I am glad to have this opportunity to tell the House about the proposals for the institutional and regulatory reform of public transport and the important changes that will take place to improve public transport in the coming years. I thank Deputies Stagg and Yates for putting forward the idea that time be allocated to debate the issue.
It is my firm intention that the proposed institutional and regulatory changes will be implemented in a spirit of partnership in full consultation with the social partners. To begin this process, I will consult the social partners on the proposed framework through the Public Transport Partnership Forum being established under the Programme for Prosperity and Fairness. The first meeting of the forum will take place on 9 June.
It is widely acknowledged that public transport in Ireland has suffered from serious under-investment in years gone by. For a long time we were enthralled by the prospect of the private car and treated public transport as the poor relation when it came to investment.
I pay tribute to the contribution made by CIE and its subsidiary companies over the years. Man agement and staff have often had to work through very difficult times, dealing with the consequences of under-investment.
The most recent institutional change in public transport was the establishment of Bus Átha Cliath, Bus Éireann and Iarnród Éireann as subsidiaries of CIE at the start of 1987. My Department is still regulating the private bus sector under an Act that dates back to 1932. That date speaks for itself.
The Operational Programme for Transport, 1994 to 1999, provided the first tentative evidence of a major change in policy towards increased investment in public transport. However, the main impetus for a change of policy in favour of public transport has been the urgent need to deal with the traffic congestion problems in Dublin and to forestall similar problems in our other major urban areas. There is also a strong awareness of the need to improve railway safety, to reduce transport-related pollution and to address the social inclusion of people in rural areas and people with mobility impairments.
Therefore, the National Development Plan 2000 to 2006 provides for a major acceleration of investment in public transport and, for the first time, commits the Exchequer to very substantial capital expenditure on bus and rail. While this enormous £2.2 billion investment is essential and welcome, it alone will not transform our public transport services. We must also consider institutional and regulatory reform.
The sheer scale of the investment required, by itself, makes it essential that we review our institutional and regulatory structures. This raises two potential constraints, the availability of finance and the availability of sufficient management skills for the new infrastructure and to operate the services subsequently in a safe, cost effective and customer friendly way. Thankfully, the availability of finance is now less of a constraint than it was in the past. However, resources are not unlimited and we will look to public private partnerships as a way of providing some of the funding as well as bringing in specialist skills and innovation.
Ireland's traditional approach to such an investment and development challenge was to establish a State company – the ESB and Bord Gáis are obvious examples. However, this policy approach reflected a belief at the time that the private sector was not in a position to mobilise the necessary finance and the management skills to take on large projects. That is clearly not the case now because as Ireland's economy has grown, so also has the capacity of the private sector to contribute to major infrastructural development. Furthermore, our membership of the EU brings with it access to similar capabilities in other member states, coupled with their existing experience of building and operating the sorts of projects we are now contemplating.
Another change that has taken root over the years has been our preference for competition rather than monopoly supply of goods and ser vices. Many activities, such as air travel and telecommunications, that we previously assumed could be carried out successfully only on a monopoly basis have been shown to improve very substantially when exposed to competition.
Closely coupled with competition is the issue of independent regulation. It is an essential part of creating a level playing field and facilitating the development of market sectors. The need for funds and additional management skills, examining the capability developed in the private sector, the wider experience in other EU countries and the benefits of competition and independent regulation are factors that influenced this review of the institutional and regulatory approach to public transport.
The first institutional change for the public transport sector was outlined in the announcement last December that I would establish an independent body to oversee railway safety. Up to now the regulation of safety has been a matter for the Department. However, in the review of railway safety in 1998 the independent consultants recommended that our railway safety legislation should be updated to reflect current trends and practice. The Committee on Public Enterprise and Transport, which deals with matters related to the Department, has been to the fore in pressing for that railway safety legislation. My Department has been working on the preparation of new legislation and I will have the heads of the Bill detailed in a consultation paper before the end of June.
In deciding to establish an independent railway inspectorate, I am going further than the minimum recommendation of the railway safety consultants because I am satisfied that such an important issue should be dealt with on an independent basis, removing any perception of a conflict of interest.
Recently I submitted two policy papers to the Cabinet Committee on Infrastructural Development and Public Private Partnerships, entitled A New Institutional Framework for Public Transport and Regulation of the Bus Market in the Greater Dublin Area. Both papers are in the public domain, on the Department's website and were issued to all Members of the Dáil and Seanad. I look forward to hearing the views of Members of this House on both papers today and in the future.
I intend to seek Government approval shortly for publication of a composite policy paper based on those two submissions. I will also consult the social partners, beginning tomorrow week, on the proposed framework and we will work through all the proposals in that fashion.
The papers set out a policy framework or direction. Much painstaking work will be required to flesh out the details of those reforms and I have no doubt there will be lengthy discussions on those details. Those papers clearly signpost the future direction of policy. The job which now faces the Depart ment is to develop the details in consultation with the social partners and to see them through to implementation.
In framing my proposals for new institutional arrangements, I had in mind three overall objectives which should underpin our public transport policy. These are: to ensure the provision of a well functioning, integrated public transport system which enhances competitiveness, sustains economic progress and contributes to social cohesion; to ensure the provision of a defined standard of public transport, at reasonable cost to the customer and the taxpayer; and to ensure the timely and cost effective delivery of the accelerated investment in infrastructure and facilities necessary to ensure improved public transport provision.
The definition of an appropriate standard of public transport provision has historically been the responsibility of CIE, having regard to the resources available to it. CIE has been given an annual revenue subvention by the State and the company has from time to time been given financial targets to achieve. However, the Government has not ever explicitly defined what the standard of public transport provision should be.
