Oireachtas Joint and Select Committees
Wednesday, 1 February 2017
Joint Oireachtas Committee on Transport, Tourism and Sport
Current Financial Situation at Bus Éireann, the Expressway Service and the Rural Transport Programme (Resumed)
We will now consider the current financial situation at Bus Éireann, the Expressway Service and the rural transport programme. This is the second in a series of meetings this committee has convened to examine the very challenging situation developing at Bus Éireann. Last week we heard from acting chief executive officer, CEO, Ray Hernan, who set out the challenges as he views them and from Irish Rural Link which expressed concerns about the possibility of diminishing bus services in rural areas.
Today's is an important meeting on the current financial situation at Bus Éireann, the future of the Expressway Service and the vital role of the rural transport programme. I am delighted to welcome the Minister for Transport, Tourism and Sport, Deputy Ross, and I thank him for giving us his time. I invite him to make his opening statement. Given the time constraints, could he please limit it to five minutes and anything not covered can be taken as read because the presentation has already been circulated?
I thank the committee for inviting me today to discuss the situation at Bus Éireann. I do not for one minute underestimate the challenge facing Bus Éireann and I know this committee, irrespective of differing perspectives, does not either. It is unfortunate that these difficult issues have arisen on the 30th anniversary of the company's establishment in 1987 but in some ways that anniversary reminds us how different a place Ireland now is compared to then and how different the operating environment within which Bus Éireann now operates is too.
Today Bus Éireann fulfils three different but important roles. It acts as the provider of taxpayer-funded public service obligation, PSO, services under contract with the National Transport Authority, NTA. Those PSO services carry approximately 40% of the company's total passenger journeys in any one year. It continues its role as the administrative agent of the Minister for Education and Skills in terms of the school transport services. These services carry approximately 50% of the company's total passenger journeys each year. It also acts as a commercial bus company under the Expressway brand, offering inter-city services across its 23 Expressway routes, often in competition with other operators. Those 23 routes carry around 10% of the company's total passenger journeys each year, yet it is Expressway, which, despite its small size in the overall context of the company, is the root of its current difficulties.
The taxpayer recognises the company's importance. That is why just over €40 million was granted to the company last year to provide those socially necessary but commercially unviable PSO services, while in addition the company receives around €150 million per annum of taxpayer funding in respect of its school transport work.
The recently confirmed PSO outturn for 2016 means that last year Bus Éireann received 21% more in taxpayer funding for PSO services than the year before. This year I secured 11% additional funding for overall public transport services, which will see Bus Éireann benefit from even more taxpayer funding in 2017. The €40 million of taxpayers' money in 2016 supported approximately 230 routes across the country, in every county outside Dublin. From Dungloe in Donegal to Goleen in Cork, from Clifden in Galway to Carlingford in Louth, the Bus Éireann PSO bus service is a vital, vast and much-used service across rural Ireland. That taxpayer funded transport connectivity is at the heart of our public transport system. Under legislation passed by the Oireachtas, the NTA has the statutory powers to ensure continued public transport connectivity regardless of decisions taken by any individual operator. The NTA has assured rural Ireland that it can, and will, step into any area, consult with local communities, and assess what public transport services are required and what is the best method to provide them. It has done this in the past and will do so in the future. Accordingly, the NTA will ensure that there is no negative impact on the connectivity of rural communities.
As I have said, however, in addition to its vast PSO network, Bus Éireann also operates commercial services under its Expressway brand. Equally, we all know those services lose money. If a company wishes to operate a commercial service then that service must make commercial sense. That is a basic concept that I think is well understood, the taxpayer cannot fund the commercial services of one operator and not fund those of all other operators. That is a basic principle of fairness and also, importantly, a fundamental tenet of national and European law. Let me be clear – I cannot provide such funding. As a company Bus Éireann needs to examine how it operates and how the company will be able to not just survive, but thrive in a country and a bus market that have changed for the better since 1987.
In difficult situations such as these, we often see periods like the last few weeks, where accusation and counter-accusation fly back and forth, fuelling media speculation and adding to the uncertainties and upset of bus users and company employees. We all know that ultimately these disputes will only be settled by open, constructive and realistic engagement between the parties involved, the company and its employees. I know this might seem strange but I saw some signs of hope last week because amid all the noise, we heard two clear messages. The first was that trade unions are willing to engage on the basis of no preconditions. The second was the acting CEO confirming to this committee that nothing he has said or issued in recent weeks constitutes preconditions.
If the two parties are claiming they do not have preconditions, it makes one wonder why they are not talking. The State is ready and able to assist in these situations, as it has done since 1946 when the Oireachtas first established the State's industrial relations resolution bodies. Both parties need to reflect immediately on how these bodies can assist and instigate whatever action is needed to ensure discussions begin. I cannot understand, in the light of the statements both parties have made, what is hindering them from coming to the table or using the institutions and bodies of the State to come together.
The word "policy" has been used a lot in recent weeks. I am clear on whom public transport policy should be about; it is about the ordinary citizen. When we strip away the rhetoric, everyone in this room who claims to want to advance public transport services agrees with that statement or, at the very least, should be able to agree with it. In fact, the same sentiment featured throughout the Oireachtas debates in 2009 when the then Minister, Noel Dempsey, introduced what is now the Public Transport Regulation Act 2009. It is that legislation, as passed by the Oireachtas, that reformed the restrictive practices of the past and hauled commercial bus services into the 21st century. The Act sought to place the citizen at the heart of these services rather than the vested interests of the past, as enshrined in a law dating back to 1932. Most importantly, the Act provided a platform for citizens to avail of better services, frequencies and fares. The ordinary citizen has embraced the reforms introduced by the Oireachtas, as evidenced by the 23 million people all over the country who chose to use a commercial bus service in 2015.
The Minister has stated Expressway services are the root cause of the current difficulty in Bus Éireann. They account for 10% of the company's passengers. Is it the Minister's opinion that if Bus Éireann did not operate the Expressway services, it would not be in such dire financial circumstances?
I shall take that question straightaway. Obviously, the service has accounted for most of the losses of Bus Éireann. The turnaround in the fortunes of Expressway has been very sudden and critical. Was the Deputy asking whether Bus Éireann would be able to operate without it?
