Chairman
I am pleased to accept this invitation from the Joint Committee to outline my policy priorities as Minister for Communications, Energy and Natural Resources. Given the span of the brief in this portfolio and the relatively limited time at my disposal, I will use this address to focus on what I see as the key priorities. I look forward to elaborating on these or indeed other issues in the Question and Answer session.
Background
I have responsibility for policy in the areas of Communications, Broadcasting, Energy and Natural Resources. As Members will readily see, this is a very wide remit encompassing areas of major economic and social importance. Members may recall from our Estimates discussion in July that the Voted Expenditure to this Department is small, some €495 m in 2011 or less than 1 % of the total Voted Expenditure Budget. In terms of numbers employed, the numbers have now fallen to 260 – down from 339 at the beginning of 2008.
The strategic importance of the Department should not however be judged by its spend or the number of staff. It is self-evident that Energy and Communications are critical to sustainable economic and social development. Broadcasting and the media generally are important industries in their own right as well as playing key roles in our democratic, sporting and cultural lives. The Department must also oversee the regulation of key national resources such as petroleum and mineral exploration as well as our inland fisheries resource. My Department also operates the corporate governance and general oversight role of 7 commercial state bodies employing some 21,425 persons and of 8 non commercial state bodies employing some 769 persons. In addition independent regulatory authorities operate under the general aegis of my Department in the areas of Energy, Communications and Broadcasting.
The work of my Department also involves external interaction with numerous stakeholders, notably commercial private entities. The days of 100% State monopolies in the Energy, Communications and Broadcasting sectors are gone. This may be a welcome development on competitive and consumer choice grounds but it does, however, result in a complex policy environment in areas which by their nature are complex in any event. Add to this, the very strong EU policy framework which traverses across most of the Department. The cumulative effect is a challenging environment for policymakers. Equally, however, these are dynamic areas where one cannot stand still in policy terms. Accordingly, I intend to drive an ambitious policy programme in the various sectors.
My Department has the responsibility of ensuring that significant parts of Ireland’s essential economic infrastructure runs smoothly and efficiently. While the global and domestic economies face such turbulence the work we have is both more challenging and more important.
Energy
I will commence with the Energy Sector. The current framework for Energy policy rests on 3 fundamental pillars:
- Competitiveness
- Security of Supply
- Environmental Sustainability
Prices and Competitiveness
I recognise that the cost of energy in Ireland is a key element in the competitiveness mix. Contrary to some misleading commentary, Ireland’s electricity and gas markets, both wholesale and retail, are characterised by strong and vigorous competition regulated by the independent statutory regulator, the Commission for Energy Regulation. The retail electricity market is now fully deregulated. The small to medium business segment of the gas retail market will be de-regulated from 1st October 2011. From then on residential consumers will form the only regulated part of the gas market. As a result, business and domestic customers can increasingly avail of competitive offerings from electricity and gas supply companies active in the retail end of the market.
Sometimes it is claimed that we have the highest electricity and gas prices in EU. However, Eurostat data published recently by the Sustainable Energy Authority of Ireland shows that Irish electricity and gas prices at the end of 2010 were competitive when compared with our European neighbours. In other words our prices are about average. Over the two years to the end of 2010, the two predominant trends in Irish electricity and gas prices, for domestic and business consumers, were convergence to the EU average and falling prices
It is the reality that Ireland is very vulnerable to volatile international gas and oil prices. Over the last year, international energy prices have risen significantly. The wholesale gas price for the coming winter is more than 30% higher than for last winter.
The recent CER decision to approve a 21.7% increase in the Bord Gais tariff from 1st October is the first price increase for BGE’s residential gas customers since September 2008. It follows three successive price cuts. The increase in the price of gas internationally is also the cause of the recent increases in the price of electricity.
I am acutely aware of the impact of these increases on businesses and domestic consumers. I can assure the Committee that I am determined in consultation with the Regulator and the Energy Companies to ensure that everything is done to restrain costs which are within our own control. In the case of State Owned Energy Companies, I will shortly be meeting again with the Chairs and Management to impress this imperative on them.
