The meeting has been convened to consider the Supplementary Estimate for Vote 31, Department of Transport, Tourism and Sport. I remind members that this is a Supplementary Estimate, not the full Estimate. I thank the Minister of State at the Department of Transport, Tourism and Sport, Deputy Alan Kelly, and his officials for attending to assist with our consideration of this Supplementary Estimate. I invite him to outline the requirement for this additional expenditure and how it is intended to fund it. Two element are involved: additional funding of €32 million for the CIE group of companies and €300,000 additional funding for the National Sports Campus. Perhaps the Minister will outline how he will source the finance for this additional funding.
Vote 31 - Department of Transport, Tourism and Sport (Supplementary)
Thank you, Chairman. The term suits you well.
This year the Department of Transport, Tourism and Sport requires a Supplementary Estimate of €4 million. In addition, a technical adjustment for €32.3 million is also required to reallocate savings between subheads within the Department's Vote 31. Current and capital expenditure savings of €32 million will be reallocated to subhead B7, public service provision payments, National Transport Authority public transport contracts. On 24 July last, the Government decided to provide additional public service obligation, PSO, funding of €36 million to Córas Iompair Éireann, CIE, to ensure the companies could continue to operate for the rest of 2012. This brings the total subvention to CIE for this year to €278 million.
Each year funding is provided for socially necessary but financially loss-making public transport services. Funding for such services is made available under the Vote for the Department by way of a payment to the National Transport Authority for public service obligation services. The CIE group has had to confront a very difficult financial situation. As in most business sectors in the State, the current economic environment is very challenging for public transport providers. The cause of the problem is primarily the recession, which has caused a drop of over 20% in passenger numbers from the peak in 2007. This has been partly offset by fare increases. The group's revenue is down by over 11% from the 2008 level. The PSO subvention has reduced by 21% between 2008 and 2012, and is due to fall by another 14% in the next two years.
The removal of the fuel rebate is estimated to have cost the group approximately €22 million, at a time when it has had to absorb even higher fuel prices. In 2006 and 2007, as a result of the CIE operating companies expanding their network of services and growth in the economy, CIE experienced an increase in passenger volumes and revenues. However, the impact of the economic downturn, which started in 2008, resulted in decreases in passenger numbers in each year from 2008 to 2011. Once the expected increase in demand did not materialise as a result of the economic downturn, CIE was faced with an expanded network of services and reduced revenues which resulted in each of the operating companies incurring deficits in each of the years 2008 to 2011. The exception was Bus Éireann, which generated a small surplus in 2011.
The CIE group reported surpluses in each of the years from 2006 to 2008. 2007 was the only year in the period 2006 to 2011 in which the group generated a surplus when the gains from the disposal of fixed assets were excluded. In the past three years 2009-11, CIE suffered a total loss of more than €137 million, after exceptional items. Clearly, this level of losses cannot be sustained and must be addressed.
The 2011 annual report and financial statements for CIE and those of the three subsidiary companies were recently laid before the Houses of the Oireachtas. An unqualified audit report was issued by the group's auditors on CIE's 2011 financial statements. However, the auditors have included a heading "Emphasis of Matter" regarding the group's ability to continue as a going concern. They note that funding and trading difficulties give rise to uncertainty for the business and challenge the group's ability to continue to trade as a going concern. The board of CIE expects these uncertainties to be addressed through a range of measures, including the realisation of non-core assets; a reduction of the cost base, including pay-roll reductions; multi-annual fare increases and the curtailment of the own-funded capital programme. The CIE companies have been endeavouring to deliver savings which will not have an adverse impact on services. However, it will be a struggle every year to meet the reduction in the PSO budget while maintaining services.
The Minister for Transport, Tourism and Sport, Deputy Leo Varadkar, and I meet regularly with the four chairs and senior executives of the CIE companies as well as with union representatives. While facilitating a range of measures to address the problems, we have stressed that significant progress needs to be made in the development of a realistic, sustainable and robust business plan by CIE to deal with the current economic realities, cost reductions with the CIE group and employee support for same, the sale of non-core assets and the securing of new credit facilities. These avenues are being explored. The additional funding for this year only provides a short breathing space to CIE. It is essential that management and staff in the CIE companies use this time productively to discuss and implement proposals to cut costs that can help address the serious financial position in which the CIE group finds itself. In view of the difficult financial situation of CIE and the need to finalise its business planning for 2013, it is imperative that these discussions result in a positive outcome in the next few weeks.
