Seamus Brennan
Ceist:2 Mr. S. Brennan asked the Minister for Transport, Energy and Communications his views on the financial situation of Dublin Bus; and the plans, if any, he has to approve a fare increase. [10949/97]
Ceisteanna — Questions. - Dublin Bus.
The most up-to-date published accounts for Dublin Bus relate to 1995. It would not be appropriate for me to comment in detail on the financial performance of Dublin Bus until the publication of the 1996 accounts which is not due until next June. We will have an opportunity to discuss them then.
The Deputy's question may be prompted to some extent by the fact that an extraordinary general meeting was convened by the directors of Dublin Bus on 16 April 1997. Dublin Bus was formed and registered under the Companies Acts. This legislation includes a requirement that when a company's assets are less than half of the amount of its share capital, an extraordinary general meeting be held to bring the company's financial situation to the attention of the shareholders.I understand that this situation arose during 1996 in relation to Dublin Bus, chiefly as a result of the need to make provision for the cost of severance payments provided for in its cost reduction plan, with a new policy of depreciating vehicles on a 12 year rather than a 16 year basis.
While the conveying of the extraordinary general meeting was occasioned by the need to comply with the terms of the Companies Acts, it serves to underline the erosion of the company's balance sheet and the need to tackle its problems sooner rather than later. In common with the rest of the CIÉ Group, Dublin Bus is not generating sufficient revenue to cover its costs. The only realistic approach to this problem is to reduce costs. Increased fares, or an increase in the financial support provided by the Exchequer, will not address the problem of costs.
Fares increases of the order which would be necessary to make a substantial impact on CIÉ's finances will simply drive customers away to other modes of transport, including the private car, which is Dublin Bus's principal competitor. Increased subvention does not offer a real solution either. The subvention to CIÉ for 1997, at £105 million, represents an increase on the 1996 figure of over £5 million. However, the Exchequer is not in a position to indefinitely underwrite excessive costs in the CIÉ Group. Moreover, the provision of additional taxpayer's money to CIÉ would only mask in the short-term the group's underlying problem of excessive costs. This problem would very quickly again surface, proving even more difficult and more painful to resolve the longer its resolution is deferred.
I have no difficulty with most of the Minister's reply. Is there an application for price increases before the Government at present?
That is the subject of the question.
I dispute that. The question is about any plans the Minister has to approve a fare increase. Is there an application for a fare increase with the Minister and is it before Government?
That question is posed in Question No. 2.
CIÉ approached my Department in June 1996, seeking a fare increase of 10 per cent. My predecessor, having considered the matter, decided the issue of increased fares by CIÉ should be considered in the context of the development of public service contracts with them, a matter which is ongoing.
It is important that the Minister reassures the public, that having, in effect, turned down that price application from CIÉ in June 1996 that there is no fresh application before him.
I will reassure the public by repeating my answer. A fare increase is not the answer to CIÉ's problem. No application for a fare increase has been received since that of June 1996.