The Minister has stated the service accounts for 10% of passenger journeys. I want to know what his opinion is. In fairness, he is the Minister responsible for transport, tourism and sport and has a responsibility to do something.
It is obvious that it is the most unprofitable and difficult part of the company. It is patently obvious that it has caused the crisis, but I am not in the business of directing or pushing anybody in any way to make Expressway exit from Bus Éireann. That is not my intention. My intention-----
My opinion is that the two sides should get together and construct a solution in the interests of the taxpayer, the consumer, workers and rural areas. The interests of rural areas are very important. In that sense one cannot just do away with Expressway. What we must do is ensure a profitable service is run and a PSO service also. We have to ensure social needs are met. This is imperative in the transport system. The PSO service runs in parallel with a profitable or commercial service. That is what I am pursuing. I will not dictate whether Expressway should be closed down. What I really want to see is a healthy, thriving bus service in rural areas and throughout the rest of the country.
The NTA has made it absolutely clear that if Expressway drops any route, it will move to establish connectivity to ensure no community will be abandoned in the way people are suggesting. It will move if it looks as if any rural community is being abandoned as a consequence of the withdrawal of other services.
The Minister has stated publicly that he will not interfere in any dispute between Bus Éireann and the unions. As the Minister with responsibility, he has a duty to become involved and do everything in his power to ensure both parties can reach a compromise in order that services will not be disrupted.
As Minister, I take responsibility for a large number of areas. There is an enormous number of responsibilities which I welcome. Let me make it quite plain to the Deputy that one of my responsibilities is distinctively not to get involved in the nitty-gritty of an industrial dispute in various bodies under my aegis. It is specifically not up to me to do so. We have institutions of the State specifically set up for this purpose, as acknowledged by both parties. We have the Workplace Relations Commission and the Labour Court. That is why they exist, as I specifically said in my opening remarks. This relates to the question the Deputy has just asked. The two parties are not producing reasons for not talking at this stage. They are both stating they will talk without conditions. Why is that not happening? Let them come together and talk. I do not want to be there because the reason they want me to be there is they want me to come with my cheque book. That is not the role of a Minister in these disputes.
I asked that question because it is related to my next one. The Minister has stated that, as far as he is concerned, neither party has set preconditions to beginning discussions. I have to disagree with him in that it is quite clear that the acting CEO of Bus Éireann has set out preconditions in his recent letter to workers in which he outlines the actions he intends to take in the coming weeks. What is the Minister's opinion on the letter sent to workers? Does he agree that the actions outlined in the letter are, in fact, preconditions to entering negotiations?
The CEO has said they were not preconditions. What he did do was put out some programme which he was sharing with everybody else. Obviously, as far as I can see - I cannot read his mind - these are negotiating positions. He has stated specifically that they are not preconditions. The trade unions have also stated they would begin discussions without preconditions. Therefore, let us get on with it.
I am very concerned by the comments the Minister made in his opening statement. He stated: "Government will review how best to ensure a sustainable funding model for the free travel scheme." I spoke directly with the Minister for Social Protection, Deputy Varadkar, last week and received absolute clarification from him that there would be no changes to the free travel scheme. Can the Minister, Deputy Ross, confirm to the committee that there are no changes planned for the free travel scheme?
Deputy Varadkar said quite specifically that we would engage in discussions on the free travel scheme. This seems to conflict with the conversation Deputy Fitzpatrick had with him. We will engage in discussions on the free travel scheme. I confirm that I have been in touch with the Minister, Deputy Varadkar, I will speak to him and my officials and the Minister will engage on the issue of the free travel scheme. I hope Deputy Fitzpatrick has no doubt about this whatsoever. It is absolutely unambiguously true that those discussions will commence.
I ask the question because a few weeks ago one of our national newspapers tried to scaremonger people that the free travel scheme would be taken away. Free travel is so important for Ireland, especially rural Ireland, and the last thing we want to do is scaremonger people that there is a possibility free travel will be taken away from them. All I ask the Minister is that he give a commitment, as the Minister, Deputy Varadkar, has, that free travel will continue as far as the Government is concerned.
I am very glad the Deputy asked this question because I want to make an absolutely emphatic statement that there is absolutely no suggestion of free travel being taken away from anybody. That is not what is at issue, and anybody who makes that suggestion is either being mischievous or misunderstanding what is going on. This is about how free travel will be funded in respect of Bus Éireann and how it gets its share of it. I have not spoken to anyone in government about removing free travel, I will not initiate any proposals to do so and I would not countenance any proposals to do so.
I thank the Minister for putting that on the record.
The last thing we want is a bus strike in this country. This country has come through a lot in the past number of years and, in fairness, everybody has put in a big effort to put this country back on track. The Minister should intervene in the Bus Éireann dispute, try to talk to both sides, get the two of them sitting down together and get the situation sorted out. Nobody will gain anything from the current state of affairs. There are an awful lot of concerned families in my constituency and, I am sure, throughout Ireland that are very worried by this situation. The public transport providers in this country, including the private companies, which are doing very well, have been doing a fantastic job over the past number of years. I ask the Minister for the last time whether there is any chance he, as the Minister with responsibility for transport, can intervene and try to get involved in some way or some capacity to sort this problem out.
I appreciate the Deputy's plea and I know it is genuinely felt. I think it arises from a misunderstanding that I have a role to play in an industrial dispute. I do not have that role. I repeat that I am a shareholder; I am not a party to this industrial dispute. There is nothing I would like to see more than a sensible and satisfactory end to this. It is worrying a large number of bus drivers and staff in Bus Éireann, and they are justified in having worries. They read in the newspapers every day about threats to their livelihoods, and that is awful for them. There is nothing I would like to do more than to sort out this problem for them. Let us acknowledge that rural communities also feel threatened and vulnerable, as does the taxpayer. I assure the Deputy it would not help to resolve this dispute, certainly in any long-term way, if I were to get involved because it would give a misleading impression. The dispute will be resolved, as were the Luas and Dublin Bus disputes, by my staying out of it and by the machinery of the State. It has been painful and it is regrettable, but my intervention would do more damage than good.
