Dáil Éireann - Volume 632 - 21 February, 2007

Priority Questions. - Rail Services.

Ms Shortall asked the Minister for Transport his views on the continuing reduction in the use of rail freight and the corresponding increase in road freight here; the Government policy in respect of rail freight; the consideration which he has given to the introduction of an incentive scheme to encourage the greater use of rail; and if he will make a statement on the matter. [6884/07]

  Mr. Cullen: Iarnród Éireann continues to pursue a policy of growing its rail freight business where opportunities present, such as in bulk and trainload traffic. The company has also sought 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 resulting in the deficit on rail freight being reduced by 50% in the past three years.

Since 1999, Iarnród Éireann has invested over €1.6 billion 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. Although such investment has primarily focused on improving passenger services, where the need is greater and the demand strongest, 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, such as large volumes or trainloads over long distances. For example, Iarnród Éireann has reintroduced the trainload pulpwood business by modifying surplus wagons and providing additional services for Coillte between the west and the south east.

It has 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. It has modified surplus platform wagons to provide a trainload service for containers between Ballina and Waterford Port.

[63] Iarnród Éireann has undertaken extensive engagement with industry and transporters around the country to try to identify long-term sustainable business opportunities. It has had genuine difficulty in identifying 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 Éireann has not identified sufficient business, with the exception of the Ballina to Waterford stream, to group a number of separate activities together to form a viable load.

Most 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.

As part of the engagement with industry, Iarnród Éireann works closely with port authorities, such as in Dublin relating to transport of lead and zinc and Waterford relating to container traffic, to increase rail-based freight. The Government’s ports policy statement recognises the need for the integration of ports as a fundamental link in the supply chain with other transport modes, including rail.

Additional information not given on the floor of the House.

In the absence of opportunities or proposals for viable long-term rail freight business, the development and use of fiscal incentives has not been considered.

As regards a role for new market entrants to the rail freight business, I have introduced the European Communities (Access to Railway Infrastructure) (Amendment) Regulations 2005, SI 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. To date, no serious representations have been made to my Department for entry to the market.

I am open to any views on how we can expand rail freight but the business environment is such that real opportunities have not been presented to me. The market for rail freight is now fully liberalised and if there are promoters who have identified opportunities I would welcome expressions of interest.

  Ms Shortall: The Minister began his reply by stating that Iarnód Éireann continues to grow the [64] rail freight business, which is patently untrue. The figures over the past few years indicate a 28% decline in rail freight in 2005, with a 47% decline last year. The business has virtually disappeared, with approximately 0.5% of freight now carried by rail. The Minister should stop codding himself and us. Nothing has happened to support rail freight or encourage its greater usage in the past few years. The opposite has been the case, with a dramatic decline becoming evident.

I asked what Government policy on rail freight is and if the Minister has any proposals for incentivising rail freight. Looking at the rest of Europe, Britain, Denmark, France, Germany, Austria and Switzerland have incentive schemes to encourage the use of rail freight.

The Minister is operating on the basis that Iarnród Éireann has a very limited budget, with its emphasis rightly being on passenger services. It does not have the resources to try to expand the rail freight business. This does not stack up. I listed the countries which have incentive schemes but does the Minister have any proposals for an incentive scheme to encourage a switch from road to rail?

  Mr. Cullen: To correct the Deputy, I stated that Iarnród Éireann continues to pursue a policy of growing its rail freight business where opportunities present, such as in bulk and trainload traffic.

  Ms Shortall: It is in serious decline.

  Mr. Cullen: It is interesting for the Labour Party to adopt a position where it suggests the taxpayer should fund highly profitable commercial sector companies to move their goods and services around the country. This is an extraordinary position. The taxpayer has enough to fund in this country.

  Mr. Eamon Ryan: The taxpayer is already paying for the carbon fund.

  Ms O. Mitchell: There is a significant hidden cost.

  Ms Shortall: The Minister should stop making cheap political points.

  Mr. Cullen: It is not a cheap point. The Deputy is requesting that the taxpayer fund, through subsidy, highly profitable and commercially successful companies——

  Ms O. Mitchell: The Government does that already with the roads.

  Mr. Cullen: ——in this country in doing their business. That is not a position to which I subscribe. We all have demands on the Exchequer and we need funding for health, education, the social services and all these areas.

