Joint Committee on Transport and Communications debate -
Wednesday, 15 Jan 2014

Tendering of Bus Services: SIPTU and NBRU

Chairman

The purpose of this meeting is to discuss with representatives of SIPTU, Services, Industrial, Professional and Technical Union, and the NBRU, the National Bus and Railworkers Union, the decision of the National Transport Authority, NTA, to tender 10% of routes operated by Bus Éireann and Dublin Bus.

On behalf of the committee, I welcome from SIPTU, Mr. Owen Reidy, divisional organiser, Mr. Willie Noone, Mr. John Murphy, Mr. Bill McCamley, senior union representative, Dublin Bus, and Mr. Peter O'Toole, senior union representative, Bus Éireann. From the NBRU, I welcome Mr. Dermot O'Leary, general secretary, Mr. Paul Rowsome, assistant general secretary, Mr. John Moloney and Mr. Thomas O'Connor.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a person or an entity by name or in such a way as to make him, her or it identifiable. I advise that any opening statement submitted to the committee will be published on its website after the meeting.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

I invite Mr. Owen Reidy to make his opening statement.

Mr. Owen Reidy

We are grateful to the Chairman and the committee for facilitating us to make a presentation on the NTA’s decision to effectively outsource and tender 10% of routes operated by Bus Éireann and Dublin Bus in 2016. We note there has been a real lack of public debate on this matter. While there has been much debate at this committee and its predecessors, there has been a lack of public debate outside of this forum on national or urban public service transport provision among the public, communities and local elected representatives. While the NTA has gone through the normal consultation process on this proposal, it has been very narrow and its consequences have not been fully thought through, the implications of which are potentially grave. We are pleased the NTA came to the decision that, based on economic interests, it made complete sense to continue with the direct award model, giving Bus Éireann and Dublin Bus 90% of contracts for another five years. However, we do not understand why 10% would be tendered out beyond the direct award model. It does not seem to make any economic sense or logic.

We believe the process is flawed. Essentially, the NTA, with the support of the Government, seems to be looking at what is potentially a very dangerous experiment which could have much wider consequences. Our concern is that this initial 10% offering could be the thin end of the wedge.

There are a number of areas where the NTA's stated objectives have not been fulfilled by the decision it took in December 2013. The first area is that of value for money for the Exchequer, something that is of importance to all of us - the committee as elected representatives of the people and the likes of us as a trade union that represents up to 2,000 people and the largest civic society organisation in the country. We believe the NTA's decision mixes up and conflicts cheapness with value for money. There are a number of criteria we look at. The Deloitte report, which was discussed in this and other forums in 2009, looked at the efficiency and cost of Bus Éireann and Dublin Bus to the Exchequer. It came to the clear conclusion that the subvention and PSO obligation offering received by Dublin Bus and Bus Éireann is low in comparison with many European counterparts. That was in 2009. Since 2009, year on year, we have seen the subvention being cut for each of the three CIE companies. We estimate that the subvention for Dublin Bus has been cut by in excess of €20 million over that period. There is no magic formula as to why the decision to cut the subvention has come about. There is no criterion or formula laid down that deals with the subvention. If it was value for money in 2009 and we have had five years of cuts, it is certainly value for money for the Exchequer in 2014. There is another cut this year.

It should be noted that while the two bus companies have been dealing with the recession like all entities, falling passenger numbers during that period which obviously affected revenue and the reduction in the subvention, they have restructured on two occasions. The staff in both companies represented by us and other unions have done not just one restructuring agreement but two. The first one in 2009 was very comprehensive and saved €34 million in Dublin Bus. The second one was in 2013. It was well documented that there were two disputes in both companies. Very difficult and comprehensive negotiations took place. Workers who felt that they had already given were being asked to give more. Given that workers came to the conclusion that they were prepared to make personal and financial sacrifices for a second time in four years to support the viability of their company, the timing of this NTA decision is seriously problematic. People have tightened their belts and made sacrifices and now they have been told that 10% of the routes they operate might go out to tender.

Keeping it very simple, if one looks at what is required to operate an urban and national bus system, one sees that there are a couple of entities involved in costs such as fleets, fuel and logistics that are fairly static and the same all around regardless of whether it is public or private. The significant variable where there is potentially a huge difference is labour costs. Our concern is that the logic seems to be that we will outsource 10% on this occasion to the private sector as a guinea pig and save money. This is a black and white view of the world that private will be cheaper than public and that it is the way to go at all costs.

