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Dáil Éireann díospóireacht -
Thursday, 1 Apr 2004

Vol. 583 No. 2

Priority Questions.

Energy Costs.

Simon Coveney

Ceist:

1 Mr. Coveney asked the Minister for Communications, Marine and Natural Resources the reason, in the past two years, energy costs here have risen so dramatically; and the action he is taking to bring energy costs back in line with the rest of the EU. [10324/04]

As the Deputy will be aware, as Minister I no longer have any function in relation to the pricing of electricity. The CER was given statutory responsibility for regulating ESB tariffs in 2000. Previously, the ESB would, by custom and practice, have sought Government approval before increasing its tariffs. On a positive note, in terms of EU comparisons, according to EUROSTAT July 2003 data, prices for domestic customers were at the European average. However, those for industrial and commercial users were at the higher end of the scale. Large-scale customers and many SMEs are free to purchase electricity from suppliers other than the ESB.

In the interests of competition, I have decided that full market opening will come on stream in February 2005, two years ahead of EU requirements. From that date, all electricity customers will be free to source their requirements from whomever they choose. In advance of the full opening of the market, the CER is taking action to make all electricity tariffs fully cost-reflective. This is to ensure that the costs of generation and investment in the grid are recovered. This was not the case in the past and acted as a major disincentive to investment in generation, transmission and distribution networks. Such a situation is no longer tenable. Cost-reflective tariffs are required to support funding of the €4 billion project from 2002 to 2007 in investment underway in the network grid. This is essential to avoid blackouts and grid system failures.

When comparing the cost of electricity in Ireland relative to costs in the EU, it is important to make fair comparisons bearing in mind the issue of peripherality. Ireland's geographic position as a small island economy poses structural difficulties which cannot be easily addressed. Networks in mainland Europe are also mature in investment terms and heavily interconnected across land borders. The Irish market is the second smallest market in Europe next to Luxembourg. It is not yet significantly interconnected. This is being addressed by the recent Government decision to develop two East-West 500 MW interconnectors. We also lack relatively cheap indigenous resources and must rely heavily on imported fuel supply sources, all of which contribute to higher costs.

Turning to gas prices, the price charged to consumers for natural gas is made up of two main elements: the cost of transporting the gas and the cost of the quantity of gas being supplied. In October 2003, the Commission for Energy Regulation approved a 6.8% rise in gas transmission tariffs, the fourth rise in such tariffs since 2000. The increase resulted from the cost of BGE's infrastructure investment programme, which included the second Scotland-Ireland interconnector, the lC2, and the pipeline to the west, an investment in the region of €750 million. Additional factors were the closure of Irish Fertiliser Industries and the slower than expected rate of growth in the economy, and in gas demand. For the next four years, increases in the transmission tariffs are expected to be close to the rate of inflation.

From 1 April 2003, Bord Gáis Éireann's supply tariffs for its franchise customers were increased by 9.1 %. The increase affected all domestic, small and medium industrial and commercial customers but not those large gas consumers who can source their gas from other suppliers.

Additional information not given on the floor of the House

Domestic gas prices in Ireland had been subject to a price freeze since the middle 1980s despite steep increases in the market price in recent years, particularly in the UK where Bord Gáis Éireann, BGE, sources most of its gas. BGE had been able to sustain the price freeze because it held a number of favourable long-term supply contracts. The first of these contracts ended in early 2003 and, as a result, the price rise was unavoidable.

The Deputy will be aware that the regulator has postponed a decision on the price of gas. Current prices for domestic customers are to remain in place until 30 September while the regulator undertakes a review of prices in the franchise market.

I accept many of the points made by the Minister regarding the reasons for the increased costs. Would he agree that many of those factors existed five years ago, when seven countries were more expensive than Ireland in terms of industrial and commercial electricity pricing? We have now moved close to the top of the list, just behind Italy, in terms of the cost of energy. Does the Minister agree that it is not a valid argument to say that the increased costs are as a result of upgrading the grid, since other European countries must also upgrade their networks and grids? Are we so different? Is this the only country which must have to pay for such an upgrade? Apart from the difference of Ireland being an island — the same difference applied five years ago — what is so different now, when the whole of the EU is supposedly moving towards a market liberalisation approach in this area?

Will the Minister comment on the increasingly held view that we now have the worst of all worlds in our energy market, because we have neither the consistency of a state monopoly, with its attendant capacity to increase generation, nor the benefits of competition or liberalisation in the marketplace? There is no reduction in prices nor any significant increase in choice. Does the Minister agree it is time to reconsider the model we have been adopting for the last three to four years, either by taking a more aggressive competitive approach, or else reverting to the previous situation, which at this stage is probably impossible?