The issues involved are complicated, and some of the issues that have been raised are not to do with the pay deal. This is a company which needs root-and-branch and cultural changes if it is to compete in the marketplace. Whether this should be called restructuring I do not know because that is a very general word, but there are issues-----
Paragraph 8.27 of the Code of Practice for the Governance of State Bodies requires the Minister to get involved where major change is envisaged within a State body. I ask in light of the fact that the Minister would acknowledge that major change is envisaged, that he get involved. His predecessor requested a report in late 2015. This report on proposals as to how the financial challenges could be dealt with was presented to his predecessor in early 2016. I have asked this question before. Did the Minister, Deputy Ross, see that report? A "Yes" or "No" will suffice as it is a simple enough question.
I do know whether or not I saw it. A series of reports are coming through. If the Deputy is referring to the report of late 2015, which was presented to Deputy Paschal Donohoe, I was briefed on it. I was not in office at that time. I was briefed on it as I have been briefed on many of the reports to which Deputy Troy has referred. I did not send for it because I was not in office at the time so I was not in a position to do so. However, I certainly was briefed on it at the time. The Deputy also asked if I will get involved in the dispute because the issues are so intertwined.
We can come back to that, if the Minister does not mind. A number of plans were put to his Department between 2015 and 2016, namely, a five-year plan and strategy roadmap for Bus Éireann and various iterations of an existence plan which were put forward in July 2016. Something further was put forward to the Minister in August 2016 and September 2016. Did he receive these?
During the course of 2016, Bus Éireann worked on developing a business plan to address the loss-making situation in its commercial Expressway business. Several drafts of Bus Éireann's proposals were presented to my Department and NewERA, my Department's financial advisers, and were discussed. These discussions highlighted some shortcomings that existed in the draft proposals. In September 2016, the board of Bus Éireann commissioned its own independent consultants, Grant Thornton, to review the company's proposals and advise the board.
The consultants' confidential report to the board, which was widely commented on by the media, essentially came up with a similar analysis to the one given over the preceding months by the Department and NewERA. Arising from the board's consideration of that Grant Thornton report, the report which Deputy Troy would be familiar with, the company has now embarked on developing a new plan to address the company's loss making situation and restore it to a sustainable future. The company aims to have this plan in the next few weeks.
Did the Minister see any of the reports or witness any of the reports being given to the Department during 2016 that identified Bus Éireann as being in a serious and precarious financial situation? I have to say to the Minister that there was complete and utter inaction by him, his predecessor and the management of Bus Éireann for over one year, knowing that the company was haemorrhaging money. We now have a situation where, despite what the Minister says, letters have been issued to the workers with confirmation - it is not a threat - that wages will be reduced from 20 February.
I have not been in office for a year or anything like it. I was kept advised by my Department about all the reports to which the Deputy referred. I am talking about the NewERA, the management and the Grant Thornton reports. On every occasion I was kept advised and up to date. It would be absurd to say that I was not. To suggest that I was responsible for something not happening for one year when I have been in office for eight months is somewhat stretching it. There were reports obviously from-----
What about the previous reports? The Minister was in office in July and in August in 2016. In terms of whether he read the entire report or simply received a briefing on it, he can be pedantic and split hairs whichever way he wants to but the question is around what actions the Minister took to try to stop the haemorrhaging of funds at the semi-State company.
The responsibility throughout that period was on the company to produce a viable business plan. I have given the committee the sequence of events of what happened and Deputy Troy is aware of them. There was a series of business plans and suggestions from the company. I have said quite specifically that NewERA looked at them and came to a decision on them. I have given this information quite specifically and also that Grant Thornton, again, looked at the possible options in the management's report and it came to certain conclusions about that. The company itself recently came up with yet another plan and report, which it is now working on. If the Deputy considers that as inactivity, then I do not know what he would consider as activity.
I do not consider commissioning one report after another as activity. It has been identified by the acting CEO that €7 million was spent in 2016 on the hire of private coaches. This is something the company says can be done without in 2017. Perhaps there is a saving to be made there. At the committee meeting last week, the Bus Éireann acting CEO said that the technology to ensure efficiency with petrol and diesel for the buses was not being implemented throughout the fleet. An increase in efficiency levels of 1% would save in the region of €350,000. It has also been suggested that savings could have been made in the whole area of insurance. Between the Minister's Department and the Bus Éireann management these efficiencies were not looked at. Under the acting CEO, they are being looked at, which is welcome. What is also being looked at is the slashing of the employees' terms and conditions but when the acting CEO appeared before this committee last week he could not identify the percentage of savings the company would achieve through non-payroll activity. That is the fact.
I am conscious of my remaining time but I have two further questions. The Minster speaks of the social protection negotiations with the Minister for Social Protection. This was identified in the very first report the Minister, Deputy Ross, would have received very early on after taking office but he is only going to start talking to the Minister for Social Protection in the coming weeks or days. What has the Minister, Deputy Ross, done to date? What negotiations has he had to date with the Minister, Deputy Varadkar, in order to increase this funding? In the Dáil last night the Minister, Deputy Ross, said that the Public Transport Regulations Act 2009 had at its very core putting the customer first. That is right. While I agree with much of what my colleagues have said, I am not against competition but I want to see fair competition. Does the Minister believe the competition is fair in how the licences are now issued? There is a situation, for example, where we have the Bus Éireann route between Waterford and Dublin servicing ten stops while the private contractor, which has a similar licence in regard to departure times, etc., services two stops between Waterford and Dublin. Does the Minister believe this to be fair? Does he not think that now is the time to address this? Things constantly evolve and change, and no legislation is enshrined to be in existence for an indefinite period of time. Does the Minister think that now is the time to carry out a regulatory review on how the NTA issues licences?