Our concern is that what could be hit are labour costs. We make no apologies. We have two interests here. We represent our members and want to advocate and protect their terms and conditions of employment but we also have a dual interest in trying to protect what we believe is an important element of core public transport for the travelling public for its social and economic dividends. There is an issue of the transfer of undertakings legislation that has been referenced in many documents relevant to this. The EU directive led to the Dublin Transport Authority Act 2008 talks about the Transfer of Undertakings (Protection of Employment), TUPE, Regulations 2006. Ernst & Young was asked to put together technical documents as part of the consultation talk about the TUPE issue. Clearly, the NTA document where it decided on this course of action in December 2013 made it clear that transfer of undertakings would apply. What that effectively means is that if Dublin Bus or Bus Éireann are not successful in tendering with other competitors for the 10% of routes and operator A or B gets them, the workers affected in Dublin Bus and Bus Éireann would transfer under their terms and conditions of employment, excluding pensions. Pensions are regrettably not covered under the legislation.

If one takes that to its logical conclusion and if the incoming operators who also inherit collective bargaining, collective agreements and the two unions were to honour the letter of the law, the rates of pay should be protected so there is no saving on labour costs. Even the Ernst & Young document makes it very clear that in the short term, there is very little potential in savings by taking this course of action. What are the savings? Where is this extra value for money? When the Ernst & Young document talks about the economic analysis, it makes it very clear that public transport is a spur for economic activity and very important for social and economic ends. We appreciate that there is a finite amount of resources. Our argument would be that in a time of economic retrenchment and crisis, the Government and the political elite should be looking at subventions going up rather than down as a spur and boost to public transport and to build confidence into this system.

The second area that the NTA is making clear is a fundamental objective is compliance with contracts. I am sure it is something we would all agree with. Contractors must comply with the regulator's requirements. It is a key objective. One could understand if the two incumbents were reckless or were not hitting or exceeding their targets, some might suggest this is the road to consider. Even a cursory look at the data that is out there, which is NTA rather than Bus Éireann or Dublin Bus data, shows that on nearly all indicators, Dublin Bus and Bus Éireann hit and exceed targets. The target percentages are usually between 95% and 98%. Here you have two operators that are hitting and exceeding their targets notwithstanding the challenges they and their staff have been through.

A third area of importance is that of improved customer experience. The committee will be aware that with the co-operation of their staff, Dublin Bus and Bus Éireann have done quite a lot in conjunction with the regulator to try to improve the customer experience be it real-time passenger information, the development of IT with apps, the journey planner, working on the Leap card process or making sure that 100% of the buses are fully accessible. I note the National Disability Authority highlights that in its performance for Dublin Bus and Bus Éireann and raises concerns and questions as to whether that would be the case if private operators came into the market as is potentially intended. In the Behaviour & Attitudes studies, it seems to be coming through that the customer experience for both entities has improved as well.

I know people will say that we are not adopting the British model as it is 10% but we see this potentially evolving where it is 10% for five years and potentially 20% and 30% subsequently. If one looks at the British experience of deregulation, one can see that there has been a drop in usage, confidence and satisfaction for customers when it comes to their overall experience. There are problems in Newcastle where there is a row between the private operators and the incumbents over ticketing and integration. In places like Sheffield, there has been a 40% drop in usage while there has been a 30% drop in usage in places like Manchester. Consumer confidence has not given its seal of approval in Great Britain and we need to learn from the mistakes of our nearest neighbour and act accordingly.

Chairman

I do not want to stop Mr. Reidy in full flight but I am conscious of the time.

Mr. Owen Reidy

I will sum up.

Chairman

Could Mr. Reidy sum up because I want to let the NBRU in as well?

Mr. Owen Reidy

I appreciate that. My last point is the real red herring. We are told by everybody that we must do this to comply with the EU directive and the Dublin Transport Authority Act 2008. It is quite clear that we do not have to do it. There is an economic interest argument which it seems the NTA was 90% persuaded by.

This allows them to continue with the direct award model. Our view is that they should do that. We are, hopefully, getting out of the economic crisis and all of the stakeholders should consider this over the coming five years. We need a wider and more comprehensive debate, which should include those who use the service, about what kind of public transport system we want. We should revert to the direct award model.

Chairman

I apologise for cutting Mr. Reidy short but members received copies of his submission in advance of the meeting and I want to give Mr. Dermot O'Leary from NBRU an opportunity to address the committee before allowing questions from members. It is often the case that the questions are also informative.

Mr. Dermot O'Leary

I thank the committee for affording us the opportunity to outline our views on the Government's decision to privatise 10% of Bus Éireann and Dublin Bus routes. The NBRU represents more than 2,500 staff in both bus companies. This responsibility is not borne lightly and we deem it to be our duty to convey to the decision-makers the folly of pursuing an ideologically based agenda to the detriment of staff and public alike. This committee is in a position to influence the decision-makers with regard to this ill-thought out move to privatise public transport provision. It is only six short months since staff at both companies suffered significant reductions in take-home pay, which was the second time in three years that our members suffered a reduction to their terms and conditions. Those cuts came as a direct result of the Government decision to reduce subvention to both companies.

