Mr. Kevin Kelly:

I thank the committee for the opportunity to address it. I am the interim chief executive of Galway County Council. I am joined by Councillor Joe Byrne, leas-cathaoirleach of Galway County Council, Mr. Robert Meehan, law agent, Mr. Kevin Finn, senior executive engineer, and Ms Nuala Heffernan, administrative officer.

Members will be aware that ferry service to Inis Mór is a privately-operated ferry service currently undertaken on a year-round basis by Island Ferries Teoranta, with other ferry service operators operating during the tourist season. The Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs has a role in ensuring the provision of ferry services to all of the islands. It is understood that the Department operates a State-subsidised service contract to two of the Aran Islands for the purpose of maintaining a regular, all-year-round ferry service. It appears that there is no State-subsidised contract in place in respect of Inis Mór. While the service may be of questionable commercial viability in the winter months, it is considered to be a viable route on a year-round basis. The current ferry service operator to Inis Mór is a private entity and, therefore, is not under contract to provide a regular service and is free to cease the service provided by it at any time as a commercial decision.

Galway County Council has no role in the provision of ferry services to the islands, other than being responsible for Cill Rónáin harbour. More recently, it has had an indirect association arising from the introduction of by-laws to provide for the management and maintenance of a new harbour facility at Cill Rónáin. The previous facilities operated in an extremely hazardous and dangerous manner. All activities including shipment of goods, livestock, vehicles, plant and machinery, building and construction supplies and activities associated with fishing vessels, together with the arrival of up to 200,000 passengers per year, took place on the existing harbour which was completely inadequate to deal with the type and level of activity. The requirement for a new harbour was identified to address the various safety issues, safeguard the island's significant tourism sector and secure the sustainable development of Inis Mór. The contract for the construction of a new harbour development was signed on 17 December 2007, works commenced in early 2008 and substantial completion was confirmed by November 2011. The harbour remained open throughout this period and the final cost of the project was approximately €48 million.

It was considered necessary to introduce by-laws in order to regulate and control activities at the harbour, including collecting charges for the purpose of managing the harbour and its facilities especially with there being in excess of 200,000 passengers disembarking and using the facility annually. Approximately eight passenger vessels operate during the busy tourist season. Some of them undertake multiple trips each day depending on the demand. In the case of those vessels, a charge per passenger per entry of 80 cent, with a multi-user charge for those using the service more than five times per annum, applies. Those in that category, including island residents, are required to pay €5 per annum. The approach of the council was that the charges collected from the users of Cill Rónáin Harbour would be used to pay for a portion of the annual costs associated with the management and maintenance of the harbour.

Galway County Council has a full-time harbour master who is assisted by other outdoor staff to manage the facility to ensure it is safe and orderly for all harbour users and most important to guarantee that the harbour will not return to what was an unacceptable and dangerous location in the past. There is a cost associated with providing this service which must be funded and a payment to be made by the users of the facilities is a means of part funding this cost.

The consideration and adoption of the by-laws is a reserved function of the councillors and the draft by-laws were debated extensively at meetings of the Connemara electoral area committee and subsequently considered by the roads and transportation strategic policy committee. Ultimately, the public submissions were considered and the by-laws were adopted by full council. This process occurred between September 2010 and October 2011 when several amendments were made to the by-laws, including a reduction in the fee per passenger from €1.20 to 80 cent and the modification of the charge for residents of the island and frequent travellers to €5 per annum. Following the adoption of the by-laws, Island Ferries Teo, IFT, was successful in being granted leave to apply for a judicial review which was heard over 11 days in the High Court and at which both parties gave detailed evidence.

Galway County Council successfully defended the case in the High Court and IFT then appealed the case to the Supreme Court. Given that all of the issues involved in respect of the council's actions in bringing forward and adopting these by-laws were fully considered by the High Court and Supreme Court, which both found in favour of Galway County Council. I have provided, for ease of reference, copies of the judgments in those two cases. The Supreme Court stated that there is nothing in the judgment of the trial judge in the High Court to suggest that what he characterised as a "modest charge" could not be passed on to passengers. It was considered that the levying of a fee based on passenger numbers is not characteristic of a tax but a standard method of charging for use. The court found that "Galway County Council set the charges for Cill Rónáin through a process of debate and analysis within the scope of their delegated governmental function." The Supreme Court agreed with the High Court trial judge who found the value of the facility to be considerable and that the imposition of the charge involved no serious additional burden in terms of the counting of numbers to Island Ferries, is a reasonable means of charging and, is no more than the fixing of "a very modest per capita fee of €0.80 on individual passengers arriving most of whom will make the trip only once". The use of multiple tickets, and a reasonable charge in that regard, protects the interests of islanders who, given their isolation from many other State services, are entitled to some compensatory benefit in the eyes of the court. It was found that the charges on visitors using the harbour are both modest and reasonable and that Galway County Council had ample statutory basis for imposing the charge and for doing so in the manner in which it did. The Supreme Court found that there was no basis upon which any of the appeal grounds could succeed.

