I move that the Bill be read a Second Time. Before asking the House to accept the principle of this measure I propose to outline, as briefly as I can, the sequence of events which have led to its introduction. Shortly after taking up office I was informed by the chairman of Córas Iompair Éireann that the company had incurred a loss of over £800,000 in 1947 and that he then estimated that the loss for 1948 would be £1,250,000. In fact, this estimate proved to be somewhat too low, as the deficit actually incurred on the year's working was £1,400,000.
The measures which the company considered necessary to remedy the position included:—
(1) Dismissal of 2,500 men by reductions in maintenance;
(2) closing down of branch lines, involving further disemployment, possibly amounting to 1,000 men;
(3) increasing fares to road and rail passengers and raising freight charges on road and rail;
(4) restriction on privately operated road transport.
These proposals were so drastic that they could not be accepted by any Minister without the fullest investigation.
At the same time the following list of capital commitments had been entered into or were about to be incurred by the company:—
Railways |
£ |
|
Locomotives |
6,000,000 |
|
Wagons |
2,225,000 |
|
Coaches |
3,000,000 |
|
Central Passenger |
||
Terminal |
750,000 |
|
Spring Shop, with plant |
106,000 |
|
Tool Shop, with plant |
62,000 |
|
Development at North Wall (L.M.S.) |
70,000 |
|
Waterford Wharfand Store |
80,000 |
|
Limerick Wagon Shop |
280,000 |
|
Running Shed, North Wall |
80,000 |
|
Kingsbridge Goods |
40,000 |
|
Track alterations, etc. |
500,000 |
|
Train lighting |
40,000 |
|
Suburban Services |
560,000 |
|
13,793,000 |
||
Omnibus Section |
||
Store Street Station |
338,000 |
|
Broadstone Shops |
900,000 |
|
Garages |
500,000 |
|
Chassis Shop, with plant |
356,800 |
|
Buses |
905,000 |
|
2,999,800 |
||
Road Freight Section |
||
Lorries |
300,000 |
|
Containers |
63,000 |
|
Trailers |
40,000 |
|
Furniture Repository |
40,000 |
443,000 |
TOTAL |
17,235,800 |
|
I was not satisfied that this programme of huge expenditure was necessary, nor was it shown to my satisfaction that if it were carried out it would put the company on a self-supporting basis.
After the Minister for Finance and I had discussed the situation with the chairman and directors of the company, I made a full report to the Government who gave very anxious consideration to the whole matter and came to the conclusion that the affairs of the company should be investigated by the most competent person available for the purpose. We were extremely fortunate in securing the services of one of the greatest experts in road and rail transport administration. Sir James Milne is an Irishman who in a career of high achievement had attained the position of general manager of the Great Western Railway in England in 1929 and had held that position until the railway was nationalised. He was also chairman of Pickfords, Ltd., the road transport company. He has, in the course of years, carried out many transport inquiries and has been consulted by Governments in other countries on transport problems. When requested, he readily undertook the onerous task of examining and reviewing the position of rail, road and canal transport and reporting on the steps it might be necessary or desirable to take to secure:—
(a) the greatest measure of coordination of rail, road and canal transport;
(b) the restoration of the financial position of the public transport companies; and
(c) the most efficient and economical transport system.
To collaborate with him in his task he brought together a team of experts possessing experience and qualifications in transport so wide and varied that I doubt if such a concentration of knowledge and ability was ever before brought to bear on the transport problems of any country in the world. These consisted of a former vice-president, London, Midland and Scottish Railway, who had been a past president of the Institute of Transport; a former chief accountant, London and Northern Eastern Railway; a former general manager and at that time director of Hay's Wharf Cartage Group (including Pickfords, Limited, and Carter Paterson and Company, Limited); a chief engineer, western region, British Railways, who was a vice-president of the Institute of Civil Engineers; a chief mechanical engineer, southern region, British Railways, who was a past president of the Institute of Mechanical Engineers; and an assistant to the chief accountant, western region, British Railways. Let me place on record again the Government's appreciation of the work of these men and of the speed with which they submitted such a comprehensive report.
In view of the importance of completing the inquiry at the earliest possible date it was announced in the Press that it would not be possible to hold public sittings to hear evidence, but that written submissions from interested parties would be considered, and representations were made by the following 23 bodies:—
Clara-Banagher Branch Railway Committee. Cork Chamber of Commerce. Dublin Carriers' Association (1938). Dublin Chamber of Commerce. Engineers' Association. Messrs. Arthur Guinness, Son and Company Limited. Irish Engineering and Foundry Union. Irish Farmers' Federation. Irish Licensed Haulage Contractors' Association. Irish Lorry Owners' Association. Irish Railwaymen's Union. Irish Transport Stockholders' Association. Labour Party. Limerick Chamber of Commerce. Limerick Harbour Commissioners. Merchant Lorry Owners' Association. National Executive of the Irish Live Stock Trade. National Union of Railwaymen. Railway Clerks' Union Tramore Development Association. Waterford Chamber of Commerce. Waterford Harbour Commissioners. Wicklow Urban District Council.
