Joint Committee on Transport, Tourism and Sport debate -
Wednesday, 5 Oct 2016

A Vision for Public Transport: Discussion

Chairman

I remind members, witnesses and observers in the public Gallery to turn off their mobile phones as distinct from putting them on flight mode or silent since the phones interfere with broadcasting and recording equipment.

On a matter of EU scrutiny, the committee considered COM (2016) 549 on maritime safety and agreed that it warranted no further scrutiny.

In our first session today, we will consider public transport for Ireland with the Minister for Transport, Tourism and Sport, Deputy Shane Ross. Members are reminded of the long-standing parliamentary to the effect that they should not comment on, criticise or make charges against any person, either outside the Houses or an official, by name or in such a way as to make him or her identifiable.

The Minister must leave by 10.15 a.m but I welcome him and his officials to the committee. The Minister's opening statement has been circulated to members. I invite the Minister to make a brief opening statement. When he has concluded, I will ask the members to respond in groups of three. Members are limited to a maximum of a three minute contribution and I ask that the Minister also limits his responses to that time in order for the committee to cover as much ground as possible.

Minister for Transport, Tourism and Sport (Deputy Shane Ross)

I thank the Chairman. As time is limited, I will try to be as brief as possible with my answers. I thank the members for their invitation to appear before the committee this morning for what I know will be an interesting and, hopefully, productive exchange of views. The committee has invited me here to talk about the future for public transport and on the levels of subvention. I will outline my thoughts on these matters and look forward to discussing them with members. Members will be aware that the programme for partnership Government contains a commitment to review public transport policy, to which I will return later, and I hope that today is the beginning of an ongoing dialogue with committee members as regards the future of public transport policy.

First let us look at transport generally and what is at the core of public transport policy. It is about having a system that allows people and goods to move efficiently, sustainably and safely between the places they need to go. It is about people getting from home to work, to school and to social activities. It is about alleviating the impacts of congestion in our urban areas and enabling goods to move to markets. It is also about enabling sustainable travel choices and contributing to a more sustainable future. Having an efficient, value-for-money and accessible transport system is critical to underpin economic growth and to enable social and economic development for the future. Those objectives require the development of an accessible, integrated, well-funded, high-quality and efficient public transport system that delivers real value for money for both the taxpayer and the fare-paying passenger.

In recent years, transport policy-makers and planners have grappled with better integrating the transport system to allow for more efficient mobility in order that our economy can continue to grow and develop and that quality of life can be enhanced. In Dublin and the provincial cities, we can see positive initiatives to improve public transport integration with walking and cycling. We have also seen the roll out of integrated ticketing, real time passenger information and journey planning which all serve to improve flexibility and choice for customers who must be at the heart of how we continue to improve the service offering.

Consider how public transport is organised in Ireland. In recent years, there have been great improvements to the way public transport is organised and delivered in Ireland. The major impetus behind these recent changes is the Dublin Transport Authority Act 2008. It established the National Transport Authority, NTA, and lays out the legal framework for how public transport is organised, financed and delivered. As Minister, I retain responsibility for transport policy and priorities for delivery. I provide an aggregate amount of money each year to the NTA and other agencies to fund service delivery. I have certain statutory functions in relation to the NTA and Transport Infrastructure Ireland, TII. I am the shareholder for CIE and its subsidiaries. On a statutory basis, the NTA enters into contracts with public service obligation, PSO, operators. It regulates those PSO services and allocates funding to PSO operators. The NTA licenses and regulates commercial services, develops integrated ticketing and promotes public transport generally.

The regulatory framework for public transport is based on EU law and, like all other member states, we now have a dedicated transport focused authority working with, and allocating funding to, the transport operators. The NTA will tell the committee more about its approach to this task. It is important to note that the public transport system as we know it today is effectively made up of three services - public service obligation services, commercial licensed services and the rural transport programme. The NTA regulates the PSO and commercial services on a statutory basis and administers the rural transport programme on a non-statutory basis under agreement with my Department.

A key element in delivering any public service is the funding of that delivery. Public transport is basically funded through two sources - the passenger and the taxpayer. During the 2010 to 2012 period, there were some significant fare increases, which were imposed to assist with the financial crisis which engulfed all three CIE companies during the economic downturn when passenger levels fell in line with the fall off in employment levels. However, that period is now behind us. The NTA's fares policy in the last few years is part of a medium-term plan to overhaul the complex and different levels and types of fares and move toward a more streamlined system that will encourage greater use of public transport services. With regard to the second major source of funding, Government will this year provide approximately €595 million to fund our public transport system. That comprises €236 million in PSO funding, €346 million in capital funding and almost €12 million for the rural transport programme. The total amount of Government spending must be taken into account if we are to have a real discussion on how public transport is funded. One cannot fund new buses without funding new services just as one cannot fund new services without new buses. I know that comparisons of PSO subsidy levels are frequently raised but the point I have just made is an important caveat to any quick conclusions, which are sometimes drawn. A recent report for the European Commission highlighted the numerous difficulties faced when attempting to accurately benchmark PSO subsidy levels across different countries. I welcome this year's 13% increase in PSO funding and can assure members I am looking to secure further increases for next year, as may be possible within the overall budgetary position. I would like to invest more in public transport but I have to recognise that there are huge demands elsewhere for scarce resources, including in housing, health, education, etc. However, I am clear that any increase in PSO funding should prioritise improvements in the delivery and quality of services. I hope that all members would share the view that if we are to provide more taxpayers' money, we must be able to demonstrate the value for money of that expenditure.

What is the future of public transport? Right now across Government there are a number of important initiatives under way which will heavily influence the future of public transport. First and foremost, there is the development of the national planning framework.

I do not think it is possible to overstress the importance of that work to our transport system.

Additionally, important work that is under way in the area of climate change will have important consequences for the future direction of the transport sector. I recently received a copy of a rail review conducted by the NTA in co-operation with Iarnród Éireann, which examines the funding parameters required to support our rail network now and into the future. I am currently considering its conclusions and I expect to make a decision on the next steps shortly. As I mentioned at the outset, a programme for a partnership Government commits to a review of public transport policy to ensure services are sustainable into the future and meet the needs of a modern economy. I will consult my Department later in the year on how best to make progress with that commitment. I believe this committee will play a crucial role in the development of the revised policy.

In recent months, I have met many stakeholders with an interest in public transport. Those meetings, together with the many different issues raised during Oireachtas business, have allowed me to develop a sense of the essential needs of the public transport sector. As a result of these deliberations, I intend to ensure the interests of commuters and taxpayers are at the heart of public transport policy and our public transport system. I will also consider the conclusions of the rail review and its implications for our rail network and develop our overall public transport investment programme in line with the principles of the strategic investment framework for land transport and in the context of the overall Exchequer funding resources. This will ensure value for money and improved outcomes for all stakeholders in the delivery of public transport services. I look forward to working with this committee as we embark on our work on these issues in the coming months and years. I thank the members of the committee again for inviting me to address them. I look forward to their questions and to our discussion.

Chairman

As agreed, I will begin by calling Deputies Troy, Munster and Barry.

Deputy Robert Troy

I welcome the Minister to this morning's meeting. It is funny to note that the first three pages of his presentation gave us a history of public transport. In the final pages of his presentation, he spoke about plans and next steps. He committed to examining a review, consulting his Department later in the year on a revised policy and working on climate change. I am somewhat disappointed that we have heard no specifics, no vision and no indication of where the Minister is coming from as he takes responsibility for this incredibly important brief.

I would like to ask a number of specific questions. I hope the Minister will keep his reply specific. Does he feel the rate of subvention is adequate? The Minister has said today, as he did in previous committee meetings, that he would like to see an increase in that subvention. Can he indicate what he would consider to be an appropriate level of subvention for our State companies? Will conditions be attached to any increase they receive? Will an increased level of subvention have to be accompanied by an improvement in services, by additional services or by investment in buses and trains, etc.?

The Minister said he cannot overstress the importance of the national planning framework. Can he give us a timeline for that framework? Can he tell us what role the Department of Transport, Tourism and Sport is playing in that regard?

The Minister did not mention the review of the school transport network even though it is an integral part of the activities of Bus Éireann. I understand it has been operating on a cost recovery basis whereby the Department of Transport, Tourism and Sport pays Bus Éireann exactly what it costs. Can the Minister confirm whether any profit has been made on the school transport system? If it has, then school transport is subsidising Bus Éireann at the moment. When will a review of school transport take place? Anyone who represents a rural constituency will know just how inefficient the routes are at present.

The Minister said that transport will be competing with major issues like housing and education. Does he agree that public transport has a fundamental role to play in helping to solve the housing crisis and, on that basis, we should be able to get an increased allocation for capital expenditure to improve our public transport infrastructure? We need to make sure there is an efficient and reliable public service to bring those who have to live on the outer limits of Dublin into the capital.

What level of interaction has the Minister had to date with Bus Éireann regarding the proposal to hive off the Expressway service and diminish the terms and conditions of the workers? In my opinion, this will run the risk of leaving provincial towns and villages in rural Ireland without a public transport service in the future.

Deputy Imelda Munster

I thank the Minister for his opening statement. He said that the objectives of the public transport system "require the development of an accessible, integrated, well-funded, high-quality and efficient" service. I would like to compare the document on the future of public transport, to which the Minister referred, to the statement that was given to the unions representing Bus Éireann workers in the past couple of weeks. They were told that structural changes would involve separating Expressway services from the rest of the public transport network. Workers were also told that their pay and conditions would be changed. In any other language, that is a privatisation agenda. We know about the decision to allow 10% of the market to be put out to public tender as part of that agenda. Is this the start of the privatisation of our public transport network? It has been suggested that the 2,600 workers and the fleet of 800 buses in the Expressway system will be separated out. Is this part of the privatisation of public transport?

The Minister said in his statement that he is responsible for transport policy. Is this part of his policy? Is he in favour of going down the road of privatising our public transport network? It has been suggested, particularly in the context of the Dublin Bus strike, that the workers are the only people who have not benefitted from the upturn since 2013-14. Those who have an ideology of pure privatisation can adopt a myopic mindset or view. It is better to adopt a long-term strategy of public investment to deliver a first-class public transport service that can be accessed by everyone in every town and village in the State. The State will eventually reap the long-term benefits of investment in delivery. I am extremely worried that the Minister's policy to date is favouring a privatisation agenda. What does he think about the statement that was made to the unions about privatising our entire Expressway service?

It has been said that the rural transport programme is under review. Is the Minister of State aware of the issues that have been identified in that review? What actions have been taken to date? Will the rural transport programme be secured as the programme it was set up to be? The intention is that people in rural areas who have no other means of transport can access rural transport services under the programme.

Deputy Mick Barry

I will not say much about the Dublin Bus dispute except briefly to congratulate the workers on achieving the 3% offer. However, the Minister's failure to increase the State subvention has complicated the ballot because workers are asking where the money to fund the claim will come from. There is a concern that if it is not funded from the State, workers will be made to pay through the back door. Ministers felt last week that the Garda pay claim was wrapped up, but the Garda Representative Association, GRA, rejected the proposals, and it would be a mistake on the part of Ministers to feel that the Dublin Bus issue is wrapped up now. A similar result in that ballot cannot be ruled out.

Bus Éireann management plans to separate out the Expressway operation and slash the wages and conditions of the workforce. The Minister has denied that he gave the green light for this so this morning, at this committee, he has an opportunity. The question is this: is he prepared to say that Bus Éireann management's actions are a real upping of the ante in the race to the bottom, that they are provocative and that he dissociates himself entirely from them? The model in Bus Éireann has clearly failed. The issuing of new licences and the amending of existing licences have damaged Expressway to the point of it being unsustainable. The commercial bus market has reached saturation point in respect of the number of operators and routes and is now in need of urgent review. I ask his opinion on that. I also ask him to comment on the fact that private operators can regularly breach the Organisation of Working Time Act 1997 with little or no punishment, yet State operators must stringently abide by it.

The Minister said in his introductory remarks that in recent years there has been great improvement in public transport. Many people listening to this would shake their heads in wonder at that statement. The State subvention has been slashed across the board year after year for eight or nine years now. I will not go into all the facts and figures, but the 2007 State subvention to Iarnród Éireann was €195 million; last year it was €98 million - cut in half. For Dublin Bus, the subvention fell from €86 million to €58 million between 2008 and 2015 - cut by a third. For Bus Éireann, the subvention fell from €49 million to €34 million - cut by 30%. Public transport is at a breaking point. Iarnród Éireann does not have enough to maintain current services or rolling stock, let alone to expand operations.

