Dáil Éireann díospóireacht -
Wednesday, 16 Oct 1996

Vol. 470 No. 2

Adjournment Debate. - CIE Subvention.

Mr. N. Ahern

I thank the Chair for giving me the opportunity to raise this matter and the Minister for attending. An article appeared in the papers about ten days ago clearly showing that Dublin Bus is the least subsidised transport system among European States. They cover 96 per cent of operating costs from fares whereas in Brussels 33 per cent of costs come from fares, in Amsterdam, 25 per cent and in Rome 10 per cent. Even London, the home of right-wing Thatcherism and deregulation, the percentage is only 79 per cent.

In every aspect of life we are told to look at what is happening elsewhere in Europe. However, the Department of Transport, Energy and Communications is telling Dublin Bus in particular that from next year they will have to cover 100 per cent of operating costs from fares.

We recognise that urban transport systems throughout the world have to be subsidised. The attitude of CIE with its latest viability plan is at the root of the problem. The plan proposes 800 redundancies and major changes to take home pay and working conditions.

CIE companies are like all other businesses and must invest in new rolling stock. It is crazy to expect this type of investment to be funded from current cash flow on the backs of people being forced out on early retirement. The Minister tells me we have to look at the CIE argument. The latest CIE figures for last year have been presented in a manner which shows the 1995 outturn in the worst possible light. There have been changes in the way in which depreciation is calculated and in the allocation for public liability claims. The figures have been presented to show a certain line of thought. I do not suggest CIE should ignore expenditure. Expenditure has to be controlled and reviewed and any restrictive practices approved by management over the years have to be changed.

In the light of the overall position I am horrified at the way some of CIE management, particularly newer management is operating in trying to push everything through without any discussion or consultation. There is an agreement between the Government, the unions and the social partners negotiated by the last Government. The Taoiseach has expressed his interest in another similar agreement. How can the Minister ask CIE management to bulldoze its way through that fundamental agreement? I do not know what happened today in the court but will the Minister, in the context of what has been threatened within the next few days, call on the management to deal with this matter in an organised way by consultation? I realise the Minister has to curb the subvention to CIE and the opportunities for fare increases are limited but bulldozing something through without negotiation must not occur. It appears management has soured its relationship with the unions. Will the Minister take an initiative and call all parties together, give them a deadline and ask them to sort out the matter?

I understand the company is withdrawing from the rail link side in December. It has notified all its customers and put them in touch with another company, yet there has not been one meeting with the unions on the matter. It is a major problem. They might like to put the boot in and get tough but they must sit down and negotiate rather than try to ram something through. The Department has many demands on its subvention but I ask the Minister to call on those who are acting tough to sit down and sort out CIE's problems. If change has to come let it be done by agreement as it is in other walks of life and in Government.

Minister for Transport, Energy and Communications (Mr. Lowry)

I thank Deputy Noel Ahern for raising this subject and suggest he refer his point of view to the leader of his party, his brother, Deputy Bertie Ahern. The Deputy's contribution contrasts with the contribution of the leader of Fianna Fáil who has talked about democratising the semi-State companies which, in effect, is a fancy term for privatisation, but tonight the Deputy is asking for an additional subvention.

Mr. N. Ahern

And discussion.

Mr. Lowry

The 1996 Exchequer subvention for CIE is £99.76 million. There are no proposals to reduce this. The allocation of the subvention between the three subsidiary companies is a matter for the CIE board and is made in accordance with the relevant European Union regulations.

State financial support for the provision of socially necessary non-commercial public transport services has been very substantial over the years. In the past ten years more than £1 billion has been paid by way of Exchequer subvention to CIE. This high level of financial support reflects the continuing commitment of Governments to the best possible provision of public transport services throughout the country consistent with what the taxpayer can afford.

The ability of CIE to offer a satisfactory service to its customers is not solely determined by the availability of Exchequer subvention. Management and staff have made very real efforts in recent years to develop the range and quality of services available to the public and to improve the efficiency with which those services are delivered. I welcome these efforts which reflect a realistic awareness of the increasingly competitive environment in which CIE must operate. These efforts have to continue across the company with a particular emphasis on improving equality, reliability and value for money for its services.

In determining the level of subvention to be paid to CIE each year the Government has to find the right balance between a range of competing demands across all sectors of the economy. CIE cannot operate on the basis that the taxpayer has a bottomless purse. I am sure the Deputy will agree that the Government should not increase subvention to subsidise inefficient practices or as a way of postponing decisions which the company must take to ensure its commercial viability and to protect its competitive position.

Since the 1980s successive Governments have pursued a policy of containing CIE's requirement for State financial support. This has been accompanied by a substantial development of services and by a major improvement in productivity throughout the CIE group. More and better services for less subvention is surely something of which we should be proud rather than apologetic.

I have already announced a further and very significant development in subvention policy. I intend to replace the current lump sum subvention payment to CIE with a series of public transport contracts. The contracts will cover those bus and rail services currently being supported by the Exchequer as well as rail infrastructure.

One of the objectives of the new arrangements will be to provide for a greater degree of transparency in the State's financial relationship with CIE. The contracts will set out clearly what services CIE will provide and what the State, in turn, will pay to support socially necessary non-commercial services. They will also specify the quantity and quality of services to be provided and will allow for independent performance measurement, the results of which will be published.

Users of public transport will be able to see, for the first time, what service standards have been set for CIE and how it performs against those standards. CIE management and staff will know what is expected of them. Taxpayers will be able to see exactly how their taxes are being used to support socially necessary transport services.

Public service contracts combined with the Government's customer service initiative will be used to ensure that the quality of public transport services is improved. Performance standards will be set for the equality and reliability of CIE services and the company's performance will be independently assessed and published.

While I am heartened by the sense of purpose and realism evident within the company in recent months and by the efforts to make CIE more effective and efficient, there is no doubt that the group's cost base remains too high. More work must be done to improve its financial position if the company is to remain viable and competitive. Cost reductions will have to be achieved throughout the company at all levels and in every area of activity.

The company is now facing increasing competition from the private sector. Gradual liberalisation of the public transport market driven by European Union legislation is also inevitable. The Exchequer is simply not in a position to deal with the problem of excessive costs and inefficiency by providing increased subvention. Even if the Exchequer could provide extra funding this would only postpone the necessary remedial action and make the ultimate resolution of the problem even more difficult. Large fare increases would be counterproductive and drive many of CIE's customers to other modes of transport and to lower cost private sector competitors. An organisation which contributes to its own decline is not my vision for CIE.

A concerted effort must be directed towards ensuring that CIE is geared to provide effective and high quality public transport services, giving full value for money to both the taxpayer and the public transport user.

Mr. N. Ahern

The Minister should get them to sit down and talk.

Mr. Lowry

This will require a major effort by the management and staff and must be undertaken in a spirit of partnership, co-operation and non-confrontation.

Mr. N. Ahern

Tell them that.

Mr. Lowry

While Exchequer support for non-commercial services will continue to play an important role in CIE's finances, it is only the efforts of its management and staff to make the company more competitive, customer driven and user responsive which can guarantee its survival and development in the coming years.

Precipitate industrial action will only further damage the competitive position of the company and make it more difficult to ensure its long-term commercial viability. A way forward has to be found through negotiation in a spirit of common purpose.

The Dáil adjourned at 9.35 p.m. until 10.30 a.m. on Thursday, 17 October 1996.