Numerous comments and suggestions were also sent in by individuals and these too were given consideration.
As a preliminary to the inquiry, questionnaires were sent to the principal public transport undertakings as to the scope and activities of their organisations, and the information thus obtained formed the basis for subsequent discussions with the representatives of these undertakings. Sir James and his colleagues have expressed their appreciation of the full and informative replies received in response to the questionnaires and to all subsequent inquiries. In particular, the chairman, general manager and other officers of Córas Iompair Éireann afforded them every assistance in a detailed investigation of the company's affairs and made available for inspection all relevant books and records of the company.
I think it cannot be gainsaid that every opportunity, consistent with the necessity for completing the inquiry quickly, was afforded to all interests concerned.
After an inquiry that was conducted with a speed which must be regarded as unique in matters of this kind, the report was submitted to me in December, 1948, and made public immediately.
I do not propose to take up the time of the House by outlining in detail the recommendations of the inquiry. In order, however, that Deputies may be enabled to appreciate fully the issues involved, and the reasons underlying the approach to the problem, embodied in this measure, it is necessary that I should give as briefly as I can an account of the main conclusions arrived at by Sir James Milne and his colleagues.
The experts considered that the services provided by Córas Iompair Éireann are the backbone of the present public services and that these services form the natural foundation for future development. They felt that it was wrong in principle that the affairs of such a large undertaking should devolve almost entirely on the shoulders of one individual, the chairman; they recommended that two additional Government nominees should be appointed and that the board as a whole should be made responsible for the administration of the company's affairs, reserving only to the Government directors the right to veto capital expenditure.
The report examined in detail the functions and operations of the various departments in the company and made recommendations as to changes which the experts considered would improve services to the public and iead to more efficient and more economic results in working. They suggested certain improvements in the headquarters organisation of the company and in the organisation of the various districts handling the traffic, both road and rail. They examined in detail the work and organisation of the civil engineering and mechanical engineering departments; their recommendations for the better working of these departments, as indeed of all other sections of the company's activities, will be a guide and directive to the technical staffs of the company for many years to come. They have dealt also with the company's whole financial position and have made many recommendations.
They have made specific recommendations:—
(1) for the setting up of a central highways authority, the main purpose of which would be the equalising of the basis of track costs on the operators of road, rail and canal transport;
(2) for the future of the Great Northern Railway and other cross-Border undertakings;
(3) for the operations of the Grand Canal Company which they considered should be absorbed into Córas Iompair Éireann;
(4) for modifying the system and basis of licensing of road vehicles.
I will refer later to the recommendations made in the report on these particular items.
The report was severely critical of the policy of the board of Córas Iompair Éireann and the control it exercised, particularly in the matter of capital expenditure, and the findings confirmed the doubts present in the minds of the Minister for Finance and myself as regards the wisdom or necessity of undertaking the projected capital developments. The opening words of the report on this matter are:—
"Capital expenditure amounting to £5,325,000 has been authorised by the board between 1st January, 1945, and 31st August, 1948. In submitting capital schemes for the approval of the board, no formal reports are made and no information appears to have been furnished in regard to the probable effect on net revenue or to show that schemes undertaken in the national interest were essential to an efficient and economical transport system."
In the literature relating to the affairs of this State and its public utilities, this paragraph will surely rank as a masterpiece of understatement. When one reads the detailed examination of the huge unnecessary capital commitments entered into by the board, in the absence in nearly every case of reports and advice from the various technical officers of the company, one cannot but be struck by the restraint which has tempered the objectivity of Sir James Milne and his colleagues.
Take, for instance, what is known as the central bus station at Store Street. The need for a central bus station in Dublin is unquestioned, but the central bus station at Store Street would occupy only the ground floor of the building. Above it have been erected five storeys of new offices for the staff of the company. The cost of the bus station might be anything from £100,000 to £150,000, but the cost of this new building now in progress (including the new offices for the company) is estimated at £850,000; and with furnishings, etc. the final cost may be nearer to the £1,000,000 mark. I might mention that expenditure to date is £320,000.