The Minister correctly said in his opening statement that public transport is vital to combat congestion and assist the environment and that what is needed is a vision of improved public transport services. However, given those stats, that cannot be done by tweaking; it needs a massive increase in the State subvention. If we say that health and education are public services and we fund them accordingly, we must do so as well with public transport, very much the poor relation at the moment. At least €170 million would be needed simply to bring Dublin's bus services up to the European average. Is the Minister prepared to fight for increases of that kind? Does he have sufficient vision to aim that high?

I want to ask in particular about a cut in the State subvention regarding payments from the Department of Social Protection to CIE to cover the free travel scheme. I understand that these transfers, incredibly, are based on a passenger survey carried out in 1973. I also understand that payments have been frozen since 2011. In 2011, there was a transfer of €76 million for the free travel scheme, but passenger numbers that year were 726,000. In 2015, they were 842,000. That is an increase of 16%, but there has not been a 16% increase in the payments, which indicates that, to a greater or lesser extent because it is not exact, CIE is down in the region of 16%. That is a further €12 million slashed from the budgets. That should be addressed, and I ask the Minister for his comments on that.

Deputy Shane Ross

I will deal with Deputy Troy's questions first. He continually looks for what he calls a vision for transport from me. There are two ways of considering this. In the transport sector, there is the long-term vision and the short-term problems, and they are very closely related. The long-term vision, obviously, must be considered not achievable in a very short period of time because of the extraordinary demands on the Exchequer and the extraordinary way in which the Department of Transport, Tourism and Sport eats up the money allocated to us every year. In the short term, the outlook is obviously less fortunate and less rosy than the long term. The long-term vision is there in all the great projects which members see and which have been laid out many times before the committee. They are to deal with the accelerating demands in the transport sector from people who need services.

It is mainly in Dublin, but not exclusively, that the huge commitments have been made in the long-term capital plan to meet those demands which face us. I refer to Metro North, DART Underground and all those projects, which have not been shelved but have been postponed because of the extraordinary demands of the financial crash. They have been mentioned so often before but they will be mentioned again, and I mention them now. All these are going ahead and are part of the vision we have which must work within the limitations of the financial stringencies we have. If Deputy Troy wants to come to me at any time - thank God we have conversations about these things - with proposals as to how these could be funded at an earlier date and where the money would come from, I would be the first to welcome them and credit him with those proposals. I have no problem with that whatsoever, but that long-term vision is certainly there. However, let us be honest about it that it will not be achieved overnight. No government, whether Deputy Troy is in government or I am in government, will achieve it overnight. However, the vision is there, those commitments are there and they will be achieved within the projections that we have. The short-term problems are ones of which we are all acutely aware and which we are tackling very adequately within those budgets which are available to us.

Is the subvention adequate? The answer is "No, it is not". It would be wonderful if it were higher. I think it has gone up by 13% this year after several years of falling. I have been in negotiations, as I am sure Deputy Troy knows, about the Estimates and I hope we will be able to improve the subvention on a gradual but consistent basis in the years to come. Of course it is not adequate. I would like it to be a lot larger. Our plans have had to be put off several times but they are there, and the subvention, along with other forms of funding and the direct investments, are commitments which we hope to be able to fulfil. However, the subvention is not enough. It is nothing like enough. It would be much better if it were higher.

The national planning framework is due to report, I think, in the near future. I am not sure of the exact date, but the Department has a role in that and a member on its steering committee.

The national planning framework is a successor to the national spatial strategy and provides a blueprint for development in Ireland for the next 20 years. It is an absolutely vital part of what we do and it is vital for planning transport. The Minister for Housing, Planning and Local Government, Deputy Coveney, is leading this work and the cross-departmental group has been established. I understand a public consultation document is being considered by that group with a view to a full public consultation on that. We will have a very important input because transport and national planning frameworks are very closely integrated.

Bus Éireann made a presentation to me on 12 September - if I have the date wrong forgive me - and told me about the work in progress. I gave no indication of approval or disapproval. It told me the dire state in which it found itself and I listened. I did not approve or disapprove any plans it might have had. It did not have a completed plan of any sort. It was simply reporting to me what was going on. That is the extent of the interaction I had.

Deputy Mick Barry

Can the Minister clarify his position on the plans to cut the wages and conditions now?

Deputy Shane Ross

I will come back to that point later. Deputy Munster asked whether my attitude to Bus Éireann was the beginning of privatisation. I have no plans whatsoever in any ideological sense to open what I suspect the Deputy would call the thin end of the wedge to privatisation. That is not the intention whatsoever. If there is to be competition in the bus market or in any of the transport markets, I would welcome that, of course. If the Deputy is asking whether there is any kind of underhand, behind the scenes, talk of privatisation going on, I have had no conversations with anybody about this. I have no ideological commitment to it and have no plans whatsoever to do it. Expressway is a commercial part of Bus Éireann and it operates under a completely unsubsidised regime but if the Deputy is suggesting that there is any plan for privatisation, we do not intend to do that.

Deputy Imelda Munster

The presentation that Bus Éireann made to the Minister, is, whatever way he likes to dress it up, the start of a privatisation plan. It is separating Expressway from the rest of the service. If this is to be the start of separating and putting out to tender, is the Minister in favour of that?

Deputy Shane Ross

I am not-----

Deputy Imelda Munster

Did the Minister express his dissatisfaction, or say he would not support it, to Bus Éireann when it made the presentation?

Deputy Shane Ross

When it came to me, it told me the state of affairs at the time. It was a work in progress. I did not intervene. It was going to the Workplace Relations Commission, WRC, and the National Transport Authority, NTA, with that. I did not intervene in any way with its plans. I did not express approval or disapproval. If the Deputy thinks it is the beginning of some sort of trend, it absolutely is not. I have not expressed a view on that and as far as I am concerned, the operation of the subsidiaries is a matter for itself. I am the shareholder and the Minister but I do not interfere with its operations. I deeply regret the fact that it is in such difficulties but this is a kind of stand alone body and it is up to it to make proposals as to how it will get it out of its problems.

We have spent approximately €75 million over the last few years on accessibility. All new infrastructure is accessible, 100% of Dublin Bus is accessible. I am absolutely committed to this and I am working on accessibility. I told the committee at our last meeting that I have made a special effort in the Estimates negotiations to ensure that accessibility is recognised in a tangible way.

Deputy Barry asked where the money would come from for Dublin Bus. At the risk of repeating myself, I said all along that we would not provide the funds for that and it was made absolutely clear to the management of Dublin Bus that we would not provide some sort of a back-up and that it had to negotiate on its own. It did that and I have had absolutely no communication with it about funding. I welcome but have no comment to make on the deal since then. I do not want to say anything that would in any way prejudice the ballot. We stand in exactly the same place as we did before on that but we welcome the fact that the two sides got together. I think I have answered the questions about Bus Éireann.

I would love to embark on a big capital programme-----

Deputy Mick Barry

There is an outstanding question. Bus Éireann management has made it clear that it plans to slash the wages and conditions of the workforce. Will the Minister comment on that?

Deputy Shane Ross

I have answered that question already. The plans the company has are only plans and I am not going to comment on negotiations it is going on with. I am not under any circumstances going to comment one way or the other on negotiations between management and unions. That would be ministerial interference and I have repeated time and again that the Minister will not interfere with the negotiations between management and unions in the semi-State sector. That is not my job. I will not be doing that.

Deputy Robert Troy

The Minister is running the risk of part of rural Ireland being totally isolated. If this goes ahead, there will be towns and villages the length and breadth of Ireland that will be left without public transport. It is the Minister's responsibility.

Deputy Catherine Murphy

The Oireachtas Library has provided me with a table showing that the subvention has consistently decreased over several years but fares have increased because there are only two ways to fund public transport. Either people pay as they use the service or the public service obligation, PSO, levy is sufficient to keep it in balance. There is a cost of living driver in that respect and a point of diminishing returns if people opt to use their cars when it becomes less cost efficient to use public transport.

In turn, we must pick up for this with hard cash under our climate obligations. I would have expected some of these issues to be addressed in the Minister's strategy for the future of public transport. Cost of living increases will drive wage demands. Since they have many effects, it is important to get the strategy right.

Previously, the Minister told us there were two ways of funding public transport, namely, the public service obligation, PSO, levy and increasing bus and train fares. The subvention increase really only restores some of what was cut. In 2013, 2014 and 2015, the degree to which the PSO levy included operators other than Iarnród Éireann, Bus Éireann and Dublin Bus increased. Subventions increased from €27 million to €174 million to €228 million. I am sorry - those figures are in thousands. An increasing amount of money is being provided to private operators, which tends to suggest that a particular approach is being taken. Will the Minister comment?

The Minister told us previously that he felt that management had a role to play in getting better value. Has the Minister conducted an assessment of issues such as contractual obligations, which management can do nothing about, or the things that have been trimmed over the years to achieve efficiencies? Has work of any description been done in this regard or is it just the Minister's view? What is the basis for believing there is a fund that can be called on to increase the amount of money that is available for other initiatives, including wage matters or increases in public transport output?

Deputy Kevin O'Keeffe

I was disappointed to hear the Minister say that he was playing third or fourth fiddle to the Departments of Health and Education and Skills in terms of obtaining extra funds in the coming budget. It is an acknowledged fact that, if we have no transport, people cannot get to work to provide the Exchequer its income. I remind the Minister that less than ten years ago, when the US economy collapsed, its Government increased funding for public infrastructure.

Speaking more locally, the Minister should get more involved in the school bus transport issue. Many pupils could end up staying at home if they cannot get transport to their local second level colleges. Will the Minister impress upon the Minister of State, Deputy Halligan, to have more of an input? This matter is not for the Minister to decide, but the situation is reaching crisis point.

Regarding rural transport, it is important that there be strong connectivity between our towns and major public transport routes. I call on the Minister to invest more money in that.

Expressway bus routes were mentioned. Should the unprofitable ones not be recategorised as PSO routes?

The previous subvention increase was touted as being for new business. If there is to be another increase, how will the Minister roll out that funding?

Deputy Peter Fitzpatrick

I am disappointed with the Minister's opening statement, as it was short on specifics. I agree with his conclusions, but more specific actions should be put in place to achieve the goal of a better transport system. We all agree that we need a better transport system. The Minister should propose a more detailed plan outlining the actions that he believes are required. I would also like to know the timescale and funding for such actions.

Chairman

Deputy Bríd Smith and Senator Kieran O'Donnell indicated. I ask that they keep their contributions brief so that we might allow the Minister to respond.

Deputy Bríd Smith

It is extraordinary that the Minister introduced this session by outlining his vision for public transport and saying that it was about getting people from home to work, school and social activities, given the fact that, according to himself, when he met Bus Éireann and it revealed the disastrous situation it was in and the stringent changes it believed it had to make, he did not intervene or comment one way or the other. It would have been prudent of him to ask a few questions of it. For example, had the company tried to develop a business plan to enhance, promote and get more people using the Expressway service? Why did he not ask these questions?

I have a wider question on the vision for public transport. If it is about being a public service, why does Bus Éireann keep referring to it as a product? Expressway is a product to Bus Éireann, not a service. We must change that language. If we do not, we will revert to the scenario mentioned by another member of a swathe of towns, villages and less-populated areas being left without a service, rather than a product. That matters to the development of rural Ireland, the sustainability of communities and, to a greater extent, to the question of the environment and climate change. I am a member of the Joint Committee on Communications, Climate Change and Natural Resources and it strikes me that, instead of the Minister thinking one way and the Minister for Communications, Climate Change and Environment thinking another way, they need to bang their heads together and consider ways of getting cars off the roads, improving the public transport system and improving Ireland's failed record in reducing carbon emissions. Anybody travelling on the motorways can see bumper-to-bumper traffic with one person in each car because public transport is inadequate and unattractive, is not really public and is, by stealth, being privatised. If the National Transport Authority, NTA, keeps giving licences to private operators, it will make it impossible for the public service company, Bus Éireann, to deliver a decent service. That is why the Minister should have questioned Bus Éireann about whether it had a business plan to promote its services so that it might compete effectively. He should also question the number of licences that the NTA is willingly giving to private transport companies, thereby pushing Bus Éireann into this difficult position.

Senator Kieran O'Donnell

I thank the Chairman for allowing me to make a contribution and I welcome the Minister.

