Select Committee on Transport and Communications díospóireacht -
Wednesday, 6 Jul 2022

Vote 29 - Environment, Climate and Communications (Supplementary)

Chairman

No apologies have been received. The purpose of this meeting is to consider the Supplementary Estimate for Public Services relating to Vote 29 - Department of the Environment, Climate and Communications. The Supplementary Estimate arises from the need to provide funding to EirGrid, the electricity and transmission system operator, to enable it to take certain emergency measures, including acquiring electricity generation plant for the purpose of ensuring and protecting security of supply. Specifically, this Supplementary Estimate relates to the reallocation of €30 million in savings from subhead D3, national broadband plan, to subhead B13, emergency generation capacity. The Supplementary Estimate is also due to be considered by the Select Committee on Environment an Climate Action next week.

I welcome the Minister for Transport, Deputy Ryan, and his officials and thank them for coming in at short notice.

Minister for Transport (Deputy Eamon Ryan)

I thank the committee for also facilitating the taking of the Supplementary Estimate at short notice.

Chairman

I still have a small bit procedure to deal with. I will read the note on privilege. Witnesses are reminded of the long-standing parliamentary practice to the effect that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory of an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable. I remind members of the constitutional requirement that they must be physically present within the confines of the Leinster House complex in order to participate in public meetings. Reluctantly, I will not permit a member to participate where he or she is not adhering to this constitutional requirement. Therefore, any member who attempts to participate from outside the precincts will be asked to leave the meeting. In this regard, I ask members participating via Microsoft Teams to confirm, prior to making their contributions, that they are on the grounds of the Leinster House campus.

If attending in the committee room, members and officials are asked to exercise personal responsibility in protecting themselves and others from the risk of contracting Covid-19.

I invite the Minister to make his opening statement on the Supplementary Estimate.

Deputy Eamon Ryan

I thank the committee for facilitating this meeting and giving me the opportunity to present details of the Supplementary Estimate. The purpose of this meeting is to seek the approval of the select committee to reallocate €30 million in savings from subhead D3, which relates to the national broadband plan, to subhead B13, which relates to emergency generation capacity.

On 7 June 2022, the Commission for Regulation of Utilities, CRU, directed EirGrid, the transmission system operator, to procure around 450 MW of additional generation capacity for winter 2023-24 through to winter 2025-26 to offset a potential capacity shortfall of electricity supply. In order for EirGrid to be able comply with this direction in the next few weeks, financial support needs to be provided by my Department to the company. Legislation to ensure that EirGrid can carry out this direction, including the legal basis for my Department providing the necessary financial support, passed all Stages in the Oireachtas yesterday and is expected to be signed into law by the President in the coming days.

The level of financial support required in 2022 to allow EirGrid place orders on the electricity generation units and ensure that they are delivered and installed in time for winter 2023-24 is estimated to be in the region of €350 million. As the final level of financial support required this year will not be fully known until later in the summer when all the contractual arrangements in place, it has been agreed that approval of the allocation of funding for the emergency generation capacity will be requested in two tranches, namely, the current allocation request of €200 million and a subsequent request later in the year for approval of the balance of the funding to be allocated. The second Supplementary Estimate to be provided later this year will take account of the final agreed figures for the purchase and installation of the equipment and any further savings arising in my Department based on projected year-end expenditure.

As I mentioned, the overall purpose of this Supplementary Estimate is to allocate €200 million to a new subhead B13, in the energy transformation programme, to fund the purchase by EirGrid of additional emergency generation capacity. The €200 million being allocated is comprised of €110 million in additional funding from the Exchequer and €90 million from a reallocation of savings within my Department. Some €30 million is being reallocated from savings on subhead D3, which is the national broadband plan, and €60 million is from forecasted capital underspend in the energy transformation programme.

My Department has agreed an updated interim remedial plan with National Broadband Ireland to take account of the knock-on effects of the Covid-19 pandemic and other delays to the programme. Under this plan, the revised target has reduced from 130,000 to 102,000 premises to be passed by the end of January 2023. This has resulted in reduced 2022 projected expenditure with a mid-term forecast of €30 million in underspending at the end of the year. It remains the ambition of the Government to roll out the national broadband plan State-led intervention as quickly as possible in all areas. To achieve this, National Broadband Ireland will continue its focus on addressing the delays which have arisen and ensuring that the build programme gets back on track.

Following the announcement by Government earlier this year of an enhanced package of measures to support the uptake of home energy upgrades, demand for the SEAI residential energy efficiency schemes has been strong, with double the number of applications seen in 2021. It is expected that the pipeline of applications will result in high levels of delivery for the remainder of the year. However, indicative mid-year results from the SEAI show a forecasted underspend at the end of the year on the one-stop shop and community energy schemes. While the targeted number of houses will be started in 2022, it is anticipated that not all of these will be completed and certified for payment this year due to supply chain constraints. It is expected that the pipeline of applications in 2022 will result in strong levels of delivery next year.

The €400 million allocated to the electricity credit included a contingency to cover the possible cost arising from growth in the number of domestic household accounts in excess of the original 2.15 million forecast. The final cost of the electricity credit was just under €380 million, leaving a saving of €20 million to be reallocated to the emergency generation capacity subhead. I am happy to take questions from the committee on this Supplementary Estimate.

Deputy Darren O'Rourke

I have a number of questions. There is something Orwellian about the term "savings" here. They are missed targets in the national broadband plan and retrofitting. We were told that carbon taxes would be ring-fenced to retrofit homes and protect people from fuel poverty. That carbon tax is being siphoned off to pay for backup electricity generated by fossil fuel. That demand is induced by data centres and Government policy. Customers, many of them living in poverty, will pay a premium for that. It is a perverse scenario I find quite incredible and is a clear indictment of a failed Government policy. It flies in the face of statements made by the most senior members of Government, including Deputy Micheál Martin himself, about the ring-fenced nature of the carbon tax.

We are dealing with a €30 million transfer. Will we have the same opportunity to deal with the €60 million for retrofitting?

Deputy Eamon Ryan

Next week.

