The main purposes of this Bill are to extend the existing statutory powers of Córas Iompair Éireann in relation to
(i) the construction of railways;
(ii) temporary borrowings;
(iii) long-term borrowing for capital purposes;
(iv) the abandonment of railway lines;
(v) the payment of redundancy compensation
and also to provide sundry statutory safeguards for members of CIE staff transferred to the new Hotels Subsidiary Company known as Ostlanna Iompair Éireann Teo.
The necessity to extend CIE's statutory powers in relation to the construction of railways arises from the fact that the Board proposes to extend the railway line at Wicklow so as to provide a rail connection to the factory of Shamrock Fertilisers Ltd., Wicklow. At present traffic between the factory and the railway station has to be hauled by road and the proposed rail extension would allow of traffic from the factory being loaded directly on to railway wagons. The present arrangement involves double handling of fertilisers consigned for onward delivery by rail from Wicklow with a resultant increase in costs.
The extension is a relatively small job involving only about 700 yds. of new line at a cost estimated not to exceed £8,000. The extension line will, however, run partly over the public roadway and partly through private property. It would seem at first sight that CIE could be given the necessary powers to construct this railway extension by the making of an Order for the purpose by me under Section 14 of the Transport Act, 1960. I have, however, been advised by the Attorney General that in the laying-down of new lines other than lines on its own property or on another person's property with that person's consent the Board might successfully be restrained if some part of the construction works, for example, the breaking-up of the public roadway, were held to be in conflict with Statute or Common Law.
Since the proposed railway would run for some hundreds of yards through the town of Wicklow along a route adjacent to the sea front, it will be necessary having regard to the Attorney General's advice in the matter to extend the existing statutory powers of CIE in relation to the construction of railways. This I propose to do in the present Bill.
The proposed statutory powers are in Sections 2 to 10 of the Bill. There is nothing novel in these proposed powers; they are, with a few minor exceptions, identical with the corresponding powers conferred on Bord na Móna by the Turf Development Act, 1946.
As CIE have already constructed minor railways under powers conferred by two separate Ministerial Orders made under Section 14 of the Transport Act, 1950, it is proposed for the avoidance of doubt to provide as at Section 11 of the Bill that the two Orders which are specified in that Section shall be treated as if they had been made under this Bill when enacted.
CIE are empowered under Section 28 of the Transport Act, 1950 (as amended) to borrow temporarily from their bankers for general financing purposes. They may borrow at their own discretion up to £½ million and to the extent that these borrowings exceed £½ million my prior approval, given with the consent of the Minister for Finance, is required. The Minister for Finance is empowered to guarantee these borrowings to the extent of £1½ million. CIE normally exercise these powers to secure short-term accommodation during periods when revenue drops seasonally. There has, however, been a rather serious deterioration in the Board's revenue position during the past financial year and it is clear that the Board will be obliged to have recourse to temporary borrowings to a greater extent and for a longer period than in preceding years. It is proposed accordingly to take powers in the present Bill to enable the Exchequer, in the person of the Minister for Finance, to lend direct to CIE within the existing £2 million statutory limit of such borrowings by CIE. As a complementary measure, the Bill proposes to empower CIE to borrow temporarily from sources other than bankers. I think that the House will wish to have some explanation as to the reasons for deterioration in CIE's revenue position. It will be recalled that in the period following the enactment of the Transport Act, 1958, CIE made substantial progress towards achieving the objectives of that legislation. The Board's operating losses, which amounted to £1,950,000 in 1958/59, fell to £709,000 in 1959/60 and to £246,000 in 1960/61. This progress suffered a sharp setback during the year ended 31st March, 1962, due mainly to the eighth round of wage and salary increases and associated improvements in conditions of employment, which in that year together amounted to an increase of £1,024,000 in the Board's wage and salary bill. In a full year the cost to the Board of these increases amounts to £2.35 million. Other factors also contributed to worsen the Board's financial position; these included heavy additional maintenance costs of a periodic nature, increased depreciation charges, and the cost of additional road staff recruited to handle increased business. To these factors there was added a continuing decline in railway business and the fact that the increased rates and charges only came into operation in the last few months of the year. There were on the other hand offsets resulting from increased road freight and passenger business and from economies introduced. The net result, however, was that the board's operating loss for the year 1961/62 rose to £1,696,000 as against £246,000 in the preceding year. During the financial year ended on the 31st March last, the course of events I have outlined continued without significant change and the operating loss is, I understand, even greater than for the preceding year.
