Speech by Minister for Transport, Tourism & Sport Leo Varadkar at the Transport Ireland Conference on Thursday 25th April

 
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It is my pleasure to address the Transport Ireland Conference.   This is the third time that I have done so since I was appointed as Minister for Transport, Tourism and Sport.  And, as you know, the new government is just over two years in office. I think, therefore, it is appropriate to spend a little bit of time looking back on those two years.
 
The last two years have been very difficult for Irish people, Irish business and Irish families.  Unemployment remains stubbornly high and we are losing many of our best and brightest through emigration. Many families are struggling to make ends meet, whether it is due to falling incomes, rising bills or the burden of debt, and many businesses are struggling to survive, not least those involved in transport, civil engineering and construction among others.
 
Against the backdrop of hard reality, it is easy to forget about all the progress that has been made and how far we have come in the last two years.
 
In the three years before the change of government, we lost 250,000 jobs in the private sector.  Now, unemployment has stabilised, the live register and standardised unemployment rate are starting to fall and, most importantly, the number of people at work is increasing again according to the Quarterly National Household Survey.   It’s a slow start, but it is a start nonetheless.
 
When we took up office, the budget deficit was one of the widest in the world, greater than that of many ‘failed states’ in the developing world.  The global money markets were closed to Ireland necessitating the intervention of the Troika. Now, the deficit is under control, our official sector sovereign debt has been restructured on favourable terms, Ireland’s international reputation has been restored and we have returned to the money markets.  All things going to plan, by the time we meet again, the programme will be complete and the Troika long gone.
 
When it comes to the banks, there is a long way to go. Nonetheless IBRC, Anglo Irish Bank, the promissory notes and the bank guarantee are now history, allowing us to focus on getting the banks back to the business of normal lending, profitability and ultimately their return to the private sector.
 
Exports are now higher than they were when the bubble burst and the IDA expects this year to be a record year in terms of inward investment.  Tourist numbers were up in 2011 and 2012 and so far, for 2013, there has been a further increase in visitor numbers and passenger numbers through the State airports which signals a strong start to The Gathering Ireland 2013.
 
In my own brief, notwithstanding the many difficulties we face which I will speak about later in detail, there are some important achievements I want to mention.  These include:
 
                    Separation of Shannon Airport from the DAA
                    The decision to proceed with Luas BXD or Luas Cross-City as we call it now
                    The Gathering
                    A package of ‘Jobs Initiative’ measures to support tourism including the 9% VAT rate, reduced employers’ PRSI and the extension of the Employment & Investment Incentive Scheme to tourist accommodation
                    A package of incentives for the aviation sector in this year’s Finance Bill
                    A fuel rebate to assist the haulage sector and bus operators thus moderating the cost of transport for all
                    The successful launch of the Leap Card
                    The restoration of the sports capital programme
 
I am not saying this in an effort to blow my own trumpet, but rather to thank my officials, political staff and the agencies and companies under my remit for their commitment, endeavour and loyalty in the last two years, and to recognise the part they played in achieving these things.
 
And so, where will we be in two years’ time?  If we stay the course, I believe we will be in a much better place with sound public finances, falling unemployment and rising living standards again.  But only if we stay the course. 
 
As you know, Ireland currently holds the Presidency of the European Union.  I am chairing the Council of Transport Ministers.  The over-riding priority for the Presidency is to promote a safer, more efficient and sustainable transport network for Europe and a key focus of the Irish Presidency across all policy formations is to advance legislation that can contribute to creating the conditions for stability, jobs and growth in Europe. Transport policy is critical here - particularly as a key driver of the Single Market.  As an island on the periphery of Europe, we are only too aware of the importance of transport links that are fit for purpose.
 
Connectivity is key and in that context, we are working intensively with Member States and the European Parliament to advance the Connecting Europe Facility as far as we can during our six months. This multi-billion euro programme is aimed at targeting investment in the transport, energy and telecoms sectors where it is most needed over the next financial period – 2014 to 2020.
 