Deputy Darren O'Rourke

I thank the Minister. Has the Minister clarity about the extra cost of a residential electricity bill on the back of legislation? The question was raised on Committee Stage. I refer to the €350 million bill. I know there were differences of opinion. The Commission for Regulation of Utilities pointed to a figure of €40 for each residential bill. Has the Minister confirmed that at this stage? Will he provide clarity about it? We will have an opportunity to come back next week to address retrofitting. I ask the Minister to address the cost per bill.

Deputy Eamon Ryan

The Deputy made a variety of points. We have been upfront and honest. National Broadband Ireland attended the committee last week to share what is actually happening. These figures are not coming as a surprise. We have been clear about the fact that, due to Covid-related complications and other challenges with the national broadband plan, the changed target should not be a surprise. The committee debated it last week. Everything is being done to address that and to get ahead of targets again.

The carbon tax is not being siphoned off. For background to this issue, in the past week, the European Council made a decision. It has to be ratified by the European Parliament but I do not expect it will be blocked. The decision is that Europe will introduce a form of carbon tax in the transport and building sector. If we are not applying our carbon tax and increasing it in the way that we have committed to, then the funds would go away. We would not have the funds for retrofitting, social welfare increases and for farming. To my mind, that completely changes the debate on carbon tax, unless we want to buck the entire European system and say we are opting out of it, which I do not think we could legally do.

Deputy Darren O'Rourke

Is this part of the Fit for 55 package and the EU's introduction of measures relating to transport and buildings?

Deputy Eamon Ryan

We have a derogation from the European Council, subject to us continuing to do what we committed to in legislation, increasing and reallocating the carbon tax the way we have. It is a broader point.

Deputy Darren O'Rourke

I presume it does not intend for us to spend the funding on fossil fuel infrastructure.

Deputy Eamon Ryan

For absolute clarity, to meet our target of 80% renewable energy, we will need about 2 GW of additional gas-fired energy generation, with a mixture of combined-cycle and open-cycle turbines, or an open-cycle aeroderivative plant in this case. That is part of the plan and we will need it. It will use less gas because it is only there for back-up, but we need it.

We will not know the exact cost to the consumer. There are all sorts of estimates, which depend on what one counts and how it is measured. We could ask what the costs would have been had our auctions been successful in the first place. This emergency generation seeks to catch up with that. There would have been an underlying cost. We would have needed this backup, but we were not able to deliver it in the auction process, so we are taking the purchase route. Whether one counts that or not, the reality is that we will not know until we purchase the equipment, agree on the installation at sites, and know the related costs. A cost of €40 was mentioned on Committee Stage. I think that will be less. It depends on the purchase price of the generation equipment and the installation price at the sites, which will then accrue.

Any figures we mentioned do not take into account the plan that we would be able to get a resale value and clawback for households and taxpayers in the event that the equipment can be sold at the end of its use in this emergency way. Other countries in Europe are going in the same direction as us, to use much renewable energy, and they will need the backup. I am convinced that there will be demand, whether in Ireland or abroad, for our state-of-the-art Rolls Royce jet engine equipment. Therefore, we will get a resale value which will lower any costs.

We do not have the figure. Anything is speculation in advance of knowing what we pay for the equipment. As soon as we have that, we will share it with the committee.

Deputy Darren O'Rourke

I take the Minister's point on moves at a European level but this seems to be a significant departure from stated Government position in relation to the ring-fenced nature of the Irish carbon tax to fund retrofitting, agricultural schemes and address fuel poverty. This funding was allocated to retrofitting and is being moved to fund emergency fossil fuel-powered electricity. Was that considered in the Departments? At what level was it considered?

Deputy Eamon Ryan

What was considered was whether we had unspent allocation that we could reallocate. The choice was whether we should take money from other budgets. It is far better to take it from unallocated funds, in this instance, the national broadband plan. Next week we will discuss the reallocation elsewhere. It was money which was going to be unspent. Far better to take it from there than from-----

Deputy Darren O'Rourke

What do the Government and the Taoiseach mean when they say "ring-fenced"?

Deputy Eamon Ryan

It is ring-fenced. Going into the budget allocation this October, I know for certain that we will have an increase in the budget available for retrofitting, coming from the revenues from carbon tax. The Department of Finance, very unusually and exceptionally - I cannot think of another example - has been willing to agree and hypothecate. I do not need to negotiate that. That is done. It is agreed.

Deputy Darren O'Rourke

In this transaction, is the Minister not taking that hypothecated, ring-fenced funding and, because it is unspent for whatever reason, moving it to somewhere entirely inappropriate for it to be spent? This move will drive people further into fuel poverty rather than protect them. They will be paying for this through taxes in the first instance, with carbon tax as part of that, and on their electricity bills at the back end. They will not have the protection of retrofitting, which it was to be ring-fenced for.

Deputy Eamon Ryan

The alternative would involve the funding being returned to the Exchequer and not spent. It is better to make sure we have back-up generation so we have the power we need to-----

Deputy Darren O'Rourke

Does the funding not roll over into next year?

Deputy Eamon Ryan

You can do a certain carryover but, in this instance, we need this generation. I would much prefer if the original auctions had delivered what was committed to. The Dáil voted 115 votes to eight in support of that strategy. I think it is the right strategy.

Deputy Darren O'Rourke

To be clear, there is a commitment. It is agreed, as I understand it, in the Government that the increases in the carbon tax would be ring-fenced for these purposes. Now we have, today and next week in this transaction, that so-called ring-fenced funding being redirected to fund-----

Deputy Eamon Ryan

I do not agree. The Deputy is hypothesising. That is not affecting the ring-fencing in the slightest. There is an underspend, be it in the national broadband plan, on the energy credit or in some retrofitting schemes. That is not undoing the ring-fencing at all. Had that been fully spent, we would not be taking it from that area.

Deputy Darren O'Rourke

Is that not exactly what it is doing? If the money is ring-fenced this year for retrofitting, not being spent, being taken and spent elsewhere, it is not the same money that was ring-fenced. The Minister said you cannot roll it over into next year.

Deputy Eamon Ryan

You could. There is some potential for carryover. That would probably take----

Deputy Darren O'Rourke

But you are not doing it anyway.

