Hildegarde Naughton (Galway West, Fine Gael) | Oireachtas source

I thank Deputies for the opportunity to speak to the House about the increase in toll prices on a number of national roads. I can confirm that the Government is not opposing the motion. However, while the overall objective of the motion is in line with the Government's concern around the increase in the cost of living and its effect on workers, families and businesses, there were some assertions made in the motion which require clarification and will be highlighted in the ministerial speeches this evening.

There are 11 toll roads in the State, of which ten are on the national road network. The East Link-Ringsend bridge toll in Dublin is on the local road network. Of the ten tolls on the national road network, two are essentially public tolls, namely the M50 and the Dublin tunnel. Revenue from these tolls is collected directly for Transport Infrastructure Ireland, TII, by operating companies under contract to Tll. These revenues are invested by Tll in the operation and maintenance of the road network. It is important to point out that toll income is not allocated to the construction of new roads, but rather to the protection and renewal of the existing network.

It should also be noted that there are extra inflationary costs in the construction industry, particularly in regard to products such as bitumen which is used in road pavement repair, meaning the cost of the protection and renewal of the existing network has increased significantly.

The other eight roads are public private partnership, PPP, roads which were constructed and are now operated and maintained under long-term contracts with Tll. Revenue generated by these roads is collected by the PPP company and used to repay loans arising from the construction of the road and to fund ongoing operations and maintenance activities.

The public, private and contract law considerations with respect to increasing toll charges for public toll roads and PPP toll roads are somewhat different. In addition, there are different financial and budgetary implications relating to toll revenue generated, with TII more reliant on the public toll revenues.

In terms of the framework for setting tolls, toll by-laws for each individual road set out the basis for calculating maximum tolls each year. Maximum tolls are calculated for each vehicle category. Tll calculates the maximum tolls for the Dublin tunnel and the M50 and decides the actual tolls that should apply. The PPP companies calculate the maximum tolls for the eight PPP concession schemes and propose the actual tolls that should apply. The mechanism for these calculations is set out in the individual toll by-law and is based on the consumer price index, CPI. Actual tolls charged may not exceed the calculated maximum toll for each scheme.

In December 2021, Tll announced an increase in toll charges for eight toll roads for 2022. It should be noted this was the first increase in tolls for motor cars since 2013. This increase was driven by inflation.

For 2023, the board of Tll has approved a number of toll changes. In the case of public tolls, there is no change to existing toll rates for the Dublin tunnel, while the toll rates for the M50 have increased across the board. Increases have also been agreed for all eight PPP schemes. These increases include a 30 cent increase for cars without tags or video accounts on the M50, bringing the toll paid to €3.50. On the M4, there will be an increase of 20 cent for cars which brings the toll to €3.20. Tolls on the other PPP schemes will increase by 10 cent. This has been driven by inflation of 8.6%, based on the CPI, and is within the relevant by-laws for each scheme.

It is estimated that these changes will generate approximately €25 million in additional toll revenue, dependent on traffic volume, which will be used for loan repayments in the case of the PPP schemes and maintenance and operations in the schemes in question, and to ensure that toll income continues to support adequately the protection and renewal of the existing road network. Any measures introduced in regard to these toll increases will need to account for the contractual arrangements with the PPP companies, along with the impact on the protection and renewal of the existing road network.

PPPs have been instrumental in the expansion of Ireland's motorway network through recent decades, particularly on inter-urban routes. This has delivered safer roads with reduced journey times to the benefit of private motorists, businesses and the haulage sector. Furthermore, the contractual arrangements for these roads ensure they will be maintained in a safe and robust condition before reverting to the State on the ending of the contract. These arrangements have allowed for risk-sharing, efficient project management and delivery and the completion of critical public infrastructure without incurring upfront Exchequer costs.

The motion put forward refers to payments to PPP operators. I would like to expand on this. These variable operation payments, VOPs, cover two PPP toll concession contracts, namely the M3 Clonee to Kells and N18 Limerick tunnel. They provide that where traffic volumes do not reach a threshold specified in the respective contract, moneys are paid from the State to the toll operator. This has incentivised private sector infrastructure development on roads where traffic volumes are less certain.

Due to Covid-19 restrictions there was a significant drop off in traffic levels across the national road network in 2020-21, including the two VOP contract roads I mentioned. As a result, VOP payments in 2020 and 2021 increased on 2019. In addition to the reduction in traffic due to Covid-19, the other factors that impacted the calculation of VOPs in 2020 and 2021 included the level of traffic guarantee applicable to each year, the level of toll charges applicable to each year and the level of non-availability payments, which are deductions for lane closures, applicable to each year.

Covid-19 and the reduced traffic since 2019, combined with the reduced VAT on toll charges in 2020 and 2021, contributed significantly to the increase in 2020 and 2021 payments. It should also be pointed out that as part of a revenue sharing mechanism contained in PPP contracts that if traffic volumes exceed a certain threshold specified in the contract for each scheme, the excess toll revenue returns from the toll operator to the State. In recent years, such revenue has been generated on the M4 and M1.

The Department has introduced a number of public transport measures to help to ease the cost of transport, mainly aimed at reducing fares for users.

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Furthermore, the Department has rolled out an emergency support scheme for hauliers. There have also been other Government measures, such as the reduction on excise duty for petrol and diesel. This is in addition to the various measures outlined in budget 2023 to help people with the challenges relating to the cost of living.

The broad intent of this motion is generally in line with the principles of the Government in helping people as the cost of living increases. I can confirm that the Department of Transport has been directed to develop options that might allow for the suspension of planned toll increases until the end of June 2023. As I have outlined, however, the toll contracts are complicated and further discussions with all relevant parties, including TII, are needed.

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