I feel that the offices at present occupied by the company's staffs, and indeed I am so advised, are reasonably adequate and satisfactory for their purpose. The decision to provide these new offices involved the company in £750,000 of capital which, even if it were available, could be better spent on the provision of better carriages and wagons on the railway system and to put more omnibuses on the streets of our cities.
In addition to this, it involves the company in an expenditure of £40,000 per annum to meet interest and rates over and above the cost to the company of its present office accommodation. The former chairman in his reply to the Milne Report stated:
"It is estimated that the annual charge for interest on the capital cost of the new building—rents, rates and taxes—will be less than the present charge and there can be no doubt that the centralisation proposed will produce much greater administrative efficiency."
From the figures supplied by the accountant to the company, I find that the estimated rents, rates, etc. for the new building would be £45,000 per annum, while the estimated saving by removing the offices from their present building would be £3,000 to £4,000 a year.
Let me quote the portion of the report dealing with the Store Street omnibus station and central offices:
"It is considered doubtful whether the provision at Store Street, Dublin, of a terminus for long distance omnibuses or the centralisation of headquarters offices there can be regarded as sufficiently important to have justified the company in embarking upon such an ambitious project, when capital resources are limited and large expenditure is required for the rehabilitation and improvement of railway facilities."
So much for this illustration of the cold, unimpassioned reasoning which characterises the report.
The experts stated with reference to the proposed introduction of diesel electric locomotives that in their opinion
"the use of large main line dieselelectric engines in Ireland is unwarranted, and in view of the high cost and untried performance of these engines, the design of which is still in process of development, it is recommended that endeavour be made to cancel the order placed for six large passenger engines, which appear likely to cost about £80,000 each."
I understand that the company is in negotiation with the suppliers of these engines for the sale of the engines when completed to some other transport undertaking. The expenditure incurred to date on this project is £192,000.
The report recommended the cancellation of an order placed for 94 boilers costing £280,000 because the experts considered that the existing output of new boilers in the company's workshops should be sufficient for replacement purposes having regard to the fact that the stock of locomotives was considerably in excess of requirements. This order has been cancelled and a claim for £25,000 compensation has been made on the company by the manufacturers.
Dealing with the company's proposals for new chassis maintenance and body-building shops at Broadstone at an estimated cost of £927,000, the report states:—
"A modified scheme for extension and rearrangement of chassis maintenance and body-building facilities should be prepared, making use of existing buildings on the lines suggested, entailing an expenditure of not more than £100,000."
This project had reached the stage where tenders were received for the work. The company, on my instructions and against their wishes, did not go on with the project. They had, however, incurred an expenditure of £32,000 on fees to architects, engineers, etc.
Dealing with the company's proposal to build a new factory at Inchicore to make motor chassis for the company, the report said:—
"The scheme to erect a new factory at Inchicore to manufacture motor chassis for the company's use and for sale cannot be regarded as an essential adjunct to an efficient transport system. The agreement entered into with Leylands in connection with this project places onerous restrictions on the company's powers to purchase, manufacture and market vehicles. If it is decided, in the national interest, to proceed with the project, it is recommended that the work should be entrusted to a separate undertaking. If the scheme is abandoned, chassis required for the company's own use could be assembled without any extension of existing facilities".
The programme for the proposed chassis manufacturing factory envisaged the production of ten chassis per week, this being the minimum economic production for a factory of that kind. The company's requirements for chassis for both omnibuses and lorries was estimated to be four to five a week, of which two would be allocated to lorries. The balance of the factory's output would have to be sold within the country as lorries to the company's competitors. The company would, therefore, be providing nearly three times as many lorries for its competitors as for itself. I accept the statement contained in the report that the scheme cannot be regarded as an essential adjunct to an efficient transport system. Nearly £300,000 has been expended on the project. This factory is nearing completion and if it is not utilised for the manufacture of chassis it can be used by the company for other purposes or disposed of to a suitable purchaser.
Similar critical reference has also been made in the report to the proposed expenditure of £190,000 for the reconstruction of Limerick Junction where a modified and less costly scheme would meet requirements; to the proposal to provide a new spring shop at Inchicore at a cost of £56,000, the experts being of opinion that the existing spring shop should be adequate for all purposes; and to the new wharf constructed at Waterford at a cost of £89,000 which the experts consider does not meet the urgent need of providing proper facilities for dealing with the existing traffic.
These various items are included in the list of contemplated works estimated to cost over £17,000,000 to which I referred earlier. In addition, there was a further project of which Sir James Milne was not aware, a project for the construction of a six-storey luxury hotel at Glengarriff. Land had been acquired and tenders for the building of the hotel invited. The lowest tender for the shell of the building was £507,000, and this was accepted by the company. It was estimated that the hotel, when completed, would cost approximately £1,000,000. The board, however, decided before the Milne investigation, to abandon the project, but not before an expenditure of £35,000 had been incurred, of which £24,000 consisted of fees for architects, engineers, etc., the balance being paid for the purchase of Roche's Hotel which was entirely demolished.
