to use the buses rather than their cars. If we have to pay them to do so it would benefit us nationally to do so. The unions, quite rightly, say that they have to fund the public transport system by one means or another. One cannot have a system of no fare increases and no increase in subventions. There must be one or the other and the unions make the case, which is valid, that they are getting neither. As a result we have a skeletal public transport service in comparison with what is required to deal with the problem. It is not being funded one way or the other. I acknowledge the improvements that have been made, the initiatives taken by the Minister and the progress on special transport corridors. That is real progress.
We need to address the issue of Luas. I am a strong advocate of overground light rail transport in the city. The Minister gave us a figure, at the time of the change from underground to overground, of £400 million plus but I heard a figure of £1 billion being quoted by experts.
That was from CIE who has now had a change of heart.
That change of heart might arise from the fact——
——that they might not be running it.
I told you that.
We need clarification on that point.
According to the Minister's speech, Bord na Móna is doing rather well; it is now a public limited company which gives it commercial flexibility. That is nonsense. It had all the flexibility it required previously because the Minister and successive Ministers allowed it that flexibility. The reason it is now a public limited company is to prepare it for future privatisation and make that easy. That is always the first step taken by the Department in preparing a company for privatisation.
Bord Gáis is next on the list. I have not seen any evidence that Bord Gáis suffered from inflexibility in its commercial activity. I do not believe it will have any greater degree of flexibility when it becomes a private limited company. Is there any sign of the new line? During my time in the Department, we undertook a great deal of work on the new line from the interconnector through the midlands and on to Galway city. It is even more timely, given the prospect of a real commercial find off the west coast, to have that line in place now. Perhaps upgrading the pipe may be required. We have received clearance from Europe - it came after I left - for the spending, which was modest in comparison with the total cost, for the trunkline. The proposal was to put the cities and towns along the line out to tender. Is there any prospect of reactivating that proposal? It was a good proposal on which I did a great deal of work with the support of the Department. We honed it down to the point where it was acceptable to Europe. I would like it to be resurrected.
The issue of fibre optic networking by Bord Gáis was raised with me. There was a crazy decision - maybe that is one reason it should be a limited company - by the Attorney General that it is not entitled to proceed with laying cables along those lines. Seemingly it can put these cables inside the pipes and lay a network of fibre optics at a very cheap rate because the system is already in place. I am not technically qualified in this area but I believe that would be a huge advantage for the company. As a shareholder the Government should allow the company that advantage. I do not think it would be breaking any law but there was mention of not being able to do this because of existing legislation. If a change in legislation is required it would be very acceptable in the House. That matter should be revisited.
The Minister said she is selling off Telecom Eireann. I do not know what is the justification for that. I regard Telecom Eireann as a strategic utility on which Members and the Department of Public Enterprise should keep a very watchful eye. A good way of doing that and ensuring it is developed in the right direction is to have people sitting around the board. The Minister would have that facility if she retained a 20 per cent shareholding. That would be very desirable. If we needed the money for something else there would be a case to be made. However, we are simply selling it off to get rid of it and at a price that is required to be below value, even at the £7.2 billion mentioned, so that a good return is made not just for those who will buy shares but for the institutional investors who will end up with practically all the shares. The shares will not stay in the hands of small buyers for long. They will be bought by institutions and then the industry will be outside the Minister's control. The market will dictate and we will not be sure who will control our telecommunications industry and from where they will control it. As this is a strategic industry and we are not pauperised at this stage of our development, it is a mistake for the Minister not to retain a sizeable shareholding which would entitle her to a continuing input. While the Minister may make general policy in the area, the development of the company will be completely outside her control.
I am also concerned about the absence of policy on the use of resources resulting from privatisation. It is extraordinary that we are selling one of our best industries for a lot of money without clear, stated, thought out and debated lines on what should happen to the money. The policy area is seriously lacking in this regard and needs to be addressed, as does the strategic importance of the industry being sold. Taking it outside any form of social control is a mistake and we will regret it. We have seen examples of this - Irish Life is probably the best. What happened there was not in the best interests of policy holders and workers of that company, although it may have been in the interests of those who eventually bought Irish Life.
I would like the Minister to address this important policy area. We have now targeted companies such as the ESB, Aer Rianta, Aer Lingus and Bord Gáis for sale. State coffers could gain a lot of money from this but we have no policy as to its use. A sum of £2 billion is needed immediately for transport. I would like these funds to be used for future infrastructure and if necessary we could roll over capital for further investment. To sell the company and put the money into the black hole in the Department of Finance - which will probably cut taxes in the short-term - would be highly undesirable. We should look at what the Norwegians did with their oil money. They stacked much of it for pensions and a rainy day. We should look at the infrastructure they put in place and the ways and the areas in which this money could be spent. We need to examine this area because, in one case, we are talking about £7.2 billion.