I will try to answer as many of the questions as possible. The Deputy spoke about the hire of coaches for the figure of €7 million. He also made reference to insurance costs soaring unnecessarily and difficult to explain. These are operational issues which is why we have management and people operating the companies. I am not going to micro-manage any of those semi-State bodies, in which I am a major shareholder, on a daily or weekly basis. That is not my job. Mr. Hernan, to whom the Deputy has given a great deal of credit, rightly or wrongly, although it is up to him, has made some statements about what he is going to do. Those things may or may not be palatable to the Deputy but we must allow the new management and the unions to work out these issues between them. While there have undoubtedly been problems there in the past, it is now possible to identify what has gone wrong. The Deputy should not ask me to get involved on a daily basis in the work of management-----
The Deputy should not ask me to get involved on a daily basis in the work of management which we have appointed to do this particular job. There is a board of directors. It must be remembered that there are several layers here, including me as the shareholder, acting on the Deputy's behalf and on that of everybody else, a board of directors, a chairman of these companies-----
Yes, there are vacancies on the board. No doubt we shall come to that point. Those people are there to see management is doing its job, and the management is being monitored on a monthly basis. That is not up to me. I take Deputy Troy's point about looking at the annual report and asking about what is happening. That is very fair indeed but do not ask a Minister to move in on details on a daily basis.
I do not expect the Minister to micro-manage but I expect him to macro-manage. From the time the Minister was appointed and was made aware, as were his predecessor and the officials in the Department, of the serious financial situation pertaining to Bus Éireann through various reports, what action has been taken?
I quoted some of the dates on which the Minister would have received reports. Did the Minister at any time instruct board members or the then managing director or chief executive officer to take corrective actions? The point I am making is that the lack of leadership and instruction from the Department for over 12 months - I am being generous in terms of that timeframe - allowed the situation to arise whereby greater losses were generated. I do not expect the Minister to micro manage what is going on internally in the company but he was made aware of what was going on. What did he do?
I am delighted Deputy Troy has asked that question. The Deputy said I received a large number of reports. I did and I was also briefed by my officials on those reports on an almost daily basis. The Deputy's question is a fair one. I did not micro manage but I do not know off-hand how many times I have met the chairman or the chief executives of these companies but I can get that information and forward it to the Deputy. I am speaking not just about Bus Éireann but Iarnród Éireann and Dublin Bus as well. I have been meeting them regularly since I became aware of the problems arising, if I have not been briefed by my officials. Some of my officials are pretty fed up trotting up and down to my office because I am monitoring the situation very carefully. I have had regular reports not just from my officials but from the chairpersons of these particular bodies. That is what I have done. That is my job. It is my job to meet with them if a situation is becoming critical. As I said, I can provide the Deputy with the information. I have been talking to them on a regular basis not just in my office but by telephone. I do not accept that I am neglecting any particular form of communication. Far from it. If the Deputy asks them I am sure he will be told that I have been quite demanding about getting answers on certain issues.
While the Minister's approach up to now has been somewhat clinical, his opening statement today is so full of sympathy the only thing we are missing is a cup of tea.
The Minister's reference in his opening to there being no pre-conditions is nothing short of insulting. I have a copy of the letter that Bus Éireann issued. While I do not propose to outline in detail the list of inflammatory and demeaning cuts mentioned in it, including a reduction in pay of 30%, the following point might add a bit of weight to the pre-condition issue. The letter states:
I ask you to give full and careful consideration to this proposal and confirm your willingness to accept the overall objectives that we are both attempting to achieve by confirming acceptance. We are willing to meet with all the unions to discuss the detail of these initiatives and how they could be best applied to practice. [It then gives the date of the meeting] If we do not receive confirmation of your acceptance of these proposals then we will, as a matter of urgency, be seeking that the Labour Court would reconvene.
What is proposed is clear, precise and targeted. Regardless of whether the Minister believes these are proposals, initiatives or pre-conditions, the unions are of the view that they are pre-conditions. That is what they believe and that is what I and everybody else in the public domain believes. They are precise pre-conditions and they are targeted at the workers. The Minister said earlier that he would like to see the two parties come together and that there are no pre-conditions. As I said, the unions believe there are pre-conditions. I have previously raised with the Minister the issue of having the pre-conditions withdrawn. Whether what is proposed are termed proposals, initiatives, pre-conditions, given the Minister's statement that he is anxious for the two parties to meet, will he agree to instruct or advise Bus Éireann management to agree to set aside these pre-conditions so that the parties can enter into negotiations? That is not an unreasonable ask of the Minister if, as he said, he is genuinely interested in resolving this matter.
Let us accept that these are proposals or initiatives. Will the Minister ask Bus Éireann management to set aside its letter, which has only inflamed the entire situation, and meet with the unions?
I want to be helpful in this situation. I do not want to be partisan in any way either, because I do not believe that is my job. If either party believes that there are pre-conditions then perhaps the WRC or the Labour Court should be the judge of whether or not they are. It is my understanding that there are no pre-conditions. When the chief executive appeared before the committee he said that there are no pre-conditions. The unions have also said that there are no pre-conditions. I can understand the Deputy's interpretation of the words but I will not instruct or advise because to do so would be to break the principle of getting involved. However, I would appeal to management to repeat its claim and commitment that there are no pre-conditions. I appeal to both sides to say publicly tonight that there are no pre-conditions. That is all they need to say. They then need to get around the table.
Will the Minister agree to advise or request Bus Éireann management to set aside the letter to allow for negotiations? Given what lies ahead, in terms of the chaos in three weeks' time across our public transport network, will he do that? The Minister is aware of the unions'' perception of this letter. I believe it is an ultimatum to workers but the unions, workers and the public believe they are pre-conditions. If the Minister is genuine about wanting to see this matter resolved will he instruct Bus Éireann management to set aside that letter? Will he agree to do that this evening so that the two parties can come together in discussions?
The issue of under-funding in respect of the travel pass has been a topic of discussion. I would like to raise with the Minister an issue which was drawn to my attention a fortnight ago. Does the Department of Social Protection PSO subsidy differ from the free travel pass subsidy?
The Department of Social Protection PSO subsidy covers 41% of an average journey.
I would like confirmation of a rumour that exists, namely, that private operators get a higher subsidy towards the average fare. Several people have mentioned that private operators are given upwards of 70%, which would be alarming were it the case.
