Revised Statement of Strategy, the Department of Transport
Submission from the Coach Tourism & Transport Council
August 8th, 2011
We are pleased to present our submission for the Department’s Statement of Strategy 2011-2014, and in so doing, assist you in defining your strategic direction, high level goals and work programmes.
We present our views below under the same headings that were outlined in your email of July 27th (items 7-14). However, it is important first to comment on some other relevant matters that are not mentioned in your email (items 1-6):
1. Bord Snip and Sale of State Assets report
The two McCarthy reports contained many important recommendations that are relevant to the Department of Transport’s immediate strategy, so we were surprised to note that we were not invited to comment on those proposals in this submission.
McCarthy’s recommendations include the sale of Expressway; the “complete liberalisation” of long distance bus services; the disposal of CIE tours business and “other bus businesses competing directly with private operators”; the sale of non-essential land and property that are owned by State agencies such as CIE; the merging of the National Vehicle and Driver File (NVDF) into the Road Safety Authority; the withdrawal of funding for the Rural Transport Scheme; a review of the application of PSO payments and a reduction of PSO costs of €55m arising from a reduction of costs at CIE; and the consideration of “the privatisation of all or part of Dublin Bus” with a suggestion that Dublin might follow the example of London in liberalising its bus market.
We support all of these proposals except for those detailed below, and strongly recommend that the Department adopts them as part of its Statement of Strategy 2011-2014. The proposals we don’t fully support include:
• Rural Transport – we recommend not all of its funding is removed but that its scheduled services are subject to the NTA’s licensing rules
• Dublin Bus – we recommend its routes are put out to tender in order to ensure the best value for the Exchequer’s investment in public transport. We recommend that Dublin Bus is not privatised because this would maintain a monopoly in the provision of the capital’s bus services.
• We recommend the sale of unused CIE lands, but that the proceeds is ring fenced to pay for a coach park in Dublin city.
A series of Local Integrated Transport initiatives were undertaken in 2009 to explore the potential for improved synergies between existing transport providers, including Bus Eireann, the HSE, and the Department of Education and Science, Pobal and the Irish Wheelchair Association. This work is ongoing following approval by the Minister for Transport in December 2010.
Private bus and coach operators were not invited to take part in LITS even though the private fleet is by far the largest in the country (approximately ten times the size of Bus Eireann’s). Private operators provide more than 80% of the vehicles in the School Transport Scheme, and are substantial providers of scheduled services outside Dublin, and access health services, including disability services.
The exclusion of private bus and coach companies from the LITS programme casts doubts on the Department of Transport’s stated intention of “exploring how existing transport providers might make more effective use of their individual resources by working in closer cooperation with each other”.
We urge the Department to acknowledge the critical role played by private bus and coach companies in transport in rural areas, and include them in the LITS programme immediately and in its Statement of Strategy.
3. Policing of transparency
Even though the School Transport Scheme is under the remit of a different Department, it is managed by Bus Eireann, which is under the Department of Transport’s charge.
In recent months the CTTC has raised concerns that School Transport money is being used to fund other activities at Bus Eireann. Subsequent releases of information on the matter by Bus Eireann have failed to disprove our claims.
We have raised other concerns about the finances of CIE, including the combining of School Transport and ‘commercial’ accounts in its annual reports; and the non-publication of the accounts of CIE Tours International, a State-owned off-shore company. These are serious concerns about the use of State money, yet the Department shows little interest in providing the transparency that we believe should be mandatory.
We urge the Department of Transport to determine in its revised Statement of Strategy that there will be transparency in the audited accounts of its State companies, and to make sure there is no improper cross-subsidisation of activities at the State companies.
4. Representation in Europe
The CTTC sought help from the Department of Transport in 2009 out of concern for an amendment to Regulation (EC) No 561/2006 (Article 8) that was making its way through the legislature in Brussels.
This is a piece of legislation that is best described as daft. It allows drivers on international tours drive for 12 days before a rest day is required, whereas those on domestic tours can drive for a maximum of six days before a mandatory rest day. This counter-intuitive ruling has pushed up the cost of coach touring in the Republic of Ireland, with no mitigating benefits in other areas such as safety. It is a penalty on tourism in Ireland.