[65]   Ms O. Mitchell: What about the environment?

  Mr. Cullen: When it comes to it, that is further down the line.

From 1 January this year, all domestic freight operations in this country have become an open market which has been fully deregulated. To date, no serious representations have been made to my Department to enter into the market. I have requested the private sector, if it so wishes, to come into the market.

  Mr. Eamon Ryan: I would not as long as the Minister is still there.

  Mr. Cullen: Some private sector companies have considered the move but the big difficulty in Ireland is that distances are very short and end-to-end points do not have huge business at either end. This is the reality here and in Europe. Freight movements on trains are more successful in Europe where they are over long distances.

In fairness to Iarnród Éireann, Norfolkline, a major international shipping company, put a proposal to it for the movement of freight across this country. It came on board with a joint venture and worked it through. Unfortunately, it failed completely because of the private sector costs, including trying to get the goods to the station. They had to hire trucks to get the goods there. There was also the cost of putting goods on and off trains, which meant the operation was not viable.

The private sector, which is very experienced in shipping and operating rail systems in Europe, came to the conclusion that, given the configuration in Ireland, it was not viable because of the cost base of moving much freight by rail. It was significantly different to do so by road. That is the reality of using rail freight in this country.

Iarnród Éireann has maximised its benefit in some specialised bulk cargoes, which it is growing, and some specific long loads of container traffic.

  Ms Shortall: It is very disingenuous of the Minister to try to score cheap political points. He knows perfectly well that the road system is highly subsidised by the taxpayer. He should also know that the cost to the taxpayer of road freight is very high. If we lose the remaining tiny proportion of freight currently travelling by rail, it will cost the taxpayer some €36 million a year. That has been fully costed and refers to wear and tear on the roads, not to mind the increased likelihood of accidents or the environmental impacts of having more HGVs travelling through residential areas.

Almost every other country in Europe subsidises the operation of rail freight. I asked the Minister if he had a policy and he clearly has none. He has spoken about opening up the market but there was no interest. There is no interest because it does not stack up unless all the [66] costs are included. We can look at internal costs but the Minister and his Government should also take into account external costs.

Will the Minister be proactive in this area and end the hands-off approach? We have a serious problem with the amount of freight carried on our roads and we are paying a heavy cost for it.

  An Leas-Cheann Comhairle: We must move to the next question as the time for this one has expired.

  Ms Shortall: It would be good to believe that the Minister has thought about this issue, has a policy on it and is prepared to take a proactive approach.

Bulk cement is ideal for carriage by rail freight. The service operating from Drogheda to Cork is nonetheless in decline in recent years.

  An Leas-Cheann Comhairle: We must move to Question No. 77.

  Mr. Cullen: I would like to answer this question.

  Ms Shortall: Will the Minister take any action to restore the business and make it viable, or to ensure there will be savings for the taxpayer?

  Mr. Cullen: I have a policy that is fundamentally different from that of the Labour Party. In Government, the Fianna Fáil Party will not subsidise highly profitable companies to move their goods and services around the country.

  Ms Shortall: Why is the Minister trying to deceive people on this matter?

  Mr. Cullen: That is the enunciated position.

  Ms Shortall: The Minister knows the cost for the taxpayer is much higher for road freight. The Minister should stop trying to mislead people.

  An Leas-Cheann Comhairle: The Chair is now calling Question No. 77.

  Mr. Cullen: If the Deputy is going to enunciate a position, she should at least have the courage to stand over what is being said.

  Ms O. Mitchell: She is.

  Ms Shortall: Does the Minister not understand the costs involved in road freight?

  Mr. Cullen: Of course I understand the costs involved.

  Ms Shortall: He should stop making cheap points then.

  Ms O. Mitchell: The Minister only understands it because he has been told by CIE.

[67]   Mr. Cullen: The Labour Party seems to be taking a view that it can force commercially successful companies in this country to use rail freight, which is not viable, as opposed to road freight. To get them to do so, they would use taxpayer’s money. It would be an appalling waste of money and only the Labour Party could develop such a skewed view on how to use taxpayers’ money.

  Ms Shortall: We are discussing incentivising them which would result in savings to the taxpayer and the environment. If the Minister does not understand this, he should not be in his position.

  Mr. Cullen: I understand, which is the difference between the Deputy and me.