Smart investment in transport will enhance Europe’s overall competitiveness. It will also have a direct impact on job creation in the sector in Europe with an EU budget of over €23bn earmarked for investment from 2014 to 2020. My aim is to secure agreement with the Parliament and Member States on these files over the remaining two months of the Presidency. 
 
We are also confident that we can secure agreement on the Transport Guidelines that underpin the CEF. Ireland – like many other countries – is not in a position to invest in transport at the same levels as before. That does not mean we can’t invest in transport – it simply means we need to get smarter about how and where we invest.  This is very much at the heart of TENT and CEF where the objective is to target the limited resources available more wisely and where they will add greatest value from a European perspective. The initiative is also about attracting the private sector to play a greater part in delivering key infrastructure investment. In that context, TENT and CEF are very much allied to the stability, jobs and growth theme of Ireland’s Presidency.
 
The 4th Rail Package is a key priority in the Single Market Act 2 and has featured high on our Council agenda.  The Commission proposals here are substantial. We have prioritised work on the technical aspects of this package – principally the interoperability directive – as these aspects are fundamental to building consensus and advancing towards a fully-integrated rail system in Europe.
 
Ireland has a very strong track record on road safety and are working hard to move ahead on the Roadworthiness Package at Council and to look for an agreement with the European Parliament on a new Tachograph Regulation.  Last month, we hosted a major conference on road safety in Dublin Castle. Ireland will also host the ITS European Congress in Dublin’s Convention Centre from 4 to 7 June – where the focus will be on optimising the benefits of Intelligent Transport Systems across the EU.
 
In January, the Commission published its “Clean Power for Transport Package” which contained some very ambitious and far-reaching proposals in relation to infrastructure and standards for alternative fuels.  I see that this will be discussed in one of the sessions later this morning.  I have to say that I am really enthusiastic about this new European law. When adopted, it will commit member states to funding and supporting the development of infrastructure for electrical vehicles across the union and LNG and CNG infrastructure for heavier vehicles and for ships at our ports.  It has the potential to transform transport as well as helping to tackle climate change.  Of all the European laws being considered by the Council, this is the one that I can see making the most difference in 20 and 30 years’ time.  We need to get serious about it and we need to get it right.  Following an initial exchange of views at Council in March, work has commenced at a technical level to advance this proposal.
 
While this European work rarely grabs the headlines, it is nevertheless important and has a direct impact on Europe’s competitiveness and Europe’s citizens. For my part, I continue to learn a great deal from my contacts with EU colleagues at Government, Commission and European Parliament level.  The role of President of the Council is a privilege and an opportunity which I have the privilege to take on.    
                                                                                                  
Transport Investment
 
In the past, Transport Ministers had very large capital budgets at their disposal, much of which was spent wisely and some not.   My funding for transport infrastructure is greatly reduced, for obvious reasons.   I’ve had to fight for every cent, which makes me all the more determined to ensure that we get the maximum return from it.  The first priority has to be to protect investment made to date; the second, to extract maximum value from existing assets by using existing infrastructure more efficiently and in a smarter way; and the third, to invest in new projects with a focus on safety, missing links, and capacity to generate employment and growth.
 
Funding for national, regional and local roads has reduced significantly over the last number of years, with capital funding reduced from over €2.1 billion in 2007 to €542 million in 2012.  Lower funding and two severe winters between 2009 and 2011 have taken their toll on the road network. 
 
In practical terms this means that resources have to be concentrated on maintaining the existing network and accident prevention measures rather than new developments.  This is reflected in the fact that no new major direct Exchequer funded projects are scheduled to start in the next few years on the national roads network and State grants for new schemes and realignment schemes on the regional and local network will be suspended from next year.
 
While the main focus will be on the maintenance and rehabilitation of road pavements, the Government also announced an off-balance sheet stimulus package in July 2012 with funding of over €1 billion towards major transport projects using private finance. 
 
There are three road PPP projects included in the Government’s stimulus package. These are the N17-N18 Gort-Tuam link, the N25 New Ross bypass, and the M11 Gorey-Enniscorthy,
 
Now that additional funding has been confirmed for the Exchequer element of these projects the National Roads Authority is moving ahead with the procurement process.
 
