I welcome Members to consider the Estimates relating to the Department of Transport, Energy and Communications. I also welcome the Minister, Deputy Lowry, the Minister of State, Deputy Stagg, and their numerous officials. I circulated a proposal relating to the time schedule which was agreed by the convenors but is also subject to agreement by the committee. Is it agreed? Agreed.
Page 2
Estimates 1996.
Vote 18: Transport, Energy and Communications.
What is the position relating to time constraints?
The Minister will be obliged to leave at 4.15 p.m. to attend a Cabinet meeting. We will endeavour to cover the main aspects of the Department's Estimate before that time and the Minister of State will deal with outstanding matters until the conclusion of business. Other than that I will have no alternative than to adjourn the meeting, because we must deal with the Estimates relating to the Department of Agriculture, Food and Forestry tomorrow. The only alternative would be to convene after the conclusion of today's Cabinet meeting. With Members' cooperation we will proceed on the basis outlined.
I suggest that we proceed and discuss the matter later. It will be easier to decide if substantial progress is made.
We normally try to facilitate all shades of opinion. In view of the time constraints, I call on the Minister to give his opening address. He has 20 minutes.
I thank the Chairman for his welcome. The Minister of State, Deputy Stagg, holds delegated responsibility for matters relating to oil, nuclear power, renewables, road haulage and offshore exploration. To facilitate the committee I suggest that Members pose specific questions to me immediately and then they can question Deputy Stagg about his areas of responsibility. The business of the committee will probably conclude today as a result.
I welcome this opportunity to discuss the 1996 Estimates for my Department. This is the fourth occasion on which the Estimates will be considered in this way. It is a very useful procedure for providing information on all aspects of the work of the Department and to provide the opportunity for in-depth debate on all the sectors for which I have responsibility.
As in previous years, it would be useful to give the Deputies a brief outline of the nature and extent of the Department's responsibilities and functions which relate directly to how the Department's Estimates are framed. The responsibilities in the areas of transport, energy and communications are very important to many aspects of the county's economy, and include responsibility for several commercial and non-commercial State bodies engaged in the provision of vital services in the transport, energy and communications fields. In addition, the Department is responsible for the Geological Survey and the Meteorological Service, each of which provides a very important public service. The commercial State bodies under the aegis of my Department give employment to over 59,000 people and have a combined turnover in the region of £4 billion per annum. Their contribution to Ireland's economy is clearly extensive, not only in the scale of their own operations but in their contributions to the general competitiveness of the economy.
Deputies have already been given briefing notes on the subheads, the structure of which is mainly along the lines of the 1995 Estimates. The gross expenditure provision for my Department for 1996 is £142.913 million. Appropriations-in-aid for 1996 are estimated at £27.275 million, giving a net estimate of £115.638 million. The net figure shows a decrease of some £23.146 million over the 1995 equivalent.
Moving to the Estimates themselves, the day-to-day running costs of my Department, the ‘A' subheads, are covered by the terms of a three-year administrative budget agreement which each Department has concluded with the Department of Finance. Funds of £21.515 million are provided for the current year. The 1996 provision of £21.515 million compares with the 1995 outturn of £22.946 million, a decrease of £1.311 million. It would be useful if I outlined some of the main activities which the Department undertakes in the areas of transport, energy and communications.
In the transport area, aviation is a vital component and Aer Lingus has always figured strongly in this area. Aer Lingus performed well in 1995, following the implementation of the group's three-year restructuring programme which was supported by £175 million in Exchequer equity. Aer Lingus is just emerging from one of the most traumatic periods in its 60 year history. The early 1990s saw the company in such a perilous financial situation that, in the absence of strong corrective action, its very existence would have been threatened. Among the priorities which I set, when I came into office at the end of 1994, was the need to ensure the future viability of Aer Lingus. My immediate task was to ensure that the Aer Lingus Group was positioned correctly to achieve European Commission approval for the payment of the balance of the £175 million equity pledged by the Government as part of the restructuring programme. I am pleased that this objective and the targets set out in the restructuring programme have been achieved in full and that the outlook for the coming years is encouraging. Future success will only be achieved, however, provided the airline's growth is pursued in a prudent and cost effective manner. This is a fundamental lesson which cannot be repeated too often.
The disciplines which have been imposed and the lessons learned in recent years must not be cast off now that the airline has achieved the objectives set out in the restructuring programme. For that reason, the current industrial relations difficulties are a cause of concern. I trust that the Labour Relations Commission's intervention today will lead to a speedy resolution. The reality of the world in which Aer Lingus now operates is that State aid and the protection of flag carriers are things of the past. I am confident that Aer Lingus and its people have the ability to overcome the challenges ahead.
Following my request in the early part of 1995, a comprehensive five year business plan was developed for TEAM Aer Lingus for the first time in the history of the company. The plan was formulated in a manner which takes account of market realities. It provides a means of returning TEAM to profitability on a phased basis within its five year time-frame. The plan requires major adjustment and extraordinary effort. It must be clearly understood that it is an integrated strategy which must be fully implemented to protect the future of TEAM and the Aer Lingus Group generally.
There has been some misinformed criticism in the media of the level of charges — aircraft landing and passenger load fees — at Shannon, Dublin and Cork airports. These charges have not been increased since April 1987. In addition Aer Rianta has, at my instigation, introduced a range of generous discounts on the basic charges. At Shannon and Cork, for example, there are no charges for new scheduled services, or for growth on existing scheduled services, in the years 1996 and 1997. A consultancy study of airport charges which was undertaken for my Department last year showed that the basic charges at the three airports are highly competitive and that the discounts available are the best published discounts in Europe. Airlines will, of course, always want charges set at the lowest possible levels but the infrastructure that they use must also be paid for.
I regard the regional airports as an important part of the transport infrastructure of the regions. They increase the range of access options for potential visitors and serve as an inducement for the attraction of industry to the regions. In this way they help to spread economic development to the regions and counteract excessive centralisation. In recognition of the important role of these airports the Government has approved a scheme of Exchequer funding totalling £2.35 million for the six regional airports over the years 1996-1999 to assist the companies in marketing and promoting their airports.
A sum of £1.8 million has again been provided in the Vote of my Department for 1996 in respect of marketing Shannon Airport, a task I have now assigned fully to Aer Rianta, ending the earlier and less effective arrangements which involved both Aer Rianta and Shannon Development. I am happy to say that traffic figures for the first four months of 1996 are up 23 per cent on last year. Prospects for the remainder of the year look extremely positive, particularly on the US routes where a number of new services are operating this year.
Services under the essential air services programme from Galway and Kerry airports commenced in January 1995. I have provided a sum of £1 million under subhead D3 of the Vote this year which is aimed at guaranteeing a minimum level of service at these two airports. In addition, my Department has advertised the public service obligations attaching to the Sligo/Dublin and Donegal/Dublin routes and has sought tenders from airlines interested in providing a service to meet those obligations. Two earlier invitations to tender in respect of these routes had proved unsuccessful. I am hopeful this third attempt will be successful. In that event, additional funds will have to be allocated to this subhead.
The Irish Aviation Authority, which operates under the aegis of my Department, is now into its third year of operation as a commercial semi-State company. As the House is aware, the authority is responsible for regulating the safety and technical standards to which civil aviation in Ireland operates and for the provision of air traffic control services to aircraft in Irish controlled airspace. In so doing, the authority operates to the highest international standards and practices.
State financial support for the provision of socially necessary non commercial public transport services has been very substantial over the years. In 1996 a sum of £99.76 million is being provided by way of Exchequer subvention to CIÉ. The high level of State financial support reflects the continuing commitment of the Government to the provision of public transport services.
I have already announced my intention to replace the current lump sum subvention payment to CIÉ with a series of public transport contracts. The contracts will cover the 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 CIÉ. The public transport contracts will cover a fixed period. They will set out clearly what services CIÉ 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 performance measurement, the results of which will be published. The contracts will put an emphasis on performance, not penalties. The State will buy certain specified services from CIÉ at an agreed price, which will be paid on delivery of those services.
The new arrangements will give rise to many benefits. Users of public transport will, for the first time, be able to see what service standards have been set for CIÉ and how it performs against those standards. CIÉ management and staff will have a clear mandate from the Government. Taxpayers will be able to see just how their taxes are being used to support socially necessary transport services.
In recent times the public spotlight has focused on plans for the development of public transport services in Dublin and, in particular, on the proposed light rail network. I am pleased that a full scale public debate about the plans is finally under way. An open debate of the issues is a vital part of the planning and implementation process.
Clearly there are no easy answers to the problems caused by traffic congestion in Dublin. There is however a consensus that we need a significant enhancement of public transport services as part of a broad strategy to deal with those problems. In particular, it is accepted that public transport must be fast, attractive and reliable if it is to provide a credible alternative to car commuting. The Dublin Transportation Initiative, which was the most extensive study ever carried out into traffic and transport in Dublin, has been adopted by the Government as the general policy framework for the future development of the transport system in the Greater Dublin Area. The linchpin of DTI's public transport strategy is an on-street light rail system. Significant improvements to bus and rail services are also part of the strategy.
