JOINT COMMITTEE ON TRANSPORT díospóireacht -
Wednesday, 25 Jun 2003

Vol. 1 No. 19

Bus Deregulation: Ministerial Presentation.

Chairman

I propose that all private business, including the minutes, will be dealt with later this evening. Is that agreed? Agreed.

I welcome the Minister for Transport, Deputy Brennan, and his officials, Mr. Pat Mangan, assistant secretary and Mr. Dermot McCarthy, principal officer. I remind members of long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the Houses of the Oireachtas or an official, by name, in such a way as to make him or her identifiable. I invite the Minister to make his opening presentation.

Minister for Transport (Deputy Brennan)

I thank the Chairman and committee for the invitation to discuss my proposals for regulation of the bus market. A high quality and efficient public transport system is essential to sustaining the economic and social progress made in Ireland in recent years. The bus system is the backbone of our public transport system. Dublin Bus and Bus Éireann carried 190 million passengers in 2002. I acknowledge the great progress made by both companies, their management and staff, in responding to the challenges of recent years.

Historically high levels of capital investment, amounting to nearly €2 billion since 1999, have been made in public transport under the national development plan. This has been supplemented by significant increases in the annual subvention, which currently stands at nearly €250 million per annum, compared with less than €150 million as recently as 1999. Agreement has been reached with the Department of Finance to sustain current levels of investment on a multiannual basis. This investment has begun the transformation of public transport. We have seen, for example, a significant upgrade of the bus fleet in terms of quality and capacity. Over a third of the Dublin Bus fleet and all buses in the provincial cities are now low-floor, wheelchair accessible. The old, cramped, uncomfortable and unreliable buses, which was the common experience of bus travel in Dublin not too long ago, are largely a thing of the past. However, as in many areas of the public service, Exchequer investment alone is not sufficient to deliver the level and quality of public service which the current generation of Irish people expect and rightly demand.

Many may not realise that we have a regulatory framework for the bus market in Ireland that dates back over 70 years to the Road Transport Act of 1932. The organisational framework is over 50 years old, dating to the Transport Act 1950 and the only significant organisational innovation since then was the establishment of three CIE operating subsidiaries in 1987. The regulatory and organisational models for public transport served this country well in the past but our social circumstances and economic outlook have changed significantly in the intervening period. We must look for greater accountability and customer responsiveness in our public services. We need to examine new ways of delivering our public services, which are not rooted in the economic and social perspectives of a different era but reflect the changing nature of the society and economy for which these services are being provided.

The key ingredients in delivering public services should be quality, customer focus, accountability and value for money. It is no longer good enough to merely assert that these requirements are being met. We have to demonstrate that this is the case. There is always a concern, where there is monopoly provision, that the organisational imperative takes over from the service imperative; that the needs of the organisation get confused with the needs of the public or, worse, that the public interest becomes subordinate to that of the monopoly itself. We need to look at new ways of delivering public services. If the private sector can deliver a public service of satisfactory quality that is more cost-effective and responsive to customer needs, then why not let the private sector provide the public service?

It is not a question of assuming the private sector can deliver a better service than traditional public service organisations but more a case of using properly constructed competitive processes to decide that issue. In my view, contrary to some commentaries, it is not a question of public versus private but of deciding what mix of public and private will deliver the best result for both the taxpayer and public transport user. We need flexible systems, both public and private, to deliver public services of high quality which are responsive to need and cost effective.

I am firmly of the view that investment alone will not deliver the public transport system that is required for this country in future years. Improving the infrastructure will help, but will not, of itself, provide the public transport system required in the 21st century. We also need to focus on how the service itself is being delivered. It is in this context that we need to modernise the 70 year old regulatory framework and 50 year old organisational structure for delivering public transport. I emphasise once again that my aim is to provide a framework which ensures greater accountability and customer responsiveness, together with increased quality and value for money in the provision of public transport.

There is, currently, in real terms, effective monopoly provision of bus services in Dublin. There is a handful of private operators but Dublin Bus is the dominant network provider. International experience indicates that monopoly provision may not be the most efficient way to deliver public services. It can result in inefficient use of resources, arising from an absence of competitive pressures, lack of transparency and accountability regarding costs and lack of flexibility, innovation and customer responsiveness.

I am also of the view that deregulation of the bus market in Dublin, in that sense, would not meet the social and economic needs serviced by urban public transport. Deregulation involves public transport operators themselves deciding what level, quality and types of services to provide. Each operator acts independently so there is effectively no public transport network and no consistency of service, frequency levels or fares between operators. Deregulation, in the strict sense of the word, of urban bus services was introduced in the United Kingdom, outside London, in the 1980s and has not been successful. It has led to an unstable network, with services and timetables changing frequently and resulted in lower costs but higher fares. More bus miles have been operated, but fewer passengers carried. In the UK, local authorities spend almost €2 billion per year on buying bus services and must do this without a robust regulatory framework which ensures good accountability for this subvention.

No other country has fully deregulated urban public transport and I do not propose that we do so here. Rather, I am proposing a system of controlled competition for the bus market in Dublin. My proposals are based on a substantial body of research. Departmental research carried out as a precursor to the consultation paper, A New Institutional and Regulatory Framework for Public Transport, supported the introduction of franchising. Independent research conducted by the European Commission and published as the ISOTOPE report also supported tendering and led the Commission to introduce legislative proposals requiring competitive tendering for the allocation of transport subsidies. Independent consultants NERA and TIS, working for the public transport partnership forum, carried out a comparative international review of public transport provision and regulation and also recommended in favour of the introduction of competitive tendering in the greater Dublin area.

Competitive tendering, in the form known as franchising, has been successfully introduced in a number of countries. My Department examined its operation in London, Sweden and Denmark and will continue to review developments in these and other countries as it completes its policy development and legislative programme. The latter two Scandinavian countries have a significant tradition of public service provision, which is the envy of many European countries. This research informed my proposal for an independent regulator who will procure bus services using controlled competition. In other words, competition will be for the market not in the market.

The regulator will act as the planning body and define the required level of public transport provision. This will ensure non-commercial but essential services continue to be provided and network integrity will be maintained and enhanced. The regulator will tender services by route or area and operators will compete for the right to provide the services. This will bring competitive efficiencies to bear in the provision of public transport, while preserving the integration of the network and safeguarding the interests of passengers.

Franchising will introduce a sufficient level of competition in the bus market to stimulate better performance, improve efficiency and deliver better value for money. The proposed regulator will establish a direct link between State funding, which is now significant, and service performance and quality, which will make public transport operators more fully accountable for any revenue support payments they receive from taxpayers. Operators will compete for the subsidy they require, thereby ensuring transparency and value for money.

