John O'Mahony (Mayo, Fine Gael)
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The purpose of this meeting is to meet Mr. Gerry Murphy, chief executive officer, National Transport Authority, and his colleagues, Ms Anne Graham, director of public transport services and chairperson of the national committee for integrating local and rural transport, and Mr. Hugh Creegan, director of investment and taxi regulation, regarding the authority's decision to tender out up to 10% of the routes currently operated by Bus Éireann and Dublin Bus.

On behalf of the committee, I welcome Mr. Murphy, Ms Graham and Mr. Creegan.

I draw the witnesses attention to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a person or an entity by name or in such a way as to make him, her or it identifiable. I advise that any opening statement submitted to the committee will be published on its website after the meeting.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

I invite Mr. Murphy to make his opening remarks.

Mr. Gerry Murphy:

I thank the Chairman for the invitation to attend the committee. I will make a relatively short statement as I will not cover what is in the appendices to my presentation. I understand that there are three areas in which the committee are interested - the competitive tendering of subsidised bus services, rural transport and the new local area hackney licence. I will deal briefly with each of those in turn.

First, on our plan to tender bus services, the current contracts with Dublin Bus and Bus Éireann expire in December this year. Following a national consultation exercise last year, we recently notified the European Commission of our intention to do the following: to enter into further contracts with Dublin Bus and Bus Éireann in 2014 for a period of five years; to amend those contracts in 2016 to reduce the services by 10% within those contracts; and to provide those removed services through separate contracts following tender competitions. We plan to start the prequalification stages of those tender competitions in December of this year.

The existing operators, Dublin Bus and Bus Éireann, will be able to tender for those 10% of routes alongside other providers. While this means that the existing publicly subsidised bus market will be partially opened to tendering, all the key decisions affecting the public will continue to be made by the National Transport Authority. We will apply the same level of control and centralised planning to the tendered routes as to the routes which are currently operated by the two CIE companies. We will predetermine the routes, the schedules, the vehicle types and standards, the fares and the customer service requirements. A contracted operator will have no say in fares, routes or frequencies. Customers will be able to use the Leap card, free travel passes will be accepted and the services will be included in our journey planner and real time apps and on the street-side real time displays. The branding will also be determined by the authority as well as accessibility standards and emission standards for pollutants and noise, and compliance will be required with employment law in terms of applicable pay and terms of employment. The object is that this will ensure that the customer's public transport experience will be seamless across the country – there should be no discernible quality difference to bus users regardless of which operator is operating the services. The services will have been designed and will be supervised, in the customer’s best interests, by the authority.

In the case of Dublin Bus services, the routes that will be opened to tender are the orbital routes and some local routes around the city. For those who are familiar with them, examples of the routes are route 17 from Rialto to Blackrock, route 33B from Swords to Portrane and route 111 from Dún Laoghaire to Loughlinstown. For Bus Éireann services, the routes for tender will be the city services in Waterford and certain commuter routes into Dublin along the N4 and N7 corridors, for example, routes 120 from Tullamore and 124 from Portlaoise. A full list of the routes to be tendered is set out in appendix 1 to this presentation. We expect to commence the prequalification process in December and at that time we will advertise the tenders in the Official Journal of the European Union and in a national Irish newspaper.

Moving on to the local area hackney licence, the Taxi Regulation Review Report, published by the Government in January 2012, recommended the introduction of a local area hackney licence to address transport deficits in some rural areas. Certain areas have no public bus services nor have they taxi or hackney services operating in them. To address this need it was decided to introduce a lower cost local hackney licence to service these isolated areas.

In November 2013 the authority created, by statutory regulation, a new form of hackney licence, the main features of which are that the vehicle must meet all hackney requirements other than luggage space requirements; it must meet all age rules – the vehicle must be under 10 years; the fee for the licence issue is to be €50; a tax clearance certificate is required; the licence is non-transferable; and the licence would expire after three years at which time a new application could be made for a subsequent licence. To ensure that the issue of this licence will address a real deficit in services, we have put in place a number of requirements in respect of the licence application. It must include the following: written confirmation of the need for the service from either an established group representing local businesses or a community group who has been granted charity able tax status by Revenue; and an analysis of the need for the service carried out by the relevant local authority with a letter to the National Transport Authority confirming the need for the service. The driver of such vehicle will need to have the appropriate small public sector vehicle licence and a fee of €20 relates to such an application. We have advised the industry of the new procedure and have written to local authorities explaining their role in validation. All this only occurred last month and we have yet to receive an application.

Regarding the rural transport programme, I am sure the members are aware that a value for money review of the rural transport programme was published by the Department of Transport in 2012. The review identified that the organisational structures were contributing to the high cost of administration. That is not to say that the individual groups managing or directly providing services were not pursuing efficiencies and operating well - they were - rather the number of groups was simply too high at 35, leading to a replication of administrative charges across the country. In mid-2013 we devised a new organisational framework for these services and we decided to reduce the 35 groups to 18 transport co-ordination units, based on local authority boundaries or amalgamated local authorities boundaries. In autumn of last year we initiated an application process from within the existing groups to run these new units. The applications have been assessed and all the groups have been advised, as of Monday as, to who will comprise the new units. The listing is set out in appendix 2 to this presentation.

