Pre Budget Submission

Introduction

The Coach Tourism & Transport Council (CTTC) makes this submission to Government in advance of October’s budget. The CTTC is the representative organisation for Ireland’s coach touring companies, and the private coach and bus operators. All of our members are family-owned companies with a combined fleet of over 1,000 coaches, and we employ over 2,000 people directly.

The CTTC comments regularly on matters of concern to our members such as public transport, school transport, the coach tourism sector, the tourism industry generally, and the price of diesel.

It’s ironic that the State invests so much in different forms of transport, and yet our public transport is poor by international standards. Moreover, the best examples of public transport services are provided by unsubsidised companies, who must endure competition from State-subsidised companies. It follows that if the State were to cease subsidising transport companies, and only subsidised individual services, and then only following a tender process, the State would have a more effective and cost efficient public transport system. We have estimated that such a move to tendering of subsidised bus services would save the State €20-€30m a year (based on a wealth of published international data). 

The School Transport Scheme is often used as an example of public / private partnership however this example is highly flawed as the scheme is under the control of Bus Eireann who receive inordinate management fees under the heading of shared costs. Cost reductions in the scheme have been born almost exclusively by private operators through an oppressive contract negotiation system, introduction of five year contracts which make no allowance for any increased operator costs during their duration and the retendering of existing routes on an ad hoc basis.

 

Under the terms of the 2010 ‘bailout’ any new bus service is no longer be eligible to receive compensation for transporting Free Travel Pass passengers. Traditionally, an operator who is considering starting a new route will have been able to rely on the Free Travel Pass scheme to provide the bedrock of his / her revenue. Because this is no longer available, there are many services that should be commenced, that will not now happen. The current tendering process for school services places too much emphasis on price and not enough on the quality and age of the vehicle required.

All of this means Ireland’s private bus and coach companies are in a permanently weakened state. They are prevented from growing their sector in line with the State’s requirement to deliver a quality public transport system. And they are prevented from maintaining the quality coach tourism product our tourism industry requires.

European law determines that the CIÉ monopolies on public transport will eventually disappear. This should provide a boost to Ireland’s domestic bus companies, but there is a strong possibility that they will have been so weakened by years of ill-conceived Government policy that they will be unable to compete for the former CIÉ routes. Foreign multi-national companies will take over where the CIÉ companies left off, which would represent a loss to both the travelling public and us.

We submit this document in the hope that the State will finally realise the way to the delivery of a comprehensive public transport system is through partnership with private operators who deliver quality public services on a daily basis and stop its myriad of activities that weaken our domestic bus and coach companies.

Ireland’s family-owned bus and coach companies provide employment in towns and villages where few other employment opportunities exit. They bring tourists to the regions, which would be otherwise inaccessible by public transport helps in balanced regional development and rural development, and compensates for the lack of flights into the airports outside Dublin.

Coaches offer the cleanest and safest means for visitors to explore our country. For this, we ask for greater support from the State, in terms of incentivisation for fleet renewal, reduction in Vat rate and less State-sponsored competition. We need a bus station in the capital, and we need protection from other ill-conceived policy proposals such as that relating to sick pay.

The CTTC presents this submission during one of the worst economic crisis since the foundation of the State. Our recommendations are designed to help create the biggest boost to the tourism and transport sectors and provide significant opportunities to generate employment growth and revenue to the state with minimum investment from the Government. Judicious regulation and management of the factors that influence these sectors will, in most cases, provide satisfactory outcomes.

The CTTC is a member of the Irish Tourism Industry Confederation (ITIC) and our tourism-related recommendations are supported by the Confederation.

Kevin Traynor

National Director

Coach Tourism & Transport Council,

1st floor Chamber Building

North Street

Swords

Co. Dublin

September 2013.

CTTC Pre Budget Submission 2013

The State’s payment to Dublin Bus and Bus Eireann for operating PSO services are approximately €65m and €34m respectively in 2013.

With such generous aid from the State, it is little wonder that their employees are some of the highest paid public transport workers in the world (UBS Price and Earnings Report, 2009). 

None of this would be possible if there was open tendering of PSO bus services. Tendering processes identify the best operators at the lowest prices, factors that are not in place at present. The CTTC believes the State could save €20-30m per year if this were to happen. This is based on international examples of tendering from cities such as Adelaide, Copenhagen and London contained in the OECD report: Privatisation and Regulation of Urban Transit Systems (2008).

Further savings could be made at the State companies through proper financial policing. In the Financial Analysis of Ireland’s State-Owned Bus Companies; a report commissioned by the CTTC and carried out by Mazars Consultants, various questionable procedures were highlighted included possible over-provision for Liabilities & Charges (€150m); possible cross-subsidisation of Bus Éireann’s commercial services by the School Transport Scheme (€16.7m); and loans from Dublin Bus and Bus Éireann to the parent company totalling €150m 

The CTTC recommendations the phased introduction of tendering of all PSO routes starting immediately. The saving to the State will be approximately €20-30m in the funding of these services, yet there should be no deterioration in services.