I plan to introduce franchising in the Dublin bus market on a phased basis once the necessary legislation establishing the independent regulator is in place. International experience and the research carried out by my Department indicate that a phased approach is the best way of opening the market. By phasing the introduction of franchising over a period the regulator can learn from its initial experience and adjust its procedures and practices so as to maintain and strengthen competitive tension in the bus market. I have proposed an initial phase of 25% of the market to ensure a smooth transition. This is large enough to attract sufficient competitive interest and provide a good comparator with direct service provision by the CIE companies.

A phased opening of the bus market will also allow us to compare the results of franchising with the direct provision of services by the CIE bus companies. This comparative evaluation will provide the regulator and my Department with valuable information on the process, which can inform its future direction.

Opening the CIE bus companies to competitive pressures will also provide the Department with direct market tested evidence of their comparative performance. The reality is that we do not know precisely how well they are doing or how much better they can do. The only really effective way of establishing this is to put them to a competitive test and fully evaluate the results.

I realise my proposals provide an opportunity and a challenge to Dublin Bus to demonstrate that it can continue to deliver. Dublin Bus will still have a major role to play in the delivery of bus services in the capital. When the market is opened I believe it will prove able to compete on equal terms with the best of the private sector operators. To ensure Dublin Bus and the other CIE companies have the commercial freedom to act in a competitive market, I am proceeding with a parallel programme to restructure CIE to give the three operating companies the necessary independence and commercial freedom they will need to perform effectively in a competitive transport environment.

I recognise that regulatory and structural reforms on their own are not enough. We also need to improve the operating environment for buses in urban areas. I recently set the traffic authorities in Dublin the target of doubling the number of quality bus corridors. My Department is also working with the authorities in the provincial cities on the introduction of effective bus priority measures. I am also committed to continuing a sustained programme of public transport investment, resulting in more and better services. This investment can only be sustained, however, by demonstrating that we have put in place improved delivery structures, including a reformed regulatory and structural framework.

I have concentrated so far on the bus market in the greater Dublin area but I also want to speak briefly about public transport regulation in the rest of the country. All public transport outside the greater Dublin area should also be subject to independent economic regulation. I recognise, however, that different regulatory models may be appropriate for the different markets. I am continuing to consider the recommendations made in the report, Regulation of Bus Services Outside the Greater Dublin Area, published last year and I am carefully considering the submissions received in response to the report.

CIE employees may be concerned that change will be delivered at the expense of their employment conditions. I acknowledge that these are legitimate concerns and that uncertainty can bring real fears to all those seeking to build careers and support their families. It is my hope that these genuine fears can be addressed through constructive dialogue with the trade unions. I remain open to addressing these concerns and examining mechanisms for providing the necessary reassurance in the context of a changing environment. I and my Department also remain open to a continuing dialogue on the wider dimensions of this issue in advance of my seeking definitive Government decisions on regulatory reform.

In this context, I want to speak directly to CIE staff and the wider trade union movement. I want to express my disappointment at the recent decision of the CIE trade unions to engage in a campaign of industrial action over the coming months. This decision was taken despite ongoing informal contacts between Government and union officials following the meeting the Taoiseach and I had with congress in mid-May.

I ask the CIE employees and their trade unions to fully consider the implications of their decision to oppose Government policy in this way, the disruption it will have on the lives of ordinary working people, many of whom are trade union members, the impact it will have on the economy, which already faces significant internal and external challenges, and on public attitudes to public transport. The recent improvements in the public's perceptions of public transport are in danger of being set at nought. The growth in public transport usage and the increase in market share achieved in recent times will be much more difficult to sustain if services are being disrupted every few weeks by industrial action.

I ask CIE employees to consider the impact on the CIE companies. The protest action on 18 July will result in a direct revenue loss of €1.1 million for the companies, to which must be added the cost of the six further days of industrial action already announced and the longer term cost of customers who permanently desert public transport. This will worsen the already unsatisfactory financial position of the CIE companies. The difficult Exchequer position means there will be no additional funding to CIE to help to recoup those losses. This, in turn, will worsen the position of the CIE companies in an increasingly competitive transport market and damage the viability of the very companies the trade unions and I seek to protect.

Chairman

I thank the Minister for his informative presentation.

Deputy Naughten

I welcome the Minister. For the first time, we have his proposals in black and white. I welcome the proposal to establish a regulator in the first instance. The correct approach is to establish the necessary structures and enact the necessary legislation to avoid the position in the United Kingdom where deregulation and competition, we all agree, was an unmitigated disaster. Dublin Bus and Bus Éireann have improved dramatically in recent years and all credit is due to the management and staff in both companies for the standards achieved in recent years. These companies are in receipt of one of the lowest levels of subvention of any state bus company throughout the European Union. On the basis that service criteria and so forth would be put in place by the regulator, does the Minister see the levels of subvention increasing in future?

What steps is the Minister taking to address congestion, which is the single biggest cost facing an operator in the Dublin bus market? Twenty three separate agencies are involved in dealing with congestion in Dublin.

Has the Minister further developed his proposals for integrated ticketing? As he already agreed in the Dáil, this will be important if competition in the Dublin bus market is to be successful. While the Minister accepts that integrated ticketing will have to be put in place, we have been informed that it will be two years before this happens in the city of Dublin, except in the context of Luas.

What, precisely, are the Minister's plans for deregulation of the Dublin bus market? Is it a case of transferring assets from Dublin Bus to a private operator? If so, that will not increase capacity or provide additional services to the consumer, which is what is required. There is no point in opening up 25% of the market if that 25% is to be transferred in assets to a new operator. What we need is additional capacity of 25% within the Dublin market. We do not want new logos on the buses; we need additional buses in Dublin.

On the proposal for deregulation outside the Dublin bus market, the current proposals would establish two further layers of bureaucracy in the regional system. In addition to a national regulatory authority, there would be two regional authorities as well as the Dublin Transportation Authority. All these would, in turn, answer to the Department of Transport. The additional costs involved would have to be passed on to the consumer. Will the Minister elaborate on this and the type of structural mechanisms he envisages being put in place in Dublin?

Will we see the establishment of a single transport authority in Dublin? Even the traffic lights in the city and county of Dublin are not co-ordinated at present. It is difficult to address the issue of competition and increasing capacity unless we address the issue of congestion.

What is the envisaged cost of CIE reform in light of the letters of comfort to which the Minister referred? Will he elaborate on the reasoning behind his view that he does not envisage any resulting cost? The current estimated cost for the break-up of CIE is €300 million. That money would be better utilised by investing in infrastructure, such as buses and quality bus corridors in Dublin city.

Deputy Shortall

I thank the Minister for attending today and sharing more of his thinking with us. I am still not clear where he is coming from on this issue. I cannot help thinking that he has an ideological hang-up about public service companies. It is interesting that the first target of deregulation will be Dublin Bus, which is the only profitable company within the CIE group. This company has been extremely successful and has made a great deal of progress in recent years. Dublin Bus has reduced its costs to a minimum. It is now an efficient service which has improved enormously with a modest increase in subvention in recent years. It has shown what it is capable of doing if put on a proper financial footing with a basic level of subvention comparable with other European cities.