Light rail is in the vanguard of urban transport development internationally. More than 300 light rail systems have been implemented worldwide with many more under construction or in planning. Thanks to the detailed work carried out by DTI and the assistance of the European Union, we now have a unique opportunity to build on international experience and give Dublin a modern and permanent transport system which will support our economic development, job creation and urban renewal strategies. However, I understand and recognise that many people have genuine and serious concerns about different aspects of the project which need to be fully addressed. Accordingly, I am committed to ensuring that progress toward implementation of the light rail project will not be made at the expense of genuine and effective public consultation and a rigorous statutory approval process.
Legislation to provide a statutory framework for the construction, maintenance and operation of a light rail system in the greater Dublin area was presented to Dáil Éireann on 10 May. The target is to have the Transport (Dublin Light Rail) Bill enacted before the summer recess. This will enable a public inquiry to be held in the autumn and permit construction of light rail to begin as early as possible in 1997, keeping the project on course within the timescale of the current round of EU Structural Funds.
In March of this year I approved the allocation of funding under the Operational Programme for Transport for a package of investment in DART and suburban rail costing £17 million. The investment package includes the acquisition of additional DART rolling stock and construction of new DART and suburban stations, and clearly demonstrates my commitment to ensure that the DART and suburban rail services are maintained to the highest standards.
I would now like to address the advances that have been made regarding the electricity sector. Over the past year or so my Department has been developing new arrangements for the electricity sector, including restructuring the ESB to increase its efficiency and to prepare it for the requirements of the single market.
The members of the Committee will be aware that later this month I will be attending a special Council of Ministers meeting which will attempt to finalise the forthcoming Electricity Directive. If implemented as it currently stands, the directive will mean a substantial degree of liberalisation of the Irish electricity market with a progressive opening up of the number of customers who would be eligible to contract directly with independent power producers.
At the Council meeting last month, I made it clear to my European colleagues that the critical issue for Ireland was a clear commitment to the principle of public service obligations. Agreement has now been reached on this issue. This deals effectively with my primary concern to prevent cherry picking of the larger, more lucrative customers and to ensure the interests of the smaller consumer are fully protected. I have also obtained the necessary provisions to ensure we can continue to generate electricity from indigenous peat, thus assuring the future of Bord na Móna and of more than 2,000 jobs in the midlands.
The compromise proposal discussed at the EU Council of Ministers last month reflects a shift to a stance at Council which favours a greater degree of liberalisation than had been envisaged heretofore. However, a number of member states do not consider that it moves sufficiently quickly towards liberalisation, whereas only one or two favour a more gradual approach. The precise extent of market opening provided for in the directive will emerge from negotiations at the Council meeting of 20 June.
The draft directive will inevitably have a significant impact on the ESB. It is estimated that 25 per cent of the ESB's market would be open to competition if the proposal becomes law. This will present an opportunity for customers and a challenge for the ESB. I expect that the introduction of significant levels of competition will bring considerable downward pressure on electricity prices.
The successful negotiation of the cost and competitiveness review will, I am certain, prove to be the most important development for the ESB. This has been an essential exercise in preparing the ESB to face a future based on a competitive electricity sector. It is also an achievement of national importance, as electricity affects virtually every segment of social and economic activity in the country. Electricity at the lowest possible price makes an invaluable input to the competitive sector of the economy. The CCR has been a unique process of change management, and is certainly the most ambitious ever undertaken by a State company. I have requested the board to proceed with its immediate implementation of the CCR agreement. The successful implementation of the CCR is now more important than ever to secure ESB's future in an increasingly competitive market.
As regards natural gas there was a number of major developments in the past year. The Energy (Miscellaneous Provisions) Act, 1995 provides a statutory basis for the introduction of third party access to the natural gas transmission system. The Act allows Bord Gais Éireann to transmit gas owned by another party through its network for a charge to be negotiated. The third party access facility only applies in the case of very large gas consumers, those consuming at least 25 million cubic metres of gas per annum at a single site. This is the threshold proposed in the EU draft Directive concerning common rules for the internal market in natural gas, which is likely to be considered in detail by the Council during the Irish Presidency.
The Ireland/UK natural gas interconnector is now fully operational and gas is being imported through it. In addition, it provides security of supply in the event of an interruption in supplies of gas from the Kinsale Head/Ballycotton fields and when the Kinsale Head field is depleted.
Regarding oil, in response to the Culliton and Moriarty reports, the Government announced in 1993 that the mandatory offtake regime at the Whitegate Oil Refinery would terminate at the end of 1996. As a result of the Government decision, the Irish National Petroleum Corporation prepared a commercial plan designed to upgrade the operational performance of the refinery and to prepare it for the open market trading environment which it will face from 1997 onwards. The implementation of this plan is on target and I am confident that its realisation will enable the refinery to trade profitably in open market conditions from 1997.
Apart from the strategic value of an oil refinery within the State, the other major element of oil supply security is the maintenance of national oil reserves. Under EU Directives and the rules of the International Energy Agency, Ireland is obliged to ensure that oil reserves are at a level equivalent to at least 90 days consumption. Since June 1, this responsibility has been vested in the National Oil Reserves Agency.
The restoration of the oil terminal at Whiddy will assist greatly in the effectiveness with which the National Oil Reserves Agency can discharge its remit. Whiddy Island will shortly resume operational status following the installation of one single point mooring for the discharge and loading of crude oil. Work on the project has recently been completed and it is hoped the mooring will become operational during the coming summer months.
As an indigenous fuel, the Government is committed to the future use of peat, particularly in the electricity generation fuel mix. This is evidenced by our backing of the proposal for a new peat station to be built in the Midlands, which would consume 1 million tonnes of peat per annum thereby securing the long term future of Bord na Móna, as well as helping to sustain significant employment in the area.
In May 1995 the Government approved an equity injection into Bord na Móna of £120 million, over a three year period subject to any state aid implications being investigated by the EU Commission. Under the EU Treaty, the Government is precluded from injecting Exchequer funds until clearance from the EU is received. The Commission is currently considering the case and I expect a reply in the near future.
Energy is the lifeblood of our society. Yet we take its existence for granted and use it as if it were in endless supply. It is not, and that is why energy conservation and efficiency measures make sense. We must ensure that our resources are utilised to promote growth and are not misused, badly managed, or wasted. A well designed and effectively run energy efficiency programme has the potential to reap rewards on several fronts. It strengthens security of energy supply and reduces imports. Energy conservation leads to reductions in energy bills, thereby allowing Irish companies to compete better in international markets. This sustains and creates employment. A national energy conservation programme creates the potential for new jobs and business opportunities in the areas of energy services such as insulation, energy auditing, and employment resulting from the installation of more energy efficient technologies. Energy efficiency contributes to environmental policy as energy saved means lower CO² and other harmful emissions to the atmosphere.
In addition to energy efficiency measures, we have also placed a high priority on the promotion and use of renewable energy sources. Renewable energies are clean, indigenous and environmentally friendly. Their increasing exploitation addresses security of supply, energy efficiency and environmental concerns, while also supporting the local development drive. The Government's recently approved strategy sets targets for wind energy, hydro, biomass, waste to energy and wave energy development up to the year 2010. EU support of £7.5 million is being made available under the Economic Infrastructure Operational Programme.
Provision is also made in the estimates for grant-in-aid for the RPII — Radiological Protection Institute and the Radiological Emergency Protection Plan. The risks from the British nuclear industry, particularly Sellafield and THORP and old Magnox reactors on the west coast of Britain, have been identified by the Radiological Protection Institute through the results of its radiation monitoring programme.
The Institute monitors the levels of contamination of the Irish Sea and has published the results in a series of reports since 1982. It has found that radioactive contamination decreases with increasing distance from the point of discharge at Sellafield. It has also found there have been substantial reductions in the levels of contamination in recent years reflecting reductions in discharges from Sellafield. The Institute consistently stated that the radiation exposures arising from Sellafield discharges into the Irish Sea do not give rise to a significant health hazard to the Irish public. It has found that the annual exposure of a heavy consumer of seafood is only a fraction of 1 per cent of the average annual exposure received by a member of the public from all sources of radiation.
There has been a welcome renewed interest in petroleum exploration since the introduction of new tax provisions and licensing terms in 1992. The Department's promotional efforts have resulted in a substantial increase in the number of exploration authorisations, bringing many important companies into the Irish offshore. This interest and commitment augurs well for the future. A high level of exploration activity is guaranteed in the coming years.
A case to extend the boundary of the Irish Continental Shelf is currently being prepared for submission to a UN Boundary Commission in accordance with the UN Law of the Sea Convention. The first phase of a programme to define the boundary of the continental shelf involved the acquisition and processing of seismic data and was completed in 1995. The second phase, involving a survey to determine the water depths, will commence shortly. Funding for this work is provided under Subhead B6 of my Department's Vote.