That is the upper amount for the total company. It is going for £5.9 billion to £7.2 billion.
We are talking about selling the ESB, Aer Rianta, Aer Lingus, Bord Gáis, Telecom Éireann and probably An Post. This will earn a huge amount of money and we need to consider how it should be used in the national interest. It should not be frittered away.
My next point comes within the remit of the Minister of State, Deputy Jacobs. Non-ionising radiation has been a matter of concern for many people. Money was found all over the world to research this issue. Arising from research - including research in Ireland - I am satisfied it is not a danger to health. There is radioactive radon gas in Ireland and we have now identified exactly where it is and the areas and people at risk. We know 200 to 300 people in Ireland die each year from the effects of radon gas. If somebody stated that non-ionising radiation caused that number of deaths we would consider taking down wires all over the country and banning mobile phones and mobile phone masts. People such as myself who live in a radon gas area and smoke are particularly at risk. Perhaps that is a self-induced additional risk. However, there comes a stage when it is not just self-induced, it is necessary. The Department of Public Enterprise, in conjunction with the Department of the Environment and Local Government, prepared a fairly simple, straightforward and relatively inexpensive means of saving 200 to 300 lives each year. The funeral costs - never mind the medical costs - for these people would be greater than the cost of the remedial scheme.
They are going to die anyway.
I ask the Minister - and I know the Minister of State is fully supportive of this - to do battle on this small issue which would save lives. I am not accusing her of disregarding lives but she should insist on this next year and get the grant scheme going.
I thank the Minister and spokespersons for their contributions. We will now have a question and answer session.
Deputy Yates said there was now a confluence of favourable events and I agree. In a debate on public transport in the House approximately six weeks ago, I said I never dreamt I would be in charge of a Department which hoped to make major investments because I always seemed to be scrimping and saving in Departments during bad times. Now there are reasonably good times and we have a chance to do something.
The Deputy quoted the figure of £2 billion which I had stated as the total investment requirement for public transport for 2000-6. We have put that forward in the national development plan. I am a member of the relevant Cabinet subcommittee which has met once and will meet again shortly. The Deputy asked when all will be unveiled. The plan must go to Brussels by September so it will happen this year. We need approximately £2 billion and could do with more. The Deputy said one-third of the population live in the Dublin area. I agree with his statement that a gigantic leap forward in thinking is needed for the plan's implementation.
I am not giving out about the Department of Finance but it always says no to everything. That is its job. However at our last meeting two weeks ago we were told that the Minister and his officials are very open to our investment needs in two areas of infrastructure - transport and roads. There is no doubt we must take a gigantic leap forward; our millennium project should be a modern network of public transport. I am tired of tagging the word "millennium" on to everything; I refer to it as the "new century". There is now a chance we could have decent public transport. Public transport needs £2 billion.
On integrated ticketing, I too saw how one ticket is valid for all lines on the London underground. Integrated ticketing is being discussed by CIE but it appears to have difficulty with it. The company says it will lose money because people will not pay. That is madness. I understand integrated ticketing and funding for it will be features of the upcoming DTO plan.
Deputy Yates asked about Aer Rianta, the eight hotels and the Andersen report. He said the group should not be split up. In approximately three weeks I will discuss with Government the report on the eight hotels. I understand various groups have expressed an interest and when the Houses go into recess I will meet them. I had a two hour meeting with a group of 24, headed by Mr. Jack Nash. The employees do not want the group to be sold or to be split up. These are important matters for both Aer Rianta and Aer Lingus and I will keep in contact with the main spokespersons of the parties as summer advances.
It is true that of 1,800 local post offices, 600 have not been automated. I could not agree more on the importance of post offices to villages. I loved being in the Department of Education because I travelled to small remote areas I might never have seen or heard of. Now when I hear of certain villages I know if they have a new school or extension. The post office, church, school, pub and shop are the fulcrum of a village and make it tick. An argument took place about the social welfare payments contract and the post office and I am glad reason won. It was due to be reconsidered but it comes into action in 2000, I presume at the same rate. That is a social welfare matter but I can come back to the Deputy on that.