The Department was of no assistance on this matter. It did not provide us with an early warning; it didn’t assist in our lobbying; and it did not encourage its Minister to vote against this proposal.
We hope that the lessons learned in this example would be used to inform your Statement of Strategy 2011-2014.
We call on the Department to take a proactive role in supporting Ireland’s transport and touring companies; to be our watchdog and our guide in making sure the six day rule is overturned, and that such a mess cannot happen again.
5. Eliminating Regulatory Burden
The Department of Transport has been slow to react when we have alerted it to the difficulties caused by improper regulation of the passenger transport industry.
Two examples come to mind.
Vehicle Weights: The current weight limit for two-axle coaches is 18 tonnes, and we have requested that that limit should be increased to 19 tonnes. This would bring Ireland into line with other European countries such as France and Spain, and would be consistent with design manufacturers’ specifications. We have found no evidence to suggest this weight limit increase would have an adverse effect on road safety.
When we requested an increase in the weight limit, more than a year passed before we received a decision, and when it arrived, our request was refused.
New Vehicle Tests: When a new coach is brought into the State it must be inspected by several different State agencies: Vehicle Testing Network (VTN) Centre, National Car Test (NCT) centre, and a Public Service Vehicle (PSV) Centre. The paperwork must then be taken to a local motor tax office, and must then be submitted to the Department of Transport.
These layers of red tape place unfair and unnecessary burdens on companies that are already struggling to survive. Yet, eight months after notifying the Department of this, we have heard nothing to suggest it intends streamlining the system.
We hope the Department of Transport will use the revised Statement of Strategy 2011-2014 to promote a policy of reducing the regulatory burden that it places on us, its clients.
6. Philosophy of Public Transport
The CTTC believes there is a philosophical problem at the heart of much of the Department of Transport’s dealings with regard to public transport. The dominant philosophy since 1932 holds that public transport should be provided by the State, and should be protected from commercial pressures with a combination of State funding and restrictive legislation.
All available evidence suggests this approach has produced a poor level of public transport for the traveller; an overly expensive cost on the Exchequer; and poor opportunities for the creation of viable businesses for the private sector.
This system has created a widespread attitude to bus transportation in Ireland whereby if people could avoid using it, they did avoid using it. Ireland developed the most car-dependent transportation system in the EU, and the resulting gridlock in our cities and towns costs the national economy approximately €2bn per year.
We contend the only way to improve all the public bus services in Ireland is to make a far greater proportion of those services available to competing private companies. Only competing companies can bring additional passengers into the public transport system, and only private operators can do it without being a drain on the public purse. Only the introduction of widespread competition for Dublin Bus will force it to improve its services, just it has done at Bus Eireann.
The Department of Transport is best positioned to bring about this change, but apparently has been reluctant to do so. Even the much-heralded introduction of the Public Transportation Regulation Act of 2009 has had little effect; mostly because it contains enough negative provisions to make sure the more progressive measures do happen.
All of this is particularly pertinent to Ireland’s Presidency of the EU during 2013. Europe is clear in demanding greater competition in the provision of transport services, and transparency from its member states in their financing of state-owned bus companies. It demands that there is no over-compensation for PSO services, or compensation for otherwise profitable services. We feel the Department of Transport has traditionally been slow to embrace the spirit of the EU’s intentions in these areas. As long as the old philosophy prevails at the Department of Transport, we do not expect any substantial progress in the provision of a world-class public transport in Ireland.
We recommend that Statement of Strategy 2011-2014 is used to launch a new philosophy; one that throw off the dead weight of the CIE companies, and one that will facilitate the better service and lower costs of the private sector.
7. Programme for Government 2011-2016
The first key transport-related suggestion in the Programme for Government was to “establish a Cabinet sub-committee on Infrastructure to explore the benefits to the public transport passenger of more diverse bus service provision.”
