Committee Reports > List of Committees > Joint > 1979 > Committee on Commercial State-Sponsored Bodies > Report No. 04 - Córas Iompar Éireann

FOURTH REPORT

CÓRAS IOMPAIR ÉIREANN

I INTRODUCTION

(a) Background

1. The 1944 Transport Act established Córas Iompair Éireann (CIE) as Ireland’s principal public transport operator by bringing together State railway interests and the Dublin United Tramway Company under a single Board.

2. That Board now controls the railways, buses in Dublin and the provinces, road freight services, coach hire and tour services, and canals. It also has an interest in Rosslare Harbour and a number of hotels. Its activities, therefore, cover almost all forms of inland public transport in Ireland.

3. The comparative importance of its activities may be measured by the proportion they are of CIE’s total expenditure:

TABLE I

Relative Importance of Different CIE Activities

4. The Table indicates that the most important CIE businesses are in the order—the railway. Dublin’s road passenger services, provincial road passenger services and road freight. The others are of substantially less significance.

5. Measured in this way the railway has maintained its relative importance in the last ten years. It accounted for just under 45% of total CIE expenditure in 1968 and for just under 43½% in 1978. But there have been major changes in the importance of road freight and buses. Road freight services have contracted from just under 13% to just over 8% of total expenditure; but this has been balanced by the growth of bus services in Dublin from 20% to 23%, and of other bus services from 15% to 17% of total expenditure, all over the same period.

(b) Statutory Duty

6. Since its founding statute, the Transport Act, 1944, CIE’s powers and duties have been modified by the Transport Acts of 1950, 1958, 1964 and 1974. It is also subject to some earlier legislation, for example, that on railways.

7. Its principal responsibility remains as defined in the Transport Act of 1958 which requires it:

“to provide reasonable, efficient and economical transport services with due regard to safety of operation, the encouragement of national economic development and the maintenance of reasonable conditions of employment for its employees”.

Though there is no express requirement for it to provide commercially unprofitable services where there is a social need for them, the obligation to provide “reasonable” services is interpreted as implying such a duty.

(c) Financial Powers and Duties

8. In its founding statute, the Transport Act of 1944, it was intended that CIE should break even, taking all its activities as a whole. The Act of 1950 laid a duty on the Board “so to conduct its undertaking as to secure, as soon as may be, that, taking one year with another, the revenue of the Board shall be not less than sufficient to meet the charges properly chargeable to revenue”.

9. Mounting losses on the railways in the years following made it increasingly difficult to meet this objective. Even so, a Committee of Inquiry into Internal Transport in 1957 (the Beddy Committee) concluded that the railway could be made financially viable. This led to a further Transport Act in 1958 which freed CIE from “common carrier” obligations and gave it the power to “refuse any particular traffic offered to it.” It may, subject to certain provisions “terminate any service of trains for passengers and merchandise or either of them” provided “that its operation is uneconomic and that there is no prospect of its continued operation being economic within a reasonable period”. By the same Act, the Board “may fix, demand, take and recover such charges as the Board thinks fit for any service provided by it”, though at present this freedom is curtailed since changes in charges are currently subject to approval by the National Prices Commission and the Government. In addition, CIE was granted a subvention for a limited period of five years to give it a respite while reform and re-organisation took place. The railway network was cut back substantially between 1958 and 1963 to help achieve its aim of financial viability by 31st March, 1964.

10. In 1964 the Government decided that the objective of a financially viable railway was not attainable; and made provision for CIE to receive an annual subvention of £2 million for five years. That was reviewed in 1969 and increased to £2.65 million a year for a further five years.

11. Almost immediately that level of subvention proved inadequate. Not only did railway losses continue to grow, but other services began to move into financial deficit and the Government provided more grants on a year to year basis to meet CIE’s growing losses. In view of this, and to comply with regulations that had to be adopted following entry into the EEC, a further Transport Act in 1974 provided that the level of grant should be determined annually. Its provisions still govern the financial relationship between the Government and CIE.

12. EEC regulations do not permit open-ended grants to meet the deficits actually incurred by transport undertakings; nor do they allow general or blanket grants set in advance, which are intended as general subventions to meet losses. Instead any subventions must be made in accordance with criteria laid down in the following EEC Regulations:—

(a) Regulation 1191/69: This permits payments by the State to transport undertakings for losses incurred on services operated under public service obligations, that is where services are deemed essential, but cannot be provided profitably;

(b) Regulation 1192/69: This deals with the normalisation of the accounts of railway undertakings. It permits payments to be made by the State for financial burdens to which other transport undertakings are not subject. In the case of CIE this regulation is applied to certain superannuation and pension costs and to 50% of the cost of level crossings;

(c) Regulation 1107/70: This specified a number of further circumstances in which grants were permitted, including infrastructure costs borne by transport undertakings where other undertakings are not subject to a like burden, and various tariff obligations not covered by Regulation 1191/69. This regulation also permits payments to cover residual deficits not covered by other regulations where harmonisation measures necessary to make the undertaking financially autonomous have not been completed

13. Subventions are provided to CIE for the railway under all three regulations. Payments under the public service obligation provisions of Regulation 1191/69 are essentially similar to the payments CIE received to meet losses under the requirement of the 1958 Transport Act to provide reasonable transport services. Rail freight losses are covered under Regulations 1192/69 and 1107/70 though CIE has been instructed by Government to make every effort to run these services on a commercial basis.

14. Losses by road passenger services, both in Dublin and in the provinces, are met under Regulation 1107/70 where they cannot be recouped through fare increases or eliminated by economies in operation.

15. Losses on canals are met under Regulation 1107/70. Separate provision is made, outside EEC regulations, for losses on the Galway to Aran Ferry service. For other services, such as road freight, tour and private hire bus services, hotels, refreshment rooms and international activities, CIE is expected at least to break even taking one year with another.

16. As first the railway and then other of its services have moved into deficit, the proportion of CIE expenditure met by revenue has fallen very substantially in the last ten years:

TABLE 2

Percentage of CIE Expenditure Covered by CIE Revenues

In 1967/8, 8.3% of CIE’s total expenditure was met by subvention, the remainder by receipts. In 1978, 27% of CIE’s total expenditure was met by subvention.

17. The proportion of expenditure met by subvention has become particularly high on the railways. Already nearly 24% in 1968, for the last three years the amount of the subvention has exceeded receipts.

As recently as 1972 Dublin bus services made a profit but thereafter there was a marked deterioration so that recently about 20% of expenditure on them has been met by the Government. In 1978 Government subvention to CIE totalled £37.7 million. There is no question that the size of the subvention and its rate of growth presents a very serious problem. One consequence of the growing deficit has been closer Government surveillance.

(d) Relationship with Government

18. The Chairman and Members of the Board are appointed by the Minister for Tourism and Transport. By the Transport Act of 1950 the Board must have a minimum of three and a maximum of seven members. The Board is also subject to the Worker Participation (State Enterprises) Act, 1977, as a result of which proposals are now being considered to expand the Board to include worker representatives. Currently there is the full complement of Board Members. The division of responsibility between the Board and the General Manager and his staff is that the first is responsible for the formulation of policy, the second for its execution.¹

19. The Board is also required to keep accounts which must be audited, and sent to the Minister for Tourism and Transport, who in his turn must lay them before each House of the Oireachtas.

20. While the appointment of the Board and the right to receive accounts in due form are the prime statutory powers of the Minister, they are far from exhausting the extent of Government involvement in CIE’s affairs. The existence of the subventions and their amount have understandably increased the extent of Government intervention with the aim of securing the necessary public accountability for the disbursement of public funds on such a scale.

21. Every autumn there are discussions between Government and CIE to agree the amount of the subvention for the following financial year. This figure is published in the Annual Estimates. Government approval is sought at the same time for CIE’s capital budget. Some part of this is financed through Exchequer capital advance and so involves a commitment by Government. During each financial year CIE submits a monthly return to the Department of Tourism and Transport and, through it, to the Department of Finance covering both capital expenditure and subvention requirements.

22. While the Minister for Tourism and Transport has other powers —for example, over capital expenditure and borrowing—which affect CIE’s financial position and forward planning, those mentioned above would seem in practice to have been the most influential.

(e) The Joint Committee’s Report

23. This is the Joint Committee’s fourth report and the first on CIE. The inquiry was commenced in April and completed in October, 1979; and evidence was taken at five sessions. Such is the size of CIE, and the range of its activities, that the Joint Committee decided that it would not be possible on this occasion to consider all the questions that might properly be judged to lie within its scope. Attention has been concentrated on a number of issues arising out of CIE’s relationship with central Government. Because of the size of the subvention CIE receives, the financial aspects of this relationship were of the greatest concern to the Joint Committee. A second issue of major importance is the nature of the difficulties created for CIE finances and operations by present institutional arrangements for transport in the Dublin area, involving both central and local Government. In discussing these issues the Joint Committee necessarily found itself discussing some of the most important problems of transport operation and policy affected by them; and as a result the report also makes some recommendations on such questions.

II THE OVERALL ROLE OF CIE

(a) The Subvention

(i) Arrangements for Paying it Subvention

24. Arrangements for paying subvention to CIE have changed substantially in recent years, from a position where an annual cash sum was granted by legislation, as under the 1958 Act, to one where an annual figure is negotiated between CIE and Government within a framework laid down by EEC regulations. These changing administrative arrangements have been accompanied by rising levels of subvention. A CIE deficit of just over £3 million in 1969/70 had risen to almost £38 million by 1978. Nor is this simply a matter of subventions rising in line with general price levels. If CIE losses since 1969/70 had risen at the same rate as the consumer price index, the loss in 1978 would have been about £9 million rather than £38 million. Subventions have, therefore, risen substantially in real terms.

25. Arrangements for negotiating the subvention vary little from year to year. In the early autumn, CIE receive Government wage and material cost guidelines to compile a budget for the following year. The guidelines generally anticipate a less inflationary outcome for the following year than CIE is expecting, with the result that the estimate of losses produced for inclusion in the Annual Estimates is too low. As the year progresses, it becomes increasingly clear that subvention provisions have been set at too low a level, particularly if, as often occurs, CIE’s rates and fares increases are deferred. However, additional subvention requirements are met through Supplementary Estimates. Thus for the year 1978, a subvention of £30 million was approved in the autumn of 1977, but the eventual subvention turned out to be £37.7 million. A figure of £35 million was included in the Annual Estimates for 1979; it was increased to £45 million by a Supplementary Estimate passed by the Dáil in July 1979; and it is understood from CIE that an additional £5 million will probably be required before the end of 1979.²

26. Thus the negotiation has come to take place in two stages. First there is a preliminary round in which a provisional figure is agreed for the Annual Estimates, but apparently with the expectation that it will be exceeded. Then during the course of the year a supplementary grant is agreed so that CIE is reimbursed for whatever emerges as its actual deficit. However, this second round of subvention serves two purposes. Firstly it compensates CIE for the amount by which the original level of subvention fell short of what was felt to be necessary at that time; and secondly it compensates CIE for subsequent rises in cost or shortfall in revenue.

27. It may be argued, as CIE do, that to have a first figure pitched some £2 or £3 million below what is likely, exerts a useful discipline on management to make it exert itself to achieve all possible economies.³ Moreover, it argues that trade union representatives are unlikely to accept a wage offer lower than that implied by the provision CIE has made in its budget, and that, therefore, since labour costs are almost 65% of all CIE expenditure, the accuracy with which they are forecast will materially affect the accuracy of the whole forecast.