I do not know the answer to that question. The Department of Social Protection administers the scheme. It has nothing to do with me, but I will try to find out the answer for the Deputy and let her know. I do not know. Bus Éireann gets approximately €20 million for the free travel scheme, or is that part €12 million? Bus Éireann overall gets €20 million.
The Minister referred to increases in PSO non-commercial services. Will he elaborate? I hope that he will commit to conducting a review of PSO routes as well as Expressway routes where there are private operators. I am referring to oversaturation. The Minister stated that it would be as resources allowed, which could mean everything or nothing, but is he committed to a review of the identified routes?
Yes, but it operates the licensing. Some reports claim that the NTA has saturated the commercial bus market through licensing. I do not understand the saturation point, which is often made by people in this forum and elsewhere. The figure, which is out in the open, is the correct one. The NTA has granted eight licences and refused 11. That was in a five-year period from-----
Let me finish my sentence, please, Deputy. I told them to go into the negotiations with a blank piece of paper. I am not saying to anyone not to hold those beliefs. I would not ask the trade unions or management to do that. They should not discard what they believe in for a second, but they should go there with a blank sheet of paper. Those are not preconditions.
We can play with words, but the world and its brother know that they are. For negotiations to take place, the unions will not commit to any of these. That is what the Minister is saying. Two blank sheets of paper.
"Rural Ireland is a top priority". That was last night. "The NTA will ensure that there is no negative impact on the connectivity of rural communities" was today. That is a rather vague formulation, so let us pin it down.
There is a village. Let us call it Ballykissangel. Six Bus Éireann buses pass through it every day. As a result of current events, that service is axed. The NTA brings in a private bus operator, which runs a bus through the village twice per day. Technically, there is no negative impact on connectivity because there was connectivity yesterday, there is connectivity today and there will be connectivity tomorrow, but the people's service has been slashed by two thirds.
Let us tighten up the formulation. Will the Minister give a commitment that the level of service to rural towns and villages will not be negatively impacted on irrespective of what happens in Bus Éireann and that people will retain 100% of their current service levels?
I thank the Deputy, but I am sorry that he mocked my commitment to rural Ireland. It was not phony. It is a commitment that has been given solemnly, not just by the Government but also by the NTA. The Deputy heard me in the Dáil last night when I stated that it was a top priority. It is. I do not want myself or the Deputy to send out the message that connectivity is in some way going to be removed. It is not. Connectivity is the top priority. However, I cannot comment on individual routes. The Deputy knows that. That is not my job.
I am not asking the Minister to. Connectivity will be maintained. I got that. I gave the Minister an example of six connections. Even if they are reduced to two or one, there is still a connection, but the service has been slashed. Will the Minister give a commitment that the level of service will be maintained 100% for each town and village? Yes or no?
The Deputy should let me finish my sentence. I did not interrupt him, nor would I. I am not going to give commitments in detail on individual routes. However, there is a pledge that there will not be a loss of connectivity. As evidence of this and as members will be aware, the NTA has stepped in previously when commercial operators moved out. The NTA can extend-----
Fair enough. We only have ten minutes. Let us leave aside the question of individual routes. We will not get into that level of micro detail. If one combines the individual routes, one gets a national picture. Instead of six in one village, there are 2,000 throughout the country, for argument's sake. Is the Minister giving the commitment that the level of service will still be 2,000 or more overall or is he leaving open the possibility of a reduced level of service even while maintaining connections?
This is very important, given some of the comments that have been made and the vulnerability of the many people around the country whom I have met.
They believe they are going to be abandoned because of some of the things that are being said, which are misleading, about their communities. What I am saying is that the NTA will consult local communities, as it has in the past, in order to ensure their requirements will be considered and met, as far as is possible, in situations such as this. It will be consistent in that regard.
As I note that the Minister has not made a commitment to the level of service to be provided, I will move on.
The acting CEO confirmed in the statement made to the committee that nothing he had said or issued in recent weeks constituted preconditions. One can argue that what is stated in the letter does not constitute preconditions but a negotiating position, if one stretches it a little. I will tell the committee what a precondition is. Mr. Hernan has stated publicly that he will unilaterally cut the driver's allowance for working on a Sunday, overtime, meal allowances, etc. in 19 days if the unions do not submit to something like this plan in negotiations. Even if talks begin in the morning, unless Mr. Hernan withdraws his statement, he is effectively saying they talks have 18 days in which to succeed or he will slash take home pay. That does not constitute a blank sheet of paper. To be blunt, I call it a bloody big precondition. If the Minister is genuine in the point he made about having a blank sheet of paper, will he call on Mr. Hernan to withdraw this precondition?
I am not going to get into the details of the statements issued on the industrial relations dispute or ask Mr. Hernan or any trade union leader to set or withdraw certain conditions. I am not going to ask Mr. Dermot O'Leary to withdraw anything he has said and I am not going to ask Mr. Hernan to withdraw anything he has said. I do not want to see the two guy setting preconditions but sitting down together.
The Minister has come before the committee and recommended that the two sides sit down together with a blank sheet of paper. However, those involved on one side will have it hanging over their heads that if they do not agree to pay cuts of up to €7,000 a year for some of the workers, it it will happen unilaterally within 18 days. The Minister does not think it would be in the interests of genuine negotiations to have that proposal withdrawn.
The Minister's "no comment" speaks volumes. I want to ask him about the insolvency of Bus Éireann. Mr. Hernan has said that within a year the company could reach a crunch. He has also indicated that the board will be unable to sign off on reports at the end of March unless a plan is put in place. He has talked about making unilateral cuts within 19 days, which means, as we all know, that there will be national strike action soon afterwards. The Minister is in a situation where we are 19 days away from a national bus strike in a company that has a boss who has said the board will not be able to sign off on reports by the end of March and the entire company could be insolvent. If it was to become insolvent, what would the cost be in terms of redundancies, lost tax revenue to the State and social welfare payments for 2,500 employees? Can the Minister give us that figure?
We are talking about the immediacy of the issue. The Deputy has said that in 19 days we will face a doomsday scenario. I do not think Mr. Herman was saying the company would be insolvent by March; rather, I think he was saying it would be insolvent much later if things were to continue as they were. I do not know what the cost would be. We could probably have a figure worked out. It would be extremely punitive if there was to be an insolvency.