The condemnation of this huge programme for capital expenditure created the gravest doubts in the minds of the Government as to the feasibility of permitting the board as then constituted to continue to control the company's activities, and consequently it was decided to change the Government's representative on the board. This was done on the 18th February last. The retiring chairman was compensated in accordance with the terms of a contract he had made with the company.
At the same time it was announced that the Government proposed to introduce legislation to provide for:
(1) the acquisition of the public transport systems other than the Great Northern Railway Company;
(2) the appointment by the Government of a transport board;
(3) the provision of compensation for stockholders; and
(4) the making of arrangements to ensure that dismissals of staff on grounds of redundancy would not take place.
The present Bill is to give effect to this decision. The main purpose of the Bill is to bring under public ownership the undertakings of Córas Iompair Éireann and the Grand Canal Company, for the control of which a new board to be called Córas Iompair Éireann will be set up.
The amalgamation of Córas Iompair Éireann and the Grand Canal Company constitutes a further step in the process of unification which began with the amalgamations effected by the Railways Act, 1924. This measure is the logical outcome of the developments in transport in this country since the foundation of the State. When the Transport Act, 1944, was introduced, its sponsors claimed that it would lead to economical and efficient transport services. It is now generally accepted that the combination of private ownership and semi-State control have not achieved these results. The division of ownership and effectual control could be satisfactory neither to the nominal owners of the undertaking nor to the Government, whose responsibility it was to ensure that the public interest was served.
Transport is a vital public service, of concern to every individual in the State and intimately affecting every phase of the economic life of the country. We all know that the task of providing a national transport system in this country under modern conditions has proved to be beyond the scope of private enterprise, and also that the compromise between State ownership and private enterprise has not been successful. It is the Government's duty to ensure that such an important service is carried on as effectively and as efficiently as possible. We have come to the conclusion that the discharge of that duty demands State ownership of public transport. That conclusion has already been reached in many other countries. We have the example of countries such as France, Switzerland, Sweden, Denmark and Belgium. In Britain also a solution of the transport problem is being sought through the medium of a Government-appointed Transport Commission.
Of the company's created capital of £18,000,000 some £14,500,000 debenture stock is guaranteed by the Government as to principal and interest, while the common stock amounts to £3,500,000. For the protection of its interests in the company the previous Government gave to the chairman in the 1944 Act special powers, but, as will have been seen, the results have not been satisfactory. Sir James Milne has recommended that two additional Government representatives should be added to the board and that the only additional power given to Government directors should be a veto on capital expenditure. This would still leave the Government representatives in a minority on the board, despite the preponderance of Government participation in the finances of the undertaking. This position would not be a satisfactory one from the point of view of the taxpayer or the Government.
There has been considerable speculation on the part of the public as to whether the future of the Great Northern Railway Company and the other cross-Border concerns would be dealt with in this Bill. A possible basis for an arrangement for the future ownership and operation of the undertaking was suggested in the Milne report.
I have had a number of meetings with the directors of the Great Northern Railway Company who have explained their financial position very fully to me. It was not possible to give them the subsidy or the financial guarantee which they were seeking, but I undertook to do all in my power to expedite the discussions regarding the future of the company. The chairman of Córas Iompair Éireann has been nominated by the Government to carry on preliminary talks with the chairman of the Ulster Transport Authority and their discussions are proceeding. It is still too early to anticipate the outcome, but it is hoped that an agreed scheme will emerge for decision by the two Governments. There are complex legal and other problems involved and despite the powers proposed to be taken in this Bill, I for one will not be surprised if further legislation is necessary before the matter can be implemented on any permanent basis.
The Government are fully alive to the anxiety which has been caused by the worsening financial position of the Great Northern Company, and to the uncertainty which prevails as to the future of the system. I have had a number of discussions with representatives of the unions in the matter. I can assure the House that so far as the Government are concerned, every effort will be made to find a speedy solution of the problem facing the company and its employees.
The Bill provides for the establishment of a board consisting of a chairman and five other members to be appointed by the Government. It is proposed that appointments will be for a period not exceeding five years, but that members will be eligible for reappointment. The terms and conditions of office and the remuneration of the members will be fixed by the Government. It is also proposed that the board shall be empowered to co-opt the general manager to be a member of the board. This will afford a useful link between the board and the management and is an arrangement for which there is a number of precedents in the railway world.