28. While the Joint Committee sees some validity in this argument for not making the Annual Estimate equal to the out-turn expected at the time the estimate is approved, it would not seem as if this were the main explanation for the scale of the Estimate over-runs that have had to be met by Supplementary Estimates. If Department of Tourism and Transport officials were privately to agree at the time that the Annual Estimates were being negotiated that the ultimate subventions would be as large as they have turned out to be in recent years, the Joint Committee would regard this as wholly unacceptable; and indeed there is no reason to suppose this. Rather the actual deficit for all too many years has been substantially in excess of what was expected.

29. As a result of present procedures there is a grave risk that CIE are coming to regard the subvention figure presented in the Annual Estimates as a first instalment, which they expect to be increased during the year and which they are under no compulsion to meet. Moreover, there is no definite hidden higher figure to allow for wage negotiation which is known to them and which sets a limit to the allowable Supplementary Estimate. Thus insofar as CIE can count on a Supplementary Estimate to meet whatever deficit it may have, the actual subvention, despite its form, is in practice little different from an open-ended deficit grant.

30. The Joint Committee feels, therefore, that the present position is deeply unsatisfactory and prevents effective public accountability for the monies spent. It has therefore considered whether there is a better procedure. A deficit in excess of the subvention agreed on the basis of Annual Estimates may be met by any of:—

(a) an increased subvention;

(b) cost savings; and

(c) higher rates and fares.

Short-term cost savings in addition to those already planned are usually difficult to effect during the course of a financial year so that the choice is normally between (a) and (c).

31. CIE has outlined⁴ the approval procedures now required for rate and fare increases and have drawn attention to the delays experienced in recent years in obtaining increases when planned.⁵

32. The Joint Committee would recommend that when Government approves the Annual Estimates, it would only be logical if it were regarded as approving the rate and fare increases implied by those estimates. On the other hand, CIE in its estimates must make a realistic forecast of the time normally taken for such approvals to be granted with the implication that for this reason increases must be greater than would otherwise need to be the case. If nevertheless the National Prices Commission or the Government does thereafter delay the planned increases, the Committee regards it as not unreasonable for Government to compensate CIE by an additional Supplementary Estimate; though it would recommend that for the sake of public accountability that item should be specifically identified in the Supplementary Estimate. Thus the costs of such delays should be identified separately.

33. The Joint Committee considers that there has been too great a readiness in recent years to provide automatic increases in subvention to meet unexpected increases in the deficit because of a shortfall in revenue or an over-run of costs. But it is inevitable that the extra deficit must be met by extra subvention, if CIE is prevented from raising rates and fares as a commercial organisation would have to. While appreciating the strength of the short-run political case for resisting price increases, what is not met from the fare box must come from the taxpayer. The real danger in the end is that both will suffer. If CIE automatically expects its deficit to be met by rising subvention, it will be under no effective financial discipline to contain costs so that ultimately rates and fares will be higher than if there had been such a discipline.

34. In the light of these considerations the Joint Committee would recommend that:—

(a) the initial level of subvention set in the Annual Estimates should continue to be based, as at present, on estimates of labour costs bearing in mind the exigencies of negotiation;

(b) any excess of labour costs over this level should be met either by increased productivity within the organisation or by increased rates and fares;

(c) nevertheless any cost to CIE of delays in granting rate and fare increases so as to result in lower revenues than those planned in the Annual Estimates should be recouped by a Supplementary Estimate in which such compensation should be identified; and

(d) CIE might also receive a Supplementary Estimate to cover part of unanticipated raw material costs, particularly for imported products like oil. Such costs increases are almost entirely outside CIE’s control and higher subvention payments to meet them would appear entirely justifiable.

The Joint Committee would not want to rule out the possibility of Government deciding to meet some part of an unexpected shortfall in revenue or increase in costs (other than in raw materials) through additional subvention, but believes it should be the exception, not the rule.

35. The experience of road freight services over the past three years confirms the view that CIE can accommodate unexpected changes in costs within its budgeting and control framework without creating a subvention requirement. Since the beginning of 1976, CIE have been required to operate road freight services without subvention, as a result of EEC regulations. In each year since, CIE has succeeded in balancing its road freight budget, with an extremely small surplus, which invariably amounted to well under 1% of expenditure. There is no obvious reason why similar results could not be achieved for other services, albeit with a different control requirement, in that CIE would be working within a predetermined subvention.

(ii) Making the Subvention conform to EEC Regulations

36. The Joint Committee also considers that arrangements for payment of State subvention to CIE should be amended to bring them into line with the practice of our partners in the European Economic Community. Where applicable, subvention payments should be made above the line in CIE’s accounts, rather than below the line as at present. Subvention payments would, therefore, be treated as a receipt, along with revenue from rates and fares, in compiling working accounts, rather than as a provision to cover losses. In practical terms, the impact of such a change would be small; it would not reduce the costs of running the railway. Nevertheless, the Joint Committee considers that such a change would be more consistent with the logic of EEC regulations. Regulation 1191/69, under which CIE received over £13 million for the railway in 1977, permits the payment of grants by States to transport undertakings which discharge “public service obligations”. The regulation defines such obligations as “obligations which the transport undertaking in question, if it were considering its own commercial interests, would not assume or would not assume to the same extent or under the same conditions”. In other words, CIE are receiving a payment for a service rendered to the State. Such a payment should, therefore, rank with rate and fare revenue when compiling accounts. This approach has already been adopted in France, Germany and Britain in relation to their respective railway administrations.

37. Though superficially such a change would only be one of accounting procedure, the Joint Committee would expect it to have some beneficial effect on morale and efficiency within CIE With foreknowledge of the payments due to it for the discharge of public service obligations, and other requirements under EEC regulations, and a knowledge that such revenue would rank as receipts, CIE would again be operating in a more commercial setting. The Government could be seen not as meeting deficits but as a customer buying valued services on behalf of the public. CIE could then meaningfully aim to break even after payment of subvention. Management would not be attacked so heavily for CIE losses, which were anticipated and budgeted for in advance and without which CIE public services, and in particular the railway, could not be operated.

(iii) Monitoring Subvention

38. The Joint Committee considered how far the subvention CIE receives should be broken down and made specific to each service or group of services. At present CIE publish a table in the notes on their accounts, showing the division of Exchequer subvention between the railway, road passenger services in Dublin, in the provinces, the maintenance of canals, and the Galway to Aran ferry service. But when the subvention is negotiated with Government only a single figure is given to cover all services.⁶

39. It would be possible for Government to negotiate the subvention on each of CIE’s divisions separately. The logic of this would be, for example, that it would mean determining the value of the public service obligation provided by the railway and comparing that with other uses of public funds. The principle could be taken further so that Government paid a separate subvention on each service or group of services: for instance, passenger services between Dublin and Cork or bus services within a county, or at whatever level of disaggregation was held most meaningful. The logic of this approach is that Government appraises the value to the public of each service, weighing the marginal cost to it, i.e. the amount not met by rates and fares, against the social benefit.

40. The Joint Committee decided against this approach. It would mean in practice officials of the Department of Tourism and Transport entering into detailed analysis of the costs and revenues relating to each service, and exercising commercial and political judgment in trying to establish what should be kept and how much should be paid for it. The Committee does not believe that civil servants should become so involved in such exercises as to require them to trespass on the prerogatives of management.

41. Instead the Committee would recommend a rather different approach by which CIE, while retaining its freedom to use subventions received at its discretion, should nevertheless ex post facto give prominence in its accounts to giving a breakdown on how the subvention was spent. Not only should this information be given greater prominence than is implied by placing it in the Notes on Accounts; but it should be given in more detail.

42. Though this breakdown should not be fixed in advance by Government or CIE, it should be disclosed afterwards, since the balance of subvention between, say, the railway and the bus services is a legitimate topic of public and political debate. The audited accounts should show the subvention received not only by main services but also by various routes or services within each service group. As a representative of the Unions told us, if CIE gave an analysis in much greater detail of where it lost money, it would lead to greater understanding. The Joint Committee has not felt able to decide the most appropriate level of disaggregation but recommends that this should be considered further by the Department of Tourism and Transport. This would provide an indication of how the public funds were being disbursed. Nor should such a requirement impose any additional data collection costs on CIE, in view of the budgeting and monitoring arrangements which are already in force. C.I.E. already collect all the necessary data.⁷

(b) Relations with the Private Sector

43. As part of its deliberations, the Joint Committee has sought and received submissions from a number of organisations with vital interests in the provision of efficient transport services. Many of these organisations have argued that greater efficiency could be achieved by the introduction of competition between CIE and private sector enterprises. The National Consumer Advisory Council argued, in relation to Dublin bus services, that “the idea of introducing private services is a matter that should be very seriously considered” because of “recurring strikes and their constant upset to the orderly business of the citizens of this city”. Similarly, in rural areas “It was pointed out by some of the members that there are private buses serving country towns very satisfactorily at reasonable rates. Could private buses be allowed to operate all rural routes?”

44. The Confederation of Irish Industry argued that “the development of private commercial services whether for passengers or freight should be actively encouraged where these can be seen to be more efficient”. More specifically, the Confederation proposed a relaxation of present restrictions on private road hauliers, to enable the private haulage sector to expand, and the introduction of competition from private operators in the provision of road passenger transport in Dublin.

45. The Dublin Chamber of Commerce put forward more explicit proposals. It suggested that “Córas Iompair Éireann should be asked to state what services they cannot operate at a profit. Having ascertained that, they should then be asked to indicate what subsidy they need in order to break even and the Government should then decide if such subsidy should be given for social grounds. Private enterprise should be asked to bid for operating such services”.

46. Finally, “some members of the committee” of the Royal Irish Automobile Club “expressed the opinion that the competition of private enterprise might be in the best interests of the public”.

47. CIE, in its evidence,⁸ argued that it did encourage and co-operate with the private sector in certain areas. It considered that some way should be found of allowing private sector buses to feed CIE’s express services and drew attention to the excellent co-operation it received from the private sector on school transport. However, it argued that urban transport must be retained by CIE because of the need for subsidisation. Present CIE policy in relation to road freight only involved the operation of services which supported the railway. Thus the provision of pure road freight transport was left to private enterprise. This provided a satisfactory balance between the private and public sectors which CIE wished to see maintained.

48. The Joint Committee considers below more specific aspects of CIE’s activities, including bus and road freight services, and there makes further reference to the role that the private sector might perform. However, in general terms, the Joint Committee would agree with the present balance between the public and the private sectors for two reasons:—

(i) The provision of public transport must recognise a social as well as a commercial dimension. The social dimension will, quite reasonably, not be recognised by a private sector operator wishing to make a profit. At one level, this may mean that the operator is unwilling to provide a service at all on many routes, wishing to take over the more heavily trafficked and profitable services, and leave unprofitable routes to CIE. At a more detailed level, private operators may be unwilling to provide services at times of day when demand is light, for example, early in the morning, even though the social case for such services is strong. The Joint Committee sees no good reason why CIE should be expected to operate only the inherently unprofitable routes and services, leaving private operators to cream off the best traffic which may, in any case, have been established by CIE marketing initiatives.

(ii) Public transport services, if they are to be effective, require close co-ordination in such detailed matters as timetabling. This can be more effectively achieved in one single organisation than if a large number of operators are providing services.

49. The Joint Committee therefore concludes that, although, as is discussed below, there may well be potential for enhancing the role of the private sector in certain areas, there should be no general policy of hiving off profitable CIE activities. Moreover, a policy by which profitable activities were hived off would be profoundly discouraging to CIE management; and might even deter further improvements in efficiency.