I wish to raise two issues briefly. Regarding the rail review, the programme for Government referred to ensuring services were sustainable into the future and meeting the needs of a modern economy. Specifically, that has to do with making Irish Rail attractive. I use Irish Rail, taking the rail link from Limerick to Dublin frequently. Two aspects of its efficiency and attractiveness are lacking - broadband coverage is dire and mobile phone coverage is worse. If we are trying to encourage business people and others who are able to contribute to use public transport, we must provide modern facilities. The PSO ensures that older people and other categories can get public transport around the country. I ask the Minister to raise these matters with Irish Rail.

The second issue is the need for a proper road network, specifically relating to a matter I have raised with the Minister previously, namely, the recommencement of work on the M20 motorway between Cork and Limerick. The fact that we do not have a proper motorway between the two largest cities outside of Dublin beggars belief in a modern economy.

It is also about making it attractive. Anybody who has travelled the route between Cork and Limerick by bus knows the hazards of going through Buttevant and other places. I have raised this previously but will the Minister consider reactivating the scheme in a small way, initially by reactivating the planning process? It stalled in November 2011. That would allow consultants to be appointed by Transport Infrastructure Ireland so they can get the process under way again. That could be done prior to the mid-term review which will happen next year.

Deputy Shane Ross

Deputy Catherine Murphy talked about the PSO private operators. I believe she was suggesting that there was uneven treatment between one group and the other. There are a small number of tendered PSO services. These are important and socially necessary for rural Ireland.

Deputy Catherine Murphy

My point was that it is a growing number.

Deputy Shane Ross

Yes, but it is small. Bus Éireann operates one of those routes while others are provided by local operators. Typically, these services arise due to reorganisation of commercial services and are a response to ensure rural connectivity. The Deputy also raised the fares policy. The National Transport Authority, NTA, is responsible for that, so perhaps she will address her questions to its representatives when they appear before the committee in the next few minutes. The NTA's plans for the future are probably for regular modest changes, not on the scale of the large lumpy changes which we had in the past. However, the Deputy can address her question to the NTA.

The Deputy spoke about cost efficient ways of getting people out of their cars. The general strategy of getting people out of their cars is working. It is certainly the objective and it is the thrust of public transport policy in certain areas. This is important for emissions and congestion. If anybody asks what the long-term vision is, as Deputy Troy likes to ask-----

Deputy Robert Troy

The wider public wishes to know the Minister's long-term vision, not just me.

Deputy Shane Ross

I am prepared to take any input from Deputy Troy but in all the encounters I have had with him, I have not yet received a single suggestion that was constructive. Perhaps he could make one and I will be delighted to take it up.

Deputy Robert Troy

By all means.

Deputy Shane Ross

Good, so let us do that.

Deputy Robert Troy

I was very constructive with the Minister when the Olympic Council of Ireland, OCI, debacle was ongoing, which he acknowledged at the time.

Chairman

Allow the Minister to continue.

Deputy Shane Ross

Thank you, Chairman. I will respond to Deputy O'Keeffe.

Deputy Catherine Murphy

I asked about the management. The Minister said that the management had a role to play at our last meeting. I specifically asked if the Minister has carried out an assessment of any money that could be saved that is not based on a contractual obligation.

Deputy Shane Ross

The Department is continuously looking at ways of saving money on management and on other things. There is a challenge in that regard but I constantly look at savings in management. I will ask my Department to look at it again, so I can respond to the Deputy in more detail in the near future.

Deputy O'Keeffe addressed the school bus issue and the rural transport programme, RTP. The purpose of the restructuring of the RTP is to protect the provision of the rural transport service into the future by ensuring a more efficient delivery structure that maximises integration with other State transport services and by making the programme a sustainable part of the public transport system. The Department of Social Protection currently provides funding of €1.5 million annually to the RTP under the free travel pass scheme. This level of funding does not meet the cost to the RTP of free travel pass passengers using the services. I am committed to this programme. It is really important that these types of communities should be looked after. If the Deputy has any routes or areas in mind or specific complaints, I ask him to contact me about them. The subsidy there is only approximately €14 million but the Department is totally committed to it. It is relatively new but I believe it is working reasonably well. If the Deputy is specifically concerned about something, he should contact me.

Deputy Fitzpatrick asked about detailed plans. First, well done in the football yesterday. I will be at the next game. If the Deputy wishes to have more detail, we can provide it to him. Today, I was asked to provide a long-term vision and to discuss the subvention, which I have provided. I can provide the Deputy with a great deal more detail at any stage but this is a short meeting and detail-----

Deputy Peter Fitzpatrick

We need the timescale and also the funding. We wish to know what is needed, in the Minister's opinion, into the future.

Deputy Shane Ross

I can provide that for the Deputy but it would probably require another session.

In response to Deputy Bríd Smith, I did not give any approval or disapproval. The Deputy assumes things which are incorrect. She should not assume that I did not ask any questions. I did not say I did not ask any questions. The Deputy assumes it and she is wrong about that. What I did not do is say I was going to intervene in the operations of this company. Do not say this means that I sat there like some type of stuffed dummy. I did not.

Deputy Bríd Smith

I did not comment one way or the other.

Deputy Shane Ross

The Deputy said I did not ask any questions. The Deputy was not there, so she does not know whether I asked any questions.

Deputy Bríd Smith

That is a little sharp by the Minister.

Deputy Robert Troy

She wanted to know what discussion the Minister had, in fairness.

Deputy Bríd Smith

Of course, I was not there. The Minister gave the impression that he sat there like a dummy, saying he did not comment one way or the other and did not intervene. If he did ask questions about the business plan, perhaps he could tell us that.

Deputy Shane Ross

I did ask questions-----

Deputy Bríd Smith

Perhaps the Minister could tell us them.

Deputy Shane Ross

-----but I did not approve or disapprove.

Deputy Bríd Smith

That is not what the Minister said.

Deputy Shane Ross

That is the important thing.

I will move on to Senator O'Donnell's questions. The broadband issue is important and the Senator makes a good point. It has been raised on several occasions with me, including recently. I have talked to various people about doing this because the Wi-Fi and the situation-----

Senator Kieran O'Donnell

I have already raised it with Irish Rail many times.

Deputy Shane Ross

It is a fair point and I will raise it with Irish Rail. I have been approached about it, sometimes by people with industry interests and the pure commercial interest of installing it there, which is something I must be careful about. It is a problem about which I am aware and it is a constructive suggestion.

We have addressed the M20 from Cork to Limerick previously. I am sympathetic but I am unable to give any commitments beyond the mid-term review and what I outlined in the Seanad a few months ago. I will look at it sympathetically and if any money becomes available, I will regard it as a priority.

Senator Kieran O'Donnell

The amount of money involved in reactivating the planning process is relatively small. A significant portion of the planning work was completed up to November 2011 when the project was stalled. In terms of time and efficiency, it would probably take a number of months to procure consultants. They could be procured, taking account of what has already been done, so that in the mid-term review, if all is going well and funding becomes available to reactivate the project, we will not have lost time. The biggest single problem on the route is that many people commute daily between Cork and Limerick. It would be good for Ireland in terms of balanced regional development as a counterpoint to the east. We must get the project under way. I am seeking ways that are not hugely costly to push the project forward without losing time. I ask the Minister specifically to consider reactivating the planning aspect, not the project.

Deputy Shane Ross

I will look at that.

Chairman

Deputy Troy, perhaps your queries could be responded to in writing. We do not have the time now.

Deputy Robert Troy

I asked the Minister three specific questions to which he did not refer. One was asked by a number of members. It is about the Minister's personal view of the proposals by Bus Éireann regarding Expressway.

Does he believe certain existing Expressway routes will never be profitable and that they may need to be transferred under the public service obligation to ensure continuity of service and that certain parts of the country currently serviced by Expressway will retain a public transport link?

With regard to the Department of Education and Skills, a number of members and I asked about a review of the school transport scheme. The Department of Education and Skills currently pays Bus Éireann to operate the scheme. Is that Department's funding cross-subsidising other elements of Bus Éireann? I would like a simple answer of "yes" or "no".

The witness said they would like to see an increase in the subvention. I hope the Minister is successful in his battle with his colleagues around the Cabinet table in this regard. Will there be criteria attached to any increase in the subvention to Bus Éireann, Dublin Bus or Irish Rail? The 13% increase in 2016, of which the Minister spoke, related to new projects. Will the same apply in 2017?

Deputy Shane Ross

The issue of moving routes from Expressway under the public service obligation is a matter for the NTA. It is a question the Deputy should ask the NTA's representatives specifically when they are in attendance. He must not ask me about specific routes because that is an operational matter. He should definitely ask the NTA about it.

On school transport, the Department of Education and Skills audits each year the funding provided to Bus Éireann for school transport to ensure there is no cross-subsidisation.

My understanding of the subvention is that it exists to improve the services of the transport companies. I have not made any specific directions on where exactly it should go.

Chairman

I thank the Minister and his officials for their time. We are a little over time but we did all right. This is the Minister's third time to appear before us in recent months. We appreciate his efforts in that regard.

Sitting suspended at 10.22 a.m. and resumed at 10.28 a.m.

Chairman

I welcome Ms Anne Graham, CEO of the National Transport Authority, Mr. Ray Coyne, CEO of Dublin Bus, Mr. Martin Nolan, CEO of Bus Éireann, and Mr. David Franks, CEO of Irish Rail. I thank them all for attending today to discuss issues relating to Ireland's public transport system. The opening statements from the four witnesses have been circulated.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of the evidence they give to this committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a 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 they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.

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.

Presentations should not be more than five minutes in duration. The submissions have been circulated among members. I invite each delegate to make an opening statement, starting with Ms Graham from the National Transport Authority, NTA, who can give us an overall picture. When the four opening statements have been made, I will call on the members to ask questions in the order agreed.

Ms Anne Graham

I thank the joint committee for the invitation to attend. I understand it wishes to focus on two areas, in particular, the vision for public transport and the subvention of public transport services.

Before dealing with these two specific areas, I would like to set the context by providing a brief overview of the remit of the National Transport Authority. It is to regulate and develop the provision of integrated public transport services, namely, bus, rail, light rail and taxi, by public and private operators in the State, to secure the development and implementation of an integrated transport system within the greater Dublin area and to contribute to the effective integration of transport and land use planning across the State. In addition to its statutory responsibilities, the authority has various arrangements with the Department of Transport, Tourism and Sport to discharge functions on its behalf. These include the assignment of responsibility to the authority for integrated local and rural transport, including provision of the rural transport programme.

The vision of the National Transport Authority, as set out in its statement of strategy, is a greater share of high-quality, accessible, sustainable public transport services being used by all. This forms the basis of all the work the authority undertakes. It has a statutory function to produce a transport strategy for the greater Dublin area, GDA, which includes the four Dublin council areas and counties Meath, Kildare and Wicklow. The GDA transport strategy for the period 2016 to 2035 was approved by the Minister earlier this year. It sets out how the vision for greater use of sustainable transport services could be delivered by 2035, allowing also for a 29% increase in transport demand in that period. The strategy outlines the heavy and light rail network, the core bus network and a supporting cycling network, as well as other demand management measures that are necessary to ensure 55% of the trips to work in 2035 will be made by using sustainable modes. While the authority has no statutory function to provide strategic plans outside the GDA, it has developed a suite of transport models which would allow us to do so. It has worked with Galway City Council on the Galway transport strategy and is actively engaged with the other regional city authorities in planning for sustainable transport services.

The authority is responsible for securing the provision of public bus services through two specified mechanisms: public service contracts, where services would not otherwise be provided on a commercial basis, and the licensing of public bus services which are operated on a commercial basis. Dublin Bus, Bus Éireann and Iarnród Éireann are contracted to the authority to provide public transport services. The authority is also contracted with TII to Transdev Ireland Limited for the provision of Luas services, while there are a number of bus services provided under contract to the authority by other private operators across the State. The authority has been working to improve public transport services since its establishment, supported by Dublin Bus, Bus Éireann and Iarnród Éireann.

The authority commenced a series of network reviews across all of Bus Éireann’s services. Starting with the regional cities, a number of network changes were made which resulted in increased passenger numbers at a time of declining passenger numbers on other services. Some results are outlined in table 1 in the pack members have received. They will see that, between 2013 and 2015, passenger numbers in Cork increased by 14%, in Galway by 4.7%, in Limerick by 2.9% and in Waterford by 2.4%.

