The purpose of today's meeting is to consider the Supplementary Estimate for the Office of the Minister for Transport, Vote 32. I welcome the Minister for Transport and his officials to the committee.
Vote 32 — Department of Transport (Supplementary).
This is a technical Supplementary Estimate of €1,000. The gross requirement of the Supplementary Estimate is €36.275 million and this figure is offset by savings of €36.274 million, leaving a net requirement of €1,000. The funding is required for the following key areas: taxi regulation, digital tachograph, the light rail project, payments to the Irish Aviation Authority, miscellaneous aviation services, subscriptions to international organisations and the National Safety Council.
There are varying amounts involved, the largest being that for taxi regulation this year. An amount of €1.5 million was originally provided for in 2004. However, a total of 1,938 applications have been received by ADM Limited under the taxi hardship payments scheme. The total cost of the scheme, coupled with the expenses arising from the establishment, staffing and running of the Commission for Taxi Regulation in 2004 and the expenses of the Advisory Council to the Commission for Taxi Regulation this year, will be just over €20 million, giving rise to a requirement for additional funding of €18.63 million. Colleagues will be aware of the other subheads.
This year my Department requires a net technical Supplementary Estimate of €1,000. This has arisen because of a requirement to re-allocate funding within my Department's Vote. As the amounts being re-allocated in some instances could be considered large in relation to the original provision in the subheads, best practice in public financial procedures recommends that a technical Supplementary Estimate be sought. Where the transfer is not excessive relative to the original provision then virement is the mechanism used.
This is also the first year where the provisions of the capital envelope arrangements allow for the carry-over of unspent capital sums into the following year. My Department has already informed the Department of Finance that the carry-over sum involved is €42.7 million. I am looking closely at expenditure demands for 2005, at the size of the investment programme and the need to maintain flexibility. Funds are being carried forward from the roads subhead and I have the flexibility to use these in the roads, public transport and aviation areas in 2005. Based on projections for expenditure and progress on projects, I shortly will be making proposals on the allocation of this carry-over.
I am pleased to have the opportunity to discuss these items and explain the requirement to you. On subhead B4, taxi regulation, the Taxi Hardship Panel was established by the Government in February 2002 on the basis that certain taxi licence holders suffered extreme personal financial hardship following the November 2000 taxi liberalisation changes, which were not fully addressed by the mitigation measures such as the refund of parts of certain taxi licence fees and capital allowance provisions in the Finance Act 2001.
In response to advertisements, which were placed in the national newspapers inviting submissions by 19 April 2002, in excess of 2,000 submissions were received by the panel. To progress the Taxi Hardship Panel recommendations in advance of the formal establishment of a proposed Commission for Taxi Regulation, Area Development Management Limited, ADM Limited, was engaged to administer and manage the taxi hardship payments scheme.
While an amount of €1.5 million was originally provided for in 2004, a total of 1,938 applications have been received by ADM Limited under the taxi hardship payments scheme. The total cost of the scheme, coupled with the expenses arising from the establishment, staffing and running of the Commission for Taxi Regulation in 2004 and the expenses of the Advisory Council to the Commission for Taxi Regulation this year, will be just over €20 million, giving rise to a requirement for additional funding of €18.63 million.
On subhead B4, digital tachograph, the introduction of digital tachograph technology to replace the existing analogue recording devices in lorries and buses will soon become mandatory within the European Community. Tachographs are instruments fitted in the cab of trucks and buses to record the driving times, breaks and rest periods of individual drivers. Smart cards will be used to record and download data from the digital tachographs. The opportunity to progress the development of these cards arose in 2004. The cost in 2004 will be €1 million, while the figure for the overall project is €3.5 million over the next five years.
On subhead C3, the light rail project, the Luas green line commenced operations at the end of June 2004 and the red line commenced operations on 28 September 2004. The Railway Procurement Agency, RPA, have given assurances that the capital cost of Luas will be completed within the €691 million budget and risk provision of €84 million, as notified to the Government in December 2002.
There are two aspects to the additional funding requirement under this heading. First, an amount of €7 million was originally allocated towards the costs of mobilisation in 2004. The figures were based on costs estimated in 2002. Mobilisation costs represent once-off pre-operational costs and as such will not arise again and include costs for the development and testing of the Luas system.
These 2002 estimates of cost needed to be adjusted to take account of significant increases in world insurance rates for train systems. Also, tender prices received for necessary maintenance operations were greater than anticipated and higher than anticipated costs were also incurred because services did not start up sooner.
Specifically, the shortfall arising in 2004 in respect of mobilisation can be accounted for under the following headings: increased cost for infrastructure and vehicle maintenance contracts; increases in operator mobilisation, energy requirements and insurance cost; and costs related to extended reliability support for trams.