Separate from this organisational structure, we asked the Department of transport to bring forward amending legislation in order that we could enter into services contracts directly with those rural transport groups who own their own fleet. Their fleet contains many wheelchair accessible vehicles and it was vital that we could continue to subsidise those particular service providers. I am very pleased that the amending legislative provision was contained in the Taxi Regulation Act 2013, which has now cleared the way for us to offer bus service contracts, without competitive tendering, to Bantry Rural Transport, Comharchumann Chléire Teo., Clare Accessible Transport, Meath Accessible Transport, North Fingal Rural Transport Company, the Community of Lougharrow Social project, and Carlow, Kilkenny and South Tipperary Rural Transport Company, known as Ring a Link. Alongside these major changes, we have proceeded with some other important developments. We have identified the appropriate IT system for managing such transport provision across the country - the dispatch organisation of services. The Sligo Leader Partnership, funded by the Department of transport, had developed a system and it has innovated its contract with its system supplier to the authority and we have commenced further development of that system for multiple organisation units for all these 18 transport co-ordination units. When finalised it will be a standard across the country.

We are piloting new rural transport services, which co-ordinate with existing school transport services in County Roscommon, in Tramore, County Waterford, and the Copper Coast service also in County Waterford. These started in December 2013 and they avail of the empty return leg of school services. In 2014 we will start retendering all of all rural transport services provided by private bus operators. Currently there is nearly 300 contracts in place. They need to be refreshed and gradually over the next 18 months these will be tendered by the authority.

In summary, the overall restructuring has been necessary in order to protect the level of services in rural areas. As with all State-funded transport services, savings have been required. Our ambition has been to reduce administration but protect services. There are challenges remaining throughout the year in the restructuring but a strong efficient foundation will be created that will enable expansion of these services in the future on foot of economic growth. That concludes my presentation and I hope we can answer any queries that arise.

John O'Mahony (Mayo, Fine Gael)
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I thank Mr. Gerry Murphy. I wish to make a brief comment before I call Senator O'Sullivan. Is the Senator the spokesperson on this area or is it Senator Mooney?

Ned O'Sullivan (Fianna Fail)
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It is Senator Mooney.

John O'Mahony (Mayo, Fine Gael)
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As members are aware, the NBRU and SIPTU appeared last week on this matter and they raised concerns about employment if they are unsuccessful in tendering for 10% of services.

As members are aware, the NBRU and SIPTU appeared last week on this matter and they raised concerns about employment if they are unsuccessful in tendering for 10% of services. In Waterford, all services are up for tender. The witnesses' point is that all of this is for the benefit of the consumer but perhaps they can address worries or concerns of the companies in respect of the employment conditions and the difficulties if they are unsuccessful. At last week's meeting, reference was made to letters of comfort received by some workers. What is the position in that regard?

Mr. Gerry Murphy:

This is for the benefit of consumers but there are implications for the employees within the company. The 10% quotient was carefully chosen to test the market and to test competitive tendering and pricing and to introduce benchmarking. At the same time, it is manageable for these companies. They have up until 2016 to plan for this small downsizing if they are unsuccessful. This year, Dublin Bus is advertising for 50 new drivers and putting extra services on the road because of slight economic growth and the need for services. We believe careful management by the bus companies, along with retirement and increased growth and increased demand for services, will mean that the need for transfer of employees may not occur. If a transfer of employees does occur, they are protected by transfer of undertakings regulations and EU directives in that regard. Terms and conditions are protected. The protection of employment on transfer of undertakings regulations are silent in respect of pensions. We will meet the NBRU during the week and we will discuss pensions and any requirement on the successful tenderer to provide a pension scheme. In general, terms and conditions are protected. It is an important item of European legislation transposed into Irish law, which means that when an asset or a service is moved on, the person's job is not lost. I understand the concerns but there is an opportunity to prepare for the 2016 change. Some 10% of Dublin Bus services will be tendered and in the case of Bus Éireann it would have less of an impact. Bus Éireann also runs commercial operations, such as the school transport services. We are talking about taking 40 buses out of 1,200 buses, which is only about 3% of its operations nationally. In the case of Waterford, city services will be taken for tendering but there will be residual commercial services and school transport services. At the Waterford depot, the services that will be going out to tender amount to only 15% of the depot size. There was a careful balance between maintaining the coherence of Dublin Bus and Bus Éireann, being able to run efficiently and opening up for competitive tendering.

Paschal Mooney (Fianna Fail)
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Will the routes lead to a better service or are they being cherry picked as high-volume routes? In the context of the Bus Éireann routes from Tullamore to Portlaoise, I assume there are already existing commercial operators on the routes. What is the advantage of singling out those routes, which are already providing a service? With regard to the employees of CIE, I am curious about the position of the letters of comfort that many employees are believed to hold.

Is it always the case that competition benefits the customer? In England, the deregulation of the bus service has led to more inefficiency and a reduction in service because tour operators operated to a strictly commercial criteria rather than including a public service obligation. As a result, customers lost out on services. Do the witnesses foresee that as a possibility?

Mr. Gerry Murphy:

With regard to the benefit to customers and the British experience of deregulation, this is very different. There are two British experiences, one of which is deregulation outside of London. It allowed for a commercial response that was uncontrolled and unmanaged by the state authorities. There was a controlled response within London, which is a regulated sector. Transport for London decided everything and put routes out to tender. Our model is very similar to that of Transport for London. There is no case that commercial considerations drive the quality of service for the public. Senator Mooney asked whether we have cherry picked high-value routes. In fact, we have done the opposite. Local and orbital routes for Dublin Bus are, financially, some of the poorest performing routes so it is not the case that we are cherry picking high-value routes.