Bus Éireann's stage carriage service between rural towns is still in the process of being restructured on a county by county basis. In south Kerry an amended network of services has been implemented, while some revisions have been implemented in County Mayo and more are scheduled by the end of 2016. Reconfigurations of the network of services on the M2-N2 corridor approach to Dublin have been implemented and those planned for the M3 will follow before the end of 2016.

The objective of the rural transport programme is to provide a good quality, nationwide, community-based public transport system in rural Ireland which responds to local needs. In 2016 funding of €13.7 million was provided through the authority for the programme, which represented a 16% increase in the annual funding for the programme. With the benefit of this local collaboration, we expect to make considerable progress throughout 2016 in refining and expanding, where appropriate, the operation of local transport services, in addition to ensuring the optimal level of integration with other public transport services. There are 41 new rural transport services being examined by the authority across the State, with a number of local link offices. The planned services also include new town services in Cavan, Ennis, Mullingar, Kilkenny and Letterkenny. With the additional funding, the authority has been able to provide 13 additional services in counties Kerry, Wexford, Leitrim and Roscommon, ensuring better connections to and between local towns to key destinations such as shops, hospitals and community facilities. The authority is developing a three-year strategy for the development of rural transport services which will see further expansion of services and further integration with HSE transport services, subject to funding being received. The authority is working to simplify the fares structure for bus and rail services and offer integrated fare products across the State. The introduction of the LEAP card has greatly facilitated such integration. Our vision for fares is for a further simplified, better value fares offer for the public transport customer. The authority is examining what the next generation of smart ticketing might be for Ireland.

The authority has had a multi-modal national journey planner in operation for over four years. This allows anyone to plan his or her journeys to and from any location in Ireland by public transport. It has been continually improved by our system developers and a new version of the journey planner app has just been launched in the app stores. Real-time passenger information has greatly enhanced the experience of the public transport customer and the authority would like to expand on that system by erecting more signs and developing real-time travel alerts for customers as they travel.

The first real return to growth in passenger numbers across all public transport services occurred in 2014. The demand for public transport services continued to grow in 2015 as illustrated in the table. To date in 2016, passenger numbers have continued to grow, with estimated outturn growth of between 5% and 8% expected by the end of the year. Demand for travel services is on the increase and the level of patronage on public transport services is growing. This trend of increased overall demand is expected to continue and accelerate with further economic recovery and population growth envisaged in the next five years. Public transport service provision must anticipate this growth and additional service provision should occur in a timely manner to influence mode choice associated with the increased levels of demand, particularly arising from new developments and new employment opportunities. This will assist in maximising the public transport market share and national policy aims to increase mode share for sustainable travel services. It is unlikely that all such demands can be met within existing service provision and capacity, particularly within the city and urban networks where population growth will be highest, and where existing peak capacity is already well used. The authority will continue to work to improve existing public transport services and provide additional services to meet the growing demand within the budget it receives.

Mr. Ray Coyne

I thank the Chairman and the members of the joint committee for the invitation to attend. I understand the committee has requested that I focus on the vision for public transport and the level of State subvention. My opening statement will reflect this request.

An efficient public transport system is key to delivering positive economic and social development in the country and, in the case of Dublin Bus, Dublin and its hinterland, in particular. An economically vibrant Dublin is also of benefit to the wider economy. In order to outline a vision it is important to, first, reflect on the recent journey to where we are. Dublin Bus operates under a direct award contract to provide services on all of its public service obligation network. It is a net cost contract in that Dublin Bus has both revenue responsibility and to deal with associated risk. This type of contract is the most used in large European cities and is provided for under EU directive 1370/2007.

Our most recent contract was signed in December 2014 for a period of five years. Creating a customer-centric, well functioning and efficient public transport network is our ultimate aim and it can be achieved through a direct award contract. There are many performance criteria which are independently audited in the contract and Dublin Bus has a strong record in exceeding its targets. The performance criteria outlined in the contract targets areas that benefit the customer experience considerably. By consistently exceeding our targets, we have been able to grow our business in a sustainable, efficient and customer focused manner. Dublin Bus remains the largest public transport operator in Ireland. In 2015 it carried 122 million passengers in operating over 57 million km on 112 routes. We achieved these figures through strong growth on both the commercial and public service obligation network of services.

Dublin Bus customers account for 39% of the retail spend in Dublin city and 62% of all public transport users in Dublin are Dublin Bus customers. Our network speed at peak times is the region of 14 km/h, with substantial variances on all transport corridors. Despite the significant roll-out of quality bus corridors, private transport services remain extremely competitive in terms of journey times to the city and, in many cases, are faster than the bus. In many areas of Dublin private transport services are an attractive alternative to public transport services.

Dublin Bus, with many other companies, felt the impact of the recession. In 2013 it returned to profitability for the first time since 2008, with an operating surplus of €500,000 on total revenues of €268.6 million. This profitability continued into 2014 and 2015, with an operating surplus of €11.6 million and €10.9 million, respectively, on total revenues of €266.4 million and €286.2 million, respectively, helped by a return to growth in our revenues, coupled with the implementation of cost reduction measures throughout the company.

Our fare box coverage - customer generated revenue as a percentage of total revenue - remains one of the highest in Europe, averaging 78% in the past three years. This performance has been achieved against the backdrop of an annual cash cycle, with many agencies competing for the naturally limited current and capital funding available. This is an annual challenge for all concerned in the delivery of public transport services, from the Department of Transport, Tourism and Sport to the National Transport Authority, CIE and Dublin Bus. However, significant progress has been made while operating in this budget cycle.

One of the key benefits of the bus is that the service is flexible. A bus network can quickly match resources with demand, as Dublin Bus proved after 2008 by reducing the scale of its activities by more than 20% to reflect the impact of the recession. As the early signs of economic recovery appeared, the company was in a position to quickly re-adapt to increasing demand. In line with the general recovery, our activities have since increased by more than 12%. This growth continues at a rate of between 5% and 7%. We must ensure we do not leave people waiting at our bus stops and stations. Additional capacity introduced will benefit the city in the long term and introduce new customers to public transport. It is significantly easier to introduce a customer to public transport than to convert a customer from private transport. The youth of today are the future users of public transport and have a strong appetite for multiple transport travel options that exclude car ownership. We must meet their future needs now.

Flexibility also applies to the ability to meet the aspirations of a city and its people. Dublin is undergoing significant change, with the ongoing construction of the Luas cross-city project. Throughout this period Dublin Bus has been able to adapt services and minimise the impact on customers. This has been achieved in a congested city in which we have simultaneously increased customer numbers.

Congestion remains a problem in Dublin, particularly in the morning and evening peak commute times. The city has narrow roads which were not designed to carry large volumes of vehicular traffic. Many users are competing for the limited road space available, including private transport, that is, cars and motorcycles, public transport, cyclists, taxis, delivery vehicles and pedestrians. As economic growth returns, congestion levels will increase further. Congestion limits a city’s ability to achieve its full potential in the economic, environmental, social and cultural areas. Dublin is positioning itself as a modern European capital and a congested city does not fit with this outlook.

The changes I have outlined in the scale of our business were complemented by a total restructuring of our bus network, the largest of its kind in Europe. In this period we also introduced significant enhancements of the customer experience, with the implementation of free Wi-Fi on all our buses; achieving the target of 100% accessible vehicles in our fleet; assisting in the roll-out of the Leap card and the national journey planner, in conjunction with the National Transport Authority; launching real-time passenger information and the Dublin Bus app, with more than 1 million downloads to date; and introducing Euro 6 engine vehicles which comply with the latest EU emission standards. Dublin Bus has achieved these changes in unprecedented times through the prudent management of the resources available to it and, crucially, the commitment of all of its employees. While the recent past has proved challenging for our customers and employees, there is an onus on all of us in Dublin Bus to ensure we provide continuity of the vital service we deliver. Dublin Bus has a proud tradition of ensuring every journey matters for every customer. This is something we will work hard to re-establish with our customers in the coming months and years.

I set out the current environment for public transport relating to Dublin Bus. My vision for the future of public transport services in Dublin is clear. It is a public transport network that is a better option than owning a car. The public transport network of the future must have, after safety, three basic fundamentals in place, namely, frequency of service, reliability of service provision and competitive and consistent journey speeds. Thereafter, information and price are key for customers. Having a public transport system that is a better option than owning a car is a vision that is achievable and will enable the city to fulfil its potential in many diverse areas. They include enhanced urban living opportunities, reduced congestion, improved air quality and reduced noise pollution. Achieving this objective will enable the economy to prosper and provide a platform for a vibrant social and cultural city scene. It will also increase capacity to deliver people to and from the city with reduced road space, increase the pedestrian environment in the city and enhance safety for all road users in the city. These objectives can only be delivered by way of a multi-modal mobility platform as opposed to a single means of public transport.

In short, the public transport network comprises many transport options, including bus, coach, bus rapid transport, buses which offer a high level of service, rail, metro, bicycle, taxi, car share and light rail. We must make the transport experience as simple as possible for customers.

Chairman

As the presentation has been circulated to members, we will take the rest of it as read. I invite Mr. Nolan to make a five minute presentation on behalf of Bus Éireann.

Mr. Martin Nolan

I thank the Chairman and members for the invitation to attend.

As the biggest provider of regional and rural transport services in the country, Bus Éireann employs an estimated 10,000 people to deliver services on almost 5,000 vehicles, connecting thousands of locations and customers in rural areas on a daily basis. We work with the National Transport Authority to ensure city and rural stage carriage services are dovetailed with our commercial services and other public transport services to provide a vast integrated bus and coach network throughout the island.

Since emerging from the recession, Bus Éireann has been delivering an average of 3% year on year growth in the number of customer journeys and last year carried slightly more than 37 million passengers on its road passenger services. This figure excludes the 112,000 children we carry to school each day under the school transport scheme. From 2009 to the end of 2015, on our public service contract routes, we delivered growth in revenue per kilometre of 20%, with only a 4% increase in cost per kilometre. At the same time, State subvention was reduced by 26% per kilometre and the scale of our operations was delivered by 12% fewer staff than in 2009. While this might point to greater efficiencies being achieved by the organisation in a difficult period, it broadsides the need for continuous investment in the fleet and facilities and the requirement to achieve new standards in customer service which requires a longer term investment framework.

While Bus Éireann continues to expand its network and offer greater frequency and connectivity on services to improve its product, it needs steady State investment to underpin its growth ambitions. Above all, we must ensure safety is never compromised and members of the public will continue to benefit from the continuous improvements in technology, training, fleet and facility standards in line with best practice in Europe. We must keep pace and continue to invest for tomorrow’s standards for the future. All of these initiatives underpin our goal to be recognised as progressive and deliver on our mission to succeed by providing an excellent service for the public.

The financial difficulties we are experiencing on our commercial Expressway network which is not in receipt of a State subvention have been well publicised in recent weeks. I have repeatedly shared during our visits to this forum in the past ten years our concerns about the impact of the motorways on smaller towns and villages. I also advised the committee as recently as January this year that change was required to ensure the survival of Expressway routes across the country. In addition to losses of €5.3 million in 2015, we are forecasting losses of €6 million in 2016 for Expressway. The board and management have signalled that these losses cannot be allowed to continue and a solution must be found urgently. While we have reduced our cost base by €10 million or 20% since the recession started, new entrants on commercial routes with lower costs require us to be even more cost efficient to survive.

Bus Éireann continues to work with the National Transport Authority on the issue of commercial licensing to ensure a high level of and high quality inter-regional connectivity and balanced regional development. However, we continue to make the point that the supply of services must be matched with demand on every corridor to ensure the market is structured in such a way as to ensure it is not only competitive but also financially sustainable. It is not sufficient to focus on customer growth if the seat capacity provided is up to three times more than the level of demand on some corridors. We have to focus on filling existing capacity first.

It is vital that Bus Éireann’s public service obligation, PSO, services, are fully funded and provide a reasonable surplus to allow for service enhancement and investment. In 2015 and 2016 we have delivered a significant expansion of our services, in conjunction with the National Transport Authority, and seen strong growth in passenger numbers emerging as a consequence. We need more of this, as well as collaboration with local authorities to bring about modal shift to reduce congestion and continue to support local economies outside the greater Dublin area. The PSO subvention for 2016 has been advised at €37.9 million and we are grateful for a further increase of €3 million received to date this year for the expansion of services sanctioned by the National Transport Authority. However, this should be contrasted with the 2009 level of subvention of €49.4 million. No business can survive long term without generating a return and we are in discussions with the National Transport Authority on the return applicable to the public service contract. The subvention for 2017 has not yet been agreed with the authority. The company has assumed, however, that a subvention will be provided to meet the net cost of the PSO contract.

