I move:—
That a supplementary sum not exceeding £120,000 be granted to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1952, for certain Transport Services; for Grants for Habours; for the Salaries and Expenses of the Marine Service (Merchant Shipping Acts, 1894 to 1947, and the Foreshore Act, 1933 (No. 12 of 1933); for certain payments in respect of Compensation, including the cost of medical treatment (No. 19 of 1946); for expenses in connection with the issue of Medals and Certificates; and for the Coast Life Saving Service.
This Vote is for the purpose of making certain payments to the Great Northern Railway Company. The House will remember that towards the end of 1950 the Great Northern Railway Company announced that because of the financial difficulties resulting from a marked deterioration in their operating results they were about to curtail transport services and to make drastic reductions in staffs. Following that announcement, at a joint meeting between the representatives of the Governments here and in Belfast with the company, the company agreed that the dismissal notices, which they had issued to their staff, would be withdrawn on an assurance being given by the two Governments that they would accept responsibility for losses incurred in maintaining services and employment, while negotiations for the purchase of the undertaking were proceeding. Both here and in Belfast there was an undertaking to give these assurances. There was not then, may I say, any further or more detailed arrangements with the authorities in Belfast and no discussion at that stage regarding the division of the liabilities that were undertaken.
A written assurance was issued on 11th January, 1951, to the company to the effect that as the company might find it necessary in the immediate future, in order to maintain existing services and appropriate employment, to incur liabilities in the ordinary course of business, pending the completion of arrangements for joint acquisition, the Government undertook in association with the Six Counties Government, that in so far as the resources of the company might prove insufficient to meet these liabilities, they would be met out of public funds. It was added that, if necessary, an Estimate would be submitted to the Oireachtas, and at the same time a similar letter was issued by the Six County authorities. An Order under the Emergency Powers (No. 157) Order, 1942, added the Great Northern Railway Company to the list of undertakings whose borrowings could be guaranteed by the Government. There were discussions with the company as to their immediate requirements, on 12th May, and the Minister for Finance gave a guarantee as to principal and interest for borrowings by the company from their bankers to a sum not exceeding in the aggregate £40,000 at any one time for a period ending September 30th, 1951, as required for the maintenance of the existing services and the employment appropriate thereto. The Six County Government proceeded on a different basis; they took a supplementary estimate and have been making periodic cash payments to the company on the basis of weekly returns since then.
Because of the guarantee that was given here of borrowings up to £40,000 and the provision which was made by way of Estimate in the Six Counties the Great Northern Railway decided to implement a number of wage awards and maintain its existing services. Later a list of materials and equipment which were required in the opinion of the company for maintenance and renewal works was submitted to both Governments and the appropriate expenditure was approved by them, but the company decided not to place orders for these materials and equipment on the ground that they could not enter into commitments which they might not be able to meet when they matured. It was pointed out that, as far as the Government here was concerned, responsibility under the guarantee was limited both in amount and in time and that that guarantee might have expired by the time the goods were delivered. We considered that to be a reasonable case and on 17th August the Minister for Finance guaranteed borrowings by the company without time limit up to a maximum of £125,000 for the purchase of materials and equipment necessary for the maintenance of the undertaking and subject to the prior agreement of the Minister for Industry and Commerce as to the items of expenditure. The company placed an order for its materials and equipment following that undertaking but to date, due to delays in delivery, not more than £21,000 has been withdrawn from the special account which was opened in connection with that guarantee of £125,000 to which I have referred.
In October, the original guarantee of £40,000 given in respect of operating expenses was extended to 31st December last and in December the amount was raised to £75,000 and the period extended to 31st March next. The company have recently indicated that its overdraft with its bank against that guarantee exceeds the limit of £75,000 and that the bank has requested that an arrangement be made to reduce that overdraft.
I mentioned that at the time when the joint proposal was made to the company. There was no discussion concerning the division between the two Governments as to how the liability should be divided. When recently we were able to conclude the provisional agreement with the Six Counties Government for the joint acquisition of the undertaking we discussed also this matter of the division of liability arising out of this undertaking and it was agreed that any losses arising should be met to the extent of 60 per cent. by the Six-County Government and 40 per cent. by us.
Any method of endeavouring to estimate how a charge of that kind should be divided, having regard to the character of the system, would give roughly a 60-40 per cent. division; that represents the division of the mileage of line between the two areas and of the gross receipts arising in the areas. We, however, stipulated, as an offset against any charge that might arise upon public funds here, that there should be an adjustment in the amount payable by us which would give us full credit for any profit derived from the company's road services which are entirely within the Twenty-Six Counties area, and also for any increased revenue derived from our sanctioning of increased rates and fares. The fares charged by the Great Northern Railway Company in respect of traffic originating in the Twenty-Six Counties were increased at the same time as Córas Iompair Eireann charges were increased, as we considered it preferable to meet the problem of the rising costs of the Great Northern Railway Company by increasing charges rather than by contemplating a higher subsidy.
On the basis that we are responsible for 40 per cent. of the cash deficit of the company, after taking credit for the road services and for the receipts attributable for the rates and fares, it is estimated that we are responsible for a payment in respect of the 15 months from January, 1951, to March, 1952, or a total of £117,466, and, as Deputies will note, on the back of the Estimate that is the amount provided —at least it is rounded up to £118,000— the amount to be paid to the company in respect of operating losses and revenue charges. I should say that there is a considerable element of estimation in these calculations and that adjustments may be necessary later in the final accounting with the Six Counties Government. The figure for losses would have been considerably larger if the company had not deferred placing orders for materials and equipment.
The fact that any charge arises on public funds here, I know, will be a disappointment to some Deputies because they may have been under the impression that the Twenty-Six County part of the Great Northern system was producing a profit or, at worst, breaking level. That was true up to last year, but it is no longer true. The increased wages and salaries which came into operation last year increased the company's operating charges in a full year by £370,000 and there have also been increases in the cost of coal and oil. Furthermore, Deputies will recollect that there was a prolonged strike on the company's omnibus services which diminished earnings from that source, and its earnings were also affected to some extent by the strike on the Córas Iompair Éireann system.
Against these increased wages and salaries which came into operation last year, the rates and fares were increased in September, the average increase being 16? per cent. on rates and 12½ per cent. on fares, the same increases as were effected on the same date by Córas Iompair Éireann. These increases are estimated to bring in £212,000 for a full year. So, it will be noted that the full estimated increase in revenue from the higher rates and fares will not be sufficient to offset the increased charges on the company arising from higher wages and salaries alone, apart altogether from the increased cost of fuels and materials. Nevertheless, the company consider that they are the highest increases that the traffic will bear and that to attempt to raise them further would not increase their revenue but might cause a loss through a diversion of traffic.
These increases operated in the Twenty-Six Counties area only. There was no increase made in the local charges in the Six Counties area because the company's charges there are already in line with those of the Ulster Transport Authority and, in the company's view, have to be maintained in line with those charges.
That is a brief statement of the reasons why this Estimate is required.
The House will remember that, following the discussions which proceeded between the Minister for Commerce in Belfast and myself, a joint statement was issued indicating that both Governments had found it possible to agree on a basis for acquiring the Great Northern Railway and for its operation by a joint board. Legislation to give effect to that agreement is in course of preparation. I cannot yet say when it is likely to come before the Dáil. It is obviously in our interest to speed it up as much as possible but there are some matters of detail for decision before it can be completed.