What is the Minister's general thinking in respect of public transport? Does he accept that, if one wants an effective and efficient public transport system, it must be subvented by the State? This has been the experience throughout Europe. The subvention rate for Dublin Bus is about 25% of current operating costs, while the European average is 50%, rising to about 80% in some cities such as Athens. If the Minister is keen to learn from the experience of other European cities, he would identify an adequate level of subvention as a key aspect of providing good public transport. He should aim to reach the European average of 50% subvention.

In his presentation, the Minister referred to the establishment of a regulator as the first step towards deregulation. This is the logical approach towards deregulating an industry. While I welcome the fact that the Minister recognises this, is it not the case that, as recently as six weeks ago, he responded during Question Time that he had no intention of establishing a regulator prior to his proposals for the CIE companies? I questioned him about that at the time as I could not understand how he could be hell-bent on deregulation without intending to put in place a regulatory framework before taking any action.

What precisely is the Minister's timescale for the establishment of a regulator? Can he guarantee that we will not have a similar situation to that with taxis where a meaningless interim regulator was established, and that from the start there will be a statutory regulator for the bus industry? Does the Minister intend having two separate regulators, one for the Dublin area and one for outside Dublin?

I do not understand why the Minister would propose to open up 25% of Dublin bus routes. There is no logic to that approach as it would be unlikely to improve the service for commuters. Dublin Bus costs have been reduced to the lowest possible level. The main problem it faces is congestion. The introduction of a private operator will not improve the situation. How can costs be reduced and the service become more efficient in the context of the existing congestion? It will not be more efficient simply because the service is privately operated. What is the gain for the commuter? I presume it is the profitable and busy routes in which private operators are interested. These are also the routes which are profitable for Dublin Bus. When the company makes a profit, it is used to cross-subsidise the non-profitable routes.

Those of us who represent the Dublin area are familiar with the large sprawling housing estates that are cut off from the centre of town. They are isolated and the residents are, by and large, low income earners. These people depend on a proper bus service coming in to their estates and serving the local communities. Dublin Bus has been excellent in that regard in recent years. It manages to do so because it uses the profit from the busier routes to support the less profitable ones. My concern is that, if one proceeds with franchising out 25% of routes, which invariably would be the profitable ones, there would be a net loss to Dublin Bus because its ability to make a profit would be eliminated and the gain would go to private operators. The State will be obliged to provide an increased subvention to the non-profitable routes. That does not make sense from a social or economic point of view.

As regards the proposed break-up of CIE, how can the Minister ensure what happened to the Eastern Health Board will not happen again? Surely it will result in additional costs to the Exchequer.

Deputy P. Power

I welcome the Minister and his officials. I welcome the clear distinction the Minister is drawing between deregulation and controlled competition, which I do not think has been accepted by the other members. With all due respect to Deputy Shortall, she is still using the language of deregulation. I know what she was getting at, but there is a major difference. It is important that we use the correct language in talking about what is being proposed here.

Not being from Dublin, I am not completely au fait with the system, but I do have some experience in the Limerick area in terms of competition or the lack thereof. Before being elected I represented, in my professional capacity, clients who were trying to get in on the Limerick bus market, with enormous difficulty. These private operators were willing to serve markets and routes which were not being served by Bus Éireann and where there was a clear demand for these services. They applied for licences for bus routes in the normal way and the amount of bureaucracy and red tape they had to cut through was quite staggering, to the extent that the professional costs involved in pursuing their application turned out to be uneconomical at the end of the day. In any environment of controlled competition or new bus routes, the essential element must be to introduce some simplicity to the system - to make it easy for people to get in.

I share Deputy Shortfall's concerns about the nature of the routes which may be open to controlled competition. There should be an opening up of routes right across the spectrum and an attempt to introduce further competitive services in routes that serve the areas whose populations are in a lower socio-economic bracket. Inevitably, those areas require these services more than others. There are difficulties in certain areas with anti-social behaviour and vandalism along the bus routes - that should not be used as an excuse by some people not to operate these routes.

I do not subscribe to the view that we should aspire to a certain level of subvention just because it happens to be the European norm. We should aspire to a level of zero subvention if an optimal service can be provided at this level. We should not have to subsidise, but subsidies may be necessary so that the best possible service may still be provided. Automatic subsidisation is not the norm in almost any other area of public transport, including aviation and railways, or any other area of economic endeavour, and I do not think we should subscribe to this view.

Deputy Brennan

Deputy Naughten said it was the first time he had heard about these proposals. This is obviously the first time we have been able to go into detail, but I did lay out the forum report in detail at our meeting. It is time to get rid of the myth that privatisation in the UK has been a disaster. I acknowledge that the experience outside London was a disaster, but that was deregulation, which I am not proposing. I am proposing franchising, which is controlled competition. It is not four different buses tearing up to the bus stop to compete in picking up the passengers. That is full deregulation and that would not suit Dublin city or any city I know. It would be daft.

Deputy Naughten

Or any other part of the country either.

Deputy Shortall

It is already happening outside Dublin.

Deputy Brennan

As Deputies know, it does operate on the long-distance routes now - the Galway-Dublin and Cork-Dublin routes are fully deregulated. There is a report about the situation outside Dublin which has not been concluded yet, and I am listening carefully to the discussion about that before we decide about inside Dublin. One can ask anyone who travels up and down to Galway or Cork on the bus how the current service compares to that of ten or 20 years ago or whether prices have improved.

In London franchising was introduced and passenger journeys increased by 26%. Passenger numbers have been heading up over the last couple of years and will rise further over the next few years, so that the overall increase in the number of people using public transport will be 40%. At the end of the day, this is about getting more people onto buses so that we get them out of cars. It will be said every day we discuss this for the next couple of months that deregulation in the UK was a disaster. It was a disaster to sell the tracks and railways - that was a silly thing to do. I am opposed to that happening here. I do not believe in selling the fundamental structural assets of the State in the way that was done in the UK, whatever about having separate operators.

Total deregulation in some cities outside London was a disaster, as I have described, with different buses tearing up to the same bus stop, but the franchising model in London city was a huge success. The numbers using the service have gone up dramatically. This year in London there were 20 separate operating companies competing for taxpayers' money. One of them offers to provide the service for X hundred thousand and another operator says it will do it for less than that. The second company is looking for less taxpayers' money. There are three sides to this story - apart from the company and its workers and the industry itself, the taxpayer is taken into account.

Deputy Naughten also asked me about the subvention. The subvention this year for Dublin Bus is €54 million. I picked up a newspaper this morning and saw a headline, "Dublin Bus only loses €3 million". That is after subvention. The taxpayer gave €54 million this year towards the day-to-day running costs of Dublin Bus. When my Government came into office in 1997 that was €5 million, so we can take some of the blame for that. I take the point that it is not so bad when compared with international levels of subsidy, but the Government must be the custodian of what the taxpayer is prepared to pay for and, importantly, the taxpayer is fully prepared to pay for public transport provided it is totally transparent, he knows what he is getting and he is given some options. By the way, that €54 million is the current subvention. On top of that there was €100 million in capital investment. Since subvention is running at about €50 million per year, even if we do nothing over a five-year period the total subvention will be about €0.25 billion. The indications are that the subvention is to become even higher, but that would be the cost of doing nothing for five years.