(c) Industrial Relations

50. In the course of taking evidence, the Joint Committee heard quite a lot about industrial relations in CIE. In this context the Committee noted the fact that there were two main unions catering for the employees in the road passenger sector of CIE. The Chairman of CIE stated that “industrial relations in the whole of CIE have been remarkably good”. The representative of the National Association of Transport Employees said that industrial relations on the rail side were excellent. A representative of the Irish Transport and General Workers’ Union stated that “The public image of industrial relations in CIE is based primarily, if not exclusively, on what happens in the bus sector … The difficulty the busmen experienced was their inability to have their skill and expertise recognised simply and solely because they worked for an industry which required a subvention”. A representative of the National Busmen’s Union stated that “We have not had many disputes but when they arise they always make the headlines”. Apart from stoppages in Dublin City Services over the last few years, the number of man-days lost as a percentage of man-days worked in CIE is quite small. But stoppages in Dublin City Bus Services have led, according to an ITGWU representative to “The image the public have of CIE: because busmen stop CIE is riddled with industrial relations problems; it has an incompetent management and it has an equally incompetent trade union structure”.

51. The Joint Committee considers that, given the large staff (16,000 approximately),⁹ the wide gamut of activity and the large number of trade unions involved, the overall industrial relations record of CIE is not as bad as it is popularly believed to be. However the Joint Committee is very concerned about the serious inconvenience and real hardship caused to the public in general, and to less-well-off people in particular, by disputes which cause the withdrawal or curtailment of Dublin City Bus Services. Furthermore, the Committee is very concerned about the disruptive effect such disputes can have on industry, with consequent loss of production.

52. There are constructive aspects of the industrial relations scene. For example, the trade unions showed considerable responsibility when through negotiation, agreement was reached to reduce, through voluntary redundancies the staff of CIE by over 18% over the last five years. Management and trade unions appear to attach particular importance to the need to improve industrial relations. The Irish Congress of Trade Unions in its submission to the Joint Committee stated that “The Company and the Unions have actively been reviewing and improving their industrial relations system. The Unions have in agreement with CIE recently appointed a full time Secretary to service the various trade union groups and to strengthen and improve the working arrangements and the communications”. The Joint Committee welcomes these developments and hopes that they will result in limiting areas of dispute, particularly in the Dublin City Bus Sector.

53. The management of CIE is decentralised by area or region and in certain cases by function. A memorandum received from CIE describing the form of decentralisation is reproduced in Appendix 4. In the course of evidence to the Joint Committee, a representative of the National Busmen’s Union complained that as a result of decentralised management there can be conflicting decisions, concerning, for example, the pay entitlement of busmen on sick leave. The Joint Committee, while appreciating the need for decentralised management in an organisation as widespread as CIE, nevertheless, considers that every effort should be made to ensure that such decentralisation does not result in conflicting decisions in the area of conditions of service for workers.

(d) Bus Building Project

54. The Joint Committee has been informed by CIE that a management agreement contract between it and Bombardier Ltd. covering a joint project for the production of buses for CIE with the possibility of the firm producing vehicles for export at a later date has now been approved. A memorandum on this matter received from CIE is reproduced in Appendix 5. The Joint Committee notes that it is intended that production will commence at the end of this year and that the first buses will be available in April 1980. The Committee welcomes this development in view of the serious complaints made to it concerning the existing bus stock.

(e) Pensions

55. The ITGWU representative explained the shortcomings of the present CIE Wages Grade Superannuation Scheme. At present entitlement to benefits depends on reaching the age of 55 in service and having ten years’ service. Anyone who retires — whether for ill-health or other reasons — without fulfilling both criteria, will only have his pension money refunded. The Joint Committee finds this an extremely harsh and out-moded approach to pensions which should be reviewed. It also would recommend a move to a percentage of earnings basis rather than a flat rate basis.

III TRANSPORT SERVICES IN DUBLIN

(a) The Dublin Rail Rapid Transit System

56. CIE is in an absolutely crucial position as the provider of public transport in Dublin, but to decide how much more it could achieve by its own efforts, and how much must depend on new legislation, better co-ordination and re-organisation, an appreciation of the nature of Dublin’s transport problems is required. The Dublin Transportation Study, published in 1972, recommended that a study be undertaken of the provision of a rapid transit system for Dublin. Alan M. Voorhees and Associates, an international firm of consultant transport engineers, were commissioned to undertake this study in 1973, and a final report was produced in April 1975. The report considered a range of alternative technology for solving public transport problems of Dublin:—

(a) busways, i.e. reserved roads for the use of buses only;

(b) semi-metro in the form of a modern tram car system using underground construction in the central area;

(c) rail rapid transit, through a modern high performance electric rail system, again using underground construction in the central area.

The recommended plan is largely based on rail rapid transit, with lines serving Howth, Bray, Tallaght, Ronanstown, Blanchardstown and Ballymun. In addition, there would be a busway to Dundrum, along the former Harcourt Street railway line.

57. The electrification of the present suburban line was put forward as the first stage of the rapid transit scheme, and this has been approved by Government during the course of the current inquiry by the Joint Committee. However, approving the electrification of the suburban line does not imply a decision for or against the rest of the rapid transit scheme, as CIE was at pains to emphasise in evidence. The purpose of electrification¹⁰ was “to deal with the immediate problem of refurbishing the existing suburban line”.

58. Nevertheless, that decision does at least keep open the option of a rail rapid transit system along the lines developed in the Voorhees report, whereas any decision to refurbish with diesel rolling stock would have precluded this option.

59. If one were to leave aside the cost, there are clear and great attractions in developing a rapid transit system:—

(a) The time required to travel to the centre of Dublin from locations on its outskirts would be reduced considerably. According to the consultant’s report, the journey time from Tallaght would be reduced from 30 to 19 minutes, from Ronanstown from 29 to 16 minutes and from Blanchardstown from 27 to 15 minutes;

(b) Moreover, the service would be immune from the road conditions which cause such frequent and frustrating delays to bus users;

(c) CIE would be able to effect significant savings in operating costs by withdrawing some bus services, on routes which would be served by rapid transit;

(d) Motorists and commercial vehicle users in central areas would be able to travel more quickly as a result of the reduced congestion levels;

(e) When the scheme was in full operation, some 385,000¹¹ people would live within 15 minutes’ walk of a station and 250,000¹¹ people would work within 15 minutes of a station.

These potential benefits are recognised by the local authorities in both the City and County of Dublin, who hold reserved lines for the rapid transit system.

60. While the benefits to the people who live and work in Dublin would undoubtedly be very great, so would be the costs. They are expected to be in the region of £200 million, even after taking account of the £46 million already committed for electrification of the suburban services from Howth to Bray.

61. Investment on such a scale requires detailed and searching scrutiny before it can be approved. Such a scrutiny is outside the province of the Joint Committee and it would be unwise for it to try to assess the overall merit of the scheme. Nevertheless, provided that the scheme is found to be robust when tested, and to provide an acceptable social return for its cost, the Joint Committee would recommend that a high priority should be given to it because of the serious nature of Dublin’s transport problem and the importance of relieving it for the well-being of all those who now have to contend with it, and for its effect on the Irish economy.

62. The Joint Committee, however, does feel that such a scrutiny should take into account the following points:—

(a) Though the original appraisal in the consultants’ report was undertaken in great detail, four years have passed and indeed much of the data used came from the Dublin Transportation Study and referred to 1971. Many of the assumptions, forecasts and relationships used in it are inevitably out-of-date; and indeed only the cost estimates have been revised regularly. Since it appears that Dublin’s transport chaos is worse than was then predicted, it is likely that the case for the project would be stronger, and even its form different, if it were supported by more recent information. Given the sum involved, one should, however, be wary of impressionistic judgments on how what may have happened since affects that case. Some up-dating of the data is necessary given the time that has passed; though it is, in the Joint Committee’s view, a major criticism of the authorities that decisions have been so long delayed that this is necessary.

(b) CIE drew attention in its evidence to changes that it thought favoured the rapid transit system. The original study had assumed the completion of all the roads and motorways included in the Dublin Transportation Study whereas it is now clear that these would not be completed within the timescale envisaged. As the sensitivity analysis in the consultants’ report showed, this improved the return on the project. Similarly, the rapid rise in oil prices since 1973 was at variance with the assumption adopted that fuel prices would stay constant at 1973 levels. The sensitivity analysis demonstrated that this also improved the return on the project.

(c) The report assumed that 1971 bus speeds would be maintained in the long term, whereas bus speeds have halved since then in many parts of the centre of Dublin. This, too, serves to increase the attractiveness of the rail transit system, though effective measures to improve operating conditions for buses through traffic restraint would work in the opposite direction.

(d) However, other developments are less favourable to the scheme. In particular, it was assumed that growth in income per head would be at an annual rate of 3½%. That now looks optimistic in the light of experience since 1973, and the depressing influence on world growth prospects arising from the latest rise in oil prices. Lower growth of income levels will mean less growth in demand for all forms of transport, including the rapid transit system.

(e) Forecasts of population, employment and car ownership will also have changed since 1971. For instance, the Preliminary Report on the Census of Population, 1979, shows that between 1971 and 1979 the population of Dublin County (exclusive of the County Borough and the Borough of Dun Laoghaire) rose from 231,182 to 384,806 — an increase of 66.5%. Moreover, some of the costs, particularly labour costs, used in the appraisal will have to be changed.

63. Taken together, such changes as these could have a substantial effect on the results of the evaluation, not only of the case for a rapid transit system in general but also on the detail of the system that should be developed. If for instance rail costs were found to have risen and the pattern of tripmaking to have become much more widely dispersed, even comparatively small changes in the input assumptions in the original study could lead to a system of segregated busways being preferred to the present rail rapid transit proposal.

64. Given the magnitude of the decision and its irreversibility once taken the Joint Committee is not convinced that sufficient has been done to keep these aspects under review since the Voorhees study was completed. In general terms, the case for the scheme would seem to have improved rather than worsened, but because of interaction between the various assumptions and forecasts used in the evaluation, it is difficult to reach a definitive conclusion.

65. If the project is to be constructed, the Joint Committee is concerned that this should be accomplished within the cost estimate of approximately £200 million¹² at present day prices. It would, for example, be important to avoid the situation that was reached in CIE’s agreement with Van Hool where, in the words of the CIE evidence “The deal with Van Hool was a cost-plus agreement and they treated everything as a cost”. Nor is this only a matter of concern to CIE. Public transport in Dublin, both bus and rail, is subsidised at present. Such subsidies would probably still be needed with the rapid transit system as is discussed below. In the circumstances, any additional costs incurred in constructing and operating the system would ultimately fall on public funds. The Government clearly could not be indifferent to such a possibility.

66. The Joint Committee therefore recommends that, before any contractual obligations are entered into, both CIE and the Government should have the clearest possible knowledge of the maximum expenditure that is permitted to be incurred.

67. The Joint Committee feels that further evidence is required concerning the effect of the scheme on CIE’s commercial performance, and in particular its impact on CIE’s overall subvention requirements. The cost benefit analysis used by the consultants shows that the benefits of the scheme are divided roughly equally between benefits to CIE, through reduced operating costs on buses and diesel trains, and benefits to the users of transport facilities in Dublin, through improved journey times and parking opportunities. But there is little examination of the impact of the scheme on CIE revenues. Such analysis as there is suggests that the scheme would earn a financial surplus in 1991, but it is acknowledged that the position would be less favourable in intervening years. Moreover, since the study was completed, the financial position of CIE services in Dublin has deteriorated markedly, so that this part of the analysis is undoubtedly particularly out of date.

