CIE told to reduce State subvention

The Government has told CIÉ to assess ways of reducing its €230 million State subvention, it is believed. The most senior executives at the transport group briefed the Minister for Transport and Infrastructure, Mr Brennan, on the funding situation and other matters at a meeting last Wednesday.

The meeting was one of a number Mr Brennan conducted last week with key semi-State firms such as Aer Lingus and Aer Rianta. He has called additional meetings with the CIÉ operating companies on Monday.

Mr Brennan is also expected to meet private-sector operators such as Ryanair and independent bus companies.

At the meeting on Wednesday, he met CIÉ executive chairman Dr John Lynch, chief financial officer Mr Jim Cullen, and chief executives of rail company Iarnród Éireann and bus firms Dublin Bus and Bus Éireann. The new secretary general at Mr Brennan's Department, Ms Julie O'Neill, also attended.

While the Programme for Government stated that the 1932 Road Transport Act underpinning CIÉ's monopoly would be replaced, it is thought Mr Brennan did not outline specific plans in any detail.

While the Minister is believed to have no desire to micro-manage CIÉ, he said in an Irish Times interview eight days ago that he would act in the interests of the shareholder and taxpayer.

This is seen as an indication that the Government will review the group's funding situation, particularly given renewed pressure on the public finances. With tax revenue falling, Government departments were told earlier this year not to exceed their budgets.

The subvention has increased by about €20 million annually in recent years and it is believed Government wants to minimise expenditure.

A CIÉ spokesman said: "It was a general briefing on CIÉ matters at which they went through everything, including service issues and investment projects. There was no particular focus on the subvention."

The Exchequer paid some €146 million last year to Iarnród Éireann with most of the remaining €174 million going to Dublin Bus. Bus Éireann is mostly self-funding.

Any Government plan to reduce the subvention would be bad news for CIÉ, which attributes the poor quality of certain services to decades of under-funding. The cash-strapped group applied earlier this year for a fare increase but was refused by Mr Brennan's predecessor, Ms Mary O'Rourke. The application is expected to be renewed soon. The group is believed to be seeking a fare rise in excess of inflation, currently running at about 5 per cent annually.

With inflation and pay increases under the Programme for Prosperity and Fairness eating into the group's resources, fares decreased in real terms last January because Ms O'Rourke wanted CIÉ to "round down" its rates for the currency changeover.

Dublin Bus, in particular, has been the beneficiary of a major investment in its fleet. It is thought that the use of additional buses during off-peak periods has increased the financial squeeze.