I move:
That a sum not exceeding £114,600,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1986, for the salaries and expenses of the Office of the Minister for Communications and of certain other services administered by that Office, for a cost alleviation payment and for payment of certain grants and grants-in-aid.
Since this House last approved annual Estimates for my Department, there have been significant developments on many fronts in the communications areas. Most of these have been extensively and constructively debated by the House. I do not feel it is desirable or necessary to cover such ground in detail again. However, given the importance of the communications sectors and the State bodies within these for the general competitiveness and employment prospects of the economy, it is important that Members of the House be given an opportunity to debate and contribute to general policy formulation in this area.
During my three and a half years in office, I have striven with, I think, a fair degree of success to provide a regulatory framework for the communications sectors which will ensure that not only will they be the most efficient in the domestic economy, but their performance will also compare favourably with corresponding sectors in our main trading partners. I am also determined that the State bodies for which I have direct responsibility will be efficient and profitable. These are the general parameters within which my Department have been operating over the past few years and will continue to do so over the coming one.
Expenditure on transport accounts for about 15 per cent of GNP. Demand in this sector is basically a derived demand, depending on developments in other sectors. In this regard, the outlook for it is the most encouraging for many years. Thanks mainly to the stimulus given to the industrialised world by the fall in oil prices, economic growth in the OECD area will be considerably higher both in 1986 and 1987 than any of us, or indeed most reputable international economists, had forecast at the beginning of this year. More importantly, the composition of this growth is radically different from what has been experienced in recent years. Domestic demand and in particular personal consumer expenditure will be the main driving force in economic growth in our main trading partners. This development presents us as a trading nation with a unique opportunity to achieve the substantial increases in output on which employment prospects for our growing labour force will depend. We can achieve this provided our competitiveness is at least maintained, if not improved, and we have sufficient flexibility in all markets to take advantage of increased foreign demand and other changes in our main markets. In this regard, it is imperative that we recognise that it is movements in relative competitiveness which primarily determine market shares. We must remember that our competitors have also had the benefit of the fall in oil prices and their input costs have also been reduced as a result. This is being reflected in lower output costs for the goods and services they produce and with which we must compete. Unless we can match them in this regard, we will inevitably suffer loss of market share with consequential adverse effects for employment.
One very important determinant of the competitiveness of our trading sector is the cost of finance. The CII in their recent newsletter emphasised the need for a substantial reduction in domestic interest rates. I strongly share their views on this topic. Interest rates in early 1986 were at an exceptionally high level here due in large part to uncertainty about exchange rate movements and in particular fears about the constituents of the impending EMS realignment which led to a large increase in speculative flows. The Government took a very positive and unambiguous stance in the realignment, conscious of the fact that a certain readjustment process would be necessary for certain industries. We have helped and will continue to help them achieve this. Now that our intention to pursue a strong exchange rate policy is clear to the financial markets, we expect that this be reflected in a substantial reduction in interest rates as soon as possible. Apart from interest rates there are other favourable effects from a stable exchange rate policy. Inflation should be much lower, which is good news for those on fixed incomes. The escalation in debt service costs due to exchange rate movements which have been a major factor in the imbalances in the public finances will be halted and reversed. However, by far the most important benefit is the establishment of an environment of certainty and confidence in which our trading sectors can plan and flourish.
However, a strong exchange rate policy also necessitates discipline in other areas of economic policy, a fact which I regret to say is not adequately appreciated and acted upon by the social partners. As a nation, we must accept that fiscal, monetary and incomes policies must be compatible with the exchange rate policy we pursue. Another small country in the Community, Denmark, has shown us the substantial and beneficial effects — particularly for employment — which can be gained from a strong exchange rate policy supplemented by appropriate action in other areas.
Perhaps the most important area where an adjustment is needed is incomes. I have already referred to the benefits of lower inflation. The minimum we can expect is a corresponding reduction in income demands to reflect this.
Unless we do so, not only will we destroy existing jobs but we will also make it difficult, if not impossible, for new entrants to the labour market to obtain gainful employment. Some of our trading sectors have other adjustment problems caused by structural problems, shifts in demand patterns, product obsolescence etc., which may require State help to overcome. However, any progress they make in this regard will be to no avail if their competitive position is undermined by excessive income increases.
While I do not have overall responsibility for fiscal policy, I can assure the House that any expenditure for which my Department are responsible will be economically justifiable and desirable. I can also assure the House that the regulatory framework for the sectors for which I have specific responsibility will be fully compatible with the overall national effort to improve or at least maintain our competitive position.