It is the view of the Government that a small board is more likely to yield the best prospects of efficient organisation. For this reason they have decided on a maximum of seven, the same number as the Electricity Supply Board. The over-riding powers of the chairman under the 1944 Act are abolished. A member of the board may be removed from office on stated grounds. In such cases the Bill requires that a statement shall be laid before each House of the Oireachtas, giving the grounds for removal. It is proposed that the members of the board may not also be members of either House of the Oireachtas. The superannuation provisions for the board are similar to those for members of the Electricity Supply Board, but provision is made to enable the present chairman, if he is appointed chairman of the new board, to reckon his service with the State and with local authorities for pension purposes as is provided for in the case of a civil servant transferring to a local authority.
The Government have decided that the existing name Córas Iompair Éireann should be retained. The fact that Córas Iompair Éireann denotes the Irish transport system is only becoming fully appreciated abroad. The name has not been in use for very long and a change would tend to create confusion. There is the further consideration that a change would involve considerable expenditure in printing, altering signs and names on vehicles, and in other ways. In all the circumstances, and having considered various alternatives, the Government decided that they would not be justified in making a change. For convenience, the existing company is referred to as Córas Iompair Éireann (1945) throughout the Bill.
The duties of the new board are set out in Section 14 of the Bill as follows:—
"To provide or secure or promote the provision of an efficient, economical, convenient and properly integrated system of public transport for passengers and merchandise by rail, road and water, with due regard to safety of operation ... and for that purpose to improve in such manner as it considers necessary transport facilities so as to provide for the needs of the public, agriculture, commerce and industry."
It will be the aim of the board to provide the highest degree of service at the lowest charges compatible with meeting costs. There is a good deal of loose talk about "cheap transport" and a tendency to ignore the fact that transport charges must depend, to a great degree, on the extent to which the services are supported and to the cost of providing them. Fixed expenses constitute a large proportion of railway costs, and a fall in the traffic means a rise in the average unit of cost for the conveyance of the remainder. I anticipate that the new board will find many ways of achieving economies. We know that there is scope for achieving a greater degree of technical standardisation, and for the introduction of more efficient methods. Duplicate services can be eliminated; and there are good prospects for the development of touring services, for which there is a popular demand, not only by our own people, but by tourists, with consequential intake of foreign currency. These measures can only mature slowly and they will call for the greatest organising, managerial and technical skill; for the whole-hearted co-operation of the staff, and for the active encouragement and goodwill of the public.
The powers of the board are contained in Section 12. These have been set out in detail and at some length, as we are anxious that the board will not be impeded in their operations by legal or technical difficulties. The powers given to the board are wide, as they are bound to be, having regard to the extent of the tasks they are called upon to undertake. In the present transitional period and particularly having regard to the negotiations concerning the future of the cross-Border companies it is difficult to foresee all contingencies. For this reason a special provision is included under which additional powers may be conferred on the board by Ministerial Order. Such Order would require to be confirmed by resolution of each House.
I now come to the terms of compensation proposed for shareholders and stockholders of the acquired companies. As the House is aware, these were announced last May. It is proposed that compensation shall be effected by the issue of transport stock which will be guaranteed by the State as to principal and interest. Transport stock will be a gilt-edged investment combining security of capital with an assured income. The Government gave the fullest consideration to the question of compensation and at their request dealings in transport stocks of the companies concerned were suspended to avoid possible speculation. In settling the terms of exchange the Government had regard to the claims of the stockholders on the one hand and to the rights of the community on the other. It will be no surprise to me if the proposals in the Bill are criticised in some quarters as being too niggardly, and in others as being over generous.
The capital of Córas Iompair Éireann comprises approximately £14,500,000 guaranteed debenture stock and £3,500,000 common stock. Of the debenture stock, an amount of £1,550,000 is due for redemption on the 23rd January, 1950. In view of the proximity of the redemption date to the establishment date proposed in the Bill it was not considered necessary to provide for the conversion of stock due for redemption in January into transport stock. The liability to redeem those £1,550,000 debentures on the 23rd January devolves on the board by virtue of sub-section (4) (a) of Section 21 of the Bill. The balance of the debenture stock, amounting to £12,889,000, will be exchanged for the same nominal amount of guaranteed transport stock at the same rates of interest and redeemable in the same periods as the debenture stock for which it is substituted. The details are set out in the White Paper which has been circulated to Deputies. The debenture holders will, therefore, be in exactly the same position as regards capital security and income as they are at present. In dealing with the debenture stock the Government is doing no more and no less than honouring the guarantees given to the debenture holders under existing legislation.