I would like to set out a number of areas where we in the NBRU feel this initiative is fraught with major difficulties. The number of direct job losses involved is akin to closing a factory employing more than 430 people. Dublin Bus directly employs in excess of 340 people on the routes targeted for privatisation and Bus Éireann employs approximately 90 staff on the affected services. If a factory of this size were to close anywhere in the country, there would be an outcry by all and sundry, quickly followed by the establishment of a task force.

I am aware the committee has received presentations from the National Transport Authority and the representative body from the private coach sector, the CTTC. The representative from the CTTC was unambiguous in his assessment of the future employability of displaced Dublin Bus and Bus Éireann staff. His contention was that a transfer of undertakings would not apply. It is, perhaps, an indication of the thought process with regard to how staff will be treated by the private coach industry. The same representative also said that if tendering were introduced, it would inevitably lead to job losses among bus staff because private operators would not employ the same number of staff and if they did, they would be on lower wages.

The insertion of social clauses in public procurement contracts is becoming an increasing feature across the EU. They vary from a minimum employment standard to a model which incorporates the industry norm as the benchmark. Furthermore, transfers of undertakings do not confer any entitlements in relation to occupational pensions. All staff employed by the companies are members of the CIE pension schemes. It is also important that the committee should understand that a number of the affected employees hold letters of comfort relating back to the break-up of CIE and the establishment of three separate companies under the umbrella of the holding company. Those letters of comfort effectively bestow the right of the holder to redeployment back to CIE. Another issue for concern would be the ability of both companies to remain economically viable and competitive should they be compelled to sustain the employment of surplus staff.

I note that the composition of the committee is diverse in terms of the geographical spread of representation. This observation is advanced as recognition that all politics is local and any impact on a social service inevitably draws the ire of those constituents directly affected by removal or a diminution of their service. Recent campaigns in Elphin, Dromod, Rooskey, Abbeyleix, Durrow, Johnstown and Urlingford in north Kilkenny are reflective of how people will mobilise in such circumstances. Committee members will be aware that these areas were deprived of a service because Bus Éireann felt it had to withdraw from those towns to compete with competitors that were awarded commercial licences along the new motorway network. The irony is that the NTA has had to award PSO contracts to operators to provide a social service through the towns between Portlaoise and Cashel which had previously been served by Bus Éireann on a cost-neutral basis. It does not take a stretch of the imagination to envisage a scenario where Bus Éireann, under financial duress, replicates such decisions throughout the network. This will inevitably lead to a plethora of PSO contracts being awarded at considerable cost to the taxpayer.

Fragmenting the network of both companies on an ideological whim is surely no basis for formulating a public transport policy. The taxpayer is entitled to transparency with regard to what benefits are to be derived from such an approach. It took a number of generations to build those networks, and to dispense with the parish, village, town and community based relationships which are almost exclusive to public service provision would be yet another attack on the social fabric of this country. The NBRU has consistently advocated a return to the position of 2005 and 2006, when discussions took place around the future involvement of private operators in public bus transport. Those discussions were centred on the premise that the existing activities of Dublin Bus - extended to Bus Éireann - would continue. All new routes would subsequently be open for tender to all operators, including both bus companies. Such a model would be multi-purpose. It would protect the existing PSO service for public transport users, reduce the financial impact on the Exchequer and maintain sustainable employment within both bus companies. We also sought and were given assurances during these discussions that the impending legislation, then the Dublin Transport Authority Bill 2008, would enable Dublin Bus to retain is current activities. We firmly believe that a direct award by a competent authority, in this case the NTA, to Dublin Bus and Bus Éireann in relation to their current activities is entirely compatible with EU Regulation 1370(2007). I again thank the committee for affording us the opportunity to address it with regard to the concerns of our members.

Deputy Timmy Dooley

I thank the witnesses for their presentations and share their concerns. Notwithstanding that the previous Government established the NTA and began the implementation of the EU directive, I have always been an advocate of the direct award model. Based on the advice I have received, I believe it meets the spirit of the EU directive while at the same time protecting the important integrated network that has been established by the bus and rail companies over many generations. It is right and fitting we protect this network to the greatest extent possible.

I have some concern about the notion that it may be economically advantageous to introduce competition. I am not against competition but I am concerned about the economies of scale. The bus companies operate well at their current size and scale, which allow them to achieve a reduced cost base. If we allow a number of bus companies to compete with each other, they will not be able to spread the costs over the entire network, with the result that costs could ultimately rise. As Mr. Reidy rightly pointed out, the transfer of undertakings legislation puts a strong encumbrance on other companies to take up the slack that would arise for the State companies if there is a change in the way contracts are awarded. He rightly identified the issue of pensions. How confident is he that other terms and conditions of employment will have to be preserved by any new entity?