The State would lose €59 million in payroll taxes. If 2,500 workers were to claim social welfare payments at the minimum rate for a single person, it would cost the State €26 million, but the final amount would be way more. The figure for redundancy payments, with a minimum of two weeks' statutory payments, would be €124 million, but the redundancy packages would be based on a period a lot longer than the statutory minimum of two weeks' payments. The cost would run into hundreds of millions of euro. That would be the result from a loss of €9 million per year. It is economics of the madhouse. The cost to Bus Éireann of meeting the PSO contract is €40 million. What was the figure for 2009?
I will answer both questions. The Deputy has made some points about insolvency and produced scary figures. I do not know whether his figures are right or wrong, but I can probably give him an estimate. If he likes, I can have his figures looked at and audited. On what he has said and the scenario he has painted, I have no reason to doubt the bona fides. It is very much appreciated that he has put these matters on the table because it is important that we hear that view. If he is right - I am not saying he is - he is making the strongest possible argument for entering negotiations immediately and a far stronger one than I have made in the past few weeks. If what he has said is true, we are facing a situation that demands attention and he should use his influence to get people to the table immediately. Does he not see the obligation on him, as a public representative with influence, to say to some of the parties involved, "For God's sake, look at what is going to happen if this scenario occurs"? I urge him to do so. I will do it and have been doing so for two weeks. Perhaps the Deputy might be more effective in saying, "Look at what is going to happen if an insolvency occurs. For God's sake, get to the negotiating table." That is what he should be doing.
I will not press the point about preconditions further because the Minister has made the position very clear. If I were a worker or a bus driver in Bus Éireann and with Expressway, I would believe the letter constituted preconditions and certainly a tough negotiating position. I also accept that we have industrial relations machinery to deal with industrial disputes.
The Minister has said one route is not working. Did I hear him correctly?
I thought the Minister had said it. If that were the case, the matter would be sorted out fairly easily. We know that the Expressway service is not subject to the PSO.
There are three or four possibilities, including cutting costs, increasing fares or withdrawing services. The two sides will negotiate with that framework in the background. At what point do the parties get into a discussion about non-viable routes, which are causing the problem? Who negotiates that particular aspect, as it is not on the table? If there are routes that are not viable but a service and connectivity must be maintained, does it come under the role of the Minister or the National Transport Authority, NTA? Where does it fit into the equation?
That is undoubtedly a role for the NTA. The NTA is engaging with the company about that. If I am not answering the Deputy's question or I misunderstood it, she should interrupt me. The NTA has made it absolutely clear that it regards it as its role to step in if the routes are not viable.
It is first the duty of the company to see if the routes make sense for it. The company and the NTA can then discuss the issue. My understanding of what the NTA has said is there will be no break in connectivity at all. That will be the arrangement. We will not have a case where one lot will pull out and go in later. That will not happen.
There is no more money available as we speak. If the Deputy thinks I am coming to the committee today to say there is more money available, I will not say it. There is more money available this year than last year anyway, as the Deputy knows. If the Deputy thinks I am negotiating with her about more money for this issue, the answer is "no". It just does not exist. We have negotiated more money for the year as a whole.
I might come back to that separately. I want to ask some further questions. One relates to treating like with like. For example, there is anecdotal evidence about the number of sick days taken and it was, let us say, a very unfavourable figure. A number of bus drivers have told me they have been passed fit to go back to work by their doctors or hospital but when they present for work, they are put through a further battery of tests, which means they must stay on welfare. Is that regime applied on a like-for-like basis? There is supposed to be a national standard and public safety is the most important aspect. Is the standard applied evenly, depending on whether the operator is Bus Éireann or a private driver? How is the standard monitored, as there is the suggestion of costs being a factor? A letter I received also mentioned the cutting of pay. The point is that sometimes people do not have the option to go back to work and are prevented by the company from doing so.
I would have thought so. Perhaps the Minister will get back to me on that. I have a final set of questions. I heard the Minister for Social Protection, Deputy Varadkar, this morning. He accused people who had been discussing the potential withdrawal of the travel pass as scaremongering. Was he taking aim at the Minister for Transport, Tourism and Sport and what was the nature of their discussion on that today? Is there a disagreement between the Ministers on the issue?
It is a very unlikely scenario. If they did it, it would be more subtle than that. I have not had any discussions with the Minister today. I will discuss that matter with him in order to achieve a position that would be more beneficial than it is currently for Bus Éireann.
I have had no discussion or approaches about this. There has been no indication and I have taken no initiative about it. I would not envisage a case where there would be any changes in the benefit that people get from the free travel pass.
The Minister has become the classic example of poacher turned gamekeeper. The Minister was an outspoken shareholder at many annual general meetings throughout the city of Dublin but here he is, the State shareholder in Bus Éireann. He should demonstrate more interaction in the company's affairs. As late as last night, the Minister indicated that if anything went wrong with Bus Éireann, there is the opportunity for the void to be filled by other transport operators. I am concerned that the Minister is pre-empting some of the discussions by stating that if Bus Éireann falls down in the provision of some services, other operators are ready to step in. Is the Minister comfortable in standing back and making such a statement?
Last night in the Chamber the Minister indicated that the NTA would ensure rural communities will stay connected, even if there are changes to Bus Éireann. The Minister is pre-empting the discussion between workers and the operators. Does the Minister feel that as a shareholder, perhaps he should be involved with the negotiations?
I thank Deputy O'Keeffe for the compliment but he is not the first person to tell me I am a poacher turned gamekeeper.
I do not feel in any way disturbed by having said it. The NTA has a record of stepping in to keep communities connected. That is the NTA's mandate, and it issued a press statement two weeks ago specifically saying it would step in to such situations. I am not getting involved or influencing events. It is a matter of fact and the NTA fulfilling its mandate. While I can understand why the Deputy is saying it might sound like I am interfering, I am only repeating what the NTA said.