CIE is progressing the preparation of a revised five-year business plan with aggressive targets that will support the reporting of trading improvements in 2013. It is intended that the business plan will address the underlying financial challenges facing CIE in order that its public transport services can be provided efficiently and cost effectively during the plan's period.
The goal for public transport is to provide safe, accessible and integrated services that contribute to sustainable, economic and regional development in an efficient manner. Despite the economic problems and the reduced sums available for capital and current expenditure, the Government will continue to prioritise the role of public transport. In summary, additional PSO funds in 2012 are being provided to CIE from within the Department's Vote, by way of this proposed Supplementary Estimate. So far €16 million of the €36 million earmarked has been paid. It is envisaged that the balance will be paid to the National Transport Authority shortly. The allocation of PSO subvention under the PSO direct award contracts is a matter for the National Transport Authority under the National Transport Authority's contractual arrangements with the CIE subsidiaries. It is up to CIE management and the workforce to ensure the future success of the organisation. The additional €4 million to be given to CIE will equate to the dividend in respect of the Aer Lingus shareholding that has been paid to the Exchequer.
The other area within the Department that requires additional funding is the sports programme. A further €300,000 in current expenditure savings is to be reallocated to subhead D6, National Sports Campus. The National Sports Campus Development Authority requirement for additional funding arises from unforeseen events, mainly a failure of a combined heat and power, CHP, unit that gave rise to increased energy bills at the National Aquatic Centre and a tragedy at the centre that led to a temporary closure and revenue loss.
The savings within the Department's Vote have arisen in the following areas: land transport €18.2 million, under the National Transport Authority administration, the Medical Bureau of Road Safety, smarter travel and carbon reduction and public transport investment programme; maritime transport and safety €6.7 million, under the Irish Coast Guard and grants for improvements for harbours; sports and recreational services €6.4 million, made up of the National Sports Campus and grants for sporting bodies and €1 million from the tourism product development fund.
I will briefly outline the subhead savings under each of the programmes. Under land transport, the programme savings have arisen in a number of subheads - subhead B.4 - Medical Bureau of Road Safety €500,000. Savings have arisen in two of the bureau's programmes - the drug analysis programme and the alcohol breath roadside screening programme. Savings have also arisen in laboratory equipment and buildings and utilities. Subhead B9, National Transport Authority, €1 million, the savings arise as the authority will utilise an identical amount from its own resources specifically the surplus transferred from the former commission for taxi regulation on 1 January 2011 to fund some of its administration costs. Subhead B6, smarter travel and carbon reduction, €6.2 million, savings arise as a result of the cancellation of three proposed new programmes, namely, regional transport and information hubs, a local authority eco-driving pilot project and area based personalised travel planning. Under subhead B8, public transport investment programme, there are savings of €10.5 million. The savings were made in public transport projects of €430,000 due to minor adjustments being made to a wide variety of projects. Public transport safety and development had savings of €2.1 million due to development of new stations at Crusheen and Oranmore on the Western Rail Corridor being delayed due to planning issues. Savings of €7.9 million occurred in public transport infrastructure, National Transport Authority, due to the delay in the granting of the railway order for Luas and further savings arising over a number of projects such as bus rapid transit, Dublin bike extension scheme and the Kildare route project.
Under maritime, transport and safety, the savings have arisen in the following subheads - C3.1, Irish transport, under Irish Coast Guard €5.3 million in search and rescue helicopter contracts. A milestone payment of €5.3 million, due to be paid when the second helicopter base is approved as operational with S92 helicopters was originally planned to be paid in 2012 but will not be paid until August 2013. Under subhead C3.7, maritime safety and maritime regulation, grants for improvement of harbours, there is a saving of €1.4 million. Savings arose because Wicklow County Council could not proceed with planned dredging works at Arklow harbour in 2012 as a dumping at sea licence was not received from the Environmental Protection Agency.