I regret to say that the position now is that the Board seems to be without prospect of overtaking the effects of the eighth round. It now appears clear that the increased fares, rates and charges which the Board introduced to counter the effects of the eighth round cannot be expected to bring in more than £1.13 million in a full year. The cost of the eighth round has worked out at £2.35 million a year and there is, therefore, a gap of £1.22 million. This corresponds roughly with the Board's forecast deficit on operating account in the current financial year.
A reasonable comment on this situation is that if the eighth round increase for CIE, including the cost of associated improvements in employment conditions, had been at the National level of 12 per cent, as recorded in September, 1962, instead of the actual increase of 20 per cent, then the deficit for 1962/63 would, on the provisional results, have been reduced by about £900,000.
CIE are empowered under Section 28 of the Transport Act, 1950, as amended, to raise funds by stock issues to meet their capital requirements. The Act sets a limit of £12 millions to the amount which may be so raised and this limit was reached by the last stock issue for £2 million which took place in May, 1962.
The Board have estimated that its expenditure on capital account, including renewals, replacements and additions, in the two years ending 31st March, 1964, will amount to £6.13 million. Initially the programme amounted to £9.7 million but, having regard to the desirability of curtailing the rate of new capital expenditure, the Board, at my request, revised the programme so as to defer until after 31st March, 1964, substantial blocks of capital expenditure. These deferments, together with an arrangement for obtaining the 37 new diesel locomotives purchased in 1962 on an extended credit instead of a cash basis, have made it possible to reduce total capital expenditure for the two years 1962/63 and 1963/64 to £6.13 million. This revised estimate represents maximum practicable deferments of capital projects and takes account of planned rail and station closures. Included in this programme are such essential items as payment of the instalments totalling £883,590 on the new diesel locomotives, the construction of new railway coaches of an advanced design, the continuation of the railway wagon construction project, the cost of new and more up-to-date buses for the Board's touring services and the provision of additional road freight vehicles including vehicles required to replace branch line services which have been closed down.
Of the total estimated capital expenditure of £6.13 million, a sum of £3.261 million will be provided by the Board's depreciation provisions leaving £2.869 million to be financed from new capital funds. The Board must also, at this stage, take account of capital requirements arising in the earlier part of the financial year 1964/65, which amount to £734,000, approximately. In addition, provision must be made for contingencies and for the expenses of Stock issues, together estimated at £250,000. The estimated total capital requirement for which provision must be made is, therefore, £3.853 million. The capital funds remaining available to the Board since the last stock issue of £2 million in May, 1962, will not suffice to meet this essential expenditure. It will, therefore, be necessary to empower the Board to raise further capital funds and it is accordingly proposed in the present Bill to increase the existing limit of £12 million, to which I have referred, by £3 million to £15 million.
I would like to reassure the House that the capital expenditure proposed by the Board in the two years I have mentioned, 1962/63 and 1963/64, would all be necessary even if a firm decision were taken to reduce the milage of the CIE railway system to that envisaged in the Beddy Committee Report. The present milage is 1,459 miles compared with 2,168 miles in October, 1958, and the 850 miles envisaged in the Beddy Report, to which must be added 63 miles of the former GNR line from Dublin to Belfast. Much of the proposed expenditure is, in fact, being incurred on equipment for road passenger and road freight services, both of which activities give a satisfactory return on the capital invested in them as may be seen from the Board's accounts.
The entire operation of CIE in all their sections and departments is being steadily reorganised. Very detailed information has already been given on this inevitably lengthy process of modernisation. Suffice to say that by April, 1964, the annual loss and consequent burden upon the taxpayer could well have been as much as £3 million or £4 million save for the measures taken by the Chairman and the Board.
The whole question of future transport policy, with particular reference to the position of CIE after 31st March, 1964, is at present under review. CIE themselves have embarked on a comprehensive analysis of the operation of the whole undertaking with a view to providing a fully documented factual basis for the formulation by the Government of new policies on the future of the railways, for the purpose of new long-term transport legislation which will be necessary after 31st March, 1964. That legislation must take account of, among other things, the long-term capital requirements of CIE.
I myself have spoken in very great detail on this problem and have made it clear that the taxpayer will not be asked to pay subsidies in order to maintain any type of public transport if another less costly and more efficient type, either publicly or privately owned, can be provided. I have also analysed the position in regard to the additional cost of maintaining roads where branch lines have been closed and have made it clear that there is a considerable nett saving to the collective body of taxpayers and ratepayers.
Criticism of this policy, I am glad to say, has come largely from a minority of public representatives and the overwhelming defeat in the Dáil of the Private Members Bill, whose object was to relieve CIE of the obligation to pay its way, was significant. Senators have been fully briefed in this matter over the past four years and I do not need, at this stage, to say any more on this subject.