In February 1995, I granted a State Mining Licence to Arcon Mines Limited to develop the zinc and lead ore deposit at Galmoy, County Kilkenny. Mine construction work is ahead of target. The company expects to commence mining towards the end of this year and to provide long term well paid employment of about 200 direct jobs, plus about 150 indirectly, during mining operations.
This deposit is approximately 19 million tonnes and about three times larger than that at Galmoy. The joint venture has sought planning permission from Tipperary North Riding County Council and an integrated pollution control licence (IPCL) from the Environmental Protection Agency. Those applications are being duly considered by the permitting authorities. Up to 600 jobs, direct and indirect, are projected for the Lisheen mine, when it is given the go-ahead.
The development of the two mines at Galmoy and Lisheen will, following the responsible headline of Tara Mines at Navan, significantly raise the profile of Ireland, which already ranks among world leaders in concentrate production. I intend to continue to encourage such responsible development of our national resources. In that connection I am pleased to highlight the provision in the Finance Bill, 1996, for tax relief on mine site rehabilitation expenditure and on contributions by a mining company to a fund established during the life of a mine to provide funding for post closure costs.
The tax allowance for mine site rehabilitation was one of the recommendations of the National Minerals Policy Review Group which reported to me in May last year. I welcomed this report as an important input to the further development of national minerals policy. The recommendations vary considerably as regards implementation costs and timescales and I am, therefore, dealing with them in a strategic manner. More than 15 of the 52 recommendations of the review group have already been implemented and others are being progressed.
The Government is committed to the development of a telecommunications sector which ranks in the best quartile of OECD countries in terms of range and quality of services and price competitiveness. The strategy to achieve this objective is based on the introduction of competition to the sector in accordance with EU liberalisation proposals at the earliest possible date, subject to achieving the necessary restructuring of Telecom Éireann so that the company can compete effectively in an open market.
In just three and a half years from now, there will be full and open competition in all sectors of the Irish telecommunications market. Indeed in some sections of the market, competition has already become a reality. The market for terminal equipment and data and value added services has been liberalised. Last month I issued Esat Digifone with a licence permitting it to proceed with a second mobile telephone service. I expect it to be in head-to-head competition with Eircell by the end of the year.
The advent of competition brings with it enormous challenges and opportunities for Telecom Éireann. For the company to compete successfully in a liberalised market, prices must be reduced and costs cut. Telecom Éireann's debt burden must be addressed and measures taken which will enable its business to grow with the potential of the growing telecommunications market in areas where competition will prevail. Furthermore, side by side with a leaner and more efficient organisation, it must concentrate on improving the quality and range of services it provides to Irish customers. The introduction last month of a customer charter by the company is a welcome first step in a process where an increased public awareness is resulting in demands for better performance from semi-State companies in the area of customer service.
The recent announcement by Telecom Éireann of a further £65 million in price cuts to be phased in over the next 12 months must be welcomed as evidence that the Government policy of achieving high quality services at competitive prices is working. However, even taking these price reductions into account, current charges are still far too high to be sustainable in a liberalised market. In tandem with reducing prices, the company must reduce its cost base. Its operating costs must be reduced further, to bring it into line with those of comparable companies in other countries. The process of developing the company into a low cost, customer driven organisation is under way and I, as Minister, am determined that that process will succeed.
A key ingredient in the transformation of Telecom Éireann is the selection of the right strategic partner who will bring the right balance of skills and expertise. This will be invaluable to the company in meeting the challenges of the future competitive marketplace. However, the strategic alliance is of central importance to this transformation, we must put it in context. Most of what must be done falls within the remit of the company itself and a strategic alliance will not remove the need for action by management and staff. The objective is an efficient, effective and customer focused company capable of delivering quality telecommunications at competitive prices.
With regard to the alliance process, preliminary proposals were received from two bidders last March. These proposals were evaluated by officials from my Department and the Department of Finance with representatives from Telecom Éireann and the advisers to the process. On the basis of this evaluation the Government decided that both bids should be admitted to the second phase of the process.
This second phase is now well under way and comprises a series of meetings with bidders which cover legal, regulatory and strategic co-operation issues. Following the receipt of final bids and evaluation of the proposals, I hope to bring a proposal to Government during the summer. The key to winning will be an effective combination of strategic support and fair value for the purchaser of stock of up to 35 per cent in Telecom Éireann.
At European level, the focus within the EU is now on the development of the detailed regulatory framework to ensure effective competition in the marketplace. In particular, the Council of Europe and the European Parliament are in the process of developing legal provisions with regard to a harmonised approach to licensing, interconnection, funding of universal service and the regulation of the activities of dominant operators. The Irish Presidency will have an important role in the second half of this year in achieving maximum progress towards completion of this package.
At a national level the preparatory steps for efficient regulation of the sector are now being taken. With the emergence of the information society and all that means in terms of economic development, it is essential that Ireland is strategically positioned to reap the rewards of those developments. A key issue in that positioning is the regulation of the telecommunications sector. It is my intention to ensure that regulation of the telecommunications sector is carried out independently of my role as Minister responsible for this sector and as the dominant shareholder in Telecom Éireann. To that end, these regulatory functions have already been corralled into a distinct division of my Department which operates separately from matters relating to general telecommunications policy and shareholder issues.
In addition, legislation to establish a legally independent office of telecommunications regulation is at the final stages of preparation and I hope to be in a position to publish this before the summer recess. Provision has been made in the 1996 Estimates for the cost of setting up this office on a functionally independent basis. This will be an interim measure pending the establishment of a wider multisectoral regulator in 1997.
I am delighted that An Post made a record after tax profit of £7.2 million in 1995 and that the cumulative deficit, which peaked at £13.8 million in 1991, has now been eliminated. There is now a surplus on the accumulated profit and loss account for the first time since 1988. Much progress has been made in relation to restoring the quality of the delivery service to the levels that existed prior to the operational changes implemented in 1994. Notwithstanding this there are still too many complaints about the service and the Minister for State at my Department, Deputy Doyle, has been asked to look into the situation regarding postal deliveries and to report back with specific recommendations for improvements. This area was also highlighted in the Price Waterhouse review of the role, methods of operation and effectiveness of An Post. The Price Waterhouse report has been accepted by the board as a framework for the future direction of the company and its recommendations are being implemented.
I am confident that the implementation of these measures will help to restore the public's confidence in An Post and to place the company in a position to face the challenges that will arise from increasing competition in the years ahead. In this regard the European Commission in July 1995, published a draft directive providing for liberalisation of the postal sector. The proposals include provision for a universal postal service which will give a minimum mandatory postal service of guaranteed quality to all citizens. An Post will be the universal service provider in Ireland's case. To fund the universal service, each provider will be given a limited monopoly comprising certain services and called the Reserved Services Area.
The proposed liberalisation will be in two stages. Up to the end of 2000 the reserved area will include domestic mail, incoming cross-Border mail and direct mail. The Commission wishes to decide now to liberalise these latter two services after 2000 and, if possible, to reduce the size of the reserved area further. Ireland is broadly in favour of the proposals but is advocating a more considered approach to achieving liberalisation and one which takes account of the specific problems in each member state. We are playing an active part in the EU discussions to ensure that these concerns are addressed.
It will be no surprise, Chairman, if I conclude with a general comment that the work of the Department is focused increasingly from a policy standpoint on meeting the requirements of the customers of the State companies for which we have responsibility in the most competitive way possible. In adopting such a clear general policy we can make the maximum contribution to the competitiveness of the economy and to the welfare of individual consumers. This business strategy in turn will translate into an assured and successful future for our State companies.
In line with the arrangements discussed in advance of the meeting the committee may wish to put questions to the Minister of State, Deputy Doyle, who has specific responsibility for customer service and the improvement of the public service in the context of the strategic management initiative.
I welcome the Minister of State, Deputy Doyle. I suggest we take questions from 4 p.m. to 4.15 p.m. after the opening statements.
I welcome the Minister and Ministers of State. The current industrial relations situation in Aer Lingus is a setback for the company. After the pain for the management and staff of the Cahill plan, it is a pity this problem has arisen. I join the Minister in wishing the process well. He should be available, in the event that progress is not made, to prevent the airline from shutting down coming up to the busy season.
Telecom Éireann published its annual report recently and I hope the Minister and his officials have studied it fully. It appears the conditions in Telecom Éireann have improved greatly. It made profits of between £66 million and £400 million, depending on the accounting approach. Is the Minister aware the company wrote off about £260 million in depreciation? The depreciation charge in years past was around £170-£180 million.
My calculation of the company's profits before depreciation and tax, both of which are in a sense internal charges, indicate that it has made a £200 million profit. Any valuation of a telecommunications company is about seven to ten times its annual profits, which would mean that Telecom Éireann is worth up to £2 billion. I know these points are debatable but I would be interested in the Minister's view.
If on the basis of the annual report the company is worth about £2 billion, it would be a scandal to dispose of a third of it for less than £500 million. Anything less would be a panic sale. The annual report shows that a third of the company is worth at least £500 million. It would appear that the annual report has not been fully taken on board by the Cabinet in its deliberations on the sale.