Deputy Eamon Ryan

It is an abstract argument in terms of how to define when something stops or starts being ring-fenced. One thing I know is that, come the budget process, we will get an increase in funding in the retrofitting area for the next nine years.

Deputy Darren O'Rourke

I do not think it is an abstract argument for those people paying carbon tax. The Minister knows my party's position in relation to it and criticisms of it, one of which is there are no alternatives for people paying carbon tax. Now they are told some of the carbon tax they pay is not going to retrofitting, agricultural schemes or to offset fuel poverty, but to the funding of emergency electricity generation which they will pay for, initially in carbon tax and other taxes and, at the back end, in an increase in electricity prices. It is an incredible proposition.

Deputy Eamon Ryan

My understanding of the Deputy's party's position is that it is in favour of carbon tax. Is that correct?

Deputy Darren O'Rourke

We are not opposed to the principle of it but when alternatives are there, and this is a perfect case of-----

Deputy Eamon Ryan

Now we are into semantics. Does not being opposed in principle mean being in favour of it providing public finance funding for a range of activities? Would Sinn Féin stop the implementation of the carbon tax?

Deputy Darren O'Rourke

We certainly would not do what the Minister is doing. He is coming to this committee to reallocate what were described as ring-fenced carbon taxes to deliver on retrofitting and agricultural schemes and to reduce fuel poverty, and redirect them towards funding emergency electricity that successive governments have created the demand for through the proliferation of data centres. People are being taxed on the double. This is a perfect case of the problem with this Government's and successive governments' approach to carbon tax. We fundamentally have an issue with this approach, and I am articulating it now.

Deputy Eamon Ryan

I disagree. Given that there is an underspend, it is perfectly appropriate to use it on what we need to do to help to keep the lights on. That is perfectly valid and correct. As part of our decarbonisation strategy, that is the right thing to do.

Deputy Darren O'Rourke

We are going to disagree.

Chairman

This is about €30 million going from the broadband budget into emergency electricity generation. NBI went from 130,000 expected to 102,000 at the end of January. Now it says it is the end of the year. We had NBI before us recently. Does the Minister anticipate NBI will be levied with fines at the end of this year?

Deputy Eamon Ryan

There is that potential if it does not meet its service level agreements but NBI is delivering. We are seeing increased pick-up in demand. There is real consumer interest. It has been delayed, as everyone knows. There was a problem getting contractors into the country with Covid and initial difficulties on the planning side with local authorities. In relation to getting the ability to put up poles, it took several months to iron out some of those difficulties. There is an ongoing challenge in making sure the Eir teams integrate with the NBI teams in terms of clearing difficulties. I am sure the committee had this in its discussions with NBI on ducting.

Chairman

Is the Minister happy it is back on track?

Deputy Eamon Ryan

Yes. It needs to be back on track and then accelerate further.

Chairman

There could be potential fines. The Minister is not ruling that out.

Deputy Eamon Ryan

We cannot rule that out.

Chairman

Correct me if I am wrong, but I understand that the electricity supply companies in Ireland set the price at which they charge electricity to customers based on the wholesale market price of gas in Europe. There is no built-in factor in terms of renewables. An electricity supplier may have some of what is being charged to customers generated by renewables but what is charged is based on the current European market price of gas in Europe. Is that correct?

Deputy Eamon Ryan

Their prices are typically set by wholesale market prices in Ireland. It is the single electricity market. That is set by the price of gas because gas counts for-----

Chairman

Is that a European price?

Deputy Eamon Ryan

It is a UK price that typically they purchase off the spot market. Some businesses might enter into separate forward contracts with a particular-----

Chairman

Am I correct in saying that what they charge the end consumer is based on the price of gas? If there is a renewable element to what they are charging-----

Deputy Eamon Ryan

Typically, the price of gas sets the price of electricity.

Chairman

If there are electricity suppliers that have an element of renewables, which may cost less to generate, surely that should be factored into the price charged to the end consumer rather than having a false narrative in terms of benchmarking that price, which may not reflect the reality of how the electricity is being generated. There may be a renewable element to the electricity generation. It is an issue that has come up. Has the Minister considered it? It may be worth examining it in the context of reducing the cost for the end consumer. It is technical in nature but, nevertheless, it may have significant import in terms of price reductions for the end consumer.

Deputy Eamon Ryan

It is a competitive market. If a supplier is able to source cheaper electricity through its supply agreements or contract arrangements, there is nothing to stop it getting a competitive advantage and larger market share. The truth is that the vast majority-----

Chairman

In layman's terms, if an electricity company is purchasing or generating electricity with an element of renewables, is that factored into the price it charges the end consumer?

Deputy Eamon Ryan

It would be, yes. The company would look at its overall mix. It would have greater security and certainty in respect of the price of renewables because-----

Chairman

That is not my understanding. I am open to correction but my understanding is that the price the companies charge the end consumer is based on the market price of gas. There is no factoring in of renewables in the context of the current price.

Deputy Eamon Ryan

It varies, depending on how the company might have hedged against the price of gas and its strategy in terms of from where it gets its fuel mix. It is not fixed. There is no single rate and timeline in terms of how prices are reviewed.

Chairman

Is the Minister telling me that if a company has a renewable element to its generation, it can factor that into the price it charges the end consumer? My understanding is that, under regulation, that is not the case.

Deputy Eamon Ryan

If the Chairman forwards that regulation to me, I will consider the issue further.

Chairman

Okay. The price of crude oil has decreased recently. Where does the Minister anticipate fuel prices going in the next six months or one year? I refer to petrol, diesel and heating oils such as kerosene. Is he proposing that an additional €200 once-off credit will be applied to electricity bills to help people deal with the impact of increasing prices?

Deputy Eamon Ryan

I hope it was not rude of me to look at my phone but I wanted to check the current prices. The price of fuel is exceptionally volatile. This is an unprecedented time. Two years ago, the price of gas was approximately 40 cent or 50 cent a therm. It was at that level for 20 years or for as long as I can remember. It varied slightly. Yesterday, the price was more than 400 cent a therm. That was the wholesale purchasing forward price for next winter.

Chairman

It was a hedging price.

Deputy Eamon Ryan

It was a forward price.