Deputy Naughten asked me about congestion. As I have said many times, I will not be the Minister for Transport who promises to cure traffic jams, but there will be some clear improvements. First of all we must finish the Dublin Port tunnel. Second, we must stop this madness in Carrickmines and finish the M50. The Minister for the Environment, Heritage and Local Government, Deputy Cullen, will be addressing that issue shortly. We must get the Luas finished and double the number of quality bus corridors. This will make a significant difference to congestion in the city. We are also considering opening hard shoulders as bus corridors from points one hour away from Dublin and the other cities. By completing these major projects and continuing to roll out the motorway programme, we will tackle the congestion problem in a serious way. If that does not succeed, we will have to think of other mechanisms to do it.

Deputy Naughten asked about integrated ticketing. We have given that job to the Rail Procurement Agency which is developing a high-powered electronic integrated ticketing system which should be ready by the end of next year. I have asked the RPA to speed it up and do something as an interim measure. It is considering that.

The Deputy said that there was no control of traffic lights. I would be glad to arrange for him to visit Owen Keegan's people in Dublin City Council, or he could arrange it for himself, where he will see there is a room the same size as this committee room——

Deputy Shortall

We were there.

Deputy Brennan

Then the committee knows that there is a computerised electronic system of managing traffic lights, changes, timings and so on. While there are always problems, it would be wrong to send out the message that there is no control——

Deputy Naughten

I was referring to co-ordination between local authorities, not to a single local authority. I do not dispute that Dublin City Council has co-ordination. I refer to the Dublin local authorities, and there are a number of them.

Deputy Brennan

My point is that there is a centralised traffic light base. There are not 23 different traffic light centres in Dublin. There is one.

Deputy Naughten

Twenty three different agencies are involved in traffic.

Deputy Brennan

That is like saying that Kildare County Council is involved with traffic. Of course it is and I will not pass a law saying it will not be. They all have different roles to play. The Deputy asked me about the situation outside Dublin and I have dealt with that.

On the cost of the break-up of CIE, the figures that have been referred to are incorrect. If one applies logic instead of some of the legal mumbo jumbo doing the rounds, one will see that there are three subsidiaries and a holding company. My proposal is to dissolve the holding company and let the three companies do their business properly, offer a choice of travel and provide a competitive atmosphere. I do not see how it can cost money to shut down a company and I do not subscribe to the view that it involves hundreds of millions of euro. I have applied logic to the issue, which is always a difficult thing to do in politics.

Deputy Naughten

Has the Minister received legal advice to the effect that it will not cost money?

Deputy Brennan

There is an implementation group with every conceivable interest represented on it. It is working through the issues of pensions, properties, claims departments and so on. It depends on how we address many of the key issues such as debt and other issues such as insurance, but I am determined that there will be little or no cost involved in dissolving the company. There will be transference issues where assets will be transferred from the holding company to the relevant subsidiary as it makes its own way. I am sure they can be dealt with clearly.

I saw one report which said that the cost would be €300 million and that €234 million of that was to wipe out the CIE group debt. I have no intention of wiping it out. The debt was built up by the companies and they will have to deal with it as a company debt. That deals with the issue of that figure.

Another €100 million for compensation claims was referred to. I do not know what compensation is involved. Nobody will lose his or her job. A person might have to transfer from the holding company to Dublin Bus, but I will not pay anyone €100 million in compensation. There was also talk of another €250 million to buy out employees terms and conditions. I am not compelling anyone to leave any job. These figures are a myth. It should cost nothing. Overall, on an economic basis, it should save the taxpayer a considerable amount of money.

Deputy Shortall took me to task again about what she calls my ideological hang-up. I am always amused that, if one believes something slightly left of centre, it is described as a deeply held conviction and, if one has a strong view on the other side, it is an ideological hang-up, but I understand that. I will not say I do not have strong views on these matters, because I do, but I have practical views that initiatives will work.

I question the idea that I am the one with the ideological hang-up when it comes to public transport. I oppose monopoly in this area. If that is ideological, then so be it. Deputy Shortall is in favour of monopoly in this area. I am happy to take that to the airwaves and let the public decide whether it is in favour of or against monopolies in this.

Deputy Shortall

Has the Minister demonstrated that there will be a better service for the commuter? That is my point.

Deputy Brennan

That is agreed. Monopolies do not work in this or any general area. Obviously some public services must be dealt with as monopolies, such as health, education and so on, but not an area where companies are lining up to do business, going to court, as one Member said, to be allowed to enter the business, and the EU and the courts are lining up to burst open the market so that people can make a living running and providing their own services. Bus companies in Dublin provide buses every 20 minutes without a penny of taxpayers money. We need to consider them as well. They too have families and potential employees.

I recall years ago when I said to Aer Lingus that it had to take on the competitive environment in aviation that I was berated at meetings such as this for so doing and told that it would shut down Aer Lingus which would never see the light of day again and was betraying the workers in the company. What has happened is that there has been economic development and growth with numerous young people leaving and returning on holiday or business. There has been a transformation. Had I listened to those arguments then, which were like the arguments being made now, I would have been very silly. We would still have a nice strong Aer Lingus charging £208 to go to Europe, which is what it cost ten years ago. That is the equivalent today of €1,000. Imagine paying €1,000 to go to London now. That is what would have happened had I not listened to this ideological hang-up of which the Deputy accuses me. I do not propose to privatise the CIE companies but to open the market to let other decent people who have business ideas compete for a piece of the action. It has worked everywhere else we have done this.

I do not subscribe to the high tax, high spend approach, namely, pay the subsidies and take the chances. On the issue of subsidies, I saw a headline that said that CIE lost €34 million. That is wonderful accountancy because the taxpayer's contribution to CIE last year was €490 million - almost €500 million. A great deal could be done in other areas with that amount. I do not say that we should not invest this money, but the people need to be aware that it is the equivalent of €10 million a week going to CIE in capital and current expenditure, and that has grown significantly in five years. If I am being asked to do nothing about this, it is the same as being asked to say to taxpayers that, as it is only €500 million, they should put up with it because everyone subsidises public transport. I am not prepared to do that.

The Deputy asked about my general approach to public transport. I do accept that it must be subsidised but, if taxpayers pay out that amount of money, they need to be certain that it is the least they need to pay out. It needs to be transparent and they need to know what they are getting for it. The best way to do that is to have a competitive market where people will offer a service for less and we can let them do so and save ourselves substantial funds. That is not ideological. It is a hard-nosed practical approach to saving the taxpayers' funds.