There were up to ten bidders but only two remain — TeleDenmark which has bid about £300 million and KPN Telia which has bid less. I understand TeleDenmark is looking for a partner but I suspect a partner will not be found, in which case the other company will be left. KPN Telia is a consortium from four countries and my information is that the shares in Telecom Éireann will be held by two companies — the Dutch and Swedish companies. What madness is it to sell 35 per cent of Telecom Éireann to companies which do not have strategic alliances and whose shareholders are either state or financial institutions?
Has this really been thought through? Are we genuinely thinking of disposing a third of Telecom Éireann to Dutch and Swedish telecommunications companies? What is wrong with the Irish financial institutions that they cannot make an offer when foreign financial institutions, through their shareholdings, can do so?
The Minister should order an immediate study of the latest annual report. Being a businessman the Minister knows what business is about. I advise strongly against getting hung up on pride just because a previous Government started the process and because he is committed to the process. He knows a third of the company is worth at least £500 million and the best offer received is £300 million. The Minister should call off the process because it is a shambles. We should have a full debate in the Dáil and start again.
I also notice the Estimate includes a consultancy figure of £3.3 million. I do not know if that is the full figure. We propose to pay a consultant £3.3 million to advise us on this process, under heading E3. I presume if this process collapses, as it probably will, the consultant will not be paid £3.3 million to pick one horse out of a two horse race. Will the Minister consider renegotiating that £3.3 million consultancy fee?
My colleague, Deputy Noel Treacy, has much expertise and information on the ESB. I will just make an overall comment. The CCR is extremely expensive and I suspect the Minister is well aware of that. I have tabled 17 to 20 questions to the Minister on the subject and my conclusion from the replies is that there is not enormous faith at Cabinet or departmental level that the required £60 million per year savings will be realised. I do not believe the £60 million will be achieved. It will be in the region of £30 million. This will mean that instead of being a four and a half year pay back period, it will be a nine years and that makes it an extremely expensive proposition. It is important the country and the Government realises that.
My colleague, Deputy Molloy, raised this point in the Dáil and I am also concerned at the CCR process of opening up the market through the EU negotiations. I understand the figure of 15 per cent of an open market was used when the CCR was negotiated. The Minister says today he expects it to be 25 per cent. I understood him to say previously — he can correct me if I am wrong — that he thought it might be higher than 25 per cent. I read somewhere that he thought it might go to 30 per cent.
We have just negotiated a deal with the ESB based on an open market of 15 per cent. If we have an open market of 30 per cent one does not need to be an expert on electricity to know what it will do to the redundancy situation in the ESB. Do we have to do another CCR or is the present CCR able to cope with 30 per cent?
I know the Minister does not agree with me, but if the market is opened to 40 per cent the large customers will import electricity. That will be followed by the development of generating stations. That is all very well and has to happen at a pace but it is naive to suggest that electricity prices will not increase substantially. My calculations suggest they will increase by at least 20 per cent. If the Minister comes back on 20 June and tells the country that the EU has forced a 40 per cent open market on the ESB, electricity prices here will increase by about 20 per cent in the next 12 to 18 months. The big players and large industry will start to import and the shortfall will have to be met by domestic consumers who will face higher electricity charges.
The Deputy's sums.
I will take the Deputy's sums and we will see who is right.
Well we know Deputy Brennan's party's reputation at sums. Suppliers will voluntarily pay more for their electricity and some of it will probably be nuclear generated as well.
That may be the Deputy's policy, it was never ours.
I have not heard such rubbish in all my life.
We normally conduct our business at this committee in a friendly and constructive way.
Deputy Dukes is some economist if he can tell me that the market can be opened to 40 per cent by importing electricity and the remaining domestic suppliers will not be charged extra. I can see I touched a very raw nerve with Deputy Dukes.
I recommend Samuelson's Basic Economics. The Deputy would do well to read it.
In regard to the Dublin light rail system, I have already said in the House and I will not labour it that the Bill as drafted will delay the process interminably. The terminology is extremely legalistic and bureaucratic. Taking evidence on oath will take donkey's years. The Minister said today he will start building by 1997. If Deputy Dukes permits me to make a prediction, I will say the Minister will not start this in 1997 as the Bill is drafted. It will be tied up in the District Court, the High Court and the public inquiry long after 1997 and into 1998 and 1999. It simply will not happen because of the way the Bill is drafted. I suggested an alternative in the Chamber which I will not repeat.
I ask the Minister to introduce a special policy to help the development of regional airports. They are under enormous pressure and losing business. The Donegal and Sligo airports do not have routes to Dublin and are genuinely in need of some support. The Government moved to reduce landing charges at our main airports and that is a measure I support but it has had a knock-on effect in our regional airports which are unable to compete. I ask the Minister to look at that carefully.
The Minister told The Sunday Tribunerecently he had asked CIE to reduce costs by about £70 million. He subsequently told me the figure was £35 million — perhaps over a two year period. Regardless of how the sums work, I would be interested to hear from the Government where those savings of £70 million or £35 million are to be made.
Under subhead C2 of the Estimates the subsidy to Dublin Bus is now £3.7 million and the subsidy to provincial buses is £1.6 million. These are substantial subsidies to the bus companies. Is it the Minister's policy to continue to subsidise Dublin city bus services and the provincial buses or does he have any other helpful policy approach to public transport at city level?
There is a policy deficit in the Government's approach to the Department of Transport, Energy and Communications. The policies are EU led. The Minister, the Ministers of State and the Government continually tell the House we must face competition in the ESB, Telecom Éireann and other areas. However, they also tell us we do not have to face competition in public city transport or Aer Rianta. We have competition if it is EU led, but there is no talk of competition in areas on which the EU has not yet rounded. That is not good enough. One must have a coherent strategy across the State companies and not one of implementing what Brussels tell us to do.
This is also evident in the postal service. Up to the year 2000 we must continue to open the markets. There was no talk of that until the EU told us to do it. In the context of Dublin city buses and Aer Rianta, will we wait until the EU produces draft directives before we have a policy? Is it a matter of not having a policy on competition until the EU tells us to do it? I object to an EU led policy in regard to State companies. This Government should have its own clear policies, implement them and take on board any EU legislation which is necessary. At the moment, policy is totally EU dominated.
The present situation in Aer Lingus is of great concern. It is a critical time of the year for air transport with the tourism industry depending substantially on the smooth operation of access flights into Ireland. The Minister should keep a close watch on developments and should be available to ensure that all that can be done will be done so that nothing will happen by mischance or neglect. I welcome the moves by management and the trade unions in coming together at the LRC. I hope they can find a happy solution to this new radical change in the strategic alliance between Aer Lingus and Delta which is of great value to this country. I have publicly supported the company's stand on the issue and I hope that satisfactory arrangements can be worked out between both parties to ensure its smooth introduction and operation.
I recognise that it presents a difficulty for the cabin staff and their trade union in dealing with a radically new position on their working conditions. I hope they will see that it is in the long-term interests of their employer, Aer Lingus, as well as the sustainability of their jobs. It is also in the interests of the industry generally and the maintenance of our national carrier which cannot survive in this modern age without entering strategic alliances and other commercial arrangements to strengthen its position.
Aer Lingus is small as a world player compared to the major airlines but it has achieved a high standard and reputation and we hope it will continue to do so. Will the Minister comment on the proposal by a private developer for a second terminal for Dublin airport?
Regional airports are of great concern to many of us who fully supported their development and who had great expectations that they would open up new rapid access from the UK and continental Europe, particularly to the west coast where many of the new regional airports are located. The lack of development at these airports is disappointing. In the recent round of grants I note that a substantial sum was allocated to Kerry compared to other regional airports.
The Minister is responsible for transport but we often tend to put these questions to him as Minister for Tourism because that industry is largely dependent on the successful operation and availability of scheduled services at regional airports. Will the Minister explain how he decided to divide up the grants allocated, and why one was so much greater than the others? Will he give us an idea of what he is doing to improve access from outside markets?
Galway is acting only as a hub to Dublin by Aer Lingus. It is not bringing in any additional flights from abroad and it is grossly overbooked because of the inadequate service. There is tremendous frustration and annoyance locally in the tourist industry as well as with those directly involved at the airport itself.
What is happening to the internal air service? The Minister provided a sum of £1 million aimed at guaranteeing a minimum level of air service at these airports. Is that a hub service or is there any access from outside? Tenders were invited for the Sligo-Dublin and Donegal-Dublin service but the Minister has failed to award a contract arising from two tenders and now says he has advertised it for the third time. Are any Irish companies interested? I understand that one particular company is keen to take it up but it may not have been successful.
The Irish Aviation Authority has caused many ripples. It is new and has to stand on its own feet financially. It seems to have earned the reputation of immediately increasing charges all over the place. The international council of aircraft owner and pilot associations has expressed concern about some of the actions taken by the Minister. The council considers the introduction of the joint aviation flight crew licensing requirement, SI/50.96, which was considered as only a draft document, was premature. The Minister may care to comment on that.
