Noel Dempsey (Meath West, Fianna Fail)

The 2009 Exchequer subvention to CIE will be €313.279 million, an increase of 1.5% on the 2008 figure. During the course of the Estimates discussion, my Department had discussions with the Department of Finance and with CIE on the overall financial position of the CIE operating companies, Dublin Bus, Bus Éireann and Iarnród Éireann. The chairman and chief executive of each of the companies also briefed me on the financial outlook on 1 December.

CIE is projecting an operating deficit of €39.5 million for 2008 after Exchequer subvention, compared to an operating deficit of €1.47 million in 2007. This significant deterioration in the financial position of CIE is due in the main to losses in revenue due to a drop in demand for services and increases in costs, particularly fuel costs in the earlier part of this year. The outlook for 2009 is for a further deterioration in the group's financial situation in the absence of corrective measures. In order to preserve the financial stability of the group, each of the companies must, in addition to increasing fares, pursue some rationalisation of services, ranging from frequency reductions, to service withdrawals. The CIE subsidiaries are considering service reductions that maintain the integrity and attractiveness of their networks and achieve significant cost reductions over time.

Following my discussions with CIE and its subsidiary companies and taking account of the emerging findings of a cost and efficiency review of Dublin Bus and Bus Éireann by Deloitte, to be completed shortly, I have agreed the following package of measures to protect the financial position of the CIE group and to maintain public transport services to the maximum extent possible: an increase of €5 million in 2009 over 2008 in the compensation paid to CIE in respect of its public service obligation, provided for in the Estimates; a fares increase of 10% for January 2009; CIE to identify a package of service rationalisation and reductions, focused on heavy loss-making services, sufficient when taken together with the other measures set out to ensure the financial stability of the CIE group; and measures to improve bus priority and bus journey times.

It is a matter for the CIE group of companies to secure operational efficiencies and to reduce costs so as to maintain services at the highest level possible. I have requested that, in deciding on service reductions, the group should aim to maintain rail services, peak-time bus services, and bus services to developing areas. Service reductions should be a last resort in the group's efforts to maintain financial stability.

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