Brian O'Shea (Waterford, Labour)
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Question 121: To ask the Minister for Transport when he intends to produce a policy on rail freight subsidisation. [21991/06]

Bernard Durkan (Kildare North, Fine Gael)
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Question 292: To ask the Minister for Transport his plans to transfer a greater amount of freight traffic to the railways; and if he will make a statement on the matter. [21877/06]

Martin Cullen (Waterford, Fianna Fail)
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I propose to take Questions Nos. 121 and 292 together.

The Strategic Rail Review, commissioned by my Department, contained a comprehensive examination of the rail freight business and its realistic potential to support economic development and contribute to sustainable development.

Iarnród Éireann, in responding to the challenges contained in the Review, developed a business plan with regard to freight. The company's goal is to return the rail freight business to profitability. To help achieve this turnaround, Iarnród Éireann withdrew from loss-making groupage, palletised and single container rail transport in the recent past. However, Iarnród Éireann continues to pursue a policy of growing its rail freight business where opportunities present.

Since 1999, Iarnród Éireann has invested over 1.5 billion euro in rebuilding the railways, with Government and EU support for the investment programme. This has delivered improvements in new trains, upgraded infrastructure and customer facilities. While such investment has primarily focused on improving passenger services, the investment in improving rail infrastructure also has a direct beneficial impact on freight activities.

Iarnród Éireann has made progress in growing the rail freight business in areas where it holds a competitive advantage over road haulage, including mineral ore and pulpwood. For example Iarnród Éireann has: — increased the trainload pulpwood business by modifying surplus wagons and providing additional services for Coillte between the West of Ireland and the South East; — recently altered rail schedules and is currently providing three additional trains per week for Tara Mines with a potential to carry an extra 85,000 tonnes of lead and zinc between Navan and Dublin Port per annum, — modified surplus platform wagons to provide a trainload service for containers between Ballina and Waterford Port.

I have introduced the European Communities (Access to Railway Infrastructure) (Amendment) Regulations 2005 (S.I. No. 780 of 2005), implementing EU Directive 2004/51 on the development of the Community's Railways. These Regulations open the freight market to competition from both domestic and foreign operators, from 1 January 2006 in the case of international freight, and from 1 January 2007 in the case of domestic freight operations.

I should add that Iarnród Éireann has undertaken extensive engagement with industry and transporters around the country to try and identify long-term sustainable business opportunities. They have had genuine difficulty in identifying business opportunities that offer reasonable volumes of business on a regular basis. It is not feasible to run trains with one or two containers and Iarnród Eireann has not identified sufficient business to group a number of separate activities together to form a viable trainload. Most Irish industry is focused on 'just in time' transport and as our road network continues to expand and improve across the country, the role of rail freight becomes more problematic because all rail journeys involve road movements at each end of the logistics chain. Furthermore, in Ireland distances are short. The experience across Europe is no different. Rail freight activities are most economic where distances are long, where there are large volumes to be transported and where the freight to be carried is not time sensitive.

I am open to any views on how we can expand rail freight but the business environment is such that I have not seen any real opportunities identified. The market for rail freight will be fully liberalised in a matter of months and if there were opportunities I would welcome expressions of interest. The question of providing capital funding for sidings is often mentioned as a stimulus to rail freight but again no firm proposals have been received.

It remains my priority that any additional Exchequer subvention should focus on expanding passenger services to meet the continuing unmet demand for such services, in seeking to address the adverse social and economic impacts caused by traffic congestion.