Mr. Gerry Mullins:

I thank the Chairman for inviting us to come before the joint committee. We are very pleased to be here and it is the first time the organisation has appeared before an Oireachtas committee. With me are Mr. J. J. Kavanagh, managing director of J. J. Kavanagh and Sons, which has operations in London and runs a service from Urlingford to Kilkenny which is older than the State as it started in 1919; Mr. John Halfpenny, managing director of Halfpenny Travel in Dundalk which runs another long running bus service, from Blackrock to Dundalk, which started in 1920; and Mr. Noel Matthews, director of Matthew Coach Hire Limited which runs commuter services from Dundalk to Dublin.

The Coach Tourism and Transport Council, CTTC, advocates for full, open and fair tendering for all public service obligation bus services. We call for the tendering to take place on a phased basis over the five year period from 2014 to 2019. Routes should be tendered for on single contracts and in small bundles to ensure maximum participation by transport companies in the tendering process. The success of this new system will depend on well designed and judiciously enforced service level agreements. This is in contrast to the current situation which is best described by the Competition Authority in a document submitted to the National Transport Authority, NTA, last year. It stated:

Where there is a lack of competition, businesses are not incentivised to attract customers. For example, Dublin Bus and Bus Éireann are the sole service providers of PSO services. There are not sufficient incentives or external pressures on Dublin Bus and Bus Éireann to deliver high quality PSO services in an efficient way. As a result, the consumer suffers higher prices, less choice and lower quality, and the public finances pay higher subsidies than are needed.

We echo these comments and hope the committee will help us overturn this situation.

It is beyond argument that savings will be made by tendering for public service obligation routes. The only question is how much can be made in savings. The current PSO subsidy to Dublin Bus and Bus Éireann is approximately €110 million a year. Calculating the percentage that would be saved is difficult, but we have used the recent value for money review of school transport to benchmark the savings that could be made. The value for money review estimated that private operators were 21% cheaper or more efficient than Bus Éireann. A 21% saving on PSO services suggests savings to the State of €23 million a year without a deterioration in services. This is backed up by Privatisation and Regulation of Urban Transit Systems, a study published in 2008 by the OECD which tracked the effects of privatisation on the efficiency of public transport systems throughout the world. All reports consistently state savings are made - costs were reduced by 38% in Adelaide; by 34% in Copenhagen; by 40% in Greece; by 26% to 34% in Helsinki; by 18% according to one report and by 10.5% according to another in London; by 30% in Spain; by 8% to 15% nationwide, by 13.4% in local bus services in Sweden; and by 33% in Perth.

Therefore, when we say we would save about 21%, or about €23 million, for the State on PSO services, the percentage seems to be in line with international examples taken from an OECD report.

What do private operators provide? They provide improved local services. We have to meet service level agreements, which are weak. The National Transport Authority has very little control over the PSO services being provided. Therefore, if the incumbents want to cut out a bus stop or an entire route, there is very little that can be done to incentivise or force them to reverse that decision. If the new system was introduced and implemented in the way we would like it to be, it would begin with very tight service level agreements that would be well policed afterwards. Therefore, it would lead to improved local services. There would be no hikes in fares as they would be set by the National Transport Authority, not by the bus companies. We reckon the savings to the State would be over €20 million per year. I would say €20 million to €30 million is a good ball park figure, based on international examples. There would be an increase in the number of local jobs as contracts boost the prospects of the local bus companies. In particular, the savings of between €20 million and €30 million per year about which we are talking should be ring-fenced and ploughed into the public transport system.

The capacity of private operators to absorb the PSO route network is often questioned. There are 1,934 private operators in Ireland. This is the most recent figure from the Department of Transport this year. The private fleet is three times larger than the two CIE bus companies combined, according to a Deloitte report published in 2009. At the time, there were 8,500 large public service vehicles in Ireland, of which 1,200 were registered to Dublin Bus and 700 to Bus Éireann. Therefore, 6,600 vehicles were in the private fleet. The private bus companies combined are by far the largest group of transport operators in the State.