My commitment in regard to CIE has been clearly demonstrated by the provisions of the Transport (Re-organisation of Córas Iompair Éireann) Bill, 1986, which was introduced into Seanad Éireann and passed all stages there on 17 June. The provisions of this Bill will introduce a greater transparency into all the operations of CIE and will help them to provide the range and quality of services which we have requested of them at the minimum possible cost. Equally important, from my viewpoint, it will enable the workforce in CIE to identify much more readily with the service they are providing and the performance of the company providing it. The workforce in CIE has been much maligned over the past few years. In a small few cases this has been justified but the general body of workers in CIE have provided this country with a service of which they and I am proud. I wish to place on record my acknowledgment of this fact.
Because of this and my personal commitment to maintaining and raising morale in the company I accepted and included in the Bill a number of amendments to reassure all that the Bill was not about closing down CIE nor designed to achieve stunning numbers of redundancies. The Bill contains detailed provisions for the maintenance and protection of conditions of employment of workers transferred to the subsidiary companies. It also provides that, in the unlikely event of any of the companies being wound up, the functions of the companies shall be taken over by the board and the board shall accept into their employment without interruption of service all officers and servants transferred to the company on vesting day.
Against that background, I was rather taken aback by the scare-mongering tactics of the President of the National Association of Transport Employees, who is reported to have stated that almost 7,000 jobs could go and that the national railway system could be lost unless the Government changed their policy on the proposed re-organisation of CIE. Irresponsible comments of this nature make me wonder who is trying to put CIE at risk with attacks on the future of the organisation and their equipment. The individual CIE workers cannot be very happy, and what must the passengers think on whose support the CIE services are dependent?
I would like to assure both in a number of ways. While the improvement in the CIE finances over the past few years was a laudable achievement, it was nevertheless essential that the escalating losses of the seventies and early eighties be halted. There is no doubt that the Exchequer could not have afforded to support CIE if the losses had continued to increase at the same rate. The proposed re-organisation together with the package of financial measures introduced in 1983 were designed, not, as may have been suggested, to give rise to large scale redundancies in CIE, but on the contrary to ensure the future of CIE and their services. Make no mistake about it, if these steps had not been taken, the future for the CIE workforce would have been a bleak one. We just could not have afforded to continue to suport CIE losses if they had continued to escalate out of control. The new structures for CIE are designed to give everyone in CIE an opportunity to put new life into the organisation and to ensure its long term future.
The realities of life as regards equipment are that since 1983 a building programme of new mainline coaches has been in progress at Inchicore with many of these coaches now in service, the DART system, at a capital cost of £113 million was introduced in 1984, the whole rural bus fleets have been improved and earlier this year CIE acquired a new touring and supabus fleet. There is nothing unusual about railway locomotives running for a ten year period as locomotives have a very long lifespan. By the end of 1987 CIE will have spent about £29 million on the present signalling and communications programme. All of these are the lifelines of CIE activity and they give the lie to derogatory remarks or the raising of doubts about the quality of CIE transport equipment and safety issues.
Apart from the approval of transport hardware for CIE, it is relevant to the future of CIE that the Government introduced a special subvention formula which also provides for payment of the Exchequer support above the line, involving a sum of well in excess of £300 million over the period 1984-86. In addition, commencing in 1985 CIE are being paid £3 million annually for each of ten years in order to reduce the board's borrowings. Indeed, we also took on the interest charges on the DART. All of these measures were taken in the best interest of CIE and their workforce. They have been successful and the re-organisation of CIE is aimed at breathing further new life into the organisation. I am convinced that the changes are necessary and that the CIE employees will co-operate to show their worth. I cannot but conclude that the motives of critics of necessary change are difficult to understand.
The Estimates before the House provide a total of £300,000 to meet the running costs of the Dublin Transport Authority in 1986. The Bill to establish the Authority has recently been enacted. I am now preparing to establish the Authority so that it can get down to its main task without delay, that is, to ensure that existing transport resources in the Dublin area are organised and utilised in a way which will enable people and commercial traffic to move freely, quickly and as cheaply as possible.
One of the immediate tasks of the Authority will be to take over responsibility for the traffic management strategy which the non-statutory Dublin Transportation Task Force has been pursuing for a number of years. Subhead R of the Vote provides £395,000 for the necessary works in 1986, of which approximately £50,000 will be spent on bringing the remaining 60 or so traffic signals in Dublin Corporation's Urban Traffic Control area under computer control.
