Timmy Dooley (Clare, Fianna Fail)
Link to this: Individually | In context

Question 24: To ask the Minister for Transport; Tourism and Sport if he is committed to maintaining funding levels for CIE in view of commitments in the Programme for Government favouring public transport. [8718/11]

Leo Varadkar (Dublin West, Fine Gael)
Link to this: Individually | In context

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.

Additional information not given on the floor of the House.

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.

Timmy Dooley (Clare, Fianna Fail)
Link to this: Individually | In context

I thank the Minister for his reply. I am aware of the significant savings that were envisaged by the previous Government. Notwithstanding that, certain political statements and commitments were made prior to the general election by the Deputy's party and by its partner in Government on the basis that they were well aware of the fiscal deficit to which he refers. I would appreciate it if the Minister might explain how the Government intends to address this matter and to meet the commitments that were made during the course of the election campaign. That, of course, is a matter for those in Government.

The programme for Government contains a clear commitment to rebalance transport policy in favour of public transport. Is the Minister committed to retaining the State subvention in a manner that will ensure there will be a capacity for a favourable approach to be taken in respect of public transport? He will be aware that the National Transport Authority has expressed concern that continuing reductions in the subvention would seriously undermine public transport provision throughout the country at a time when the national policy is in favour of public transport.

Robert Dowds (Dublin Mid West, Labour)
Link to this: Individually | In context

Why did the Deputy's party not take action on that matter that when it was in office?

Timmy Dooley (Clare, Fianna Fail)
Link to this: Individually | In context

The Deputy will have an opportunity to ask a question later. Perhaps he could take the matter up with members of his own parliamentary party.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
Link to this: Individually | In context

Deputies should address their remarks through the Chair.

Timmy Dooley (Clare, Fianna Fail)
Link to this: Individually | In context

The Minister will be aware that the outlook from CIE's perspective is difficult. Perhaps he will indicate whether he has engaged in discussions with CIE in respect of the implementation of cost savings for 2011 and outline the impact such savings might have on services.

The programme for Government also states that the Government supports a modern, high-speed transport system and the expansion, in range and frequency, of high-capacity commuter services. How does the Minister propose to achieve this? Does he have plans to privatise bus or rail services?

Leo Varadkar (Dublin West, Fine Gael)
Link to this: Individually | In context

The Deputy posed a number of questions and I will answer as many as possible. The programme for Government commits us to favouring public transport over road transport in the future. That is what we will do. We will be different from the previous Government in this regard. The latter, perhaps legitimately so, favoured road transport over public transport because it decided to give priority to building the inter-urban motorways. In fairness, the inter-urban motorway system is complete and we are of the view that the priorities are now different and that public transport should be favoured over road transport. However, what we intend to do in this regard will occur in the context of a shrinking budget. We are in the midst of an economic and financial crisis and we have a budget deficit of €18 billion.

Budgets are going to shrink. Everyone knows that or at least I hope they do. Essentially, the roads budget and the public transport PSO budget will both shrink. However, the former will shrink at a faster rate than the latter. Unfortunately, that is the context within which we are operating. I accept that shrinking budgets will impact on services. I am sure that the previous Government was aware of this when it developed its plan to reduce the PSO by €100 million over three years. We can, however, mitigate against the effects of this by introducing cost savings. In fairness, the CIE companies have been very effective to date in delivering such savings without their having too adverse an impact on services. However, every year it is going to be a struggle to deliver the reduction in the PSO budget while maintaining services. As my Cabinet colleagues have stated on many previous occasions, it is about doing more for less.

I have engaged in initial consultations with the CIE companies in respect of how they will proceed in this regard. They are commercial entities and, therefore, it is they - rather than me or the Minister of State, Deputy Kelly - who are best placed to deliver the required savings. My engagement with the companies in question is ongoing.

We do not have any plans to privatise bus or train services. We are, of course, considering the contents of the McCarthy report, which proposes privatising some of the subsidiaries but not train lines or bus routes. It might be difficult to find buyers for these subsidiaries because they do not generate profits. We favour more diversity in the provision of services and that is already available in the context of the licensing of private bus services.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context

Question 25: To ask the Minister for Transport; Tourism and Sport if he will launch a full investigation into malpractices in CIE following the Baker Tilly Report on Iarnród Éireann; his views that the CIE non-executive directors refused to attend meetings of the Joint Oireachtas Transport Committee in the 30th Dáil and if he will instruct them to do so; if he will provide a full breakdown of the expenses of CIE tours executives; and if he has satisfied himself with the use of the multimillion euro subsidy to CIE. [8845/11]

Leo Varadkar (Dublin West, Fine Gael)
Link to this: Individually | In context

The Deputy will be aware that I have announced a number of significant changes to corporate governance structure in CIE and the CIE companies. The term of the current executive chairman of CIE, Bus Éireann, Iarnród Éireann and Dublin Bus will expire at the end of June. When his term ends, the position of the executive chairman will be abolished and four non-executive chairpersons will be appointed to the boards of the companies. This will represent a considerable change to CIE's corporate governance structure. Prior to their confirmation and formal appointment, each of the four individuals will appear before the relevant Oireachtas committee to set out their vision for the various State companies.