Under sports and recreational services, the sports programme savings have arisen in the following subheads: subhead D3, grants for sporting bodies, a saving of €3.2 million. Savings arose as a result of slower than expected drawdown of previously allocated sports capital programme grants. As payment of sports capital programme allocations is demand led, it is impossible to accurately predict the exact timing of drawdowns. External factors beyond the control of the Department, such as the weather, can adversely affect the drawdown rate. Under subhead D6, National Sports Campus, there is a saving of €1.5 million. The savings arose due to delays in progressing certain works in 2012 due to difficulties arising in the tender process. Under tourism services, tourism programme savings arose under subhead E7, tourism product development, of €1 million. The level of funds required to service tourism product development in 2012 is expected to be €1 million less than that budgeted for 2012, due to a slower than anticipated level of drawdown of the current grant funding.
I commend the Supplementary Estimate to the House.
I call Deputy Ellis.
Please allow me a few seconds to run through a few issues.
While we are waiting, can I inquire about CIE? CIE operates routes which are not busy. There are some such routes in my constituency. What is the future of those routes that are not making money? Are there any plans to increase passenger numbers? In various areas throughout the country I see trains passing by and not many people using them. On the Cork-Dublin train the number of passengers has fallen drastically. What action is being taken by the Department in consultation with CIE to increase passenger numbers?
That is a fair question. The position in respect of Irish Rail is quite difficult.
The improvements in motorways have greatly affected Irish Rail. It is not just in our area that the rail passenger numbers and revenue are dropping substantially; it is something that is obviously affecting various routes throughout the network. A number of programmes have been introduced to try to improve the service. Irish Rail has appointed a commercial director to try to improve the offering to consumers. In particular, there will be promotions to try to encourage many as people as possible to book in advance. Passengers booking online in advance will get significant savings. Irish Rail will also consider packaging the whole experience.
Given the cost of tolls, parking, etc., for people coming to Dublin, their experience on the train is far better and they will get more work done. For those with a Leap card they can use it for all modes of public transport to get around Dublin. We are looking at that aspect to see how Irish Rail can improve its service offering and encourage more people to use the services. Many other important improvements in service are also taking place, including offering Wi-Fi on trains, which is important for business travellers particularly on the Cork to Dublin route. There is a range of other services to make the passengers' journeys better.
Public transport by its nature is not profit making and will always need to be subsidised. There is hardly a country in the world where that does not happen. While it needs to be subsidised, we need to minimise the impact on the taxpayer. That is why we will be pushing Irish Rail to make the improvements I mentioned and others in order to get more people on those lines.
I thank the Minister of State for his presentation. Some €3.2 million in sports capital grants was not taken up. Has that been ongoing since 2008? Is that available to be drawn down in 2013? What are the implications of that? There is also €3.2 million for the sports campus. This might not be the forum for asking about the delays, but I thought that was on schedule. I ask the Minister of State to clarify the situation on planning issues at the Crusheen and Oranmore stations on the western rail corridor and the payments in respect of the automatic vending machines being deferred.
We will take all the questions if that is agreed.
I thank the Minister of State for his input. Following the tragedy at the National Aquatic Centre, the centre was closed. How much revenue was lost as a result of that closure? Considerable money seems to be made up in different areas. The transport area seems to be hit very hard with many projects delayed, which is of concern. There have been delays in the railway order for Luas Broombridge, the extension of the dublinbikes scheme and the development of the Hansfield station, which, we were all told, would have been completed. I welcome that the €4 million saved will help CIE, but I wonder if we will have a problem next year if we are making these savings now. If we are relying on that €4 million to make up the money for CIE this year, where will we be next year?
I am concerned about the search and rescue helicopters. Many people have been looking for the extra funding for the Irish Coast Guard. It is a major issue along the coast and we seem to be delaying that further until August 2013. At €5.3 million it is a substantial amount of money. Will we get it in 2013? I am concerned that when we make savings such as this one, we do not come back and correct them. Is that the intention with all of these? Do we set deadlines?