While Bus Éireann has generated a range of cost efficiencies in recent years, the company also faces a number of potential cost increasing measures. Pay rate pressures linked with the external environment and a pay rate freeze since 2008 present key challenges at this time. Other cost increasing factors, however, include increased levels of congestion, our commitment to best practice in all safety related issues, the increasing culture of making claims and the associated increase in settlement costs and enhancements to customer services.

Taking all of this into account, we have articulated our vision for public transport with our stakeholders over recent years. The primary objective for prioritising investment in public transport should be the role of transport in supporting renewed economic growth, improving competitiveness and sustaining job creation. The evidence shows that public transport has a significant positive social impact, not just with regard to access to work or education but also with regard to access to health care, retail and leisure facilities and in facilitating tourism in urban and rural locations throughout Ireland. All of these mobility and integration needs are critical to the sustainability and regeneration of local economies throughout the country.

Any investment framework should continue to place a priority on the maintenance of the integrated national network that links all communities, urban and rural, and that fosters balanced regional economic development. Bus Éireann has been at the heart of this for generations. Balanced regional development should place a priority on lower cost alternatives such as a bus-coach transport network in a small island economy. Communities outside Dublin need to be assured that they will not be isolated in terms of social and economic inclusion and international competitiveness. While passenger growth is very strong on the core routes in provincial cities at present and investment in these networks should continue, further innovations such as bus rapid transit upgrades in cities like Cork and Galway should be examined. This, together with infrastructural improvements to prioritise bus corridors, would help ease growing congestion.

Chairman

I ask Mr. Nolan to conclude. He can take it that the remainder of the speech has been read as the speech has been circulated to members. I now call Mr. David Franks, the CEO of Irish Rail, to give his opening statement.

Mr. David Franks

Along with my colleagues, I thank the committee for the invitation to attend today to discuss the future vision for public transport and funding issues as they relate to Iarnród Éireann. First, I will give the committee an overview of Iarnród Éireann’s operations. This year, we will carry a projected 41.4 million passengers and 100 million tonne kilometres of freight. We operate with a fleet of 638 carriages across a network of 1,700 kilometres and maintain both as well as 1,000 level crossings, 5,100 bridges, 4,900 cuttings and embankments and a range of buildings and structures which include 144 stations. Every week our team of almost 3,800 people maintains this network and operates 4,300 passenger train services and 50 freight services. Additionally, we are the port authority for Rosslare Europort, the State's second busiest port which handles 2.3 million tonnes of freight and 900,000 passengers annually.

In funding terms, Iarnród Éireann is divided into train operations and infrastructure management divisions, as required under EU directives. The train operations division runs day-to-day train services which are largely funded through the fare box and PSO payments from the NTA. The infrastructure management division maintains and invests in our network and is funded through multi-annual contract payments from the Department of Transport, Tourism and Sport and from track access charges from train operators - largely our own train operation division but with some other operators, notably tourism and heritage operations such as the Belmond Grand Hibernian tour of Ireland, which has just started operating, and the Railway Preservation Society of Ireland. Capital funding for major overhauls of our rolling stock and infrastructure renewal is essential. It is needed to protect the value of our fleet and infrastructure assets for our customers and the taxpayer.

In both areas of the business, Iarnród Éireann continues to operate through an era of unprecedented challenge. While business growth has made a very welcome return, the cumulative and continuing effect of operating losses and underfunding challenges our ability to operate sustainably and to maintain the levels of safety and service performance expected by our customers. Annual PSO funding has reduced since 2007 from €195 million to €98 million.

Financially, notwithstanding reducing our cost base by more than €73 million per annum during the economic crisis, we will again record a loss in 2016, albeit one that is better than forecast as a result of passenger growth. This will bring our cumulative losses since 2008 to €160 million. Our balance sheet simply will not withstand further losses beyond 2016 without impacting on service levels, performance and safety maintenance. Equally critical in terms of funding our operations and network, the Department of Transport, Tourism and Sport in its strategic framework for investment in land transport and other reviews has identified a shortfall in annual funding of €90 million for the network we operate and services we are contracted to provide.

I commend our team of dedicated employees on ensuring we continued to deliver services safely and reliably during this era. However, as history has shown us, sustained underinvestment will ultimately impact on both safety and reliability and result in greater costs to renew our assets in the long run rather than maintain them sustainably. For customers, this would mean a return to speed restrictions and a worsening of service standards when our ambition is to improve times and service quality.

We must address this underfunding to maintain our existing track, signalling and infrastructure assets and to keep pace with best European practice in safety management such as automatic train protection systems, which exist only on the DART network and which automatically prevent trains from passing red signals or from over-speeding and are commonplace across Europe. Further investment in level crossing safety is needed following an era in which we halved the number on our network. We have prioritised the renewal of our national train control centre. We have worked and continue to work extremely closely with both the NTA and the Department to identify and address these challenges and I thank them for their support as we work towards a sustainable future for Iarnród Éireann.

I will now move to our vision for the future. As I have already stated, growth has returned to our network. Passenger journeys, which fell from a high of more than 45 million in 2007 to 36.7 million in 2013, are projected to climb to 41.4 million this year. In a growing economy, the strengths of a sustainably funded rail service are clear. Rail can provide frequent, high-capacity public transport to address urban congestion, particularly in Dublin and Cork. Rail can deliver fast inter-urban journey times between Dublin city centre and key cities and towns on the island of Ireland and ensure CO2 and other emissions from transport are dramatically reduced, thus helping the State meet European and United Nations Paris climate change agreement goals. Iarnród Éireann has already exceeded the Government's 2020 target for emission reduction for State bodies. Rail can provide a competitive offering in both passenger and freight sectors, supporting a dynamic and growing economy and ensuring social inclusion.

To this end, our vision for Iarnród Éireann is to build a better future together by improving our services and growing our business. One of our core values is putting the customer at the heart of our business and this is where our priorities lie for investment and service improvements. We are committed to opening the Phoenix Park rail tunnel in the coming weeks for commuter services from the Kildare line to the stations between Connolly and Grand Canal Dock, initially at peak times before extending operations to off-peak times and weekends. Our Customer First programme will address legacy ticketing and customer-interfacing systems to deliver modern, customer-friendly engagement, including customer relationship management systems, enhanced online offerings, yield management systems similar to the airline industry and more. Other developments include the expansion of DART services to a ten minute frequency; incremental journey time improvements through ongoing line improvement works, initially between Hazelhatch and Portlaoise benefiting intercity customers to and from Cork, Limerick and Kerry; and the completion of re-signalling of the DART line between Clongriffin and Grand Canal Dock to allow more trains to operate.

Chairman

I ask Mr. Franks to conclude. He can take that the rest of his contribution is read as the speech has been circulated to members. I will hand over to members.

Deputy Peter Fitzpatrick

I thank the witnesses for coming before the committee today. My first question is directed to Mr. Franks. I note from his opening statement that one of his priorities is the introduction of an hourly Enterprise service between Dublin and Belfast in conjunction with Translink. Will he give me an indication of a timeline for the introduction of this service?

My second question is directed to Ms Graham. Will she give me an indication as to when the three-year strategy for the development of rural transport will be published? In her opening statement, she stated that Bus Éireann services between rural towns are still in the process of being restructured on a county-by-county basis.

Will Louth be examined with a view to restructuring? Will the witnesses provide an outline on the areas or processes examined when a county is being restructured?

My last question is to Mr. Coyne of Dublin Bus. I agree that a public transport network must be a better option than owning a car. For this to be a reality, we need a reliable service and competitive pricing. Dublin Bus has stated this can only be delivered with a multi-model mobility platform rather than a single means of public transport. It has been mentioned that this type of system was successfully implemented in Hanover, Germany, but will the witness explain how the system works and the plans to implement that type of system here?

Mr. David Franks

I would love to be able to give a timeline on the Enterprise service and we are working very closely with Translink. We recently set up a shadow board with it to try to improve the Enterprise service. We are currently working on the business case for this and it will require additional rolling stock. We have been looking to see if we could introduce some additional services in the early morning and evening as well. We are looking at all opportunities. An issue that has frustrated the process a little is the Brexit position because we had assumed we could secure some European funding for this but we must now consider that the element will potentially be taken from the business case. All that work is under way. Perhaps I could update the committee once the business case has been taken a stage further.

Deputy Peter Fitzpatrick

I would appreciate that.

Ms Anne Graham

Deputy Fitzpatrick asked me about rural transport and the three-year strategy. We hope to publish that before the end of the year. We will be informed by whatever budgets that would be put in place for the rural transport programmes and our strategy will reflect that. In terms of network reviews on a county-by-county basis, we usually start from scratch. We look at the travel demand in a county, where people are travelling and where the growth is likely to be. We consider existing services and where the gaps are in those services. We also look at whether we can improve services by better integration, which might come about through timetable changes and if there is a demand for additional frequency. The integration of rural transport with other public transport services is also examined on a county-by-county basis. One cannot usually confine it to a county and a number of counties may be studied together. That is what we do in a network review.

Deputy Peter Fitzpatrick

Will Ms Graham confirm when Louth will be considered as part of a group?

Ms Anne Graham

It is likely to be next year before we get to Louth. We do not have any planned programme and we deal with services when we know there is demand for additional services. Louth will probably be looked at towards next year.

Mr. Ray Coyne

With respect to the multi-mode mobility solution, we have gone some way towards reflecting this in recent years in Dublin. The Leap card was a key enabler as customers can jump between different modes of transport using the same ticket. The operators in the National Transport Authority, NTA, have increased the integration of our own services within that timeframe. Recently, we have seen that dublinbikes subscribers can use their Leap cards to use that service. It is the next step.

Hanover essentially has mobility as a service and it is an application. One can develop the technology and have an application to allow customers to pay for all services through one payment mechanism. One can build in a number of transport options. In Hanover there are taxis in the system as well. Ultimately, the application calculates the best fare. It is like a shared service so the customer can choose what he or she wants to pay every month. A person might pick a transport option costing €10 per week or it may be €50 if that person uses the service more often. The technology is a key aspect but it is enabled by all the operators working together. There has been much work done on that are there will be discussions between the NTA and operators on the next iteration of Leap, which may move to account-based ticketing. That would allow systems like that in Hanover to be introduced. We have done some of the work and there is much we can do in the area.

Deputy Robert Troy

It is hard to cover everything in a three-minute slot but I have engaged with most of our guests in the past. I thank them for being here this morning. The €2 million profit was taken from Dublin Bus by the NTA because it was deemed as excessive profit. I understand it is based on a return on equity model used to calculate excessive profits. Will the witness comment on that? I understand the model runs contrary to standard business practice. Why does the NTA use it and would it not be deemed far more beneficial if the money could be left with Dublin Bus in order for it to improve services further?

The Expressway routes play a pivotal role in ensuring that many of our towns and communities outside large urban areas have public transport. What is the NTA's view on a position where some of those routes would be transferred from being commercial services to being a public service obligation? I understand the NTA has no formal power to refuse either a public or private operator from amending a commercial service route. What could it do to prevent somebody from tendering for a route, being awarded that route but changing the route a couple of months afterwards, meaning it fails to service the stops originally identified? It puts those operators at a unfair competitive advantage over Bus Éireann. Perhaps Mr. Nolan might address that as well?

There are upcoming tendering proposals for Dublin Bus. Will Mr. Coyne give an update on the progress being made in opening existing Dublin Bus orbital routes to tender? I understand from recent media speculation that a number of potential tenderers have dropped from the process. Why has that happened? What evidence is Dublin Bus using to indicate that competitive tendering will improve cost efficiency or customer services?

According to an assessment by the National Transport Authority carried out in conjunction with Indecon in May 2011, DART underground was considered not just to be a transport scheme but an investment in the future growth of Ireland. The NTA's new transport strategy for the greater Dublin nevertheless has hardly any mention of the project, which appears to have fallen off the agenda. Will the witness comment on that?

Mr. Coyne mentioned that the youth of today are future public transport users. What work is being done in trying to change behavioural attitudes and get more people on public transport? I have posed this question before. A couple of weekends per year the bus service is free for minors. Does Dublin Bus notice a significant upturn in the number of people using the buses on those weekends? Is cost a big impediment to people using public transport?

