The third part of my portfolio is Communications in which I intend to cover the main issues in the broadcasting, telecommunications and postal spheres.
The package of broadcasting legislation enacted in 1988 comprising the Radio and Television Act and the Broadcasting and Wireless Telegraphy Act changed the map of Irish broadcasting in a most fundamental way. Apart from a small number of diehards, the pirate problem is gone. Instead we have a vibrant independent local radio sector, providing real choice of programmes to the Irish listener. Of the 22 local radio stations currently in operation many have achieved local audiences as good as or better than RTE Radio 1 and 2 FM. In addition to its success in a social and cultural context, the independent broadcasting sector had to be applauded for its job creation impact. Six hundred and fifty jobs, around half of which are permanent, have been created and the ensuing economic spin off in the individual local radio franchise areas and, indeed, the country as a whole is not insignificant.
Unfortunately, the development of the independent broadcasting sector has not been without its difficulties. The non-emergence to date of an independent television service which the 1988 legislation facilitated, the collapse of Century Radio and the teething problems of some local stations all show that independent broadcasting is not a licence to print money.
Broadcasting is a major influence on all our lives. It is particularly important at present, given the revolutionary changes taking place in broadcasting technology, to take the time to reconsider our concepts of the nature and purpose of broadcasting services here. A mere ten years ago not many would have envisaged the plethora of sports channels, film and other special interest channels, general entertainment channels which are available to anyone with the necessary receiving equipment.
Since taking up the Communications portfolio I have embarked on a review of our broadcasting legislation and structures. The most pressing reason for my review has been the problems caused by section 3 of the Broadcasting Act, 1990 in particular, which are being experienced by a number of sectors.
Section 3 of this Act limits the income which can be earned by RTE from advertising, sponsorship and other commercial activities and on the amount of air time which can be devoted to advertising on RTE. The intention was that the portion of the advertising market which could not be satisfied by RTE would find alternative outlets in the independent services envisaged.
I have embarked on a round of discussions with the sectors affected by or with a direct interest in broadcasting matters. I have met advertisers, advertising agencies, independent film makers, the Independent Radio and Television Commission and local radio operators. I will be meeting other interests. I have also met Irish language interest groups as I believe broadcasting has a pivotal role in the preservation and development of our national language and culture. I will return to this point later.
At my meetings with the groups mentioned above a number of serious operational difficulties arising from the "CAP" provision in the 1990 Act were expressed to me. While I have not yet formulated my proposals for Government on this issue, I have to say that at this juncture it is hard to see how the capping provisions of the 1990 Act have had any positive effect.
Why, the House might ask, does the Minister not simply accept that these provisions are not working and introduce a short Bill simply repealing the offending provisions? I could, but it is not that simple. I want to put in place a legislative regime which will cater for broadcasting development into the next century. I want to get the legislative environment right. My review has the following broad objectives: I want RTE to retain and strengthen its position as our national broadcaster, I also want the independent production sector to get moving again in a businesslike way; we also need a legislative environment which will allow independent broadcasting to build on its successes to date and we must also ensure that Irish companies have access to a strong domestic television service at reasonable rates in order to advertise their products and services. I realise the urgency of the situation but I intend to take as much time as is necessary to determine the extent of change needed.
To return to the theme of the Irish language and broadcasting, I want to make it clear that this is a fundamental part of my review. Television and radio have the potential for an immense positive or negative effect on the preservatior of our national language and heritage. I have appointed a special adviser to assess how the language is served by broad casters and by broadcasting legislation a present and how this can be improved. One possibility is, of course, the establishment of a Teilifís na Gaeilge service I will be closely examining ways and means of providing such a service and determining the resources needed and to be realistic, afforded. Where such resources will come from must also be determined. It will be news to no one that a separate television service does not come cheaply.
Another important broadcasting development is the introduction of multichannel television services throughout the country through the establishment of MMDS systems. The introduction of this new retransmission system has generated some degree of controversy although much of the comment on it is quite uninformed and often betrays a vested interest at source. Let us be clear about our objective; it is to provide real multichannel television choice to the entire country in a professional, technically competent and cost-effective manner. I am fully satisfied that MMDS is the best in fact the only, option open to us in order to achieve that objective.
Turning to telecommunications, we now have a system which can hold its own, in terms of quality, with anything on offer in Europe today. The reliability of the telephone service, as measured by the percentage of connections at the first attempt and by the level of faults occurring, continues to improve. The lates in telecommunications technology in the form of what is known as integrated services digital networks, ISDN, is being introduced, on a trial basis, with help from the EC STAR Programme and waiting lists for the telephone service continue to fall.