Chairman

A forward price, yes.

Deputy Eamon Ryan

That is truly frightening because it is a massive increase on what has historically been the price.

Chairman

That price relates to the coming winter.

Deputy Eamon Ryan

It does.

Chairman

In that light, can households expect an additional €200 credit from the Minister in terms of-----

Deputy Eamon Ryan

If I may finish my point, that very high price of gas related to particular circumstances, including a Texas liquified natural gas, LNG, plant being under repair and unable to ship, as well as a threatened gas strike in Norway. That sent the price really high. The price will probably come back down. We are assessing this daily, particularly in terms of the forward market. Brent crude oil is trading today at $103 a barrel. It was $115 a barrel a week ago. There tends to be a two-week lag. That decrease will start to work through in the next week or two. The price at the pumps should start to come down to reflect it.

The medium-term prognosis on gas is for continuing high prices. As members are aware, the concern is that Russia has started to restrict gas supplies into Europe again, including through the Nord Stream pipeline. It has shut off its gas connection to certain countries. That action relates to the war; it is a tactic in that struggle. The war is attritional at the moment and there is no end in sight. Unfortunately, that is likely to mean continued high prices.

Chairman

For how long will prices remain high?

Deputy Eamon Ryan

We do not know. It seems unlikely that the situation will change in the immediate future.

Chairman

It is unlikely that it will change in the next two years.

Deputy Eamon Ryan

It is unlikely in the next six months, at least. The situation in respect of oil is not as precarious for Europe because Russian exports account for 3 million of 100 million barrels a day in terms of the global market for oil. Oil is a more fungible market product and there are alternative routes for it to get into the market. It is difficult to be precise but, in a European context, gas security is a more significant issue than oil security at the moment. That could change. What we do in terms of budget measures will have to wait until September. What I have been saying is that, due to the high price of gas and the likely high price of electricity as a result, as well as the ongoing high price of oil, we should be looking at as many targeted measures as possible to protect those at risk of fuel poverty. Exactly what those measures will be and how we deliver them are matters for the budget in September.

Chairman

The Minister is not ruling out a €200 credit.

Deputy Eamon Ryan

I am not ruling out anything at the moment.

Chairman

I wish to take the opportunity to raise an issue relating to transport. The 20% reduction in public transport fares has been a great success. My understanding from the National Transport Authority, NTA, is that there has been an uplift of approximately 15% in Limerick compared with figures pre-Covid. It has been a resounding success. There have been unintended consequences, however. The 307 bus route goes from Limerick city to the University of Limerick, UL, and then up Castletroy College Road. The 308 bus route goes out to UL and then to Groody Road and comes back via Ballysimon. Those routes are important as they serve the university. Bus Éireann also has bus routes serving UL, namely, the 304 and 304A routes. However, Dublin Coach has announced that, effective from close of business on Friday, it is discontinuing the 307 and 308 routes.

Deputy Eamon Ryan

Is the Chairman referring to Bus Éireann?

Chairman

No, Dublin Coach. It is a private operator. It is discontinuing the routes as a result of the 20% public transport fare reduction. They are not public service obligation, PSO, routes. I very much welcome that 50% reduction for students that will come on stream across all operators, public and private, in August. Will the Minister consider extending the 20% fare reduction to private operators, possibly just on specific routes, such as commuter routes? The NTA anticipated this issue and made a submission to the Department for €2 million to €3 million to deal with routes from which private operators will withdraw because they are no longer competitive, given the 20% reduction for PSO routes running nearby. This is an unintended consequence of the 20% fare reduction. Will the Minister consider extending the reduction to all operators, even just on specific routes? Will he give support to the NTA in terms of the €2 million or €3 million it is seeking to deal with the fallout where private operators are discontinuing routes? I have met with the NTA. It is currently considering putting services into the areas to which I have referred. Castletroy College Road, which is a highly populated area, Groody Road and Ballysimon will not have any bus service when these routes are gone. There is commonality between Bus Éireann and Dublin Coach in terms of routes serving UL. Is the Minister aware of this issue? Will he consider it?

Will he give support to the private operators with regard to the 20% reduction and to the National Transport Authority, NTA, in respect of the €2 million or €3 million it is seeking to deal with that fallout? It wishes to introduce bus services in the areas that will no longer have any when the 307 and 308 services cease next Friday within the next two or three weeks.

Deputy Eamon Ryan

I am disappointed to hear that this commuter service may be withdrawn. As the Chair has said, it is of great benefit. We should do everything we can in that regard. I agree with him. We are seeing that the reduction in fares is resulting in a significant increase in traffic around the country. This is less so on commuter services in Dublin but is very significant in-----

Chairman

In Limerick, it has been-----

Deputy Eamon Ryan

A great success.

Chairman

From my interaction with the NTA, I understand that it is has been very successful.

Deputy Eamon Ryan

I agree.

Chairman

There are unintended consequences, however.

Deputy Eamon Ryan

There are. There was no intention to disfavour commercial operators. We expect that, from the autumn, it will be possible to apply the 50% discount for those aged under 24 and to include these operators in that scheme. With regard to the 20% reduction, it was not a question of a lack of interest or desire to include to include the commercial operators. There was a real practical difficulty in that we do not, in any way, set prices for such operators or monitor their fares. There is no mechanism by which to record, assess, monitor, manage or ensure delivery. We said that we would work with the commercial operators to see what could be done to overcome that hurdle. However, as I have said, no slight to those operators was intended.

Chairman

I have spoken to the CEO of Dublin Coach. It is very simple. It is not competitive on the route. There were Covid supports up until the end of June but now it just cannot compete. I know the historical background to that route. It was created by a previous private operator over many years. That operator was servicing that route when no one else was. I ask that, at a minimum, the Minister provide the €2 million or €3 million the NTA is seeking to deal with the fallout so that we can get these highly populated areas, which have no bus route, covered straight away. There are schools on the Castletroy College Road. It is a highly populated area. Northern Trust has a location on Groody Road. It is a big employer. New schools are also going into that area, including an Educate Together school. We have to deal with this now and introduce a more permanent measure in August.

Deputy Eamon Ryan

I will work with the NTA and local representatives to see what can be done.