The Deputy will understand that as a result of EU directives, we were required in effect to depoliticise the pricing issue, so that we now have an independent energy pricing regulator who regulates the price based on the rate of return to which companies should be entitled because of the investments they have made. Significant investment is required in Ireland because as a result of economic growth we have probably one of the highest demands on electricity. It is estimated that in the next couple of years we will demand 3% to 4% year on year increases in electricity capacity because of the economic situation. That is not so in other European countries.

We cannot escape the fact that Ireland is a peripheral island which in relation to gas, and especially electricity, is not interconnected in the way it otherwise is in Europe. That dictates the position. Our indigenous resource is mainly gas, and there is a possibility that we will become over-reliant on it, unlike other European countries which have other energy sources. Much of this is dictated by the type of policy we have in Ireland, and will continue to have, regarding nuclear energy. It is not a case of comparing like with like. I emphasise again that the domestic consumers are at the EU average regarding electricity prices. For industry, Irish prices are somewhat higher than the EU average, but there is open competition, so companies can choose their providers.

Postal Dispute.

Thomas P. Broughan

Ceist:

2 Mr. Broughan asked the Minister for Communications, Marine and Natural Resources the position in regard to his Department’s consideration of the recovery plan from An Post which he ordered the company on 4 September 2003 to produce; the position regarding postal services around the country in view of the suspension of large numbers of workers; the steps he is taking to assist in finding a solution to the dispute, thus allowing the resumption of full services; and if he will make a statement on the matter. [10396/04]

Seán Crowe

Ceist:

3 Mr. Crowe asked the Minister for Communications, Marine and Natural Resources if he will report on progress made in resolving the lock out of members of the Communications Workers Union by An Post management. [10326/04]

Paddy McHugh

Ceist:

5 Mr. McHugh asked the Minister for Communications, Marine and Natural Resources if he will report on the disruptions at An Post; and if he will make a statement on the matter. [10328/04]

I propose to take Questions Nos. 2, 3 and 5 together. The Labour Relations Commission has issued a framework document to An Post and the Communications Workers Union. Both sides have considered the document and are prepared to enter talks under the terms of the LRC proposal. I welcome this very significant development as a positive step towards resolving the current difficulties.

Extensive contacts have been undertaken over the course of the past week involving all the major stakeholders, including the Labour Relations Commission, to find a basis on which both sides could commence negotiations. While this latest step represents significant progress, the challenge in finding a basis on which the Labour Relations Commission could get involved is an indication of how complex and deep-seated the issues are, and nobody should underestimate the difficulty of finding a resolution to the current dispute. For my part, I emphasise that the Government is fully committed to the An Post employee share ownership plan, ESOP, in the context of the implementation of a recovery strategy for the company and provided that the terms of the agreement are complied with.

It is clear that An Post customers are suffering serious inconvenience as a result of the dispute and companies which operate in a highly competitive business environment cannot afford any loss in competitiveness arising from an industrial relations situation outside their control. An Post's financial situation is such that a prolonged dispute could cause serious financial damage to the company.

An Post needs to restructure and return to a firm financial footing if it is to be a strong player in the Irish postal market. It must continue to provide quality services to customers and sustainable employment for staff. The recovery strategy approved unanimously by the board of An Post sets out the basis on which the company, in partnership with the trades unions, can do so.

I compliment the management and staff of An Post, the union leaders and their members, the Labour Relations Commission and Mr. Kieran Mulvey and my staff on the discussions that have led to this significant breakthrough. I wish all involved the best.

On behalf of the Labour Party, I commend the leadership of the Communications Workers' Union and the management of An Post on reaching the stage of entering real negotiations, which the House warmly welcomes.

Is it not true that one of the most destructive aspects of this dispute was that the Minister for Communications, Marine and Natural Resources, Deputy Dermot Ahern, as shareholder on behalf of the State, gave the green light to An Post's chief executive to pursue an aggressive and gung-ho industrial relations policy? Last November, these profound issues were being addressed by both sides, but suddenly the chief executive said "no". It is perceived that this could not have happened unless the Minister authorised such a policy. Will he explain his role in the dispute?