In December, 1961, a subsidiary company Ostlanna Iompair Éireann Teo., was incorporated to acquire the Board's hotels and to administer its catering services. In order to facilitate consultations between CIE and the trade unions on matters arising out of the establishment of the proposed subsidiary, I undertook at the time to introduce certain measures relating to redundancy compensation and pension rights. Provision is now being made in this Bill whereby staff transferred by CIE to Ostlanna Iompair Éireann Teo. will retain their existing rights as CIE employees to redundancy compensation under transport legislation as though they were still in the employment of CIE. Provision is also being made whereby staff transferred to Ostlanna Iompair Éireann Teo., who are already members of CIE superannuation schemes, may continue in membership of such schemes.
The Memorandum and Articles of Association of Ostlanna Iompair Éireann Teo. provide for a degree of official control of the company comparable with that exercised over CIE under the Transport Acts. Provision is made in this Bill for certain additional controls complementary to those in the company's Memorandum and Articles.
Experience has shown that it would be desirable to provide for two minor amendments in the law relating to the abandonment of railway lines. The existing legislation does not permit of the abandonment by CIE of a railway line on which all train services had been terminated prior to the transfer of the railway line—for example from the GNR—to CIE. Secondly, the existing legislation does not permit of the disposal of tenanted premises on abandoned lines to the tenants thereof by private treaty. These matters are covered in the Bill now before you.
The Transport Act, 1958, and the Great Northern Railway Act, 1958, provide for payment by CIE of compensation to employees whose services are dispensed with within five years of the passing of the Acts, that is, up to and including 15th July, 1963, and the recoupment of the cost to CIE by the Exchequer. Section 19 of the present Bill proposes to extend this provision up to 31st March, 1964. The extension has been found to be necessary because the schemes of reorganisation which CIE are introducing under the Transport Act, 1958, will not be fully completed until some time between 15th July, 1963, and 31st March, 1964. It is, therefore, necessary to safeguard the position of staff who may become redundant between the two dates I have mentioned and for that purpose the Bill proposes to extend the provisions for redundancy compensation from the present termination date, which is 15th July, 1963, to 31st March, 1964, which is the date of expiry of the reorganisation period envisaged in the Transport Act, 1958.
I think that, at this stage, I should give you some figures of the number of CIE employees declared redundant by the Board since 1st October, 1958. Up to 31st March, 1963, a total of 1,247 CIE employees had been retired with compensation and some 50 other employees are expected to be retired with compensation between 1st April, 1963, and 15th July, 1963.
CIE estimate that 300 employees will be retired on redundancy during the period 16th July, 1963, to 31st March, 1964, and that the ultimate cost to the Exchequer of the compensation payable in relation thereto will amount to £900,000. The provision in the Vote for my Department for recoupment of redundancy compensation in the current financial year is £400,000.
The opportunity is now being taken to deal, also, with two small defects in the Great Northern Railway Act, 1958. It was the intention that ex-GNR employees transferred or seconded to CIE as a result of the transfer to CIE of that part of the GNR undertaking in the State would have the same rights to redundancy compensation as CIE employees. I have been advised, however, that while the provisions of Section 17 (1) (c) of the Great Northern Railway Act, 1958, cover redundancy arising from such causes as the reduction of rail services or the substitution of diesel for steam traction, the subsection does not extend to redundancy arising under reorganisation schemes covered by Orders made by me under Section 14 (6) of the Transport Act, 1958. It is accordingly proposed to remedy this defect by amending subsection 17 (1) (c) of the Great Northern Railway Act, 1958, so as to bring its provisions into line with those of Section 14 of the Transport Act, 1958, in accordance with the original intention.
A further drafting amendment to Section 17 of the Great Northern Railway Act, 1958, has also been found to be necessary. Subsection (3) of that section deals with, inter alia, the grant by CIE for the purpose of determining entitlement to redundancy compensation, of an increase in pensionable service of a person taken into the employment of the Board at a late age. It now appears, however, that the application of this provision does not extend to employees who become redundant under the provisions of Section 14 of the Transport Act, 1958. As it was not the intention that this provision should be so restricted it is proposed to take the opportunity of extending it to cater for redundancy arising under the Transport Act, 1958.
Finally, I come to Section 21 of the Bill. This section is designed to remedy a defect in paragraph 5 of the Second Schedule to the Transport Act, 1958. That paragraph relates to the abatement of redundancy compensation where the recipient is employed by a State-sponsored company or a local authority. The paragraph as at present drafted does not embrace subsidiary companies of such boards or bodies. This defect is now being remedied in so far as future redundancies are concerned.
I recommend this Bill to the House for acceptance.