My Department set up a subcommittee under Mr. Brendan Twohey and I am pleased to say we have already received a very favourable reaction from the ESB because the payment of bills in areas where there are no shop outlets is important and I made that clear to the man in charge of that area in the union. We are seeking to have motor taxation renewals paid through the post office and the subcommittee is exploring that. Aer Lingus and An Post have agreed a system which provides an alternative payment channel for Aer Lingus bookings. If the post offices were automated that would be an advance. The social welfare contract has been concluded and when the Telecom flotation is out of the way next week, the subcommittee of the Departments of Public Enterprise and Transport, Environment and Local Government, Finance and the Taoiseach will meet.
On television deflectors, the ODTR recently concluded a round of consultations on licensing. The responses received are now being assessed and a report on the outcome of that process will be published in August. This will clear the way for issues later in the year, perhaps in October, provided no legal problems arise. The Deputy asked about the licensing of television deflectors. That situation should be sorted out satisfactorily by late autumn.
People may apply at that stage.
Yes, they may apply at that stage. The report was very good and made a lot of sense.
The Deputy asked about the strategic alliance for Aer Lingus, the interregnum and whether Air Delta and the others co-chairing may leave that arrangement without having another arrangement tied down. The chairman put that to me two or three weeks ago. He said they had to work quickly because other airlines, and one in particular, were put out at not being chosen as a strategic partner. The strategic partner must be tied down while keeping within the timeframe of co-chairing with the other airlines. I happen to know about this because of the chairman's keenness to ensure the Government makes a quick decision on what was put to us. Aer Lingus cannot afford a gap to open up between losing co-chairing and being in the new arrangement. It will take time to sort out the details of the new arrangement. The Deputy is correct. It is a potential danger.
Deputy Stagg talked about public transport and asked from where will the money come, where will it go and when we will have the plan. We will have it this autumn because the development plan will be ready. The Deputy raised an interesting point which Deputy Yates also raised, namely, the need for the Government to draw up a framework for where the money will go. I do not know about the Norwegian experience but they are probably thrifty. The Deputy is right. It appears that for last year, this year and next year, there are budget surpluses. We will also have the proceeds from the sale of Telecom. We cannot decide in an ad hoc fashion what happens that money. This is virgin territory for any Government since the foundation of the State. We were always scrounging and scraping. There is now bounty and how we plan for its distribution is very important. It is a social question. It must be done in an inclusive way and there is nothing more inclusive than proper public transport.
The Deputy mentioned fares. The unions have sought an increase in fares. The Deputy said that is couched against the background of public transport having to prove itself cost effective and run on an economic basis. Leaving aside Dublin Bus and Bus Éireann, Iarnrod Éireann, due to its social remit and the area it covers, cannot be run on an economic basis. However I presume the Deputy was referring to the two bus companies.
If we could have clarification of the Luas costs we would be sitting pretty. A very interesting situation has developed regarding the Luas. Four days after I published the report on public private partnership and the possibility of CIE franchising out the running of it - and there would be nothing to stop it bidding for it itself - I received a letter from the chairman expressing reservations about Luas. I thought the timing of the letter very interesting.
Did the Minister publish the letter?
I did not publish the letter. I told Deputy Olivia Mitchell, in answer to an oral question in the Dáil, that I had received a letter. As applicants before Mr. Justice O'Leary, they are in a quasi-judicial situation so this is distinctly odd. I will be meeting the chairman for dinner tomorrow evening.
Will the chief executive be there?
No, he will not.
Will you have cold mutton?
I hope not. I am sure we will go to a nice restaurant. I shall be the guest of the chairman as I paid for lunch the last time we met. I understand Deputy Yates's allusion but this is not the season for mutton. I hope the chairman will clarify matters then.
I presume CIE sees Luas as competition. This is far from being the case. Luas can only meet a small part of the public transport needs of Dublin. Mr. Justice O'Leary has been very clear on that matter in his judgment on the Tallaght line and the judgment which Members will be reading. He says Luas fulfils a need and will be part of an overall public transport strategy. Mr. Justice O'Leary goes no further because that was the limit of his remit. He answers three questions at the head of his report and that was one of them.
We will not have enough public transport for the next decade. The idea that Luas might present serious competition to CIE and that buses and trains would be empty is ludicrous.
Redundant capacity is not a problem.
It certainly is not. That appears to be one of the arguments put forward by CIE against Luas but I have my own opinion about the reason for the company's objection.
I will not be privatising Bord na Móna. The Minister of State, Deputy Jacob, will be dealing with Bord Gáis. I have heard about the fibre optic cable partnership proposed by Bord Gáis and I asked about the matter in my Department. It appears that the legislation which established Bord Gáis was much more explicitly restrictive on partnerships than that which set up CIE, for example. A fibre optic cable partnership would require new legislation. The Minister of State, Deputy Jacob, will deal with this matter.