The Minister announced his intention to replace the current lump sum subvention payment to CIÉ with a series of public service contracts. This proposal is interesting and I want the Minister to elaborate on it. Will these services be opened up to private bus owners? Will it be open and transparent or is the Minister merely talking about a closed shop, entering into a contract with CIÉ for specific services? There is quite a difference as the Minister will accept.
As Deputy Brennan emphasised, much of the competition the Minister advocates is merely as a result of EU requirements. We are reluctant to open up competition where an initiative can be taken here at home. In this area it is not clear what is involved. I am sure the Minister will agree there are hundreds of excellent bus operators in the country who will be keen to tender for these public service contracts.
The Government recently published the Forfás document which lays great emphasis on competitive public services. On page 50 it proposes selling off ESB power stations. I would like to hear the Minster's comment on that because it is rather unusual that this document was issued by Forfás and not as a Government document. Does that imply a reluctance on the part of some partners in Government to accept all the recommendations contained in this interesting document? My party largely supports many of the major recommendations in the report. We consider these kind of proposals to be essential. We would like, however, to hear whether the Minister accepts these proposals and, if so, what action he plans to take to implement them.
On page 48, the report recommends the sale of Cablelink. I would like to hear the Minister's views on this because we are aware of the publicly stated policies of some of his partners in Government. Is there a clear intent by all parties in the Coalition to pursue the policy objectives laid out in the Forfás document?
As regards Telecom, I want to ask the Minister about the question of routers concerning which there is much confusion in the industry. For over two years several telecommunications companies in Ireland have been using routers to offer alternative long distance and international telephone services to customers. At the same time the Minister's Department is of the view that the use of routers is contrary to condition 1b of the value added service licence. The Department presented a variety of reasons for not having taken any action against those using the routers and has continuously advised that action to prevent their use was imminent. However, the Minister has not taken any action against the companies using them.
In addition, he has put the companies acting legally by not using routers at a commercial disadvantage. That is an unacceptable situation. The public perception is that the Department is prevaricating on this issue. Why is the Department saying that they are illegal and cannot be used while at the same time it has taken no action against those who continue to use them. If the Minister were to take action by instructing Telecom Éireann not to connect any routers, it would seem we were giving a blessing to those who have been connected. We are creating a lot of anomalies and an illegal situation over which we cannot stand. I would prefer if the Minister opened up the area and allowed free access. I do not believe we should turn a blind eye to those who have broken the law and we should prohibit any new people from coming in and availing of the same service.
I would like to ask the Minister a few specific questions on Luas. Did the Department or CIÉ carry out a study on the cost of going underground in the city centre? The Minister is aware of the alternative proposal which has been drawn up in great detail and into which a lot of time and expertise has gone. No clear statement has emerged from the Minister or his Department on the suggestions and proposal contained in the alternative plan, that is, going underground in the inner city area between the two canals. What firm of consulting engineers was used to carry out the study, if a study of underground costs was undertaken? What conclusions did that study come to? If there was a study, will the Minister announce whether he will publish its results or the study itself as it would be helpful to the debate?
Was a Government decision made to switch funding from the Ballymun line to the north-south port tunnel? If so, when and by whom was that decision made? I would like that cleared up. Most people observing the flow and density of traffic can see that the real need is for an east-west tunnel to the port. On what basis was a decision made to reallocate the funding and was approval received from Brussels for this move? Why and by whom was the privately funded east-west port access tunnel rejected? Is the north-south port access tunnel part of a larger roads plan for the capital about which we have not been told?
What is the reason for the delay in commencing work on the peat station? Has everything been agreed as regards funding for that proposal? There seems to have been an inordinate delay. This proposal was under active consideration when I was in the Department up to November 1992. We are well into 1996 but we have not seen anything happen. What percentage of the electricity market was estimated to be opened up to competition when the Cost and Competitiveness Review was being finalised? I read it was based on an estimate that 13 per cent of the Irish electricity market would be opened. We know from the most recent Council of Energy Ministers meeting that it is estimated to be 25 per cent but reports from other countries which I read stated it could be as high as 40 or 50 per cent in the short term. I would like the Minister to elaborate on the assurance he gave the House as regards protecting domestic consumers against inordinate increases so that they will not be asked to carry the full burden of granting reductions or the loss of customers on the other side. How does he plan to handle that situation?
As regard gas and third party access, the Minister introduced the Energy (Miscellaneous Provisions) Act, 1995, and the limit was 25 million cubic metres. That is a large threshold about which we argued in this committee. Is there a possibility that level will be reduced as with the opening up of the electricity market? Will the Minister tell us more about the National Oil Reserves Agency? Who are its members and what is its remit? As regards the £120 million equity injection into Bord na Móna, we heard about shortly after the 1992 general election, yet the money has not been paid. I believe it was a wrong decision. Will the Minister give us more information on what is holding up the payment? Is there a possibility that the Commission, which is considering it at present, will reject this proposal? Is the Department finding the Commission's attitude to be opposed to this move? There is no information on what has happened since 1992 as regards wind, wave or hydro power. How much progress has been made?
With agreement, I suggest we give Deputy Dukes and Deputy Treacy five minutes each in which to question the Minister after which we will deal with individual subheads.
I moved the adjournment of the debate on the Transport (Dublin Light Rail) Bill, 1996, in the Dáil so I must go back to continue it. I may not be present when the Minister replies.
I have no problem if both Deputies agree to allow the Minister to reply now. Deputy Molloy asked a number of important questions; he obviously did his homework. I am trying to facilitate everyone. We will go though the various subheads. Is the Minister in a position to reply to the main questions asked by Deputies Brennan and Molloy, the main Opposition spokespersons?
I do not want to be awkward and I appreciate Deputy Molloy's point. The Order of Business is at 4.20 p.m. and assuming the two Opposition parities carry on as usual, the debate on the Bill will not resume until 4.30 p.m.
I will ask the Minister to reply to the questions.
If I do not answer any of the questions put to me by Deputy Molloy, I will answer them in writing over the coming week so that he will have the necessary information. Obviously we are concerned about the dispute at Aer Lingus. The company has come through a very difficult time and it has improved its position greatly due to the stability of industrial relations. There has been a huge growth in business and I am concerned that any escalation of industrial activity will have a huge impact on the company and will inconvenience customers, particularly during the summer months.
The worldwide partnership agreement with Delta is something which I fully endorsed and helped to facilitate. This agreement helps to underpin the transatlantic operation of Aer Lingus by protecting existing jobs, attracting additional traffic and encouraging market growth. It also should help to create additional employment in Aer Lingus in the long term. I hope the procedures in place for resolving such industrial disputes will be fully exercised. I am happy the professionalism of the Labour Relations Commission is being utilised to the best possible advantage. I hope the procedures in place for resolving industrial disputes of this nature will be fully exercised. I am happy that the professionalism of the Labour Relations Commission can be utilised to the best possible advantage in this case and I look forward to an early resolution of the problem. It is not usual for a Minister to get involved in industrial disputes on an ongoing basis, but we are available to offer whatever advice and encouragement we can to ensure this matter is resolved satisfactorily. I hope that common sense will prevail and that the issue in question can be resolved quickly.
On the Telecom strategic alliance, Deputy Brennan referred to the comments made by the chairman and the chief executive in respect of their accounts. He should also note that they said the most important decision, which is of fundamental importance to the future of the company, was to conclude the strategic alliance process. Everybody involved in the telecommunications sector accepts the need for an alliance partner for Telecom Éireann. This is not simply about money. We can argue about the value of the company but I do not accept Deputy Brennan's principle to adjudicate on its value.
There is a consensus by everybody who understands the changing world of telecommunications that the proposed strategic alliance is about helping Telecom Éireann transform itself into a strong competitive company. This is why we have opted for a trade partner with the know-how and track record in this area. Finance alone has never been the prime consideration. The principal consideration is to align Telecom Éireann, give it access to a broad range of modern telecommunications services, ensure it has access to that network and to the professionalism, skills and human resources it currently does not hold.
That process is under way. I have outlined the current stage. There are two strong bidders in contention, the negotiations and discussions are ongoing and we are now in detailed negotiations. We received preliminary bids for up to 35 per cent of the company. It is not the case that a company will put its best foot forward, In any bidding, it will not give us what it considers to be the value of the company on the first offering. The negotiations in respect of the valuation on the company is only a small element.
In respect of the proposal for a second terminal at Dublin Airport, I asked Aer Rianta for an initial response. I received this and it is currently being studied in the Department; I have not yet seen it. Aer Rianta has already informed Fingal County Council that it will be lodging an objection to the proposal on the grounds that it will interfere with the orderly planned development and the operational efficiency of Dublin Airport. As the airport authority, Aer Rianta has integrated long-term plans already in place for the future development of the airport. I will be considering my position on the proposal in the next few weeks, taking into account the broader interest of air transport policy, aviation and the economy generally. The proposal should and must get careful consideration and it would be premature for me to take up a position either way until all the implications have been fully assessed.