SIPTU is an affiliated member of the Labour Party, or at least it has close links with it. I understand SIPTU's president sits on the national executive of the Labour Party. Is Mr. Reidy disappointed that the Labour Party in Government is opening the door to privatisation of our bus network with the decision to allow the NTA to proceed with this partial privatisation of the routes?

Mr. O'Leary correctly identified the issues that face Bus Éireann in particular on the rural network. For far too long, the NTA has taken a hands-off approach which has disenfranchised many of the rural villages and towns that depended on the bus network. It has provided licences to independent operators to allow them to compete with Bus Éireann, thereby eliminating the latter's capacity to provide the services it delivered over many generations. Rural and minor towns are effectively being bypassed.

An integrated public bus network is a vital component of our rural life, not just to service local needs but as an integral part of our tourism offering. I am familiar with County Clare, where I come from, and I see how the bus network takes people from many parts of the country to places such as Doolin, Lahinch and Kilkee as part of their travels as tourists. A diminution of that would impact negatively on the way we are seen internationally and I hope that does not happen. I thank the witnesses for their helpful and thoughtful presentation, which I hope will help us in our communications with the NTA.

Mr. Owen Reidy

On paper we would be satisfied that other terms and conditions of employment would be included, but in practice we would not. Experience has shown that. In the Waterford area, for example, a decision has been taken to tender out all the routes. Bus Éireann employees in Waterford will not want to move. We met the Minister, Deputy Varadkar, and he said he did not want people to be moved forcibly. If people do not want to move, does that mean Bus Éireann must carry extra staff? Does it pay a severance? Where will it get the money for that? None of these questions has been thought through.

I have read the Labour Party and Fine Gael manifestos. The Fine Gael manifesto in this area is to privatise the lot. Some 10% is up for grabs. I want the situation to be different, but I must respect the fact that 60% of citizens vote for centre-right parties who are interested in deregulation and the points Deputy Dooley has made, which he says Fianna Fáil is not interested in. That is interesting. If people voted for a left-led government or for the parties of the left to be in government, I doubt we would be in this situation. That is not the way it is. There is still an opportunity for the regulator and the Minister for Transport, Tourism and Sport to examine this more carefully, commit to the direct award model for another five years and allow much more comprehensive and public debate among the users of public transport as well as those who work in the companies and deliver the service.

Mr. Dermot O'Leary

While I am not affiliated to any political party, my colleague, Mr. Reidy, and I are both familiar with both the Labour Party and Fine Gael manifestos before the previous general election. As Mr. Reidy said, people chose to vote as they did. No matter what party a person represents, people have mobilised already and have used the offices of various Deputies across the political spectrum to voice their disapproval of Bus Éireann's willy-nilly decisions, based on the NTA awarding licences. There was no plan. Mr. Reidy and I are at one regarding this. There was a rush to satisfy some lobby group by privatising 10%. The CEO of the NTA was before the committee in October 2012 and under questioning from the Deputies admitted that as little as 5% savings could be derived from this model and went on to say that this 5% could be subsumed or lost in administration costs. I am back to the point I made at the outset, that this is an illogical decision by the main party in government. It is ill-thought out and has no concern for either the staff or the public.

Deputy Seán Kenny

I welcome Mr. Reidy from SIPTU and Mr. O'Leary from the NBRU. I agree with what Mr. Reidy said about the need for a public debate on public transport and we have not had one. Since I was elected to the Dáil in 2011, this is the first meeting where we have had a serious debate around public transport, its role in the economy and its importance. I agree that direct award is the better model. We have seen the performance targets that have been set. I am talking about Dublin Bus in particular, as that is the company with which I am more familiar. Dublin Bus is hitting performance targets of 95% to 98%. If something is working well, why change it? If it is working, do not break it. One would question the need to do that. Deputy Dooley has suddenly left, but it goes back to the 2009 legislation which established the NTA. Under that legislation the NTA proposes to put out for tender 10% of the routes. In theory the bus companies can tender for that, although I do not know how that works in practice. As has been pointed out, there is a body of opinion, which neither Mr. Reidy nor I share, that more than 10% should go out to tender. We must recognise the political reality.