Internationally, over the past 30 years, bus tendering has grown throughout the world. The markets have opened up. In Europe, only three countries have not used competitive tendering, namely, Greece, Northern Ireland and until recently the Republic of Ireland. In fact, Ireland used it for M&A Coaches contract in Portlaoise, the first public subsidy service that we put out to tender. The services we are putting out to tender are subsidised public service obligation services. While there may be commercial operators on corridors, they are not doing the same job as the public service obligation services. They are multi-stop services serving areas that commercial services will not serve because they are not commercially viable.

The Chairman asked me about letters for comfort. Any letters of comfort that apply within the companies will apply. It is up to Dublin Bus to identify the staff they consider are changing with the service and it is up to new organisations, if it is not Dublin Bus that wins the service, to take them on. Dublin Bus must then manage the issue of letters of comfort and contractual conditions of its workforce.

Paschal Mooney (Fianna Fail)
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I will ask a brief supplementary in the context of what Mr. Murphy is saying about the commercial operators. There is controversy over the Bus Éireann policy of reducing the number of stopping points in order to compete with existing commercial operators on some routes. This applies particularly to the north west of the country, where there is a lower population volume. It is a real concern that, if we put routes out to tender, it will reduce the number of stopping points. That will mean a denial of services to the public along those routes. Is Mr. Murphy not concerned about that as he expands the number of routes out to tender? I am thinking about the two routes that have already been chosen.

Mr. Gerry Murphy:

I am not concerned at all because they are existing routes that serve existing needs and people who need the bus services. They are subsidised services and the State provides them because there is a need for them. The routes will be retained and we are simply putting it out to tender to see whether another operator can win the route. It does not change the strategy for public transport.

Paschal Mooney (Fianna Fail)
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Will there still be an obligation on the private operator to continue with the route arrangements in existence?

Mr. Gerry Murphy:

Absolutely. The operator selected will have no determination in deciding not to operate the route. There will be a contractual arrangement where the operator must operate what we determine. We determine everything, including the frequency, the fares and all aspects of it. We are simply trying to avail of a contractor to do a delivery for us.

Seán Kenny (Dublin North East, Labour)
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I welcome Mr. Murphy to the committee. As a Dublin Deputy, I am concerned with the Dublin Bus services and the impact any changes will have on the service in light of SIPTU and the NBRU raising their concerns last week.

In 2009, Deloitte carried out a study of Dublin Bus and Bus Éireann services and came to the conclusion that they offered value for money. The point was also made that the subvention that both received that year was way below that paid in comparable countries. Since then, the subvention has been lowered again and again. Performance targets set for both companies have been met and, in some cases, exceeded. That raises a question about the rationale for putting 10% of their services out to tender through open competition and why the figure of 10% was selected. Why was it not 5% or 15%? On what basis was that decision arrived at?

Reference was made to the transfer of undertakings legislation and it was pointed out to the committee last week that there is grave concern that pension rights are excluded under the legislation. That factor weighs heavily on existing employees and it could be a reason for them not wishing to transfer if the services they work on are handed over. This is an important consideration for all workers and, in particular, older workers.

Senator Mooney referred to the experience in the UK. That must be borne in mind because bus service deregulation did not work out there. Fewer people used buses following deregulation.

There is also the question of the subvention. I assume the new operators will continue to receive a subvention. What gain will there be if the State is just subsidising another operator to provide the same service?

Mr. Murphy clearly stated there should be no discernible effect if the operator of the services was to change and this should happen seamlessly. I refer to the example of Aircoach, which provides a service from the airport to various parts of Dublin city. The company has been taken over by FirstGroup, which is one of the largest bus operators in the UK. However, Aircoach does not provide wheelchair accessible facilities in its fleet, despite the fact that it has been raised with its representatives. If a customer in a wheelchair approaches an Aircoach staff member in Dublin Airport, he or she is told to use Dublin Bus services, as the company will not carry him or her. That is not a level playing field. It has also been pointed out that the space provided on a bus for wheelchair passengers is three times that provided for able bodied passenger and the operator that provides such a service must carry a loss. The fact that Aircoach will not transport wheelchair bound passengers is a matter of concern because other operators could point to the company and say that because it is not doing so, they should not either.

I do not represent Waterford city but the committee was informed last week that all the Bus Éireann services out of the city will be put out to tender. Mr. Murphy referred to the school bus and other services and that is a concern as well because of the impact that might have on those who provide the service currently.

Mr. Gerry Murphy:

I will pick up on the issue of the Deloitte report, subvention and performance targets first. The 2009 report was not conducted on behalf of the authority but in general it made a number of statements about Dublin Bus and Bus Éireann being comparable with their peers. One could take comfort from that as it seemed to say they were efficient. However, a careful reading of the reports gives a slightly different picture. For example, a case study of the Dublin Bus Finglas corridor was done and the authors identified 17% cost savings that could be made and this could be replicated across 13 other corridors in the city. They said Bus Éireann should subcontract and tender some of its services because smaller operators would perhaps be able to provide them at a cheaper price. The Deloitte report, therefore, has issues in it as regards their efficiency.

In general, subvention in Europe ranges between 30% and 70% in some cities. However, it is not as low as perceived in Ireland. It probably comes to approximately 50% of the revenue of Dublin Bus and Bus Éireann, which is the mean throughout Europe. This comprises the base subvention, the free travel scheme supported by the Department of Social Protection and tax foregone through the taxsaver scheme under which the Revenue supports public transport. I do not say it is the highest subvention in Europe but it is not the lowest.

