Vol. 567 No. 2
82 Ms B. Moynihan-Cronin asked the Minister for Transport the progress made to date with regard to the implementation of the proposals contained in his statement to the public transport forum on 7 November 2002; and if he will make a statement on the matter. [13680/03]
84 Mr. Eamon Ryan asked the Minister for Transport when he will have final plans for the introduction of private operators into the Dublin bus market; if it is proposed to offer access to routes via a public tender process; if such a tendering process will allow for the winning tender to have exclusive rights to the provision of services on such routes; and, if so, the way in which he envisages that such an arrangement will allow a comparison of the service provided by different bus companies. [13654/03]
88 Ms Burton asked the Minister for Transport his plans to appoint a regulator to oversee the bus transport industry and the timescale for same; and if he will make a statement on the matter. [13666/03]
93 Mr. Howlin asked the Minister for Transport if it is intended to transfer Dublin Bus workers to the private companies in regard to his proposal to franchise up to a quarter of bus routes in Dublin; if an estimate has been made of the potential costs involved in such a transfer, having regard to the current employment status of these workers; and if he will make a statement on the matter. [13675/03]
136 Mr. Cuffe asked the Minister for Transport if the opening up of 25% of the Dublin bus market to private operators will involve the exclusive use of individual bus garages and depots to service these selected routes; and the way in which the current arrangement where buses from other garages can be drafted in to provide additional short-term capacity on routes not served by that garage will be continued. [13655/03]
157 Mr. Gilmore asked the Minister for Transport his proposals for dealing with the issue of cross-subsidisation of bus routes in the context of his plans to franchise out 25% of Dublin Bus services; the way in which he intends to proceed in this regard; and if he will make a statement on the matter. [13672/03
I propose to take Questions Nos. 82, 84, 88, 93, 136 and 157 together.
As regards the restructuring of the CIE companies, I established a restructuring implementation group to oversee the restructuring of CIE. I met with the boards of CIE and its subsidiaries during December and January and discussed the restructuring proposals with them. At present the focus is on the detailed preparatory work required for the restructuring. I will bring a progress report on the work undertaken to date to Government in the near future.
As regards my proposals for the appointment of an independent regulatory authority and the introduction of competition into the bus market in the greater Dublin area, I have already outlined details of my discussions with the trade unions in my earlier reply. During this period my Department has continued with its preparatory work. While it would not be appropriate to go into detail pending completion of this preparatory work, consideration by Government and further discussions with the trade unions, I will try to respond in general terms to the questions raised.
My November 2002 proposals for the reform of the Dublin bus market involved the phased introduction of tendering by an independent regulatory authority or regulator for the exclusive provision of bus services on particular routes or in particular areas. In addition to the benefits outlined in my reply to the priority question on the reform programme for public transport, this would allow for a direct comparison of services provided by different operators, including Dublin Bus. The detail of how tendering might be implemented is still under consideration, including the deployment of staff, buses and garages. It is my understanding that virtually all Dublin Bus routes require subvention and, therefore, cross-subsidisation is not a material issue. Tendering of a package of routes would allow for internal cross-subsidisation between profitable and non-profitable routes to be taken into account in tender pricing.
As regards the point about cross-subsidisation, I would like to hear the Minister's view on one of the main points made by the transport unions about the proposal to privatise 25% of the routes in Dublin. Does the Minister accept that the routes which will be of interest to private operators will be those which are profitable and that there will be a certain amount of cherry-picking, as is always the case in such situations? If Dublin Bus loses those profitable routes, it will seriously diminish its ability to cross-subsidise the socially necessary but unprofitable routes? Does the Minister accept, therefore, that that will result in a net loss to the taxpayer in terms of revenue and that eventually it will result in a situation where a higher level of subvention will be required to keep the socially desirable routes operational? I would like to hear the Minister's specific views on that because he has not addressed that point in any forum.
As regards a regulator, does the Minister accept that the most urgent need in the transport industry is to appoint a regulator? We already have a free-for-all in relation to the bus services outside Dublin. A bus regulator must be appointed as a matter of urgency to stop the same thing happening in Dublin, which could lead to chaos. What is the Minister's timescale for that?
I remind Members that supplementary questions are limited to one minute.
A regulator is only required if there is more than one player in the market.
The regulator should be appointed first.
We are moving on that. An independent regulatory authority is required. In designing that, I must first understand what type of market I am trying to put together in Dublin so that the regulator knows what the job is.
The Minister should tell us that.
I am moving on that. As regards cherry-picking by private operators, as I said in my reply, virtually all Dublin bus routes require subvention.
A number of them are profitable on the QBCs.