I agree with Mr. Reidy's idea for a public debate and would like to hear his views on how we could continue that. He made a point on the possible effects of putting the routes out to tender and whether the new operators would provide the same level of service to the travelling public. He mentioned wheelchair accessibility and that is a key point. When the Minister was present at a meeting of this committee, I raised the fact that the Aircoach services to Dublin Airport, a subsidiary of First Group, does not provide wheelchair services. The Minister and Department have asked Aircoach a number of times to do that. If Aircoach can get away with it, other operators might do the same. It is all about the fact that a wheelchair space takes up the space of three able passengers, so economics are at play. People who have asked Aircoach if it could take a wheelchair passenger were told to go to Dublin Bus, that it would carry them. We need a level playing field. Clearly there is not a level playing field regarding services to the public in that area. It will be 2015 before the tendering process is completed and 2016 before the new operators come into play, so we have some time to monitor that carefully and watch how it develops. I would be interested in the witnesses' views on how we should all approach that.

Mr. Willie Noone

I welcome the Deputy's view that the direct award model should be used. The level playing field is the nub of the problem we face. I represent workers in the private bus companies as well and we should not forget that fact. When a contract goes out to tender, the incumbent companies have pension liabilities to their employees. Everything being equal, they cannot compete, because the prices of buses, fuel, etc. should be the same. They are not starting at the same place. We are concerned that the NTA is taking a dangerous gamble because, as Deputy Dooley alluded to, economies of scale come into play.

The big private bus companies will have the propensity to get the majority of these routes as time goes forward. That will rule out smaller bus companies competing and we could end up in the future with a monopoly of private bus companies. All evidence to date shows that when that happens, standards, customer service and usage fall. That is where we are.

The Deputy's final comment referred to a better approach. Our view is more time needs to be given to this, more debate needs to be had and more consultation should take place because this gamble is taking place at the expense of the taxpayer, the consumer and our members and workers. If contracts are changed on a regular and ongoing basis, and even the NTA says in its own proposal that if Bus Éireann does not get a number of these contracts, voluntary severance and TUPE will have to apply, both of which will end job security for workers and reduce driver standards.

Mr. Bill McCamley

The big problem with this is that we have never, as a State or as a parliamentary system, got down to discussing what a national transport plan should be. It has always been ad hoc. Reference has been made to ideological ailments in the context of the current proposals but we must remember that CIE was established for pragmatic reasons. Trade union colleagues and I prefer to look at this from a purely pragmatic point of view. Although I could present a social democratic view, I prefer a pragmatic one.

Deputy Kenny is correct that there could have been more if Fine Gael had been in a right-wing coalition, but we are where we are. What has not been addressed is that there is no business plan to justify what is being done. We cannot say that the taxpayer and the State will benefit from it and we cannot say how this will affect national strategic aims regarding the regions, inter-urban travel and rural isolation because there are unintended consequences to these proposals which have not been considered.

Until now, the commercial services of Bus Éireann subvented the public service obligation services because they were under-funded. The way licences were distributed in recent years affected the company's bottom line. It has been reduced to pulling out of villages and hamlets as a consequence, and this will occur again because nobody knows what will happen once elements and components of the network are removed. When we talk about public transport provision, we forget two factors. Anybody can make money on a bus service from A to B if he or she has the right corridor. The other factor is much more sophisticated and socially desirable, which is a network. Bus Éireann provides a national, integrated network. If one starts taking out bits and pieces, one does not know where that will end. That could have an effect because of the economies of scale being attacked. Services may have to be taken out which were never intended to be removed.

I am conscious the Deputy is from Dublin. Nobody is making allowance for the fact that the Dublin Bus may have its own particular problems relating to TUPE, pensions and the letter of comfort, which is there as a consequence of the Transport Act 1986. Leaving that aside, it would be unfair if the changes in the Dublin area were not financially neutral in regard to Dublin Bus. The company should have the right and should be given every opportunity to expand its services. It has retrenched because of the recession but it needs to be able to provide capacity for its customers going into the future. We are not sure about that.

What has been forgotten regarding Bus Éireann is that once one removes the economies of scale, administration and so on, the social dividend the company has provided in isolated villages and so on will also go and the State will have to pick that up. We have to be able to compete on a level playing ground for commercial services on Expressway routes with the private operators. When we do that, areas will be left out, which will then become subject to PSOs in their own right. Once again, the State will pick them up. These are hidden costs that are never discussed. There is no like-for-like judgment and the cost of tendering, administering and monitoring the tendering process is never quantified. Nothing is said about the areas that will be left behind or about the overall policy of integration, sustainability of services and so on. All that is forgotten in the rush to fulfil a simple ideological aim.

Mr. Dermot O'Leary

Deputy Kenny is from Dublin and he referred to Dublin Bus and the lack of wheelchair accessibility on Aircoach-FirstGroup. The Dublin Bus fleet is 100% wheelchair accessible.

Senator Sean D. Barrett

Is it not correct that this is 100% paid for by the taxpayer? Dublin Bus received a subsidy to do that while Aircoach did not.

Deputy Seán Kenny

We are either in favour of wheelchair accessibility or we are not.