Sometimes when we raise our heads and make comments about the benefits we could bring to the public transport system, we are met with various comments that, at best, are unhelpful and often quite insulting. "Cherry pickers" is a term often used. I am not sure it was ever applicable, but there is no opportunity to engage in cherry-picking, particularly under the Public Transport Regulation Act 2009. What we are proposing is competition for subsidised services, not profitable services. Are we looking to be monopolists? The answer is no. We are calling for tendering for small bundles of routes on fixed-terms contracts. We think contracts should be for a minimum of five years and a maximum of ten. Nobody should ever own a route or be able to enforce monopolistic practices. Might there be room for "cowboys"? The answer is no. This is one of the most regulated sectors in the country, rightly so.

In order to put a vehicle on the road, we must first obey the service level agreements with the National Transport Authority. Safety is enforced by An Garda Síochána, as it is through the PSV system, the Road Safety Authority, the Department of the Environment, Community and Local Government and the operators themselves. No operator ever wants to have any kind of safety issue. Bus transportation, regardless of whether it is provided by State or private companies, is a very safe form of travel and I expect it to remain so, regardless of the outcome of this process. We are often told it did not work in Great Britain. There is a small degree of truth in this, but the system in London seems to work very well and there is very little criticism. Ridership rates are up and costs are down. The system in the rest of the United Kingdom, in which there was full deregulation, got off to a very bumpy start. It became a case of survival of the fittest where large companies swallowed up small companies and there was competition on routes rather than for routes. In other words, buses were racing each other to get to the next bus stop, which raised safety issues. We are not calling for such a system. At no stage have we called for deregulation; rather we are calling for proper regulation.

There are a few roadblocks, by which I mean unforeseen difficulties. We could end up with full open tendering for which we have called and at the same time, there could be snags in the system that would prevent this from happening properly. One could involve the transfer of undertakings. We say successful tendering companies should not be forced to take on existing CIE staff. The chances are that we will want to take on existing CIE staff who are very experienced and well trained drivers and administrators. If this process turns out the way we want it to, we will have a huge number of vacancies that will need to be filled. We, therefore, expect to take on CIE staff, but we do not want to be forced into doing so. We need access to stations and depots currently in the hands of CIE. Places such as Busáras, Colbert Station in Limerick and MacBride Station in Drogheda are State property and our buses should be able to use these stations as part of an integrated public network. The main point is that these are State-owned properties and they should be treated in the same way as Dublin Airport which is open to every airline.

On ridership rates on routes, when this process goes ahead, private operators will be tendering against Dublin Bus or Bus Éireann for routes on which they already run services. Therefore, they have the best knowledge of ridership levels, such as at peak and off-peak times. That information has to be placed in the public domain; otherwise we cannot have a fair, open and transparent tendering system.

I am sorry that Senator Seán D. Barrett has just left because I wanted him to be here when I gave the next piece of information which I shamelessly stole from one of his reports. He looked at the effects of deregulation on other industries. Again, just to be clear, we are not calling for deregulation, the word that is often used; rather, we are calling for restructuring. In the taxi industry before 2000 there were 4,218 taxis on the road and 22 million taxi trips in Dublin. If one fast forwards eight years, one finds that there are over 21,000 taxis on the road and twice the number of taxi trips in Dublin. The significance is that every time one hops into a taxi, most of the time at least, one finds that the taxi driver will complain about how the industry is not as profitable as it used to be. That is probably true, but the reality is that when one has 17,000 extra taxis on the road, there are at least 17,000 extra jobs for people supporting their families and paying off mortgages. There is twice as much business, as consumers are happier to get into taxis because there are more of them. The point is that in the restructuring of any industry such as this, the incumbent or occupier of the business does not want to see change. I am sure the committee will hear arguments later from people who do not want to see change. However, these arguments usually come from people who have had it too good for too long. Before 2000 taxi drivers had had it too good for too long. The taxi drivers who entered the industry after that date have to work harder to make the same amount of money, but if one looks at the wider benefit, the good to society, more people are employed, fares are lower and more people are enjoying the business. That is what would happen in the case of public transport services.

I have just explained that I am stealing from one of Senator Sean D. Barrett's reports.