Has the Minister any estimate for the cost and damage of this dispute to the economy? As a director of a small business centre, I have received countless e-mails and telephone calls from small businesses and voluntary organisations all of which are disgusted with the loss of the postal service which was a key mode to doing business. Has the Government estimated the damage that has been done in that regard? What has this dispute cost to An Post?

Everyone will welcome that the negotiations will now be on partnership basis in the bid to maintain the postal service. Will the Minister indicate that the negotiations will be in accordance with the ambition of Sustaining Progress to ensure partnership in semi-State companies rather than descending into lock-outs and provocative actions where workers are prevented from carrying out their work by gung-ho management?

The Deputy is strange as he compliments the management of An Post and then attacks them in the same breath. An Post's financial situation has been difficult for some years, particularly with unsustainable losses of €17 million in 2002, €43 million in 2003 and an estimated €30 million this year. It is the workers who will ultimately suffer if these continue. An Post's management brought forward a draft strategy towards the end of last year which was approved by all the members of the board, including the five worker directors. I received a presentation of the strategy before management engaged with the unions. Unfortunately, those discussions broke down almost immediately because of the precarious financial position of An Post.

Thankfully, as a result of the intense discussions over recent days, there is now a basis upon which all the issues, including the ESOP and Sustaining Progress, can be examined. It will be a difficult time for all parties involved, not just for management. It will be difficult for the shareholder — the State and taxpayer — because issues will be difficult to grasp. I am optimistic that, within the structure set up by Mr. Kieran Mulvey and his team, discussions will work, leading to a better postal service. The public requires an efficient and effective postal service at a reasonable cost to the taxpayer.

What about the cost?

How much has the dispute cost? Some claim it will cost An Post €14 million. As Deputy Broughan stated, it has caused disruption for charities, credit management groups and the like. Does the Minister not share my unease about the treatment of some of the suspended staff? I understand that the Minister does not wish to inflame the situation, but a number of staff were suspended because they would not operate certain machines. Is the Minister aware that some staff were not trained to operate the machines in question? Is he aware that some have cancer or are pregnant and had medical letters stating that they were not to operate the machines. One staff member received a letter of suspension when he was at his mother-in-law's funeral. Will the Minister agree that management attempted to drive the staff out in what was really a lock-out?

The Deputy should confine himself to questions.

As the largest shareholder in An Post, the Minister has an obligation to ensure that workers in the company are treated in a fair and respected way. Is he aware of how some workers have been treated as I have outlined? Does he accept that there is a problem with management? Where has management learnt its industrial relations, as this is not the way to treat workers? I accept the Minister's argument that there is——

I again draw to the attention of Deputy Crowe the fact that three Members have submitted questions. He cannot continue making statements and should confine himself to questions.

Is the Minister concerned about these suspensions which have exacerbated this dispute?

The Deputy heard from me on this issue when I answered, at some length, a Private Notice Question at the beginning of the dispute. No one wants to see workers suspended and treated unfairly. However, there are issues in this dispute, as in the past, on which both the management and unions cannot agree. I insisted, particularly with the ongoing discussions, that all issues, including the bushfire disputes at Tuam and Drogheda, be on the table at the Labour Relations Commission to be resolved. Ultimately, as I have said all along, our time-honoured industrial relations mechanisms are designed to give each of the parties an opportunity to air their views and grievances, some of which have been articulated here.

Will we have a postal service in the meantime?

It is probably fortunate for the Minister that he is taking Question Time today, after we have heard the news, which I welcome, that both sides have agreed to sit down to do some serious business. I am sometimes amused by the shadow-boxing that takes place before the real issues are faced. It appears that the moving and shaking has finished and the real work is being started. I hope that the issues are sorted out as soon as possible for the sake of the country, the workers and the company. The Minister is aware that I have a specific interest in the disruptions in Tuam and north Galway, as I have raised the matter with him on previous occasions. I thank the Minister for the interest he has taken in the matter.

I have said on many occasions that the core problem relates to unsuitable and unsafe working conditions. I have impressed on the Minister and the management of An Post that the priority should be to solve the central issues. I am glad the management of An Post has moved on the issue of finding new accommodation by signing a lease on new premises. I thank An Post's management for moving on the issue, although it was needlessly dragged out for a considerable period of time. I thank the Minister for showing such interest in the matter. I imagine that his interest has moved the situation forward.

The Deputy should ask a question. I have already drawn Deputy Crowe's attention to the fact that three members have submitted questions.

