Leo Varadkar (Dublin West, Fine Gael)

This question relates to a Government commitment to maintaining funding levels for CIE. Deputy Dooley will be aware that the fiscal legacy of the outgoing Fianna Fáil-led Government was to leave an expected deficit of €18 billion for this year. This fiscal legacy, coupled to the banking crisis, necessitated the intervention of the IMF and the EU late last year, a measure which compromised our economic sovereignty to a significant degree. In light of this legacy, while I would like to tell the House that I am committed to maintaining funding levels for CIE, to do so would involve a significant departure from reality.

During the lifetime of the previous Government the total subvention paid to the three CIE subsidiaries was reduced from a high of €308 million in 2008 to €263 million in 2011. This represents a reduction of 15%. I recall Deputy Dooley voting in favour of all of those cuts. Unfortunately, there will be a requirement to reduce this subvention once again. That is the simple, hard reality and I have conveyed it to all interested parties I met in recent weeks. Despite this economic framework, the Government will - as it has committed to do in its programme for Government - with the reduced sums available for capital and current expenditure, favour public transport over road transport.

The outgoing Fianna Fáil-led Government produced a four-year plan which envisaged further cuts in current expenditure in the Department's Vote by €30 million in 2012, €30 million in 2013 and €40 million in 2014. This will undoubtedly affect the PSO subvention significantly, particularly as it makes up over 50% of the Department's current budget. This is subject to reconsideration by the new Government under its comprehensive spending review. Unfortunately, however, working assumptions for economic growth and other budgetary variables have worsened rather than improved in the interim.

The reduction of the subvention to date and into the future has necessitated and will necessitate the design and implementation of cost-effectiveness plans. The CIE group has implemented significant cost-management measures, including the implementation of the Deloitte cost and efficiency review of Dublin Bus and Bus Éireann, which included Dublin Bus's network direct project. Irish Rail has also been successful in reducing its cost base to date.

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However, they will be required to go to the well of further cost savings again. A recovery in passenger numbers and further increases in fares could soften the impact of these cuts but it is difficult to see how reductions of this order will not impact on services if we continue with the business as usual approach to providing bus and rail services.

In respect of capital investment, there will be a comprehensive review of capital spending with a view to developing a new national development plan for the period 2012 to 2017. This review, which will take place against a background of the new funding realities, will examine the costs and benefits of all capital projects against a range of economic, social and environmental criteria. Key considerations for transport will include the need to prioritise funding to protect investment made to date and to maintain high safety standards.

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