Noel Dempsey (Meath West, Fianna Fail)

I am glad to have the opportunity to report to the House on the outcome of the Deloitte review of Dublin Bus and Bus Éireann. I commissioned the review in mid-2008 to assist me in deciding on the funding to be allocated to the two State bus companies and to provide reassurance to the Government and the taxpayer that both companies are operating efficiently and effectively.

The two companies receive significant capital and current funding from the Exchequer as compensation for the additional cost of providing loss-making but socially and economically necessary services. Since 2002, we have invested more than €230 million in capital funding in replacement buses, additional buses and other facilities. Over the same period, a total of over €660 million has been paid towards operational costs. The two companies will receive more than €125 million in current funding support in 2009 and it is, therefore, important that we are satisfied this funding is being used efficiently and effectively.

Since I commissioned the report, the financial positions of both companies have deteriorated significantly. While both companies were in profit up to 2007, they now face major challenges to restore their finances in the face of declining passenger numbers. Despite an increase in the Exchequer subvention to €313 million and a fare increase of 10%, the CIE Group is facing a projected operating loss in 2009 of up to €100 million. In response, the companies are now considering a range of measures to reduce costs and have set out plans to address these difficulties. It is imperative that both are restored to a good operational and sound financial condition as quickly as possible, and the Deloitte report should be seen as a supporting measure in this regard.

Before dealing with the report itself I wish to set it in the context of my overall approach to the strengthening of bus services. This comprises the transformation of bus services as set out in Smarter Travel, the new transport policy framework launched on 5 February; a move, as provided for in the Dublin Transport Authority Act, to public service contracts for the provision of funding for loss-making services; the reform of the Road Transport Act 1932 with regard to bus licensing; a continuing high level of funding for public service obligation, PSO, services and the introduction of a framework to facilitate the subvention of private bus operators; and ongoing investment in bus priority and traffic management measures to improve bus flow.

This report is timely given the challenges facing the two companies and will assist them in developing and implementing their cost recovery plans. It is also timely in view of the ambitious transformation agenda for bus services set out in Smarter Travel. The report dovetails with the vision set out in the new transport policy framework for a more comprehensive, reliable and customer-focused bus service. Together with the move to public service contracts, this report provides a good basis for Dublin Bus and Bus Éireann to pursue the transformation programme set out in Smarter Travel. The fundamental challenge we face is to provide services that are more attractive and better aligned with the needs of the public at a lower cost.

The report by the Deloitte-led consortium reaches a number of key conclusions. With regard to the effectiveness of bus networks, it finds that the Dublin Bus network has not been realigned for a number of years and, as a result, has become overly complex, with a significant amount of service duplication. It concludes that there is an opportunity, through complete network redesign, to create a simplified network offering improved services with improved cost efficiency. The consultants undertook a review of one corridor in Dublin and on the basis of a conceptual redesign identified potential operational savings of approximately €2 million on that corridor alone. A review of the other corridors on the same basis would also be likely to deliver significant efficiency gains. The report concludes that the current fleet size in Dublin Bus is adequate to service current demand and that the need for fleet expansion should be reviewed in light of changes in demand and improvements in efficiency. This conclusion reflects the growth in the capacity of the fleet in recent years. Since 2000 the capacity of the fleet — seated and standing — has grown by more than 35%, yet passenger numbers are falling. With regard to operational efficiency, the report concludes that in the case of Dublin Bus there is scope to adjust scheduling, in the interests of improved customer service, through changes in the timetable, in the practice of "out of service" running, and in the operation of routes to garages without apparent customer demand.

At the risk of over-distilling the report, the headline recommendations are that bus services in Dublin be improved through redesign of the network to provide a similar or better level of service at a lower cost, principally by simplifying the network, eliminating duplication of services, creating even headways, providing additional direct routes into and out of the city and to key employment centres, improving scheduling effectiveness and improving bus priority. The Deloitte report recommendations will not by themselves be sufficient to ensure the bus plays its full part in providing a sustainable transport system. Action on three other fronts — reform of the bus licensing regime, the implementation of contracts for PSO services and increased bus priority — is also required. Progress is being made in all these areas. Government has approved the drafting of a Public Transport Regulation Bill to replace the Road Transport Act 1932. Work is under way on the drafting of PSO contracts for the CIE companies, and significant investment is being made in traffic management measures, including bus priority.

Overall the Deloitte report sets out a series of measures which are designed to enhance the role of buses and to make the CIE bus companies more customer focused. The report sets out the kind of reform that I want to see in Dublin Bus. I want a simple efficient bus network that serves more customers more efficiently, easy to understand routes and timetables, improved reliability and reduced bunching of buses, additional direct routes serving the city and major employment and retail centres and better co-ordination of services through the elimination of unnecessary duplication.

I am not interested in cutting bus passenger numbers or making life difficult for bus users. The bus is and should remain the backbone of public transport in Dublin for the foreseeable future but we need major bus reform and this report sets out how that can happen. People are looking for a fast, efficient and reliable bus service so that they can leave their cars at home. Public transport usage along routes provided with good quality bus corridors has increased by 40% over the period under discussion. If people know when a bus will arrive and the time required to travel to their destinations, they will use public transport.

The report clearly shows that we can grow bus passenger numbers by deploying buses where and when people need them. It also supports the actions being taken by both companies to turn around their unsustainable financial positions. I have asked the companies to present their plans for the implementation of the recommendations in the report and I expect to receive these shortly. I look forward to the support of all parties in the implementation of these recommendations.

In conclusion, I welcome the engagement by management and unions with the Labour Relations Commission. It is important that they discuss their difficulties around a table in order to make progress together.

See this speech in context