I was asked why we are selling shares in Telecom. The people seem to be clamouring to buy them. A golden share was left in Irish Life as a comfort for people who might need it but it did not work as planned. I asked the Minister for Finance at the time, Deputy Quinn, why he did not exercise his rights under the golden share at a time when there was some difficulty with employees. He said the golden share gave him no rights to intervene in company difficulties or otherwise. We have already sold 35 per cent of Telecom. The process of taking a strategic partner which was entered on in 1996 presaged later developments.
Deputy Stagg spoke of an absence of a plan to deal with the revenue from the sale of State companies. The idea of a plan for the spending of this revenue is an excellent one and I shall discuss it with the Taoiseach and the Minister for Finance.
I accept the Deputy's point regarding the effects of radon gas. We will go jointly to the Minister for Finance and try to change his mind on this matter.
I propose that we have a general question and answer session on subheads A1 to A8. Is that agreed? Agreed.
I will pass over subhead A2 - the Minister's travel budget.
I go nowhere. I am famous as the Minster who will not go anywhere.
The Department has spent almost £250,000 more on travel this year.
Other people must be going places. It is not I.
Subhead A7 deals with consultancy services. These tend to be one-off services and £4.1 million seems a lot for this. Is it being spent on public relations and photograph contract agencies?
I have no photograph contract agency.
Make-up perhaps?
I was made up twice - both times for Telecom.
A sum of £4.1 million is a lot of money to spend on consultancies.
We have used £1.865 million to date. National Economic Research Consultants, Denton Hall and Arthur Andersen were consulted in relation to electricity restructuring. Consultancies arose under the technical assistance programme of the economic infrastructure. Contributions were made to the expenses of the gas technical standards committee. A report was commissioned in relation to a proposed BGE pipeline from Abbotstown to Poolbeg. A review of the road haulage sector was commissioned from Indecon and a review of the potential of CIE's surplus property portfolio was commissioned from Sherry Fitzgerald. Consultancies were commissioned in relation to an Aer Lingus strategic alliance and a review of Aer Rianta.
I do not employ photographers for long sessions. I would love to see the Taoiseach being made up every day.
Guilt often haunts the suspicious mind.
I did not spend half enough money when I was a Minister.
Will the entire amount of £40 million allocated under subhead E1 for fees and expenses relating to the sale of shares in Telecom Éireann be spent?
More than that will be spent. That amount was based on the expectation that we would sell approximately 35 per cent of Telecom shares. We have since decided to sell 50.1 per cent.
The cost of selling 50.1 per cent is the same as the cost of selling 35 per cent.
There are scaled fees.
I understood that the advantage of selling all the shares at the same time was that a second payment of fees would not be necessary.
There will not be a second payment of fees.
Will the amount be in excess of £40 million?
Yes. It will be £40 million plus.
How big a plus is the Minister talking about?
I do not know the amount.
Might there be a Supplementary Estimate?
There will need to be a Supplementary Estimate next winter.
Is there a sliding scale which will automatically increase if the whole lot goes? I believe Mr. Loughrey can make a relevant point.
Mr. Loughrey
If I may contribute, Sir, with the Minister's permission, there are scaled fees. Because the valuation is determined by the price, which has yet to be determined by the Minister, it is impossible to say, at this time, what the outcome will be but it will be, as the Minister said, in excess of £40 million. On the institutional side, worldwide placing, there will be an increase of scaled fees. We were calculating on a 30 per cent sale but we have increased it to 50.1 per cent. The outcome depends on the size of the retail take up of shares It tends to be skills intensive and labour intensive and therefore more cost intensive.
Are you saying that if you get a higher price they get a bigger cut?
Mr. Loughrey
Global co-ordinators are paid fees. It is a matter of their placing power. The all-in cost of fees for this placement will be lower than any other in western Europe in the past five years.
That is a typical classic spin.
I remain to be convinced.
I have no doubt some arithmetical statistic will be found to prove that.
It would not be hard to prove as there are published figures for the UK where "Sue, Grabit and Run" has handled many of the placements. Regarding retail, will the number of retail transactions be charged at some sort of unit cost?
Mr. Loughrey
No, but the costs will increase. We have moved from selling 30 per cent to 50.1 per cent.
