Mr. Fintan Towey:

I welcome the opportunity to brief the committee on the proposals under the European Union's fourth railway package and further discussion on the potential impact of the proposals for the rail market in Ireland. The Chairman has already introduced my colleagues. To assist the committee, the Department has prepared a briefing note on the proposals and I understand this has been circulated to members.

The objective of EU railway policy over the last two decades has been to reverse the Europe-wide trend of rail passengers and rail freight traffic shifting from the railway to other transport modes. In particular, rail transport in Ireland faces major competition from the road-based transport modes, especially since the completion of the major inter-urban motorway network. For Europe's railways to gain, or even to retain, their share of the market, it must be ensured that railways can deliver a high quality, reliable and efficient service that is also environmentally friendly.

The European Commission 2011 White Paper sets out the objective for a single European railway area whereby administrative and technical barriers are removed allowing ease of access to railway markets. The proposals under the fourth railway package deal with greater market access, in particular, the amendment to EC Regulation 1370/2007 dealing with opening of domestic rail passenger markets and the competitive tendering of contracts for public service obligations, PSO. In principle, there is broad support from the European railway industry for further opening of domestic railway markets, with an understanding that there should be protections for existing PSO routes. However, these are politically sensitive issues for many member states.

The recast first railway package, which was adopted late last year, was an important step to reaffirming the structural foundations required for further railway market liberalisation. The Commission ambition is for complete unbundling of the railway infrastructure manager from any railway undertaking. Some of the larger member states view this as a step too far. This view was bolstered by a recent decision of the Advocate General to the European Court of Justice which found in favour of the holding structure model in Germany. The final decision of the court is awaited.

The Commission proposal under the fourth railway package, to amend Directive 2012/34/EU establishing the single European railway market, reflects recent events and allows for an alternative to complete institutional separation of the railway infrastructure manager and railway operator. However, the proposal also puts forward other new requirements for discussion concerning necessary safeguards under any alterative structure, which would ensure non-discrimination of access to the railway market. In Ireland, we are currently in the process of introducing reforms to ensure EU regulatory compliance in the context of the ending of our long-held derogation from certain aspects of the first railway package. This will see a reorganisation of our national rail company, an independent rail regulator and safeguards to ensure non-discriminatory access to the market. In Ireland's case, there is a fine balance to be maintained between ensuring that our railway is organised and positioned in such a way as to be open to the benefits that are envisaged under the single European railway area while, at the same time, to ensure changes reflect the small size and capability of the rail network in Ireland and do not create any undue burdens.

The previous EU railway packages have underpinned the improvement made over the past two decades across Europe in terms of railway safety and technical interoperability of railway systems. In particular, the use of common safety indicators allows us to better measure our safety performance against our European peers. In the areas of technical interoperability of railway subsystems, harmonisation of technical rules can lead to more cost effective and interchangeable components on the market, which can give rise to economic benefit, even for Ireland, despite the unique features of our infrastructure such as rail gauge.

The fourth railway package recognises that safety and interoperability form the cornerstone of an effective and reliable railway system. Proposals for amendments to the safety and interoperability directives under the fourth railway package seek to refine and build upon the regulatory framework established under the previous packages. During the Irish Presidency, progress will be made on these technical aspects of the European Commission's proposal. Further improvements in these areas will form the basis for overcoming other obstacles to achieving a fully integrated rail system in Europe. Towards this objective, the fourth railway package proposes a central role for the European Railway Agency in the areas of common safety certification and systems for the placing into service of vehicles and command and control systems. The future relationships and optimal distribution of responsibilities between ERA and the national safety authorities in member states is a matter for further discussion under this proposal.

Under previous European railway packages the introduction of standard training requirements across Europe has been of benefit to the railway workforce in terms of greater opportunity for employment mobility within Europe. While there are no specific proposals in the fourth railway package addressing workforce issues, in its official communiqué, the European Commission acknowledges the need for protections for workers in the context of further railway market reform under the proposals for market opening and the competitive tendering of PSO contracts.

Ireland has in the past argued that physical and geographic limitations prevent compliance with the EU railway model. Ireland does not have a rail connection with the mainland rail network of Europe. However, we share a rail network and our 1,600 mm. rail gauge with Northern Ireland, which differs from the standard rail gauge in Europe. Furthermore, the Irish rail network is small by comparative standards with a total length of 2,400 km. covering inter-urban and suburban commuter service. However, there are potential benefits to be gained through the regulation of common European standards, in particular with regard to railway safety, but also in the area of technical interoperability of railway systems across Europe. The proposals under the fourth railway package will build on the regulation of such standards. Furthermore, the ongoing development of transparent and non-discriminatory systems for access to the rail market envisaged under the fourth railway package is necessary to support future opening or access to the railway market, even in Ireland and potential benefits that this might bring. I thank the Chairman and members of the committee. My colleagues and I will be glad to deal with any questions.