Chairman

Will the Minister look at the question of extending the 20% reduction to all operators or even to some specific routes?

Deputy Eamon Ryan

I am not opposed to it in principle but it has to be practical and something that can be monitored and managed.

Chairman

The NTA would have to come up with a proposal.

Deputy Eamon Ryan

There would be some difficulty. It would involve quite a significant change in the relationship, which might not always be to the advantage of the commercial operators.

Chairman

The Minister has an open mind, however.

Deputy Eamon Ryan

The scheme was not designed to restrict such operators. It was just a matter of the practicalities.

Deputy Ruairí Ó Murchú

I will follow on from where the Chair finished. On commercial bus operators, I accept what the Minister has said, which is that an NTA proposal would be required and that he is not against extending the 20% reduction to such operators. Am I correct in saying that the 50% reduction in student fares works by operators cutting their fares for such people in half and then getting something like 70% back?

Deputy Eamon Ryan

The practical details are still to be worked out. It will be in the autumn rather than----

Chairman

Will it be August or October? We are talking about the student reduction, are we not?

Deputy Eamon Ryan

We are but it is not just for students. It is for younger people in general including those who are working.

Chairman

I was under the impression it was to be introduced in August.

Deputy Eamon Ryan

I do not have the exact timeline. I do not have an update as to when it will be introduced but it is due in autumn.

Deputy Ruairí Ó Murchú

The Chair is right. Some operators are very worried. They want to be able to tell their potential customers when this is to come in because some will be making decisions about college on the basis of whether there is a commuter service that they can afford. I am sorry; I stopped the Minister halfway through.

Deputy Eamon Ryan

As I have said, the exact mechanism behind the youth reduction has not been finalised yet but it will be in the coming weeks.

Deputy Ruairí Ó Murchú

That 70% is what is being talked about at the minute. That is the operators' understanding.

Deputy Eamon Ryan

It is a 50% reduction.

Deputy Ruairí Ó Murchú

There will be a 50% reduction and the commercial bus operators will get 70% of that 50%.

Chairman

The operator will get 70%, based on an uplift in-----

Deputy Ruairí Ó Murchú

They have been told that this is based on some formula which suggests that, if they drop fares by 50%, even though that reduction will not be covered in full, the number of customers will increase. This was raised with me by Matthews Coaches, which does a lot of commuter work, particularly between Dundalk, Drogheda and Dublin, although it also serves east Meath. It provides services to colleges and the city centre. Obviously, its numbers have decreased on what they were previously. They are not sure what pool this increase will come from and believe that this formula may not work for them. They are worried about their business model. This needs to be taken into account with specific regard to that company.

Deputy Eamon Ryan

Prior to the Covid pandemic, this company was expanding significantly all over the country. It has a valuable and important role. I would like to get back to that. We are in the closing stages of agreeing how the exact mechanism of the youth reduction will apply to such operators but we do not know yet.

Deputy Ruairí Ó Murchú

A fair amount of due diligence will have to be done. This firm had a foolproof business model that was impacted greatly. We will not really know what the reality of hybrid and remote working will be and the numbers it will be carrying until September, October or November. As the Chair said, with regard to students, it is about letting the operators know the realities as soon as possible so that they can tell their customers, including students, who may avail of their services. That 50% reduction is a big deal.

Deputy Eamon Ryan

I will take that on board.

Deputy Ruairí Ó Murchú

I imagine we will have further conversations on this. We started with discussion of National Broadband Ireland, NBI, and the €30 million. As Deputy O'Rourke said, this is not exactly a saving but arises from not reaching targets. We recently had what was probably our best interaction with NBI. Once it reaches or exceeds the targets, I do not believe anyone will complain.

With regard to the work and responsibilities of the Minister and his officials, can we change this from a seven-year project to a six-year project? What is really being talked about is the self-installed product. This relies on the outworkings of the court case between Eir and ComReg and completing negotiations as quickly as possible. The only alternative is for Eir to increase its capacity for delivering make-ready infrastructure and I am not sure it is fit to make that promise so it looks like this is the only show in town if we are to deliver in six years rather than seven.

Deputy Eamon Ryan

As I understand it, the Deputy is right that the court's decision on the case between Eir and ComReg is required in this regard. We will have to await the outcome of that decision.

Deputy Ruairí Ó Murchú

I get that. At that point, there will need to be as much government intervention as possible to ensure a solution is reached as quickly as possible. The negotiations between NBI and Eir could go on forever if either party was not very interested.

Deputy Eamon Ryan

I had a meeting with the chair and chief executive of Eir recently. I made the point that it is in everyone's interest to provide this. It should be remembered that this is about NBI's wholesale open access product. Everyone can get access to it. It is Eir's interest to be able to give its customers, of whom it has many in those rural areas, the very best and quickest connection. It is not just about the outcome of the court case but, as I was saying earlier, the general speed and flexibility of the roll-out of this infrastructure. It is in Eir's interest for this to be done as quickly as possible.

Deputy Ruairí Ó Murchú

That is okay once we are keeping an eye on it and once all parts move as quickly as possible when the court case is over. Nobody will complain about timelines being improved. Deputy O'Rourke dealt with the issue of the money that was to be ring-fenced for retrofitting.

It has been brought to my attention that a number of medium-sized builders involved in installing heat pumps, dealing with retrofitting projects and so on have applied to be one-stop shop operators but do not fit the criteria. Only a small number of companies do. What is the situation? Another complaint is that people can still approach some of these builders, who have built up a significant level of competence in this field, but they can only avail of a limited number of grants, for example, for heat pumps and insulation. There are other grants for windows and so on that only fall within the gambit of those who can operate as one-stop-shops, for example, some of the large energy suppliers and a number of companies that seem like they have been set up very quickly. The concern is that the work will still get done by some of these builders, but it will be subcontracted to them. They are afraid that they might not necessarily be the beneficiaries of the contracts.

Deputy Eamon Ryan

The one-stop shop is working now and the numbers are increasing. It was always going to take time. This is a medium-to-long-term initiative. Doing up your house is not a small decision. The benefit of a one-stop shop where you get trusted advice and are helped through the process is real.