Deputy Shortall asked me about a regulator and I take the point. I was taken to task in the Dáil because we had thought about introducing the legislation and including the regulator in it. I promised to consider establishing the regulator first. There is no point putting one in place now because there is nothing to regulate. We need the legislation to establish the framework the regulator can regulate. We will appoint the regulator in the autumn and establish the system. Given that it needs legislation, I will put that in place as soon as possible.

Deputy Ellis

What will be the mix in the proposed 25% of the market that will be opened up? Will the franchise holders be the only operators or will Bus Éireann also operate on them? The reason I ask this question is that I want to ensure that there is no cherry-picking. There has to be a proper mix of operators. An operator who gets a plum route, will have to take secondary routes. That is something we all are concerned about.

Has there been any research into the possible defection from Dublin Bus once the Luas and the Metro come on line? There will be definite defections from the bus service. It may end up that the necessary capacity will be created in the overall transport system by the number of people who will be able to use the alternatives there.

The other issue that concerns people is that if the proposed industrial action goes ahead on 18 July, the loss of income to CIE could reach €1.1 million. The income of Bus Éireann and CIE is about €6 million a week. From the figures given to us by the Minister for Transport, the State has been giving €10 million a week for the past 12 months. Iarnrod Éireann has received €490 million and subventions are also given to both Bus Éireann and Dublin Bus. The State is spending one and a half times more than income from transport services. I accept that a large amount of it goes into capital projects which are necessary, particularly in the case of CIE. It is an issue that will have to be looked at in the overall context of the transport system in the State.

The provision and franchising of services in rural areas is an issue that will have to be looked at after the position of Dublin Bus has been dealt with. There is a need in rural areas to provide some transport services. Bus Éireann provided a better service in rural areas 25 years ago than is provided today. The company has now concentrated on the main urban routes where it can attract passengers and thereby generate an income. However, the company has walked away from many of the rural routes that operated. In some cases, it now only provides once-a-week service although in the past it used provide a six day service.

Senator Dooley

I join with my colleagues in welcoming the Minister for Transport, Deputy Seamus Brennan. The paper outlined to us by him is the way to proceed. I am in favour of the franchising model. It provides a proper environment in which to get the deregulation necessary but, yet, in a controlled way. This ensures that we do not add to the congestion. If we were to take the model of some of the private companies taking the long-distance routes, I do not believe Dublin city could handle three bus companies chasing punters at bus stops. The franchise model is the best way forward.

With regard to licence applications for rural areas, there is an issue about a Galway-Shannon bus link. I understand there are some delays in implementing this link. What is the process for applying for a licence and why are there delays? When can we see some movement on this?

Deputy Healy

I thank the Minister for presenting the proposals to the committee. At least, now we are aware of the proposals and we can scrutinise them. In view of the fact that Dublin Bus is effectively a profitable company now and the level of subvention is the lowest in Europe, can the Minister outline what he believes are the practical benefits of his proposal? What are the benefits for the consumer, the taxpayer and Bus Éireann? Has the Minister considered the likely effects on Bus Éireann of this proposal of franchising? Has the Department of Transport looked at the effects of franchising on existing public operators in other countries? Can he indicate the likely effects on the financial position of Dublin Bus, the permanency and conditions of employment of its staff? That is not covered in the paper from the Department.

With regard to the 25% of franchising of routes, can we have some indication of what type of routes will be chosen? What type of provision will be put in place to ensure there is a level playing pitch for the various operators tendering for these routes? Everything possible should be done to ensure that Dublin Bus will not be lumbered with all the non-profitable routes. Will the Minister indicate what he has in mind for routes in rural areas where there is little or no public transport available?

Senator Norris

I welcome the Minister for Transport's open and practical approach to these matters. I have no ideological hang-ups either of the left or the right. I have no real difficulty with the Minister's proposals for controlled competition by opening up 25% of the market in the initial phase. This allows an empirical study of the effects of this. This is a reasonable way to behave. I like the engaging fact that the Minister admits he has never claimed he is going to solve all the traffic jam problems. He has listed the various measures being taken to relieve traffic congestion, including the Luas. As far as I am concerned, we have been proved right in everything that we said about the Luas over the years. Between red cows and white elephants, it is simply an expensive, cosmetic exercise. For that reason, I am sure it was only an oversight of the Minister not to mention the metro. The metro is the one system that will make a difference to Dublin.

With regard to the proposals for bus services, the principle issue is to provide a service to the public. If we get through this method that the Minister is embarking on, an efficient service for the public , and do not just look after the economic routes, but social provision, then I, as a consumer, will be perfectly happy. Under deregulation, controlled or not, what provision will me made for the garaging and parking of these extra buses? There are none at present. They are parked all over the place, creating traffic difficulties, and nuisances. There are streets and side streets jammed with these private buses which is not appropriate. In terms of garaging and parking, CIE has the garages, but what will happen to the other operators?

What checks will there be on the behaviour of bus operators? With CIE, I assume, it is easier to regulate the behaviour of operations. However, there are particular issues that concern me. One of the least likely places in certain areas of Dublin one will find a bus is in a bus lane. They are hogging the main roads which is the only place for private motorists. This leaves empty the bus lanes which the rest of the private traffic cannot use. The breaking of three tonne limits happens all the time. The limit on my street is broken everyday, repeatedly, by CIE, among others. Sometimes those vehicles are driven by inspectors. If one leaves this building during any of the rush hours, and walks towards the corner of Merrion Square, near Greene's bookshop and Sir William Wilde's house, one will find buses stationary in the middle of the box. They are driven on to the box although the drivers know perfectly well the bus will block the traffic crossing.

What training will be provided for the private operators, given that we have not got it right with CIE and it seems to be impossible to control the behaviour of a small minority of the bus drivers? Most of the bus drivers are decent people who do a very professional job under circumstances of considerable stress but there are a sufficient number of them behaving very badly to cause concern. If we have this with CIE I imagine it will be worse when new operators come in unless a clear policy is laid down from the beginning and unless there is proper training during which it is pointed out to these people that this kind of behaviour makes the traffic situation worse. My two questions relate to garaging and parking for the private entrepreneurs and proper training for the drivers of the new buses as well as CIE drivers.

Deputy Brennan

Deputy Ellis asked about cherry-picking. The regulator will either tender individual routes or, more likely, a mix of routes in an area for a specific number of years, perhaps, five years. The regulator would probably have a view on that. During that period the bus company will operate the route to standards laid down by the regulator. The whole package, fares, timing, cleanliness and delivery, will have to be laid down by the regulator. The great strength of this system - and this will be provided for in legislation - is that if during that period a number of complaints against that operator are upheld by an independent authority I would take the view that the operator should not be eligible for re-appointment to the route. That will have to be written down very carefully in order to avoid vexatious complaints. Non-performance should be triggered almost automatically if an operator does not meet requirements on fares, frequency, reliability, cleanliness and courtesy. If an operator does not meet certain thresholds in those areas either that company will not be eligible to re-apply or, if so, it will be held against the operator. There will be no automatic re-appointment to the mix of routes. An operator will have to perform, grow the market, get more people out of their cars and on to the buses. If an operator does not meet those requirements he will have little or no chance of getting back on that route after four or five years. That should provide the impetus for operators to try hard with special offers, special fares, carrier bags or whatever. It is the kind of service to which we are entitled to aspire as a travelling public, to be treated as valued customers of any particular service. That is where I see some of the benefits in this system.