68. CIE, in evidence, argued that if the public once saw the rapid transit system in operation and got the benefit of it CIE could build up traffic very easily and an extension (i.e. additional to the Howth/Bray electrification) “would be feasible on a commercial basis”.¹³ However, such a proposition most certainly needs to be proved. For example, if the scheme costs £200 million, with a 10% interest rate, and an assumed asset life of 20 years for depreciation purposes, the annual capital charge for the project would be £23½ million. This alone exceeds CIE revenue from all bus and suburban rail services in Dublin in 1978. In addition, there would, of course, be operating costs incurred in operating the transit system, and other bus services.

69. This is not to say that the transit system should not be built if it cannot be made self financing. In many other countries, the construction and operation of transit systems is subsidised. In London, for example, capital requirements for the construction of new underground lines have in general been provided by the Government and the Greater London Council, and not financed from fare revenue. In the United States, the new transit systems in San Francisco and Washington are operating at a loss. However, if such losses are also to be incurred in Ireland, the Government and CIE should advise the public and the Oireachtas of this possibility before, rather than after, the transit system is constructed.

70. Therefore the Joint Committee considers that previous studies have given insufficient attention to these financial aspects, and recommends that further evidence should be made available, the necessary work to be completed within six months.

71. The Joint Committee concludes that the additional evidence called for above would provide the material necessary for a decision to be reached on the transit proposal. In the light of such evidence, Government should decide quickly in principle whether the transit scheme should be proceeded with or not. Such a decision need not be final so far as the entire scheme is concerned — the timetable for implementation of the rapid transit scheme provides for a staged approval process, in which the results of one stage can be fed into the decision process at the next. However, a decision in principle made as soon as possible would do much to resolve current uncertainties in Dublin.

(b) Traffic Restraint in Dublin

72. In the course of taking evidence, the Joint Committee heard little but criticism of current traffic conditions in Dublin, and the impact which this is having on the operation of public transport. In recent years, average bus speeds in central Dublin have fallen from fourteen to seven miles an hour, and as low as three miles an hour in particular areas at some times of the day. At the same time, violations of the parking regulations have become increasingly widespread.

73. The Joint Committee finds inescapable the conclusion that present conditions are chaotic, and a severe obstacle to trade, industry and civilised life. It is convinced that these conditions have a deleterious and costly impact on the performance of CIE. It has, therefore, been concerned to identify steps that might be taken to alleviate present traffic conditions, and the administrative changes it believes are needed to ensure that these steps are indeed taken.

74. There is widespread recognition in CIE, in the local authorities and in the Garda Síochána that the volume of traffic entering and parking in the city, particularly in peak periods, is far too great. As a result, bus services cannot keep to timetable, so that even more traffic is diverted from public transport to the private car. It is a vicious circle. Policies are required which redress the balance between public and private transport, and recognise the impossibility of full motorisation in central Dublin, as indeed did the Dublin Transportation Study. Such policies must simultaneously promote the efficient operation of the bus, and restrain the use of the private car.

75. The measures required are well known to all concerned. CIE, in evidence, cited bus lanes, bus priorities at traffic signals and bus only streets as being of assistance to its buses. A reduction in the number of private cars, and thus of the congestion they cause, would require a reduction of the available parking space in central areas, particularly for all day commuters, and more intensive enforcement of parking regulations.

76. The Joint Committee would unequivocally endorse such policies as a means of improving the financial and operating performance of CIE buses, and believes that such measures would be in the long term interests of most if not all Dublin residents.

77. In deciding how far to pursue restraint, there is a difficult balance to be struck between the interests of the motorist and those of the public transport user. There is still substantial agreement on what should be done immediately. All concerned are agreed that the CIE proposal for a bus lane in Parliament Street should be adopted, and it is now intended that this will be introduced in October, 1979. There is similar agreement on the need for stricter enforcement of parking regulations. The Joint Committee endorses both proposals.

78. But there would appear to be more disagreement on how many bus lanes to provide; CIE has identified several streets where they could be and Union representatives told us how important more would be, but Dublin Corporation argued that “there is not an obvious means whereby bus priority schemes could be introduced”, and the Gardaí argued that “the places examined so far indicate that the disbenefits to the public generally would by far outweigh the benefits to CIE.” Detailed technical issues need to be resolved to help achieve other policies, for example to ensure that commuters to central areas use off street, rather than on street, parking spaces.

79. The key issue in the Joint Committee’s mind is why it should have taken so long to reach and act on such conclusions as have been made (and why others have not been reached at all). Proposals for bus lanes were included in the Dublin Transportation Study but until now there has been only a single experiment, in 1971, which lasted for a week. Similarly, the parking situation has deteriorated to the point where Dublin Corporation witnesses referred to situations “where cars are parked on double yellow lines on both sides of the road”.

80. In the Joint Committee’s opinion the problem, as a Dublin Corporation witness observed, is that “In anything where the responsibility is divided, no matter what it is, it cannot be effective”. Under present arrangements, CIE have responsibility for the operation of public transport, the local authorities are responsible for land use planning and the road system, and the Gardaí enforce the various traffic regulations. Within central Government, these three groups are overseen by three separate Departments of State; the Department of Tourism and Trans port, the Department of the Environment and the Department of Justice. Each may take decisions which materially affect the interests of the others, and there is no organisation responsible for ensuring that their activities are co-ordinated, consistent or conducive to the efficient movement of passengers and goods in Dublin.

81. Relations between the bodies are limited to a monthly meeting of a traffic study group, on which inter alia, there are officials representing the Department of the Environment, the Gardaí, CIE and Dublin Corporation. In addition, CIE and Dublin Corporation have each supplied one engineer for a technical traffic unit to study bus priority schemes in Dublin. This reports to a steering committee on which the Department of the Environment and the Gardaí are also represented, and thence to the traffic study group.

82. Undoubtedly the traffic study group has had certain successes, for example its recommendations leading to the introduction of 270 one way streets in Dublin and 38 miles of clearways. However, the Joint Committee cannot agree with the view of Dublin Corporation¹⁴ that the group has been effective. The present situation proves it has not, and the impetus behind efforts to find solutions to acknowledged problems is limited. What has happened to the traffic wardens is a good example. The wardens were originally introduced under the control of the Gardaí, and operated by the Corporation. Their powers were limited to the ticketing of stationary vehicles, and they therefore had no powers to control traffic, or even to instruct illegally parked vehicles to move. These arrangements proved ineffective, and the Corporation has now disbanded its warden service, and responsibility has been returned to the Gardaí, who are in the process of recruiting new wardens. However, it is difficult to see that this will do anything to resolve the fundamental problem that the wardens are unduly restricted in their powers, since their powers will not be extended under the new arrangements. The Joint Committee recommends that the new wardens should be given additional limited powers in the field of traffic control, e.g. power to control traffic where there is congestion and no member of the Garda Síochána is available to deal with it.

83. This lack of co-ordination has, in the Joint Committee’s view, delayed the implementation of bus priority and other traffic management schemes. The Committee concurs with the view expressed in CIE evidence that this delay is largely caused by the lack of Garda expertise in traffic management. The Committee wishes to make it clear that in concurring with CIE’s view it is in no sense criticising the Gardaí in their customary roles; but in these times traffic management has become a science requiring specialist expertise of a high order. The Gardaí do not possess or should not be expected to possess such expertise; and it is therefore unsurprising that they cannot cope effectively with this task which is peripheral to their central activities but of vital importance to the people of Dublin. Garda witnesses themselves acknowledged that their expertise lay in the field of traffic control rather that traffic management.

84. The Joint Committee therefore recommends that effective evolution and enforcement of traffic management policies requires a single body with the necessary authority over all forms of transport in the Dublin area to ensure that such policies are made to work; and that such body should acquire the necessary expertise in traffic management.

85. Several proposals for a body of this sort have been submitted to the Joint Committee. Dublin County Council passed a unanimous resolution in February 1979 “That this Council calls on the Government to establish a Transport Advisory Committee with responsibility for planning all aspects of transport for the Greater Dublin Area, this committee to consist of representatives from the three local Authorities together with representatives from the Department of Transport and Power, the Department of the Environment, CIE and the Gardaí”.

86. In its evidence, CIE approved of such a Transport Advisory Committee, adding “Ideally, we like to provide the services on a contract basis to the local authorities”. CIE had previously tried to establish such a co-ordinating committee but without success.¹⁵

87. Dublin Corporation put forward a more radical proposal which had been evolved by a special committee of the Council set up in 1976. They suggested an independent statutory authority taking over most of CIE’s functions in the area. In the latest review of the Dublin Transportation Study, submitted by the Dublin City Manager, there is a renewed call for a high level co-ordinating committee to oversee transport planning and implementation in Dublin. This reflects an earlier proposal, not adopted in the Transportation Study itself which envisaged CIE, central Government, the local authorities and the Gardaí coming together in a high level committee for this purpose. In evidence, the Corporation repeated its belief that better co-ordination was vital.

88. The Joint Committee believes that there is a need for a high-level co-ordinating authority and this should take, if necessary, the form of a new statutory authority. It should have powers to develop and execute a traffic management strategy for Dublin as a whole, and to ensure that the measures it proposes are enforced. It should cover Dublin as a whole and result in necessary changes in the relevant bye-laws, and parking regulations and have powers to introduce bus priority schemes throughout the city. Such an authority would have considerable implications for CIE and for the Gardaí. The Joint Committee urges the necessity of a new authority for this purpose, and trusts that the local authorities will also recognise this need.

89. Inevitably, this will require the local authorities to transfer the relevant powers they hold at present to the new authority. The Joint Committee is convinced that this is essential. It recognises that there will be difficult boundary problems in determining the division of responsibility but they must, in its opinion, be faced.

90. The new authority should also acquire the powers and expertise to consider more fundamental solutions to the transport problem. The Organisation for Economic Co-operation and Development (OECD) has recently completed a study of urban transport policies in twelve cities in Europe, North America, Japan and Singapore which shows that a great range of comparatively low cost policies have been adopted in some or all of the cities concerned. Examples are:

(a) traffic cell schemes, which limit the number of entry and exit points to areas of the city,

(b) traffic collar schemes, which limit the volume of traffic entering central areas at peak periods by means of traffic lights. The amount of “green-time” at traffic lights is determined by conditions in the area concerned and public transport vehicles are often given priority,

(c) controls on off-street parking in both new and existing buildings,

(d) computer managed area traffic control,

(e) incentives and publicity to encourage the use of public transport and car pooling, and

(f) supplementary licensing schemes whereby extra charges are levied for the use of motor vehicles in central areas.

The Joint Committee is of the opinion that the proposed new authority should give urgent consideration to the experience of other cities and its potential relevance to Dublin in developing a more imaginative urban transport policy.

(c) One Man Bus Operation

91. CIE has wanted one-man operation of Dublin’s double decker buses for a number of years. As was made clear in evidence to the Committee, CIE is convinced that such a development would be in the best interests of bus crews and the general public. It argued that one-man operation “would certainly be a much better situation for them (i.e. the bus crews), for the public and for all of us. Experience everywhere has proved that the drivers of one-man operated buses are much happier men and are better paid than those on two-man operated buses”. This view was based on experience overseas, and experience of one-man operated single deck buses elsewhere in Ireland. CIE suggested that “The public like it because they can get to know the driver and the drivers like it because they are so much better paid. It also means we get less problems with disruption due to absenteeism. People are less inclined to stay away from work because they have more job interest and better pay”.