The Task Force is probably best known for its work on the introduction of bus lanes, of which there are now more than 14 kilometres in Dublin. While the scope for further bus lanes is constantly under review, the focus in devising new bus priority measures has switched to the selective bus detection system, which uses an infra-red link between buses and roadsides units to give priority at signalised suburban junctions to buses which are behind schedule. The pilot scheme which has been installed at a number of junctions in the southern suburbs at a cost of almost £400,000 will be operational shortly. This will be monitored and the benefits assessed before any decision is taken regarding a wider deployment of the system.
The Road Transport Act, 1986, has recently been enacted. This again is another initiative which my Department have taken to enable a more cost effective service to be provided for our trading sectors. In this regard, it has been welcomed by a wide cross section of our community. I will carefully monitor the effects of this Act to ensure that the competitive benefits which I intend will flow from it will actually materialise.
There has been some criticism concerning the enforcement of legislation relating to road transport. It has been alleged that in the past the ad hoc application of the regulations has caused great difficulties for the provides and users of road freight transport services. I can assure the House that the enforcement of all aspects of road transport legislation, including the limits on weights and social regulations which must be implemented universally and be subject to common criteria throughout the country, will, in future, be enforced rigorously.
A central theme of my speech to the House has been the need for a competitive transport sector relative to that in our main trading partners. However, competitiveness is not much use if our operators are denied access to markets in which they can gain and hold a share.
The major portion of international road freight haulage is undertaken on the basis of bilateral agreements. Such agreements are already in operation between Ireland and 12 other countries, namely, France, Belgium, the Federal Republic of Germany, the United Kingdom, Denmark, Italy, Norway, Sweden, Finland, Greece, the Netherlands and Luxembourg. Agreements with Spain, Portugal and Czechoslovakia are at an advanced stage of negotiations and negotiations are also proceeding with Yugoslavia.
These agreements benefit Irish hauliers in two ways. First, Irish hauliers wishing to operate to from, or in transit across these countries may obtain the permits, where required, from my Department rather than from the transport authorities of these countries. Secondly, the agreements provide exemption for Irish hauliers from certain taxes which would otherwise be payable by them while their vehicles are in the country concerned.
In addition to bilateral permits, Ireland has quotas of multilateral authorisations under the EEC Community Quota Scheme and a scheme operated under the auspices of the European Conference of Ministers of Transport.
In the context of the European Communities, I would like to mention a significant decision of the Council of Transport Ministers in November, 1985, when there was agreement in principle on the creation of a transport market free from quantitative restrictions by 1992 at the latest. It is hoped that this will lead to substantial increases in the EC Community quota of multilateral authorisations for road haulage over the years between now and 1992.
I have succeeded in getting a 40 per cent increase in our allocation of authorisations for 1986, from 147 to 204, but I can assure the House that I have been pressing and will continue to press for much higher increases than this. I have no doubt about the capacity of the Irish haulage industry to take on and beat the best operators already in the Community market.
For an island nation it is essential that we provide regular, efficient and competitive access transport. Shipping is paramount in this regard. It is generally accepted that the quantity, quality and cost of shipping services for trade are relatively good by international standards.
Policy in relation to passenger services has been the subject of much debate in this House recently in the context of the British & Irish Steam Packet Company Limited (Acquisition) (Amendment) Bill, 1986. The House was furnished with full details concerning the Government's £38 million rescue package for B & I and various questions raised by Deputies were dealt with. I do not consider it necessary to dwell any more on B & I at this stage except to acknowledge the resolute manner in which the board and management of B & I have acted. In this context also the company's workforce must be commended for their acceptance of the proposals which include the type of flexibility in work practices which I would like to see implemented in other sectors. What is needed now and in the years to come is a sustained commitment from the workforce and management alike to work together towards the common goal of creating a vibrant, efficient and commercially viable enterprise.
There has been some criticism recently concerning the regulatory framework for passenger services between Ireland and the UK. In this regard, I would like to point out that my Department have a dual objective in so far as transport services are concerned. First, they have a responsibility for the commercial and financial viability of State bodies under their control. Secondly, and as I have repeated several times throughout this debate, we have a duty to provide the necessary regulatory framework for the most efficient operation of the sectors of the economy for which we have responsibility.
To take the first objective, I feel it must be acknowledged that the achievement in turning B & I around to a point where they will be making profits shortly is a substantial one by any standard. That is not to say that I have ignored or will ignore the second responsibility which I also have. However, in this regard I feel that we must look at the transport sector as a whole and recognise that there is now a considerable amount of competition within the sector, particularly between sea and air transport. Because of the initiatives I have taken on air travel over the past few years, air fares are now much lower than they otherwise would have been. This in turn has put pressure on the shipping companies to reduce the cost of their services. I would also like to point out that while there may be a fare cartel arrangement on cross-Channel services I have insisted, and will continue to insist, that B & I achieve the maximum possible efficiency in their operations. I stress the word efficiency because while this is a similar, it is also a much broader, concept than pure price competitiveness.
