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Ministerial Brief Sectoral Breakdown July 2014

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Ministerial Brief Sectoral Breakdown July 2014 Ministerial Brief Sectoral Breakdown July 2014 Index Tab 1 Maritime Tab 2 Land Transport Tab 3 Aviation Tab 4 Tourism Tab 5 Sport Tab 6 Corporate Services Tab 7 Comprehensive Review of Expenditure 2015 – 2017 / Capital Review 2015-2019 1 Maritime Sector Contents Maritime Transport ................................................................................................................................. 3 Maritime Safety Policy Division .............................................................................................................. 8 Irish Coast Guard ..................................................................................................................................... 9 Marine Survey Office ............................................................................................................................ 11 Irish Maritime Administration & Maritime Services Division ............................................................... 14 2 Maritime Transport Assistant Secretary: Maurice Mullen Principal Officer: Mary Lally The Division comprises two distinct units: Ports Shipping PORTS National Ports Policy The vast majority of the State’s commercial port infrastructure falls under the control of the nine State port companies, although much of the superstructure and most services are provided by the private sector. The port companies are private limited companies governed by the Harbours Acts and subject also to normal Companies Acts provisions. The Minister for Transport, Tourism and Sport is the majority shareholder with the Minister for Public Expenditure and Reform holding one share in each company. The ports receive no exchequer funding and in fact both Dublin and Cork pay a dividend yearly to the state. In March 2013 Government approved the publication by the Minister for Transport, Tourism and Sport of a new National Ports Policy. The publication of the new policy concluded a review of ports policy which commenced in September 2010. National Ports Policy’s core objective is to facilitate a competitive and effective market for maritime transport services. The policy contains a number of legislative and non-legislative measures designed to address not just the issues facing the sector today but also equip all of the current State commercial port companies with governance structures most appropriate to their particular circumstances, role and function. National Ports Policy categorises the State commercial ports sector into – Ports of National Significance Tier 1 (Dublin, Cork and Shannon Foynes) Ports of National Significance Tier 2 (Rosslare* and Waterford) Ports of Regional Significance (Drogheda, Dún Laoghaire, Galway, New Ross and Wicklow) *Rosslare is not a State commercial port company similar to the others but rather due to historical reasons is operated as a business unit of Iarnród Éireann. One of the key features of the policy as agreed by Government was the re-orientation of national policy focus along those designated Ports of National Significance (Tier 1 and Tier 2). The Ports of National Significance are our key international maritime gateways handling approximately 90% of all tonnage and are of significant importance in terms of our national competitiveness. This tiered categorisation of the sector is in line with revised European transport policy as evidenced by the approach adopted in the new Trans-European Transport Network Regulation which sees ports categorised as ‘core’ or ‘comprehensive’ ports. In Ireland our Ports of National Significance (Tier 1) fall into the European ‘core’ network while our Ports of National Significance (Tier 2) fall into the European ‘comprehensive’ network. 3 As part of this agreed re-orientation of policy focus, National Ports Policy recommends that the designated Ports of Regional Significance are transferred to more appropriate local authority led governance structures. The five Ports of Regional Significance (Drogheda, Dún Laoghaire, Galway, New Ross and Wicklow) retain important roles as facilitators of their regional economies and in some instances as centres of marine related amenity and tourism activities. However, the scale and nature of these activities are not of a scale that warrant continued central Government involvement and in line with the principles of Putting People First-Action Programme for Effective Local Government the oversight of these regionally significant ports should be carried out at the level of Government most suitable to their role and function. In May 2014 Government approved the General Scheme of the Harbours (Amendment) Bill 2014 which provides for the necessary primary legislative framework to allow for later transfer of control by Ministerial Order. The Scheme has been submitted to the Oireachtas Joint Committee for pre-legislative scrutiny and the Committee has indicated it will now initiate a stakeholder consultation and report back by the first week in October. In light of the Committee’s timelines it was decided to submit the General Scheme to the Office of the Parliamentary Counsel in June and any observations the Committee may have can be incorporated as required once received. While port capacity is currently not an issue due to the continued existence of surplus capacity across the ports, National Ports Policy clearly states that ‘Government expects the Ports of National Significance (Tier 1) to lead the response of the State commercial ports sector to future national port capacity requirements. There is also a role in this regard for the Ports of National Significance (Tier 2) to develop additional capacity to aid competitive conditions, within the unitised sectors in particular’. The policy also commits to improving the board appointment process to the Ports of National Significance and the Harbours (Amendment) Bill 2014 will introduce mandatory skillsets, term of office limits, a public expressions of interest system, appearance of Chairpersons designates before the Oireachtas committee and a prohibition on local authority members serving on the boards of the Ports of National Significance. Port Performance Tonnage In recent years the Irish commercial ports sector has experienced fluctuating circumstances from the record highs in traffic volumes, which peaked in 2007, to steep declines in the 2008 – 2010 period. The figures for 2011 and 2012 were largely stable while 2013 witnessed a moderate return to growth across the sector. However, while the ports face immediate challenges arising out of the general economic climate, an additional challenge is faced by a number of our ports in respect of their potential to respond to underlying international trends in ports and shipping services. These trends point toward an ever increasing centralisation of resources in order to achieve optimum efficiencies of scale, with knock-on effects in the size of vessel used, the depth of water required in ports and the type and scale of port hinterland connections required. Such trends present obvious opportunities for growth for some ports and manifest themselves in others through falling tonnage throughput levels, loss of services, reduction in turnover and profitability, and potential ultimate decline. 4 These trends are particularly evident in the unitised markets (LoLo and RoRo) and the 2008-2012 period witnessed a number of market changes which resulted in the larger unitised ports (Dublin and Cork) gain market share at the expense of the smaller unitised ports (Waterford (which also handles bulk traffic) and Rosslare). CSO figures for 2013 are not yet available (end- June 2014); however, indicative figures for 2013 show increased growth across all ports reflecting the broader economic recovery. Financials The 2013 annual accounts of the ports will be laid before the Houses of the Oireachtas in July and will then be published by individual companies on their websites. The 2013 accounts of the companies as a whole show a notable and welcome improvement on recent years with turnover in the sector increasing by 6% and seven of the nine companies recorded both an operating and net profit. However both Dún Laoghaire and New Ross recorded losses in 2013. Both of these companies face differing challenges – Dún Laoghaire is seeking to source new revenue streams following the much reduced value of their Stena contract, while New Ross has witnessed a decline in tonnage throughput in recent years. Two of the three Ports of National Significance (Tier 1) (Dublin and Cork) comply fully with the policy objective of returning a 30% dividend of distributable profits, while Shannon Foynes has indicated it will return its first dividend in 2015. There are two Ports of National Significance (Tier 2) – Waterford and Rosslare; however, Rosslare is a business unit of Iarnród Éireann rather than a State commercial port company and therefore does not return a dividend to the State, while Waterford has returned to profitability in 2013 but has a significant pension liability which impacts its ability to return a dividend in the medium term. The Harbours (Amendment) Bill 2014 will provide that for those companies which transfer to a new local authority shareholding arrangements, future dividends will return to the relevant local authority rather than the Exchequer. Shipping 90% of Europe’s external and 40% of its internal trade goes by sea. The shipping and maritime commerce sectors are the largest direct employers in the Irish maritime economy. It has been estimated that the sector directly contributes over 40% of the
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