There has been significant discourse on the operation and maintenance costs of Cill Rónáin Harbour and these costs, which were only estimates at the time, were outlined during the discussions as being between €150,000 and €200,000 per annum. This issue was raised in court where further detail was outlined in terms of the cost, particularly in 2012, which was presented as €176,600. Using the same approach for the period 2012–2015, the annual costs are between €118,400 and €204,420. Any moneys derived from the passenger would equate to only a portion of those costs. Other costs that must be met include indirect payroll costs, foreshore licence and ongoing maintenance which will be significant given the harsh coastal environment which will cause rapid wear on the facilities such as public lighting, navigational lighting, CCTV network, safety ladders, railings and so on. It was intended to establish a sinking fund to provide for the replacement of those items in due course in the absence of any other funding arrangement. There will also be a requirement at intervals for the maintenance dredging of ferry berths 1 and 2 due to the proximity of the Cill Rónáin beach. The total for all of the costs including indirect costs and the sinking fund requirements each year could be in the range of €192,300 to €269,000. That is based on figures derived between 2012 to 2015.

Following the decision of the Supreme Court in December 2015 Island Ferries Teo announced that it was going to withdraw its winter service on 16 January 2016, apparently with the intention that the service would resume at a later date in the context of the commencement of the tourist season. The council met with representatives of Island Ferries Teo and Comharchumann Forbartha Arann as well as the Department immediately before and after Christmas 2015. In January last, Island Ferries Teo agreed to make a payment per vessel on a per entry, per month or per annum basis, depending on the usage of the vessel but the total estimate for the amount that would accrue in those scenarios was very small. Following all those discussions, the cessation of the service did not occur at that time. Between June and October of this year, as chief executive of Galway County Council, I met a representative of Island Ferries Teo on two occasions during which the resistance to the by-laws was still voiced and the offer of a payment based on each vessel remained the desired approach from the company's perspective, at a much lower rate than might accrue under the by-laws. In October, the company put forward a written proposal, one of the main changes being a reduction of the fee per passenger to 40 cent from 80 cent. As I have outlined, the fee had already been reduced by the council from €1.20 to 80 cent. It was suggested that the higher fee would be financially unviable for the company. This proposal was discussed at a meeting of the corporate policy group of Galway County Council in early November where it was not considered favourably.

At a meeting of Galway County Council on 24 October 2016, the members unanimously agreed that "Galway County Council would request that the Department would implement a PSO Service to Inis Mór so as to give certainty of services to the Islanders." At a subsequent meeting of Galway County Council on 23 November 2016, following the withdrawal of the ferry service by Island Ferries Teo, the members mandated the chief executive to engage in further discussions with Island Ferries Teo and the Department of Arts, Heritage, Rural, Regional and Gaeltacht Affairs. These discussions were to be held in the context of the company's assertion that a fee of 80 cent would impact on the commercial viability of the operation while the approach was not to impact on the integrity of the by-laws. These discussions have commenced, are continuing and have made progress. The discussions are mainly of a financial nature, including consideration of the fee per passenger, the arrears of fees due from the company since 2012 , the substantial court costs which remain outstanding and the methodology for collating and agreeing passenger numbers in the future.

The adoption and implementation of the by-laws has been fully examined by the Courts and upheld. The by-laws in question were adopted following extensive public consultation and careful consideration of the various issues raised, and it has always been expected that the operator could pass on the charge to the passenger but has chosen not to do so at the present time. Island Ferries Teo now accepts the by-laws and the discussions centre on the financial aspects that arise. The principles and procedures involved have been fully considered by the courts and found to withstand detailed scrutiny. The current by-laws and method of calculating the charges have been found to be entirely legal and within the powers and competence of the council. The council remains committed to the current discussions relating to the outstanding financial matters.

Those discussions are ongoing.