Another important PPP project, the provision of a motorway on the N11 between Arklow and Rathnew, bundled with a free-flow system at Newlands Cross on the Dublin to Limerick road, is at an advanced stage of negotiation and is expected to reach financial close in the near future.
 
PPPs are not easy to put together.  The process requires investment banks, construction companies and the Government to enter into 30 year partnerships and financial commitments.  If we can achieve financial closure on the Newlands Cross/Rathnew bundle, it will be the first in six years. It will be a major signal of confidence in the Irish economy and further evidence that the green shoots of recovery are real and are putting down roots. 
 
These PPP projects will provide a welcome boost to Ireland’s construction sector as well as generating significant long term economic benefits.
 
In relation to public transport the funding from 2012 to 2016 will amount to over €1.3 billion averaging around €260 million per annum. 
 
This means we can’t, for the moment, invest in our public transport network on the scale that had been envisaged.  Instead, we have to aim for a better return from the existing public transport system, through targeted investment, better use of existing resources and by using smart technology to make public transport more responsive and passenger friendly.
 
We are, of course, funding one key integration project, Luas Cross-City. This represents a very significant milestone in the creation of a high quality integrated public transport network in Dublin. It fills in one of the gaps in our infrastructure and helps to make Dublin a properly connected city.
 
Work has already commenced on the building condition surveys which will establish a baseline record of the condition of properties along the Luas Cross City Line. The procurement process for the remaining advance works is also well advanced and these works will commence in June. The main construction works for the project will commence in early 2015.
 
I am aware that there have been concerns that the construction works could impact on the city centre business area. I have made it a priority that everything possible is done in preparing for construction to ensure that the city remains open for business. I chair a group of stakeholders which includes representatives of all business groups to oversee the delivery of the project and to ensure that the traffic management and communications arrangements at all stages are appropriate and adequate.
 
Separately, the RPA and NTA are working closely with the City Council, Gardaí, Dublin Bus and the business community on traffic management issues. Preparations for a dedicated web page and a city centre information office are also well advanced.
 
I am confident that in 2017 we will all be very proud of this new service.  It will carry 10 million passenger journeys ever year. It will link the existing Luas lines and will link Luas to the Maynooth/Dunboyne commuter line at Broombridge in Cabra.  It will make all sorts of journeys not currently possible by rail, possible and easy - Leixlip to St Stephen’s Green and Dundrum to Croke Park to cite just two examples.  The Luas has been an enormous success.  Passenger numbers have grown throughout the recession, proving that passenger numbers do not always track GDP, and it operates without subvention.  Dublin is, without doubt, suited to light rail.
 
We will continue to give a significant allocation to Irish Rail for railway safety and maintenance. At the end of this year over €1.5 billion will have been spent under the 15 year Railway Safety Programme, 1999-2013.  We have budgeted for the continuation of a spend of around €100m per annum on railway safety post 2013.
   
In addition to safety related works Irish Rail is undertaking infrastructural works to improve journey times such as removing or upgrading level-crossings, WiFi, providing automated ticketing machines, improving station facilities - all of which contribute to making the railway faster and more attractive to passengers.
 
Work continues on the City Centre Re-signalling project which will increase capacity at Connolly and Pearse stations. It is important to do this in order to facilitate the DART-Underground project so that it can move more quickly when we are ready to re-initiate the PPP process for that project.
 
The NTA is being funded for a rolling renewal programme for the PSO bus fleet.  Bus is still the most used public transport mode and it is important that we have a fleet that is reliable, efficient and reasonably modern.  I have also provided funds in Dublin and the regional cities to promote sustainable travel including further developing QBCs, improving rail and bus stations, bus stops and shelters and also to improve the accessibility of public transport. Funds are also provided for infrastructure and safety measures to support cycling and walking in these urban centres.
 
We are also funding the use of smart technology to make public transport easier to access and more reliable for the user.  Significant progress has been made with the Leap card, Real Time Passenger Information, the National Journey Planner - which maps all public transport services across the country - and with related apps including the Driver Check Taxi App.  Among his many responsibilities, Minister Kelly is spearheading the move to the Leap card and integrated ticketing.  Numbers are very encouraging, allowing for a few delays and false starts. 
 