92. However, these views are not universally held. In particular, the trade unions involved have been unwilling to agree to the change. The National Busmen’s Union has a mandate to discuss one-man operation with CIE, but the unions which are affiliated to the Irish Congress of Trade Unions do not. The representative of the ITGWU did not disagree that CIE had been accommodating in being ready to meet all the objections crews had made to one-man operation, but their conclusion was that bus crews were adamantly opposed to it as a matter of principle.¹⁶ There was also a widespread feeling that abroad it had often slowed down the service and led to congestion as other vehicles were obstructed in their attempt to overtake. Even so, the representatives believed it not impossible that the talks could re-open even in a short time. The Joint Committee would welcome this and would urge CIE to make what investigations abroad they feel might meet the contention that one-man operation slows down buses and other traffic. CIE has made several offers to the unions in recent years without success, and the topic recently came before the Labour Court. The Court learned that some drivers were interested in adopting one-man operation, and suggested a ballot amongst union members.

93. Another difficulty with one-man operation relates to the sale of tickets and the fare system to be adopted. Since the driver is also the conductor, he is, of course, responsible for the collection of fares and the issue of tickets. If the fare system is complex, this can impose lengthy delays which will adversely affect the efficiency of the one-man operation and inconvenience the public. Travellers on the bus are held up, and a traffic jam may well build up behind the bus. CIE consider that such problems can be met by adopting a simpler fare structure and by intensive efforts to pre-sell tickets off the bus. Thus it is proposed that the existing fare structure should be simplified to one with only three fares. Such a structure would be acceptable to the National Prices Commission, which indeed has in the past advocated the adoption of flat fares. However, the Department of Tourism and Transport has been unwilling to accept this simplification as it would mean a sharp increase in the minimum fare. In evidence, CIE stated that the Department had not accepted their last fares proposal, which would have increased the lowest fares, while keeping the highest fare steady.

94. To ease the burden on drivers and to reduce delays to the public, as many tickets as possible should be pre-sold. This would involve offering books of tickets to regular users at a discount. If one-man operation were accepted CIE would launch an intensive marketing operation in a drive to sell 80-85% of the tickets in this way. CIE envisage that there would be three fare bands. While this is acceptable for medium and long-distance passenger journeys, it would mean greatly raising the fares over short distances. But to meet this problem there could be more than three fare levels for pre-sold tickets. Indeed, it would be easy to have an especially low fare pre-sold ticket only available to those who bought it before entering a bus. Anyone boarding a bus to make such a short journey without a ticket, would have to buy one from the driver at a higher rate—that is, the lowest of the three rates available on the bus. Such an approach would not only be a way of keeping a low fare for short distances but would be an added inducement to buy pre-sold tickets.

95. Regrettably it would appear that the effort to get one-man operation is at an impasse. CIE stand by their belief that the operation would be right, while there is trade union opposition. This disagreement is not over objectives but over the practicability of what is proposed: in that no one doubts that one-man operation would be a success if it achieved all the results hoped for by CIE To break the impasse by seeing whether such results are attainable, the Joint Committee would urge both CIE and the unions involved to engage in an experiment on at least one route, and preferably on three dissimilar routes and lasting for one year, in the first instance, so that the practical effects of one-man operation of Dublin’s double decker buses can be more fully assessed on the chosen routes. It would allow CIE to show that it can pre-sell 80-85% of the tickets, adopting a simplified fare structure on the chosen routes.

96. The Joint Committee acknowledges the validity of Government objection to sharp increases in the minimum fare. However, provided CIE can demonstrate the efficiency and acceptablity of what is proposed, the Joint Committee considers that CIE should be allowed to set and simplify the structure of fares, but not until after an experiment of at least a year.

IV THE RAILWAY

(a) Financial Performance

97. Attention has already been drawn in the Report to the financial performance of the Irish railway system, which measured by the percentage of expenditure covered by receipts, has deteriorated steadily in recent years. Inevitably, this has led to rising State subvention, and for the past three years, more than half of rail expenditure has come from the State rather than from rates and fares. Subventions have also risen faster than prices generally, as measured by the Consumer Price Index.

98. As a consequence successive reports have dealt with the financial position of CIE in general, and its rail operations in particular, and produced proposals for reducing rail deficits. As long ago as 1957 the Beddy Committee on Internal Transport concluded that CIE’s rail operations could break even if the system were reorganised and modernised; and over the succeeding five years measures which attempted this objective were taken, unsuccessfully. More recently, in 1971, the McKinsey Report on “Defining the Role of Public Transport in a Changing Environment” made various suggestions for improving CIE’s financial performance without effect. The latest proposals were put forward by CIE itself in its 1977 report, “CIE — The Way Ahead”.

99. In that, CIE foresaw a fall in the deficit on rail operations from £24 million in 1976 to £17.5 million (at 1976 prices) in 1980. In the process, it was inferred that the proportion of railway expenditure covered by revenue would rise from 49% to 62%.

100. The Joint Committee has no choice but to recognise that CIE is now half way through the period covered by these figures, and results for 1978 show that the rail deficit at 1976 prices is now higher than it was in 1976. At the same time, the proportion of expenditure covered by revenue is now just under 49% whereas in 1976 it was just over 49%. The achievement of the financial objectives set out for the railway in “The Way Ahead” would appear increasingly improbable.

101. Indeed, CIE, in their submission to the Joint Committee, acknowledged that railway results were disappointing citing as the major reasons costs imposed by recent reorganisations, from which benefits would be reaped in the years ahead. However, even if CIE’s target of financing 62% of rail expenditure can be attained, albeit at some date after 1980, and we would like to believe this not impossible, there would still be a very substantial deficit on rail operations. The retention of the railway cannot be justified on commercial grounds: as CIE acknowledged in evidence “The services we provide are mostly social because if the railway is losing £30 million why are we running it? We are doing so because it is socially desirable to run the railways”.

102. The Joint Committee accepts that there is a social service role for the railway, a point which it takes up further below. At the same time, however, the Joint Committee recognises in the interests of public accountability and because of the many calls on public funds, that rail losses cannot be allowed to grow without limit. It is only realistic to note that though CIE have hope of reducing the deficit further and have succeeded recently in reducing its rate of growth, the past history of Irish railway operations suggests that an intention to reduce the deficit is frequently expressed and never realised. The matter is particularly important at the present time, when CIE are appealing for major investment in the railways.

103. In “The Way Ahead”, CIE proposed upgrading the radial routes from Dublin. It would effect “a substantial improvement in the quality of the permanent way, i.e. the track”, “the provision of air conditioned modern carriages on all routes” and “the automation of signalling throughout the system”. Though CIE has undertaken investment since “The Way Ahead” was published its requirements remain substantial:—

(a) CIE have requested approval from the Department of Tourism and Transport for the construction of 100 mainline coaches, at a cost of approximately £16 million;¹⁷

(b) Looking forward towards the end of the century, CIE have stated a need for about a further 300 coaches;

(c) Such requirements, added to the new stock needed for the electrification of the suburban line, recently approved, could generate sufficient demand to justify the establishment of a coach building capability at Inchicore. CIE have proposed to establish such a facility, in association with the German firm of Linke, Hofmann and Busch. The hope is that the new enterprise might also generate export demand for its products;

(d) CIE also proposed line improvements. For example, in evidence it drew attention to proposals for improvements at Kilkenny and to improve services between Dublin and Waterford. However, CIE see no point in this investment unless it gets new coaches.¹⁸ This emphasises the interrelatedness of CIE’s rail investment proposals, a point to which the Joint Committee will return.

104. CIE have stressed in evidence that further investment was a precondition of expanding traffic volumes on the railway. It argued that, without such investment the Board “will not be able to cope with the volumes we are generating for the main line”. Without it, the railway could not offer a service that was competitive with the private car or the lorry. Higher traffic volumes were, in turn, a necessary precondition of improved financial performance. CIE argued in evidence that without greatly increased volume “There is no way of reducing the subvention on the railway”.

105. The Joint Committee accepts the view that higher traffic volumes will require more investment. This is important since it is often assumed that the railway has substantial excess capacity. Therefore, in general, the railways cannot cater for substantial increases in traffics without substantial capital expenditure.

106. The Joint Committee has to regard as more doubtful the second leg of CIE’s contention, namely “that if we do not get capital the current deficit is going to increase” with its implication that the capital investment proposed will reduce that deficit. This would only be true if the forecasts of increased traffic were realised. Experience overseas suggests that the increased volumes CIE hopes for will not be easily realised; and it would be foolish to be blind to the possibility that more capital expenditure could increase the subvention required. Indeed the experience of the last three years when traffic volumes have increased substantially¹⁹ and financial performance has not improved at all is not encouraging; and the contention that the financial performance would have been even worse in the absence of increased traffic volumes is not in itself a justification for investment unless there is clear public acceptance of a loss-making railway based on a realistic and unoptimistic appraisal of the anticipated losses and the resulting subvention that will have to be provided by the taxpayer.

107. The Joint Committee would not wish to create the impression that further investment would necessarily be unjustifiable. The Joint Committee believes the railway confers substantial social benefits which in turn justify a substantial State subvention. Further expansion in rail activity could, therefore, justify a greater subvention. But the Joint Committee does recommend that CIE’s case for further capital expenditure should be backed up with detailed estimates of the impact it will have on cash requirements, losses and traffic over a ten year period. This analysis should be supported by details of the assumptions and forecasts on which the projections are based, and should be compiled on a realistic basis which is acceptable to central Government.

108. The Joint Committee also believes that, in an effort to improve performance, CIE should be given greater freedom to determine rates and fares. At present CIE have to cross three barriers before raising fares. The Department of Tourism and Transport must approve the fares increases first. Then the National Prices Commission must approve, and there is a third stage while CIE await approval to implement from Government. In evidence CIE protested that, in recent years, it has only once been able to implement fares increases on the proposed date.²⁰ Though true for all CIE services, it is particularly important for the railway because of its effect on the subvention required. The Joint Committee recommends that the Department of Tourism and Transport expedites its examination of CIE’s applications for rate and fare increases. In particular it would seem to be worth considering how far:—

(a) Government (though not the National Prices Commission) could be regarded as agreeing the fares and rates increases implied in the Estimates, both in principle and also their implementation, when agreeing the Estimates;

(b) if any further fares and rates increases are needed to meet unanticipated deficits the Government (as opposed to the National Prices Commission) should be regarded as agreeing them unless it is ready to agree within six weeks to meet the same deficit in part or in whole by a further subvention.

109. Turning to more specific aspects of CIE’s charges, CIE has made proposals to the National Prices Commission for a reorganisation of its charging system for freight. The changes were accepted, but an implementation again awaits Government approval. The Joint Committee recommends that CIE should be given this approval on the basis that such commercial decisions should properly be left in CIE’s hands.

110. The better service on the Dublin suburban rail services which CIE will offer with electrification could well justify higher fares. Indeed, CIE argued in evidence that “There may be a suggestion that fares on the suburban line are not high enough”. CIE went on to argue that it would be difficult to justify increases in fares to the National Prices Commission as these needed to be based on increases in costs. For Dublin suburban fares the “base has been far too low”, i.e. the level of fares has long been at an unduly low level in relation to the level of costs. The Joint Committee notes, however, that a study of CIE commissioned by the National Prices Commission in 1973²¹ recommended that Dublin suburban rail fares should be raised to a level where they at least covered the avoidable costs of providing the services. In the light of this, the Commission recommended, as a first step, that suburban rail fares be raised to the same level as bus fares. It went on to conclude that “a second step in this direction would be to charge higher fares on the railways than the new bus fares for the same length of journey. This is an aspect of transport policy which the Government and CIE should examine as a matter of urgency”. It is apparent that the National Prices Commission recognise that there may be a case for higher suburban rail fares. The onus is, therefore, on CIE and Government to make this case, rather than regarding it as axiomatic that the National Prices Commission will reject it.