It is proposed that the common stock of Córas Iompair Éireann will be converted on the basis of £80 of 3 per cent. guaranteed transport stock for every £100 of common stock. The common stockholders will thus receive a guaranteed income equivalent to about 2½ per cent. on their present holdings at their nominal value and they will have the assurance of being able to redeem their holdings of transport stock in full in 1975-85. This rate of compensation is based on the average of the highest and lowest of the stock exchange quotations in each month in the three years 1945-1947.
The capital of the Grand Canal Company comprises £36,000 of 3 per cent. irredeemable debenture stock; £332,950 of 3 per cent. non-cumulative preference shares and £332,950 worth of ordinary shares. The Bill proposes to convert all these holdings totalling £702,500, into 3 per cent. guaranteed transport stock on a £1 for £1 basis. As far as the debenture stock is concerned, no one will, I think, question the Government's decision. Debenture stock is in a class apart from share capital. It is really a loan, and the holders of debenture stock are creditors with a first charge on all the assets of the undertaking. Conversion at par merely preserves the existing loan at its nominal value. The interest on this debenture stock has always been paid in full by the Grand Canal Company.
As there are very few dealings in Grand Canal Company shares, the stock exchange quotations could not be regarded as a reasonable basis of acquisition. We found that the general level of market quotations for the three years 1945-47 was actually higher for the ordinary than for the preference shares.
The dividend of 3 per cent. on the preference shares has been paid each year since before 1922, while the dividend on the ordinary shares has averaged almost 3 per cent. over the last ten years. The company is in a relatively sound financial position. In addition to its canal it owns valuable property. Apart altogether from revenue from the carrying trade, the company derives a substantial income from rents. The company contended that even if they discontinued transport services they could earn dividends as a property-holding concern. The fact remains that the Grand Canal Company is a solvent undertaking with an excellent dividend record extending over many years. To offer the preference and ordinary shareholders of that concern compensation at less than par would, in my view, be unreasonable. I do not believe, on the other hand, that the shareholders have any ground for complaint. Their income will be assured and their capital position fully protected.
The Bill provides that the existing statutory controls on charging powers will not apply to the board. Control of railway charging powers by the State or by State-appointed tribunals dates from the last century. When railway systems began to expand about 100 years ago, it was deemed necessary to impose restraints in regard to rates and fares. These were designed to secure fair play for all transport users and to ensure that the interests of the community were not prejudiced by-excessive charging designed to produce exorbitant profits. In this connection it must be remembered that at that time railways enjoyed an effective monopoly in the transport field. Conditions to-day are different. The large-scale development of road transport has destroyed forever the monopoly position of railway undertakings and has turned profits into losses. The case for these restrictive controls is, therefore, no longer so strong as it was formerly.
Prior to 1922 the maximum railway charges in this country were fixed by the British Board of Trade and confirmed by statute. Legislation was enacted during the first world war empowering the appropriate Ministry to authorise from time to time increases in railway charges. That position remained until the passage of the Railways Act, 1924. The Railways Act, 1924, established the Railway Tribunal whose functions included the settlement of rates and charges—both maxima and minima—and the hearing of applications for alterations of rates. The Railway Tribunal was abolished by the Transport Act, 1944, which invested the Minister for Industry and Commerce with power to fix maximum rates and charges. This power was never exercised in regard to road merchandise rates. Railway companies were free to vary their charges within the statutory maxima approved by the Minister under the Act. It is the view of the Government that the most direct and business-like course is to leave this complex matter in the hands of the members of the board who, with the detailed knowledge that will be available to them and the technical advice that they can command, will be the best qualified to determine the level of charges from time to time. My belief is that a State-owned corporation of the kind we propose in this Bill, charged with the duty of providing an essential public service, should be invested with the greatest possible degree of autonomy, both commercial and financial, to enable it to carry on its business economically and successfully and without interference in its day-to-day management.
It will be the board's duty to fix its rates and charges equitably over the various classes of traffics. It will have to direct its energies towards a solution of that most complex of all charging problems, the determination of the relationship between rail and road rates so as to attract towards each form of transport the maximum volume of traffic of the kind for which the form is best suited and equipped. In that way only can the full benefits of a policy of co-ordination be attained. The powers of the board in regard to charges will be conditioned and governed by factors which, in my view, are a much more potent deterrent to excessive charging than any Ministerial controls such as have existed in the past. In the first place there will be the powerful influence of public opinion to which a State board will naturally give full attention; in the second place, there is the competition from licensed hauliers and from traders carrying their own goods which will also provide an effective independent check on the charging policies of the new undertaking. Thirdly, there is the sensitivity of traffics to alterations in rates. In transport operations as in other activities the point is quickly reached at which increased charges result in loss of business which can rarely, if ever, be recaptured. Finally, there is the legislative provision which will still remain which requires the undertaking to afford all reasonable facilities for traffic, and prohibits any undue preference for any person or any particular class of traffic. This does not preclude the company from quoting special rates where there is a substantial new traffic and in fact they have co-operated in this way with a number of our new industries.