We will continue to progress these consumer-friendly initiatives which make using public transport attractive.
 
I don’t have to tell you that there is no shortage of projects and programmes which could be funded if I had the money. From time to time I review with my officials and agencies the lists of projects at various stages of planning and design which have been evaluated and appraised as regards value for money. We also continue to check the funding opportunities that might become available.  In the short-term I want to have a small number of shovel-ready projects so that we are ready to take advantage of any funding opportunities that may arise. The priority will be to direct any available funding to projects which are affordable, have robust business cases, a positive benefit-to-cost ratio, and deliver the best return in terms of economic recovery and job creation. The ability to operate profitably and without reliance on Exchequer subsidies is also a key consideration for investment in any new public transport projects. 
 
A strategic framework for future investment
 
I want to take some time today to tell you about an initiative which my Department is taking with a view to improving the basis on which future investment decisions will be taken. A study is underway into the longer-term transport needs of the Irish economy, the Strategic Framework for Investment in Land Transport.  The purpose of this work is to examine the role that transport plays in the Irish economy, and to understand how the Irish economy and society are likely to develop over the longer term and the contribution that transport can make to that development.  The idea is to take advantage of the current lull in investment and construction activity in the transport sector, which has followed a period of very high levels of investment in the sector from the mid-1990s, to take stock and learn lessons from how we selected and implemented projects during that period.
 
Decision-making in the transport sector has traditionally been pro-cyclical. In other words, we have waited for economic growth to pick up and for congestion and unreliability problems to build before making plans to invest in transport. Conversely, transport has not been a significant priority at times of stagnant or low growth, and high unemployment and emigration.
 
This has led to two problems. Firstly, there is a long lead time for transport projects, and some major transport projects can be years in the planning and design phases. When the time comes for money to be spent, often the economy has moved into a lower growth cycle and funding is no longer available, and the immediate need for the project may no longer be apparent.  Thus it ceases to be a priority for the public, and if it’s not a priority for the public, then it ceases to be a political priority too. 
 
Secondly, investment decisions in transport are often made to relieve a pressing bottle-neck or congestion point. However there is a need to take a longer term view and to make such decisions in a far-seeing and planned manner, which maximises the return on investment to the country as a whole, rather than implementing piece-meal solutions in a reactive manner.
 
We want to move towards a more long-term approach to managing expenditure in transport, which recognises the historical impact of carefully planned and evaluated investment, in terms of economic competitiveness, but also in terms of other impacts which may not be so apparent in the short term.  These should include the role of transport in facilitating more sustainable patterns of land use and development, or in allowing more efficient models of delivery for other public services, whether that be in health, education or social services.
 
The work that we are doing seeks to identify the linkages between transport investment and regional economic development and the spatial distribution of development and economic activity. Most importantly, it will examine the role of transport in creating an efficient, well-functioning economy which allows, for businesses, efficient access to suppliers, markets and workers, and for citizens, efficient access to jobs and services.
 
It will seek to establish the principles to frame decision-making on the appropriate type and quantum of expenditure on transport for Ireland’s economy in future. It will also examine the question of how best to fund expenditure in the sector, the most effective ways of introducing private sector funding, user-charges, demand management schemes and other new or innovative funding or procurement models.  The work will also consider the role of new technologies in transport and how we can best make use of these technologies to help create a more sustainable, more efficient, more cost effective transport system. 
 
The Strategic Framework for Investment in Land Transport should be completed by the first half of 2014.
 
The work on the strategy was initiated by a workshop where we invited academic and other parties with transport interests to give us their views. This proved to be very useful and we will engage in further consultation exercises as the work progresses.
 
CIE’s financial stability
 
I’d now like to turn to some of the other significant developments since I addressed this Conference last year.
 
In the past 12 months I have had to deal with a difficult financial situation within the CIÉ Group. As in most business sectors in the State, the current economic environment is very challenging for public transport providers, which, in the case of CIÉ, has coincided with a drop of over 20% in passenger numbers from the peak in 2007. 
 