111. However, it is clear, and CIE have in effect told us this, that even comparatively major adjustments to rates and fares could not remotely make the railway commercially viable, in the sense of covering its expenditure from revenue. Therefore, as the Joint Committee accepts, the case for its retention must be social. To assess the social case, it is necessary to examine the alternatives to the railway, which are in the main the private car, bus and lorry, travelling on the road system. By comparison, the railway offers the advantages of lower energy consumption, greater safety and less environmental pollution through noise, visual intrusion and the emission of noxious gases. The railway also provides vital public transport facilities to people who do not have access to the private car, and serves to promote the development of some remote areas specially in the West of the country.

112. The Joint Committee concludes that these aspects form the basis of a social case for the railway. The strength of that case is, in part, dependent on comparisons with alternative road transport which may also in part serve social ends.

113. This raises a fundamental issue in that the construction, maintenance, administration and policing of the road system is in the hands of central and local Government. As such, it is never looked on as a commercial operation and it is, therefore, never possible to talk about the profitability of or level of losses incurred by the road system, in the same way as it is for the railways.

114. As a consequence, allegations are made which cannot be tested: either that the present situation is monstrously unfair to the railways since they pay for their track and road users do not, or that the tax system is so biased against road users that it enables the railways to engage in unfair competition because of it.

115. Whatever may be said about the legal differences between taxes and prices, and the non-hypothecation of the former, the economic and commercial reality is that road users do contribute to the costs of the road through the payments of taxes on vehicle ownership and use. The relationship between these tax payments and expenditure on roads is a matter on which little information is available in Ireland. A major study on this topic was undertaken in the United Kingdom in 1968²² and updated in 1976.²³ A simplified study of the same sort was undertaken on behalf of the National Prices Commission, dealing with the position in Ireland in the years 1969/70.²⁴

116. The Joint Committee considers that a more comprehensive study is badly required to establish a fair basis for competition between road and rail transport. Such a study should establish the costs and revenues of the road system, drawing attention to areas of conceptual difficulty where there were reasonable grounds for suggesting alternative methods of approach leading to different cost and revenue figures, and bringing the results together in a way which enabled reasonable comparison to be made with the commercial results of the railway.

117. The first requirement would be to establish the revenue from the road system. This could include revenue from taxes on petrol and diesel, from vehicle excise duties, and more arguably from VAT paid on such items as vehicle servicing. There is a difficulty in deciding what revenue is specific to the provision of the road system, and what is revenue raising taxation to finance general Government expenditure. Indeed, such a question is in a sense unanswerable since the Government, quite rightly, recognises no necessary connection between taxation of the road user, and public expenditure incurred for his benefit. However, in the context of a study comparing road with rail, it would seem appropriate simply to employ a basis which ensures equity in tax treatment between the two.

118. The second, and probably more complex, aspect would be the costs incurred by the public sector and the community at large. The public costs included in the United Kingdom study were those “of road construction and maintenance, of cleansing, lighting, of traffic policing, of courts and the costs of local and central government administration of highways”. Few of these items are easy to estimate precisely. In some cases, such as policing costs, allocations have to be made from more aggregated levels of police expenditure. Items of capital expenditure present basic conceptual problems, as no data are collected on road depreciation or interests charges on funds used for road investment. Figures for these items would be required if the expenditure figures are to be made comparable with those for the railway. It would be possible to calculate notional figures for these items, but an alternative is to adopt a pay-as-you-go approach whereby capital expenditure in any one year is fully allocated to road user taxation in the same year. This was the approach adopted in the United Kingdom, and is undoubtedly simpler to apply in practice, although one would have to allow for it distorting to some extent any comparison with the railway.

119. Costs incurred by the community as a result of vehicle use include accidents, noise, fumes, vibration and visual intrusion. Some accident costs are borne by the State, through the hospital service and are appropriate for inclusion with the public costs above. However, there are further costs such as grief, pain and suffering which are borne by the community at large. There are obvious difficulties in placing values on the costs of such items, and the same applies to environmental effects such as those of noise, but such items are undoubtedly costs which could justify a charge, through taxation, on the vehicle user.

120. A study such as that outlined above could go further than an aggregated comparison of road user costs and revenues, and could examine individual classes of road user, such as cars and heavy lorries separately. In the Joint Committee’s view, this would be a particularly worthwhile extension, which could have implications for vehicle taxation policy, in that the Joint Committee would not consider it appropriate for any class of vehicle user to pay less in taxation than the public expenditure incurred for its benefit. An appropriate scale of duties progressive with vehicle size and weight, and justified by the wear and tear imposed by heavier vehicles could be an important element in helping a more rational distribution of freight between road and rail.

121. In the Joint Committee’s opinion, an examination of the comparative commercial position of road and rail transport could well be a worthwhile task for the Transport Consultative Commission to undertake. Such an assignment would require the active co-operation of the Department of Tourism and Transport, the Department of the Environment, the Department of Finance, CIE, the Gardaí, and other State bodies such as the hospital authorities who bear some of the costs of road accidents. The Joint Committee imagines that such co-operation would be forthcoming and recommends that a study be undertaken as a matter of urgency.

(b) The National Commitment to the Railway

122. At several points in evidence, CIE argued that the Government and country needed to reach a fundamental decision on the type of railway they wished to see in future, if any, and the role of that railway in meeting transport needs in Ireland. CIE argued that “The first thing we must do is get a definite policy.… The Government will have to say what they intend for the railway in the long run”.²⁵ Elsewhere, CIE’s chairman suggested that “the country needs to make up its mind on what kind of railway it wants, whether it sees — as I do — the railway having a greater future than its past in the context of the best use of energy”.²⁶ Indeed, CIE went as far as to state that it “would far prefer to be told that the intention is to contract the railway or develop the railway rather than to have no decision. At least we could plan and or adapt our whole future to whatever decision is taken”.²⁷ Similar arguments are made elsewhere.²⁸

123. Such statements perhaps go a little too far in creating an impression of public indifference to the railway. One must not forget that the latest White Paper on National Development²⁹ states that “The Government recognise the necessity of maintaining an efficient mainline railway network and the desirability of attracting to rail as much as possible of heavy freight traffic and long distance passenger transport. CIE are therefore continuing their mainline railway modernisation programme”. Similarly, the Government has approved continuing investments in the railway from year to year, though CIE argue that this “is a very small commitment”.

124. Outside Government, CIE may take some encouragement from the submissions to the Joint Committee. None argued for further contraction of the railway, with a view to reducing losses. Many recognised the railway’s social role, and argued for further expenditure. The Confederation of Irish Industry “recognises the need to provide a social service at a subsidised cost”. The Industrial Development Authority acknowledges that “CIE have made significant improvements in their freight service, both in the provision of liner train services and in the establishment of rail heads, equipped with modern handling equipment, at strategic locations”, and “welcome the improvements in container handling facilities which CIE is making at regional railheads”. The Dublin Chamber of Commerce suggested that “The rail services should be allowed to continue to operate as in the event of a fuel crisis this service would be vital for the continued economic life of the country”. The Irish Congress of Trade Unions felt “that the greatest emphasis should be placed on the development of public transport” and that “recognising the benefits an effective, efficient and reliable public transport system has for the community, arrangements should be made for finance to be made available to carry out the necessary improvements”.

125. While it cannot be said that the Government and these other bodies are not committed to the railway, the CIE case as we understand it is that such fair words are not followed through in action; and with this view as far as it concerns Government, the Joint Committee has much sympathy.

126. The Joint Committee believes that if there is such a commitment to a loss-making railway, and it would not disagree with this provided there are greater controls on loss-making as already mentioned, then the railway should receive approval for investment and borrowing appropriate to its scale. Bringing Government subvention above the line as revenue would make the appropriateness of this clearer.

127. CIE put it to the Joint Committee, and it would not deviate from this, that the cause of the gap between theoretical and effective commitment is the absence of a well defined national transport policy, which established the role which the railway should perform within that policy framework. CIE, however foresaw difficulties in formulating “a national transport policy” because it would mean “legislating for the private sector as well as the public sector” and it “cannot see that being done”.³⁰

128. The Joint Committee does not accept the CIE view that there can be no policy towards the private sector. Indeed, such a belief appears inconsistent with the present legislative situation in Ireland, and with the arguments CIE themselves advanced elsewhere in evidence. The haulage industry, both own-account (i.e. manufacturers carrying their own goods in their own vehicles) and for hire and reward, is subject to a variety of restrictions arising from Government licensing policy. The requirements of the EEC are placing stricter controls on the quality of the haulage industry in both the public and private sector. The private motorist is subject to a variety of controls through, for example, safety and parking controls. CIE have themselves argued that such controls should be intensified and more strictly enforced, particularly in Dublin. Whilst it might be argued that such measures do not stem from consideration of a national transport policy, they certainly do disprove any contention that Government is unwilling to legislate for the private sector.

129. The Joint Committee therefore believes the Government should establish a national transport policy which covers both the private and public sectors. Such a policy would need to deal with the role that Government sees public and private transport performing in urban areas, the way in which it wishes to encourage development of the road haulage industry, steps to be taken in relation to the provision of transport in remote rural areas and similar topics which have limited bearing on the future of the railway. In this context, a policy statement on the railways’ future, in terms of the scale of the network to be retained, the types of traffic for which the railway should compete, the services to be offered, and the social role which the railway should perform would comprise a vitally important component of such a policy.

130. There are two reasons why a decision on the future of the railway is particularly necessary now:—

(a) the energy crisis has made a major difference to relative prices of road and rail. Many would see it as a watershed in the history of the Irish railways, justifying not only the retention, but even possibly their expansion. The Joint Committee recommends that the transport implication of energy planning should be a major concern of Government. It realises the importance of reaching a balanced view on this and that the case depends crucially on particular circumstances. Rail does offer substantial economies for bulk movements, passengers and freight, though they will be less marked for those persons and goods that have far to travel to reach the rail head at one end or both, and also on lightly trafficked routes. In the longer term, this might justify the restoration of the tangential routes from which services have been withdrawn in recent years;

(b) so many of the decisions now needed on the railway are interrelated one with another. Improvements are needed to the track, to the signalling and to the rolling stock. But improvements to any one of these items is of limited or no value in the absence of a commitment to improve the others.

131. The Joint Committee has already drawn attention in this report to the CIE proposals for line improvements at Kilkenny, and the fact that CIE are unwilling to proceed with these without a Government decision to permit additional rolling stock. Similarly, CIE proposals to establish a coach building capability at Inchicore can only be justified if there is a commitment to provide substantial orders for rolling stock.

132. If CIE are to plan coherently for the future, they must do so with a knowledge of the amount of capital the Government is willing to make available for the railway for a period of years ahead. At present CIE only knows how much capital is to be made available for the railway for one year ahead and has to argue for each aspect of that expenditure.³¹ This is not satisfactory when much of the investment can only be justified by what CIE will do in the future, rather than what it has done in the past.

133. It is noteworthy that the Government has recently committed itself to a ten year development programme for the road system,³² identifying planned schemes, their cost, and the time scale in which they will be implemented. This creates a much better environment for long term planning, which is every bit as necessary for the railway as it is for the road system. A similar plan, which is accepted by Government, is needed for the railway so that the volume of resources to be devoted to its development over a ten year period can be agreed. The implementation of such a plan, as with the Road Development Plan, must be “dependent on the sufficiency of available financial resources”. However, the Joint Committee notes the Government’s statement that it is conscious that “the possibility of short-term variation in the level of investment in the light of the state of the national economy must be reconciled as far as possible with the fact that major road schemes can take a considerable time to prepare and several years to execute”. This is equally true for the railway, and requires a Government agreement that a long-term investment plan for the railway, once agreed with CIE, will not be varied by more than, say, 15% from one year to another.