We must also take into account the quality of the services and remember that customers are prepared to pay a premium for a comfortable and friendly service. However, I am also conscious of the need for price competitiveness. In this regard, I can assure the House that the B & I objective is to provide similar services to those operated internationally at a corresponding, if not improved, relative price. My objective in this regard is also shared by the Chairman and Managing Director of the B & I.
In the Green Paper on Transport Policy I referred to the question of providing a strategic shipping fleet for Ireland. The report of the committee which I set up to examine this matter is being examined by the Government and their decisions will be announced in the White Paper on Transport Policy which I hope will be published by the end of the year.
My main policy in relation to ports is to provide an efficient and cost-effective service to international trade so as to maximise the potential for growth in our economy. I am also conscious of the role which port investment can play in regional development. In this regard, the House will note that provision has been made in my Department's Vote for grant assistance of £2.8 million to Cork Harbour Commissioners in respect of the construction of the deepwater wharf at Ringaskiddy in Cork harbour. Work on this project commenced in 1984 and is due for completion this year. The completion of the wharf is the final stage in the Cork harbour development scheme.
The Free Ports Act, 1986, was enacted in March of this year. While it is an enabling measure permitting the establishment of free ports in any area of the State, the immediate purpose of the legislation is to facilitate the establishment of a free port at Ringaskiddy. My Department are consulting with other Departments and with Cork Harbour Commissioners on a number of operational aspects to be finally decided, including the precise area to be designated as the free port, the designation of the management company, details of the licensing regime that will apply to users of the free port when established and the customs and VAT regimes that will apply. These consultations will be concluded as speedily as possible. I believe that both the harbour development scheme and the establishment of a free port at Ringaskiddy have the potential to make a very valuable contribution to the industrial development of the southern region and Cork in particular.
Other expenditure on harbours includes a grant from the Department's Vote of £3 million to the Dublin Port and Docks Board towards the resolution of the board's financial problems. This forms part of the financial package for the board agreed by the Government last year. I am glad to say that the major elements of the package are now in place and that user confidence in the port has been revived. A sustained effort will be required, however, if the port is to maintain recent progress in its return to viability. Provision has been made in the Vote for grant assistance of £359,000 this year towards the cost of providing passenger handling facilities at Rosslare.
The balance of the amount provided in the Vote for grant assistance is mainly in respect of projects at the harbours of Sligo, Tralee and Fenit. Projects at other ports are also being considered for grant purposes, as well as assistance to the Royal National Lifeboats of Ireland for the improvement of lifeboat facilities around the country. The foregoing projects do not include those being financed from the Local Loans Fund, or projects funded by harbour authorities from commercial borrowings or own resources.
Deputies will be aware that the Harbours Bill, 1986, was circulated recently and currently has passed the Committee Stage in its debate in the Seanad. This Bill will provide for the setting up of a unified harbour authority, to be known as the Shannon Ports Authority, which will take over and manage the existing harbours and publicity owned piers in the Shannon Estuary, excluding for the moment Foynes Harbour. The Bill also proposes to provide powers to enable the Minister for Communications to dissolve, reconstitute or amalgamate any of the harbour authorities specified in the First Schedule to the Harbours Act, 1946, to give effect to Government policy as enunciated in the Green Paper on Transport published in November 1985. I look forward to the debate on the Bill when it comes before this House.
A token provision of £1,000 under subhead W.1 is being made to cover payments to the General Lighthouse Fund. Following negotiations between the Irish and British authorities, it has been agreed that in future a greater share of the costs incurred by the Commissioners of Irish Lights in the State will be met from sources in the State. Under the agreement, the light dues collected at Irish ports will be supplemented as necessary by an Exchequer contribution so that total revenue from sources in the State will account for 50 per cent of CIL's expenditure in the State. The arrangement will be phased in over a five-year period commencing at a level of 30 per cent in 1987 and increasing to reach the 50 per cent level by 1991. It is estimated that the cost to the Exchequers in 1987 will be of the order of £1.4 million. The pressure in this matter from the UK Government has irritated me not a little and they are aware of this fact. Arrangements, satisfactory to me, on the future administration of CIL have now to be finalised, but I do not visualise dramatic change.