I do not see a disadvantage in there being contractors, be they subcontractors or contractors. The main constraint at the moment is the lack of contractors. From speaking to people in the business, the challenge for them is in getting workers and meeting demand. There has been an explosion in public demand for their services. That is right and good. Numbers are increasing in terms of apprenticeships and other mechanisms, and the certainty around multi-annual funding is helping that further. I do not see subcontractors working with a one-stop shop operation necessarily being at a disadvantage.

Deputy Ruairí Ó Murchú

What were the determining factors in setting the criteria for becoming a one-stop shop operator? I am no expert in this field, but I am told that the criteria are very tight, for example, a turnover of €1 million. I accept that the Minister would not want the Chairman, Deputy O'Rourke and I setting up a company to become a one-stop shop operator, for example, but I am talking about people who have a history in doing this work, are sizable outfits regionally and could easily fit criteria, albeit not necessarily the criteria that have been set. Only a small number of companies have been approved as one-stop shops.

Deputy Eamon Ryan

Yes, but it is a question of having the ability, particularly in terms of back office and customer relations, which is not easy. Regarding broadband, many of the companies that I have spoken to down the years have said that when retail engagement starts, having the logistics and resources to provide a good front-of-house public service is the main criterion.

Deputy Ruairí Ó Murchú

I accept that, but the companies I am referring to have been doing this work and facilitating the people who have come to them in dealing with grants and so on. They say that they cannot meet the criteria because those criteria require them to be very big operators. Why is that the case? This might be something that needs to be considered.

Deputy Eamon Ryan

I do not have the note with me, but our committee meeting next week will examine this matter specifically and I will try to get some details on the criteria.

Deputy Ruairí Ó Murchú

Is that covered in this?

Deputy Eamon Ryan

No. It is due to be discussed next week.

Deputy Darren O'Rourke

I will take the note and give it to Deputy Ó Murchú.

Deputy Ruairí Ó Murchú

That is awful decent of the Deputy.

It has been raised with me that becoming one-stop shop operators is an onerous process for people. I am afraid that this is creating another cause for a backlog and slowing down the entire operation. The people in question are worried from the point of view of-----

Deputy Eamon Ryan

Their own business.

Deputy Ruairí Ó Murchú

Yes. They will not have the control they would have had previously. They are afraid that they will not necessarily benefit.

Deputy Eamon Ryan

We will consider the matter and revert at the second committee meeting.

Chairman

Regarding the roll-out of broadband, when NBI appeared before us, the information we were given was that under a self-install, it could do the ducting work itself instead of Eir. That would take a year off the roll-out. I accept that this matter is before the courts and I believe that a decision is expected in July. In considering what could be done around the edges, time could be shaved off if NBI was physically able to perform a self-install. There could be added benefits, for example, fast-forwarding the work on gap intervention areas.

A major issue that the Minister is probably aware of is that people in rural areas, some urban areas and some near-urban areas are looking over the ditch at their neighbours who have fibre broadband when they do not have it themselves. In many cases, the roll-out for them is three or four years down the road. From our deliberations with NBI, self-install would not be a total game changer, but it could take a year off the time and we could look forward to 2025 instead of 2026. Some people have spoken about the roll-out taking seven years. We are nearly two years into the contract, so there are four years left, but we could reduce that to 2023. If the bulk of the roll-out was completed by 2025, it would be phenomenal and make a real difference. Will the Minister keep an eye on this matter?

Deputy Eamon Ryan

Before making commentary, could we await the court's judgment so as not to-----

Chairman

Yes. I appreciate that.

What is the Minister's general view now of his putting the Army on standby as a contingency measure at Dublin Airport? Aer Lingus is cancelling flights for various reasons. What does he believe will happen with aviation over the summer period?

Deputy Eamon Ryan

I am happy to comment on that. The Minister of State, Deputy Naughton, and I had an in-person meeting with the board of Dublin Airport yesterday, which was useful. We have effectively been having daily meetings. The airport has got through a difficult period, with passenger numbers in the low 50,000s. In recent weeks, 94% of passengers have been getting through airport security in less than 45 minutes. That is the broad benchmark. It is not satisfactory, and we want everyone flying through security quickly, but compared with what happened at the end of May or what is happening in other European airports where there are widespread cancellations, not because of Covid, but because of airports not being able to cope, Dublin Airport should be able to work its way through this busy period.

There have been significant cancellations by some of the airlines because of Covid. The airport is not responsible for that. It has not seen a surge in absenteeism due to Covid. If it does, the Army is on standby and will be deployed straight away. That will not be initiated unless there is a specific need, but I told the board yesterday not to hesitate and to apply straight away, at which point we would respond immediately as needs be.

Chairman

Is the Army undergoing training?

Deputy Eamon Ryan

Yes. Those who have already been trained are now training colleagues and could be deployed immediately, but-----

Chairman

We have heard reports of existing security staff and their unions taking issue with the Army assuming a similar role. Where does that stand?

Deputy Eamon Ryan

That is a matter for the airport. It has good working relationships with SIPTU, other unions and the workers directly. It will have to assess and manage that situation. Yesterday, the Minister of State and I acknowledged that the workers in the airport had given everything in recent weeks, for example, working overtime and in different roles than they would originally have expected to be in. They rightly have pride in the airport and in their work.

The airport will manage that. It was right for the Government to have the Defence Forces on standby to deploy if they are needed, and that was the agreement.

Chairman

When does the Minister anticipate the Army will have a complement ready, if it is called in on standby?

Deputy Eamon Ryan

It could do so immediately. It does not look likely at present. If anything, with the cancellations by some airlines because of Covid that have occurred in the past week, the numbers are slightly below where might have been expected. We are probably at the peak of the numbers, even though it would have been expected that the peak would have been in another two or three weeks, with the airport not yet seeing a significant increase in Covid cases. In the first quarter of this year, at the height of the Omicron variant, up to 26% of the workers within the security end-----

Chairman

What is the level which will trigger the Army coming in?

Deputy Eamon Ryan

What I said to the board yesterday, and it and the management have to make this decision, is that if they have the slightest question about resource capability being constrained by Covid, they should call them in straight away. My message to them was they should not hesitate for one minute if they feel it can be of help.