There is no basis for Deputy Brennan's assertion that there will be a massive increase in electricity prices. Large consumers can buy electricity under the directive from either new generating capacity in Ireland or import it. New generation capacity will take a significant period time to put in place. Imported electricity is limited to Northern Ireland where at present, electricity prices are greater. Therefore, the likelihood of the importation of more expensive electricity does not apply. In effect, we are liberalising the market. If one accepts the line put forward by Deputy Brennan, large consumers should not have third party access. We believe it is necessary for them to have the opportunity to purchase electricity other than from the existing monopoly.
I do not know what will be the outcome of the meeting at Council level in June. Intensive negotiations are taking place, particularly between France and Germany. It is an item on the agenda for a meeting today between the two heads of State. This issue is currently being debated at working group level. My officials have taken a keen interest in the matter. We have been actively involved, vigorously pursued the stance we have taken and making every possible attempt to get the message across that Ireland has problems peculiar to it alone. There is a necessity to recognise that we have a small and isolated system and that we need to have those reservations addressed in the directive.
There is a strong pro-liberalisation lobby group in the European Union and a huge divergence between the points of views of France and Germany. Over the next week, we will have a better idea of the likely outcome. We will keep the opening of the market at as low a level as possible. We are also anxious that rather than having a progressive opening of the market, there should be a prudent and careful management of any liberalisation and that the impact of the first round opening will be assessed before we continue to liberalise that sector.
The cost and competitiveness review is expensive and everybody involved in the process is aware of that. In entering the process, it was imperative that the ESB reduced its cost base. Difficult, complex and sensitive issues were debated and negotiated over a protracted and prolonged period of time. We eventually reached a conclusion and it is crucial and vital for the future of the ESB and its employees that the CCR is implemented in full.
The Government agreed to a modest price increase which is conditional on the full implementation of the CCR and a realisation on the full savings of £58 million per annum. We have put in place a monitoring procedure and there will be no price increase next year or the year after that if the CCR savings are not fully achieved and realised.
We introduced legislation last year to allow for a £120 million equity injection into Bord na Móna and I expect we will be able to forward the first tranche later this year. The Government has made provision for it and it is now only a question of getting European Union approval. It was debated under competition and State aid rules. The Union has come back to us on two occasions looking for additional information. We have at this stage provided all the information sought and I expect to hear a decision on it in the near future which will allow the Government to implement its policy in this area.
In regard to Deputy Brennan's criticisms of the legislation we are introducing on public transport in Dublin, the statutory procedures proposed in the Light Rail Bill are almost exactly the same as those used for major roads and motorways. These have proved successful in the case of roads and have not been overly bureaucratic. There is no distinct difference between this legislation and that governing those other developments. In addition to the statutory process, there is the ongoing non-statutory public consultation process. It has engaged numerous groups and individuals around Dublin.
I monitored it closely and the process is genuinely open and responsive to legitimate concerns of and demands from community groups and individuals. I have taken an active interest in this matter and as recently as yesterday I met the Dublin Chamber of Commerce. I find that when there are exchanges of views and people are presented with all the facts and details, they take a different outlook on the light rail system. My job and the role of the Department and the project team is to minimise the level of disruption and inconvenience during the construction phase of the system. I am satisfied this is being done through the public consultation process.
One of the difficulties is that many good viewpoints are coming forward. For example, Deputy Brennan and others said the system should link up with the DART system. This is desirable but the difficulty is that limited resources are available. The money available to me is the same amount, in real money terms, which was available three years ago. We are working within those constraints and I am satisfied that, after the public consultation process concludes, the scheme will meet the public's approval and can be implemented. I hope it can be implemented on time. As I stated, construction is due to start next year.
In respect of Ballymun, I am not aware of any moneys being switched. The moneys available for the light rail system were clearly defined and made public a number of years ago. The same amount of money is still available and we are still committed -and will be committed — to the construction of the Ballymun line. The last Government and the current administration had to establish priorities in terms of the timescale for implementation of the Dundrum, Tallaght and Ballymun lines and both Governments favoured the Tallaght and Dundrum lines as the initial phase, to be followed immediately by the Ballymun line. Our advice is that it is not technically feasible or practically possible to construct the line to Ballymun at the same time as the north-south port tunnel is being constructed. This Government, as was the previous Government, is completely committed to the provision of the Ballymun line in due course.
Deputy Brennan and Deputy Molloy raised CIE cost reductions. CIE is carrying out an extensive review of its cost base with the assistance of independent consultants. This will take a number of months to complete and the management envisages at this early stage that the minimum reductions it will require are in the order of £35 million per annum. It is for the consultants and the ongoing project teams to reach conclusions on that matter but CIE's objective is to improve its financial position through a planned and agreed programme of cost reductions. It is for the executive and board of CIE to do this in consultation with the unions in the company.
I set out an overall strategic framework, which is that the company should have an overall strategic objective, be commercially oriented, customer focused and cost effective. Public transport contracts will transform CIE's financial relationship with the State. It will have a clear investment programme agreed in advance with the Department of Transport, Energy and Communications.
The subvention to the bus company is low by European Union standards. Dublin Bus meets up to 95 per cent of its costs from fares revenue whereas public transport services in other European cities meet less than 50 per cent. The UK is the only exception to this general trend. The Minister of State, Deputy Stagg, is carrying out a review of bus licensing regulations policy. He has held a series of consultative meetings with the main interest groups involved. He may wish to elaborate on that matter.
Deputy Molloy asked about the option of an underground light rail system in the city.
I am sorry to interrupt, but it is 4.15 p.m. and the Minister wishes to leave shortly. As Deputy Molloy is not present, it would be more appropriate if the Minister replied to the questions in writing and the time remaining were used to deal with the subheads. I thank the Minister for his detailed replies to Deputy Brennan's queries.
Regarding the strategic alliance, the Minister said it was not just about money and that Telecom Éireann would in effect get technological benefits. Is the Minister totally convinced that the Dutch, Swedish and Danish telecom operations will bring technology to Telecom Éireann which it does not have already? I understand Telecom Éireann's technology is world class. Enough money was invested in it to make it so. With no disrespect to the companies, if the Minister were talking about British Telecom or other large world players, I would not quibble with him. However, the Minister is talking about players which are reputable but regional. I do not know what TeleDenmark and the Dutch and Swedish telecommunications companies can bring to Telecom Éireann that it does not have already. Is the Minister totally convinced they can provide additional access or technology?
There is no doubt Telecom Éireann has made huge strides and advances in recent years. However, the company says — I am not advocating policy for it — it is a matter of priority for it to gain access to modern telecommunications services. Technology waits for nobody. By the time Telecom Éireann was in a position to fund new infrastructure and put it in place, its situation would have disimproved considerably. The Deputy mentioned KPN Telia and Unisource. This is an extremely successful group which has links with AT&T.
They are only marketing links.
It is recognised as one of the most successful operators in the telecommunications area. It is an international player.
It is not proposed that Unisource will hold any shares in Telecom Éireann. My information is that the shares will be held directly by the Dutch national telecommunications company and the Swedish telecommunications company, not by Unisource. What have they got to give Telecom Éireann?
I hate to interrupt this cosy chat but the Chairman has been extremely indulgent. He has bent the rules considerably for Deputy Brennan.
I think so. I must draw it to a conclusion.
Will the rest of the members be able to contribute after the Minister leaves?
I have allowed the meeting to be dominated by two Members. Other Members may wish to put questions.
I do not wish to be disruptive but will the rest of the members outside the cosy cartel be able to address some of the issues the Minister talked about after he leaves?
Yes. I am trying to terminate the discussion so we can move on to that. The next time the committee meets I will strictly adhere to the time schedule, as I normally do. This will apply to Ministers, Ministers of State and members. I thank the Minister.
I will come back to this subject.
The Deputy can refer to it under the subheads. It is not fair to the other members to continue this discussion.
I am not sure there is much point detaining the Minister but I must congratulate him on his patience. Deputy Brennan said Telecom Éireann has world class technology, which is undoubtedly the case, but he is casting doubt on the possibility that the Swedish telecom operation, which involves a larger population, a much bigger land area and a much more difficult terrain, has technology at the same level as Telecom Éireann. He mentioned that the Dutch telecom system, which involves a much denser population spread, a much higher level of income and a far denser level of telecommunications activity, may not have technology at the level of Telecom Éireann. Denmark has a larger population and a more difficult terrain in some respects than Ireland. It is off putting to listen to this type of claptrap from Deputy Brennan when the rest of us are not getting an opportunity to contribute to the debate.
I have never heard a more fanciful presentation of the Telecom case with Deputy Brennan — based on how he reads the books of Telecom — estimating profits that he says could vary between £200 and £400 million and then going on to estimate the value of Telecom at £2 billion and giving us his wisdom about that. That is not a debate on the Estimates.