Regarding subhead E2, I am fearful for the future of An Post in the context of the EU directive. When does the Minister think the directive will come into effect? Does she see a dual tariff in Ireland? I have been told that companies will come to Ireland and offer to post a letter from Dublin 1 to Dublin 6, for example, for 10p, and that letters to the country will be put in letter post. This means they can cherry pick the short distances.
They cannot cherry pick.
I was told they could and that outside selected areas letters will be put in the post box.
I know to what the Deputy is referring. However, only mail above a certain weight, namely, five times the basic letter tariff, is subject to full and unrestricted competition.
What will happen in the future?
I think the next directive concerning the postal sector is due in 2002. By then the directive could be assuming lengthy proportions. It is interesting when postal services are discussed at meetings of the Council of Ministers. Every country is wary and cautious about any dramatic liberalisation or opening of the sector as each has small towns and the postal service is one of the domestic matters for which they have high regard. In the UK, the Prime Minister has exempted the postal service for several years from all sorts of directives. In the Conservative Government, Michael Heseltine balked at it and ran from doing anything to the service. All states are cautious about it and I think that caution will infect the Ministers who discuss the matter.
Will there be a single tariff? Is it our position that there will be a single tariff?
Yes.
Therefore, anyone wishing to set up here will not be able to cherry pick.
No, it will not be possible for somebody to have a postal service from Donnybrook to Dundrum, for example.
And not post to Donegal?
And not post to Donegal or Dingle.
I note others in Europe are working on strategic alliances in the postal services.
That is correct.
Royal Mail has set aside much money in this context, as has Deutsche Post. Has a study into a strategic alliance for An Post, similar to that for Aer Lingus, been considered? I thought the profit and loss account showed a pretty poor performance by An Post. They seem to be going backward while everybody else seems to be going forward. Is somebody in the Department worrying about this?
I am. An Post has a very good chairman and chief executive. I think Stephen O'Connor and John Hynes are very good, hard working people and that they have a good board. They put their all into running An Post. However, An Post is always in a precarious position. We must consider the nature and size of Ireland. I see nobody hugely interested in establishing postal services here. An Post is always more or less living on the edge, and this year showed that more than anything else. This was due in particular to SDS in the context of costs where there was a particular vacuum. However, work is being undertaken to address this. An Post will never be a wealthy organisation or make increasing profits. It is doing well in terms of holding tightly to what it is charged with doing and in giving good service.
Would the Minister consider a study into the future of An Post, taking into account all these issues, including a strategic alliance and other threats and opportunities?
Out of the Price Waterhouse study came the suggestion that 1,000 post offices be closed. A colleague announced this in the Dáil but subsequently had to retract it a week later. I am a fervent believer in post offices. Of all the semi-States bodies I like the way post offices conduct their business and operate. The people in An Post are very hard working and the chairman and chief executive are particularly fine people. While things are very tight for them, there will come a time - perhaps not in the next two or three years - when circumstances will be very difficult for them. Perhaps an examination of what An Post is doing in a general sense might not be a bad idea. The Price Waterhouse report was produced in 1991.
Regarding road and rail transport, subheads C1 to C5 deal with Dublin or the greater Dublin area. I am aware that one-third of the people live in Dublin, but one-third live in other urban areas.
The Deputy's colleague said this and referred to public transport around the country.
However, there are no new buses around the country while 150 have been ordered for Dublin.
New buses have been designated for Cork.
I know there are plans for Cork. However, while I am from Cork, this issue affects not only Cork.
I understand that. The funding set out is for the entire country. The context is the number of people living in Dublin and the huge public transport crisis in the city. There are plans, some of which are being implemented, for Cork, Limerick and Galway in terms of public transport. There are medium term plans to open railway stations in areas outside Cork city - Midleton, Youghal and towns which have railway stations which have become defunct. A strategic study is being undertaken in these areas.
Before leaving I wish to say that this is the last time John Loughrey will be associated with the Estimates. It has always been a delight to work through the Estimates with him and I thank him.
As a former employee of An Post, I want to compliment the Minister on her one stop shop initiative as a way of saving sub-post offices. Everything she has said is true. They are unique social centres and I think Members on all sides of the House will agree with her.
As a former officer holder in the Department of Agriculture, Food and Forestry, in which Mr. Loughrey also worked, I join in wishing him every success in his future career.
I am pleased to have the opportunity to address the committee on areas for which I have responsibility in the Department. I am mindful of the Chair's comments about the time factor. I will try to be as brief as possible.