Mr. Dermot O'Leary

The Deputy referred to direct awards. From the trade union side, we favour a return to the situation where we were in discussions to facilitate the entry of private operators into the market. Unfortunately, time has long since passed. A decision is a decision. Evidence from some European countries is that the initial tender is competitive and, of course, it would be. My colleague, Mr. Noone, referred to the simple fact that a pension liability attaches to both Dublin Bus and Bus Éireann, which does not attach to a private company bidding or tendering for routes. Inevitably, the cost increases in the second and subsequent tenders for bus routes across Europe.

Mr. Peter O'Toole

Under the NTA proposal, all the services in Waterford city are being put out to tender and not just 10%. It will work out at a 20% loss of jobs in the Waterford depot if we do not win the contract, for which we are allowed to tender. As sure as night follows day, the lowest tender will get the contract. That applies in almost every walk of life. When the city services are awarded and we lose that number of employees, we will be left with the commercial Expressway service, with which we have no problem. There are two other bus companies, which have been there for years, competing on the city services, which is no problem at all. Competition is also not a problem on the Expressway route but we do not have a level playing field. I am sure it has come to the attention of Deputies, Senators and councillors that lately private companies have not been accepting free bus passes on non-stop bus services, some of which go to airports and bypass small towns. I have met the companies myself. I go on Eirebus and the other company is not taking bus passes.

Chairman

Is the reason they are not accepting them that they are not getting anything for them?

Mr. Peter O'Toole

They will get it for them but they are not accepting them because they can fill their bus with cash customers, which is cherry picking and represents a race to the bottom. While, as I have said, I have no problem with competition, it will impact on our Expressway services. We have no problem at all carrying passengers, including disabled passengers, and one does not need to have a wheelchair to be disabled. We are very courteous in bringing passengers around the country and have done so for years. However, passengers can now get on the bus in Cork with cash and get off in Dublin Airport. They cannot get on the private bus with a bus pass. That should have been highlighted by the transport committee years ago.

Chairman

That clarifies a number of issues.

Deputy Michael Colreavy

I thank the witnesses for appearing before the committee today. I apologise for the absence of my party colleague, Deputy Ellis, who had to attend another meeting. I normally cover communications, energy and natural resources issues, but am covering transport for Deputy Ellis today.

I am totally confused and I do not believe it is just because I do not normally deal with transport. I do not know why we are having this discussion today, as it should have been held two years ago. Our discussion at this stage should be with the Minister and not with the unions. I do not have any questions for the unions. I agree with practically everything the witnesses have said. I do not know why the Minister made this decision. Is it to comply with an EU directive? Why is it 10%? Will it stay at 10%? No, it will not because if one stands still one will die so that 10% will have to grow. Are we looking at the beginning of the total privatisation of public transport services? Why pick these routes? What did the people down in Waterford do to the Minister, Deputy Varadkar? They must have done something very bad to him.

What will be the impact on Bus Éireann and the public transport network? What will be the impact on the income of the existing public services? Are all employees of private bus operators unionised? I very much doubt they are. Somebody mentioned the Dromod and Roosky bypass. I do not believe the Minister, the Department, the NTA or even the union head offices are too concerned about people living in Dromod or Roosky, but I know who they are. I know the Maggie Anns of this world who used always to travel that route. However, now because the Bus Éireann bus has to compete with a private bus service, the Bus Éireann bus no longer goes through these two villages and instead goes on the bypass, thus reducing the number of people on the bus and making it a faster although not more efficient service.

Mr. McCamley put his finger on it. I believe the reason I am confused is that there is no national strategy. In the absence of strategy we have an ad hoc situation. This bears all the hallmarks of an ad hoc decision. My primary question is to the committee. Is there any way to put this on ice and encourage the Minister to come up with a coherent strategy and set of policies regarding transport?

I have a question for the union representatives. Has this tendering process started anywhere yet? Will the tendering process require the tendering companies' staff to be unionised and paid an acceptable wage?

Mr. Willie Noone

The tendering process has not yet started even though it has been announced. Regarding the contracts insisting on employees taking over the employment conditions, that is not the case. TUPE is supposed to apply. We believe it applies. It is now in documentation that it will apply. We have members in some private companies. Those companies have said publicly they do not want to employ these people because of the concerns and problems they would bring with them because they would invariably be on better conditions than the employees the companies currently have so they do not want those employees. Our members in Dublin Bus and Bus Éireann have indicated to us that they have no intention to transfer into a private bus company.

Mr. Dermot O'Leary

I want to respond to the Deputy's point about Dromod. Those of us in this trade union's head office do care and we have a concern. As I said in my opening remarks, the people I represent have built up relationships over many years servicing those little towns and villages. The concerns initially come from our members and then the public mobilise to contact their elected representatives. We do care as shown by how our members react to such situations.