My information is that virtually all Dublin bus routes require subvention and, therefore, cross-subsidisation is not a material issue. I can look at that again if the Deputy wishes. A franchise is not head to head competition as such. One competes to win the franchise on the route. While CIE would not be eligible to compete for those in the initial stages, I do not see any reason Dublin Bus could not tender for those routes when the market is properly opened up later on. If it is a loss making route, one tenders for the taxpayers' subsidy. That is a well known structure around the world.
What is the profit on the profitable routes?
None of them is profitable.
That is not true.
Virtually all the routes are loss making. If the profitable routes are tendered, the successful tenderer pays a fee to the State. If a loss making route is tendered, applicants tender for the subsidy so that there is transparency and we know exactly where taxpayers' money goes.
Who calculates that?
It is calculated by the regulator.
Will the Minister give a commitment that the regulator will be appointed before action is taken in regard to the Dublin bus market?
There are parallel operations currently because of the nature of the market.
That is nonsense.
Does the Deputy want the regulator appointed before the market is opened?
Of course.
Will she support the appointment of the regulator?
Yes.
Does the Minister agree his primary concern should be running the transport system for the public and not necessarily for vested interests? I have a serious concern that all transport initiatives introduced by the Minister are referred initially to the social partners, particularly IBEC and the unions, for vetting and approval rather than being presented to the House. Is he not perpetuating the same system under which the unions and business interests decide whether public transport initiatives are acceptable? Does he agree that is not in the interest of the consumer and that he needs to change that practice and draw from a wider pool in terms of his new proposals?
I refer to the need for a regulator and the franchising system that should be implemented. Does the Minister further agree that a primary requirement, other than the appointment of a regulator, is a greater Dublin land use and transport authority? It is included in the legislative programme but the Taoiseach stated earlier there is no sense of urgency about it in the Minister's Department because he is proceeding with other legislation first. However, an overriding transport and planning authority has not been established to decide which bus routes are needed and which ones are selected for franchising. We will, there fore, not get anywhere. I do not see how the Minister can introduce a franchising system unless the proper transport and planning authority is in place. That legislation, and not the legislation being introduced before it, should be a primary concern of the Minister's.
The social partnership process is in place to deal with the role of unions and IBEC.
What about democracy?
I accept appropriate consideration must be given to their role, but the Deputy's view is also valid. I try in so far as I can, in formulating my proposals, to ask what does the taxpayer and the consumer want from his or her transport system. I then bring the proposals to the unions, IBEC and the other players, and usually, though not all the time, that is when we experience heavy weather. However, my starting point always in the transport brief is what does the travelling public require. Deputy Rabbitte was correct about the valuable input of transport workers. However, while we take their viewpoint on board, it is not the only one. The transport system is not only in place for those who operate it but for the consumer. The House should continue to send that message. I agree with the Deputy in this regard.
With regard to the land use authority, I have informed the Deputy once or twice previously that the reason I am holding back on the legislation is that it is an enormous overlay authority. It is supposed to regulate taxis, buses, sign off on the development plans of seven county councils, second guess those councils and order them around by telling them they cannot have a zoning plan here and a housing development there. I reflected on the time it would take for that monstrous legislation to see the light of day following the resolution of all those issues. I have been asking myself what is the need for an eighth authority to tell the seven local authorities what they know they should do in terms of development. If I sense in the coming weeks that I can knock the legislation into shape, I will try but I have deliberately held it back.
The evidence is that the seven local authorities are allowing Dublin to sprawl throughout the eastern half of Ireland. A co-ordinating authority is needed to halt that development. It may be one more authority but it is the most urgently needed.
This is how we got the health board structure.
There is a free for all among developers currently and that will continue.
I take it from the Minister's reply to Deputy Shortall that he is considering appointing a regulator. It would be a positive development to provide such co-ordination. Everybody agrees competition is needed. Does the Minister agree a quality service that will deliver for the consumer is required if he is to succeed in achieving his targets? For example, competition was introduced on bus routes in County Cavan but, ultimately the consumer did not benefit. Regulation is required.
There are proposals for the establishment of five agencies to regulate the bus sector in conjunction with the Department. If the Minister adopts that mechanism, it will cost millions of euro to run per annum and the consumer will have to pay for deregulation and competition without receiving a net benefit.
I acknowledge the demands for the appointment of a regulator. I will move the appointment up the agenda and bring it before the House. The reason we have held back on it is that the regulator needs to have a market in Dublin to regulate and if we ended up in a scenario where the Dublin market had not opened, the regulator would have nothing to do. However, I take the point that if we go down that route, it would be wise to press ahead and appoint the regulator so that he or she can implement whatever market opening the House agrees. I will try to press on in an orderly fashion.
Members think I am hung up on competition but this relates to a question of choice for the consumer. If the travelling public has choices, they can dictate which routes and companies they want to support. That will mean they can vote with their feet and that is the best from of control of public expenditure at the end of the day.