Deputy Ellis asked about the defection rate to Luas and metro. I am not aware the figure has been worked out. Many of the buses will be used as feeder services to metro or Luas so they may operate a different kind of business. It is up to the bus companies to offer a better service if they can and that is where the quality bus corridors have a role to play.

In regard to the protest on 18 July, I will try to reconcile the figures. The estimate for lost revenue on the day is €1.1 million. Irrespective of whether the loss is €1 million, €2 million or €0.5 million, the point is the same. To go out on 18 July and not collect the fares is not a wise course of action and is likely to make the travelling public more sceptical.

Senator Dooley asked about Shannon. There is an issue there about a travel club operation between Shannon and Galway. This came to my notice on 29 May 2003. My Department made immediate contact with the operator concerned and asked for full information as to the nature of the proposed travel club and the company's intentions. A response was received from the company. The Department sought legal advice from the Attorney General's Office in the matter. The company concerned has been requested to cease the operation of this service and the matter is currently the subject of ongoing correspondence between the operator concerned, the Department of Transport and the Attorney General's office. I do not wish to say any more about this except that it demonstrates that we cannot continue to operate under a 1932 Act in 2003, otherwise these anomalies will continue. I am in the ridiculous position where I am turning down service on routes because the 1932 Act says that is what I have to do. That is crazy. I want more services, not less. I hate sending out letters stating that one cannot operate this or that service because that is not the way to proceed.

Deputy Healy asked about the benefits of deregulation. I have outlined some of them - the ability to change the operator, the transparency of taxpayers money, the ability to compare the franchisee with what CIE is offering and - I probably will not be thanked for saying this - even for employees who may want a bit of excitement and mix in their profession if they fall out with company A, they are not out of the business forever. I recall pilots who approached me many years ago saying that one aspect of the new arrangement they liked in aviation was that if they fell out with company A, they could go along to company B and, perhaps, continue their profession. I ask employees to think about that because it may be that there are better careers and, certainly, other careers. An employee in CIE does not have to think this is his job for life because he has nowhere else to go as there is no other company doing the particular type of work. That would be unfair to their capacity and their ambition. Many of them would like the opportunity to offer their services, perhaps at a higher price, if someone is prepared to pay it.

Deputy Healy asked about staffing and referred to the level playing pitch. The regulator will have to ensure there is a level playing pitch for all operators. He used the phrase that CIE would get lumbered with the non-profitable routes. We will ensure the regulator operates a level playing field in order that any profitable routes are mixed up with unprofitable ones. Let us be clear about one thing in Dublin and this is another myth I need to get rid of this morning, there are no profitable bus routes in Dublin. The CIE list of routes available, analysed by my Department, do not show any profitable routes. Some €54 million is being applied to all the routes in Dublin. In a franchised system, that means somebody else will have the opportunity to offer to operate a particular mix or package of routes at less than the subsidy on offer. If that is the case the taxpayer does not have to pay. There was a myth that we would take away all the profitable routes and that CIE would be left with all the unprofitable ones. That is not the way it will work. Even if that were the case, the way the franchise model works is that if one has a very profitable route the person bidding for it puts up a cheque and offers to buy the route. In that way one gets one's money back. I do not expect to see many companies offering to buy routes from us given the profit and loss account on individual routes. That may change from time to time, depending on the accountancy models used.

Deputy Healy asked about rural areas. We have to finalise our consideration of the model outside Dublin. I mentioned the report earlier and we will come to a conclusion on it soon.

I thank Senator Norris for his welcome. I agree with him about the metro and while I do not wish to dwell on it in any detail today, it is the major solution and it takes over part of the old Luas. So the Luas and the metro can be integrated. That is very important, for we do not need a whole number of different systems in the city but one. Ultimately we must aim at a metro and integrate all the other systems with that. That is where we are headed, and we will discuss that on another occasion.

I have been watching the Luas very closely. It must be 20 years ago that I went out campaigning to open the Harcourt Street line. It helped with the election once or twice in South Dublin. I am convinced that Luas will be successful when the members see it up and running, swishing through the city. There are one or two pinch points, such as the Red Cow interchange. We can fix some of those things, and the big picture will be that Luas will carry 15,000 people at peak hours. That is a large number, and it will take those people out of their cars. When one can make that journey from Sandyford to St. Stephen's Green or from Tallaght to the city centre, there will be a big difference. The Senator and I will see.

Senator Norris

It will be fun, but it will not make any difference.

Deputy Brennan

I agree with the Senator about garaging. I believe that the regulator should make it clear, as I will certainly try to do in legislation, that no one will get any franchise without putting forward serious depots and places to garage their buses. That is critical.

The Senator asked me about training. For the first time, the regulator can say that one of the conditions for tendering is being able to demonstrate what training workers will be given. Someone giving them more training will have a better chance of getting the business than someone giving less. We should make training a condition of the contract.

Chairman

I welcome the Minister's ideas and proposals. It is a very good paper and it outlines very clearly what he intends. The Luas, which goes through my constituency, will make an improvement - there is no question about that. I hope it happens quickly. I was up in Harcourt Street last night, and the devastation that its construction is causing to businesses is outrageous. Those involved in the construction work seem to have no concern whatsoever about the damage that they are doing to businesses there. Timescales go out the window. Once they are in, they cannot get them out, and no one has any idea of when it will end. The sooner Luas is up and running and trams are going through the streets, the better.

One of the issues raised - of which I am not totally convinced - is that, if one examines plans for various communities in the RAPID areas, one will see that one of the main concerns, especially in outlying areas of which Deputy Shortall spoke, is an improvement in public transport. Many people living in those areas avail of public transport. Probably the highest level of use is in such communities. I am not terribly convinced that such people will get a guarantee in the long-term of a good public transport system. I agree with what the Minister is doing, but I would like to see more of a guarantee that less affluent areas that use public transport will get a better-quality system. How will we guarantee that? It is very important that those communities get good access to the city centre or wherever they want.

Deputy Shortall

That is a very important point. If we accept that public transport is a key part of the social infrastructure, we must commit ourselves to it by subvention. It is nonsense and wishful thinking to suggest that we can defy the logic of providing public transport. The experience gained in every other country is that it cannot be done cheaply if one is committed to social inclusion and ensuring that there is a proper social infrastructure in place. I ask the Minister, if he is serious about competition and ensuring that we get the best value for money, why he is going to preclude Dublin Bus from bidding for any of the franchise routes. Surely, if it is capable of providing the service more cost effectively than any private operator, it should be allowed to bid. By precluding it from doing so, the Minister is distorting the market.

