Mr. Willie Quigley:

Unite thanks the committee for the invitation to make this submission. We will focus on three areas: Bus Éireann as a provider of public service transport; Expressway as a commercial operation; and a new strategic stakeholder approach.

Just as we showed in October when Unite presented its submission on Dublin Bus to this committee, research shows that our national public transport service is severely constrained due to low subvention levels compared with other European countries. Deloitte, in its report "Cost and Efficiency Review of Dublin Bus and Bus Éireann", found that, in terms of subvention as a percentage of total revenue, Belgium was at 78%, Switzerland was at 51%, the Netherlands was at 49% and Ireland was at 12%. While the subvention in other European countries is 50% or more of total revenue, Ireland's figure had fallen to 10% of total revenue by 2015. There is a measurement issue. Expressway is included in revenue. The Deloitte report does not say whether subventions in other countries also include commercial revenue. Therefore, while we cannot estimate with any accuracy the appropriate level of subvention that Bus Éireann should receive to bring it to European norms, it would be substantial. At the very least, an additional €46 million. From a very low level, the actual subvention has been cut further since 2009. Factoring in inflation, the subvention has been cut by more than €12 million in real terms, or 22%. Whether measured against other European countries or historical subvention levels, State support for public transport services is poor.

Expressway's commercial mandate and the efficient operation of the transport market have been undermined by Government policy, agency oversight and management practices. A significant factor in the company’s finances is the underpayment of the free travel scheme.

According to a report in The Sunday Business Post, the Department of Social Protection reimburses Expressway only 40% of the average fare for journeys taken by pensioners and pass holders. The Department pays €11.4 million for these journeys. Assuming the report is valid, if the full cost were reimbursed, the Department would pay €28.5 million for these journeys, an increase of €17.1 million. In effect, the Government is using a commercial company to subsidise in-kind social transfers.

The joint committee should immediately investigate the regulatory oversight of the transport market. The issuance of licences for private sector operators may be saturating the market. Efficiency requires that the methodology and data sources used to inform the issuance of licences is open and transparent in respect of estimated demand, future projections, optimal level of competing companies, etc. Is the absence of Expressway from profitable non-stop routes due to managerial decisions or market regulation? In either case, the downside is obvious, namely, the market is either being skewed against Expressway or Bus Éireann management is failing to expand into profitable markets.

Expressway accepts free travel passes, whereas private bus operators do not accept them. This places the company at a commercial disadvantage, one which is not acknowledged either by the market regulator, which could require private bus operators to accept free travel passes, or the State, which benefits from below market reimbursement. Put another way, pensioners are denied access to the full transport market as only a public enterprise company vindicates such access, while private operators do not.

Expressway serves a number of communities on loss-making routes. That it continues to do so is a social good but there is no regulatory mechanism to ensure the company, as a commercial operation, is compensated for what should be a public service obligation, PSO, route. This is an example of Expressway being used to subsidise the underinvestment in a public service.

Regarding the failure to monitor the operation of companies, the Cork Council of Trade Unions claimed in a letter to the Minister that serious breaches of the road transport working time directive are taking place. The National Transport Authority replied that this was not a matter for the authority. As the issuer of licences, it is imperative that the NTA take a proactive role towards monitoring the activities of all bus companies as otherwise the market will become degraded and companies will compete on the basis of which one is more effective at breaking the rules.

There are numerous anecdotal reports of low wages being paid by private bus operators. A survey found that one company paid an average wage lower than the living wage. Not only does this drive down employees' living standards but it also undermines companies which pay proper wages. Low wages mean that bus companies impose costs on the taxpayer. For example, wages of less than €30,000 mean that, depending on household circumstances, an employee could be eligible for family income supplement. With lower tax revenue and higher social transfers, low road employers are appropriating benefit at the expense of taxpayers. This requires removal of wages from competitive advantage through a registered agreement applicable to all companies. This would protect workers' living standards save the Exchequer money and ensure competition was based on service quality.

The position in Bus Éireann can be compared to Alice's Adventures in Wonderland. A report commissioned by the Department was shown to journalists but not to employees and Bus Éireann management responded to this secretive report in public. Other reports have been circulated in secrecy but still employees are excluded. Management has leaked information to the media, while the Minister has refused any kind of engagement. Can anyone think of a private company that conducts its industrial and commercial relations through media leaks, while the principal shareholder openly declares complete disinterest in the conduct of the company? Is this a way to operate a modern commercial company?

Expressway cannot be compared to a commercial operation. It subsidises State social transfers, provides access to free travel customers and operates public service routes which should be subsidised by PSO payment. Deloitte reports that Bus Éireann used Expressway profits to subsidise PSO routes, while the National Transport Authority has raided Bus Éireann for funds. We have an opaque regulatory process in which the regulator, the National Transport Authority, refuses to regulate. We have bus companies that can only operate on the basis of depressing their employees' living standards. All the while, members of the public experience a degraded service while employees are left in the dark. It is misleading to benchmark Expressway on a market basis. There is a much better way to manage both the company and the market.

I will now discuss a new strategic stakeholder method.Bus Éireann management claims to have a stakeholder approach. In its 2015 annual report, the company claimed to have developed a"strategic plan to work collaboratively with all stakeholders to return Expressway to profitability." The word "stakeholder" was used 17 times in the report but the company's actions belie its words. It conceals essential reports from stakeholders, makes demands upon employees which it cannot justify or measure and, more important, knows cannot be sustained. It demands that employees enter discussions without conditions while it comes to the table with a suitcase load of conditions. No dictionary in existence would define this behaviour as a "stakeholder" approach.

Bus Éireann management now wants to re-embark on a substantial downsizing strategy. This approach was tried and failed. Between 2009 and 2015, payroll expenditure fell by more than €15 million or 10%. This did not solve the company's problems. Management now wants a further €12 million in cuts to payroll expenditure and a total of €30 million in cuts overall. It is repeating a failed strategy. The real problem for Expressway is not the level of expenditure, which has fallen since 2009, but a decline in revenue of €8 million. If a company cannot generate revenue, no amount of downsizing will save it, as academic scholarship confirms. According to Professor Freek Vermeulen of the London Business School, downsizing does not work and this view is backed up by detailed academic studies. The simple reason is that downsizing incapacitates a company's ability to expand and, without expansion, it is incapable of surviving in highly competitive markets.

There are two complementary approaches to resolving the company’s problems, both of which are grounded in an authentic stakeholder approach in which employees and employers are equal partners. The first is to drive productivity and the second is to expand through investment, market expansion and rolling out new products and services. The best transport companies in Europe increasingly practice what is known as employee driven innovation to achieve these goals. In short, resolution of the company's problems begins with the worker.

While there are a number of models of employee driven innovation, the fundamental starting points are that management and employees must both want to enter the process; a guarantee must be provided that proposals adopted will not lead to job losses or a reduction in earnings; a process of adoption and implementation of the proposals must be agreed in which neither side enjoys a veto; the innovation process must be based on a bottom-up approach that takes place in work units; and the process must be open and transparent, both operationally and financially.