In the three years from 2009 to 2011, CIÉ suffered a total loss of over €137 million after exceptional items. Clearly, this scale of losses cannot be sustained and must be addressed. While progress has been made over recent years in reducing costs and headcount, these reductions have not been sufficient to eliminate the deficits in the operating companies.
 
While additional funding of €36 million was provided by Government to CIÉ last year to ensure that the companies could continue to operate PSO services for the rest of 2012, there is no possibility of this being repeated this year. At this very difficult time for the public finances, the provision of additional funding last year involved very difficult decisions in terms of having to divert funding from other very worthwhile and important projects and initiatives and imposing sacrifices on others.
 
I know that the Board of CIÉ are pursuing a range of measures such as realisation of non-core assets and reduction in cost base including payroll reductions.
 
At the end of 2012, in addition to the increased Exchequer funding of €36 million, a significant voluntary severance programme was implemented in Irish Rail and the Group generated cash of €20 million by selling its interest in the ground lease in Spencer Dock. Passenger numbers and revenue, following fare increases, have stabilised in recent months. The Group is also in negotiation with its banks in relation to refinancing. I understand that these discussions are progressing well.
 
However, while all of these are positive for the Group, it is essential that it continues with the development of long-term plans to deal with the current economic realities and the historic losses. Both management and staff in the CIÉ companies must focus on cutting costs in order to address the serious financial position in which the CIÉ Group finds itself, therefore protecting jobs in the companies and public transport services in general.  
 
Road Safety Strategy
 
At the end of last month I launched the Government’s new Road Safety Strategy which covers the period 2013-2020.
 
The reduction in road fatalities has been one of the country’s achievements of recent years.  It is a good example of how to develop and implement public policy and demonstrates that the system can work and joined-up government can be a reality.  As recently as 2005, 396 people lost their lives on Irish roads.  Last year the figure for fatalities fell to 162.  In the space of seven years we have, as a nation, more than halved our road fatalities.  There are many reasons for this remarkable achievement, including an improved primary roads network, higher standards and better maintained vehicles, a greater emphasis on enforcement with the establishment of the Garda Traffic Corps and targeted legislation that introduced, in particular, lower drink driving limits and penalty points.
 
The establishment of the Road Safety Authority in 2006 was also a significant factor. However, the primary reason why Ireland has succeeded in reducing its road fatalities so dramatically is the change in the behaviour of road users.  They, for the most part, have embraced road safety and in doing so deserve recognition for their actions. 
 
The new Strategy sets a very ambitious target of reducing road collision fatalities to 25 per million population or less by 2020.  This is required to close the gap between Ireland and the best performing countries in Europe.  The overall effect will be reducing fatalities from 162 in 2012 to 124 or fewer by 2020.
 
The Strategy also aims to reduce serious injuries by 30%, from 472 in 2011 to 330 or fewer by 2020, a reduction to 61 serious injuries per million population.    
 
The new Strategy builds on what was successful in the previous Strategy. Once again the RSA is responsible for the overall implementation.  It contains 144 specific actions that seek to continue to reduce road fatalities, but it will also have a new focus on reducing the number and severity of injuries on our roads. 
 
The increase in road fatalities in the early months of this year is a reminder to us all that we must not become complacent where road safety is concerned.  While it is too early to identify a trend, the increase in deaths does serve to demonstrate that we must continue to be vigilant when using the roads.
 
Ports Policy
Last month I also launched the Government’s new National Ports Policy.  Our commercial ports are gateways to the world, and handle large volumes of traffic both in terms of goods and passengers.
 
Within the sector there is huge diversity when it comes to the size, capability and potential of individual ports. Trends, both nationally and internationally, in maritime and land-based distribution networks pose challenging questions for the sector itself and for Government as shareholder and policy-maker.
 
It was increasingly apparent to me that our previous ports policy did not provide the type of framework required to allow all of our ports develop in a manner that best suits their particular circumstances.
 
My own analysis, informed by my Department and others, was that the sector was not structured in a way that provided Ireland or the individual ports themselves, with the optimal outcome – namely, a competitive and effective market for maritime transport services.  The new National Ports Policy addresses these challenges head-on and provides an appropriate development framework for all of our commercial ports.
 