I thank the Minister of State for outlining the reasons for the reallocation of the moneys. The lack of coast guard facilities at Doolin has been on the agenda for some time. I understood that moneys were not available previously in that subhead to meet the costs of the provision of that facility. It appears that there is now, but it has been diverted out of the section to deal with the CIE issue.
Overall at the end of the year some €30 million remains unspent. This is money that could be used for the so-called shovel-ready projects. The Government and the Minister of State's party made considerable play about shovel-ready projects generating activity in the economy, yet at the end of the year we find the Department has €30 million in spare cash. It is an indictment of the Department and the Minister of State that it has not been able to drive these projects, many of them in capital areas, that would generate employment and increased activity. I ask him to comment on that.
I thank the Minister of State for his detailed account of where the moneys are being sourced and where they are going. There is an increase of €36 million in the CIE subvention. I presume whatever cuts are made next week or in future weeks for next year's budget will be from the base of €242 million and not the €278 million. I know the Minister of State is awaiting the detail of the five-year plan. Is there a danger that we will be back in 12 months looking at this? Fare increases have been highlighted as a way of filling the gap so to speak. Are economies of scale at play that might lead to bigger problems next year in terms of the subvention required?
Most of that additional subvention is coming from money allocated to capital expenditure. Is it not unusual for additional current expenditure to be funded from an underspend on the capital side? Can the Minister of State give us some guarantee that future capital expenditure will not be reduced by the amount being reallocated here? Can he confirm that the various capital items he has highlighted will proceed and not be dropped at the expense of other planned capital projects?
Members will have to excuse my ignorance, but I need an explanation of what a CPH unit is. If it is giving rise to increased energy bills at the National Aquatic Centre, how will it continue into the future? On timely drawdowns by sporting bodies, I know of sporting organisations that were allocated national lottery money but were never able to draw it down. Would it not be better to give them a much more realistic drawdown period and if they cannot draw down the money, it then goes back into the pot? There is no point in sitting on money like that for years on end. Perhaps we should consider some kind of amnesty for organisations that will not be able draw down at the end of that period.
Perhaps the Minister of State could give us an overview of Ireland's future public transport. It is fast becoming a difficult situation for those in rural areas. As a result of motorways, there are large parts of rural areas not being serviced by public transport. We are all aware of rural isolation, and I need not go into it here. There is the loss of the post office and the pub, and now the bus as well. It is an issue about which I have considerable concern.
There was a range of questions which I will address in no particular order because some of them overlap.
The helicopter will be delivered in 2013. It is purely a payment going over the threshold of 2012 into 2013.
The Doolin facility is down in the plan. We do not yet project it will be in 2013. That is something that will be looked at and I will get back to Deputy Dooley on it.
Did the Minister of State say it will not be in 2013?
At present, it is not in 2013. That is something I will come back to confirm.
On the loss of revenue at the National Aquatic Centre, this relates to a couple of one-off events in the failure of a CHP plant and also a tragedy that resulted in substantial revenue losses that needed to be accounted for this year. Its operation thereafter is expected to be as normal.
Is that not covered by insurance? Does it not get recouped?
I understand there was no recoupment of insurance.
There was a planning issue with Cusheen station where it was rejected on a technicality. I understand the planning application was resubmitted in September, and that will come through.
What about Oranmore?
Works have commenced on Oranmore station and we expect that to be completed next year.
There was also a question from Deputy Walsh on the 2013 plans for CIE. CIE, as I stated on numerous occasions, is in a perfect storm between loss of revenue, loss of passengers, loss of the fuel rebate, the price of fuel also increasing and the drop in the PSO. As we all will be aware, it is in an extremely difficult position.
Deputy Walsh asked if I could give a guarantee that we will not be dipping into capital expenditure in the future. I can never give such an absolute guarantee, but it is not our intention. We have been in negotiations with CIE on ensuring that it will get to a position of strong viability next year. We have had to put €36 million into the group. It has been done in stages. The group has been set defining targets. Obviously, we have had to submit this Supplementary Estimate for CIE in order to ensure its future. That five-year business plan is fairly robust. At this stage, we are nearly down to weekly meetings to ensure the robustness of the plan for the future. We would be hopeful that the plan will make the group's services viable.