I would like to ask about the legislative proposals in that regard. Is legislation required for franchising out the 25% which the Minister intends? What is the time scale for that and for the legislation to provide for the break-up of CIE?

Deputy Naughten

Perhaps I might return to my original question to the Minister. Please elaborate on how you see franchising out taking place. Essentially there are two options. One is to furnish part of Dublin Bus assets to the franchisees, including both buses and garages. However, that will not increase capacity. The consumer in Dublin seeks additional services and increased capacity. Those are the big demands at the moment. The demand is there, but the frequency, capacity and service are not. The other option for the Minister is for the franchisees to provide their own buses and garages. If that is so, they will have to make repayments regarding the lease or purchase of the garage and vehicles, and that will have to be tied in with the repayment costs. Where does the Minister envisage this going? Will we have increased capacity or just different buses on the road with different colours on them and signs on their sides but no real improvement in the level and quality of service?

The Minister talks of savings that will be made on the State subvention currently given to Dublin Bus and Bus Éireann, though we are focusing on the former. What is the Minister's plan for the savings that are to be made? Will they be reinvested in improving the services to some of the more disadvantaged communities around Dublin to ensure that they have equality of service, or will it go back into the Department of Finance and be redistributed elsewhere? We need an improvement in the quality and standards of the services that are there currently, and that is not transparent from the document the Minister has presented to us today.

Deputy Brennan

I will take the Chairman's point about social routes and disadvantaged areas first. That is an important point, and Deputy Shortall makes it too. In the legislation, the regulator would be required to provide a service to areas that require a transport service for social reasons, such as major estates and outlying areas. The regulator will be required to provide that service.

Chairman

What kind of service?

Deputy Brennan

A bus service. The legislation would require the regulator to put on an appropriate bus service.

Deputy Shortall

There is no profit to be made on those routes.

Deputy Brennan

The regulator would seek people to supply that service. A subsidy would be available to the company. If someone can do it at a certain price and the conditions are right, the regulator being satisfied that the quality of service is good, he or she can award the franchise to that person. The regulator procures the service rather than simply handing it to a company. He or she will have the funds. At present the figure is €500 million, but the State subvention will go to the regulator rather than the Minister. The regulator will use those funds to purchase and procure services. In legislation the regulator will be required to do so for virtually all areas that require it. There is no question of huge areas that need a service not getting one. They will get a far better service in many ways, since there will be people interested in putting it on to attract a State subsidy.

Deputy Shortall

There is no profit to be made out of it.

Deputy Brennan

The potential is there to provide a great service. The Deputy knows how the public service obligation currently operates regarding airports. A company has a £20 million or £40 million contract. It has collectedawards and shown great profits. It is doing very well.

Deputy Shortall

There are high numbers of paying passengers, not small numbers of pensioners, for whom Dublin Bus caters in many areas.

Deputy Brennan

The point that I make is that the model is there in aviation. The State puts up a subsidy, and individual firms bid for it. Whoever does it at the least subsidy with the required standards wins the business. In other words, whoever wants the least amount of taxpayers' money will get the business. I do not have a problem with that. I do not subscribe to the view that whoever wants the most amount of taxpayers' money should get the business.

Deputy Shortall

Neither do I.

Deputy Brennan

The only way to test that is to have a competition to see who wants the least amount of taxpayers' money to give a specific level of quality and service. That is critical. This is not about making money. This is about providing a first-class service to everyone who wants it. If you want any proof of that, just——

Deputy Shortall

You admit it is about making money for the private operators.

Deputy Brennan

No, I did not say——

Deputy Shortall

They are not in this for the good of their health. They are in it to make a profit.

Deputy Brennan

They will save taxpayers' money.

Deputy Shortall

And make a profit. That just does not add up.

Deputy Brennan

I do not have a problem with people making a profit if they want to run a business.

Deputy Shortall

Neither do I, but there isno profit to be made in the system at themoment.

Deputy Brennan

I gave the Deputy the figures earlier. At the moment that amount of taxpayers' money is being paid to one company. In opening some routes - and in some areas, mixes of routes - we should see if someone else can do that same business, better and cheaper. You take the view, possibly, they cannot do it cheaper. I take the view, let us find out. We found out in aviation——

Deputy Shortall

They are there. The Minister can check that for himself.

Deputy Brennan

Let us find out.

Deputy Shortall

There is no evidence that——

Deputy Brennan

There is a particular bus going to Dublin Airport every 15 minutes, as I mentioned earlier. They are getting no subsidy and they are carrying passengers——

Deputy Shortall

High numbers and they are fare-paying passengers, that is why. There is no difficulty. Anybody could make a profit on the airport route.

Deputy Brennan

I do not envisage free buses. I envisage passengers paying fares.

Deputy Shortall

Dublin Bus caters for large numbers of people who are pensioners.

Deputy Brennan

That is paid for by the Department of Social Welfare - including private buses. In this city at present the Department of Social Welfare pays the private bus companies. The taxpayer is paying for all of this.

Chairman

Will the Minister accept that many local communities in outlying areas put forward plans about improving services and suggested the introduction of a rapid bus system. That is clearly marked as one of the services that is badly missed. If we want to tackle social exclusion, when the Minister is putting the package together for the regulator, the emphasis should be on providing a certain standard of service, as opposed to a minimum standard. It is something that is raised on a regular basis at community level where people complain it is impossible to get to work on the far side of the city.

Deputy Brennan

I will consider that point. I am fully determined as Minister for Transport that a first-class service will be provided to the socially excluded. My job is to provide transport to people and that I will do. I believe in doing it in a transparent, efficient and modern way, as opposed to the only option on the shelf being a monopoly situation. I am fully committed to providing transport for people who are regarded as socially excluded. We have a rural transport initiative at present which is quite successful and we are investing funds in that, every day. This is not about exploiting the disadvantaged in a rush to profit. It is about providing a solid integrated transport system in a transparent way. That is what we are at.

Deputy Shortall

That is going to cost money.

Chairman

Could we go on to the next question?

Deputy Brennan

Deputy Shortall asked about the timeframe. Looking at the Dáil calendar and the consultations yet to be completed with the trades unions and management, as well as the further discussions I want to have with my colleagues, it will be well into the autumn before I have legislation for the Houses to consider.

Deputy Shortall

The legislation is planned for the middle of next year.

Deputy Brennan

I envisage two pieces of legislation, one on the reconstruction of the companies and one on the market opening. I know Deputy Shortall will be the first to throw this back at me in a few months, but my target is to try to have them in the late autumn, perhaps; hopefully before the end of the year.

Deputy Shortall

Why will Dublin Bus not be allowed to tender for the routes?

