Mr. Philip Gaffney:

It is an honour to have been nominated by the Minister, Deputy Varadkar, for reappointment as the chairperson of Iarnród Éireann. I am pleased to have this opportunity to attend the committee meeting today. My intention is to tell the committee a bit about myself and my background, reflect on the past three years as chairperson of Iarnród Éireann and set out my plans for the company and the board for the next three years, should I have the privilege of being reappointed.

I was born in Glasgow 66 years ago, brought up in the east end of the city, and educated by the Marist Brothers and through the Glasgow Education Department's school system. I joined British Railways in August 1965 on a five-year engineering student training scheme and attained a higher national certificate in electrical and electronics engineering at Glasgow College of Technology. On completion of this training scheme, I was appointed to various roles in the delivery of re-signalling schemes in Scotland and London, most notably the major rationalisation of Kings Cross station.

In 1977, I joined the Hong Kong mass transit railway corporation as a train control and signalling engineer for the construction of the original line of the network. Over the following 28 years with the Hong Kong MTR, I held a variety of engineering and operations management positions including chief engineer and operations director. My final position was as managing director, operations and business development. When I left Hong Kong in December 2005, the network had grown to five lines, carrying 2.5 million passengers on a daily basis and was the most intensively used, most reliable and most profitable metro in the world.

In 2000, I was part of the executive management team which successfully launched the company on the Hong Kong stock market. From 2002, I was the director responsible for developing and implementing an international business strategy, which now sees Hong Kong MTR operating in London, Stockholm and Melbourne, as well as Beijing and other Chinese cities.

In December 2005, I retired from Hong Kong MTR and relocated to west Cork where I still live. I was fortunate to be appointed to the Iarnród Éireann board as a non-executive director, a position I held for just over five years. In July 2011, I was appointed non-executive chair in the revised CIE group and companies governance structure.

In addition, I am a non-executive director of Crossrail, London, the largest railway infrastructure project in Europe. Through my own company, Phil Gaffney Consulting Ltd., I provide advisory services at board and senior management level to a variety of railway industry companies and authorities. Currently, I am advising the New South Wales Government on the introduction of the first rapid transit railway line in Sydney.

Since I became chair of Iarnród Éireann in 2011, the overriding challenges have continued to be financial. The board, management and staff have worked to address these. We have suffered an unprecedented reduction in income, primarily in the form of public service obligation or PSO payments, but also through lower passenger revenue. While reducing our cost base, which we have done to the tune of €73 million over the past five years, we have operated an expanded network with three new lines opening as well as a number of new stations.

We have also seen a significant reduction in the amount of capital funding available to us by 75% over five years. Therefore, not only have programmes to expand our capabilities and capacities come to a halt, but this has also reduced the volume of essential renewals and overhaul to infrastructure and rolling stock.

We have delivered efficiencies, reduced our staff numbers to their lowest level ever, reduced overtime, made savings through re-tendering services and contracts, and improved our fleet efficiency. In addition, we have implemented lean management techniques which have seen other railways from around the world coming to Ireland to learn from our practices. At the same time we have increased the service levels we provide to our customers as measured by passenger train kilometres, while maintaining an excellent safety performance.

On the issue of safety, I should note that last night we had the first ever derailment of a DART train, just south of Bray. Fortunately, the 33 passengers on board and the driver were not injured. It is clear that the derailment occurred due to the train striking a coping stone from a wall above the railway which had been dislodged in what appears to have been a deliberate act. We are working closely with the Garda to seek out who was responsible for this act. Actions such as this are extremely serious and reprehensible and, in this case, could have resulted in fatalities among passengers and staff.

In the past three years we have delivered efficiencies and implemented on schedule the internal reorganisation of Iarnród Éireann required under European Union regulations which had previously been the subject of a derogation for Ireland. This included the establishment of separate railway undertaking - a train operations organisation - and infrastructure manager organisations within Iarnród Éireann. We have improved customer facilities, including the provision of free Wi-Fi and online resources. We have become more commercially and customer focused and commenced the Customer First programme which will be central to ensuring strong customer relationship management and dynamic yield management, among many other benefits.

At board level, I have introduced changes to our financial reporting and procurement processes which have resulted in greater transparency at all levels of the organisation and improved procurement of services and contracts to the benefit of our suppliers. This has also provided greater protection for Iarnród Éireann staff and value for money for our funders.

Thankfully, we are seeing recovery in the numbers travelling with us across all passenger services, as well as growth and new business opportunities in the freight business. We have met and exceeded punctuality and reliability statistics under the public service obligation contract with the National Transport Authority and, most crucially, operated safely. This has all been achieved while reducing our cost per kilometre by 20% in the past three years and a cumulative 33% in the past five years. Notwithstanding this, the position of Iarnród Éireann remains extremely critical. We are seeking to agree a series of pay and productivity measures with our workforce, including a temporary forgoing of pay increases for a period of 20 months, with the sums involved ranging from 1.7% to 6.1%. The senior management team and board, including me, have already implemented these proposals in our own terms. Alone, however, these changes will not be enough - far from it.

That brings me to the challenges and my vision and plans for Iarnród Éireann in the next three years. This will be a period which will determine the role railways will play in the future of transport in Ireland for the coming generations. Today, resulting from the reduction in PSO payments of almost 40% from what was already one of the lowest levels of PSO payment in Europe and reduced capital funding, the current network we manage and service levels we deliver are not sustainable and there is a real threat to the solvency of the organisation. We must grow our revenues further. Working with the CIE Group, the Minister, the Department and the National Transport Authority, we must determine if the current network and services are to be supported adequately, from infrastructure to fleet maintenance to all service operations.

Investment is required in the national rail network. Unlike the bus companies or Luas, Iarnród Éireann is responsible for the infrastructure on which its services operate. In this regard, agreement on a new multi-annual contract in respect of rail infrastructure is absolutely imperative to secure the future of the railways in Ireland. Capital funding is required to maintain our rolling stock fleet at its current standard. We have transformed the quality of the trains on which our customers travel, moving from the oldest train fleet in western Europe to the youngest, through significant investment in the period from 2000 to 2010. If we are to ensure the return to the taxpayer from the significant investment in the fleet, we cannot allow these assets to deteriorate. If it is decided not to invest, to sustain safe and reliable operations, the extent of our current network will have to be reviewed. Also, initiatives which require expanded operations must be adequately funded for the whole-of-life cost. The position is that stark and I am focused on working with all stakeholders in ensuring there is an understanding of the issues we face and we emerge a stronger and more sustainable organisation.

There is a strong role for Iarnród Éireann in meeting the transport needs of the country - in urban areas and nationally. We can generate a return for the economy, for instance, by connecting Dublin Airport to the rail network and expanding the DART network, including DART underground, to effect a significant modal shift from private to more sustainable public transport. There is scope for improving speeds on the network to reduce journey times and improve our service offering and competitive position. While the challenges are great, the opportunities can be greater still. I look forward, therefore, to the opportunity of working with the board, management and staff of Iarnród Éireann in meeting these challenges and opportunities and providing our customers with transport solutions which are safe, service oriented and sustainable.