I am also very concerned at the impact of gas and electricity price increase on vulnerable households. I will shortly be submitting a Memorandum to Government on an Energy Affordability Strategy. The various supports to address fuel poverty which come under the aegis of the Minister for Social Protection are very important. In addition, a fundamental element of the fight against fuel poverty must also be improving the energy efficiency of the homes of those in fuel poverty. The Warmer Homes Scheme which is funded by my Department plays a key role in this regard and it is my objective to see this scheme maintained and indeed accelerated. Over the longer term, energy efficient and well insulated homes are a permanent and indeed most cost efficient way of addressing fuel poverty.
I am also glad to have been able to agree with the Energy Companies, with the approval of the Regulator, that there will be no disconnections this winter provided families in financial difficulty have entered a pay plan or agree to the installation of a pay-as-you-go meter.
Security of Supply
I have already referred to our exposure to international prices. Achieving security of supply requires us to reduce our dependence on imported fossil fuels, reduce our carbon footprint and invest in our infrastructure. As regards infrastructure, there are a number of priority programmes and projects.
EirGrid’s national grid development strategy “GRID 25” is of key importance. Both from the viewpoint of improving our infrastructure and enabling us to meet our binding renewable energy targets.
The East West electricity interconnector between Ireland and the UK will be completed by the end of next year. It will improve security of supply, as well as increasing competition.
The North-South electricity link from Meath to Tyrone is also a key strategic project and is critical to ensuring energy supply adequacy on the island of Ireland. In line with the commitment in the Programme for Government, I have established an independent commission of international experts to review and report, within six months, on a case for, and cost of, undergrounding (all or part of) Meath-Tyrone 400KV power lines.
I expect to have the Report of the Commission in the near future. After consideration by the Government, the Report will be published. I would stress that the enhancement of the North / South link is an essential investment in the interests of both economies and all energy consumers and I am determined to see it delivered. I will also give priority to advancing commercial development of gas facilities and enhancing our ability to respond to any oil supply shortage.
Renewable energy
I would like to take this opportunity to formally reiterate the Government’s commitment to deliver 16% of all our energy from renewable sources by 2020. This is consistent with our EU obligations. We will achieve that through our national sectoral targets of 40% renewable electricity, 12% renewable heat and 10% renewable transport. Overall renewable energy use grew by 14% during 2009 and by 15% per annum on average in the period 2005 to 2009. In 2009 alone there was a 23% increase in wind generation with renewables now generating around 15% of our electricity consumption.
Increased use of renewable energy also contributes to our environmental targets. SEAI figures show that renewables reduced our CO2 emissions by almost 3 million tonnes in 2009. The recent spike in gas prices show that it is wrong to predicate policy on the availability of volatile imported fossil fuels. Studies by both EirGrid and SEAI have also indicated that wind generation does not adversely impact on electricity prices.
Energy efficiency
Energy efficiency plays a key role in meeting our sustainable energy targets. It also reduces energy bills and helps redress fuel poverty. The Better Energy programme is central to my efforts to meet the 20% energy savings target in 2020. Over 96,000 homes have now been grant-assisted to improve their energy efficiency, resulting in economic activity of over €280 million since the scheme’s launch. I was very pleased to bring the investment this year to €100m which means that for 2011 alone the scheme is supporting 6,000 jobs.
Energy suppliers are also being asked to participate in the programme through voluntary energy saving agreements. I anticipate that as the programme develops energy suppliers will be an important delivery mechanism.
New energy policy framework
Finally as regards energy, it is my intention that a new energy policy framework will be published in 2012. Energy policy will be reviewed over the coming months in consultation with stakeholders. The new framework will take account of developments over the past few years since publication of the 2007 White Paper.