Deputy Brennan

It will be and should be, at an appropriate time. Again, I want to be practical about this. There is no point in my saying I want to open the market and then telling a company that has €54 million of taxpayers' money it can bid for the routes, because it would win them all with such funds. Given the fleet Dublin Bus has and the money at its disposal, if it did come into the first round and won all the routes, I would then have to decide whether it was successful because it was using taxpayers' money. The company's bus fleet is free, for example. Every single bus has been given to it by the taxpayer. The operators who run the other buses have to buy them. They have to pay insurance, tax etc. It would be a bit silly and contradictory if I presided over a situation where the Dáil approves legislation to open the market, and that is not actually what happens. When we get to the 25% level, however, I will give serious consideration between now and the processing of the legislation to creating a level playing field. In short, at the appropriate time when a critical mass of the market is opened, I would be in favour of it bidding for routes against the private sector.

Deputy Shortall

Would it not be a bit silly to pay a private company to operate a route when Dublin Bus could do it more cost effectively?

Deputy Brennan

How do we know what is cost effective until there is a contest?

Deputy Shortall

It is the job of the regulator to work that out. The Minister is pre-judging that situation.

Deputy Brennan

I see the point that there is a slight contradiction in my position. The prior objective, however, is to open the market. If the market opening was frustrated by Dublin Bus winning all the routes, we would be back where we started. That would be silly.

Deputy Shortall

That is why there are public service bus companies in many cities.

Deputy Brennan

The Deputy and I will never agree on this. I believe monopolies need to be tested. The best way to test them is to see who else can provide a service.

Deputy Shortall

The emphasis should be on providing better services to the public, to see how best that can be done and to learn from experience in other countries.

Deputy Brennan

I agree with that. We should also learn from the experience of our own people in Ireland who want to provide alternative services.

Deputy Naughten

Could I get an answer to my question?

Deputy Brennan

About capacity - yes. The Deputy asked me many detailed questions about where the buses go, where the staff will go and where other things go. There are, I acknowledge, serious practical issues which we have to talk about with the trades unions and management over the coming weeks and months. I do not have answers to all the practical issues right now. I am open to criticism for not having them, but we have still to work out logistics in detail with the trade union movement. I did have a discussion with the Irish Congress of Trade Unions on this issue. All I can say is I will bring practical solutions to the questions raised by the Deputy and reveal them in the Dáil.

Deputy Naughten

Will the Minister clarify one thing for me? Does he envisage, with the franchising out of 25% of the routes, a 25% increase in the number of buses in Dublin?

Deputy Brennan

The market is growing very fast, particularly on the outskirts of Dublin. We are talking to both unions and management at present about what precisely the market comprises, where it extends to and what new services are required. I envisage every single bus owned by Dublin Bus being used. I also envisage opening up 25% of the market.

Deputy Shortall

And then?

Deputy Brennan

The Deputy is wondering how I can do both. The fact is the market is growing at an alarming pace. There is huge demand for new services all over the city and in the outlying areas. No one will be confiscating anybody else's buses. In so far as there is a need for any transfers, we will work those out. If financial arrangements will make such transfers easier, I will consider them so that people in CIÉ do not lose out. I cannot be more specific at this point. The full detail has still to be worked out.

Deputy Naughten

It is a very basic question, whatever way one looks at it.

Deputy Brennan

That is what legislation is for. This is a programme——

Deputy Naughten

The core principle.

Deputy Brennan

The core principle does not get down to detail about who drives which bus.

Deputy Naughten

No, but it covers whether we are to have additional buses or just change the livery on those that we have at present.

Deputy Brennan

We will have a substantial number of additional buses and substantial capacity. I am not interested in rearranging the deck chairs. I am interested only in ensuring that we get more people using public transport. We have doubled the number of bus lanes and will move beyond that. We apply the innovative use of hard shoulders and grow the bus market. That tackles congestion in itself, for fewer people are using their motor cars. I am about growth and extra services, capacity and buses.

That is my programme, and I believe that this is the way forward on that rather than simply relying on one company. I have said this dozens of times on radio and television, and I stress it again to the committee. Members may smile, but I firmly believe this, for I have seen it. Dublin Bus is a good company. It has good buses, staff and management and runs a good show. However, I have a difficulty with it or anyone else telling me that it should be the only show. That is my position. While it is a good company, it cannot be the only one. We would all like to have that in our political lives, being the only candidate for votes, but we cannot, for we have competitors.

Senator Morrissey

I apologise for being late and welcome the Minister. I presume that many of the questions that I was going to ask have already been answered by him. I wholeheartedly support the Minister's proposal for the reform of CIE, the franchising of the marketplace and introducing competitive tendering on routes. I do not see the problem or dichotomy that some other members see regarding tendering for a subsidy. In a loss-making situation, the taxpayer will be the net winner. As Dublin grows, so too will public transport.

The Minister mentioned other initiatives such as his recent meeting with the Dublin traffic authorities concerning the doubling of the QBCs. From my own experience - and I presume that other members have experienced this too - on the 37 route, for example, there were ten buses in 1999. There are now 18 carrying the same number of people at a cost of €300,000 per bus and with maintenance costs of €150,000 per annum. Perhaps €5 million has been spent over the past few years carrying the same number of passengers on that route. I dread to think that the figure might be extrapolated across the city.

When we are talking about rolling out more QBCs, I cannot see why we cannot tackle the infrastructure problems on the existing QBCs, just as we now have a public transport motorway through the city along Benburb Street for the Luas, which will be carrying fewer people. Why can we not tackle the pinch points that we have on the QBCs? Whether we are going to franchise out services to other operators or to Dublin Bus, people will not patronise a service that is not quick or reliable. While eight extra buses have been put on the service about which I am talking in the space of three or four years, the journey time to town has lengthened from 50 minutes to 70 minutes, and that means that people will not patronise it. Those are the issues that I would like the Minister to address.

The other question which I would like addressed is that of licensing. In the Minister's Department, when a private operator or Dublin Bus applies for a licence, there should be a fast-tracking mechanism as with a planning application to a local authority, where it is dealt with in a very short period, perhaps——

Chairman

I would not cite that as an example of fast-tracking.

Senator Morrissey

I would say four to six weeks for an application to be determined. Thereafter, there should be some system of checking whether it has been taken up. My understanding is that, since 1996, despite my enthusiasm for the private operators, many have been given routes that they have not taken up. I would like the Minister to fast-track the licensing system. While I am enthusiastic about examining bringing the private sector into this market, its representatives have not always been the good guys regarding taking up routes that they have been granted by the Minister's Department.

Deputy Brennan

I agree with Senator Morrissey that the QBCs are a major solution. On the Stillorgan route, for example, the number of passengers is up 250% since it started, and I would love to see that rolled out throughout the entire city and county. Cork and Galway are getting their very first bus lanes soon. It has been finalised and will be rolled out in cities around the country. On licensing, we are putting measures in place to speed up applications, subject to my earlier comments about the Road Transport Act 1932.

Chairman

On behalf of the committee, I would like to thank Minister Brennan and his officials.

The joint committee adjourned at 11.15 a.m.sine die.