There are things I want to say about some of the areas the Minister has talked about but if it is your ruling that we should let the Minister go, and continue the debate afterwards I am happy to do so. It is a pity that we wasted good debating time on that kind of rubbish.
I only have control over the business of this meeting. I cannot have control over the business of cabinet meetings.
Before the Minister leaves, Deputy Dukes has raised a question about what my colleague, Deputy Brennan said.
A point of order. I understood you were going to leave it open to other members of the committee who have not yet spoken. If the Minister is prepared to stay, I would like to contribute to some of the other parts of the debate.
It is not a point of order. The Minister volunteered to stay on for a few minutes to allow the two members who had indicated to ask questions. Please continue, Deputy Treacy.
Having listened to what the Minister, Deputy Lowry, said about Telecom, we have to raise a major question. In his contribution pertaining to the performance of Telecom Éireann, he has not referred to the reported profits of the company. In contrast, when it came to An Post he put a strong emphasis on its profits. What is the Ministers position on the disposal of part of the assets of Telecom Éireann which is a vital national asset? What does he think he will get for it and when does he think he will dispose of it?
On numerous occasions in the Dáil during the course of Question Time, I outlined the progress made in this process. The Deputy knows well that this is a very sensitive and delicate process. The future of Telecom Éireann which is a major asset and a vital national interest is what we are talking about. I wanted to ensure that Telecom Éireann is well placed through an alliance with a partner to give the best possible telecommunication services to Ireland and will enable our business to be competitive so that we can create additional wealth and jobs. That is absolutely vital for Telecom Éireann and this country.
I outlined the various phases and the stage we are at. I am happy that progress is well under way; we are down to the detailed negotiations and discussions. The Deputy surely does not expect me to discuss and give him information in public about what stage we are at and what we are likely to achieve? I will not negotiate publicly with the two companies involved but I can assure the Deputy that there will not be a distress sale of any portion of Telecom Éireann. We will bring forward a good business plan which will point to the future direction of Telecom Éireann and ensure its continued success in a very competitive marketplace, a marketplace which is opening up gradually and which will be engulfed in competition in the very near future.
I am reassured by what the Minister has said. There clearly is an agenda on the Fianna Fáil side to gut Telecom Éireann. The Fianna Fáil/PD alliance is quite openly embracing a basic agenda to bash the semi-State sector.
That is leftist propaganda.
I welcome the Ministers programme of DART refurbishment and the expansion on the northside of Dublin of the development of Luas. Like many northside Dublin TD's, I feel the northside was effectively shafted again but I accept the Ministers reassurances about that. The Minister and the Minister of State, Deputy Stagg are right to proceed with speed and urgency to build the Luas. I welcome the Minister's Bill but there is a strong feeling in the northwest of the city where traffic is in crisis that some major public transport initiative is essential before phase 3 of DTI. Is it possible as part of DART refurbishment to bring forward the Drumcondra line or to work with Aer Rianta who came up with an interesting plan to bring a line from the airport complex to the northern rail line? It could be the solution for the northwest of the city. I applaud and congratulate the Minister on the progress that has been made. However, we still feel in the northwest of the city is not being catered for.
I would like the Minister to give more details on the proposed new peat fired electricity generating station in the Midlands. When does the Minister expect to be in a position to invite bids for participation in the project? The European Commission has undertaken to provide £21 million and the Minister will look for equity and participation to the tune of £69 million to cover the rest of the project. That power station will use upwards of one million tonnes of peat per annum. The Minister mentioned waste to energy projects. Will the Minister or Minister of State fill us in on any further thinking there may be in relation to waste to energy projects, the conversion of some portion of both domestic and industrial waste into fuel and the place of incineration in the process? I am not so interested in the energy side of that equation although we have at look at it in a comprehensive way. We are faced with the problem of disposal of a far greater quantity of animal waste than before. None of the technologies we have will allow us to deal with that problem quickly and if we do not other parts of our industry including our beef industry in particular will have a very serious problem. Is any consideration being given in an integrated way to the balance between waste to energy, fuel from waste and incineration?
What stage has been reached on the review of licensing private bus services? My constituents, and other people around the country, are of the view that Bus Éireann is providing an inadequate service. In some parts of the country, including my own constituency, it frequently provides an inadequate service with very unreliable, outdated equipment, whereas there are a number of private operators who, it seems, under the right conditions would be prepared to provide a comprehensive service.
It is unhealthy that private operators can operate regular scheduled services about which everybody knows but which are not properly licensed because there is no place in our system to license them properly. They provide a service which cannot be matched by Bus Éireann but which is disrupted every so often because there is another rash of implementation of the legislation as it stands. That is not healthy for anybody. It is not healthy for the customers, it is not healthy for the operators of a service for which there is clearly a need and a market, and it is not particularly healthy for Bus Éireann.
I am pleased that attention is being paid to the provision of new rolling stock and the opening of new stations for the DART service; this is undoubtedly good news for those who have the good fortune to live on the eastern corridor and who do not have to rely on the umpteen promises they have heard over the years from various people including Deputy Brennan that the Harcourt Street would be reopened.
It is coming.
Not in its original shape. That man promised that so often he is ashamed to say anything about it now. Does the Minister intend to give similar attention to a new service opened by the Minister's predecessor, Deputy Cowen, known as the Arrow? This service has made a reasonably good beginning. There is a substantial case for extending the Arrow service at least as far as Portarlington. I understand that this has already been done to the extent that one Arrow train runs as far as Portarlington in the morning and in the evening.
I am sorry to interrupt, but you are being very parochial.
I am not being parochial. Portarlington is in a neighbouring constituency.
If you want to continue, you will have to get your replies by post. I have sat here very patiently.
Chairman, if you interrupt me like that there is no point in continuing this discussion. For the first time in my life, Sir, you have brought me to the point of believing that there is no point in participating in this discussion. I do not intend to bother you any more.
I want to explain that there is no provision in Standing Orders for a contribution of the nature you are making.
I have a question in relation to biomass, energy from waste. We were very disappointed when biomass was withdrawn from the programme under the last tranche of aid although heat and power, wind, LFG and hydropower were included. In regard to the competition at the end of October, if we do not get aid from energy from waste in my constituency, we will be in a very serious position in regard to the agri-industry. I appeal to the Minister to give very serious consideration to Monaghan in that competition.
The Minister of State, Deputy Stagg, will respond in respect of the biomass project to which Deputy Leonard referred. He has specific responsibility for that area and for the Irish Aviation Authority. A number of questions relate to his specific areas of responsibility. I am responding to empty seats in regard to the other questions asked.
I always ask Ministers not to reply to members' questions when they are not here. If you wish to correspond with those Members I would appreciate it.
There are a number of outstanding questions to be answered. I will put the details in writing and correspond directly with the Deputies concerned.
Members put a number of questions which referred to my brief. Some of the Members who put the questions have left. Points have been made which will not be answered on the record if we simply send written replies to people. For example, the point was made that Bus Éireann give a rotten service.
I take your point, Minister, and if there are points which you feel need to be corrected, please feel free to do so.
Thank you. The Irish Aviation Authority was set up in 1993 and has the power to make regulations. Deputy Brennan questioned me on the issue today. When it makes an Order under the Act, this Order is laid before the Dáil for 21 days and can be rescinded by the Dáil if required. It made such an Order which was referred to by Deputy Molloy.
The Irish Aviation Authority has major potential for further commercial contribution to the Exchequer. Are there any proposals for that at the moment? Will the Irish Aviation Authority be consulted about the proposal at Huntstown?
It will be automatically consulted about any proposals which concern air safety and required to give an opinion to the Minister and any other authorities concerned, such as Aer Rianta. The Authority has been very successful in a very short time in establishing and developing a commercial niche for itself; that is its role. At the same time we need to ensure that costs are not created for the consumer in the long term, that their charges are not simply a system of causing extra cost to consumers that are not required by service. Will I move on to other questions, Chairman?
Please do. I will be terminating the meeting not later than 4.55 p.m.
Chairman, may I ask a brief question on aviation?
In trying to facilitate Members the arrangement as per Standing Orders has gone astray. I was trying to bring the meeting back on the rails. The Minister will use the remainder of the time to answer questions which have already been put and the business will be concluded at 4.55 p.m.
I will be quite brief; I do not need to give long answers.
Will we go through the subheads?
We cannot do so within the time limit. The programme was circulated, agreed by those responsible for doing so and by the meeting, but if people want to ask questions of a general nature I will not have the time to deal with the individual subheads.
Would it be possible for us to adjourn until another day to conclude business?
That is a matter for the committee, but generally speaking the time allocated was used. The Minister overran his time, as did the spokespersons. I will terminate this meeting at 4.55 p.m.
The legislation governing control of bus traffic has not been changed since 1932. All my predecessors have shied away from it. Deputy Brennan had a Bill ready to go to the House and it did not go beyond that stage.
It was disrupted by Government; it made provision for competition and the Minister's party does not believe in competition.