Chairman

As we are moving into the final ten minutes, I ask Deputy Harrington to confine his contribution to questions and for the witnesses to give brief answers.

Deputy Noel Harrington

I welcome the SIPTU and NBRU officials. Their contribution has been very helpful and informative. We accept the case put forward by both unions. There has been much mention of politics and ideologies. We represent people, the community, the taxpayer and the citizen, and we have an obligation to them. Regardless of whether we represent rural or urban constituencies, we must ensure our policies provide for the most efficient and best value for money service for the citizen, consumer and taxpayer. The one thing worse than a public monopoly is a private monopoly and both should be avoided.

It is clear from the presentations that there are many constants. There are standards through the regulatory NTA process that will be constant both to Bus Éireann and Dublin Bus, and to private operators. They will have to comply with the contracts. The differences come down to the pensions of the employees if they are going to transfer or wish to transfer from either Dublin Bus or Bus Éireann. They can remain with Bus Éireann or Dublin Bus if they so wish. There are implications to what I would call letters of comfort. I know they are difficult to deal with. The witnesses mentioned level playing fields in a narrow sense. In a broader sense we do not have a level playing field and these letters of comfort and such issues make it very complicated.

It was mentioned that some elements of Bus Éireann were subventing PSO routes in other areas. That could be broadened out to cover the implication of the school transport service subventing some other public transport services. In this debate we should tease out those issues much further. What is the taxpayer ultimately paying for? Mr. McCamley mentioned the ultimate objective of developing not just bus routes but a transport network, and we take the point. That is a very legitimate argument that we rarely go into. In the years I have been on this committee, we have not discussed it. That debate should be opened. In that context I very much welcome the unions' submissions to the committee. Those genuinely held views should be accepted.

Deputy Ann Phelan

Where I live in County Kilkenny, transport difficulties arise because of rural isolation. At present, I am dealing with a very difficult school transport issue and I would love to see much more debate take place. In his submission Mr. Reidy stated we certainly need a national debate on how transport is delivered and the issues which have been raised at the meeting are valid. We need public debate and the communities must have a say. They deserve to be listened to because they are the people who use the service. With regard to Mr. McCamley's contribution, I was involved in the campaigns along Abbeyleix, Durrow, Johnstown and Urlingford and eventually a public service order must be introduced to make it attractive. As Mr. McCamley stated, the State must pick it up anyway. All of the concerns which have been raised are valid. Kilkenny works extremely well with Waterford and I hope the witnesses from Waterford will continue to be involved.

Deputy Michael Colreavy

Is it open to the committee to request the Minister to defer implementation of this until such time as a debate has taken place and the strategy has been developed?

Chairman

The discussion today has been very informative. The National Transport Authority will come before the committee next week and I presume many of the points raised today will form the basis of questions at that meeting. We must explore what we can do after we have heard from the NTA.

Senator Sean D. Barrett

With regard to Deputy Harrington's point, according to the annual accounts of Dublin Bus last year it received €69 million through public service obligation, PSO, services, €13 million in capital grants and €5.3 million in emergency funds. It received €107 million to carry 115 million passengers. Of course the Minister had to question this. Over a five year period Bus Éireann received €292 million in subventions and capital grants and the number of passengers decreased by 51 million. At present, 58 buses a day go between Dublin and Galway but there was only one bus a day when there was a monopoly. This proves the benefit of competition and we now have 57 or 58 more drivers. Young people in particular travel in this way. Such routes are also developing from Dublin to Belfast, Cork and Wexford. Mr. Matthews commutes from Dundalk to Dublin. Given that the Minister was faced with more and more public money being spent, with vast amounts of it not accounted for, I am amazed he stopped at 90% being given to the people here today. The market is going elsewhere and the services are good.

When they came before a committee yesterday, representatives of Irish Water stated every contract worth more than €400,000 must be open to competitive tendering. I am glad they did not have a direct award contract or they would have given the entire €85 million in an unaccountable way. We must have competitive tendering. We must examine what is happening in transport. Some of what I heard was like what Aer Lingus used to argue against competition. It held back the country for years. To put out 10% of the routes in five years will mean it will be 50 years before we have a competitive bus service. This is what is holding it back as far as I concerned. The Competition Authority has questioned this and it is not obvious on the NTA website how it selected the routes. Why were the commuter routes west of Dublin substituted? No information was available to potential tenderers about the expected levels of subsidy on the routes. I do not believe what the Minister has done is competitive enough.