My commitment to a regular, efficient and cost effective air transport sector is a matter of established fact and considerable achievement. I have consistently kept air fare increases below the rate of inflation and will continue to do so. My recent approval of an application by Ryanair to introduce a scheduled service on Dublin-Luton at unrestricted low fares is an example of my continuing efforts to maintain fares at the lowest possible levels, consistent with continuity of service, and to generally bring a greater degree of liberalisation to air travel.
I have also authorised or agreed in principle the operation of services by:
Ryanair:
Waterford-Luton
Shannon Executive Aviation:
Shannon-Manchester
Shannon-Belfast or Bristol
Shannon-Dublin
Dublin-Derry
Celtic Air:
Connaught-London (Stansted)
Connaught-Manchester
Connaught-Dublin
Connaught-Shannon
In addition, on the North Atlantic route I have authorised two additional carriers — Delta and Pan Am — to operate into Ireland. These, together with Aer Lingus and Northwest Orient who are already on the route, now provide us with the most extensive access air transport from North America in many years. The consequential benefits to the economy are self-evident.
At the European level, there has been much comment on the recent decision by the European Court of Justice concerning the applicability of the competitiveness provisions of the Treaty of Rome to air transport. The Commissioner for Competition, Mr. Sutherland, has signalled his intention to press for the introduction of a far greater element of competition into European air transport. In this he has my full support. It is something I have campaigned strongly for in the Council of Ministers over the past few years. Given the relatively small size of our domestic market it is desirable, if not essential, that Irish operators be given access to far wider markets and at a minimum should have free access to Community markets. In this regard I have the full support of Aer Lingus who have spent considerable effort and resources in developing routes which have been either taken from them or which they have had to share with other carriers who did not incur or share in the initial development costs.
At a meeting of the Council of Transport Ministers in Luxembourg last week, Commissioners Sutherland and Clinton-Davies did not cover themselves in glory. It seems clear that the EC Commission is now pulling in its horn on liberalisation of air transport and the very late paper which they submitted to the Council during last week's meeting was very disappointing to say the least. I hope it is not a case of the Commission, like some of our colleague countries, talking liberally and acting conservatively.
Nineteen eighty six has been a very significant year for our national flag carrier, Aer Lingus. I am sure Members will all join with me in congratulating the board and workforce in the company on their 50th anniversary. They have made a significant contribution to the image of this country abroad and to the development of our economy.
The early eighties witnessed difficult years for the company during the which they made relatively big losses. While they have overcome these difficulties to a large extent and profits for year ending March 1986 should top £20 million, the fact has to be recognised that the profitability of the company has not been sufficient for them to renew their basic plant, that is, aircraft. Given the inadequacy of their reserves for fleet replacement, I feel that we have to look at all the other possible options available to them and to us as owners of the company. Subsidies and free additional equity by the Government, which in effect is the same thing, have been advocated by some and, inevitably, the question of public equity participation arises. However, there are also other options including a range of leasing possibilities and allowings the company borrow either on the domestic or international markets to fund at least part of their capital development programme. Either way, greater profits in an increasingly competitive environment are required. I can assure the board and the workforce that their profits will continue to be available to the company for reinvestment. The future prosperity and expansion of Aer Lingus require that future financing be carefully considered by all and that no option be prematurely excluded.
I referred earlier in my speech to demand for transport being a derived demand. Demand for Aer Rianta's services is also to a large extent derived — from the traffic and passengers passing through our airports. As you will gather from the theme of my speech I am determined to increase these as fast and as much as possible. In this regard I have taken a major initiative this year which I am confident will attract more traffic to our airports. I refer to the introduction of US immigration and public health preinspection. This scheme is just about to commence on a trial basis at Shannon. I would like once again to thank Members of both Houses for facilitating the speedy introduction of this service by passing the necessary legislation so quickly.
The Government are determined to maintain air transport infrastructural facilities at the highest possible level. We are also acutely aware of the role of such investment in stimulating building and construction activity. Expenditure on capital works in this area will more than quadruple this year.
Some months ago the Government approved the provision of a new 8,650 foot runway, together with associated facilities and buildings at Dublin Airport, at an estimated cost of over £31 million. This will be the biggest project to be undertaken at the State airports for some time. Traditionally State airport capital works have been funded fully by the Exchequer. In the case of the runway project, however, there will be a break with tradition in that the project will be funded primarily from non-Exchequer sources. The bulk of the funds will be provided from Aer Rianta's resources and borrowing by the company. An allocation of £3,350,000 is included in the Estimates for electronic equipment for civil aviation and the marine coast stations. The main projects to be carried out during 1986 are:
(i) Installation of two new ILS systems at Dublin Airport.
