Mr. David Franks:

In 2012 Irish Rail recorded an operating loss of €22.5 million, and that was after the supplementary Exchequer payment that was made. In the past five years, Iarnród Éireann has had its subvention levels reduced by one third, €64 million. At the same time, during the very difficult economic situation in Ireland, we have seen passenger revenues drop by almost €35 million, a fall of 16%. To address this combined income shortfall of almost €100 million, we have been working with our staff to reduce costs. We have successfully reduced these by almost €67 million. This has more than compensated for the fall in the passenger revenues but it has not been nearly enough to deal with the large reduction in subvention. Despite this very difficult financial position, we have maintained the majority of services. Examples of the measures we have taken include a voluntary severance programme, which has reduced the workforce by almost 25% since 2008. We now employ just fewer than 3,800 people, compared with 6,000 ten years ago. We have agreed efficiency measures with our staff and negotiated reductions in overtime levels, allowances and leave benefits. We have also taken action to reduce one of our other big cost areas, fuel consumption, which of course yields environmental benefits. We have re-tendered major contracts to achieve cost reductions from suppliers.

The committee will be aware that proposals are being balloted among our staff, which will deliver further efficiency measures, including reductions in basic pay, with the underlying principle that those who earn the most will contribute more. A successful outcome is critical to achieving our financial goals and the requirements of our banks, not only in 2013 but up to 2017, when our projections will show we aim to break even.

We have seen fare increases. These have been balanced by promotional activity, including advance-purchase discounts and special offers for students and families. The introduction of the Leap card and Taxsaver products has also resulted in large discounts for customers. It is good to note that according to our most recent customer satisfaction survey, these offers have helped to drive a significant improvement in the value for money score, which is up ten percentage points.

Despite the current funding environment, we remain ambitious about the future of the rail network and the role it can play in meeting the economic and mobility needs of the country. To that end, further significant intercity journey time improvements are a key priority for us. The economic benefits of these have been clearly identified by the AECOM study carried out on behalf of the Department of Transport, Tourism and Sport in 2011. Other priorities for us include the DART expansion projects, including the DART underground line, the electrification of the Maynooth, Hazelhatch and northern lines and the opening of a DART airport link. We would welcome the committee's support for each of these projects as the Government prepares to assess its investment priorities in 2015.

In summary, we have been through an era of significant change. We have an upgraded network, one of the youngest fleets in Europe and new customer facilities. We are running more trains with a reduced workforce while at the same time delivering record punctuality. However, our financial position remains extremely challenging and must be addressed. We must continue to improve our services if we are to compete effectively with the improved motorway network. The cost-reduction measures are crucial to ensuring that Iarnród Éireann plays the strongest possible role in delivering a high-quality public transport network for Ireland and most of all for our customers.