The Deputy mentioned Aircoach and wheelchair accessible fleets. Aircoach runs a commercial service and currently in Ireland there is no requirement on licensed commercial services to have a wheelchair accessible fleet. For example, Bus Éireann does not have such a fleet on its commercial services. The State, however, has invested in Dublin Bus and has funded buses that are wheelchair accessible. I guarantee the Deputy that all the services we provide through the new competitive tenders will be 100% wheelchair accessible.

He referred to the experience in the UK. He is correct that outside London, there has been drop in bus services. There might have been a splurge of growth in commercial bus services outside London but that diminished and the state went on to subsidise services. I would not recommend that model. However, within London, there has been massive growth in public transport. Passenger numbers are as high now as they were in 1962 during the great age of public transport before the growth in car use. There is continued growth in ridership and continued satisfaction.

TUPE is a matter we will address. We will talk to the unions and the companies and we will see what can be done with regard to that within the tender competition.

The Deputy asked why 10% of routes was chosen. In constructing competitive tendering in any tender competition, one of the keys to realising value for money is to have competition and to have a significant number of people bidding for the services. We did a market consultation in 2012 with both international and Irish operators and approximately 80 bus routes in the Dublin region would draw in large Irish operators and international operators to compete. That would enlarge the pool. If the number of routes is too small, the pool of operators will reduce. A total of 80 routes may allow us to parcel a north and south tender competition, which we are looking at, and it may allow us to run that concurrently with the tender for Bus Éireann commuter services to create a significant market that international and domestic operators could bid for in lots. Throughout Europe major operators have come into all the cities and jurisdictions that have realised value and they have delivered the value. Large global operators deliver value through competition. They leverage their management resources and existing systems, all to the benefit of the contracting authority which can avail of that and pass on the benefits to the consumer.

I guarantee the Deputy that the service will be the same. There will be no discernible difference. We hope it will realise cost savings for us to improve and increase services because the savings will be put back into the public transport system, whether that is in Dublin or in rural areas that have large gaps in services. Every penny we realise in savings, therefore, will be put back into better services.

Dessie Ellis (Dublin North West, Sinn Fein)
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I thank Mr. Murphy and his staff for their presentation. He mentioned the benefit to consumers. The greatest benefit to consumers would be a proper public transport system. Dublin Bus passenger numbers are beginning to increase and that appears to be working.

The Deloitte study and the Finglas corridor have been mentioned. The Finglas corridor was chopped to bits. The two No. 19 routes were amalgamated into the No. 9 route and there were other changes which affected services that were hard-won by communities. Communities have fought to get these services and there is still an impact, to this day, on them. Dublin Bus has done this.

I totally disagree with the entire approach and this is a road to privatisation, although the authority may say something different. There is the argument it is only affecting 10% of services five years down the road but ultimately it will open the door to privatisation. We must consider some of the orbital routes that are to be affected, as well as those in Waterford, where Bus Éireann will operate. There is absolutely no doubt that if these go out to tender, they will be cut to bits and managed in a way that will seek maximum profit. There is no doubt that the services will suffer in the delivery of passengers and ordinary people who have fought hard for the services. The cutting of routes in rural transport will certainly have an impact on many communities throughout the country, and everybody knows that many of these routes have served the public very well. From an economic point of view they have been good in that sense.

The new hackney licence has been mentioned and I know the Minister, Deputy Varadkar, has spoken for quite a while about bringing in a lower cost hackney licence. There will be an impact on taxis in some of these areas and also some of the other hackney services. It will facilitate the introduction of a third licence. There are some areas with high numbers of taxis compared to others. This is not just in Dublin and it is also apparent in some rural areas, and they will feel that impact. Have we examined the matter in that respect? Have we indicated that when we introduce this measure, businesses and others should demonstrate their need for the service? We all know what their answer will be. There will be an overall impact, and it is crucial that this does not knock other people out of business. I agree with SIPTU and the National Bus and Rail Union, NBRU, as we will lose personnel in Dublin Bus, so how will that be managed? We are putting more people on the dole but bringing in others. Experience tells us there will be a reduction in the number of people coming in from private companies or elsewhere.

I have always believed the subsidy has served us well. It is one of the lowest, if not the lowest, in Europe. Although it has been argued it is not the lowest, I have always believed it is one of the lowest. Most countries operate on the basis of a subsidy. It does not make sense to bring in private companies and give them a subsidy while we eliminate the services of State-run companies. The witnesses have indicated that Bus Éireann and Dublin Bus will be able to tender but the exercise does not make sense. I do not know who is responsible, although I suspect the Minister is partly behind the process. I do not know if the National Transport Authority, NTA, has had an impact, or if it will stand behind some consultants and argue that they have made such recommendations. I would love to know who is behind it. My opinion is that this is driven by a Fine Gael Minister with the ultimate goal of privatisation.

Mr. Gerry Murphy:

The key strategic question was who is responsible and if the process is driven by the Minister or the NTA. I am before the committee today because it was an NTA decision. It was driven by national legislation, and there is a requirement that before giving another direct award contract to Dublin Bus and Bus Éireann, there should be consideration of whether the public services could only be guaranteed in the economic interest by giving it to the companies. We have completed the consideration and I am quite satisfied that we have carefully considered and balanced the needs of consumers and the requirement to keep viable companies. There was no Government decision not to have Dublin Bus and Bus Éireann. There is a need to test market pricing, and there are a number of benefits to competitive tendering. It induces discipline, even in Dublin Bus and Bus Éireann, to price and compete with other people for that 10%. If somebody else wins, we have a benchmark on performance and cost base. It will also bring competitive attention, for the next five years, on Dublin Bus and Bus Éireann, whether they win or not. That will be apparent for the next tendering phase, so the companies can maintain and manage prices in order to stay competitive. If this process was not followed, one would end up - as we do - trying to determine fare increases for a monopoly where there is no benchmark or comparator. It is particularly important to have some comparators in the Irish market so we can benchmark the performance of the State-owned bodies.

