Fergus O'Dowd (Louth, Fine Gael)

Indeed and I will look after Tallaght as well. Hysterical interventions point to the hysterical person making them rather than the reality on the ground.

In 2000, the total number of buses in the fleet stood at 1,039 and was only marginally increased in 2007 to 1,182 buses. During these boom times there were still newly developed areas in Dublin such as Clondalkin and Swords that still lacked a frequent or reliable bus service. More critically, Dublin Bus is in the process of reducing the number of buses on the road by 120 due to financial difficulties. This will bring Dublin Bus services back to 2000 levels even though the demographics of the city have dramatically changed since then. Dublin Bus has not managed to match the demographic needs of the people. The Central Statistics Office figures from the past census showed clearly the high numbers travelling into Dublin by car. The key point is that the public service obligation - what the taxpayer paid - to Dublin Bus was €16.8 million in 1999. That figure rose to €82 million in 2009. While the number of buses has remained static, the population has increased and the subsidy has increased massively. The subvention for Bus Éireann was €7.4 million in 1999 and it has now increased to €44 million, which is significant.

While people may have a problem with these points, we must address the arguments presented, and the truth is we all have to change. The country and the bus system have to change. The bus system has not changed sufficiently in terms of what has happened in the recent past and in the context of this legislation, it will not change fundamentally for probably a period of at least five years.

The effect of urban sprawl was amplified by the inefficient use of the Dublin Bus fleet, which the 2009 Deloitte report claimed could act as a barrier to use. In essence, Dublin Bus failed to adapt or alter routes to meet the changing needs of the city. What Dublin needs is better planning, route planning and network mapping to ensure that routes connect areas of high population density and places of employment. While the Luas has been a success story, the city is basically reliant on Dublin Bus, which still carries more than 70% of public transport passengers in the city centre area.

When a private operator was granted a licence to operate buses in the Maynooth area, he put a significant number of buses on the route. His view, the information I gleaned from the Freedom of information Act and the views of the Department of Transport officials all bear out that he was operating under conditions of unfair competition. The record will show that on the first day his buses operated on that route, Dublin Bus ran a bus on the route before and after his bus and when he approached the bus stop he could not stop at it because a bus operated by Dublin Bus had pulled in at the stop. He was not allowed to operate freely on that route. The Department has cited a number of cases where it has been found that Dublin Bus has abused its dominant position in the marketplace. Having such a dominant position is the wrong way of thinking. Everybody has to change and Dublin Bus has to change. Private operators should be able to operate in conjunction with Dublin Bus and with Bus Éireann.

When competition was introduced in the bus market in Dublin it did not work because Dublin Bus abused its dominant position. That has to change too. In this legislation the Minister is still giving Dublin Bus and Bus Éireann such a position because it will give them a direct award as opposed to introducing competitive tendering for those routes. That is where the legislation is weak.

From my discussions with Bus Éireann, it appears it has greater synergy outside of Dublin in terms of the bus market, competition and working with other operators. Bus Éireann uses private operators on many of its routes and they operate with such a synergy. They have a symbiotic relationship from which Bus Éireann benefits because its route is being covered, the private operator benefits because his or her spare capacity is available to operate the route and the public benefit because they have the service. That is the sort of service I want to see in this country. Deputy Bannon will deal with the other implications of that.

When I have asked the representatives of Dublin Bus to approach private operators in this city and ask them if they could assist their organisation by providing a better service on route A, B, C, or D, they have said to me that they will wait for the Act and it will allow them to do that. I have asked them to do that now. That is what is needed. Why should operators who provide buses at their own expense and no expense to the taxpayer have them lying idle while the taxpayer is paying for the other buses on the route? We should use the facilities and the buses available for the benefit of everybody.

I want to address the core of our argument in regard to the legislation, as set out in section 52, with which we disagree. I acknowledge the work of the Oireachtas Library in preparing this background document. The Minister is operating a direct award system under the legislation for the State companies. The document states:

A direct award system seeks to address some of the shortcomings of state operation without jeopardising the state's commitment to the provision of public good. The system, in essence, allows for an operating agency which is bureaucratically and administratively distinct from the regulatory authority under whose aegis it exists. While, in theory the contract to operate is subject to renegotiation at periodic intervals, in practice there is not much possibility for the operation to be awarded to a competitor, as the incumbent operator will have scale and informational advantages which would represent an insurmountable obstacle to a potential market entrant ....

