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Dáil Éireann díospóireacht -
Tuesday, 20 Jun 2000

Vol. 521 No. 4

Priority Questions. - Public Transport.

Emmet Stagg

Ceist:

5 Mr. Stagg asked the Minister for Public Enterprise the reason it is necessary to privatise either Dublin Bus or Bus Éireann to introduce competition in public transport in the greater Dublin area. [17505/00]

The analysis of this issue was set out in the paper entitled "Regulation of the bus market in the greater Dublin area" which I recently presented to the Cabinet committee on infrastructural development and public/private partnerships and circulated to all Oireachtas Members. It is proposed to establish Bus Átha Cliath and Bus Éireann as independent companies and to remove the existing geographical restrictions on their areas of operation imposed by the Transport (Re-organisation of Córas Iompair Éireann) Act, 1986.

This means that both companies will be free, along with private bus operators, to compete for franchises in the greater Dublin area. It also provides a potentially very effective way of developing real competition in the bus market in the greater Dublin area. However, there is a number of potential problems with the companies continuing in State ownership in a competitive franchised market. There is a risk of both companies becoming involved in below cost bidding to protect market share and if the State owned both companies, it would be the ultimate loser in such circumstances.

A common shareholder might be tempted to discourage the two companies from competing too aggressively with each other and this could have negative implications for the competitiveness of the franchising process. There would also be a perception among potential private competitors that a State-owned company, particularly the existing dominant provider, would have an unfair advantage in any competition for franchises and this could discourage potential participants in the tendering process.

Private ownership would enhance the commercial freedom of the company. The primary concern is to ensure that there is an effective competitive market for bus services in the greater Dublin area, which provides quality service and good value for money for public transport customers and a level playing field for all operators.

I thank the Minister for her reply and for circulating the copy of her report to us. Does she agree that while there is existing de facto competition in part of the service, she seems to be purposely mixing up privatisation and competition? Would she agree also that as in other areas – for example, in the energy sector – there is no proposal to privatise the energy com panies but there are definite proposals to introduce competition, and they are under way? Why is the Minister introducing a new policy trend in this case where she is arguing that it is necessary to privatise in order to introduce competition?

When the Deputy said at the beginning of his question that there was de facto competition, I presume he meant in Bus Éireann.

Yes, and in Dublin Bus to some degree.

To a very small degree, yes. We had the first meeting with the transport partnership forum last Friday week. The agenda is being set in two weeks time and the issues will then begin to be discussed. I intend to do that in a partnership manner. The issues as set out in my reply are quite clear: there is a number of potential problems with the companies continuing in State ownership in a competitive franchised market, and a common shareholder might be tempted to discourage the two companies from competing too aggressively with each other. I made these points when I replied to the Deputy and I do not want to go over them again.

Perhaps I did not say this, but private ownership would enhance the commercial freedom of the company enabling it to do much better for itself. All these matters are being discussed now in the transport partnership forum.

The Minister applies that argument to the generally held and accepted view, including on this side of the House, that competition should be introduced. Is she now telling the House that there has to be privatisation across the board before competition can be effective? That is a new argument that we have not heard before.

No, that is not the situation. I said competition has to come in first and that is my primary concern.

Would the Minister agree that there is no let or hindrance on the private sector introducing competition in Dublin, if it wished to do so, in the same way as it introduced competition in rural areas? While it is technically illegal, the law is an ass in so far as it cannot be enforced. It did not prevent the private sector introducing competition on rural routes, so can the Minister explain why this has not been done in Dublin?

I agree with the Deputy that in that case the law is an ass given the way it is being utilised. Rural routes came about as a result of the way the word "club" was used in order to operate private buses. People said they were members of a club which could operate a bus. Tuam to Dublin was one of the first such services and it developed from then on. The 1932 Act lays out conditions but it is quite restrictive in how competition can operate and what routes can be used. We intend to use it initially on approxi mately ten new routes for which bids have been submitted and then consider the rules governing the 1932 Act. However, this is still only competition of a limited nature. It is hoped to introduce the shadow regulatory authority within 12 months. However, the full regulatory authority will oversee the franchising and the full introduction of competition.

Does the Minister agree the first introduction of private sector buses to rural areas was undertaken by Fianna Fáil during an election when they were used to bring "culchies" home to vote? The private sector saw the potential there. Will she indicate who she thinks would buy Bus Éireann or Bus Átha Cliath? Does she agree it is likely to be one of the big British companies?

I have no idea who would be interested in buying the companies. We are a long way from that point.

Who else would be able to buy them?

I do not know the position on bussing voters. Presumably, as in the case of all voters who are brought to polling stations, one does not know for whom they are voting.

There should be more elections then.

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