I would like to outline some developments in relation to air traffic management. The Irish Aviation Authority is facing a period of major advancements in air traffic management technology. I recently laid the foundation stone of the new air traffic control centre at Shannon. The centre will cost an estimated £20 million to construct and an additional £50 million to equip. The development of the centre represents a major investment programme by the Irish Aviation Authority.
Demand for natural gas continues to grow, particularly for electricity generating purposes. In order to plan for the provision of the necessary infrastructure, my Department and Bord Gáis are carrying out a study of gas demand and infrastructure requirements to the year 2025. The study is well advanced. Technical consultants appointed by Bord Gáis have recommended the provision of a second Scotland-Dublin interconnector pipeline as the optimal solution. There are parties other than Bord Gáis interested in future gas infrastructure needs and supply possibilities. The interests of such parties, together with the interests of both current and future gas consumers, must be taken into account in developing policy for the future. The possibility of a commercial gas discovery in the Corrib field off the County Mayo coast must also be considered. It is essential that the most economic and cost-effective infrastructural solutions are put in place.
Some months ago the Minister, Deputy O'Rourke, and I met the Secretary of State for Northern Ireland to discuss how best to cater for the growing demand for natural gas for consumers both North and South and how to provide enhanced security of gas supply for the whole island. We agreed that the question of a North-South gas interconnector and other infrastructural options should be examined jointly by northern and southern officials. This examination is currently being carried out.
The Department is also preparing proposals for Bills to restructure Bord Gáis as a public limited company and to set out the regulatory regime for a competitive gas market. In the context of the liberalisation of the gas sector, this legislation will give Bord Gáis the necessary flexibility to compete effectively in this increasingly competitive market.
On nuclear safety, £1.704 million has been provided in the Department's Vote for 1999 as grant-in-aid to the Radiological Protection Institute of Ireland to cover the net cost of its day-to-day operations.
Some £200,000 has also been set aside in my Department's Vote to facilitate payment of financial aid to the County Louth Residents, largely for scientific research work being undertaken by the residents to assist them in their independent legal proceedings against BNFL.
The increased use and further expansion of renewable energy sources are necessary both in the interests of sustainable development and with a view to meeting our commitments to reduce greenhouse gas emissions under the Kyoto protocolumn Renewable energy projects can also create new employment opportunities, leading to economic and social cohesion in regions that otherwise lack industrial development.
A review of sustainable and renewable energy policies and targets has been initiated through the preparation of a Green Paper on Sustainable Energy. The Green Paper will explore the options available for meeting Ireland's energy requirements over the next ten or 15 years in an environmentally and economically sustainable way. It will be one of the key elements in the Government's overall greenhouse gas abatement strategy. As a practical measure, tax relief was introduced in the Finance Act, 1998, to encourage corporate investment in renewable energy projects.
In November 1998 my Department, in conjunction with the Department of Economic Development, Northern Ireland, commissioned a joint study of the assessment of the offshore wind energy resource of the island of Ireland. The report of this important study will be completed later this year. At that stage there will be a comprehensive atlas of the wind energy resource both on-shore and off-shore.
With regard to the Geological Survey of Ireland, together with the Minister for the Marine, Deputy Woods, I announced Government approval for a major £20.7 million seabed survey of the Irish offshore territory. I consider this to be a very exciting and developmental project. It will be the largest and most comprehensive survey ever in Irish waters and will be carried out over a seven year period. An earlier survey, funded by the Marine Institute, covered a small area of the seabed and revealed 15 major canyons on the side of the Rockall Trough which were previously unknown. There may be good things out there for us as a nation. This initiative will provide an integrated databank for use by fishermen, engineers, biologists, oceanographers, exploration interests and geologists. The potential for public-private partnership opportunities will be examined as the study proceeds. It is to the credit of the Geological Survey of Ireland, which will manage this project under a joint steering committee involving the Departments of the Marine and Natural Resources, Public Enterprise and Finance, and all involved in the formulation and planning of this important initiative, that the survey has been given the go-ahead.
On the Irish road haulage industry, I am pleased that, thanks to the co-operation of colleagues on all sides of the House, the Road Transport Bill has passed all Stages in the Oireachtas. The Bill contains some very important provisions which have been long sought by the industry, in particular the provisions ensuring that all haulage operators can be brought to account for breaches of road transport legislation within the State. This is long overdue and is a welcome addition to the Statute Books. For far too long operators from outside the State were in a position to ignore the road transport regulations. This had very serious implications for our hauliers.
I would like to refer to the road haulage review published just before Easter. The consultants found that there is significant non-compliance low levels of enforcement in a number of areas. In particular, unlicensed haulage and the rules on lorry weights were instanced. Non-compliance in these areas are seen to have important implications for the level of capacity and the nature of competition in the market and a number of recommendations are made to address this.