(ii) Installation of a new ILS system at Cork Airport.
(iii) Installation of new reserve VHF communications equipment at Dublin Airport.
(iv) Installation of new reserve VHF equipment at Shannon Airport.
(v) Provision of additional radar display unit at Dublin Airport.
(vi) Installation of new Range Azimuth beacon monitors at Woodcock Hill and Mount Gabriel.
I would also like to inform the House that I have initiated reviews of all the activities in the Air Navigation Services Office and the Meteorological Service.
Outside consultants have recently commenced the ANSO review and are expected to report back shortly. The Meteorological Service review is being carried out by my Department in association with the DPS. The report of this review should also be available soon.
A key element in our regional development programme is the provision of adequate air transportation facilities within the country. This year I have provided over £1 million in my Estimate for the development of such airports. The bulk of this is earmarked for the development of Carnmore Airport, County Galway, where there is a local contribution of 25 per cent.
Connaught Regional Airport was formally opened last month. I think it is only giving credit where it is due to claim that neither the opening of the airport nor the pilgrimages flights to Lourdes last October could have taken place but for the assistance given by my Department in advising on the technical and administrative steps necessary to meet the target for the commencement of operations. In addition to facilitating the completion of the airport, I gave approval in principle to the inauguration of scheduled air services between Connaught and Dublin, Shannon, London and Manchester.
A number of matters regarding the future administration of the airport remain to be resolved; it is essential for the company to ensure that, for instance, the optimum administrative practices and appropriate accounting procedures be employed.
From the outset, the Connaught Airport project has inspired a mixture of enthusiasm and scepticism. Nevertheless, we can only admire the indefatigable vision of its promoters in pressing the project through to completion. I would like to reiterate the hope that the drive and enthusiasm of the airport's promoters will overcome the valid doubts expressed about its viability.
I am happy to inform the House that the licensing and bonding scheme for the travel trade introduced in 1983 under the Transport (Tour Operators and Travel Agents) Act, 1982, continued to show its worth as a consumer protection measure in 1985. A total of eight travel firms ceased trading in the second half of 1985 as they were unable to meet their obligations to their customers under overseas travel contracts. I activated the statutory rescue arrangements in each. The amount in the fund at present is of the order of £2 million. It has always been my intention to reduce or suspend contributions to the fund when it is large enough to meet any possible contingencies. While this stage has not yet been reached, I propose to carry out a review of the position at the end of this year.
Before concluding my remarks on the transport sector I would like briefly to refer to the response to the Green Paper on Transport Policy. First of all I would like to thank those individuals and institutions who have made submissions as invited on the contents of the discussion paper. The number of submissions received exceeded my expectations and indeed some are still coming in. My officials are analysing these and have already had some meetings with interested parties. I can assure all concerned that I will take full cognisance of their submissions in arriving at conclusions to be incorporated in the White Paper on Transport Policy which I hope will be published before the end of this year.
There are three other important sectors whose regulation is primarily a matter for my Department, namely the postal, telecommunications and broadcasting sectors. The effectiveness — cost and otherwise — of the postal and telecommunications sectors is also a major determinant of competitiveness in our economy. They are also dominated by two State bodies whose financial performance is of equal importance to the taxpayers of this country who, through the Government, are their ultimate owners.
When An Post were set up I gave a clear mandate to the boards to provide a good quality and very cost-effective service. Their response to date has been gratifying and encouraging. Present indications are that the company are within sight of achieving break-even in their profit and loss account.
The company introduced a series of adjustments in postal charges. The increase in basic postal rates — which averaged about 7 per cent — was the first since April 1982, a period of four years. In the same period the price of the main morning newspapers with which the cost of posting a letter is often compared, doubled approximately.
The quality of service of An Post's mails operation continues to be very high, especially by international standards. This is shown by surveys commissioned by An Post themselves and confirmed by independent surveys organised by the Postal Service Users' Council. In general, more than 90 per cent of letters, properly addressed, are delivered on the first day after posting, while over 96 per cent are delivered within two days of posting.
A feature of An Post since vesting day has been their policy of seeking out new business opportunities in order to promote growth and greater utilisation of the postal service including the company's counter facilities. This policy has resulted in a large number of new initiatives by the company, including the special St. Patrick's Day cards, Christmas and Valentine's Day stamps and Publicity post providing a low cost unaddressed mail service for advertisers and so on.