134. The preparation of this longer-term investment plan for the railway will require many inputs. The financial analysis of the implications of further investment, and the comparative study of the commercial provisions of road and rail, both of which were recommended by the Joint Committee earlier in this report, will be vitally important inputs to the study. In addition, the Government will need to consider the social service role that CIE are performing on the railway in some detail to decide which areas of investment are particularly deserving of support because of their social service implications.

135. To some extent, this will require Government to make its views public in areas which are currently the province of CIE. CIE stated in evidence that “The way the system works at present is that we establish what quantum of services we can give for the amount of money that is available”.³³ Elsewhere, CIE argued that “the good thing about the Transport Acts is that they give us the discretion to decide which social services we will operate”,³⁴ and approved the fact that Transport Acts allowed CIE “to determine the kind of mix and how we should operate the transport services”.³⁵

136. Clearly, if Government is to express more precisely the social service role it expects the railway to perform, and give a longer term commitment to the railway on the strength of that social service role, it must expect CIE to respect its wishes. Government cannot be expected to endorse CIE policies unless it first agrees with them, and CIE have acknowledged that the role of a railway which is making losses on the present scale must be social. Since Government finances these losses, it must be the final arbiter of what services should be provided. The Joint Committee is convinced that Government should specify more fully the social services that it expects CIE to provide as part of a long term policy commitment to rail development without, however, going so far as to allocate subvention to particular services.

V THE PROVINCIAL BUS SERVICES

(a) The Urban Bus Services

137. CIE provides urban bus services in the cities of Cork, Galway, Limerick and Waterford as well as in Dublin. In CIE’s accounts, these services are amalgamated with the long distance stage and express services, and with school transport services, and losses on all services taken together amounted to just under £1.3 million in 1978. In evidence CIE stated³⁶ that the urban services caused virtually all these losses.

138. In the Joint Committee’s view the fact that virtually all losses are incurred on the urban services is a point to which attention should be drawn in CIE’s annual report. The urban and inter urban services are very different in that they supply and cater for different demands; and the financial performance of each is a legitimate topic for public debate. In the absence of information on the costs and losses of each, it is possible to draw quite wrong conclusions from the figures in CIE accounts. For example, one might infer that CIE was in the aggregate subsidising transport in rural areas, which it is not. Equally, one might conclude that the financial performance of urban bus services outside Dublin was markedly better than in Dublin. Again this is not true; the provincial urban services incur losses amounting to about 22% of expenditure; the comparable figure for Dublin is 16%. Moreover, there are notable differences in the operational and financial performance of what is provided in each city.

139. It would be consistent with the Joint Committee’s recommendations on the method of presenting the subvention in the accounts that CIE produce separate consolidated revenue accounts for the urban, provincial and “other bus services”. The Joint Committee would not recommend such an approach if it imposed significant extra administrative costs on CIE but believes:—

(a) that as in a commercial enterprise there is a strong case for producing separate accounts for what are separate profit centres; and

(b) that at the least the accounts should show separate figures on revenue, cost and subvention in the financial statistics which CIE already publishes with its accounts. Since it already collects these data and cited them to the Joint Committee, this course will impose no extra costs.

140. Provincial urban bus services show similar results to the services in Dublin for similar reasons. The cities concerned suffer from significant traffic congestion, particularly in peak periods. However, CIE shows considerable optimism about the future suggesting that “Though the situation is becoming worse in the cities the hopes are very bright”.

141. Its optimism appears greatest in Cork, where a Land Use/Transportation Study has recently been completed. The proposed plan has, as an integral part, “the provision of an enhanced and reliable public transport service. Buses in particular can only operate effectively if they are not subject to excessive traffic delays. In each corridor approaching the City Centre, it is recommended that buses be segregated from the main stream of traffic by priority measures”.³⁷ The plan also acknowledges that “it is neither practical nor desirable to provide parking for the full commuter demand”.

142. The Joint Committee welcomes the emphasis which the plan places on public transport and, in common with CIE, trusts that the recommendations will be implemented. The Joint Committee believes that other cities should consider giving similar priority to providing more advantageous operating conditions for CIE’s bus services. Because of CIE’s present optimism the more drastic proposals suggested for Dublin would not seem to be justified in the smaller cities.

(b) Long Distance and Rural Bus Services

143. CIE operates a variety of services in rural areas. Express services, operating between major towns, make a profit which is sufficient to cover losses on rural stage services. School transport services are operated on behalf of the Department of Education, which remunerates CIE for all costs incurred. In addition, there are many private operators who also provide school services. It is CIE policy to break even in the provision of these services, and this has been achieved. Losses on some routes, particularly in the more remote areas, are covered by profits on long distance express services.

144. The Joint Committee considers that the major issues arising in the provision of these services are to do with the availability of public transport in rural areas. There are obvious difficulties in operating services profitably when volumes of traffic are very low, and CIE have acknowledged that some routes are operated at a loss. CIE believes, and the Joint Committee agrees with this judgment, that the provision of such services is justified by social considerations. CIE stated in evidence that it applied a “containment of loss” criterion in considering the operation of those services.³⁸

145. The Joint Committee is, however, concerned for the long term health of rural transport under present arrangements. Car ownership levels are rising rapidly and this is bound to have an adverse effect on the use made of rural buses, and will result in increasing losses. Unless the containment of loss criterion can be relaxed to permit higher losses, services must be progressively withdrawn. However, rising car ownership will have an equally adverse effect on longer distance services. If that happens, then the profits CIE makes from these routes will be reduced. As it is present CIE policy that these profits should be the source of finance for losses on the rural routes, in future the containment of loss criterion must be more rather than less strictly applied. CIE told the Committee that it “is very anxious to do something for the rural communities who are denied transport because the volumes are too small”.f39 However, unless new policies can be devised, it is likely that the number of communities who are denied transport will rise rather than fall; a situation which the Joint Committee views with great concern.

146. The first and most obvious way of dealing with this situation would be for CIE to amend its financial objective and permit losses on rural services over and above those which could be financed by profits on long distance routes. This would clearly require increases in Government subvention unless economies could be achieved in other areas. Such a step should, therefore, require a Government approval.

147. Although a need for further subvention would be unattractive, the Joint Committee nevertheless believes this is a step which may need to be considered eventually. If CIE tries to push up fares on express services to generate extra profits to finance rural routes, this cannot fail to have an adverse impact on the use made of these long distance services, and ultimately on the scale of services provided and their profitability. CIE would then be in the position of withdrawing profitable services as a result of their efforts to maintain unprofitable ones. Such an outcome cannot be in the long term interests of public transport.

148. The alternative to increased subvention would be to devise measures which reduced the costs of public transport in rural areas. Such measures might involve CIE or the private sector. In evidence, CIE drew attention to a number of its own proposals for providing transport at low cost, and in particular to proposals for more effective use of school buses. CIE had wished to use school buses to take schoolchildren “to Feiseanna or matters associated with school activity”.⁴⁰ However, the drivers of school buses were often part time, and CIE could only keep costs down to an acceptable level if part time crews also manned the buses when they were used for other purposes. This was not acceptable to the unions, who wanted CIE’s own crews used in these circumstances. CIE proposed that if a CIE driver was free he would be used on private hire school buses, and that drivers would be compensated for any loss of earnings arising from the new arrangements. The proposal was put to the Labour Court on this basis, and the Labour Court recommended in CIE’s favour. However, the proposal has still not been accepted by the busmen.

149. The Joint Committee believes the unions should accept the Labour Court decision and believes this would be a useful supplement to the range of available services in remote areas. The problems which afflict CIE in achieving more extensive use of school buses is in marked contrast to the position where such services are operated by the private sector. CIE acknowledged in evidence that “A number of people who have acquired buses for schools services do use them for private carriage. In many cases the school business is their bread and butter and it enables them to operate minibuses for social events”.⁴¹ Such operators are clearly making a greater contribution to rural transport problems with their school buses than CIE is allowed to make. The Joint Committee therefore recommends that, unless and until there is a change in union attitudes, there should be a general policy of transferring such services to the private sector, where there is an operator willing to provide the service, and there are established local needs that are not at present being met. This would be a limited policy and would not, certainly in the short term, mean any great change in the arrangements for providing school transport. It would not therefore impose substantial costs on CIE through redundancy payments, which CIE fear if a decision were taken “to operate school transport in another way”.⁴² Any changes in manning requirements could be accommodated through natural wastage.

150. A further experiment to reduce the costs of rural transport has been the operation of minibuses. CIE has a minibus operating between Birr and Roscrea, but proposed services on other routes have encountered opposition from trade unions. CIE explained in evidence that “The drivers felt that they were too near to the customers, that there was not enough baggage room, and that the ceiling was too low”.⁴³ In the Joint Committee’s opinion, the case for operating vehicles which are smaller than conventional buses to reduce costs on very lightly trafficked routes is overwhelming. The points which divide CIE and the trade unions seem both trivial and capable of amicable resolution by suitable attention to the type of vehicle to be used for the services. CIE should investigate further the potential for provision of such services.

151. Another possibility, which CIE should inquire into in conjunction with the Department of Posts and Telegraphs, is the provision of post buses. Such services would combine the carriage and delivery of mail with the carriage of a limited number of passengers. Though the needs of postal business can often mean that post buses are a comparatively slow method of transport, they have operated successfully in mainland Europe and in Britain, and would undoubtedly be welcome if the alternative was no service at all. The Joint Committee believes services of this type may have a role to play in very remote areas.

152. The final possibility for reducing the costs of providing transport in rural areas would be to encourage the private sector to develop further. Though some areas are now served by private operators, CIE provide the vast majority of services. CIE, in evidence, expressed the belief that it “should find some way of allowing the private sector to feed the express services”.⁴⁴ However, results to date are far from impressive. The Joint Committee considers that CIE could and should do more. In particular, it should identify those services which are at present losing money, using the comprehensive data it has available on route costs and revenues, and invite private operators to take these routes over if they so wish. If successful, such a policy would release resources for the operation of other rural services by CIE, thus increasing the total quantity of transport available. This would undoubtedly be in the public interest.

153. A radical possibility would be for the Government to make finance available to private operators to run services which it considers socially necessary. This would be a reversal of present policy, though one which might well need to be considered if the financial climate for rural services worsens, as the Joint Committee fears it may. Before this, however, the Government might consider making loans or loan guarantees available to prospective private sector operators who had difficulty in obtaining the finance necessary to purchase a vehicle.

VI OTHER ACTIVITIES

(a) Road Freight

154. CIE’s objectives for road freight were set out in “The Way Ahead” as follows:—

(a) Road freight should not compete with rail;

(b) Road freight railhead services should be developed;

(c) Road freight services, other than railhead services, should complement the railway operations;

(d) Road freight shall not incur losses.

In evidence, CIE confirmed that these were still their objectives.

155. The Joint Committee considers that CIE policy in this area is satisfactory, and would not wish to recommend any changes. It notes that CIE has been unwilling to accept the recommendations made in the McKinsey Report and elsewhere that CIE should operate road and rail freight businesses competing with one another, thereby enabling the road freight side of the business to tender for traffic currently carried by rail. Instead, CIE has contracted road freight operations, as an act of deliberate policy, and only provides services which support the railway.

