Pat O'Neill (Fine Gael) | Oireachtas source

On behalf of Fine Gael I welcome the Minister of State to the Upper House. I have a Leap card, although it may need a top-up. The Minister of State asked whether Senators use them. All of us should carry Leap cards because they are part of a great system. In regard to the transport for Ireland website, I have seen people use smart phone applications to find out when their buses were departing.

I was surprised to find that the Bill increases the amount of money CIE is allowed to borrow to fund its day-to-day operations, as opposed to invest in other areas, until I realised that the current borrowing limit was set in 1987. The Bill will increase the borrowing limit for non-capital purposes from ¤107 million to ¤300 million and remove the possibility of a State guarantee for such borrowings, in line with EU competition rules. The main effect of this change will be to allow CIE to borrow additional funds to provide cashflow in its day-to-day operations. I presume the additional funds will be used to meet the current shortfall in its operational budget.

This is a challenging time for CIE and its subsidiaries in that they face rising fuel costs alongside reductions in Exchequer funding. A major enterprise like CIE will face difficulties when circumstances change rapidly. Smaller companies can be more flexible and have the capacity to react to changing circumstances rapidly. To use a metaphor, small companies are like speedboats whereas large State transport companies are like oil tankers. They are difficult to manoeuvre in response to changes in circumstances. Under the Minister of State, Deputy Kelly, I believe they can be moved in the right direction. They can be cumbersome in comparison to small private companies but while we must recognise the scale of the challenges faced by CIE, the company must also realise the need to change.

While the current economic difficulties mean the State cannot provide the same subventions as it did in the past, they also offer an opportunity for public transport companies to promote themselves as a less expensive and hassle free alternative to cars. In recent years, however, the number of passengers using CIE services has declined according to figures from the Department of Public Expenditure and Reform. In 2008, 43.3 million passengers used Irish Rail but this figure had declined by 13% one year later and further declined by 2% in each of the following two years to 37.4 million passengers in 2011. Similarly, the number of passengers using Dublin Bus was 143.5 million in 2008 but declined by 11% in 2009, 7% in 2012 and 2% in 2011 to 116.9 million passengers. Bus Éireann carried 48.9 million passengers in 2008 but experienced declines of 16% in 2009, 12% in 2010 and 3% in 2011.

The scale of these decreases is staggering. There was a significant drop in passengers right across CIE companies in 2009, with an overall loss of 26.3 million passengers. That would be a major loss to any company. Economic circumstances caused much of that, but it also must have to do with bus routes and services provided.

When you consider that the company has posted losses since 2008 and the management expects the losses to continue until 2014, CIE and it subsidiary companies face challenging times over the next number of years. Alarmingly, this has led the group's auditors to indicate a material uncertainty in the group's annual accounts in 2011 regarding its ability to continue as a going concern. Much of these losses are attributed to the cost of restructuring, that is, redundancy payment and other restructuring costs. These amounted to ¤113 million over the three-year period from 2008 to 2011. This restructuring reduced the number of employed by 557 and reduced payroll by ¤25.2 million. Another major effect on these losses is the cost of fuel, which has increased by 25% in three years. As the Minister outlined, CIE estimates that this costs an extra ¤22 million. This is despite a reduction in the amount of fuel used.

Public transport in Ireland can be viable but the culture must be one that looks outwards to the needs of customers and potential customers. It can be easy for large companies in receipt of State funding to get caught in a bubble and to lose focus. Mr. Michael O'Leary, the CEO of Ryanair, often states that the best companies start during a recession when the challenges to be lean and flexible are greatest. This is an opportunity the Minister has with public transport. Tough economic times can provide the impetus for much needed reforms and culture changes. There is an opportunity for our much valued public transport companies to respond to current challenges in a way that will secure their viability far in the future. No doubt the Minister of State, Deputy Kelly, and the Minister, Deputy Varadkar, are the right ones to help guide these companies towards a better future.

While on the subject of public transport, I will raise a matter with the Minister. I have a concern about the methodology used when determining the amount of free travel provided to those who qualify. I understand that two annual surveys of users take place to determine an average usage of the particular mode of transport. This is the model for public and private transportation. From the taxpayers' point of view, this is an unsatisfactory approach. It means that money is allocated based on what is, in essence, a guesstimate. Obviously, a system such as a swipe-card system would be expensive and complex; however, in the interests of transparency and prudent use of public moneys, such an approach is essential.

The aim of the Bill is to allow CIE and its subsidiaries to borrow additional funds in order to help it get over its current financial difficulties. Some degree of restructuring, such as making staff redundant, means large up-front costs with savings in the future. The additional borrowings would ease cashflow difficulties. However, interest on the additional borrowings must be paid. With proper restructuring, I hope that CIE can get back to profitability.

We have made important progress with the Leap card, thanks to the Minister of State, Deputy Kelly's, drive and determination. For many years, the project was dragging on with no end in sight under the previous Administration. We need to build on these technological advances, such as, as the Minister of State mentioned, the transport website and the smart phone apps. A spirit of reform, modernisation, transparency and prudent expenditure must pervade all aspects of policy. We must be willing to think outside the box and not accept answers when we are told something is difficult, which, I understand, can be the standard mantra within Departments. We must seize the window of opportunity that the current economic situation presents.

I would agree with Senator Mooney that CIE is a public transport company and public transport is for all the public. I would hope, when we privatise routes or put them out to tender, that companies will not be allowed to cherry-pick because rural areas need to be supported with public transport as well. I note the Minister of State will look after that.

It was great to hear Senator Mooney admit that Fianna Fáil made a mistake in 1951.