The CTTC recommends the adoption of the recommendation of the second McCarthy Report that called for the withdrawal of the loss-making ‘commercial’ Expressway Company from intercity service provision. The private sector will provide additional capacity as required.

To achieve a fully integrated public transport system all bus operators should have access to publicly funded bus stations.

The CTTC recommends that there is no further funding of the CIÉ companies until a full and independent forensic investigation of the CIÉ accounts has been carried out, dealing inter alia with the questions that were highlighted in the Mazars report.

Coach Tourism

Private operators are the main providers of Coach Tourism in Ireland, the majority of vehicles provided for this sector are supplied by private operators.

Coach Holiday tours are an important component for several reasons:

No other tourism ‘product’ achieves the same regional distribution of trips.

Some 86% of coach tourists stay in hotels across Ireland and contribute to the sustainability of our hotel stock.

The seasonal spread of coach tourists across the shoulder season is relatively good which means that they contribute well to the sustainability of tourism SMEs, and they improve the year-round utilisation of Ireland’s tourism infrastructure.

There were 284,000 overseas coach tourists to Ireland in 2011. These tourists contributed an estimated €191 million to the Irish economy. Since 2006 the number of coach touring visitors to Ireland has fallen by 16%. (Coach Tourism: A Sectoral Study; Fáilte Ireland, May 2012.)

Just over 5% of overseas visitors and 6% of overseas visitor revenue is generated through coach tourism. The average stay of the coach tourist is eight days, and coach tourists visit all parts of the country. 

There were 284,000 overseas coach tourists to Ireland in 2011 contributing an estimated €191 million to the Irish economy (Fáilte Ireland, Coach Tourism in Ireland 2013).

The number of overseas coach tourists in recent years are: 

2007    403,000

2008    328,000

2009    278,000

2010    300,000

2011    284,000

 

The importance of Coach Tourism is highlighted by the fact that although visitor numbers in 2011 decreased by 16,000 on the previous year revenue increased by 11 million. We need to continue and increase marketing initiatives such as the Gathering if we want to return to the 2007 exchequer returns.

If we are to return to 2007 levels, the economy can expect a pro-rate increase of revenue of €60,000,000 per year. We look to the Government for help in winning back those visitors to Ireland, but at present, the greatest obstacle preventing us from achieving this is Government taxation policy.

While we welcome the Diesel Rebate Scheme, the addition of the Carbon Tax on diesel and market driven fuel price increases, has resulted in very significant cost increases for coach companies. The net result is that coach touring has become a very marginal business for all operators and a loss making activity for most. The vast majority of coach operators have been unable to invest in new vehicles for several years, which means the quality of the product we are offering our valued visitors is declining.

Investment stimulation

In recent years there has been a sharp decline in the number of new coaches purchased. We recommend this process is reversed using a range of fiscal instruments.

Boosting newer coach & bus purchases

The decline in the purchase of new coaches has a direct affect on the quality of the experience that our visitors have in Ireland. Every decline in coach visitor numbers in turn damages the hotel, restaurant and visitor attraction sectors and the employment and revenue they generate. In short, it is in everyone’s interest to restore the health of the coach tourism industry.

Furthermore, new coaches emit far fewer pollutants than older ones.

One way to stimulating the purchase of new coaches is to provide tax incentives for newer and cleaner vehicles.

The CTTC recommends that a Carbon Tax Rebate on all forms of public transport.

Capital allowance to boost vehicle purchases

During the past four years investment in new coaches and buses has dropped off dramatically. This is the result of the economic environment, marginal or unviable trading conditions, government fuel taxes, market increase in fuel costs, and the alarming decline in coach tourism numbers. We have experienced accelerated vehicle depreciation rates with the market for second-hand touring coaches having ground to a halt.

The CTTC calls on Government to recognise the reality of the serious decline in coach values and the age profile of the fleet and introduce a special  capital allowance of 50% of the cost of new and second hand vehicles up to two years old  for fiscal years 2014, 2015, and 2016 in order to stimulate re-fleeting by coach providers and ensure quality standards.

These measures are necessary in the interests of fairness and to keep the coach touring fleet as young as possible in anticipation of an inward tourism recovery in the medium term.

We also recommend that the Government allows construction and improvement costs of garage facilities to be fully written off in the year of occurrence to stimulate the highest standard of vehicle maintenance throughout the industry and regional employment in the building and repair sectors.

Proposed revisions to Social Welfare Assessment

The introduction of an hour based system to calculate a person’s working time rather than the present system would ensure then they would be able to take on some employment while still receiving some state income. It would also would provide them with valuable work experience and place them in a strong position to avail of employment opportunities with employers should they arise. The reduction in the Jobseekers benefit will cut the states costs and any job created will also be generating employers PRSI adding extra income to the state.  

The CTTC recommends social welfare claimants being assessed on the actual hours they work rather than the days per week that they work. This will benefit operators hiring staff for just a few hours per day (e.g. school runs) without the need for the employee to lose all of their state benefits. This will also bring more people into the tax net as employers would be paying PRSI on these employees.