During the year ended 4 April 1991 the company recorded pre-tax profits of over £93.5 million and a dividend of £35 million payable to the State, was declared. Increasing competition for international services, increasing transfer of business to leased lines, lower growth than forecast and increases in labour and other costs point towards a reduction in profit margins in the short term at least. This problem is currently being addressed by the board of the company and will be dealt with in the next edition of the company's corporate plan which will cover the five years from 1993-94 to 1997-98.
I have asked the company in drawing up this plan to consider particularly such issues as the return to a faster growth path as the recession eases; the realistic scale of emerging competition and how best to counter it; cost control and how productivity might be brought into line with other telecommunications operators. A prime concern of mine is the very high level of charges for international calls from Ireland. This problem was adverted to in the Culliton report and is referred to by many commentators on Irish business and by bodies representing Irish industry.
The introduction of cost based tariffs, that is, charges based on the cost of providing the service, would go a considerable way towards alleviating this problem and this is the direction being urged in the European Communities. I must stress that it is simply not possible to reduce long distance charges and leave it at that. At its present stage of development Telecom Eireann cannot afford to forego significant revenues to bring down charges in one area without a compensating increase in charges in another area.
The combination of highly qualified and skilled people with a modern telecommunications network means that Ireland is now a desirable location for both European and American service industries. This is particularly true in the area of internationally traded financial services but it also applies to other database services. Jobs have already been created in places like Loughrea. Castleisland, Fermoy and Tipperary in processing information such as insurance claims for US companies after close of business in the US but during normal office hours in Ireland and transmitting the finished product to the US in time for business opening the following day. The recent development of Minitel has also led to provision of jobs in service bureau from Bray to Letterkenny with the prospect of more as the Minitel service develops and expands both nationally and internationally.
The strength of Ireland's telecommunications infrastructure has been recognised as a vehicle for job creation in the area of telemarketing. This is a system of marketing through the intensive use of inbound and outbound telephone calling and databases by specialised foreign companies which might set up here. I understand that telemarketing projects have the potential to generate up to 1,200 jobs in this area and I am confident that, with co-operation between the various agencies involved the establishment of these jobs will help to set against the loss of jobs in Telecom Éireann.
Deputies are already well aware of the nature and extent of An Post's financial problems, and of the efforts being made by the company to resolve those problems.
During the 15 months since An Post's recovery proposals were announced in February 1991, a range of initiatives have been taken to try to ensure that meaningful management-union negotiations could take place and that the course would be cleared for the implementation of measures to reverse the company's loss-making trend. The Labour Relations Commission as well as an independent tribunal set up by the Commission devoted considerable time and effort to that process. I understand that a total of 41 meetings were held since March 1991. The failure of management and unions to agree on recovery measures and the unions' resistance to the recruitment of temporary and part-time staff to reduce overtime levels and costs in the Dublin area are major disappointments.
There have been accusations made against the management of An Post that they are adopting a hard line approach and not playing fair with the unions. These accusations are well wide of the mark. Towards the end of last year the company paid an outstanding arbitration award to their staff at a cost to the company of £11 million. In addition, the company recently paid the first phase of the Programme for Economic and Social Progress, the annual cost of which is £7.2 million. These payments were made by An Post to their staff while negotiations with the unions to seek cost savings were proceeding. So far no cost saving measures have been accepted by the unions. Also, I understand that the company gave the unions access to their books to check the proposed savings figures.
The plain but unpleasant fact is that An Post are in serious financial trouble and there is an immediate need for remedial action. An Post have suffered financial losses since 1989. Their accumulated losses to end 1991 amounted to £13.8 million. The company were projecting a loss of £8.5 million for 1992 before the postal dispute took place. Their annual overtime bill is £21 million.
At the meeting last Monday between the Irish Congress of Trade Unions, the Minister for Labour and myself there was an exchange of views on the dispute in An Post. It was agreed that we, the Ministers, and ICTU would keep in touch with a view to assisting the parties in their preparation for possible further discussions at the Labour Relations Commission.
The commission recently sought and received elaboration from the tribunal on a number of aspects of their recommendations. Following further consideration of the matter the Labour Relations Commission have invited both parties to discussions this evening. It is my fervent wish that these talks will arrive at a successful conclusion. The House and indeed the general public should know that the Labour Relations Commission have been deeply involved over the last few months in attempting to resolve the issues which have given rise to this dispute. Therefore, I believe that the parties should avail of this knowledge and expertise to assist them in reaching a settlement.
Finally, I have been accused of adopting a pro-management approach to the resolution of the financial problems of An Post. Let me once again, for the umpteenth time, put the record straight. As I stated recently in the House, I have to consider the national interest. That includes the interests of An Post, all of their staff, postal customers and, very importantly, the taxpayer. My objective is that An Post should continue to provide an efficient and cost-effective postal service in an environment free from service disruption and that the company continue to play their full role in the economic and social life of the community.