Instead, contract negotiations represent an opportunity for the government to exert control on the direction of the operator's policy, and for the operator and the government to co-determine wider issues of transport provision, such as intermodal fare integration, infrastructure and urban planning. As such, the system goes hand-in-hand with an agency approach to government, in which technical operations of government functions are carried out by administratively distinct bodies under government license or oversight, whose relative independence allows them to respond more fluently to changing market conditions and technologies.

However [this is where we disagree] the system of direct awards may not be sufficiently distinct from state operation to ensure market efficiencies play out. In essence the market still lacks any real competitive dynamic, and the close partnership between regulator and operator may lead to a situation of regulatory capture, in which the regulator becomes complicit in allowing cost-inefficiencies, to the detriment of the consumer.

The core of our policy is that there should be competitive tendering in this market. In regard to the market spectrum, the document states:

... the system of competitive tendering is designed to maximise the benefits of competition in a market, while seeking to protect the public interest in terms of route coverage, safety standards and possibly price controls. In essence, the regulator defines routes and/or bundles of routes, on which the participants in the market must bid for the right to operate. In general, the bundles will be geographically cohesive, in order to maximise scale efficiencies to the operator, and will attempt to consist of a balance between 'profitable' routes and 'social' routes [or PSO routes in case of individual routes]. ... the tender could range from concession charges paid by operators for the privilege of operating profitable routes to route-specific subsidies received by operators to compensate for the cost of operating social routes.

I do not understand why the Minister cannot reconsider these issues in the legislation. Furthermore, I do not understand why Dublin Bus and Bus Éireann are not asked to examine whether routes are profitable and do the best deal that can be done for the population. No argument can be made for the taxpayer subsidising routes that can be operated at a profit or for the taxpayer paying for all routes. We do not know which routes are profitable. However, with competitive tendering all operators could enter the market. I have spoken to Dublin Bus about this and it does not envisage any barrier to this. It envisages this happening in five years as provided for in the legislation, but under it they could be given the right to work hand in hand with the private operators.

The document futher states:

A system of competitive tendering was found in the ISOTOPE report to best combine the advantages of cost savings while minimising the impact on consumers. The research estimated that even without [any reduction in costs such as costs] ... efficiency gains for European bus markets from switching to a system of competitive tending could be in the order of 15% (Cordis, 1997).

Such a system of targeting the social dimension of routes more directly by applying the subsidy on a route bundle or route-by-route basis has an advantage over the 'block subsidy' implied by direct award, in that it becomes possible to evaluate the expenditure of public funds on a route-specific basis .... In the case of direct award, it becomes difficult to disentangle the effects of subsidy in meeting social needs from its effects on fuelling .... other cost inefficiencies which may occur.

That is the summary of our point.

In Dublin city there has been increased car use over the years. The result of a growing city with a stagnant public transport service has been the explosion of car usage in recent years. From 2002 to 2006, there has been a 22% increase in the number of persons driving to work by car, lorry or van. In 2006, in the Dublin region alone, only 77,000 of the 546,096 workers took the bus to work compared to the 261,154 who drove. The simple fact is that an increasing number of people spend more time sitting in cars on congested roads commuting to and from work.

The Dublin road network has proven itself extremely fragile with minor accidents having the potential to cause long tailbacks at rush hour, for example, an accident on the M50 can bring the city to a halt. Basically, we need change. In addition, more people taking buses we will reduce our carbon footprint.

There are many other points I want to make, but the Acting Chairman, Deputy O'Connor, would be cross with me if I tried to make them all. In summary, my party is happy, notwithstanding the brevity of Second Stage, to tease out some of these issues on Committee Stage. I would genuinely urge the Minister to reconsider some of the fundamental issues. If he changes this legislation and allows more open competitive tendering, we will get a better deal for the taxpayer and for the commuter, more buses, more routes and cheaper fares. If we do not do that, unfortunately, notwithstanding what the Minister wants to do, it will be more of the same.

See this speech in context