I chaired the local transport committee on Dublin City Council briefly. We invited an expert from the European Commission to outline the experience of deregulation internationally. He stated the experiment in the UK had been an unmitigated disaster in terms of liberalisation of the bus market. There were cases in other countries where it had worked. How can the Minister say routes will be opened up for competition if he will not allow one of the bus companies, namely Dublin Bus, to bid for the routes? Where is the competition in that?
Will the Minister give a commitment to appoint a statutory regulator for the Dublin bus market before he takes action?
I need legislation to do that.
I know and I ask the Minister to do so before he opens up the market, otherwise there will be chaos. Will he outline the undertaking he gave to David Begg when he met him recently? What is the time scale for bringing to Cabinet proposals regarding the bus market?
There is evidence in the London bus market. Aspects of the UK model were a disaster but, in the main, the Dublin city bus fran chise operation has been a substantial asset. I will lay all the information in this regard before the House when I have an opportunity. It is not possible to allow CIE to bid for routes in the initial stages because if the market is opened and the company wins all the routes, we will be back to where we started.
If the company wins the routes, it is in the interest of the consumer and the taxpayer.
It would be cheaper.
I want to open the market and bring in other operators.
The Minister has not opened up the market but he wants to kick out the incumbent operator.
We could go around in circles about this. In order to successfully open the market I have taken the view that at least 25% of it should be held by operators others than Dublin Bus. When we get to that point we can then discuss the mechanism for competitions in which we could possibly include Dublin Bus. To do anything else would be counter productive.
As regards appointing the regulator first before proceeding, I will have to reflect on that to see whether it is the wise course of action. My original intention before this discussion was that the regulator proposals and the market opening would happen at the same time. The regulator would start work on the same day that we open the market. I see the wisdom in perhaps fast tracking the regulator but I would want to be fairly sure that in doing so, we would move on to the market opening. Otherwise I will have a regulator with a nice title, a big job and a glossy report but with no market to regulate.
I wish to put a couple of brief questions to the Minister. In relation to either Dublin Bus or Bus Éireann tendering for routes, the Minister will have to allocate routes in a transparent way. Can he put those mechanisms in place during the restructuring of CIE? I also ask the Minister to comment on the costs of the letters of comfort that are currently with CIE employees and on the impact that will have because there is no point making savings in relation to tendering and franchising if we are going to cost the taxpayer a great deal of money at the end of the day. Finally, could the Minister comment on the issue of integrated ticketing, which will be crucially important if competition is to be successful?
There are three issues there. Regarding route transparency, a regulator would by statute have to ensure complete transparency in franchising routes. That would be the regulator's legal responsibility. On the letters of comfort, I want to make clear that the figures that appeared in newspaper headlines recently are totally inaccurate.
Are they too high or too low?
If anything, the restructuring should save us money without entering into the kind of substantial costs that are envisaged. My legal advice in regard to the letters of comfort is to the effect that there is no such legal duty on the State. The section of the relevant Act says that if a subsidiary company ceases to be then the workers can go back to the main company. However, I am talking about taking out the main company, so workers would stay with the subsidiary companies. Members can see the moot legal point here. Our argument will be that once workers' employment is guaranteed it does not matter whether they work for Iarnród Éireann or a CIE holding company. They are both State-owned companies and, as such, there should be no question of compensation in the sense of letters of comfort. I would envisage and look forward to saving from these schemes, not accruing costs, and certainly not costs of the order I have seen in headlines recently.
I am fully committed to integrated ticketing and am annoyed at progress so far. The RPA is dealing with it and tell me that the full system is still on schedule for the first part of 2005.
Dublin Bus told us yesterday that it will be the final part of 2005.
I have told it time and time again and will take it up again with it that I want this done in 2004. I will reiterate that again.
The Minister better start cracking the whip.
I ask the Minister what specifically is the time scale for the appointment of a statutory regulator and for him bringing proposals to Cabinet on the future of CIE.
How will the Minister select the 25% of bus routes in Dublin for which he will not allow Dublin Bus to compete?
The regulator will have a key role in this once we lay out the statutory basis for it and get final Government approval. I must have further discussions with my Cabinet colleagues in this whole area—
We must have legislation first, as Deputy Shortall was saying.
Of course, and in the event of such legislation passing through the House I envisage that the regulator will take charge of the issue the Deputy is talking about. I do not have a timetable laid down. I am working my way through this process with all the urgency I can summon and am having as many discussions as I can with the unions and so on. There is no delay in the drafting of legislation, which is continuing apace, and we will continue to consult the unions and the Irish Congress of Trade Unions as the legislation progresses. I have not set down a time frame for this but it will proceed without delay.
Have the heads of the Bill been drafted?
They have not been agreed yet.
The Minister has a long way to go.
I have.
We are way over the time limit on this question.