In 1985, the company, for the first time, with Central Bank approval, introduced bureau de change facilities in Dublin, Cork, followed by Killarney earlier this year and the company's intention is to gradually extend this service. The new service provides welcome foreign exchange facilities outside normal banking hours and on Saturdays and will be helpful to the tourism trade. An Post see the provision of bureau de change facilities as part of their strategy to develop and provide a wide range of financial services to consumers.
In 1985 also, An Post succeeded in securing the franchise for the operation of the proposed national lottery. This was a considerable coup for the company in the face of significant competition. The national lottery is a major undertaking for any company and the decision to entrust the operation to An Post was interpreted — correctly — as a sign of Government confidence in the company's capacity to do the job well. I know that this capacity can be translated into performance provided the company can continue to contain costs. Given the labour intensity of the service labour costs must receive priority in this regard. Workers in An Post have been given extra job security by the Government decision to award them this franchise. I know they appreciate this and hope it will be reflected in their wage demands. Their first priority should be to contribute towards making the company a profitable and vibrant entity by reducing charges to business and the public and thereby generate increased demand for their services.
Telecommunications is an area where availability of service has tended to dominate discussion with the price of the service being considered secondary by many. While I will concentrate my remarks on the former I do not wish in any way to downgrade the importance I attach to costs in this area and the need to ensure the maximum possible efficiency in all segments of the market.
Operation of the public switched telephone network is and will always be regarded by Telecom Éireann as their primary function. Telecom Éireann have continued to make significant progress towards the elimination of the waiting list for telephones. A waiting list of over 60,000 on 1 January, 1984, when the company came into operation, has now been reduced to less than 28,000 and the company feel that they will meet their target of eliminating that list in the current year. During the 12 months to 31 December, 1985 BTE connected 75,008 new phones, almost as many as in 1984 — 75,949 — and an increase of almost 37.5 per cent on the number connected in 1983. If the growth rate of telephone lines continues at present rate the company expect to be within sight of 1,000,000 lines in 1991 and to have lines in 60 per cent of households by that date.
Ireland now has one of the most modern telex services in the world. The national network is completely automatic while, internationally, automatic service is available to 160 countries. The company expect to increase the number of lines on the network to 7,740 this year and to establish the maximum waiting period for service at three weeks from the date of application.
When Telecom Éireann came into operation on 1 January, 1984, a number of firms were already supplying a range of telecommunications terminal equipment. With the intention of giving the new State body an opportunity to establish themselves, I decided to restrict those companies in the initial stages at least to the types of equipment supplied by them in the pre-1984 period. I gave Telecom Éireann an exclusive licence for items such as telephone sets, dial-up modems and telex terminal equipment which were formerly supplied exclusively by the Department of Posts and Telegraphs.
I have decided, in response to representations from the telecommunications trade, to stimulate competition in the telecommunications terminal equipment market with a view to reducing the costs. I, therefore, extended to all licensees the right to provide dial-up modems and telex terminal equipment with effect from December 1985 and April 1986 respectively. Telecom Éireann are still exclusively licensed for the remaining item, namely, telephone sets. I will, however, keep the situation under review.
In the initial period following the establishment of Telecom Éireann, a system for the licensing of firms to supply, install and maintain equipment approved for connection to the national telecommunications network was introduced. This system had two aims: (i) to regularise the position of firms already in or entering the retail telecommunications terminal equipment trade; and (ii) to protect the network and network personnel. The aims of protecting the network and network personnel were achieved by ensuring that firms were competent before they were licensed and by ensuring that all equipment connected was compatible with the network. Firms already in the business were deemed to be competent. A scale of licence fees ranging from £10,000 to £300 was established with the aim of making the licensing scheme self financing and financing the testing of equipment to ensure compatibility.
This system which was intended only as an interim measure was found to be cumbersome so I decided, after consultation with the retail telecommunications trade, to replace it with a single renewable licence covering all approved equipment with an annual licence fee which I set at £150 for 1986. I also decided that from 1 January, 1986 applicants who wished to have equipment approved for connection to the network would be obliged to finance the necessary tests themselves.
I am hopeful that these initiatives to stimulate competition will lead to a more efficient and cost effective sector. However, I also hope that BTE will continue to reduce the cost of their core business to improve the competitiveness of our trading sectors. Their progress in this regard has been reasonably satisfactory to date. In 1984 substantial reductions — up to one-third — were made in international telex and leased line charges. Further, international telephone and telex call charges generally were exempted from the charge increases implemented from 5 April 1985, and from 1 April 1986. As a further step in improving competitiveness, telephone prices on key international routes were reduced by 10 per cent from 1 April 1986. I hope this process will continue and accelerate until BTE are fully competitive with the most efficient bodies in the same field in our trading partners.