It was ready well in time but somebody else might have decided it would not be introduced. All my predecessors have shied away from this area, but I intend to grasp it with both hands and do something about it.
There is a crazy situation at present as the legislation, which dates from 1932, is inoperable, redundant and defunct. There is total deregulation now and operators can operate with impunity anywhere they like because the law is ineffective in dealing with them. I intend to bring forward a Bill as early as possible following consultation, which we have practically completed. We will deal with that issue once and for all. That Bill will allow for competition and will have an eye to what the Maastricht Treaty says about competition.
I am from a rural area which has an excellent service provided by Bus Éireann. Excellent services are also provided in rural areas by private operators cheek by jowl with Bus Éireann. I do not want it left on the record that Bus Éireann provides a rotten service. It provides an excellent service and it does a good job. Bus Éireann is not playing on a level playing field with its competitors because it must pay union rates to its employees and must have proper safety precautions which are not imposed on the private sector.
That is because Bus Éireann is competing in rural areas and is doing better there than in the city where there is no competition .
Exactly. I take the Deputy's point, and that is why I say we will allow for competition in the new Bill.
To move on quickly to third party access for gas, the level allowed is 75 per cent of the gas market and I do not propose to change that. The National Oil Reserves Agency is in charge of ensuring that we have 90 days of essential stocks of oil.
Deputy Leonard and others raised the issue of renewables. Some Deputy said that nothing has happened with regard to renewables since 1990. This is untrue. Much has happened during my tenure of office. The first round of renewables which occurred in early 1995 saw a huge explosion in the demand from the market to get involved in the production of renewable energy. The Department set a target of 75 megawatts and received applications for 426 megawatts of energy across the various modes. Biomass was not successful in that round because there were grants available but the people who won the competition said they did not need grants to compete in the competition. The non-grant applicants, 111 megawatts of them, were granted contracts. They are seeking planning permission and all that is required there. It was a successful round.
Arising from the fact that biomass did not succeed in that round, we brought in a special AER 2 for a 30-megawatt power station from biomass and animal waste and a whole range of material which is loosely called biomass. The technical call has been completed on that. Much interest has been shown in it and there have been many applications.
I cannot in any way favour any applicant, as I am sure the Deputy will appreciate, I understand the case he has made about the particular area. To deal with the Deputy Duke's point under that heading, incineration is how we create energy from turf, coal, oil and gas. Some people have a psychological hang-up about incinerating waste and converting it to energy. I have absolutely no such hang-up. If it is all right to incinerate coal, which is a very dirty fuel, and turf, which is not that clean either, it is certainly all right with the new technology to incinerate offal or biomass if it were to be turned into energy. Incineration is how we convert these materials to energy and I have no problem with that. I am not afflicted by the hang-up that incineration is bad and everything else is good.
The issue of animal waste is a something which the Department of Agriculture, Food and Forestry and my Department is examining to see how offal, which is creating a problem for the beef industry, might be dealt with in the energy context. It should be said that bone meal and meat meal are not fuels; it would require fuel to burn it. There are people who are interested in using it in waste-to-energy outfits.
Deputy Leonard made the point that we had excluded biomass in the last round. This is simply not true. What we have said in the strategy——
It was not successful.
No, but we have the proposed 30-megawatt biomass power station and we are waiting until that competition is completed. There will be further biomass rounds every three years thereafter because one would need that sort of timescale for people to prepare proposals for biomass due to their technical nature.
It is a serious matter for the Department of the Environment with regard to our water sources, etc., on which we are spending much money. It is a serious matter also for the Department of Agriculture, Food and Forestry, not only in terms of increasing the production of mushrooms but maintaining the present level. Last week a contractor was told not to proceed with any more landfill. I have had a dozen telephone calls asking what is to be done with this waste. It is a critical matter of 100,000 tonnes of waste mushroom compost per year.
I understand there are proposals for dealing with such waste within the competition. I cannot even wish them well unless I wish all the competitors well at the same time. I will not be judging the competition and I do not want to be seen to be biased in favour of any competitor. An independent assessor is being appointed to judge the competition. Best of luck to the winner is all I can say.
I understood the Minister to say that the new Bill would provide for bus competition. Will there be provision for bus competition in Dublin city?
We have not examined the matter in that detail yet, but I am conscious of the amount of public investment in the public transport system in Dublin, in bus corridors, light rail and new quality buses. I am not sure it would be wise to have competition within that area of intensive investment. Does the Deputy see my point?
I do, but I must press the matter. Is it Government policy that there should not be competition in Dublin city bus services when there will be competition, for example, in the area of electricity?
To say it is Government policy would be to overstate the case. We are looking at that at present but I am looking at it with a somewhat jaundiced eye. Any proposals must be cleared by Government before they come before the Dáil.
I do not want to put words in the Minister's mouth but what I hear him saying is that there is no likelihood that this Government will have a policy of introducing competition to Dublin city bus services, that he is planning to maintain the monopoly.
I would not like that to be on the record because it is something which is being considered. The only reason I am not definitely saying there will be competition is that I must take into account the effects of the high level of public investment which is being put into the area now. Whether or not that infrastructure should be handed over to the private sector is a matter which should be considered.
It sounds like good old fashioned Labour Party politics.
I do not mind a joke here and there, but I ask Members to keep party politics out of the debate.
I would be a very good old fashioned Labour Party politician and I make no apology about it to anyone.
Can I ask the Minister of State——
He is here as Minister of State. He is not here representing the Labour Party or any other party.
——if the Minister for Transport, Energy and Communications, shares his view on Dublin city transport and its monopoly?
The Minister, Deputy Lowry, and I will be at one on this issue and any other issue in our Department.
They will be, but they are not at present.
The Deputy should accept what I am saying.
It is not going to happen. I hear what the Minister of State is saying.
On subhead A7, I see that the consultancy budget is down 52 per cent. That obviously does not include the £3.5 million paid to the Telecom Éireann consultants. If it were included, it would be £4.5 million.
It is a separate subhead.
Yes, but let us be clear about it just in case the Estimates give the wrong impression. The consultancy budget increased by over 30 per cent.
That is not included in this because it is a capital charge.
It is in the current Estimates. The fees for consultancy services have increased from £2.4 million to £4.4 million. That is a lot of consultancies in one year.
We need many consultancies because it is a technical Department which requires outside assistance on a regular basis.
The Minister is paying £3.3 million to pick one winner from a two horse race in Telecom Éireann. Nice work if you can get it.
We can have only one winner no matter how many competitors there are.
The Minister paid £3.3 million to pick the winner.
Two winners are not allowed.
It is disgraceful to pay £3.3 million to a firm of consultants to pick one winner.
I am advised it is low by international standards for a similar competition.
How many tendered for it?
Four major companies.
It is a disgracefully high figure.
It went to tender first; we did not pick the firm out of the sky.
I would have done it for half the price.
I am sorry I missed so much of the meeting because I was anxious to ask the Minister, Deputy Lowry, a question.
He waited as long as he could.
My question relates to the air crash at Tusker Rock 28 years ago. I am not sure if the Minister is aware of the details. I tabled a question to the Taoiseach who decided it was not relevant to his office and transferred it to the Minister's office.
That subject is not relevant to the discussion because we have been reading about it for the past 20 years.
It is. The Minister of State at the Department of Health, Deputy O'Shea, is anxious it should be raised here.
There are only two minutes left.
You may have only two minutes but I have been waiting for 28 years and I insist I raise it today.
In a reply to the Deputy's parliamentary question we stated that if anybody produced new evidence the inquiry could be reopened.
It disgusted me when the Minister said he did not have any new information. I was given information from several sources. I expect the Department to find time to investigate the information in the public domain. Perhaps the Department does not want to ruffle feathers. Some 61 families are anxious to find out what happened.
That is a parochial matter.
It is anything but parochial.
It is not relevant to our discussion.
It stretches from Cork to Dublin and to Wexford.
Has the Minister got a reply for the Deputy?
I have. The Deputy's party was in Government for most of those 28 years.
That is a poor response.
It is not my full response.
I hope not.
If the Deputy has any new evidence, he should make it available to me and we will investigate it. The Department takes a serious view of air safety and the proper investigation of any air accidents. I am satisfied it carried out a proper and thorough investigation of this accident.
We have reached the time agreed by Members to conclude. I thank the Minister and Ministers of State for attending.
I am being guillotined.
You were missing for 99 per cent of the meeting.
This is a cover up by the Department. If I can get new information, I am sure the Department can do the same with its plethora of people.
Can the Deputy give it to me immediately?
I can give it to the Minister any time.
Will the Deputy give the Minister a lead on this issue?
I would give him anything if he did something for me.
I resent that the Deputy came in at the end of the meeting and tried to raise this matter, which has been greeted with enthusiasm. We will meet tomorrow to consider the Estimates for the Department of Agriculture, Food and Forestry. I hope it will not be as lively as it was today. I thank the Minister and his officials for attending and the staff of the House.
The Select Committee adjourned at 5 p.m.