I agree that the subsidy has served us well and we have made the case to the Minister that the subsidy should not be reduced any further. In considering the next current revenue programme, the subsidy should be carefully protected. With regard to the rural hackney licence, we have put in a structure with all the protections to ensure it will not knock out other viable businesses. If no application came to us, we would not be concerned, as that would mean there is not a need. Anybody going around rural Ireland would say there are gaps in the service at night or at particular times. If there is some way we can service that need without affecting existing businesses, it would be a good measure. This does not just involve local businesses, as community groups are also involved. We are looking at the people in the area and the local authority responsible for the area, which have identified a gap. The protection is very strong.

With regard to routes being "cut to bits", as I stated earlier, I can absolutely guarantee that we will determine the routes. We want to protect them and grow services in the State, so we will not cut any rural or Dublin routes to bits.

Dessie Ellis (Dublin North West, Sinn Fein)
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We are talking about the new hackney licence. How will it be judged? Will there have to be a number of areas across the country rather than one or two places where the process is applicable? Will there have to be a plan?

Mr. Hugh Creegan:

There is not a master plan, and it is meant to be a response to a need. The need must exist in the local area, so there would be an area that does not have transport services that are sufficient to cater for demand. There are safeguards in place, as either a business group in the area or a local community group must identify the need. They must involve the local authority, which must provide analysis confirming and endorsing that need. It is only at that stage that it can come to us as a valid application. We will be very much taking comfort from the fact that the local authority will have done a piece of work indicating that there are no other hackney or taxi services. There would have to be a genuine need and it is only when the information is brought in that we determine the licence. It is on an individual area basis each time.

John O'Mahony (Mayo, Fine Gael)
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Does Deputy Phelan wish to speak to this issue?

Ann Phelan (Carlow-Kilkenny, Labour)
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No, I have a few issues to address.

Eamonn Maloney (Dublin South West, Labour)
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I welcome Mr. Murphy and his colleagues and I thank them for the concise presentation. I will confine my remarks to Dublin Bus. I must declare an interest, as I am a customer. I am fortunate enough to have a very good bus service. Over the years under the guidance of Dublin Bus, the improvements, especially in the past ten years or so, have been phenomenal.

I can get one of a number of buses from Tallaght village and be outside Trinity College in 43 minutes during peak hours. There are very few cities in Europe in which one could get such a service.

I agree entirely with some of what Mr. Murphy said in his contribution. I take the view that given the improvements in Dublin Bus that it need not worry about the private sector taking part of its domain. I do not think that will happen in any significant way because of the changes that have taken place such as bus corridors, something which many opposed and still oppose. Many who drive cars support public transport as long as someone else is using it, which allows them the freedom of using their motor car. Reference was made to the experience in the UK. Just before Christmas I read an item to which Mr. Murphy referred on the increase in the transformation from London car owners to public transport users. That is not quite the experience in this country where the car is king. Once one gets a car, public transport is for someone else. We have a very good public transport system.

There has been much talk about Dublin Bus drivers but I have come to realise that “driver” is not an appropriate description because they are not only drivers; they are cashiers, security people and heritage officers. Anyone who uses the city bus service will know what I am talking about. One frequently hears bus drivers cum cashiers being asked in which church Jonathan Swift and Strongbow are buried. Drivers are being asked for such information while they are trying to take money. In an age of bonuses and top-ups, I would support them for Dublin Bus drivers who multi-task but I would not support them for some other people.

I have two questions for Mr. Murphy. He might have mentioned a timeframe but I did not pick up on it in the reference to the tendering process which comes on-stream in 2016. Are the 10% of contracts being tendered for one year or five years? Let us say one takes a particular route in which there is no private interest. Could Dublin Bus apply to tender in the same way as a private operator?

Mr. Gerry Murphy:

I can confirm that Dublin Bus can apply to tender. We envisage that the contracts would be awarded and working in autumn 2016. At this stage we envisage they would be five-year contracts. They would probably extend right out to 2021. We have to finalise the tendering. I will not guarantee the period will be for five years. It could be four years but it would be that order of length.

The discussion has been about the 10% of routes that we are opening up to competitive tendering but one must remember that 90% of the service is being given to Dublin Bus and Bus Éireann. They have met their performance targets in the contracts so I am happy that they would have 90%. I believe they run a very good operation. I personally think bus drivers have done a wonderful job in the growth in their services. They have trained people. Approximately 80 nationalities operate in the Dublin Bus system. There is a fabulous training programme. Dublin is unique in that when people get off the bus they say "Thank you" to the bus drivers. I hope that will continue. We will ensure that private operators that win contracts will have an appropriate training process for bus drivers of the same quality as the Dublin Bus programme.

John O'Mahony (Mayo, Fine Gael)
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I thank Mr. Murphy. If it is okay we will take questions from the three remaining members in the order in which they signalled: Deputy Harrington, Deputy McEntee and Deputy Phelan.