Communications
The provision of high speed broadband is a key strategic national goal. The country is now playing catch up for the lost years of lack of investment in broadband which followed the privatisation of the State’s telecommunications network and the subsequent multiple changes in ownership in Eircom. Good strides have been made in more recent times both in relation to broadband penetration, speeds and competition. A lot more needs to be done, however, to improve our national broadband infrastructure.
Commercial operators have been investing steadily in rolling out critical communications infrastructure in Ireland over the last number of years. That investment has been of the order of €400 to €500m per annum. The State too has invested, where it has identified market failure. Initiatives such as the Metropolitan Area Networks, the National Broadband Scheme and major international interconnectivity projects are delivering important infrastructure and services to areas of Ireland which could not be served commercially. As a result of the combined efforts of Government and the private sector, a basic broadband service will be available to all citizens across Ireland ahead of the EU target date of 2013. Meanwhile speeds of up to 100mbps are now available to half a million households and industry investment is set to continue in the upgrading of services available.
Next Generation Broadband
As I have already indicated, I am critically aware of the need to move now from the provision of basic broadband services, to ensuring the widespread availability of next generation, high speed broadband. This is also a key Government priority and will be the key to delivering future economic and social development. Under the NewERA proposals in the Programme for Government, there is a commitment to co-invest with the private sector and commercial Semi State sector to deliver bigger bandwidth to more places as quickly as possible.
Only yesterday, I convened the latest meeting of the Next Generation Broadband Task Force. Its purpose is to discuss how best to deliver the optimal policy environment and to identify a roadmap for the speedy delivery of high speed broadband across Ireland. The Taskforce is looking at issues such as appropriate targets, investment plans, and the role of Government in driving and facilitating investment. I chair the Taskforce myself which comprises CEOs of all the leading Telcos as well as Minister for State, Fergus O’Dowd TD.
I am pleased to say that the work of the Task Force is progressing apace and that working with industry we will be in a position over the coming months to identify the optimal policy to deliver wider access to high-speed broadband across Ireland.
This will require careful balancing – allowing industry to continue on its investment programmes, and at the same time identifying where the State can facilitate development in areas where it is currently not commercially viable to provide an enhanced service. It will also require input from a range of public sector entities, including the communications regulator, ComReg, which will auction significant bands of spectrum over the coming months. This spectrum will facilitate the roll out of next generation mobile broadband services whilst delivering significant revenues to the Exchequer.
There are also specific communications projects and programme that I wish to advance over the coming period.
Rural Broadband Scheme
Earlier this year, I launched the Rural Broadband Scheme, which aims to identify the last remaining premises in Ireland which do not have a broadband service. The 3 month application phase for the Rural Broadband Scheme closed at the end of July and approximately 5,000 applications have been received. I expect to proceed with a procurement process for a service provider over the next two months. This programme builds on the National Broadband Scheme and will ensure that all citizens will have access to a basic broadband service before the EU target date of 2013.
Schools 100mbps project
In tandem with the roll-out of basic broadband to consumers, I am working to ensure the roll out of 100mbps to all second level schools. A successful pilot programme has already delivered 100mbps broadband to 78 second level schools. The national rollout of this programme is of fundamental importance to delivering on the commitment in the Programme for Government to integrate ICT in teaching and learning across the curriculum.
I have been engaged in discussions with the Minister for Education and Skills in relation to the full roll-out, including the issue of funding. Clearly finances are extremely tight but I believe that this is a key strategic project in the context of preparing our students to be part of the digital workforce, and in terms of delivering innovative educational outcomes.
E-Inclusion/digital literacy
Encouraging digital participation is a key priority for me, and I am anxious to see schools, businesses and citizens make the most of the opportunities presented by an emerging digital society. I recently launched a €1.6m “Benefit 3” scheme which is specifically aimed at targeting those segments of society that are in danger of being left behind in terms of technological advancement. These include the unemployed, socially disadvantaged, elderly and people with disabilities. It is envisaged that grants will be awarded to successful projects later this month and I expect training to commence across the country in projects under the scheme from October. This scheme will enable thousands of people throughout Ireland – people otherwise likely to be left behind in the knowledge society – to acquire the basic practical internet use skills to improve their quality of life.
