Noel Dempsey (Meath West, Fianna Fail)

I am delighted to have the opportunity to address some of the issues raised by the Bill. I must start by stating it is a very flawed Bill, notwithstanding the attempt it is making to piggy-back on some of the measures already adopted by the Government in dealing with other sectors through the legislation that had to be passed over the past 12 to 18 months. As my colleague, the Minister of State, Deputy Calleary, stated it is flawed because it simplistically attempts to impose the same approach on sectors where it is entirely inappropriate. In the time available to me, I want to take some examples from my area of responsibility in transport to show how simplistic the analysis is that underpins the Bill and what the real implications would be if we were foolish enough to accept it.

I will begin by examining bus and train fares. I do not think it is a secret from anybody in the House that CIE faces very severe financial constraints; it is in a very severe financial position which is not sustainable. Despite the fact that it has a huge level of Exchequer support, in the region of almost €300 million for the provision of public service obligations, PSOs, the group had an overall deficit last year of €77.7 million. That deficit is as a result of falling passenger numbers, caused by the economic downturn, the constraints put on the Exchequer subvention in recent years and the fact that fares have been frozen since the end of 2008. All of these have contributed to that deficit. The CIE group of companies must reduce the deficit and is doing so by producing a range of cost reductions and increasing efficiencies, and in some cases it has had to put in place service reductions.

As recommended in the Deloitte report, Dublin Bus is engaged in reshaping its network to improve services and provide better value for the customer and the taxpayer. Bus Éireann is similarly seeking to provide a comprehensive range of services in a more streamlined and efficient manner. Equally, Iarnród Éireann is committed to maintaining the quality of the commuter and mainline services, despite the resource constraints it faces.

It is not possible to add a requirement to CIE to reduce fares. That would severely compromise the already reduced revenue base. Prior to a 9% increase in fares in 2003 CIE fares had declined by approximately 20% in real terms over the previous ten years. Referring back to my previous role as Minister with responsibility for energy, one of the major reasons we had such increases in electricity prices up to two years or 18 months ago was because for the previous ten or 15 years prices had not been allowed to increase in line with inflation.

CIE fares had declined by approximately 20% in real terms over the ten years up to 2003. From then until the end of 2008, annual increases were improved due to increased operating costs. However, no increase was approved in 2009 or 2010. The fare increases granted previously were to try to sustain the financial health of the CIE companies. I want the CIE companies, and I have made it clear to them, to minimise the impact on their finances of the current recession so they can intensify their efforts to increase the modal share of public transport and to respond when passenger demand increases in line with economic recovery. Jeopardising CIE finances through imposing fare reductions does not serve the promotion of public transport.

In the past year we have seen significant changes in the institutional and legislative arrangements with the establishment of the National Transport Authority and the passing of the Public Transport Regulation Act. Direct award public service contracts are now in place and they represent the new way of doing business between the funding authority, the NTA, and the CIE group of companies. They provide a more formal basis for the allocation and monitoring of Exchequer support for the loss-making and socially and economically necessary PSOs. These changes will help to ensure the taxpayer and the consumer get the best possible value from our public transport services.

Delivering a quality driving test service is critical to the promotion of safe road use among learners and newly qualified drivers. The fee for a standard car test is €75. That fee is below the economic cost of providing the test. The Road Safety Authority plans to deliver 145,000 driving tests in 2010 and a higher number if demand increases. The RSA has significantly reduced input costs this year and it has maintained wait times under the national average target of ten weeks. Reducing the test fee by 5% would reduce RSA income by €525,000 but it would cause a significant deterioration in the average waiting times nationally and the authority would not be able to maintain testing at all of the current test centres. The only alternative would be for the Exchequer to make up the lost income and the Exchequer is not in a position to do so. What the Fine Gael Bill proposes is transferring some of the cost of the test from the user, the person who has to do the test, onto the shoulders of the taxpayer and I do not think the taxpayer will thank them for that.

In regard to the driver theory test, again it is delivered by a private company, which successfully tendered for it. The fee for the theory test is very competitive and is currently self-funding. Any reduction in the fee will require the Exchequer to subsidise the service and make payments to the private company to compensate for lost income due to the reduced test fees. Cost reductions and efficiencies have already been secured and the recent tendering process has validated those costs. Reducing fees will inevitably lead to the closure of smaller theory test centres, increase the waiting times again and result in a requirement for some element of Exchequer funding. The current fee is €34.60 and the RSA plans to deliver 120,000 theory tests this year. A 5% reduction in test fees would require an additional Exchequer subsidy of €213,600 if service reductions are to be avoided. Fine Gael wants to transfer some of the cost of the theory test from the beneficiary to the taxpayer generally, something for which it would not thank it.

As regards the National Car Test service, NCT, the RSA recently tendered and awarded the contract to a private company for a ten year period, commencing on 4 January 2010. The new contract provided for an enhanced service with additional test items, new test centres and other enhancements over the life of the contract. The RSA managed to secure those enhancements while not increasing the fee to the public and it will be in a position to hold the current test fee for at least three years. The current test fee is €50 and the RSA plans to test up to 1 million vehicles this year. Reducing this fee by 5% would produce a shortfall of €2.5 million and the contractor concerned would have to be funded by the Exchequer to cover the shortfall. The bottom line is that a contractor has been awarded the contract following a European Union tendering process and best value has been demonstrably achieved. In those kind of circumstances there is no basis in which to demand a reduction in fees unless the taxpayer will make up the shortfall. There is no reason the taxpayer should do so.

The Bill also seeks to cover motorway tolls. There are eight toll schemes on the national road infrastructure in Ireland. There will be nine when the M3 opens on Friday and ten when the Limerick tunnel opens later this summer. The majority of toll schemes are operated by public private partnership companies under concession contracts, such as the M1 Drogheda bypass, the M4 Kilcock-Kinnegad motorway, the M6 Galway-Ballinasloe motorway, the M8 Rathcormac-Fermoy motorway, the M25 Waterford city bypass and the M7 and M8 motorway which covers Portlaoise, Cullahill and Castletown. The M3 Clonee-Kells motorway will also be included in this category when it opens on Friday.

The public private partnership contracts were awarded on the basis of an agreed tolling arrangement and the terms, including those related to toll charges, cannot readily be changed. To do so would be an inappropriate interference with contractually binding agreements entered into with private investors. The contract provides that public private partnerships tolls are linked to inflation under the various by-laws relating to motorway tolls. Those by-laws provide for an upward-only review of the tolls. If the NRA was to seek a reduction-----

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