In addition, there will be a number of ministerial appointments of ordinary members to the boards of the various CIE companies in the coming months. Each of these board members will, when appointed, receive a letter of mandate. This letter, among other matters, will advise board members that if they are requested by an Oireachtas committee to appear before it in their capacity as board members, they will be expected to attend. This is in addition to the Government's commitment to introduce legislation and hold a referendum to allow Oireachtas committees to carry out investigations and compel witnesses to attend. It is intended that the referendum to which I refer will be held later in the year.

I am aware that concerns have been expressed with regard to matter arising from the Baker Tilly report. However, I am advised that the Secretary General of my Department indicated to the Comptroller and Auditor General in September 2010 that detailed replies were received from CIE in January and March 2010 and that these outlined the steps taken in strengthening procurement policy and practice, the extent of implement of the recommendations and the board's satisfaction with the adequacy of the controls in place. As such, and in consultation with my colleagues, I will give careful consideration to the Deputy's proposal. I will report back to the House in this regard in due course. I will also be keen to take on board the views of the incoming transport committee on this matter.

The issue of expenses of CIE Tours executives is a matter for CIE and I have asked the company to contact the Deputy directly about it. I would expect any expense claims to be reasonable and vouched or verified. I will take dim view of any evidence to contrary but I recognise the fact that executives of CIE Tours are obliged to travel overseas a great deal in order to secure business. CIE Tours does not benefit from a subvention from the State and it generates cash for CIE, which, in turn, reduces the need for Exchequer contributions.

The funding of PSO services is governed by contracts between the CIE companies and the National Transport Authority, NTA. The NTA monitors the contracted performance of the PSO operators on a quarterly basis and reports are published on its website. The NTA recently imposed even more demanding performance targets on Iarnród Éireann, Bus Éireann and Dublin Bus. These companies stand to lose up to 10% of their PSO if they do not meet these targets.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context

I thank the Minister for his reply, which is most helpful in some ways. In the first instance, he specifically stated that he will, in effect, compel non-executive board members to appear before Oireachtas committees. Such compulsion was noticeably lacking in the past. The Minister's predecessor supported the decision of the non-executive board to decline to appear before the then Joint Committee on Transport, which was completely unjustifiable in terms of transparency. I also welcome the Minister's decision to abolish the position of executive chairman. I do not have an objection to any individual holding such a position but rather I object to the position itself.

I welcome his decision to advertise these posts.

I am concerned about CIE. The Baker Tilly report, to which I referred in the question, found corruption in it. It found breaches of procurement regulations, as well as wrongdoing and malfeasance. However, the report was buried. Its existence was not known to the Minister until it was exposed. Because it was buried, because there is still a culture of corruption and concealment in CIE, because the report cost €500,000, which was not revealed to the Minister, and because the Minister was not even told about the content of the report until it was leaked, does this not spell out to him the fact that there is a deep sickness in the organisation which was exposed at the Oireachtas committee? It was not exposed by the auditors or revealed to the Minister. Does this not make a compelling argument for the Minister to investigate what has been happening in CIE? My information is that many of the practices exposed in the report are continuing, at Iarnród Éireann in particular, and will continue, unless the Government gets to the bottom of what has been going on in that culture.

Leo Varadkar (Dublin West, Fine Gael)
Link to this: Individually | In context

It is important to recognise the background to the Baker Tilly Ryan Glennon report. I have not read the entire report, but it is on my reading list for next week when I will read it from start to finish. That is why I am not ruling out the possibility of appointing an inspector.

The fraud was detected by CIE which initiated the report. However, the company did not inform the Minister, as it should have done. It did not inform the Minister about the existence of the report, but it did detect the fraud and act on it. Of the 156 recommendations made in the report, 146 have been implemented by CIE. The remaining ten have not been implemented for good reasons.

I will be expecting the new chairman to do exactly what Deputy Ross suggests. When he or she is appointed, part of his or her instructions from the Government will be to look at how procurement occurs in CIE, how the company spends its money and ensure the practices followed in the past are not still continuing. That will be the job of the chairman rather than the Minister or the Government.

The Deputy alleges the practices deteced in the Baker Tilly report are still widespread in CIE. I have no evidence that that is the case. If there is such evidence, I want to see it. It is not reasonable to say that if fraud was detected by the company in 2005 and 2006 and acted upon, it must still be continuing. I do not accept that view. There must be some evidence to back it up. We cannot assume that because there was fraud five years ago, which was detected by the company, there must automatically be fraud now. I do not accept that automaticity.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context

Why did the auditors never discover such fraud or malpractice in the past?

Leo Varadkar (Dublin West, Fine Gael)
Link to this: Individually | In context

I do not know.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context

If they did not discover it in the past, they are not going to reveal it now.