Ms Anne Graham

I will speak to those questions, including the tendering of the 10% of routes, as it is a function of the authority and not Dublin Bus. With regard to reasonable profit, the authority must operate in accordance with Regulation (EC) No. 1370/2007. We are required to establish provisions to avoid overcompensation in the case of directly awarded contracts for public transport services. The regulation states that reasonable profit is the rate of return that is normal for the sector in a given member state that takes into account the risk or absence thereof incurred by the operator by virtue of the intervention.

We have reviewed the case law precedent and considered various methodologies for determining an appropriate rate of return and we concluded that the determination of reasonable profit, based on return on equity, is the most appropriate approach for a direct award contract. In regard to the risk levels, they are not as high as would be considered in the commercial market. We also ensured that it was consistent with previous EU Commission decisions concerning public transport services contracts, and this method of assessing reasonable profit has been used in other member states.

The reduction in profit of €2 million for Dublin Bus was transferred to Bus Éireann to offset the losses it was incurring in that same year. We had done a previous movement of subvention from Bus Éireann to Dublin Bus to assist it in a previous year also.

The Deputy asked about commercial services. I will outline first what we do in regard to commercial services, which is bus licensing. If somebody applies to amend a commercial service, we can either grant it or refuse it. We cannot refuse if somebody intends to reduce their service but if they intend to amend their service to increase the services or to change the location and the bus stops, we can either accept or refuse that.

Deputy Robert Troy

Did Ms Graham say she cannot refuse a proposal to reduce services?

Ms Anne Graham

No. If somebody is putting forward a proposal on the basis that they want to reduce their commercial services on a particular route, we cannot refuse that because they are taking a decision-----

Deputy Robert Troy

Even though their tender was awarded based on the services they intended to provide.

Ms Anne Graham

This is a non-commercial service, which is operated under the Public Transport Regulation Act. There is a difference between a service that is awarded a contract for bus services that is contracted to the authority. In that case, they cannot reduce services because we have set out the contracted services, namely, the bus stops and the frequency of those services. All changes related to contracted services have to be approved by the authority. There is a difference between commercial services where it is a commercial decision and a tendered service.

Deputy Robert Troy

I accept that, but their application is for a licence-----

Ms Anne Graham

Yes.

Deputy Robert Troy

-----based on a particular service, in that they intend to service, say, ten towns along a particular route. That is fine, and it is matching what Bus Éireann is doing, but Ms Graham is saying that a few months after the licence is awarded, a private operator can come in and tell her he is amending the service by reducing the number of towns being serviced, and she cannot refuse that person.

Ms Anne Graham

That is right, but if they did not operate in accordance with their licence, we would take enforcement action regarding that activity. If they make a commercial decision to change their licence, which results in reducing the frequency of the services or the numbers of stops, we cannot force them to operate on a non-commercial basis.

I will give the response on the tendering of the services. It is not Dublin Bus that is responsible for tendering the services. The National Transport Authority, NTA, is tendering the 10% of Dublin Bus and Bus Éireann services. As we are in the middle of a public procurement process I would not like to comment further on that because I do not want to undermine that public procurement process. However, when that process is over, I would be happy to outline to the committee the outcomes of that tendering process.

Mr. Ray Coyne

In terms of the youth, Dublin Bus does a lot of work in trying to attract young customers, in conjunction with other operators and also with the NTA. In terms of recent initiatives, some members may have seen online or in other social media a Baz and Nancy campaign. That was not aimed at me but at young people who watch those characters on television. It proved to be very successful and highlighted the technology behind the operation of a bus system. We also rolled out free WiFi throughout the entire network. That is in place now and is a key enabler and benefit to young people because they would have to pay for their mobile data but when they are on the bus, they no longer have to do that. In recent years we significantly increased our engagement on social media, which the younger generation use significantly. We have also increased the age one can avail of child fares up to 19 years, which is significantly reduced over an adult fare.

For the 1916 commemoration we had a €10 weekend Leap ticket for all public transport for families. Much work was done on our brand development. That was consistent with the strategy of encouraging the youth to use the bus and be aware of the benefits of using a bus. Our Euro 6 engines would be part of that because they are acutely aware of the environmental benefits of not using private transport. There is a significant shift in Europe, not just in Ireland, away from car ownership and we see that in this city in terms of shared car platforms.

In terms of the Kids Go Free initiative, for two weeks in the summer children were able to travel free of charge. We run that in conjunction with the NTA and the other operators. There was significant uptake, in the order of 50%, in those weeks by children using buses, which are free. We are tracking that to see if we can keep those customers using the bus.

Deputy Mick Barry

Is that 15% or 50%?

Mr. Ray Coyne

Fifty per cent.

The Government has a choice in terms of the public transport system we want to operate and how we want it funded. We could roll that out, but there is a cost on that. However, we would get more customers on buses. There are choices to be made. We made a choice to introduce free travel for children over a two-week period in the summer. There are obvious benefits to that but there also are costs and we need to build them into our funding model.

Mr. David Franks

I will comment on the DART underground. As I outlined in my statement, it is one of our key priorities, including the extension of the DART network to the northern Maynooth and Kildare lines. We are working with the NTA currently on a review of the design to see whether we can make it more cost efficient. It requires funding, and we are looking to have a scheme on the table to ensure that if funding becomes available post-2020, we will be ready to go.

Deputy Imelda Munster

I have a number of questions for the NTA. Ms Graham said there was a review of the rural transport programme. What issues were identified in the review and what actions have been taken on that? Another issue is fares. Given the steady rise in fares in recent years, has the NTA plans to increase fares further? Ms Graham referred to the rise in capacity numbers since 2014. How does the NTA expect to manage that increase in capacity? Is the current subvention adequate? Has it plans to expand the bus fleet?

In respect of Iarnród Éireann, does it intend to increase the number of carriages, particularly at peak times? We all know that many trains are grossly overcrowded at peak times. I raised that issue with Iarnród Éireann previously but did not get a response on it. I would have liked to hear an update on the tendering process for Dublin Bus. I am referring to Irish Rail, Dublin Bus and Bus Éireann but I am sure I should refer to the NTA; they are all the one now. Mr. Franks mentioned the annual PSO funding for Irish Rail being reduced from €195 million to €98 million. He had raised concerns about safety and service. How can he assure the public that the service Irish Rail provides is safe given the staggering decrease in funding in the past seven years?

How can we be confident that it is providing that safe service? Have any safety audits been carried out over recent years or as a result of lack of funding and, if so, what have been the results?

A matter which is a huge bone of contention is one which it is hard to credit is still happening in 2016. I refer to the train from Belfast to Dublin. We are trying to provide a service for a growing economy and to encourage public transport use. That train does not get into Dublin before 9 a.m. What other intercity rail service would be able to say that it could not get commuters from one city to another before 9 o'clock in the morning? That has been ongoing. Has anything been done to address that or is it being put on the long finger?

Looking at the Dublin Bus statement, I am glad that it acknowledges the contribution and commitment of the workers in returning the company to profit. The workers' contribution in bringing Dublin Bus back to profit was instrumental. It is acknowledged in the statement but it is something the company might say publicly at some stage to recognise their work and commitment. Dublin Bus mentioned funding for the fleet in its opening statement. Can Dublin Bus profits be used for that? How underfunded is the fleet aspect of the service?

The following comes in under the NTA also, but Bus Éireann recently announced the separation of the Expressway service not only from the rest of the service, but also to change workers' pay and conditions. We have spoken about this many times before. It is sometimes hard to credit that anybody can justify it given the experience of privatisation right across Europe and how it costs more for the public purse in the long run. If Bus Éireann has a vision, and it talked earlier about connectivity and providing a service and delivering for commuters and customers, how can it even begin to convince people that, if our Expressway service is put out for privatisation or given over to private companies to run, a private operator will not come in and cream off the most profitable routes and leave the least profitable routes abandoned? That has happened the world over. When we talk about rural inclusion and social inclusion, to attempt to do what Bus Éireann is doing will isolate rural communities the length and breadth of the State. It is something I would be opposed to and it shows a lack of vision on the part of the company. I do not know if the company has asked the Minister for funding around that. That is a catastrophe for our public transport network.

Ms Anne Graham

A number of years ago, we carried out a review of how rural transport was delivered and have now put in 17 local link offices which are on the ground working with local communities to try to develop rural transport services. We are getting down into all those individual services and locations where there is a need for further service improvements. It is a detailed service review, as in individual services, which is happening right across the State. As funding becomes available and as new services or changes to services are justified, we will work with the local link offices to put those in place. As I said, 13 have already gone in this year and we are looking at a further 40 this year alone. We would like to increase that across the State.

In terms of fares, we had to respond in the downturn because of reduced funding, both in terms of subsidy and fare revenue, to ensure that services would continue by increasing fares, even though there was a discount associated with the leap card on offer at the same time. Currently, our fare policy is to try to look at fare restructuring rather than, necessarily, fare increases. That is about rebalancing fares across the State. We found many anomalies among parts of the State in terms of services per km and we want to rebalance that so there is a fare structure for bus and rail services. That is the work we will be doing across the next few years. It will take a few years to put that structure in place.

In terms of increasing capacity, there are two elements. There is the infrastructure in terms of bus fleet and rail fleet but also there is subvention to support those services. Obviously we want to build that. We have capacity constraints building now and we want to introduce frequency and capacity on bus and rail services. However, it all requires additional funding. The tendering process is under way for both Dublin Bus and Bus Éireann services and because we are in the middle of procurement, I do not want to comment any further.

Mr. Ray Coyne

I thank Deputy Munster for her comments. She is correct in relation to our employees. They did a significant amount of work over the past number of years and I am not shy about saying it in many forums. We have a long tradition in Dublin Bus and a very proud workforce. I am very proud to be the CEO of Dublin Bus and I recognise that employees faced significant challenges over the past eight years. We need to recognise that. It is something of which we are proud in Dublin Bus and we will certainly do that.

Our fleet is funded by the NTA through capital investment. We could not fund that through our current profit structure. It was mentioned earlier that we have a reasonable profit which is in the order of €1 million to €3 million a year. A double-deck vehicle costs approximately €350,000 and, as such, one would not be able to fund a fleet out of that. One of the key issues in terms of funding our fleet is that we need multi-annual funding to guarantee a steady flow of vehicles into the system. The average age of a vehicle has been independently assessed from a customer point of view and a cost efficiency point of view at six years. Currently, our fleet has an average age of approximately 7.5 years. At current fleet requirements, that would require us to replace 85 vehicles a year. Last year, we replaced in excess of that. It was 110 vehicles. However, in previous years the numbers fluctuated significantly. Multi-annual funding would allow us to get a steady state of replacement of vehicles at the current levels of approximately 85 a year. At €350,000 per bus, the investment required would be of the order of approximately €35 million. It is a significant investment but it is worth it. There are environmental benefits, customer experience benefits and reliability benefits. I was asked if we were underfunded currently. It is a yearly cycle whereby we receive funding and, currently, we are 1.5 years over the average fleet age. That would equate to in excess of 100 buses to replace, but we advocate a steady 85 a year on the current fleet to get an even fleet replacement process and that requires multi-annual funding.

Mr. Martin Nolan

The Expressway market was set up under legislation in the late 2000s and since then there has been a vast oversupply in the market. Everybody is scrambling after a small number of passengers. The licences that went in concentrated on each end of the route, taken at the bigger population centres, as the Deputy described. At the time, most of Bus Éireann's routes would have gone through all the towns and villages in rural Ireland. As such, we were the last ones in there so we came out kicking and screaming. It was not what we wanted to do. However, if it is a commercial product and we want to survive, we have to compete and go after the biggest population centres otherwise we will be out of the game.

Another wave of licences went to much lower-cost operators prior to the recession. I refer to operators such as J.J. Kavanagh & Sons who have been there for years. These lower terms and conditions have created another problem for us which we must deal with or go out of business. This is what we are at in Bus Éireann. The market is set and we are only a player in the market.

Mr. David Franks

To pick up on the safety point, I stress that safety is our number one priority at Iarnród Éireann. If we did not believe we could operate safely we would not operate at all. We would curtail services. That said, we have been working with the Commission for Railway Regulation on a risk assessment of the underfunding we experienced. This risk assessment demonstrated very clearly that a lack of investment in track or signalling leads to situations where we become reliant on individuals to do work which systems would otherwise do. This poses additional risks. We have been looking at what we have to do to mitigate these risks. As I said, if we got to a position where we believed that safety was seriously threatened we would not operate. We would stop running trains on particular routes.