Mr. Dermot O'Leary

I am not surprised at Senator Barrett's view. In fairness, he has been very consistent over many years in his attacks on public transport workers. I have long given up apologising for representing working people. They provide a service. Listening to the likes of Senator Barrett, one would think these people do not pay any taxes. Our members are PAYE workers. They draw a pension of €130, €120 or €115 after 40 or 45 years' service. We are pragmatic and not one-dimensional like some people. We are not afraid of competition. We want a national debate and a plan put in place. We want recognition of people's service and the network which has been built up over many years. I expect nothing else from the Competition Authority, which has a monopoly on views on competition and if that is not a contradiction, I do not know what is.

Mr. John Murphy

I wish to respond to several issues raised by Senator Barrett. He listed the subvention and capital investment in CIE companies in recent years. He did not mention that, excluding the cost-saving measures implemented in 2013 in Bus Éireann and Dublin Bus, €170 million has been taken out of the three companies in efficiencies over the past ten years. Of this more than €65 million has come out of Dublin Bus. Government-commissioned reports by experts and consultants, which is not a great word at present, have been glowing but various Governments have ignored them. They show Dublin Bus and Bus Éireann are efficient and work in the right way. There is a need for open debate. I attended the NTA's workshop consultation two years ago with some of my colleagues. Some of the comments from vested interests were scary. They stated the Ryanair model should be used with competition on profitable routes and that we should ignore the public service. This is a public service. It is not a profit-making organisation. The companies are not allowed to make profit at present as if they even look like they are making profits, the subvention is cut. We will have private monopolies on profit-making routes. There are only two ways to fund a public service, which are either through public money subvention or passenger fares. If the subvention is reduced, it will automatically increase the fares. This message needs to go out to the people dependent on the service not only for going to work, but for social welfare needs, hospitals and disability. It should be part of the debate.

Deputy Noel Harrington

For clarification, Mr. Murphy stated if the company even looks like making a profit, the subvention is cut.

Mr. John Murphy

This is how it appears to us. We have gone through a process-----

Deputy Noel Harrington

Mr. Murphy stated if the company looks like making a profit, the subvention is cut.

Mr. John Murphy

This is how it appears to the workforce and to us. Fares increase but a profit is never made by any CIE company. We believe if it got to that stage, the subvention would be cut. I was involved in the process which removed more than €11 million from Dublin Bus in the past year just to try to break even. There will be projected subvention payments and contractual obligations. The company keeps coming back, stating its hands are tied because the subvention has been cut and it needs efficiencies and cost savings. This is then done by the workforce. We will not make an apology here; we try to protect the terms and conditions.

Deputy Noel Harrington

I do not recall anybody asking Mr. Murphy to make an apology. He should represent workers' rights and should not apologise. If it looks like the company will achieve an element of profitability the threat is the subvention will be cut.

Mr. Willie Noone

I might answer that. On its own website, the National Transport Authority, NTA, states that it cut €2 million off the subvention to Bus Éireann specifically because the latter had made €2 million extra in profits the previous year. That is as clear as evidence can get.

Deputy Noel Harrington

What is wrong with that?

Chairman

Does Mr. McCamley wish to contribute? We must conclude.

Mr. Bill McCamley

The Chairman will be relieved to know that I will be quick. Senator Barrett's comments implied that we had a problem with private operators. He referred to the money given to Bus Éireann, but he did not mention that €110 million per year of that goes to private contractors. In terms of the school bus service, the ratio between private contractors and direct labour is 80:20. It is easy to make a profit on a straight line, but we should be in this for some other purpose than simply getting from A to B and privatising whatever profits are made on a line.

Regarding Mr. Murphy's comments, Bus Éireann has done everything it can to take the cuts applied by the State while still providing the State with value for money. This is despite the fact that, the tendering issue aside for a moment, the licences being distributed on corridors where commercial expressway services operate are breaking the guidelines. Most recently, J. J. Kavanagh & Sons has been operating outside the guidelines ten minutes ahead of the Bus Éireann service. This is not fair. We are seeking a level playing field. If we are to compete, let us do so on the same basis as private operators. The last licence distributed, which was in Ennis, is costing Bus Éireann €200,000. Every time we scramble to get back to the break-even point, the services that we are trying to develop to provide a social dividend to areas outside the main corridors are pulled away from us. We must ask whether this is a deliberate policy by elements in the Department of Transport, Tourism and Sport or the NTA to reduce Bus Éireann to a rump bus company. This issue must be closely examined.

Chairman

I thank Mr. Reidy, Mr. Noone, Mr. Murphy, Mr. McCamley and Mr. O'Toole of SIPTU and Mr. O'Leary, Mr. Rowsome, Mr. Moloney and Mr. O'Connor of the NBRU for attending and engaging with us on a matter that is obviously of considerable interest to those who use public transport. The NTA will attend next week. Many members will be armed with questions based on today's discussion. We will take the issue forward. As there is no other business, this meeting is adjourned.

The joint committee adjourned at 1.35 p.m. until 9.30 a.m. on Wednesday, 22 January 2014.