Elaborate provisions were made in the 1944 Act for the setting up of a Transport Advisory Committee, the chief function of which was to advise the Minister for Industry and Commerce on any matters relating to rates and fares and conditions of carriage which he might refer to it. The committee seemed a good idea in theory. In practice it never functioned and, as the members of the new board will be competent to discharge any duties which might have been assigned to this committee, it is proposed to revoke the provision which established it.
The question of branch railway lines constitutes one of the most thorny of all transport problems in this country, and the difficulties are accentuated by the intense controversy which the mere mention of the problem invariably provokes. On this occasion I trust that Deputies, with the experience of transport developments over the last 25 years, will approach the problem dispassionately and consider whether the course proposed in the Bill is not the best in all the circumstances.
First, let us consider what has been the position in the past. Before the passage of the Railways Act, 1933, railway companies were perfectly free to close down branch lines except in those cases in which the legislation under which a particular line had been constructed provided otherwise. Between 1922 and 1933 services were discontinued in whole or in part on nine branch lines, of which eight belonged to the Great Southern Railways Company. The Acts under which these lines were constructed did not require that they should be kept open for traffic, and the company, accordingly, exercised its right to close them down. The Railways Act, 1933, provided that no line could be closed down except under the authority of an Order made by the Minister for Industry and Commerce, alternative road services to be provided, and any staff displaced to be compensated. Fourteen such Orders were made by my predecessor between 1933 and 1945, of which eight relate to lines now owned by Córas Iompair Éireann. In 1944 an emergency powers Order was made which authorised the temporary discontinuance of rail services in view of the fuel scarcity then prevailing. This Order has not yet been revoked pending the enactment of the legislation which is now before the House. Services on many branch lines were suspended at varying periods during the emergency and in the spring of 1947, during the acute fuel crisis, services on many branch lines were temporarily discontinued. The services on a number of lines were subsequently restored but there are still a good many lines which are only open for live-stock fairs or for heavy seasonal traffic. That, then, is the general position in regard to branch lines up to the present.
The Bill provides that the board may, by order, terminate train services on any section of line, subject to certain conditions which are expressly laid down in the Bill. At least one month's notice must be given to the public; adequate road services must be provided in the areas previously served by rail; and employees whose conditions of service are worsened or who may lose their positions following on the termination of services must be compensated. These, in brief, are the provisions of the Bill relating to branch lines. There is nothing very startling or revolutionary in these proposals. The only departure from existing legislation now proposed is that the responsibility for an order for the closing of a branch line will lie with the board instead of with the Minister for Industry and Commerce.
The question of the retention or otherwise of a branch line must be judged in the first instance by reference to the public interest, and must also take account of economic factors. Looking at the problem dispassionately, Deputies will see that on the one hand heavy expenditure would be involved in the restoration of some of the branch line services; that the volume of potential traffic in some areas is small and is incapable of supporting both rail and road services; that in some cases railway stations are inconveniently situated, far from the towns; and that there is an increasing demand for new bus services. On the other hand, the value of the railway for heavy traffic such as beet and live stock is fully apparent to those of us who are in close touch with the agricultural community. The railways are also in a strong position to provide a cheap form of transport for heavy passenger traffic such as summer seaside services, excursions and pilgrimages.
The financial provisions relating to the board are dealt with in Part V of the Bill. The board is authorised to issue transport stock for the purpose of providing money for carrying out permanent works, for the redemption of transport stock, for the acquisition of any other transport undertaking, and for the other purposes for which capital moneys are properly applicable. The aggregate stock which may be issued for any purpose of capital works and for other purposes, excluding the redemption of transport stock and the acquisition of other undertakings is £7,000,000. This is the figure which was suggested in the Milne Report as the further capital which would be necessary for development purposes. The Bill provides for the guarantee by the State of all transport stock as to principal and interest. Issues of stock, except the substituted stock, will require the consent of the Minister for Industry and Commerce, given with the approval of the Minister for Finance. The terms and conditions as regards interest and redemption of such issues are subject to the approval of the Minister for Finance, and it is required that annual statements of stock issues shall be laid before each House of the Oireachtas. The Bill also makes provision for the establishment of a fund for the redemption of transport stock. The board will be required to keep all proper and usual accounts, and to furnish any further accounts or information which may be required. The audited accounts and the auditor's report will be presented to the Oireachtas. The appointment of the auditor is subject to the approval of the Minister for Industry and Commerce.