Recently, I commissioned an audit and I am pleased to say it demonstrated that there have been improvements in our safety performance over the past two years. At present, things are as good as we can expect them to be, but we require funding. As I indicated in my statement, we have a situation where we can no longer sustain losses. The balance sheet just will not support any further losses. We must secure funding to ensure we can continue to operate safely.

On the length of trains, I am disappointed we have not responded to the committee. I will find out what has gone wrong. We have very limited resources available to us and the majority of our trains are in service. We are looking for measures such as a DART ten-minute service to squeeze our asset base further than we do, so the same trains would operate more frequently. The issue of capacity has featured large in the rail review, about which I believe the Minister spoke to the committee earlier. We have included in the rail review investment in additional vehicles, which is what we would need to lengthen trains.

With regard to the Belfast-Dublin route, the arrival in Dublin at 8.59 a.m. is not something about which I am particularly happy. We have been working with Translink on this. A key issue is whether we could get a train into Dublin earlier. We have not been able to solve it, but it is part of the ongoing discussions on how we can improve the Enterprise service.

Deputy Mick Barry

My first question is to Mr. Franks from Iarnród Éireann. The State subsidy has been halved over the past nine years from €195 million to €98 million. In his opening statement he said the balance sheet will not sustain further losses past 2016 without compromising safety. He has just said if safety was compromised Iarnród Éireann would have to cease operations. Is he saying that if further cuts are made and there are further losses in the next year, it will have to cut operations on safety grounds?

My next question is to Mr. Coyne from Bus Éireann. The deal hammered out allows for a 3% increase over and above the 8.25%, but the Minister has not opened the cheque book or increased State funding to provide for this. How will it be provided for? The deal speaks about a lean management scheme being implemented. Will Mr. Coyne indicate how he sees this lean management scheme producing presumably what management would call savings?

My next question is for Mr. Nolan of Bus Éireann. He indicated plans are under way regarding city services in Cork and Galway. Will he be more specific about this? Bus Éireann has spoken of reduced terms and conditions for staff in a hived-off operation. I am not seeking precise details but I am looking for something beyond a broad comment. What is meant by reduced terms and conditions for those members of staff? Will Mr. Coyne be more specific about this?

My next question is for Ms Graham of the NTA. The question relates to the franchising of the 10% orbital routes. This is effectively privatisation because no one really expects Dublin Bus to win the competition the way it has been established. How does the NTA expect private operators to be more competitive when more than two thirds of the costs of Dublin Bus relate to employee compensation, either wages or pensions, and most of the other 33% of costs covering material services are fixed? Fuel accounts for almost half of it and it is fixed. It is quite evident the only way in which one is more competitive in this environment is by reducing wages and conditions for staff. What has happened to the promised triple-lock for CIE workers whereby there would be a transfer of undertakings? There was a promise of a triple-lock in terms of the registered employment agreement, REA, a sectoral employment order and legislation. This certainly has not been put in place. What is the story? Will new employees who are not transferred from CIE be on lower wages, poorer conditions and worse pensions? Will they have collective bargaining rights? Surely Ms Graham must accept this goes completely against the trend now in Europe, where the re-municipalisation of previously privatised transport services is taking place. This is the case in Germany, France and the UK, where privatisation has delivered a poor service and high fares and services are not being re-nationalised.. If the company tries to operate these routes on the basis of lower wages and conditions and a race to the bottom, it is no way to run a modern transport system in a European capital and I ask Ms Graham for her comments on this.

Mr. David Franks

We are in an extremely difficult position as I indicated. My view is we are at a turning point. Since 2007 we have been able to continue to spend money by incurring losses in the company. As already stated, we are up to losses of €160 million with no further scope to worsen the balance sheet. We are in a very difficult space, which is why we are having detailed conversations with the Department and the NTA on trying to solve the problem. We are not at a stage where next year we will take trains out of the timetable. If, however, we do not secure funding, a decision of that magnitude could occur at some point in the future. As I said, I remain concerned, which is why I carry out my own audits. I pleased to say we saw improvements in safety in 2014 which will not deteriorate rapidly.

Deputy Mick Barry

What are the areas in which you envisage this occurring in the future?

Mr. David Franks

It is very difficult to say, but somebody independently examined our safety projections and in a five-year timeframe we could see them worsening. We need to plug the financial gap we have as quickly as possible.

Deputy Mick Barry

Will it affect operations in 2018?

Mr. David Franks

To give a small example, last year we had a problem with the signalling at Cherryville Junction and we had to divert cash into this. We had the ability to divert cash. At present, we are spending money in Limerick and we have speed restrictions just outside the station there as a consequence of problems with signalling. We know we have looming problems with signalling in Kilkenny and Cork because we have not been able to invest in renewal of this critical equipment. If this were to fall over and we had no money to repair it we would have to seriously think about what we operated.

Deputy Mick Barry

Could this happen in 2018?

Mr. David Franks

The trouble with a lack of investment in signalling is it suddenly breaks. It is not like track, where we can put in place speed restrictions and keep operating. Signalling either works or it does not. We have issues such as this which we face day in and day out.

Mr. Ray Coyne

I thank the Deputy for the question. Dublin Bus has been involved in a negotiations process for the past 15 months.

In 2015, we engaged with the Workplace Relations Commission, WRC, and engaged in discussions with the trade unions for 13 months. Following the WRC, the issue was sent to the Labour Court. The Labour Court made a determination of 2.75% a year among other areas that included productivity and pension arrangements. Dublin Bus is a semi-State company and always has and always will respect the State institutions that are there to deal with industrial relations issues. The Labour Court recommendation was balloted on by our staff members and rejected. We then re-engaged with the WRC and with the trade unions which were seeking to increase the offer for our employees. Out of four days of tough negotiations on all sides, it was a tough time for our customers, employees, trade unions and management, came an adjustment to the deal, which as the Deputy pointed out was an increase of 1% per year. There were a number of measures that will offset the increase and will help Dublin Bus to increase its revenue.

The Deputy discussed a number of the measures but I do not think it would be appropriate to go into a discussion of this at present as in fairness to the employees, we are still in discussions and there is a ballot taking place. We expect the outcome of the ballot within the next seven days. I would like to give the employees the time and opportunity to reflect on the offer that is on the table and make a decision based on that.

Deputy Mick Barry

Could Mr. Coyne tell members and the workforce about the lean management arrangements that are part of the deal that was hammered out and how they will work? How does Mr. Coyne see the deal producing savings for the company? That is not a breach of confidentiality, it is a straight question.

Mr. Ray Coyne

The WRC document highlights nine areas, of which lean management is one. We have some lean management principles in the company already. Lean management is an ethos of doing things better. As I mentioned earlier there are some offsetting and revenue producing measures. Lean management can improve work processes, can improve the customer experience and can improve delivery of service.

Let me reiterate, I do not think it is appropriate for me as the chief executive of Dublin Bus to discuss single items contained in WRC documents when our employees are considering the document at present and some of them are in the middle of a ballot process.

Mr. Martin Nolan

Let me address the questions on Cork and Galway. There is an international movement to double public transport provision by 2025 and many companies and governments have signed up to it. We in Bus Éireann are pursuing it, the major element is to get 50 people out of cars and on to a bus. To do that one needs three things, frequency, reliability and attractiveness. We have put in additional frequency with the support of the NTA, which provided money as well. We were able to put double-deck buses into services. The reliability is not good in provincial cities because the priority measures are not there. We need an advantage over cars in provincial cities. Once one starts to grow public transport to make it attractive, one goes to vehicles such as BRT, which is a pre-tram system that operates in Belfast and which is being introduced in Dublin. We need to plan for it in the provincial cities as well. The Bus Éireann Expressway is moving into a subsidiary and is not being hived off. On the question of reduced terms and conditions of employment, the most I can say is that we are similar to Aer Lingus and Ryanair, we must get it within a range of the market without going down to the lowest common denominator. That is a question we need to work through with the WRC and the LRC.

Deputy Mick Barry

When Mr. Nolan states that terms and conditions must be within the market but not the lowest common denominator, can he give an idea of what that might mean? A driver who is on €X per week, is Mr. Nolan talking about reducing that by 5% or by 10%?

Mr. Martin Nolan

That is not appropriate. What we have done is that we have outlined a range of measures that we need to discuss with staff to bake the cake and make the plan. All we know is that we must save €7 million out of a turnover of €60 million. That is a range of where we are.

Ms Anne Graham

On the 10% market opening, we would not agree that is a privatisation of those services. It is a tender process for the public service obligation services. Those routes are set out by the authority and any changes to the routes, the fares or anything related to that service has to be approved by the authority and be within a contract.

I do not think we should try to see what the outcome of the tendering will be. Dublin Bus are still part of the process. I would not like to indicate at this stage who is the likely winning tender to the 10% market opening up of the Dublin Bus PSO services.

In regard to how an operator can be more competitive, this is a test of the market. We are putting out services to tender to see how the market responds. We cannot foresee how the market will respond in terms of delivery of the tendered services.

On the triple lock to which the Deputies referred, as far as I am aware the registered employment agreement already has been registered in the Labour Court. I am not sure where the sectoral employment order is in terms of process or who instigates it. It is enough for the authority to instigate. It is the role of the Department to make changes to existing legislation.

Chairman

I regret that Deputy Catherine Murphy had to wait.

Deputy Catherine Murphy

Having listened to responses from the NTA and Bus Éireann on the question about Bus Éireann, who guarantees a minimum level of service, given that it is provided on a commercial basis and one cannot refuse if villages are bypassed because of the commercial arguments that are made? Where is the guarantee for a public transport service in that context? I would have thought the PSO levy was precisely to ensure that was the case.

In relation to Irish Rail, I am very pleased to hear that DART underground is still very much on the plans. I know that the railway order was set aside last year, which was a huge disappointment. The capital plan is coming next year. Is Irish Rail almost ready at this point to vary what was originally in that railway order? I presume it will be in time for the capital plan next year. Will it vary by much? One thing in which I am interested is the proposal to move the DART on to the Maynooth line. What timeline is Irish Rail working to on that? One issue for the whole west Dublin area on that particular rail line is that peak time capacity is very tight. For example, I have been looking for additional rolling stock for this service, but there does not appear to be any. There is a demand for the service but the ability to deliver the service obviously is inhibited by the availability of rolling stock. That would obviously lengthen the trains but as the platforms were extended some years ago, the length of the platform should not be an issue.

In regard to the NTA, we have heard about the growth in the use of public transport. There also is an increase in the numbers commuting generally. One would expect to see public transport improving as the economy improves. How would the NTA measure success in terms of the modal shift? Is that part of the remit of the NTA, given that additional services must be provided if new communities are developed? I do not see where such amendments are made in any serious way. In my own area, for example, there is a demand for but no bus service between Celbridge and Leixlip, two fairly big towns with good employment in Leixlip. That has been requested for many years and would seem like an obvious demand that is not met. How does one meet the demand for service?

Is that a negotiation between the National Transport Authority and organisations such as Dublin Bus? Who makes the decision to do that? There certainly is a public demand for it, but that demand has not been met.

Some €2 million in profit was taken from the Dublin Bus balance sheet and transferred to Bus Éireann. How can fares be reduced? Companies will continue to demand fare increases if there is no other option for bringing in revenue. How can that be done if a company is not allowed to make a profit and reinvest in itself? I do not understand how a company can make a profit only for it to be returned.

Chairman

I ask the witnesses to respond in the order the questions were asked.

Ms Anne Graham

I can answer most of the questions.

We were asked who guarantees a minimum level of service when villages are bypassed. If the authority feels there is a public transport obligation regarding the provision of a service, we will respond and either provide a service by expanding the existing direct award contracts or we will tender out those services. Last year we responded in respect of the changes made on the Expressway routes 5 and 7. We provided additional services on Bus Éireann's PSO direct award and we also tendered out additional services to meet the gaps that opened up as a result of the changes to the Expressway service. We will respond wherever we are required to do so throughout the State if there are changes to commercial services leaving an area without a public transport service.

On the growth in public transport, obviously the economy is improving. What would be the measure of success for the authority in terms of extra services? The ultimate measure of success is having a modal shift, as has been set out in our strategy. That is about ensuring car usage is reduced to 45% and that the sustainable mode use is up at around 55%. To achieve that across the greater Dublin area would be quite a significant change. That would be a measure of success. However, many things need to be put in place before we would be close to achieving that, including all the rail infrastructure. Improving the core bus network is a key priority for us in terms of the measures we can take to address the growing congestion now.