While we find this encouraging, we also question the need for such a sub-committee. It is already a widely accepted fact that a more diverse provision of bus services will benefit public transport passengers, so why do the benefits need to be explored? We suggest the Department’s Statement of Strategy moves to the next level, and sets out a ‘roadmap’ for a more diverse provision of bus services. We had seen no progress in this area in recent years, even though it was a stated aim of the 2009 Act.
Other provisions in the Programme for Government are vague, so are difficult to assess. For example, what does “We will support the expansion in range and frequency of high capacity commuter services” mean? Does it mean trains or buses? Does it mean private buses or bus services provided by the State companies?
It is clear that investment in buses yields a far better return per euro than investment in train services. And also, that bus services provided by private companies cost far less to the State than those provided by the State companies.
It follows, therefore, that the reduced level of State investment in commuter services should be made by providing for a far greater role for the private sector in the provision of public transport. We advocate this position.
The programme also says: “We will maintain and extend the Rural Transport Programme with other local transport services as much as is practicable.” We believe this position to be unrealistic in the current economic environment.
Also, we believe both the Programme and the Department do not recognise the damage that the Rural Transport programme has done to public transport in rural Ireland. We have documented the closure of many public transport services because Rural Transport services opened up in competition with them. In each case the burden of providing public transport in rural areas has shifted from the private sector to the State.
A simple way of preserving the good work done by Rural Transport groups, while undoing some of the damage they have done is to demand that Rural Transport groups are subject to the same licensing regime under the NTA that applies to both private and State bus companies. We urge the Department to adopt this position in its revised strategy.
8. The EU/ECB/IMF Programme
The most important part of the National Recovery Plan 2011-2014 for independent bus companies is the sentence that reads: “Funding for the free travel and television licence schemes will be frozen at 2010 levels of expenditure for the duration of the Plan.”
The freezing of free travel funding coincides with an increase in the proportion of free travel passengers. It means that our members are carrying many passengers without reward. In some cases 25% of passengers on particular routes are being transported without payment to the transport operators.
We urge you to work with the Department of Social Protection towards releasing the funds to rectify this situation, or to stop the issuance of new free travel cards until funding has been restored. In either event, we urge the Department of Transport to work with the Department of Social Protection to eliminate fraud in the transport system through rigorous policing of the use of free travel cards.
The National Recovery Plan also says: “Government will ensure greater competition for public transport routes following the establishment of the National Transport Authority.” We have seen no evidence of greater competitiveness for public transport routes since the NTA was established, and are not confident that this will happen in the years to 2014.
We were further discouraged by Minister Varadkar’s media comments in recent months that suggested he would not ensure greater competition out of concern for offending his party’s coalition partners.
We fully support any measure that would bring about greater competition for public transport routes, particularly for PSO routes. However, we do not have confidence that this will be a priority, even if it is included in the Department’s Statement of Strategy.
We note that the Plan calls for the advancement projects such as Metro North and Dart Underground. We expect that these projects will not go ahead, and are not disappointed.
We believe the next advancement in the quality of public transport in Ireland will not come through expensive projects, but through a more effective use of existing legislation to ensure there is open and fair competition to provide quality services to the public. We urge the Department to adopt this view in its forthcoming strategy.
9. Job creation (particularly relevant commitments from the Jobs Initiative)
The Jobs Initiative announced in May this year had little effect on either the public transport or coach tourism sectors, so was of little benefit to our members.
The VAT reductions were designed to boost the accommodation and catering sectors, and were warmly welcomed by their representative organisations. If similar reductions were targeted for the benefit of coach touring companies, it would certainly boost employment in our sector, and probably save some companies from closure. Such reductions in VAT would also help coach companies in this jurisdiction compete more favourably against our Northern Ireland and UK counterparts, so the benefits to the Irish economy would be far wider than just our sector.
The coach touring and public transport sectors are heavily dependent on diesel, which is at an historically high price at present. What is most upsetting is that half of the price at the pumps goes to the Government in taxes. It means the threat to jobs in these sectors is because of Government policy, and not because of events in the Middle East or North Africa.