The Government decision of February last regarding redundancy is implemented in Part VI. The Bill provides that the services of permanent employees, or of temporary employees with not less than four years' continuous service shall not be dispensed with on grounds of redundancy. Any redundancy which may exist will be met through normal wastage. Some cases may arise where no suitable alternative employment can be found for redundant workers, in which case provision is made for the payment of compensation. These provisions cover the case of any employee whose office may be abolished due to the amalgamation of the companies, and also provide for compensation for worsening of conditions on certain transfers. The existing superannuation schemes are being continued in the Bill and there is power to make new schemes or to revise existing ones. The House will appreciate that the staff provisions in the Bill are quite exceptional. I think it can be safely said that never in the reorganisation of any industry have the workers received more consideration than they are receiving under this Bill. Córas Iompair Éireann is being given a new lease of life, and an opportunity of adjusting its affairs in such a way that it can be run in the future on a sound economic basis.
We are confident that the workers, given this unprecedented measure of security, will co-operate wholeheartedly in the attainment of our common objective. The success of this nationalised undertaking is in their own interests; it also lies largely in their own hands.
Labour unrest and unofficial action by workers in withdrawing their services constituted one of the greatest menaces to the success of the undertaking. Every employee of the company is a member of one or other of the many trades unions that cater for the workers in the various branches of the transport industry. All of these unions are strong and well organised, under the leadership of men with wide experience in the trade union movement. These trade union leaders and their officials are fully capable at all times of conducting negotiations with the board by means of the machinery which, with their agreement, has been devised for the settling of all types of industrial disputes, and which if it proves inadequate or imperfect in operation can be amended after further consultation with them.
Unofficial strikes will have most damaging effects, because not only do they disrupt the services to the community, but if persisted in will inevitably lead to the downfall of the unions themselves. Such action strikes at the very foundation of collective bargaining and puts in jeopardy those rights which trades unionists in this country enjoy to-day as a result of the struggles and sacrifices of their forebears. I cannot, therefore, conceive any circumstances in which a lightning or unofficial strike in this undertaking can be justified. I will go further and say to the House, with all the responsibility of my office, that I am convinced that lightning and unofficial strikes in any public utility where satisfactory arrangements for conciliation and negotiation exist, can never be defended.
Before leaving the question of the provision which this measure is making for the workers, it might not be out of place to point out that the problems of all other categories directly concerned, viz., the stockholders, the staffs of the companies, the directors, have all been dealt with in a generous manner in the Bill. Each is being accorded the most liberal possible treatment consistent with the interest of the public, on whose behalf we are proposing to acquire these undertakings. I submit to the House that all are getting the greatest measure of fair play that we can ask the community to give them.
The remaining provisions of the Bill are, in the main, re-enactments of existing legislation which is applied in whole or in part to the board. If there are any particular matters which Deputies may wish to raise in regard to these sections, they can, I suggest, be discussed on the Committee Stage of the Bill. There is only one provision to which I would like to make special reference and that is Section 25 of the Bill, which empowers the Government by Order to transfer the Shannon navigation to the board. This navigation has been maintained by the Commissioners of Public Works, but the Minister for Industry and Commerce has certain statutory functions in regard to it. The Grand Canal Company is the principal user of the navigation and it is felt that it is a logical development to take power to transfer the responsibility for the navigation to the board.
There are recommendations in the Milne Report which are not provided for in this Bill. These are principally the proposal for the establishment of a central highways authority, the revision of the licensing arrangements for road vehicles, the problems of the Great Northern Railway and other cross-Border railway services. These matters, as well as those of the recommendations for the better administration of the affairs of Córas Iompair Éireann as have not yet been implemented, will be dealt with by the new board which will make recommendations to the Government regarding any further legislation which may be necessary.
I would like to emphasise as strongly as I can that I am fully alive to the importance of public transport to the agricultural and industrial community and, indeed, to every single individual in the State. With this in mind I circulated copies of the Bill, with a request for views and observations, to a number of bodies who have in the past shown themselves interested in transport matters. The response to my request was most heartening and I appreciate the keen interest and the helpful suggestions made.
In recommending this Bill to the House, I should like again to explain that it does not in itself purport to provide an immediate solution for the transport difficulties with which we have been beset for so many years. I recommend it, however, as an appreciable advance on the road towards a final solution. The Bill establishes the machinery and the organisation which, in capable hands and properly used, should bring efficiency and prosperity to our transport system.