Deputy Troy referred to fair competition with the Expressway service. He stated that on the Waterford to Dublin route, the service moves off the motorway in order to stop in some major towns and villages, whereas a private operator can go straight from A to B. I have a bigger problem regarding funding. The Minister will hide behind EU regulation. In my own backyard, within the past week or two, a bus stopped in Mitchelstown on the way to Dublin with 45 passengers on board, of whom only three were cash-paying passengers. How can we expect fair competition? We must find a way around the issue of providing the PSO and still maintaining the Expressway service. Bus Éireann carried 42 passengers all the way to Dublin and, because it is a competitive route, got no money. The matter must be addressed. There is no point hiding behind EU competition regulation. There is no fair competition. The Cork to Dublin route is covered by private operators which go direct, whereas Bus Éireann stops in Fermoy, Mitchelstown and Portlaoise along the way. How is that fair competition?
I sympathise with what the Deputy says about seeing these kinds of anomalies. As a human being and as an objective observer, I understand what he is saying. There seem to be difficulties sometimes. The Deputy should not tell me stop hiding behind EU regulation. It is the law. We must, sometimes unfortunately, abide by the law when it seems extremely inconvenient. I see the problem with only three passengers paying. The Deputy is talking about people benefiting from the free travel, is that correct?
It is one of the reasons the Minister for Social Protection, Deputy Varadkar, and I will be talking. This is behind the motivation for doing so. What the Deputy mentioned is not uncommon. I will not talk about his specific route. Routes are for the operators to discuss with the NTA. On the broader issue, the Deputy is right and I will discuss it with the Minister, Deputy Varadkar. Private operators can also apply for free travel and some accept free travel passes.
I thank the Minister for his patience and I am conscious that he has to be in the Dáil in a few minutes. The Minister acknowledged that the funding the Department of Social Protection is paying is inadequate. This was identified in some of the earliest reports. It is disappointing that the Minister still has not engaged with the Minister for Public Expenditure and Reform, Deputy Donohoe. If we achieve nothing else today, could the Minister put a timeline on when the negotiations would be complete on increasing the subsidy to the Expressway service under a different heading by paying the provider of travel to the free travel pass holders an adequate fee for carrying the people who rely on it?
The Minister did not get an opportunity to answer in respect of the NTA earlier. He quoted the Public Transport Regulation Act 2009 and powers for which it provides. Perhaps some Acts can be left alone indefinitely but there is always an opportunity to amend, improve or modify legislation. Although the NTA is coming in for much criticism, it is doing only what the Act enables it to do. Is there an opportunity to amend the legislation and would the Minister be amenable to having an independent regulatory review on how the NTA conducts its business carried out?
There is a bit of a misunderstanding here. The NTA has already done a review of bus licensing. It is obliged to carry out such a review every five years. I do not think it is necessary to do it. Given that the review is under consideration in my Department, it would be absurd to do it again.
I will share it, subject to there being nothing commercially sensitive involved. Given that Deputy Troy is the Opposition spokesperson on transport, I would be very keen to share it with him. That would only be fair. I have to examine the implications involved. I am not trying to be evasive, rather I am seeking to be helpful. I am not sure it should be made public if it reveals to competitors a large number of facts that they would find useful. As a matter of principle, I would be pretty happy to share the review with Deputy Troy, particularly in view of the fact that in all my dealings with him, I have found him to be somewhat controversial and colourful but completely honourable. I would be very happy to share it with him in that sense. I will ask my Department's advice to see if the information it contains is commercially sensitive. The review has been done and it is mostly to do with compliance and techniques and how the system is operating rather than any big decisions on routes.
The Deputy asked me for a date by which the free travel negotiations would be settled. This morning, the Minister for Social Protection, Deputy Varadkar, said it could not happen before 2018 because all the money involved is tied up. I will not give an absolute date. However, it is something we would all appreciate and the Deputy can see exactly why I would like to conclude the negotiations as soon as possible. I regard this as a matter to be dealt with urgently. The commitment to change the way of funding is urgent. We need it. The Minister for Social Protection, Deputy Varadkar, has been extremely helpful and co-operative. We will do it as soon as we possibly can.
We are a right honourable committee. Representatives of Bus Éireann came before the committee last week and we asked about the severance packages for recent retirees who were senior employees. We were given the impression that they were subject to privacy agreements. Why is this the case? Given that public money is involved, surely this information should be in the public domain.
There are two conflicting forces. There is a prima facieargument that they should be in the public domain because public money is involved. I understand that some of them will be released in next year's annual report.
There is a conflict which, I have to be honest, I have not even resolved myself . It is a conflict relating to whether severance payments, which are sometimes - often rightly - seen to be absolutely excessive and unacceptable, should be hidden from the public. If that happens, it is absolutely wrong. On the other hand, some of them certainly are subject to confidentiality agreements. Obviously a conflict arises and it is difficult to resolve. A person signs a confidentiality agreement with a public company and public money is involved. The person is entitled to individual privacy. Aside from that the Chairman is, quite rightly, asking whether the public is entitled to know the details. It is a difficult question to answer and I do not know the answer.
I am wondering about the future, rather than what has happened already. Is this something the Department could examine for future reference in order to ensure it will not happen again? Can we provide for the public to be fully informed of what is being paid under severance packages to individuals? Can it be done such that confidentiality clauses would not be allowable?
It is a question of transparency and accountability. Let us consider how sensitive matters are at present. Serious demands are being sought from employees throughout the company. It is difficult for people to swallow an arrangement whereby some people are more special than others and confidentiality exists surrounding particular pay packages. Is that something your Department can examine to ensure people cannot hide behind it in future?
It is fair to say that some of the pay-offs, severance payments and redundancy money transacted under cover have been rather obscene. That is something we could not countenance or tolerate for long. The Department of Public Expenditure and Reform oversees the code of practice for State bodies. I gather that a new provision is coming along to the effect that payments of this sort will not be the subject of confidential agreements. I am of the view that they should not be subject to such agreements. I am against the idea that a person can work for a State body and be paid off with vast amounts of money that would make a banker blush. I am not saying it has happened recently but it has happened in the past. The idea is completely indefensible.