Based on the applications received I estimate that about 40,000 people will receive training, which will double the numbers already trained under previous initiatives
Technology and Business
While we continue to support infrastructure development, and encourage citizens to participate in the digital economy, we are also supporting industry through the work of the Digital Hub Development Agency, and the National Digital Research Centre (NDRC). The Digital Hub Development Agency currently supports 77 small enterprises employing over 800 people in Dublin 8. The NDRC, which is based at the Digital Hub, is supporting the translation of research ideas into commercial business propositions. Over the coming months I will be considering the optimum model for continuing these services over the longer term, with a view to ensuring synergies with similar initiatives across the public sector.
Internet Security
As I have already mentioned, encouraging participation in the digital economy by business and citizens is an important priority. Internet security and consumer confidence is a key element in persuading citizens and businesses to make more effective use of the internet. I intend, over the coming months, to establish a dedicated cyber security unit within my Department, with a view to assisting in identifying and protecting Irish businesses from cyber attacks.
Conclusion
My overriding key priority therefore, for the communications area, is “Access” – ensuring the infrastructure is in place to access basic and high speed internet services, encouraging citizens and businesses to get on line and access the social and economic opportunities which the internet brings, and safeguarding consumer rights.
Broadcasting
Turning now to Broadcasting, I referred earlier to the forthcoming spectrum auction. This spectrum partly arises from Ireland’s national digital switchover strategy which provides for the closure of the analogue TV network before the end of 2012 and the release of the resultant spectrum with the benefits I alluded to earlier.
I am keenly aware of the challenges this initiative brings, in particular for Irish households which are reliant on the analogue TV network.
All households reliant on the aerial TV network will need to upgrade to digital TV by the end of 2012 or they will lose access to television. To overcome the challenges that digital switchover brings, we must also assist people with information and practical assistance to ensure that no one is left behind as Ireland goes digital. I will implement a substantial information campaign providing households with information on the digital switchover and on their options for going digital. This information campaign will start later this year.
In conjunction with this, my Department is currently developing plans to address the particular needs of vulnerable households as they prepare to go digital. In this context, the expertise and local knowledge of the many voluntary and charity organisations around the country will be of critical importance to ensuring the success of the switchover process. I have asked my Department to ensure that, to the greatest possible extent, these organisations play a major part in our information and assistance campaign.
Review of License Fee Structure
My Department is also currently examining the effectiveness and efficiency of the current model of television licence fee collection in light of the Programme for Government and the issues surrounding the current licence model.
These issues include the current levels of evasion, inequities in the system, the cost of administration, and the problems being posed by convergence of technologies.
I expect that my officials will be ready to provide me with a first report with initial high-level recommendations before the end of the year. I should point out, however, that based on the experience in other countries, it is likely to take a minimum of 2 years before a fundamental system change could be implemented.
Broadcasting Market
As regard the Broadcasting market, regulation is the responsibility of the Broadcasting Authority of Ireland. In the case of the State Broadcasting Companies, they are facing serious financial situations largely arising from the major reduction in advertising and sponsorship revenue. The focus must be on forensic cost control by management in these organisations and I acknowledge the work already done in that regard. I also recognise the major contribution made by the private broadcasting sector and will continue to work with them on the various issues arising.
Postal Issues
As I pointed out when I brought the Postal Bill through the House in just before Summer, the postal sector worldwide has evolved significantly over the past decade. Ninety percent of letter post is now business-related and this has implications for how postal service providers, including An Post, must position themselves. An Post must look afresh at its relationships with its customers and indeed its competitors and adapt accordingly. It must actively seek to meet the needs of its users, look at ways of harnessing the potential of electronic communications and incorporating them into its product offerings, and grow its business accordingly.
