State to review transport subsidies

The State is to change the contractual basis by which it provides transport subsidies, following revelations that an Aran Islands ferry operator was paid as much as €110 per passenger for return journeys between Galway city and the islands.

The ferry operator, whose initial contract was extended from five years to 12 without a public competition, received subsidies of €6.7 million between 1992 and 2001, in addition to commercial receipts for cargo and passengers. The contract runs until December 31st, 2004.

The €110 subsidy compared to a subsidy of about €2.50 per return passenger on another ferry from the Co Galway port of Rossaveel to the islands, and a subsidy of about €16 per round trip by light aircraft, the Dáil Public Accounts Committee was told yesterday.

The committee heard criticism from the Comptroller and Auditor General, Mr John Purcell, who outlined additional payments to the operator of the Galway city to Aran Islands ferry service, over and above the contract subsidy price. The operator was not named. The committee was told the service has been operated by the same contractor since 1992 and was renewed in 1997 for a period of seven years without a public tendering process.

Mr Purcell criticised the management and monitoring of Government-subsidised contracts, commenting that "it is unlikely that best value for money was obtained by the State".

He said he had found a "piecemeal approach to co-ordination" along with a "lack of analysis and monitoring" of subsidised transport operations to the islands.

The Fine Gael TD for Galway West, Mr Padraic McCormack, said the payments "beggared belief", as did the period of 10 years in which there had been no public tendering process for the contract. He asked how the Government could sanction such action and likened the arrangement to "the goose that lays the golden egg".

Mr Gerry Kearney, secretary-general of the Department of Community, Rural and Gaeltacht Affairs, which has assumed responsibility for the subsidies, said the seven-year renewal was awarded on legal and financial grounds.

Mr Kearney said a clause in the 1992 contract had provided for negotiation of a further five-year extension by the ferry operator, who had offered to run the service for an additional two years, reverting to the original subsidy of €603,124.

Mr Kearney said that while the subsidy looked high on a per passenger basis, and while the ferry had operated without passengers on occasions, it did carry cargo, which was not a viable operation by air or from other ports.

However, he said there had been "lessons learned" from the process and the contractual side was also being overhauled, and new legal arrangements would ensure that such contracts would not again be accepted.