Protection from Proposed Sick Pay Legislation

The threat of increased PRSI and a mandatory sick pay scheme is adding to the uncertainty and fear in the coach and bus sectors. An increase in employers’ PRSI and forcing the burden of sick pay on to employers would only serve to increase the cost of employment and the overall cost of doing business. This proposal should not be introduced.

 The CTTC recommends that there is no change to PRSI or sick pay schemes.

 

Putting an End to Diesel Laundering
The high cost of diesel also has a detrimental effect on our natural environment and provides opportunities to criminal gangs. Retail Ireland has told the Government that rising fuel prices is encouraging diesel laundering, and it estimates the cost of such activity to the Exchequer at €150m a year. We believe the figure may be far higher when the costs of clean-up and law enforcement are considered.

It is believed that around 120 fuel stations sell ‘laundered’ diesel, which means many of our members may be consuming this product unwittingly, and are likely to suffer severe engine damage to their vehicles as a result.

The CTTC believes the high level of taxation on diesel encourages the criminal act of laundering the fuel. The differentiation in cost of different coloured diesel provides the basis of this criminality. We believe the elimination of green diesel would remove the criminality and free up resources that could be used to assist essential service providers.

The CTTC believes there should be just one colour of diesel (one price), and that the saving generated could fund an incentive for fleet replacement and capital investment.

Road Tolling

In a proposed review of local government finances it has been suggested that new road tolls should be introduced. Our industry cannot sustain yet another cost. We believe that such an additional burden might yield extra Government revenue in the short term, but would be counterproductive in the medium to long term because they would facilitate job losses in our transport and tourism industries.

Of course, many operators would try to avoid the new tolls, thereby sending large vehicles through towns and villages rather than along the main routes. 

We recommend that commercial passenger operators will be able to avail of a road toll rebate should new tolls be introduced.

Proposed revisions to Social Welfare Assessment

The introduction of an hour based system to calculate a person’s working time rather than the present system would ensure then they would be able to take on some employment while still receiving some state income. It would also would provide them with valuable work experience and place them in a strong position to avail of employment opportunities with employers should they arise. The reduction in the Jobseekers benefit will cut the states costs and any job created will also be generating employers PRSI adding extra income to the state.  

The CTTC recommends social welfare claimants being assessed on the actual hours they work rather than the days per week that they work. This will benefit operators hiring staff for just a few hours per day (e.g. school runs) without the need for the employee to lose all of their state benefits. This will also bring more people into the tax net as employers would be paying PRSI on these employees.

Licence Plates Opportunity for the State

Coach operators from Northern Ireland and Great Britain enjoy an advantage over operators in the Republic of Ireland owing to our different vehicle registration system.

The registration plate in the Republic of Ireland, because of its transparency, draws attention to the age of vehicles. This puts additional pressure on coach operators here to offer much newer vehicles than their Northern counterparts who enjoy the advantage of using private number plates. Because of their personalised number plates, Northern Ireland vehicles have a much longer life span in the tourism sector, and therefore have a much lower cost base.

We believe there is a revenue gathering opportunity here for the Exchequer. There are around 700 touring coaches in Ireland that would benefit from personalised licence plates. To ensure standards coach registration would be via a state approved accreditation process. Our members indicate they would contribute financially to personalise those coaches and by doing so would generate additional revenue for the State.

The CTTC calls on the Government to allow the introduction of private registration plates for touring coaches so they can compete on a more equal basis with coaches from Northern Ireland and Great Britain. We see this as a revenue gathering opportunity for the State.

Conclusion

Private operators contribute significantly in the provision of high quality transport services to their customers without any state subvention, there is a requirement for a strong private transport sector to ensure that the state achieves the goal of an effective, efficient transport system that is value for money. The current system and structure of state subsidisation which could be argued is outdated and is no longer sustainable in the current economic climate.

There is a need for incremental change, PSO routes need to be tendered out on a phased basis to private operators who have a proven track record in quality service delivery by doing so significant cost saving to the exchequer and the tax payer could be achieved.

The Coach Tourism and Transport Council feels strongly that the industry cannot withstand any further increases in the cost of fuel. We feel that the imposition of further fuel taxes would be counterproductive in that it would result in a modal switch away from public transport which would inevitably increase our national CO2 emissions. The cost to the exchequer of increased carbon emissions would far outweigh any increase in revenue that would accrue from increased taxation on fuel.

Our association appreciates the fact that the Government must raise revenue through cuts in expenditure and increased taxation, but we are requesting that the increased tax burden should be imposed in a fair and equal manner and should relate to the income of the individual and their ability to bear the increased burden.  In order to stimulate the economy and retain jobs we feel that the imposition of further taxation on small and medium enterprises would be extremely damaging and counterproductive.

 

 

 

 

 

 

 

 

 

 

© 2017 Coach Tourism and Transport Council of Ireland
  • Suite 4, First Floor St. Fintan’s North Street,Swords, Co. Dublin. Ireland.
  • Phone: + 353 1 8902635 Mobile +353 85 8588395
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  • Email: Kevin@cttc.ie

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