Ms Mary Lally:

Thank you, Chairman. I am joined today by my colleagues, Ms Catherine O'Sullivan and Mr. Garret Doocey, from the maritime transport division of the Department. Collectively, we are responsible for national ports policy, among other things. We will also be participating in working group negotiations on this proposed regulation on port services and financial transparency.

Within ports policy generally here at home, we are currently working on the implementation of the new national ports policy which was launched by the Minister in March of this year. As the committee will be aware, one of the key proposals within the new policy was a categorisation of our commercial ports into three tiers: ports of national significance, tier 1, which are our largest ports at Dublin, Cork and Shannon-Foynes; ports of national significance, tier 2, Waterford and Rosslare; and ports of regional significance - Drogheda, Dún Laoghaire, Galway, New Ross and Wicklow.

As regards the ports of regional significance, the new policy recommends the transfer of control from central to local government. This transfer process will also require amendments to our current legislation, the Harbours Acts. We have just concluded a consultation period in terms of identifying the best model for these ports into the future. As part of this process we drafted and published a regulatory impact analysis type document which is available on our website and which I can forward to the committee if members so wish.

We are also finalising a review of Rosslare Europort, which was carried out by Indecon economic consultants. The review was tasked with examining the current commercial and operational efficiency and to advise as to whether the port is maximising its potential. This work is practically complete and we expect to bring the final report to the Minister shortly.

Turning to the proposed regulation on port services and financial transparency, the committee will be aware that it was only published at the end of May and so we are at a very early stage in the European legislative process. The regulation will be examined by a working group but the first meeting is only scheduled to take place tomorrow. To date, there have been no meetings of this working group.

Broadly speaking, the regulation covers two areas: opening up market access to port service providers and ensuring financial transparency with those ports that receive public funds. The services covered by the regulation are bunkering, dredging, mooring, port waste reception facilities, pilotage and towage.

The regulation will apply to those ports which fall into the new TEN-T core and comprehensive networks. The regulation does not apply to cargo-handling or passenger services within ports.

As a basic principle, the regulation requires port authorities to open up the provision of the covered services to any interested party. There is scope for restricting this through ensuring that these interested parties meet minimum requirements, or arising from space constraints within a port, or because of a public service obligation imposed upon ports.

In terms of financial transparency, the regulation seeks to ensure that any public funds made available to a port authority are reflected in a transparent manner in the port authority's accounts and clearly show how these public funds are used.

The regulation will require governments to designate a national supervisory body to be responsible for its implementation and monitoring. It will apply from 1 July 2015.

Upon publication of the regulation this Department immediately surveyed the affected Irish ports to gain an initial understanding of the position on the ground in these ports. This consultation showed that the Irish ports sector already fulfils the vast majority of the regulation's provisions. Our port services market is largely open and generally port services are provided by private sector interests on licence or contract from the port company. A universal exception in Irish ports would be pilotage which is statutorily required to be provided by port companies. There are also one or two instances where ports provide some of the covered services themselves, such as towage in Dublin and mooring in Shannon-Foynes, but generally this is in competition with others or it is open to others to enter the market should they so wish.

It is Government policy, restated in our national ports policy, that our commercial State port companies do not receive any public funds whatsoever, so the financial transparency elements of the proposed regulation will have no real effect.

Following on from the initial consultation the Department prepared a regulatory impact analysis-type document which was published on our website and notification of publication issued to various bodies, including the committee. This document went into some detail about the regulation and its potential implications in an Irish context and sought the views of stakeholders as regards its appropriateness or otherwise in Ireland. The consultation period closed on 20 September. However, if the committee or individual committee members wish to make a formal submission we would be delighted to receive one. We are awaiting a written submission from ICTU but otherwise we received submissions or comments from three bodies, the Irish Ports Association, the Competition Authority and Dublin Port Company. We also met with ICTU recently.

There would appear to be a consensus among the industry that the proposed regulation will be of little discernible benefit to Ireland. This is due to how our ports sector is structured and the fact that the problems the Commission is seeking to address do not really apply in Ireland. The sector broadly welcomes the desire of the Commission to open up market access to service provision and its recognition of the autonomous need of the port authority to set its own charges.

However, there is concern within the industry that some of the regulation's provisions are overly bureaucratic and will result in additional administrative burden with no real return in Ireland. Another concern expressed was that the regulation allows for the Commission, through delegated acts, to regulate charging through establishing common classifications of vessels, fuels and types of operations and specifying common charging principles in respect of this across the Union.

The Competition Authority broadly welcomes the proposal although it noted that the regulation does not cover cargo handling which represents the largest percentage of the total cost of using a port. As for the national position, as I mentioned, we are at a very early stage of the legislative process and the first working group meeting has yet to be held. The problems the Commission is seeking to address with the proposal are not an issue within the Irish ports sector. By the end of the year the Competition Authority will have published its market study of the ports sector. This study will be the first such comprehensive overview of competitive conditions within the sector since corporatisation. This Department and the Competition Authority have worked closely over the last year and a half to keep each other informed as we progressed the review of ports policy and the authority progressed its market study. The Competition Authority's study will represent a comprehensive overview of competitive practices in the ports sector.

One of the requirements of the regulation is that member states establish a supervisory body to oversee its implementation. In countries such as Ireland where state ownership of ports exists, there must be a structural separation between the functions associated with the ownership of the ports and those associated with the implementation and monitoring of this regulation. Previous studies of the Irish ports sector, such as the high level review in 2003, concluded that there was no case for the establishment of an Irish ports regulator and that the costs associated with the establishment of such a body would be too high given the scale and nature of the sector. These arguments would be largely valid still in the context of this new regulation.

Committee members will probably be aware that this is the third attempt to legislate at a European level in the area of ports and port services. The two previous attempts, which were directives rather than regulations, failed in Parliament and met with stiff opposition from a range of stakeholders. While the omission of cargo-handling and passenger services from the scope of this regulation is clearly an attempt to avoid some of the opposition witnessed in the past, it is uncertain as to whether this will sufficiently calm the opposition in Europe to this latest proposal. During parliamentary scrutiny of the proposal earlier in the summer, some parliaments including France, Poland, Spain, Italy, Latvia and Sweden raised subsidiarity concerns which might reasonably be taken as an indication of their emerging position during later negotiations at Council and the European Parliament.

I hope I have provided the members with a useful introductory overview of the proposal and my colleagues and I are happy to help them with any questions they might have.