Chairman

Are the service level agreements at this stage agreed with the Army and the Defence Forces?

Deputy Eamon Ryan

With a couple of i's to be dotted and a couple of t's to be crossed, basically, yes.

Chairman

Does the Minister see no issues arising there with the Army?

Deputy Eamon Ryan

No. It is the Defence Forces. It could be the Air Corps and the Naval Service as well.

Chairman

The Defence Forces; tá brón orm. The Naval Service could be involved. It is across the spectrum.

Deputy Eamon Ryan

It is across the spectrum. The way it is looking, as of the meeting with the board yesterday, is that if we see what has happened in the past two to three weeks continuing, we will get through this. One of the real challenges is more on the airline side, both in check-in and in baggage handling, and much of that is coming from problems in other airports. It is arriving as a problem into Dublin Airport because other airports, particularly across northern Europe, are having real difficulty, especially on the baggage handling side.

Chairman

Has the Minister had any opportunity to meet with the airlines, such as Aer Lingus, that are cancelling?

Deputy Eamon Ryan

Yes. We are meeting again. I think I am meeting some of the airlines later this week. We have an open door.

Chairman

To deal with a macro point, as the Minister will probably be well aware, we as a committee issued a report as far back as December 2020 stating we wanted to see the review of aviation policy getting under way immediately. We see a major role for the airports outside of Dublin, such as Shannon, Cork, Knock and Donegal, and we see those airports having a key role to play in terms of balanced regional development. When does the Minister anticipate the review will get under way?

Deputy Eamon Ryan

We have to get through this summer first. The immediate issue is making sure we get everyone off on their holidays and back home. Coming out of Covid, there are significant changes likely in the aviation sector. What I said to the board yesterday is we should be meeting again in the autumn period as part of our wider assessment of what is happening in aviation.

I noted at the weekend Mr. Michael O'Leary, the CEO of Ryanair, on the front page of the Financial Times signalling significant changes. Increased prices, Mr. O'Leary says, due to a variety of different factors, form one of the changes. I think other changes will be, and this is happening across different supply chains, a reconsideration of and a moving away from just-in-time tight numbers and facilities to having a more just-in-case supply chain management so that there is a bit of a buffer and, if anything happens, there is not the cascading of difficulties we are seeing in some airlines at present. There is a big change coming for sustainability in aviation. We must plan that.

One of the lessons we have learned, and I said this to the Dublin and Cork airport boards yesterday, is it also behoves us to reconsider how we make use of the likes of Shannon Airport, which is relatively underutilised at a time when other airports are straining at the maximum of capacity. That regional rebalancing is part of what we need to do.

Chairman

We as a committee believe national aviation policy has a key role to play in that. When does the Minister anticipate the review will formally get under way so that we as a committee can feed into the process?

Deputy Eamon Ryan

This autumn will be a critical period. What we have all said is we need to make sure we get through this holiday period.

Chairman

The Minister is probably talking of early autumn.

Deputy Eamon Ryan

Something like that.

Chairman

Does the Minister anticipate the Defences Forces will be used by Dublin Airport?

Deputy Eamon Ryan

It is impossible to know. That will depend on Covid numbers. The clear message to the Dublin Airport Authority, DAA, board yesterday was that, if it is in any doubt on the need, it should not hesitate to call.

Chairman

What is the total complement of Defence Forces that would be on standby?

Deputy Eamon Ryan

It is roughly 100. That allows it to manage the non-public perimeter security points.

Chairman

I thank the Minister.

Deputy Ruairí Ó Murchú

I thank the Minister. To follow-up on the issue of the Defence Forces, the Minister states it is a piece of work on the outside perimeter. Initially, the Minister and others had stated there is not a whole pile the Defences Forces could do in these circumstance and that there was no point calling them in. The Minister of State, Deputy Naughton, told the committee the DAA is a private operation and there are plenty of private companies it can avail of before we would even look at the Defence Forces. Obviously, the big issue we have all heard about is the difficulties there may be with some of the other stakeholders and the unions that might not be particularly happy about this. The Minister would definitely need to make sure all the i's are dotted and the t's crossed. What has changed?

Deputy Eamon Ryan

What changed was real concern that, in the peak period of July and August, the last of the extra complement of new security staff would not be up to speed, fully in place, and up and running. There was real concern, especially in the advent of a Covid surge. It is hard to know where exactly we are on that but it is likely we are at the peak of that at present. It was a real concern that it would materialise as it had during the Omicron wave in January last where a quarter of the workforce was out due to Covid. It was a choice of going the way of other European airports and cancelling a significant volume of flights or looking to get the Defence Forces to help. It is true that where the real bottleneck was, particularly that skilled work of screen monitoring baggage, was not something for which anyone, the Defence Forces or otherwise, could be trained up quickly, but the proposal from the Dublin Airport Authority agreed with the Defence Forces regarding perimeter duty played to the strengths of the Defence Forces. As I said, it is only on a needs-be basis. At present, that need is not there. As I also said, I could not have been clearer yesterday with the board that if it is in any doubt, it should call them in because we do not want to disadvantage the travelling public. I am sure no one does. The trade unions and the workers in Dublin Airport are all committed to serving the travelling public in these coming weeks.

Deputy Ruairí Ó Murchú

Better to have and not to need. We all are in support of whatever can be done from the point of view of ensuring flying is as seamless as possible given the significant difficulties. I will not labour the point that we probably could have done this piece at an earlier stage because it was stated by the Minister and others that there was not too much to be gained and, to a degree, there is nothing to see here. Obviously, that has changed or maybe somebody looked into it to a greater degree and decided the Defence Forces could play that part in relation to the workings at the perimeter level.

Deputy Eamon Ryan

It was a specific request from DAA. As I said, we had the various options of either flight cancellations or getting the Defence Forces in. That very much led us to make a specific immediate decision.

Deputy Ruairí Ó Murchú

Okay. We have constantly spoken at this committee about regional rebalancing. It would not come as any shock that many Deputies, and even Senators at the joint committee, would extol the virtues of Shannon Airport, which obviously would have nothing to do with their geographical location or whatever.