The issue of free travel has been raised several times. It was raised again last week. For the record, the committee will hear from representatives from the Department of Social Protection in some weeks to discuss matters pertaining to free travel.
I am pleased to hear the clarification today. It is important to put people at ease and that they are reassured that there is no plan to curtail the free travel scheme. The scheme is important to a large number of people. It is their only lifeline, their only way of getting from A to B. It is also important to acknowledge that for some people free travel is not beneficial. These people are altogether outside the limits of public transport. They do not travel outside their local communities and those communities are not served well. This needs to be recognised. I have long held the belief that these people should have the option of some form of monetary provision towards private transport. Again, that is a matter for the Department of Social Protection because that Department administers the scheme – I appreciate that.
I am of the view that there is almost a laissez-faireapproach on the part of the Department of Transport, Tourism and Sport in respect of the free transport scheme in the sense that it is administered by the Department of Social Protection. However, abuse of the scheme impacts directly on transport providers. I have heard numerous anecdotes regarding abuses of the system, including stories relating to the companion pass system and the number of old passes still in circulation. What is the Department of Transport, Tourism and Sport doing to clamp down on abuse? The Department of Social Protection administers the scheme. Subsequently, however, when abuse takes place the losses are incurred by the transport providers. There is serious concern in the public domain that this system is being abused, and that some people who really should not be benefiting from the scheme are doing so. What is happening on that front?
Let me think about monetary compensation. It is an interesting suggestion. I imagine the Minister for Social Protection, Deputy Varadkar, would be interested to hear about it as well. We might put it on the table when we are talking to him about other things. It is his baby, really, but it is an interesting suggestion. You are referring to people who never use the scheme but who are entitled to it. Is that correct?
It could be an optional arrangement. There is a similar option with the household benefits packages. People can tick certain boxes and so on. Again, the cost of administration would have to be weighed up. Anyway, I have long held the view that it could be an option for someone who might wish to choose it.
There is concern over abuse. I have spoken to bus drivers and people working not only in Bus Éireann but across the board in Irish Rail. They are concerned about flagrant abuse of the system. They cannot clamp down on it because they do not have the mechanisms. I gather that only three Revenue inspectors are in place nationwide to work with Bus Éireann. Is that correct? Three officials oversee and implement the free travel scheme. There are 1.2 million cardholders. That corresponds to 400,000 cardholders per inspector.
There are 30,000 constituents for each Deputy and we are overwhelmed all the time. It is simply not feasible to have 400,000 people overseen by each Revenue inspector. The scales are stacked in favour of those who abuse the system.
Yes. I have no wish to say anything to suggest that we are going to clamp down on or reduce free travel in any way. There is absolutely no question of it. We are not going to do that. However, I understand the point the Chairman is making. The new public service cards are helping. In the main, it is a matter for the Department of Social Protection. I imagine the Chairman will make representations, but I will certainly put it into the channel of communication.
After the Department of Social Protection administers the provision of the cards and the administration relating to who is eligible for free travel, it becomes a matter for the Department of Transport, Tourism and Sport to ensure the relevant parties do not lose as a result of abuse. I do not believe that is happening. That is the point. The Department of Social Protection is operating the scheme and I do not think it is a matter for that Department to do any more. That Department is issuing the new electronic identification cards and so on. However, not enough is being done by the Department of Transport, Tourism and Sport to ensure abuse is prevented. That is the point. This needs to be examined.
The scheme is in place and it is valuable. It is in place to provide and assist vulnerable people who do not have access to other modes of transport in most cases. Unfortunately, when people abuse the system, it impacts on those who need it most. They become the losers.
In recent years, oil prices have come down significantly. Thankfully, this has been a help. We have seen some small rises recently. Last week, I asked about the implementation of the fuel-saving mechanisms on buses. I was told that a 1% saving would amount to €360,000. This suggests €36 million is what Bus Éireann spends on fuel. The figures are particularly high. That is a vast amount for any State company to spend per annum. What level of oversight does the Department over procurement to ensure the company is getting the best value for money? Given such amounts, even small margins represent major potential losses or gains for the company, and, therefore, for the State and the public. Given the scale of expenditure, is there forensic examination of the procurement process for fuel by the Department?
It is a question to which I do not know the answer because it is not my responsibility. This is something that happens a good deal.
Responsibility rests with the board of management but I can discover for the Chairman what is the position. We can ask about it and see what is happening. I note what was said last week. It was obviously a management responsibility that was being taken very seriously and dealt with quite constructively. It would presumably be brought to the board. I am not in any way trying to cop out of it because I can find out for the committee. It is not something that a Minister would normally get involved in but we can certainly find out about it.
To answer the question on abuses or possible abuses, I will ask my Department to examine matters to see what is being done and what is the level of awareness. The Chairman makes a fair point.
The point I am making on the issue of fuel is that there is perhaps leeway for savings. When the Department is such an important customer and is spending that amount on fuel every year, then maybe the ball is in the Department's court. The Department has more muscle than other buyers. I thank the Minister.
Deputy O'Keeffe has a final question.
One of the big issues that Bus Éireann mentioned was insurance cover. The cost of insurance premiums has become phenomenal. Is there anything the Minister's Department can do about it to help alleviate it? Can the Department refer it to the Minister of State, Deputy Eoghan Murphy, to look at it in the overall context of insurance premiums and costs?
I am glad the Deputy asked that question. Insurance premiums, from memory, leapt from €1.9 million to €6.5 million in one year. Those are approximately the correct figures. They are very worrying. The Deputy has spotted something in the accounts that is obviously a concern. It is a big figure that sticks out a mile when one examines the position in detail. Part, not all, of the reason is because it is motor insurance - when buses have collisions and there are claims, they are very expensive. There has been a change of actuaries because many of the provisions being made are coming under scrutiny. Provisions being made for insurance need to come under scrutiny as a result of that. One of the questions I asked as recently as this week is how this is happening. I am going to get a report on that. It is a very fair question.
I thank the Minister, Deputy Ross, and his officials for their time. I am conscious that the Minister has been here since just after 1.30 p.m. and that has to go to the Dáil now. The joys of being a Minister. I again thank the Minister for his time and I thank members and everyone here for their assistance.