It establishes clearly the role and function of individual ports through categorisation as a Port of National Significance Tier 1, Port of National Significance Tier 2 or as a Port of Regional Significance. This is an important acknowledgement of the differences that exists in the sector but one which was not recognised by the one-size-fits-all policy which applied hitherto.
 
The new policy provides a clear framework for those Ports of Regional Significance which will allow them to continue to develop in a manner that best suits their particular circumstances in association with their local authority.
 
Through this refocusing of central Government shareholding on Ports of National Significance it provides an opportunity for Government to become a more active, more demanding, better informed and more involved shareholder.
 
And finally, the new policy outlines the Government’s vision that future major port infrastructure development designed to address national port capacity deficits should be led by our Tier 1 ports, based on sound analysis rather than other speculation.
 
This new policy marks another important milestone in the continuing development and improvement of the Irish commercial ports sector and I look forward to working with all stakeholders in its implementation in the coming years.
 
National Aviation Policy
Following on from that discussion of Ports, I am glad to say that our other key means of access for goods and people, in other words aviation, is also to be the subject of a new policy statement.
 
Since coming to Office, I have been conscious that the many decisions on aviation that will be taken in the coming years should not be  made on an ad-hoc basis but rather within an overall vision for the sector in Ireland.  As an island, air transport is critically important for us and for tourism and trade, in particular, so it is no surprise that we have a very strong tradition in aviation and that many Irish aviation companies and personnel have leading positions globally.  Given the importance of the sector to our economy, I have set about developing a new overarching national aviation policy to foster its continued development and growth. 
 
I started the process with a conference on 3rd December last at which there was a fantastic turnout – approx. 450 delegates from across the spectrum in aviation and from related fields.  That provided a very useful opportunity for interested parties to raise and debate issues and initiatives that they think should be considered in the development of a new national aviation policy.
 
I have now gone out to formal consultation taking account of the issues that that were raised at the Conference and that have been raised with me in other forums since I came into office.  I published a consultation document – an ‘Issues Paper’ - on my Department's website on 1 March 2013.  The Issues Paper covers eight broad areas : Airports, Air Services, Regulation and Governance, Aircraft Leasing and Finance, Aerospace, Education and Training, General Aviation and Sustainability.It poses a number of questions under these broad headings but, of course, neither the list of topics nor the list of questions is exhaustive – I have indicated that any and all submissions will be welcome and I encourage those of you with an interest to submit your comments before the end June deadline.
 
When we have received and analysed the submissions, I intend to issue a draft National Aviation Policy Statement towards the end of the year. That will provide further opportunity for stakeholder input before the adoption of the policy in 2014.
 
In the last few weeks, there has been an interesting debate going on about the limits of austerity, the content of the budget in October and what we might do with any flexibility afforded to us by the deal on the promissory notes.  I have not entered into this debate up until now as there are many moving parts and we do not yet know how the economy will perform in the coming months.  There are a lot of variables and it is too early to make budgetary decisions now.
 
But I will say this. While tax cuts would be most welcome particularly for those on middle incomes who end up paying high rates of income tax on modest salaries, we should not reduce taxes until we know that any reductions can be sustained into 2015 and beyond. So, if there is any spare capacity in the coming budget, we should not use it to avoid making unpopular or difficult decisions that need to be made and will generate long-term savings, whether it is public service pay and pensions or other areas of day-to-day spending. 
 
Rather, we should use it to invest in jobs and growth. The most effective way to do this is, in my opinion, boosting capital spending. Investment in school buildings, health care facilities, flood relief works, roads, railways can create much-needed jobs and quickly if done through the traditional Exchequer route.
 
And, when you examine the live register, it is people with construction-related skills, in the main, who are available for work but are finding it hardest to get work. Capital spending levels in Ireland are now very low and construction prices very competitive. I believe an increase in capital budgets could be very effective when it comes to increasing employment and improving the conditions for long-term growth and recovery. And that is an objective we all share.
 
Ends
 
Department of Transport, Tourism and Sport: 01 604 1087 / 01 604 1007