As the Deputy said, commuting, including car commuting and public transport commuting, is generally increasing, leading to congestion which affects the bus services. We are working on plans to upgrade the network of quality bus corridors in the Dublin region to try to ensure there is end-to-end priority for bus services on the key radial routes and on the orbital routes in order that we can respond to the congestion that is building on the commuter areas.

On the issue of reasonable profit, the investment in public transport is covered by both fare revenue and subvention. We are obliged to ensure the public transport services that are delivered are covered either through fare revenue or through subvention. We try to ensure there are no losses to the public transport operators, as we are obliged to do. We are working with the operators to ensure that continues to be the case and also to try to meet the underfunding that certainly exists in Irish Rail services. We believe that we should work on the capital investment in terms of bus and rail infrastructure. The companies, themselves, will decide what they will do in terms of reinvesting profit. We want to deliver the infrastructure in order that Dublin Bus and Irish Rail do not have to invest themselves.

Mr. David Franks

We share in the disappointment that DART underground was delayed. The changes we are proposing in the plan consider the number of stations provided north of the link for the tunnel. We plan on being ready post 2020.

The good news on the peak capacity on the Kildare line is that the Phoenix Park tunnel will be ready to put passenger trains through and we will be running some additional trains during the peak, as I mentioned in my opening statement. We are looking to expand that off-peak into the weekends.

Chairman

In the brief time we have left I call Deputy Smith, after which I have one question.

Deputy Bríd Smith

The Chairman might need to consider extending the meeting because I have loads of questions.

I direct most of my questions to Ms Graham. I congratulate her. The last time I sat opposite her, she was a manager in the south-central area in Dublin City Council. She has done well; fair play to her. She is probably more important than the Minister, because his response to nearly everything we asked him was that it was an operational matter. I was nearly going to say "an ecumenical matter", a Fr. Ted Freudian slip. The Minister referred everything back to the National Transport Authority.

I ask Ms Graham to make a comment about subvention. I worked in Dublin Bus. I was a representative for the NBRU for years. I met Mr. Ray Coyne as a local representative in the south-central area when the services were being rearranged and cut the last time. It is extraordinary how Dublin puts up with one of the lowest rates of subvention for a capital city in Europe. I ask Ms Graham to comment on that as somebody in charge of operational matters. I refer to subvention for all companies and not just Dublin Bus.

I have a specific question on the Dublin Bus strike. It is not about the outcome and will not affect the ballot. Will the NTA fine Dublin Bus for the strike days lost? If so, what is the point in that when the company is already struggling to survive? Similarly, has it fined Luas and collected the fines for the strike days lost there?

I ask about extra licensing during the strike days. On one of the Fridays when Dublin Bus was on strike, I observed dozens of private buses lined up on Eden Quay to go to Swords and Rush and other places on the north side. They are not normally there on a Friday. Did the NTA license extra buses or give the go-ahead for extra buses to be run by private operators anywhere during the Dublin Bus strike days?

Ms Graham was already asked about returning Dublin Bus profits. I am delighted to hear that these profits, although returned to the NTA, then went to help the struggling Bus Éireann. However, I found Mr. Nolan’s comments the most honest. He spoke about Bus Éireann scrambling through this commercial pressure of competition that is forcing it to reduce its labour costs etc. because of the much lower costs of the private operators. Surely that really describes what is going in public transport. It is the pressure from the private operators on struggling companies that have the lowest subvention in Europe. Can we begin to look at that as an issue for public transport in this country? Why are we issuing so many private company licences on the routes that are already covered by our national bus company, Bus Éireann?

When speaking about the role of Bus Éireann, Mr. Nolan said it provides the access to health care centres throughout Ireland. This is a very important point. Many of the people involved would have a free travel pass and would not have to pay. Will the increased privatisation of routes impact on access to centres of excellence in Dublin, Waterford, Cork etc. for people with disability or old age passes and who have cancer or other ailments,? That is an issue for the public in general.

Can Mr. Coyne explain why he thinks it is wise for Dublin Bus to use FirstCare to track sick leave for bus drivers?

I find it extraordinary that management does not play that role. Given that the number of casual sick leave days was reduced from seven to four, why does Mr. Coyne now think there is a need to get somebody in England to ring the bus driver daily to ask how he or she is feeling?

To compliment Irish Rail, if what Ms Graham said is true, namely, that the NTA has exceeded its 2020 CO2 emissions reduction targets already, it is a case of hats off and well done. That is a fantastic achievement and the NTA should be crowing about it. I do not know what the position is - we could discuss the matter at the climate change committee - but it might be possible to make a special case for the NTA to get funding from Europe in order that it might put more money into Irish Rail to help achieve the similar outcomes to those already realised. I would be very interested in seeing Irish Rail revert to considering perhaps the reopening of disused railway lines that go to Donegal and Kerry and from Waterford to Cork. What a big difference that could make to travel in this country if we could invest in the reopening of the lines that already exist. Irish Rail probably still owns much of the routes and land. Perhaps Mr. Franks could comment on that. I am sorry for asking so many questions.

Chairman

That is okay.

I have a question for Mr. Franks about extending the automatic train protection systems beyond the DART to the entire nationwide network. What would be the estimated cost in that regard? Is there are a ballpark figure available?

Regarding investment in level crossings, I know that every accident is one too many and that one accident can completely skew the figures. However, over a period, what level of reduction in the number of accidents has been experienced as a result of the investment in reducing the number of level crossings?

That is all. I ask the witnesses to answer the questions in the order they were asked.

Ms Anne Graham

I thank Deputy Bríd Smith for her kind comments. Regarding the subvention and what the rates are compared to other European countries, it can be difficult sometimes to carry out such comparisons because it may not be possible to compare like with like. The subvention is a public service obligation, PSO, subvention but there are other subventions that also go into public transport in Ireland, namely, the free travel and taxsaver schemes. There is a tax loss associated with the taxsaver scheme, which also increases the State's subvention of public transport. These elements, taken together, bring up the level of overall subvention. Generally, however, it would still not really be comparable to other regions, particularly city regions, in Europe. Therefore, we would like to see the level of subvention increased because it allows us to provide additional services and to consider our fares structure and see whether any improvements can be made to it in order to encourage more people to use public transport, which is what we are all about - increasing the amount of modal shift to public transport.

Regarding the strike, under the contract we have with Dublin Bus, it is set out what we do when services are not operated. This applies not just to Dublin Bus but across all three operators. There are fines associated with the non-provision of services. While they have not yet been collected from Dublin Bus, they will be imposed for those days of industrial action. Similarly, they were imposed for the strike days affecting Luas services-----

Deputy Bríd Smith

Were they paid?

Ms Anne Graham

They were offset, yes.

Deputy Bríd Smith

They were paid by Luas?

Ms Anne Graham

Yes. I am not aware of any additional licences having been applied for during the period of the strike, but a licensed commercial operator is allowed, under its licence, to respond to demand that appears on the day and to have auxiliary buses available if the demand exceeds what it would normally provide on a service. It can do this on a temporary basis. If demand continues to exceed service provision, the operator must apply for a licence.

Deputy Bríd Smith

How long is "temporary"?

Ms Anne Graham

It would be a period of days. If it is happening regularly - for example, every Friday - the operator should apply to amend its service. This applies to all commercial licence services. If it is a once-off response to a particular event - in this case, the strike - the operator can, under its current licence, offer additional services, but it must operate according to the timetable for which it is licensed. It is therefore just a matter of additional fleet, but on the operator's existing timetable and according to what is allowed under the existing legislation.

Deputy Bríd Smith

Would it be possible for me to put in a request to get an answer from those operators as to whether they put on additional services during the strike days and how many additional services they put on?

Ms Anne Graham

Yes.

Deputy Bríd Smith

I understand from Ms Graham that an operator is allowed to do this under the licensing that the NTA has given it.

Ms Anne Graham

Yes.

Deputy Bríd Smith

Where there is a demand, including industrial action, can an operator put on extra fleets?

Ms Anne Graham

Yes, to respond to demand that it finds for its particular licensed service, but it must operate the timetable for which it is licensed, so it cannot operate services in addition to those on its timetable. What it must do is respond. If it finds that there is demand on a particular day, it can respond. It may not be able to respond because it may not have the fleet available, and it may leave passengers behind, but obviously, it had some forewarning of this event so perhaps it was able to plan for additional demand.

Chairman

We need to vacate the room very shortly, so I ask the witnesses to provide answers on the outstanding issues.

Mr. Martin Nolan

To give one quick answer on health centres and so on, I will tell the committee what Bus Éireann does. The market has become very mercenary and goes after the areas where it makes profit. At Bus Éireann, we have a responsibility to our staff and we will not go to the lowest terms and conditions. We have a responsibility to the customer so we still go to places that we will stay in unless commercially it is completely unwise for us to do so. For example, on the Dublin-Wexford route, we still have services going to St. Vincent's Hospital. On the Limerick-Killarney-Tralee route, we still go to Rathkeale and Limerick General Hospital, where our competitors do not, so we will stay in such areas as long as we possibly can.

Deputy Bríd Smith

That is the problem, is it not?

Mr. Martin Nolan

In fairness-----

Deputy Bríd Smith

Bus Éireann is being squeezed.

Mr. Martin Nolan

We and the NTA work together on anything that stops off as well. We have a good record of doing that.

Mr. David Franks

I would happily meet Deputy Bríd Smith separately and take her through the initiatives we have brought forward in our climate change work, which has been considerable. Any access to European funds would be gratefully received. We have projects on the cards already for replacing the engines in our diesel locomotives, which would require some funding. That would certainly be very good. Funding being used for the reopening of lines would not be my number one priority, particularly in view of all the comments I made previously.

Deputy Bríd Smith

We should meet.

Mr. David Franks

We would be very happy to.

Regarding the cost of the automatic train protection system, we have an estimate for a complete roll-out across a network, having carried out a pilot this year. It would cost €130 million, but it is investment in safety equipment that is commonplace across Europe. By way of highlighting the benefits of it, there were accidents in Italy and Germany this year in which 35 people were killed and more than 100 injured, and members will have heard about the incident in New Jersey just the other day. These would have been prevented by an automatic train protection system. It is commonplace, best practice and something we need to consider seriously.

Chairman

With €130 million of capital investment, how long a lifespan would Mr. Franks expect typically from such a system?

Mr. David Franks

We have a number of different ways of implementing it, but we believe it would take us between six and nine years. The life of this kit - it is signalling hardware - is 25 years, probably 30. That sort of-----

Chairman

We are talking only €4 million or €5 million per annum for the system.

Mr. David Franks

Yes. Regarding level crossings, I would have to go away and do the analysis to answer the Chairman's question. We can give him a written answer on that.

Deputy Bríd Smith

I asked Mr. Coyne a question about the outsourcing of the tracking of Dublin Bus drivers' sick days.

Mr. Ray Coyne

I thank the Deputy for the question. Dublin Bus has four core values. Safety is the number one value, closely followed by employees, customers and then community. We have a long history of looking after our employees in Dublin Bus. It is something of which we are quite proud. Our employees have many benefits. We have a medical welfare scheme, of which all our employees are members. They have access to an occupational doctor. We also have an employee assistance programme which helps many employees through some difficult times they may have. We also have regular health and safety weeks in the company, one of the key areas of which is the health and well-being of our employees. With all due respect to the Deputy, again, the topic on which she is asking me to comment is one of the nine items contained in the WRC proposal which is currently going to ballot for the employees. In that respect, I would like to give the employees the time to reflect on the deal as proposed.

Chairman

I thank Mr. Coyne. I also thank Ms Graham, Mr. Nolan and Mr. Franks for their time. We have been here for just over one and a half hours. We are nine minutes behind schedule, something the witnesses would know nothing about. I thank them very much as there were a lot of questions coming at them during the last 100 or so minutes. The committee is scheduled to consider A Vision for Public Transport further at its next meeting on 19 October. Session A will be with representatives from the NBRU and SIPTU. Session B will be with economists. After that meeting on 19 October I propose that this committee writes a summary report, along with a number of recommendations arising from these hearings. Is that agreed ? Agreed. A draft report will then be brought to the Minister, in due course. The committee will adjourn until Wednesday, 19 October at 9 a.m. Is that agreed? Agreed.

The joint committee adjourned at 12.10 p.m. until 9 a.m. on Wednesday, 19 October 2016.