In recent years the city of Dublin has changed beyond recognition. It was once a much smaller, compact city. The suburbs of Dublin now spread into the neighbouring counties of Wicklow, Kildare and Meath and even beyond. Likewise, many other cities and towns are growing rapidly. The challenge of getting people from A to B is all the greater and requires a new approach. Commuting by car within our cities is no longer a sustainable option, in terms of congestion, effective use of limited road space and environmental damage. If people who have traditionally used their cars to commute to work are to be coaxed onto public transport, we must provide the service demanded by commuters.
I propose that the State should, on behalf of the people, broadly define what standard of public transport services it wishes to see provided having regard to the needs of public transport users and the financial capacity of the Exchequer. As a first step, the DTO proposals for a future transportation strategy for the greater Dublin area, which are being finalised and will be published later this year, can provide the basis for defining an appropriate standard of public transport provision for the capital city. I suggest the State should then put in place the necessary legislative, regulatory and institutional measures to procure that standard of public transport service as efficiently and cost effectively as possible.
However, while the State has a responsibility to ensure that the defined standard of public transport provision is procured in an effective way, it does not need to be directly involved in the provision of those services through State owned companies. Instead, I propose that the public transport market should be opened up to private participation, as a way of better exposing it to market forces, improving its quality and efficiency and increasing attention to customer requirements.
I propose a number of institutional changes to the present public transport set-up. These are: the establishment of Bus Átha Cliath and Bus Éireann as separate, independent companies, with the freedom to operate transport services in each other's current area of business; the transfer to private ownership of one of these companies, probably Bus Átha Cliath; the division of Iarnród Éireann into two separate State owned companies, one responsible for railway infrastructure and the other for the operation of railway services; the possible dissolution of the CIE holding company; the establishment of a separate independent body with the function of procuring major infrastructural projects on a public private partnership basis; and the establishment of an independent public transport regulatory function.
Bus Éireann and Bus Átha Cliath are large public transport companies with extensive experience of providing scheduled services. These companies will obviously be significant players in any new public transport market. However, they cannot compete for business in each other's territory as both are owned by one company – CIE – and because they are directly prevented from doing so under the Transport (Re-organisation of CIÉ) Act, 1986.
Giving them their legal and commercial independence from CIE and introducing amending legislation to remove the artificial restriction on their area of operations is not enough to allow them compete effectively. Common State ownership would lead to conflicts of interest and impede their ability to be fully effective in a competitive bus market. I have proposed that the State divest itself of at least one of these companies.
The future regulatory framework for the Dublin market has been broadly defined, while the regulatory environment for the inter-city and rural transport market will be considered at a later stage of the review. As the future regulation of the Dublin market is clearer, I propose that Bus Átha Cliath is the logical first choice for private ownership.
The third of my proposed institutional changes, separating the railway infrastructure from the provision of services, will have a number of advantages. It will allow both infrastructure operations to concentrate on their respective responsibilities and is in line with best practice in Europe. It is also consistent with EU requirements to eliminate conflicts of interest where competing operators may wish to use the railway. While that may seem a remote possibility for mainline rail services in Ireland, the public private partnership development of new commuter rail services means there is a real prospect that Iarnród Éireann will no longer be the only train operator at some time in the not too distant future.
As regards my fourth proposal, I see the light rail project office as providing the nucleus of the body whose function will be to procure major infrastructural projects on a public private partnership basis. The light rail project office will need to be suitably expanded and restructured to take on this enhanced role.
The independent public transport regulatory function would have a number of functions in relation to bus and rail, including: regulation of the bus market, through franchising and licensing as appropriate; allocation of State financial support for public transport services, through public service contracts; and other market regulation responsibilities arising from public private partnerships and EU legislation.
The Cabinet committee will address the future institutional arrangements for transport in Dublin later this year. This review will address public transport, roads and traffic and possibly the interaction of land use and transport. That is why I have spoken about a regulatory function rather than a body. It is possible that in Dublin the regulatory function could be part of the mandate of a body with a wider range of functions. I would welcome the views of Members on this issue.
The paper on bus regulation is the outcome of a review of the 1932 Act, requested by Government last November, with a view to introducing competition in bus transport in the Dublin area. A public consultation process was initiated and 39 written submissions were received. These submissions came from a broad spectrum of stakeholders. Follow-up meetings were held in recent months with key stakeholders to further explore their views. As part of this review, the Department carried out extensive research and visited three European capitals, Helsinki, Stockholm and London, to view at first hand how those cities had tackled the challenge of providing an efficient public transport service and to hear from those involved the lessons to be learned.
There was a strong consensus from both the consultation and study visits on two issues. First, competition resulted in a significant reduction in cost. Second, competition should be used to choose which operator should provide services on a particular route or group of routes. Where several operators have been permitted to compete on individual routes on a fully deregulated basis, bus usage and the reliability of service have declined significantly. This view was generally shared by the people and organisations making submissions to the Department.
While competition can be expected to reduce the cost of providing bus services, I am conscious of the need to increase the quantity of services in Dublin as quickly as possible. This is likely to require a substantial increase in the level of State revenue support for necessary but uneconomic services even if those services are franchised on a competitive basis. No matter what steps are taken, recipients of free travel will continue to have free travel. Any contract or franchise given out will carry that element within it and the cash that goes with it. However, my proposal to award franchises on a contractual basis, specifying the payments to be made for a defined quantity and quality of service, will ensure that the best value for money is obtained.
I am not under any illusions as to the scale of institutional and regulatory changes proposed and the length of time it will take to implement them. These proposals will take a number of years to implement fully. A number of Bills will be necessary in addition to those already being prepared in the areas of railway safety and light rail.