I will endeavour to address a number of questions. Deputy Yates raised the matter of private buses. I agree with his comments regarding the Road Transport Act, 1932, under which we are operating. This is totally antiquated legislation. Everyone now accepts that the Act no longer provides a satisfactory basis for a credible control system which would answer the needs of 1999 and into the future. The Deputy said that successive Governments have looked at this - that is about as much as they have done. I do not say this in a critical way, but successive Governments, including Governments involving my party, have examined this matter and endeavoured to deal with it. However, they did not deal with it. There is now a greater onus on the Government to deal with this matter given the strong and growing economy. Traffic difficulties could impact seriously on that economy. That is why the Department is anxious to deal with this issue now.
As outlined in the Department's statement of strategy a review is under way to examine the options for the effective regulation of the bus market which is governed by the 1932 Act. I am also awaiting the recommendations of the Dublin Transportation Office with regard to the future development of service in the greater Dublin area. The DTO is close to finalising its recommendations as part of its overall submission to Government on the national development plan for 2000-6.
Deputy Stagg referred to radon gas. I sympathise with his sentiments because they are not far from my own. Earlier the Minister commented on the matter. Although grant aid has not been put in place we are endeavouring to address this matter and treat it with the seriousness which it deserves. There is an air of urgency about this issue. The RPII has been an advocate of a scheme like the one recommended by Deputy Stagg as a means of encouraging householders to undertake radon remediation measures. The RPII conducted a national radon survey and estimated that up to 60,000 houses may have high radon levels. A high level is regarded as being above 200 becquerels per cubic metre because that is when radon is deemed to be hazardous. My Department will continue to examine this problem. The RPII commenced its national radon survey in 1992. Its aim is to identify the areas of greatest risk of indoor radon levels around the country. The survey should be completed in the not too distant future. At present the RPII offers a radon test to householders which costs £15. Revised technical guidance documents relating to the national building regulations are also available and the Minister for the Environment and Local Government published them last year. They require that radon protection measures be taken in the building of all new houses commencing on or after 1 July 1998.
Last year the RPII, at the request of the Minister for Education and Science, commenced a three year survey of schools. The aim of the survey is to ensure that radon problems are identified. I wanted to make that information known and prove that the matter is being taken seriously. I assure the Chairman and all concerned that the matter is being treated urgently.
Deputy Stagg also referred to a gas supply for the west. A proposal to extend the gas network from Dublin to the midland and western areas was submitted to Government in 1997 during Deputy Stagg's ministry. It was proposed that the network would service Trim, Mullingar, Athlone, Ballinasloe, Galway, Ennis and Shannon. The Government decided that further inquiries should be made to the EC in relation to the State aids aspect of the proposal before proceeding any further with the project. The proposal has since been cleared with the European Commission. It is currently being examined as part of the overall gas demands study to the year 2025. Confirmation of a commercial gas discovery by Enterprise Oil at the Corrib field off County Mayo could allow for the extension of the transmission network to the midland and western areas. At this point it is not clear whether Enterprise Oil or Bord Gáis will construct a gas pipeline in this case.
Deputy Stagg referred to fibre optic cables. Bord Gáis aspires to enter into a joint venture with Telenor OS, a Norwegian State owned company. The proposal was that gas pipelines would be used as a conduit for the laying of fibre optic cables either within or along the side of gas mains and in new ducts according to how the gas network is extended. However, we have a conflict of legal opinion. Senior counsel for Bord Gáis advised that the company had the power to engage in a joint venture for the provision of a telecommunications service. The Attorney General advised my Department that Bord Gáis does not have the power to engage in that service and that primary legislation is required to permit the company to make such an arrangement. Therefore, my Department is unable to process this venture in those circumstances but the drafting of the heads of a Bord Gáis public limited company Bill and extending its powers to engage in projects such as that proposed is being addressed.
I thank the Minister of State for his usual comprehensive and informative report which displays his great ability and efficiency.
I agree with the Chairman's description of the Minister of State's statement as comprehensive and informative but it is thin pickings for anyone looking for something new. I always like to hear something new.
The Minister stated that £200,000 has been set aside in my Department's Vote for 1999 to facilitate payment of financial aid to County Louth residents largely for scientific research work being undertaken by the residents to assist them in their independent legal proceedings against BNFL. Can the Minister of State add to the sum of our knowledge in this respect and tell us the current attitude held by the residents? Can he also inform us what stage differences in opinion have reached in terms of satisfaction or otherwise?