An Post faces serious challenges especially as it core mail revenue continues to decline. It is also heavily dependent on State contracts to generate revenue. On the plus side, An Post has many genuine strengths such as a dedicated workforce, its trusted brand and its strong visible presence in every community in Ireland on every working day of the year - a presence that very few, if any, competitors will be in a position to replicate.
An Post and its staff must play to these strengths and ensure that its resources are aligned with the needs of its users. To do so will involve significant change. This is already underway but is must be strongly driven in the light of the challenges the company face. Above all, it must reduce its overall cost base and successfully innovate to attract the core revenue which it is losing.
Postcodes
In relation to the procurement process for a national postcode, the Committee will be aware that this is underway and is being managed on a ring-fenced basis by my Department. The final decision to proceed with implementation of a national postcode will be one for Government and will be based on appropriate financial, technical and operational considerations.
Natural Resources
The development of policy, legislation and oversight of the petroleum, minerals and inland fisheries sectors are important objectives in the natural resources sector and I intend to bring forward a significant Bill to modernise and consolidate the legislative code for mineral exploration and extraction.
Completion of the development phase of the Corrib gas project is of critical strategic importance for Ireland. Production of gas from the Corrib gas field will significantly strengthen Ireland’s energy security of supply as it will reduce our reliance on gas imports and help to encourage further exploration in the Irish offshore.
At peak production Corrib will provide over 60% of Ireland’s natural gas needs. Unless further commercial discoveries are made in the short-term, however, Ireland’s energy security will begin to weaken once peak production from Corrib has passed. For this reason it is of critical importance that Ireland can encourage an immediate increase in the level of exploration activity in the Irish offshore and in particular an increase in drilling activity.
To achieve this and because at this time Ireland does not have the capacity to establish a State oil and exploration company, Ireland needs to maintain a realistic fiscal regime that reflects our relative attractiveness as a place to invest in petroleum exploration. We also need a regulatory framework that is appropriate in terms of its transparency and effectiveness. I recognise the need to promote public confidence that exploration for petroleum will be carried out to high standards in terms of ensuring safety and protection of our environment. I have recently written to members of this House who represent areas where onshore exploration drilling might be proposed in the future, to set out for them how any such proposals would be subject to detailed scrutiny.
We must also be realistic when we consider how Ireland might benefit from its natural resources. Talking about “potential resources” that we do not know are actually there, as if they are resources we can bank on, is not helpful.
Measures for the conservation and exploitation of the inland fisheries resource contribute to the economic and social fabric, in particular, of rural and coastal communities. In adopting policies for this sector my Department aims to ensure that such measures should maximise the social and economic return for these communities and the State.
Public Sector Reform
I wish to conclude with a brief reference to public sector reform. I have already alluded to the major reduction in staffing levels in my Department in recent years. As I indicated during our Estimates discussion in July, I have some concerns in this regard in terms of its impact on achievement of our wide and ambitious policy programme. Given the complexity of the policy environment, it is important that the Department maintains the necessary expertise to discharge its policy advisory and other roles. My Department also has a small but crucial technical cadre in areas such as Exploration, Mining, Energy, Communications and the Geological Survey of Ireland. These are key roles in terms of protecting the State and Public interest and it is important that they are adequately resourced.
My Department has set out a strong programme of reform under the Croke Park Agreement. In particular, it has embraced the concept of Shared Services with the IT function now administered by the Department of Agriculture, Food and Fisheries and the payroll function now administered by the Department of Finance. These measures are expected to yield some €440,000 savings in a full year. This is additional to some €2m in payroll savings since 2008 arising from the reduction in numbers to which I already referred. The Department has also realised savings on the non-pay administrative budget side of €1.474m.
I will continue to ensure that my Department contributes fully to public sector reform. Given the scale of the Department – at 260 staff, this is most likely to be in the form of increased shared services, employment of specialists and interns and joint procurement initiatives with other Departments.
Chairman in this address, I have touched on key areas of my brief. I look forward to engaging with Members on any questions they may have.
Thank you