Any Bill that is designed to improve services to the public is a welcome Bill. This Bill is intended to streamline CIE to make the company profitable or, should I say, less costly to the taxpayer and more efficient. With these aims I concur fully. However, I do not agree with some of the detail of the Bill.
Since their establishment on 1 January 1945 CIE have served the country well. Without their existence many of the rural areas would have been cut off because no private enterprise would have operated a transport system at a loss. In 1963 the "pacemaker" report stated that in a demand sector services can be provided at a satisfactory profit and in a need sector services cannot be provided at a satisfactory profit but that this lack of profit does not necessarily define the need sector. That report went on to state that public transport which caters for the need sector cannot recover the costs from the demand sector and so must be subsidised. Twenty three years later the need for subsidisation is still necessary. I would like to see the need sector defined in detail, as the Minister said, to make it transparent, not for the purpose of weeding out the need sectors or of closing them down but for the purpose of identifying public accountability. In this day and age of computers and computerisation the information necessary to do that should be accessible. It is important that Members of this House are given full and detailed information in relation to the expenditure of moneys collected from the tax paying public.
The Minister stated that under new measures introduced in June 1983 the Government devised a new basis for determining the CIE subvention which now limits it effectively to one-third of the board's expenditure. This is not the complete picture because the subvention the Minister spoke of excludes payments made to CIE for the use of school buses, for travel by old age pensioners, for travel by members of the Defence Forces and of the old IRA. These categories are paid for by the relevant Departments and the payments are treated as ordinary receipts by CIE. For the purpose of full disclosure of the social element those payments mentioned above should be identified and included with the subvention. Such identification would enable a judgment to be made on the economic performance of CIE.
Cross-subsidisation is an important issue because of the imbalances in our society, not least of which is the geographical issue. Most services are financed, to one extent or another, on the principle of cross-subsidisation. For example, posting a letter from Dublin to Dún Laoghaire costs the same as posting a letter from Dublin to Ballydehob, even though the costs incurred differ considerably. There is an acceptance of cross-subsidisation in most services. There is no reason the same should not apply to the transport field.
From the results of CIE over many years, the scope for cross-subsidisation was just not there. But there is a market where a profit should be attainable because the customers are there. That market is in the Dublin or the greater Dublin area where one-third of the population live. It is up to management to devise systems and organise themselves to ensure that they get the passengers they should get — and the passengers are there to be got if the proper service were given to them.
Since 1980 the number of people travelling by public transport in Dublin has dropped from 175 million in 1980 to 137 million up to 2 November 1985. That is a disturbing trend and will require a great effort on the part of management and staff to reverse it. However, the ratio between the operating expenditure and customer receipts has improved from 1.23 to 1.21 from 1984 to 1985, and I look forward to seeing the figures for 1986 to see if the trend of improvement here is continuing.
One of the new companies is to be named Dublin Bus. Dublin City Services has operated autonomously over the years and the problems of reorganising it into a separate company should not be as great as those facing the reorganisation of the railway company and the provincial bus company. Despite this the unions say that it will take up to two years to get Dublin City Services transferred and reorganised and working efficiently under the new company. If this is true the problems to be faced in reorganising the national bus company and the rail company would take a considerably longer period to sort out. Maybe it would be wise to delay their break up to allow difficulties experienced in the reorganisation of the Dublin City Services to be assessed.
From discussions which I have had with employees of CIE down the country, I gather they are not too favourable towards the break up of the National Bus Company and the rail company. Having studied submissions I feel it would be better if we did not split the rail side from the provincial bus services.
Road passenger services feed into mainline rail services and vice versa, and this co-ordination was one of the company's principal attractions. There are many examples of district managers, clerical, supervisory and operative staff attached to rail who have a direct involvement in road passenger services, and it is also a fact that in quite a number of provincial locations, control points, booking offices and other office accommodation and equipment are shared by road passenger and rail operative staff on the same premises.
In addition to the above, the same situation exists in relation to existing maintenance services provided by various provincial garages, and the division of all these services may cause great problems. Fear has been expressed with regard to the break up as to the effect of competition between rail and road. Besides the internal difficulties already mentioned, empire builders or gloryseekers in one or other of the new companies could lead to the demise of the other.
The Minister states that the parent board will adjudicate between rail and bus in the event of differences, but this would defeat the purpose of the Bill as I believe there will be many differences and the board will be continually involved in sorting out these differences. The purpose of the Bill, maximisation of profit and efficiency, will be neglected by the board whose main function is, after all, comparing and reviewing general policy and organising finances.