Noel Harrington (Cork South West, Fine Gael)
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I wish to follow on from Deputy Maloney's point about declaring an interest. I am of the opposite view. It is very difficult for me to access public transport given where I live. I commend the NTA on its route planner app – the national journey planner. If I were to come from home this morning to work I had three options. One was to leave on Monday afternoon. The other was to leave yesterday morning, which would be okay, and the third option was to leave this morning for work yesterday. On Monday I would have had a seven hour, six minute journey. On Tuesday I would have had a six hour, 30 minute journey and today I would have had a six hour, 51 minute journey. That is quite difficult. That is one of the issues the National Transport Authority has. In saying that, when one looks at the app and the options offered, it is extraordinary to see the mix of public and private options that are available. That is encouraging. It is one of the successes of the app. That is not a criticism, it a vagary of where I live.

That follows then to what we are doing. We had a meeting with the NBRU and SIPTU representing drivers from both public and private companies. They were at great pains to say they would not apologise for representing their members. The unions represent their members. The company, by and large, should represent the company and the customers. We have a remit to represent taxpayers, both those who use public transport and those who do not. We are the poor sods that have to represent them all and their conflicting interests. People have strayed into an ideological debate on privatisation. I am more interested in achieving the best result; the most efficient service at best value for the customer who uses public transport.

Mr. Murphy answered the question of why the NTA settled on 10% of the routes. Is he considering other routes at the moment for a future tendering process? I am not talking about waiting to see what happens because the pace of change for whatever reason is slow. Is the NTA considering a parallel process and doing the groundwork to consider other routes under the same criteria or even under different terms to achieve best value?

I am pleased that it was confirmed that Bus Éireann and Dublin Bus can also tender for the routes. They went to great pains to say they are as competitive as many of the operators in the private sector. I wish them well if they have tendered for those routes. Does the NTA have any remit for the depots and how they would come into the equation in terms of the new arrangements?

Hackney licences in rural areas are an important issue for my area where I have outlined that while public transport is available and we are pleased with the service the rural hackney initiative will have a beneficial impact on the more peripheral rural areas.

Concern regarding displacement is an issue. In small and larger towns we already have good private taxi services. These providers have concerns that less onerous terms being introduced will displace them. I understand there are some checks and balances, but will these be ongoing? Will there be an appeals process or a process whereby an existing hackney driver who has invested a significant sum in his business can make an appeal or a case to the NTA through the local authorities, not now but in a couple of years time when it is apparent this initiative has detrimentally affected the service he provides and the people for whom he provides it?

I welcome the decisions taken in regard to the co-ordination of rural transport. I welcome in particular Bantry Rural Transport Partnership and Comharchumann Chléire Teoranta on the work they have done. It is clear that because they own their own fleet, they were looked on differently. The replacement of those fleets will pose a challenge, but I am pleased they were given consideration.

Helen McEntee (Meath East, Fine Gael)
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I thank Mr. Murphy for his presentation. What regulation is involved or what balances or checks will be in place for Bus Éireann routes that will be tendered out to private coach companies. Mr. Murphy spoke about performance targets and cost savings, but it all comes down to cost. I disagree with Deputy Ellis that the delivery of service will suffer as I believe it will be the smaller coach companies that will suffer. The reason I say this is that I am aware of a coach company which had a particular Bus Éireann contract for the past five years, but which has lost that business because the contract was put out to tender and another company undercut it and came in with a seriously reduced price. The company which was delivering the service had an extremely busy year last year, but was unable to make a profit. It pays taxes, does not use washed diesel, pays its employees PRSI, but is unable to compete with a number of other companies which undercut it by up to €100 a day. What regulation is in place to ensure the companies tendering for these jobs adhere to all the other guidelines?

Ann Phelan (Carlow-Kilkenny, Labour)
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I want to preface my comments by saying that low cost is not always the best value for money and I was glad to hear Mr. Murphy say that the subsidy will not be reduced further. I want to address the issue of local area hackney licences. Will it be the remit of the local authority to monitor this licence or will it be the remit of the NTA? It is not very clear from the documentation I have examined in regard to these licences whether hackney drivers are allowed to make a profit or how much of a profit they can make. The terms of how they can operate are unclear. Like my colleague, I suspect we will soon get representations regarding displacement and concerns about this. I know that part of the process in applying for licences is the need to demonstrate clearly there is a deficit in regard to transport in the area in which someone wishes to operate.

I apologise for being late and if I am going over old ground. Some 10% of routes are to go to tender, but in the case of Waterford city some 100% of routes are to go to tender. Why does the 10% not apply in Waterford? Mr. Murphy said that the authority was piloting new rural transport schemes which co-ordinate with existing school transport services in County Roscommon, Tramore in County Waterford and the Copper Coast. We are experiencing significant difficulties in County Carlow in regard to transport, so would it be possible to include County Carlow in the pilot schemes?

Timmy Dooley (Clare, Fianna Fail)
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I welcome the opportunity to say a few words. Unfortunately, I was unable to attend earlier, but I did get the opportunity to read Mr. Murphy's presentation. One of the concerns I have about the privatisation agenda is that I believe it opens up the potential for the future privatisation of our public transport network. I am concerned about the possible development of a fragmented network. I believe the current operators do an exceptionally good job at maintaining the joined-up network, but that may be undermined when the privatisation process starts. I am also concerned that this process will not necessarily lead to a reduction in costs to the State or the delivery of a better service.