Does the Minister agree that the question of clearing the backlog in north-east Galway still needs to be addressed? I ask him to urge the relevant principals to deal with the backlog. I do not seek a reinvention of the wheel. Agreement was reached on a previous occasion when a similar backlog developed for the same reason. Will the Minister ask the management of An Post to pursue the route that was followed on a previous occasion to clear the backlog? He should side-step the shadow-boxing and go right to the core of the issue because the people of Tuam and north-east Galway have suffered too much for too long.

I thank the Deputy for his remarks. It is true I have taken a keen interest in the bushfires, as I call them, in Tuam, Drogheda and elsewhere. There were unofficial strikes in such areas, although I accept there were issues. I concur with what the Deputy said about the manner in which the matter has been handled by management in Tuam in the recent past. I understand that the backlog in Tuam is not huge. The difficulties that existed at the start were worse than those in the recent past. As I said earlier, I insisted that the individual bushfires would be part of the discussions feeding into the LRC. That has been taken care of in the document released by the LRC. I understand that the LRC will employ an additional person to deal specifically with the separate issues. I also understand that the industrial action in the four locations will cease, with the action that has been taking place in Dublin.

I would like to ask the Minister about a number of points he made last week when he answered questions in the House at the start of the dispute. When will the independent financial report on the employee share ownership trust be published? Will the Minister indicate, based on his contacts with the company, when its accounts will be published? We raised queries last week about figures that were in the 2002 company accounts. Does the Minister agree that the Department should examine the universal public service obligation? Perhaps the Minister will set out the way in which the great postal service we have had for 150 years can be retained.

It has been suggested that the dispute will cost An Post €14 million. Based on his figures, does the Minister have any idea how much it will cost? Has he been in touch with management in that regard? Will he urge management to reinstate the suspended workers? There is a huge desire to move beyond the dispute and to get workers back in their jobs. Will the Minister urge management to reinstate the workers?

I understand that the suspensions will be lifted, now that the CWU and An Post have agreed to enter talks from Monday, and that people will be able to go back to work. I hope that will happen in the near future and that we will get a postal service up and running.

Hear, hear.

I was also asked about the cost to An Post. In a perverse way, An Post's financial position in the last month or two has been better than anticipated, mainly because it has not paid increases under Sustaining Progress. When the increases are paid — it is accepted they will ultimately be paid — An Post's difficulties may come back again.

We received a draft copy of the Ernst & Young report on the employee share ownership plan last week. A number of issues have to be clarified in that regard. The report will have to be given to the parties involved, in the interests of fairness, and a decision on whether to publish it will be taken at that stage. It would like to think that the report will feed into the discussions that are taking place at the LRC. The Government is fully committed to an ESOP, provided the conditions under which it was originally put together are met. That is why I specifically asked for an independent examination by Ernst & Young in that regard. When I was responding to Private Notice Questions last week, I indicated that the draft report suggested that what we already suspected was true, that the ESOP issue could not be finalised at this stage. I hope we can re-examine those issues at the LRC discussions.

When will the company accounts be published?

EU Presidency.

Simon Coveney

Ceist:

4 Mr. Coveney asked the Minister for Communications, Marine and Natural Resources the targets he has set himself to achieve as Minister during Ireland’s Presidency of the EU in his area of responsibility in an EU context. [10325/04]

I am responsible for a wide range of European Union Presidency business across the sectoral policy areas of telecommunications, energy, broadcasting, fisheries, maritime transport and maritime safety. I have commensurate chairing responsibilities for the agriculture and fisheries, transport, energy and telecommunications and education, youth and culture Council formations.

The development and take-up of broadband infrastructure and services is a key priority in the area of telecommunications and the information society, in line with the targets of the e-Europe 2005 action plan, which were reinforced by the Council of Ministers on 8 March last. I am giving particular priority in the broadcasting area to progressing a structured debate on the regulation of satellite television broadcasters, as well as advancing the review of the Television Without Frontiers directive. My priorities in the energy sector include promoting the use of renewable energy sources, increased efficiency and conservation of energy, the ongoing integration of the principle of sustainable development into energy policies and the reliability and security of energy supply for the EU.

My maritime safety priorities are progressing the proposed directive, introducing criminal sanctions for pollution offences, designating certain maritime areas as "particularly sensitive sea areas" to strengthen the protection of vulnerable areas from marine pollution incidents, introducing safeguards for seafarers and their working conditions, and progressing anti-pollution and ship security responsibilities within the remit of the European Maritime Safety Agency. In respect of the Common Fisheries Policy, I am giving priority to establishing regional advisory councils, accelerating the development of environmentally friendly fishing methods in EU fisheries and compiling recovery plans for endangered fish stocks.