In fairness, despite some of the serious discussion that has happened here regarding that matter, until a point when a determination is made by the Minister for a State or so-called national strategy that builds it in, it will not happen. It will be nothing but empty rhetoric or press releases at times of danger when we need to look at regional airports. It has to be actually built in. Otherwise, we will get what the DAA says, namely, that it is all well and good talking about that but, ultimately, if we lose slots or whatever, we will lose them in Vienna or Heathrow. Until a point is reached when there is a determination at Government level to make this happen, it will not happen.

Deputy Eamon Ryan

There are various levers, including, to go back to what was said earlier, commercial bus operations. Looking to see could we improve connectivity to Shannon Airport is one example of where there are levers we might be able to use. It is for us to review in the autumn how we capitalise on some of the benefits offered by Shannon, including the fact people get through security there in no time because there is very good security monitoring equipment and they do not have to open their bags.

Deputy Ruairí Ó Murchú

There are new machines.

Deputy Eamon Ryan

Yes.

Chairman

The Minister will have to look at aviation policy in that regard, dare I say.

Deputy Ruairí Ó Murchú

I have one final question. It relates to somebody who lives in the North, who has a Northern driving licence and who may want to become a taxi driver in the South. I am talking specifically about Dundalk, which will not come as a shock to anybody. The problem is that this person is not able to take the small public service vehicle test because a Southern driving licence is required in order to do so. If we go through what the requirements specifically state, someone with a licence from an EEA country, or a recognised state, needs to get the okay from the embassy. When we contacted the NTA regarding this matter, however, we did not get a reply indicating how it is done. The NTA just stated that it would refund the money on the basis that this individual had not been told he or she would not be able to take the test.

We all know that every town in Ireland is crying out for people to drive taxis. We have a number of individuals who are willing to do it. A number of people fall into that bracket and are licensed, but they will also fall into the Northern licence bracket in the next while. The fact is that we do not need an Irish solution whereby people get a Southern licences on the basis of having southern addresses when they actually live in the North. That is grand until they are stopped in their own vehicle on which there is a Northern number plate. There are also a pile of difficulties relating to customs and all the rest. What needs to be done to sort this out?

Deputy Eamon Ryan

I do not have the answer now. If the Deputy submits a written parliamentary question on the matter, I will certainly follow it up.

Deputy Ruairí Ó Murchú

The problem is that we submitted a written parliamentary question on the matter previously. What came back was an answer from the NTA which was just a restatement of the for a person to hold Irish or EU driving licence, or-----

Chairman

I will make a suggestion. The committee will put in a written request to the Minister for him to respond on the issues raised. It might be a more straightforward way to deal with the matter.

Deputy Eamon Ryan

I am quite happy to follow up on that.

Deputy Ruairí Ó Murchú

I have been over and back to the NTA. I just got a formulaic answer. We are into semantics in the context of what is a recognised licence.

Deputy Darren O'Rourke

I will make the point that the autumn will be important for the aviation sector. I am interested in seeing what those levers are. I do not think they will be enough as regards connectivity. We have a very liberal aviation market. We will consider how that can be influenced to try to deliver on the regional balance we all want to see, but it needs to be more than that.

NTA representatives were before the committee for a very good session a couple of weeks ago. I am very concerned about the taxi industry and late nights. As a senior Minister, he needs to address the taxi industry in the first instance but also broader public transport services out of hours or late at night, as does his colleague, the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media, Deputy Catherine Martin, in the context of the late-night economy. I am not satisfied that the NTA is on top of the matter, is responding adequately or is prepared to respond adequately. It needs considerable attention. That will become more apparent as time goes by. Maybe I am wrong, but it requires ongoing attention.

I am hearing concerns from colleagues throughout the country regarding some of the public transport services, especially some of those provided by Go-Ahead Ireland. I have raised this with the NTA, as have my colleagues, but it is something that will require particular attention. There are challenges across the board in delivering services because of driver recruitment and retention issues. There are particular problems in that area that need to be addressed.

Chairman

I will add a point on taxis. This is anecdotal, but we are hearing that prior to Covid many taxi drivers did late-night work. Post Covid, the number doing late-night work has dropped. That appears to be a factor. I have noticed that in Dublin people are now waiting for taxis when a short time ago they were not. The committee will probably do a body of work around this but I will add to Deputy O'Rourke's question. I ask the Minister to address his comments.

Deputy Eamon Ryan

There are so many sectors coming out of Covid. It is like leaving a machine idle for two years. It is not that taxi drivers were idle, but now that everything has started back up again full tilt, we are finding it is difficult for a variety of sectors to get back. As the Chairman said, the pattern changed during that two-year period. Many older drivers have left. Many of those who previously worked nights are not doing so now. My city of Dublin, as the Chairman said, it had a very large fleet. We had a large number of licensed taxis. It was meeting demand and need. It is now out of kilter and needs to get back into kilter.

It is not just taxis. One of the things we are seeing is that the roll-out of BusConnects routes is allowing for late-night services. We need more public transport services at night. It is not just the taxi industry that should take all the people. One of the issues in the likes of Dublin Airport is that many of the commercial bus services that went to the airport have not come back for a variety of reasons, including the 20% fare reduction discount issue. A complex range of issues is part of this. Deputy O'Rourke is correct that what we are seeing as we come out of Covid is various sectors, such as aviation, the taxi industry and much of construction contracting, are finding it difficult to get staff so many of them are finding it very difficult to ramp back up. We will have to make sure they do in order to provide the service the public demands.

Chairman

To round off on that, I will ask about the 20% reduction in public transport fares in respect of public service obligation routes. I worry about the private operators, many of whom applied to the NTA for many years, and in many cases, pioneered the setting up of routes. I would hate to see unintended consequences where customers are not getting the level of service they previously got because these private operators are finding it is not financially viable without the 20% reduction. I know the Minister is open to this, and I will follow up on it with the NTA. It is an area that needs a body of work from the Department, the Minister and the NTA. It is something about which there is concern.

Deputy Eamon Ryan

I hear the Chairman.

Chairman

I thank the Minister and his officials for attending and for engaging with us. We will adjourn sine die.