On Deputy Ann Phelan's question on the future of public transport, some offer the panacea of certain liberalisation and privatisation. Obviously, in certain circumstances we have had competition. I am not somebody who is necessarily against competition but, in itself, it is not a panacea. Public transport is not profit-making. We have one of the lowest subsidised public transport services in Europe, although some do not realise that. We must get to a stage where there is an integrated, viable and workable transport service in the country, dare I say it, combining both public and private operators, and that is what we aim for.
As Deputies, particularly those in rural areas, will be aware, that poses difficult challenges. For instance, Bus Éireann had to examine its network. Dublin Bus also had to examine its network. Effectively, from an Expressway point of view, Bus Éireann was in a commercial place. To a large degree, it might as well be a private operator. Having said that, I would receive a good deal of representations from Deputies stating that Bus Éireann must continue to be in this town, that town or whatever town. The fact of the matter is that these are decisions made by Bus Éireann. They are not decisions made by me or my colleagues. One cannot say that the company must compete, break even and, dare I say it, make profits while also stating the company must enter into various different operations that make it uncompetitive. It is impossible to do both. The company must try to provide as good a public commercial service as possible. That goes for Dublin Bus and Bus Éireann. I suppose it is about the future.
The future will involve a great deal of change as regards ensuring that there is integration across services. I am glad to say that in the past year and a half there has been much progress in that area, and it comes under my domain quite a bit. Whether it is the advancement of integrated ticketing, the issue of real-time passenger information, the advocacy of Wi-Fi, the national journey planner or many other initiatives down to simple provisions on public transport services, it is a matter of ensuring that consumers using public transport feel that the service operates to their requirements, is on schedule and is comfortable and they can do their business on it. That is where we have moved in the past year and a half.
Certainly, there are challenges, particularly for Irish Rail in the area of competing with other modes of transport and ensuring more consumers use its services. In that regard, there are challenges in pricing. There are challenges in how the company will entice more passengers. However, Irish Rail has made strong moves in the past few months to improve its offering. One will see from its website that Irish Rail has different pricing models and different service models. It will take time for that to come into effect but it will have an impact in the future.
Is there anything further?
On the sports capital funding grants not taken up, I presume this relates to allocations that were made back as far as 2008 to sports clubs that have not drawn them down for whatever reason, and they were not drawn down this year either. Does this mean they will be available to them next year?
Is there a cut-off point?
That money is cut off now.
Have the clubs been notified?
I will check with the officials. I presume they have been notified.
Is this the first time they have been cut off? Were they available to them up until this year?
As I understand it, yes. That changes with the accession of the new programme. The cut-off has happened. I will check and revert back to the Chairman as regards whether they have been notified. I would presume in normal practice they would have been notified that they had a time period within which to draw down the funding.
It would have been important that they would have been notified of what would happen if the funds were not drawn down by a certain date.
I could not agree more with Deputy O'Mahony. I will check on that and come back to him. If they have not drawn down the funding and if they were planning to draw down funding beyond a certain threshold and then find out that it is over and that has not been communicated, obviously, that would be an issue. I understand from my officials that the funding is no longer available and by its nature, they would have been notified of that.
If the Minister of State would get back to me, I would appreciate it.
I will come back to the Deputy on it. If there is a particular case about which Deputy O'Mahony is concerned, he might come to me directly and I will ask about it.
Is there anything else?
One aspect that worried me when I looked at these statistics was how the Government is making savings in the road safety area regarding the programme of roadside breath testing for alcohol.
I do not know what way that is made up. It seems very worrying that we are saving money in programmes that are fighting life threatening situations.
The answer is simple. There was another allocation to road safety in this budget. All the programmes have spent their budget. There was an over-allocation. They did not feel it warranted the use of that allocation this year and it was not used. Having said that, the Road Safety Authority, with which we work very closely, is looking at variations in terms of its future programmes and should extra expenditure be required that will be provided for. In this case there was no impact whatsoever on road safety campaigns or work as a result of the transfer of this money into this fund.
On behalf of the committee, I thank the Minister of State and his officials.