I am satisfied with progress to date at Council and working group level in respect of the various dossiers for which I hold responsibility. Developments are highlighted on my Department's website, www.dcmnr.ie, and on the Irish Presidency website, www.eu2004.ie. That is the advertisement.

I thank the Minister for the sales pitch. I read almost exactly the same speech on the Department's website.

Why then did the Deputy table the question?

I was hoping the Minister would get to the point about the progress we have made on these issues. In the energy sector, for example, we speak of promoting new renewable resources of energy. What have we done about this in the past three months, apart from in the wind sector, in which there has not even been significant progress? We are half way through the Presidency now. In the area of telecommunications, we promised to promote broadband across the EU. In practical terms, what have we done to fulfil that promise? We promised to host conferences on key issues of e-government and its promotion. How many have we hosted to date and how many will we be hosting before the end of our Presidency?

In the maritime transport sector, we promised to introduce and promote measures to reduce maritime pollution. What have we done in practical terms in this area under the Minister's leadership? We promised to increase the attractiveness of the seafaring profession by promoting high quality shipping within the EU. What have we done in a leadership role to fulfil this? We promised to develop maritime relations with third countries outside the EU to improve shipping standards and so on. What have we done to achieve this?

We have spoken about the fisheries sector many times in committee. What have we done in a leadership role to promote new measures that will be effective in conserving fish stocks and keeping our fishing industries intact? I know what the aspirations are, but what have we achieved in practical terms now that we are half way through the Presidency?

In the broadcasting sector——

Could the Minister answer the questions I asked?

Did the Deputy not refer to broadcasting? I can go through them all.

Perhaps the Minister could concentrate on the area of telecommunications.

The Minister should just tell us what he has achieved.

During the Presidency we will obtain political agreement on the proposal from the Commission, which has been approved by the European Parliament and Council, for a framework for eco-design requirements for energy-using products. In the area of fisheries, we recently approved a directive on the protection of citations and of Darwin mounds. In the area of maritime transport, the Minister of State, Deputy Browne, hosted a significant conference in Gorey which will contribute to the next Council meeting. We will also have Council meetings every month during the Presidency period in all five areas under my remit.

I can list for the Deputy the informal meetings taking place which are making a significant input into each area. A broadcasting conference and a fisheries conference took place in March. On 17 March the International Maritime Organisation had a sub-committee meeting on flag-state implementation. A maritime safety forum was held in Gorey last week. Next week there will be a meeting of fisheries directors general in Dublin and Dundalk. There will be a conference on broadband in Dundalk from 21 to 23 April which will also facilitate the request made at a European Council meeting for a round-table meeting between Ministers from the EU and the chief executives of some of the main telecommunications companies, not only in Europe but in the world. This will be held later this month.

There is a meeting of energy directors general, a working group meeting on a recreational craft directive and a Euromed ICT conference. The list is endless. In the area of ICT, we will have major conferences on e-health and e-government. I assure the Deputy there is a significant level of work going on in each of those areas. Work will also be done on the various directives pertaining to the roll-out of broadband across Europe to ensure that Europe is benchmarked with countries such as Japan and South Korea.

I was at the Forum on Europe this morning and I accept that much is happening and many people are putting a lot of work into ensuring that we have a successful Presidency. However, I am anxious to ensure that Ireland puts its mark on European policy in the Minister's area, which is also my area of responsibility, and that we go into the many conferences that have been organised with set initiatives and agendas which will be pushed by the Minister as the leader of the team. This is particularly important in the key priority areas outlined by the Minister: broadband, fisheries, marine safety and energy. The Minister needs to make clear what he is hoping to achieve by setting out his targets in the media and trying to achieve them.

When we have a Presidency for six months, there is an element of carrying on the work that took place in the previous Presidency. We have moved a number of the directives on to finalisation in each of the areas. Similarly, we have the right of initiative in some policy issues. For example, in the area of fisheries, I indicated to the Commission before our Presidency started that I wished to promote the issue of environmentally friendly fishing methods within the Presidency. We had a successful conference in Ireland last month and, as a result, the Commission has agreed to bring forward an action plan which will contribute to the next Council meeting. The issue of the Irish box will be finalised at a subsequent Council meeting. The list is endless. If the Deputy looks at my website he will see the level of activity that is taking place.

I have done so.

Question No. 5 answered with Question No. 2.

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