With possible duplication of services it is difficult to see how the new organisation would not result in raising instead of reducing the costs for the companies. I would like the Minister to explain how outright competition between the two companies will not damage one or other of the companies. It is very difficult to comprehend how two organisations that have worked together and are then put at each others' throats will not damage one another. The fear and suspicion of the workers is that the rail company will be damaged. According to the Green Paper published in October 1985, the Government decided to retain the railways in the medium term and said that the breathing space provided by this decision would allow time to consider whether the existing railway network should be retained in the long term, whether retention should be on the basis of a reduced railway network or whether it should eventually be closed down and that the retention of a railway network would be dependent on continuing support from the Exchequer, and that the trade off between the costs and benefits of these alternative strategies was a matter which it was hoped the publication of that Green Paper would cause to be debated further.
The White Paper is not out yet but from that statement the staff in the railway company are worried, and I do not blame them. There are 6,800 people employed in the rail section. From what I have been told the Transport Salaried Staff Association, representing mostly management, would find no great difficulty in dealing with the two companies rather than with three, that is, a joint rail and provincial bus service on the one hand and the city service on the other hand. I would like to hear the Minister's comments, as it seems the Minister is the only one favouring three companies. The unions also hold that two companies would be the most sensible approach in the reorganisation of CIE.
At present there is a need for the renewal of the school bus fleet. It is most important to do something on this level as many of the buses carrying the children are draughty and not in a fit condition to carry children in. Great concern has been expressed about the condition of the bus fleets throughout the country. There is need for renewal of the school bus fleet, and this is very important. Perhaps the Minister will tell us if he has any plans to re-activate the business of bus building here — I refer not only to school buses but those in general use as well as those for tours. It would be of benefit to the country if the Minister would organise and set up a company to produce buses. Another field in which production would be useful is the training of apprentices. Many young apprentices got training in CIE during the years and that was of great benefit to the company. I hope that under the new regime this role will be continued by CIE.
The capital invested in the new coaches for the inter city trains and the continuous welded rail for smoother riding on trains have made a tremendous contribution to the reputation of CIE and I have no doubt this will ensure increased numbers of happy customers. I am glad also to know that rail safety has been further improved by the extension of train radio to the total locomotive fleet and the installation of a continuous automatic warning system throughout the whole of the area covered by the new electronic central traffic system operated from Connolly Station. This has been extended over a large area of the national network.
In the financial summary on page 3 of CIE's Annual Report for 1985 we find that the profit/deficit position changed dramatically between 1981 and 1985. In 1981 there was a deficit of £9.45 million, in 1982, £13.423 million, 1983, £20.622 million, 1984, £.004 million, and in 1985 there was a profit of £6.79 million. Of course, we should not allow ourselves to jump over the moon in ecstasy over the 1985 figure because there was an extraordinary item of £3 million in Government grant and exchange rate benefits. Despite that, the 1985 trend is encouraging.
On page 10 of the report we see comparisons of ratios vis-à-vis operating expenditure and customer receipts. The ratio has improved from 1:43 in 1984 to 1:39 in 1985. A similar trend is noticeable in all sections — there has been an improvement in the operating expenditure compared with customer receipts. It is good to see this and I sincerely hope it will continue.
The Minister's argument that because we will have smaller units of management industrial relation will be better and more efficient does not hold up, particularly because there will be new competition. He has not given any basis for his argument. Difficulties might be caused because there is bound to be cross competition between the railways and the provincial bus services. It may take a long time to sort out the problems between those two companies if the Minister goes ahead with his present plans to break up CIE. The Minister should change his mind and keep the rail and provincial bus services under one roof. The Minister does not know whether the result of breaking up will be better services than at the moment. The real competition for CIE is from private motorists and coach owners who have forced a rethink on marketing in CIE. The Minister should tell us if he intends to introduce legislation with regard to private coach people. Each weekend coaches carrying young people from Dublin to the four corners of Ireland are evident by the score. Even during weekdays private coaches are bringing people to and from Dublin at cheap fares. They may have made CIE more competitive and I hope CIE will be able to fight them, but not at the expense of the Exchequer.
I cannot understand why the three companies being set up by the Bill will be subject to the Companies Act, yet still be under the control of the CIE board, a statutory company. I should like the Minister to explain in detail the reason for this. Even though he has tried to set people's minds at ease in regard to possible liquidation, that it will be up to the holding company to liquidate and that none of the three companies could engage in voluntary liquidation, what would be the position if the creditors tried to liquidate one of the companies? Will the Minister explain the implications of that?
Why did the Minister not consider it feasible to reorganise CIE under a two-tier system and why should there not have been internal reorganisation? In his opening speech the Minister did not clarify any of these matters. He did not explain why three companies under a holding company should be the way in future for CIE? Why did the Minister rule out other proposals before him?
I am glad to note that great progress has been made in the road freight sector. That service for many years had not been a successful operation for CIE but there has been a turn about in the past few years. I am sure the new managements in CIE will put new spirit into the company. Such a spirit was evident in the 1985 report. I hope that anything the Minister will do will not deter that progress. Going on his record, the Minister has not got a Midas touch and I hope he will keep his hands off CIE in future.