Second, the Railway Procurement Agency has informed me that it will have an operating deficit of €3.285 million this year. It was always envisaged that there would be some operational deficit in the early period of Luas operations pending a full ramp-up of the system and its customer base. Furthermore, earlier cost estimates had to be revised to take account of maintenance contract costs for trams, infrastructure and ticket machines having greatly exceeded the original estimates and insurance costs more than doubling. Based on current projections, break-even on operating costs should be substantially achieved by the RPA by 2006 and fully realised by 2007.
On subhead D3, payments to the Irish Aviation Authority, the IAA provides air traffic control and communications services to all flights passing through sovereign and international airspace, which it administers on the North Atlantic. The IAA recoups its costs by levying a charge on such flights for the services it provides. The costs of aeronautical communications services and air navigation services are reimbursed by my Department. The additional funding requirement in 2004 has arisen as a result of delayed submission of claims in respect of some 2003 costs.
The reason for the requirement under subhead D4, miscellaneous aviation services, is that the costs associated with the restructuring of Aer Rianta amounted to €1.841 million, which leaves my Department with an additional requirement of €1.475 million this year.
The additional funds required under subhead E1, subscriptions to international organisations, relate to Eurocontrol, which is mainly involved in co-ordinating planning and research in the area of air traffic control, and in expanding air traffic control capacity in its member states. It is also involved in collecting route charges, on behalf of its members, for aircraft using member states' airspace. A further €175,000 is required to meet Ireland's total contribution of €3.9 million to Eurocontrol in 2004.
On subhead E3, National Safety Council, regulations under the EU Harmonisation of Units of Measurement Directive, inter alia, require the phasing out of imperial units of measurement for speed limits on traffic signs. The changeover date in Ireland will be 20 January 2005. The National Safety Council is currently finalising a public information and awareness campaign, which in turn will be supported by a PR campaign. The additional €1.045 million sought is being used to fund this campaign.
I knew for more than a week there would be a Supplementary Estimate but I did not get notice of the detail and the fairly significant re-allocations until my office received an email at 12.30 p.m. As I was out of the office, I received it only 15 minutes ago. It is impossible to absorb this kind of information in 15 minutes. This keeps happening. That kind of notice is an insult to the Opposition and to the public who we are supposed to represent. Our one important function as Opposition is to approve the spending of taxpayers' money. When it is not spent or spent in a different way, we have a responsibility to account for that. It is just not right to give us such short notice.
Given that I had 15 minutes to look at it, the Supplementary Estimate is extremely well laid out and is clear. That is much appreciated and is a great improvement on what I suffered under the Department of Health and Children. I am not complaining about the quality of what I got. It is actually very good.
As I have not had time to look at it, I have not thought out what I want to ask. Two questions, however, arise from my quick read of it, the first of which relates to taxi regulation, where a fairly significant sum of money has been allocated for the hardship fund. Is the Minister finished with the hardship fund or is it a bottomless pit?
I appreciate the Deputy's remarks. I much prefer to get documentation to all colleagues as quickly as I can. I assure the Deputy this will not happen again. We try to present information in a clear and transparent manner.
The allocation for the taxi hardship payments scheme should cover the total cost. The Deputy will be aware that in all schemes there could be the odd straggler or two but barring some unusual circumstance, the additional funding should cover the cost of the scheme.
My understanding was that the light rail project was a fixed price contract, that operating costs would be a matter for the agency which tendered for it and that there would not be an open-ended deficit every year. Will the Minister clarify the position?
The Deputy is right that there will not be an open-ended deficit every year. I have been told by the Railway Procurement Agency that the project will be completed within budget. It was expected there would be an operating deficit during the first three years but break-even point would be reached by year three. In fact, this may be achieved in year two but I will not say absolutely that it will. By year three the company should be in profit. The expectation was that there would be an operating deficit but nobody knew how big it would be. That is why provision is being made for this figure today.
My understanding was that once the contract to operate the light rail system was awarded, there would be no risk to the State and that the successful company would carry the deficit or retain the profit.
The Deputy is correct in terms of Connex but the deficit arises at the Railway Procurement Agency end in terms of its dealings with the company.
I understand now. I thank the Minister for clarifying the matter.
The committee received a number of letters from FAIR, the representative body of taxi licence holders. When will payments be made to those entitled to them?
My understanding is they will be paid before the end of the year, literally within the next couple of weeks.
I will ask the clerk to write to FAIR stating that it is expected to be paid before the end of the year.
The scheme is administered by ADM. The people concerned are in need of resources and we want to see them paid as quickly as possible.
Does the figure of €1.5 million, the additional funding requirement for the Irish Aviation Authority, arise from our contribution to the war effort in Iraq?
I would not put it that way. International agreements are in place under which charges are not levied against certain activities. The Irish Aviation Authority does not charge in respect of one such activity at Shannon Airport but sends the bill to the Department to meet some of the cost. In fact, there was a carry-over of costs from 2003 which had not been billed in time but the Deputy would not be far off the mark.
We have now completed our consideration of the Supplementary Estimate. I thank the Minister and his officials for attending today's meeting.