Some years ago, a previous committee had the opportunity to visit London Bus and it was made clear to us at the time that the privatisation agenda there did not work. The companies that won the tenders in that case became totally profit centred, with the result the service deteriorated. Regardless of the existence of service level agreements, the bidding contest became so great that people found themselves unable to provide the service and allowed it to deteriorate. There was poor timetabling, poor delivery of service, poor quality of buses and consumers moved away from taking public transport. When the government had, effectively, to take back the operation of London Bus, it had to invest heavily to rebuild confidence. I accept that the same is not happening here, because of the stepped approach of commencing with 10%, I see it as the beginning of a process I am disappointed the Government has allowed to happen. I am particularly disappointed the Labour Party has allowed this to proceed.

There is an issue also of the impact this will have on existing licence holders. The transfer of undertaking will ensure that the individuals associated with the routes tendered will have to transfer to the new companies. I suspect this will have some impact on Bus Éireann and Dublin Bus. I also suspect it will add to costs for them because currently costs are spread across 100% of the network, but now they will be spread across 90%. I believe the change may also lead to increased fares. We had a similar situation in the case of electricity, where the regulator required the price of electricity to increase to attract competitors into the market. That was a farcical situation and we may be taking the same route here in order to meet our commitments on the introduction of competition and, perhaps, pursue the privatisation agenda of Fine Gael.

I believe the NTA could have continued with the direct award process, which would have complied with the EU requirements and ensured we ended up with the best service.

Mr. Gerry Murphy:

Deputy Harrington asked whether we were considering a future tendering process at the moment for other routes. The answer is "No". We have made our decision and have decided to open up 10% of the routes and are giving security of the 90% to the companies for five years. Therefore, we are not creating an endless churn on it. However, we will have to consider the issue again in 2017 or 2018 to decide what we will do in 2019. The companies have the security of having the direct award for five years and we have no other ambitions in general.

If services are lost, for example, through commercial withdrawal on the network as has occurred in the past, that is an area where we would considering tendering services, but other than that we are not considering the big grouping of services - Dublin Bus and Bus Éireann - for tendering.

The Deputy asked about depots. They are owned by the CIE Group and are used by the operators. We have no legal access to the depots. We have a legal provision whereby we can require access to stations in order that we could require a commercial operator to go into a station but we have no access to depots. We took that into consideration in picking the areas. The depots that would service the local orbital routes in Dublin would be at the extremities of Dublin, generally probably available at low cost. The depots many bus operators use are very different from the Victorian depots that the incumbents have. They are simply hard standings with a very slick maintenance operation. We believe that the locations we have picked would suit that well. For the Dublin commuter routes on the Bus Éireann side, we believe that they could be serviced well by a very low cost depot in the regional area. As regards Waterford, as Deputy Ann Phelan mentioned, only approximately 16 buses are involved in Waterford and we believe that a depot operation could be easily found for that.

I will deal with the bus areas and ask my colleague to deal with the questions related to the rural hackney licence. Deputy McEntee asked about checks and balances in the contracts. I can assure her these will be very strong contracts with very strong checks and balances built in. I would draw an analogy between this and the Luas. It is run by a private operator, Veolia, with a very big contract. We are tendering with the RPA for a very onerous contract for the operator. Very similar provisions would be contained in a bus contract requiring the operator to deliver services, with penalties applying if it does not deliver them.

Helen McEntee (Meath East, Fine Gael)
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If the contract for a bus route is priced €100 less than that of another company, I find it difficult to believe that if the company is paying a driver and paying for diesel, paying VAT and paying for all the other costs involved, another company can provide the service for €100 less. That is where the problem lies.

Mr. Gerry Murphy:

That is not one for which we have tendered. Bus Éireann either tenders for school transport services or they tender for subcontract operators to help them at peak times in their services. It has run that tendering operation. The operations for which we have tendered have been very small, as in the case of the one awarded to M&A Coaches. That operator provides a good quality service at very good value for money for the State and I presume the operator is earning a profit and is operating satisfactorily. The requirement in any tendering process is that it is all done on a level playing field and that the person complies with all applicable statutory regulations.

I agree with Deputy Ann Phelan that low cost is not always the best value. Quality and price considerations would be the norm for these types of contract awards. I mentioned the buses in Waterford city. It amounts to only 16 buses and Bus Éireann has a residual 86 buses for its other operations. I will ask Ms Anne Graham to deal with the questions on rural transport and school transport services. With regard to picking the bus services, Deputy Dooley mentioned the loss of a joined-up network. Nobody wants to lose a joined-up network. The integration of the network is being provided by us in the National Transport Authority. The only initiatives that have been integrated across all operators have been ours with the Leap card in Dublin, the journey planner app and the real time passenger information system. As Deputy Harrington said, the options offered under the journey planner app include public and private operators. For the first time, people have the option of a mix of public and private operators and there are also rural transport operators. The integrating agent in the State for public transport is ourselves. There have been examples of non-match of bus services meeting train timetables and all those types of issues which we are trying to address.

The was reference to the beginning of a process. I have answered Deputy Harrington's points but perhaps he wanted us to consider other routes. The simple fact is that this was an authority decision, it is done now and 90% of it is confirmed for the next five years.

On the question of increased fares and the direct award EU requirement, definitely direct award complies with EU provisions. National provisions require a review as to whether direct award is approved. On the question of increased fares, fares have increased and we have been the agent that has been sanctioning an increase in fares. There has been a very significant increase in fares to address not only the drop in subsidy but also the drop in patronage. We hope that we are coming to the end of the cycle of those increased fares and that economic growth and the stabilisation of subsidy will allow us to only have modest fare increases in line with the CPI. I will ask Mr. Hugh Creegan to deal with the questions on the rural hackney licence and Ms Anne Graham to deal with the questions on rural transport and school transport services.