156. The Joint Committee regards this decision as a proper one for CIE to make. It can see no reason why CIE should be instructed to run exclusively road freight services if it does not wish to do so, since such services are available from private sector operators for those who wish to use them. There is, however, a risk under present policy that goods will be carried by rail rather than road even in situations where it would be both cheaper and quicker to carry them by road. The Joint Committee believes CIE should be careful to ensure that such situations do not arise.

(b) Hotels (Óstlanna Iompair Éireann Teoranta)

157. CIE operate a number of hotels including one, the Russell Court, in Belfast. These activities have incurred losses in recent years, but would now be profitable were it not for the Russell Court. The Joint Committee believes it should continue to be CIE policy to operate its hotels at a profit; indeed, this is a requirement on CIE arising from EEC directives.⁴⁵ However, there is little or nothing that CIE could do to make the Russel Court profitable. The problems were described by CIE in evidence.⁴⁶ The hotel was built with borrowed funds on which interest charges amount to £360,000 per year, closed as a result of bomb damage six months after opening, renovated, bombed again and has been closed ever since. In the circumstances, there is no revenue to finance the heavy interest charges, and the Joint Committee recognises the inevitability of continuing losses.

(c) Canals

158. CIE will, as soon as the necessary legislation is passed, transfer its canal responsibilities to the Board of Works. The Joint Committee agrees with the decision to transfer these responsibilities. It is difficult to see the canals’ role as being in any sense commercial, either now or in the foreseeable future, although they could be developed for leisure and amenity purposes. However, CIE with its far more important responsibilities for railways and urban transport would not be the appropriate agency for such development. Indeed, CIE has been instrumental in the decision to transfer its canal functions to the Board of Works, by convincing the Department of Tourism and Transport that this change of responsibilities would be sensible.⁴⁷ As such, the Joint Committee agrees that the decision is a correct one.

VII CONCLUSION

159. Various written submissions received from CIE are set out in Appendices 1 to 5.

160. The text of certain resolutions in regard to transport in the Dublin area passed by the Dublin Corporation and the Dublin County Council are set out in Appendices 6 and 7.

161. Written submissions on the role and performance of CIE received from:—

(a) Association of Public Transport Users

(b) Confederation of Irish Industry

(c) Consumers’ Association of Ireland Limited

(d) Córas Trachtála

(e) Department of Education

(f) Dublin Chamber of Commerce

(g) Industrial Development Authority

(h) National Consumer Advisory Council

(i) Royal Irish Automobile Club

(j) Transport Industrial Committee of the Irish Congress of Trade Unions

are set out in Appendices 8 to 17. The submissions reflect a wide range of views on CIE and the way it operates. A written submission received from Bord Fáilte Éireann is not being published at its request.

162. The Joint Committee took oral evidence from:—

CIE

Dublin Corporation

Dublin County Council

Garda Síochána

Irish Congress of Trade Unions

National Busmen’s Union

The Joint Committee was appreciative of the ready manner in which those who gave evidence responded to questions.

163. For the purpose of this inquiry the Joint Committee engaged Professor Christopher D. Foster and Mr. David J. Parish of Coopers & Lybrand Associates Limited as consultants. It wishes to thank both of them for their invaluable advice and help at all stages of the inquiry.

164. To summarise its conclusions in the body of the report, the Joint Committee recommends:—

(i)that in agreeing the Annual Estimates Government should accept that it is approving the fare and rate levels for CIE implied by these estimates;

(ii) (a)the initial level of subvention to CIE set in the Annual Estimates should continue to be based, as at present, on estimates of labour costs bearing in mind the exigencies of negotiation;

(b)any excess of labour costs over this level should be met either by increased productivity within the organisation or by increased rates and fares;

(c)nevertheless any cost to CIE of delays in granting rate and fare increases so as to result in lower revenues than those planned in the Annual Estimates should be recouped by a Supplementary Estimate in which such compensation should be identified;

(d)CIE might also receive a Supplementary Estimate to cover part of unanticipated raw material costs, particularly for imported products like oil. Such costs increases are almost entirely outside CIE’s control and higher subvention payments to meet them would appear entirely justifiable; and

(e)while not wanting to rule out the possibility of Government deciding to meet some part of an unexpected shortfall in revenue or increase in costs (other than in raw materials) through additional subvention, that such additional subvention should be the exception, not the rule.

(iii)that procedures for paying CIE its subvention should be assimilated to those adopted elsewhere in the EEC; and so far as is relevant, grants should be paid above the line, rather than as at present below it, to CIE’s accounts to reflect their status as payments for public services rather than as grants to meet deficits;

(iv)that the subvention as agreed in Annual or Supplementary Estimates should not be made specific for each of CIE’s services, so leaving CIE free during the financial year to allocate the agreed total subvention between services at its best judgment without further authority from the Department of Tourism and Transport;

(v)that CIE shall identify in their accounts ex post facto the subvention used by each service, and that in consultation with CIE, the Department should agree how far such a breakdown should be taken—so, for example to identify the subvention received by urban and by rural bus services and within urban bus services, by each major city;

(vi)that, although there may well be potential for enhancing the role of the private sector in certain areas, there should be no general policy of hiving off profitable CIE activities—a policy by which profitable activities were hived off would be profoundly discouraging to CIE management and might even deter further improvements in efficiency;

(vii)that every effort should be made to ensure that decentralisation of management does not result in conflicting decisions in the area of conditions of service for workers;

(viii)that the CIE Wages Grade Superannuation Scheme be reviewed and a move to a percentage of earnings basis rather than a flat rate basis be examined;

(ix)that while it is well disposed to investing in a Dublin rapid transit system, much of the data on which the old studies are based is eight years old and much has altered since; these studies should be revised; the necessary work to be completed within six months;

(x)that because the transit system may not be made self-financing, this should not in itself be a reason for rejecting it since it might still be good value for public funds; but

(xi)that it is essential that the financial implications of a rapid transit system for CIE are analysed, the necessary work to be completed within six months;

(xii)that as a corollary before any contractual commitments are made, both CIE and Government should have the best possible understanding of the maximum expenditure to be incurred in constructing the rapid transit scheme;

(xiii)that buses should be given greater priority over cars in the streets of Dublin in the interests of the general public; and

(xiv)that as a corollary stricter controls on traffic circulation and on both on-street and off-street parking are needed;

(xv)that to this end a new authority must be established with full powers to develop and implement a traffic management policy for Dublin as a whole, if there is to be any hope of stopping continuous deterioration in traffic conditions;

(xvi)that the new traffic wardens should be given additional limited powers in the field of traffic control;

(xvii)that to find a way through the impasse on one-man operation of double-decker buses in Dublin, CIE and the trade unions should agree on a one year experiment preferably on three dissimilar routes to assess the effect of one-man operation;

(xviii)that, while the Committee believes the railway confers substantial social benefits which in turn justify a substantial State subvention and that further expansion in rail activity could, therefore, justify a greater subvention, it does recommend that CIE’s case for further capital expenditure e.g. rolling stock, should be backed up with detailed estimates of the impact it will have on cash requirements, losses and traffic volumes over a ten year period. This analysis should be supported by details of the assumptions and forecasts on which the projections are based, and should be compiled on a realistic basis which is acceptable to central Government;

(xix)that a comprehensive study, which could well be a worthwhile task for the Transport Consultative Commission to undertake, is badly required to establish a fair basis for comparison between road and rail transport costs;

(xx)that the Government should formulate a national transport policy, which should cover both public and private sectors;

(xxi)that within the context of such a policy the Government should make a commitment to investment in railways over a ten year period as it has done for the road system, and that the amount should not be varied by more than plus or minus 15% in any year;

(xxii)that the Government policy in regard to the social role of the railway should be more clearly defined especially where individual services will be run unprofitably, and when setting guidelines should indicate to CIE the objectives they should achieve in such services;

(xxiii)that CIE produce separate consolidated revenue accounts for the urban (outside Dublin), provincial and “other provincial” services;

(xxiv)that the recommendations of the Cork Land Use/Transportation Study should be accepted as soon as possible insofar as they bear on CIE;

(xxv)that other provincial cities should give priority to public transport as Cork intends and should adopt similar policies to this end;

(xxvi)that while for the time being it may be possible to go on running CIE rural buses so that in aggregate they avoid loss, all the underlying trends are against this continuing for long, and Government should consider whether and on what terms it should be ready to make a subvention;

(xxvii)that it would be right for the unions concerned to accept the Labour Court recommendations on the use of school buses for other purposes, so that private drivers can use them part-time for private hire;

(xxviii)that unless this is done the Government should adopt a general policy of transferring school services to the private sector where there is an operator wishing to provide such a service and where established needs are not being met;

(xxix)that the Department of Posts and Telegraphs should examine the scope for using post buses, which would combine the carriage of mail with the carriage of a limited number of passengers, in rural areas and should do this jointly with CIE;

(xxx)that the Department of Tourism and Transport, in conjunction with CIE, should invite private operators to take over rural bus services which CIE cannot operate profitably;

(xxxi)that the Government should consider ways and means of making loans or loan guarantees available to persuade private sector bus operators to buy the necessary vehicles in such circumstances;

(xxxii)that CIE should continue to run its road freight business as an adjunct to the railways and not in competition with other road hauliers;

(xxxiii)that as at present proposed responsibility for canals should be transferred from CIE to the Board of Works.

Chairman of the Joint Committee

10 October 1979.

¹See Evidence (Question31)

²See Appendix 3.

³See Evidence (Question 3).

⁴See Evidence (Question 140).

⁵See Evidence (Question 139).

⁶See Evidence (Question 6).

⁷See Evidence (Question 35).

⁸See Evidence (Question 30).

⁹See Appendix 1.

¹⁰See Evidence (Questions 45 and 98).

¹¹It would appear from the Preliminary Report on Census of Population, 1979, published in September, 1979, that these figures will have to be revised upwards, but the information available at this stage is not sufficient to enable the figures in the text to be revised.

¹²This figure is exclusive of the cost of electrifying the Howth/Bray line.

¹³See Evidence (Question 79).

¹⁴See Evidence (Question 211)

¹⁵See Evidence (Question 66).

¹⁶See Evidence (Question 292).

¹⁷See Evidence (Question 90).

¹⁸See Evidence (Question 129).

¹⁹See Evidence (Question 104).

²⁰See Evidence (Question 138).

²¹National Prices Commission. Occasional Paper No. 8. June 1973.

²²Road Track Costs, HMSO. 1968.

²³Transport Policy. A Consultation Document, Volume 2. HMSO, 1976.

²⁴NPC Occasional Paper, No. 10. July 1973.

²⁵See Evidence (Question 5).

²⁶See Evidence (Question 23).

²⁷See Evidence (Question 134).

²⁸See Evidence (Questions 11, 21, 24 and 96).

²⁹Programme for National Development 1978-1981. Prl. 7618.

³⁰See Evidence (Question 21).

³¹See Evidence (Question 7 and 9).

³²Road Development Plan for the 1980s. Prl. 7967.

³³See Evidence (Question 5).

³⁴See Evidence (Question 4).

³⁵See Evidence (Question 21).

³⁶See Evidence (Question 155).

³⁷Cork Land Use Transportation Plan, Skidmore, Owings and Myrrill, 1978.

³⁸See Evidence (Question 37).

³⁹See Evidence (Question 164).

⁴⁰See Evidence (Question 164).

⁴¹See Evidence (Question 165).

⁴²See Evidence (Question 174 to 176).

⁴³See Evidence (Question 164).

⁴⁴See Evidence (Question 30).

⁴⁵See Evidence (Question 16).

⁴⁶See Evidence (Question 182).

⁴⁷See Evidence (Question 188).