All this is in addition to the ending of the fuel rebate scheme, which the Government has shown little interest in replacing. We note that the British government, provides a fuel rebate scheme to transport providers in its jurisdiction, even though it is subject to the same EU rules as Ireland.
We ask that the Department shows support for job creation in the coach tourism and public transport sectors by introducing a VAT reduction for transport providers who are VAT exempt.
10. Economic and fiscal recovery
Drawing on the findings of the Mazars report into the finances of Dublin Bus and Bus Eireann that we published earlier this year, we have outlined how savings of €20-30m to the State could be achieved through a proper tendering of Bus Eireann’s PSO routes by the National Transport Authority.
The saving to the State by tendering Dublin Bus’s routes would probably be in the region of €40m per year. Large savings could also be yielded through proper tendering of the School Transport contract, and a review of operations of the Rural Transport Scheme.
In total the Exchequer could save around €80m per year without a reduction in service levels.
We appeal to the Department to do all in its power to push for the phased tendering of all PSO bus routes. A programme to tender out 15% of all PSO services by mid-2012 would be an achievable and worthwhile goal, and would advance our economic and fiscal recovery.
11. Fairness and Equality
Independent bus and coach companies have always pleaded for fairness and equality in the issuance of licences, particularly for PSO services. However, these pleas have fallen on deaf ears.
Even the passing of the 2009 Act and the establishment of the NTA have not brought fairness and equality to the system. The two State bus companies enjoy monopolies on all PSO services and on most commercial services until at least 2014, and possibly beyond. This ongoing situation is an affront to the Department’s intentions of fairness and equality in its dealings.
We believe the five-year protection granted to Bus Eireann and Dublin Bus in the 2009 Act can be overturned, and that it would be right to do so. Since that legislation was passed, the finances of the Irish Government have deteriorated considerably, and we believe these provisions can be and should be changed.
The tendering of PSO routes would benefit the transport user, the Exchequer and boost fairness and equity in our public transport system. This should be a key priority in the Department’s revised strategy.
12. Public Service Reform
13. Strengthening Ireland’s relationships, including North / South co-operation and within the EU and internationally
The CTTC has no comment under headings 12 and 13.
14. Key Priorities of the Minister for Transport
The CTTC has concerns about some of the current key priorities of the Minister for Transport, Tourism and Sport:
a. Develop and implement a realistic, affordable and deliverable plan to maintain and upgrade roads and public transport infrastructure
While we welcome plans to upgrade and maintain roads, we believe there will be little delivery of new public transport infrastructure. Therefore, we believe, the Minister should acknowledge the best way to deliver better public transport is through tendering of bus routes, particularly PSO routes.
b. Drive efficiencies and rationalisation in the public transport companies in the context of falling subsidies
It is clear that the only way to drive efficiencies and rationalisation is through competition. It is a contradiction for the Department to give protection to the State bus companies through the 2009 Act, and then attempt to drive efficiencies and rationalisation. We call on the Minister to drive efficiencies through the tendering of PSO routes.
c. Encourage more people out of their cars by improving their experience of public transport through initiatives like integrated ticketing, better stations, better bus stops and real-time passenger information, safe cycling and attractive walking
We remind the Minister that the private bus companies have not been included in the Real Time Passenger Information project to date and urge him to push for the necessary changes.
d. Build on the success of the last government by keeping road fatalities and injuries down
This is a worthy intention, but the Minister has been silent on the reduction of School Transport services, which will lead to thousands of extra car journeys on our most dangerous routes, throughout the winter. We call on the Minister to demonstrate his commitment to road safety by working towards the preservation of School Transport services.
e. Rationalise and restore our State-owned airports and ports to financial health and profitability. The CTTC has no comment under this heading.
f. Increase the number of tourists coming to Ireland and improving their experience of Ireland and its regions
We call on the Minister to illustrate this intention through a reduction in VAT on diesel for touring coaches.
g. Improve local sports facilities, and support Ireland’s top-level athletes to compete on the world stage. The CTTC has no comment under this heading.
Once again, we would like to thank you for the opportunity to have an input as you set out your strategy for the coming years.
We will be happy to elaborate on some of the matters that we have raised if requested.