I will also refer to the number of studies that are under way. The Minister of State's contribution reads as follows:
In order to plan for the provision of the necessary infrastructure the Department and Bord Gáis are carrying out a study of current demand and infrastructural requirements to the year 2025. It is well advanced and should be completed within the next few months.
I was told several months ago that the study was well advanced and should be completed within a few months. Has there been a slippage in this respect?
The Minister of State referred to his meeting with the Minister, Deputy O'Rourke, and the British Secretary of State. The topic of discussion was how best to cater for the growing demand for natural gas by consumers both North and South.
I welcomed that meeting at the time. It was agreed that the question of a North-South gas interconnector and other infrastructural options should be examined jointly by officials from North and South. This examination is under way. Is there any idea of the timescale for that? It is matter of concern on both sides of the Border.
There is another study, in conjunction with the Department of Economic Development in Northern Ireland, of the offshore wind energy resource. The report of this study will be completed later this year at which stage there will be a comprehensive atlas of the potential wind energy resource onshore and offshore. Again, I have heard about the completion of this study before. Will the Minister of State be more precise about it?
I agree with the Minister of State's view on the Road Transport Act, 1932. I welcome the fact that there is a commitment to revisit it. As we both know, one of the few escapees from that Act was a small private service which operates in County Wicklow and is an extraordinary example of how a private service could operate where a State monopoly could not.
My questions concern the gas issue and the idea that Bord Gáis should be turned into a private company with a view to privatisation. As Mr. Cullen, the adviser to the Minister, will remember, one of the reasons for establishing a State enterprise is the quasi-tax reason, particularly with a diminishing natural resource such as gas. The establishment of a State marketing agency is the best way in the long run to ensure that private enterprise does not rip off the natural asset.
Does the Deputy have a question?
I am asking a question.
It has been a long day for us so it would be appreciated if the Deputy would come to the point.
As I explained, I have attended three other committee meetings. I have no ideological hang-up with the idea of privatisation of State enterprise but I have a query about the wisdom behind privatising this one if that is the ultimate aim, particularly as there may be resources in the Cork field. Is privatisation a long-term objective or does it naturally arise from liberalisation? I am unsure about the wisdom of charging £15 for household tests for radon gas. I know the Minister shares my concern about that issue.
I welcome the study of offshore wind energy resources. There is considerable potential in that area. It avoids the down side of onshore structures and their intrusive nature on the landscape.
Both Deputies referred to offshore wind energy. I am excited about this. There is great potential in this area. The study under way at present, which is near completion, is on an all-Ireland basis involving this Department and our counterparts in the North. That makes sense for many reasons. I look forward to the forthcoming report. There is already interest in setting up offshore wind projects. This professional study will help those people interested in the projects and will help us to assess the future of that mode of production of renewable and sustainable energy.
Deputy Currie raised the issue of the County Louth residents. When this Government entered office it put £400,000 aside to assist the residents in their case against BNFL. This is geared towards dealing with their research costs. Last year £76,000 was paid to them and a further £34,000 has been paid out since. There are invoices in the Department which are being processed so we can make provision for further payments. An offer was made to the legal representatives of the residents to provide funding for certain aspects of their legal work. That offer was made a long time ago but last month a meeting was sought by them to discuss it. We are discussing that issue with the Attorney General's office with a view to meeting them.
The 2025 study of gas resources is necessary in the context of total liberalisation of the gas industry throughout Europe. Many factors have to be taken into consideration by Government, not least the emerging situation in Corrib and the decisions which need to be taken on the security of supply. The proposed North-South interconnector, which is favoured by the Secretary of State for Northern Ireland, Mo Mowlam, is being examined and a second interconnector between Scotland and Dublin, parallel to that which already exists, is also being looked at. That latter provision is one which the experts consider to be the optimum solution. All these issues are under consideration. We want to look further into the future, hence the study to incorporate the period up to 2025.
Deputy Roche asked about privatisation. With the termination of Kinsale, which may present difficulties in our constituency, Bord Gáis Éireann will have to buy supplies at world market prices from the North Sea or further afield. That will be facilitated by the interconnector. As we speak, most of BGE's gas comes through the interconnector.
If the Corrib gas field is declared commercial - and we hope it will be - gas will be priced modestly. It was wise to keep Bord Gáis in public ownership until now, while taking the benefits from Kinsale. Depending on what happens off the west coast, gas may be appearing from external sources. Because of that, the concept of public ownership if fast fading. Hence the decision on privatisation.