Mr. Hugh Creegan:

On the query raised by, I believe, Deputy Harrington about the effect of this on existing operators, we recognise that is a real concern among operators in the industry and we have tried to get the balance right in the arrangement we struck. I would make a number of other points on this. This is not intended to be a perpetual licence, it is a licence for three years. If it extends beyond three years, a completely new assessment process must be carried out. We would be very much looking to the local authorities, in terms of the part of the analysis they have to do to support the application, to at least flag up the impacts upon the existing services. They may not pick them all up but we would expect them to pick up some of them. It is our intention and we have agreed with a taxi advisory committee, a statutory committee that has been set up, to keep the operation of these initial local area hackneys under review and if there is need for a recalibration or a slight change, we would certainly take that on board.

Deputy Ann Phelan asked who monitors these licences and if they can make a profit. To deal with the profit issue first, they most certainly can make a profit. Because it is a hackney service, the fares are agreed effectively between the passenger and the driver, they are not set by us. We anticipate and expect that the people provide the service for a profit reason. Monitoring these licences is the same as monitoring taxi and hackney licences. The key agency in the State with the most resources to monitor them is An Garda Síochána and it will have all the powers it needs to do that and, on top of that, we have a small number of enforcement officers who will also be keeping an eye on these licences.

Ms Anne Graham:

In terms of rural transport and school transport integration, as we indicated, it is a pilot project being undertaken to see what will happen in terms of the cost efficiency, in particular, of using the same operator to run a school service and follow on by providing a rural transport service. It will make sense in some locations where the school is based in a rural area rather than in a town where the operator can pick up people in a rural location. We sought applications with regard to suggestions from all the rural transport groups but we received a very limited number of suggestions. Waterford came forward and a local councillor suggested the ones in Roscommon and those are the four that we are trying out now. We would like to extend the service, subject to funding being available. Before we would retender our rural transport services we would consider the school transport services that are in existence to establish if we could better organise the services before we put them out to tender.

Ann Phelan (Carlow-Kilkenny, Labour)
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Is it possible for me then to contact Ms Graham with my concerns?

Ms Anne Graham:

Yes.

John O'Mahony (Mayo, Fine Gael)
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Are there any further questions? I note Deputy Harrington is indicating.

Noel Harrington (Cork South West, Fine Gael)
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I have a brief question and it would be great if Mr. Murphy has the figures in this respect. If he does not he might forward them. He mentioned that as routes have ceased they have been retendered. How many times has the authority had to retender routes during the past three years?

Mr. Gerry Murphy:

Twice only.

Noel Harrington (Cork South West, Fine Gael)
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Who was awarded those routes?

Mr. Gerry Murphy:

M&A Coaches.

Noel Harrington (Cork South West, Fine Gael)
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It is a private operator.

Mr. Gerry Murphy:

Yes, it is a private company. It was awarded the contracts, not the routes.

Noel Harrington (Cork South West, Fine Gael)
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I presume it was awarded the contracts because it could deliver the services more efficiently, whether in terms of a lower cost or providing better value for money.

Mr. Gerry Murphy:

It was awarded the contracts because it had the lowest cost. It met all the requirements, the qualification requirements in terms of the bus etc. and after that on the basis of the price. It won two competitions. I would not overemphasise this, these are two very modest services. We intervened because of the loss of service on the old N8 corridor. Our capacity currently to intervene around the country in respect of other losses is very limited because of funding but we intervened in that case because there was a definite demand that needed to be filled. It is a small bus and it serves the needs of the area.

Noel Harrington (Cork South West, Fine Gael)
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At the last meeting Deputy Dooley introduced an ideological argument.

It would be preposterous to suggest the National Transport Authority, NTA, was embarking on a mission of privatisation. It was the NTA that offered those contracts to provide for efficiencies, not some political or ideological decision.

Mr. Gerry Murphy:

Yes, that is correct.

Timmy Dooley (Clare, Fianna Fail)
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For clarification, Deputy Harrington should read the document on transport his party published prior to the last general election. It sets out clearly that it is on Fine Gael’s agenda to privatise public transport services. Mr. Murphy will have to take his lead from the political arena. Although the internal governmental battle was lost by the Labour Party, there was a compromise.

John O'Mahony (Mayo, Fine Gael)
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That is a discussion for another forum.

What is the state of play with the forthcoming court case concerning the tenders for school transport and the claims made by some about CIE using profits from the school transport service to subsidise commercial routes?

Mr. Gerry Murphy:

It was raised by the National Bus and Railworkers Union, NBRU, and SIPTU that somehow school transport services were subsidised by the commercial services, which is not true. From audits of the public service obligation, PSO, side, we know the commercial bus services are not subsidising the PSO side. The Department of Education and Skills audits expenditure on school transport and it has published a report on this. A company challenged the award of the school transport contract to Bus Éireann but lost its case in the High Court. It is now taking it to the Supreme Court.

Noel Harrington (Cork South West, Fine Gael)
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Is there a cross-subsidy going from the school transport service to public transport services?

Mr. Gerry Murphy:

No.

John O'Mahony (Mayo, Fine Gael)
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I thank Mr. Murphy and his colleagues for attending today’s meeting and answering members’ questions.