Last, but by no means least, I come to the final area for which my Department have responsibility, namely broadcasting. Subhead F1 of the Estimate provides for a grant-in-aid to RTE of £38.2 million in respect of net receipts from television licence fees. This is an increase of some £5.1 million or 15 per cent over last year and is well above the anticipated rate of inflation this year. The increase in the grant-in-aid payment to RTE reflects the efforts of An Post in increasing sales and the increase in licence fee rates approved by the Government from 1 March 1986.
The review of Radio Telefís Éireann commissioned by me and published in September 1985 recommended that RTE should be given full responsibility for the control of licence fee revenue collection. RTE argued themselves for many years that it is more appropriate that they should have full control over the collection of what amounts to approximately 50 per cent of the body's total income. At present the task of collecting television licence fee revenue and of detecting unlicensed and incorrectly licensed sets is delegated by statutory order from the Minister for Communications to An Post. Gross licence fee revenue is paid by An Post to the Department and is brought to account as an appropriation-in-aid of the Vote. A payment equivelent to gross receipts less collection and other minor costs is made from Subhead F to RTE. I am considering how the present arrangements can be improved upon and how the relationship between RTE and An Post can be placed on a less cumbersome footing.
The computerisation of all licence fee records should be completed by the end of this year. During 1985, An Post achieved the target of 750,000 sales set. Also, as a result of ongoing inspections and selective campaigns, over 52,000 licence evaders were detected in 1985. This year, An Post are confident of reaching a target of 770,000 licence sales. In this context, a new saving stamps scheme, using forgery resistant stamps, was introduced in May.
Following the detailed review of RTE carried out last year by consultants on my behalf, the RTE Authority have considered the findings and recommendations contained in the consultants' report and have submitted a draft corporate strategy for the period up to 1990. The strategy document is currently being considered within my Department and I hope to be in a position to respond to it in the near future.
The RTE Authority will, I am now confident, streamline and strengthen the organisation and its financial base so as to enable it to face the current and future demands of its customers. This will entail greater labour flexibility in RTE, increasing substantially the amount of home produced material transmitted and containing all input costs. RTE can and must give the licence holder better value for money.
In anticipation of early enactment of the Local Radio Bill, 1985, which was introduced in this House this time last year, I established a non statutory interim local radio commission over a year ago to do all necessary preparatory work to facilitate the speedy establishment of legitimate local radio following the enactment of the Bill. The commission have done much work in endeavouring to formulate the policy that would be adopted by the statutory commission in relation to the areas where local and community radio services could be established and in relation to the type of service that may be allowed within the framework of the Bill. Deputies will appreciate that this type of work will be the statutory responsibility of the commission in due course and to the extent that the ground rules have been laid, legitimate local and community radio can be established quickly. I am very disappointed that it has not been possible to make progress on the Bill despite my efforts to resolve the difficulties that have arisen. I am still hopeful that these difficulties can be resolved and that the genuine concerns and fears of RTE and others in regard to the proposals in the Bill can be met.
Subhead F2 provides for a grant of £1,625,000 to RTE in respect of net receipts from licence fees on cable television systems. Increases in this subhead amounting to £275,000 or 20 per cent over 1985 are due mainly to increased charges for cable television services and to growth in the number of systems and the number of homes connected.
In March 1985 I published the report of the committee which I set up to look at the whole future of the cable area. The committee's recommendations, which are quite wide-ranging, constitute a useful blueprint for the future development of cable. In the short term I have been addressing the question of permitting satellite delivered programmes to be relayed on cable systems, etc. Work will be commencing shortly on a revision of existing cable regulations and on the preparation of a new upgraded technical specification for cable systems. I expect that further discussions will take place with the cable industry on these matters in the near future.
In September 1985, I announced that the Government had decided, in principle, to enter into negotiations with Atlantic Satellites plc. with a view to concluding an agreement to allow the company to construct and put into place the necessary satellite infrastructure and hardware which will enable the country to take advantage of direct broadcasting by satellite. A detailed business plan has been submitted by the company. This is being evaluated by the inter-departmental committee overseeing the project, representing my Department, the Department of Finance and the Department of Industry and Commerce. When the recommendations of the commitee on the business plan have been received the question of entering into a formal contractual commitment with the company will be considered by the Government.
In conclusion, I emphasise once again my commitment to efficiency and costeffectiveness in all the sectors and services which come within the ambit of my Department. The Estimates before the House today are the minimum amounts needed to provide such services. They are value for money. They could not be provided without the co-operation and commitment of many dedicated public servants. For this I thank them.
I commend these Estimates to the House.
