Dáil debates

Wednesday, 17 December 2008

2:00 pm

Photo of Tommy BroughanTommy Broughan (Dublin North East, Labour)
Link to this: Individually | In context

Question 62: To ask the Minister for Transport the size of the subvention for CIE in 2009; if he has had contacts with the Department of Finance, Bus Éireann or Dublin Bus on the subvention and any proposed programme of cutbacks for Bus Éireann and Dublin Bus services and jobs; if his Department or the Minister for Finance have suggested any series of cutbacks for public transport companies; if he will rule out large scale cuts to critical bus and rail services provided by public transport companies; and if he will make a statement on the matter. [46528/08]

Photo of Noel DempseyNoel Dempsey (Meath West, Fianna Fail)
Link to this: Individually | In context

The 2009 Exchequer subvention to CIE will be €313.279 million, an increase of 1.5% on the 2008 figure. During the course of the Estimates discussion, my Department had discussions with the Department of Finance and with CIE on the overall financial position of the CIE operating companies, Dublin Bus, Bus Éireann and Iarnród Éireann. The chairman and chief executive of each of the companies also briefed me on the financial outlook on 1 December.

CIE is projecting an operating deficit of €39.5 million for 2008 after Exchequer subvention, compared to an operating deficit of €1.47 million in 2007. This significant deterioration in the financial position of CIE is due in the main to losses in revenue due to a drop in demand for services and increases in costs, particularly fuel costs in the earlier part of this year. The outlook for 2009 is for a further deterioration in the group's financial situation in the absence of corrective measures. In order to preserve the financial stability of the group, each of the companies must, in addition to increasing fares, pursue some rationalisation of services, ranging from frequency reductions, to service withdrawals. The CIE subsidiaries are considering service reductions that maintain the integrity and attractiveness of their networks and achieve significant cost reductions over time.

Following my discussions with CIE and its subsidiary companies and taking account of the emerging findings of a cost and efficiency review of Dublin Bus and Bus Éireann by Deloitte, to be completed shortly, I have agreed the following package of measures to protect the financial position of the CIE group and to maintain public transport services to the maximum extent possible: an increase of €5 million in 2009 over 2008 in the compensation paid to CIE in respect of its public service obligation, provided for in the Estimates; a fares increase of 10% for January 2009; CIE to identify a package of service rationalisation and reductions, focused on heavy loss-making services, sufficient when taken together with the other measures set out to ensure the financial stability of the CIE group; and measures to improve bus priority and bus journey times.

It is a matter for the CIE group of companies to secure operational efficiencies and to reduce costs so as to maintain services at the highest level possible. I have requested that, in deciding on service reductions, the group should aim to maintain rail services, peak-time bus services, and bus services to developing areas. Service reductions should be a last resort in the group's efforts to maintain financial stability.

Photo of Tommy BroughanTommy Broughan (Dublin North East, Labour)
Link to this: Individually | In context

I thank the Minister for his comprehensive reply. Does what the Minister now proposes to do with regard to bus transport and public transport generally not completely pull the rug from under his sustainable transport policy? The Minister will launch the sustainable policy in a few weeks' time, but with these cutbacks he is completely wrecking the sustainable policy in terms of bus transport. Is it the case that the subvention to the CIE group of companies is among the lowest of the 27 European Union member states? It is certainly the lowest of the old EU 15. Is it the case that the cutbacks now proposed will involve the loss of 40 Dublin Bus routes, of 150 Bus Éireann routes, the withdrawal of 170 Bus Éireann buses and of 100 Dublin Bus buses and the loss of 400 jobs? Is the Minister not effectively eviscerating the whole bus-public transport strategy?

A few months ago the Minister agreed with me that buses must perform the core role until we get the major investment required into heavier public transport over the next five or six years. Is he not wrecking that policy now by these short-sighted financial constraints he and the Department of Finance are imposing?

Photo of Noel DempseyNoel Dempsey (Meath West, Fianna Fail)
Link to this: Individually | In context

The country is in the financial situation it is in and no amount of burying one's head in the sand with regard to reality will help anybody. CIE is suffering as a result of the economic recession, just as is everybody else. Fewer people are using buses and trains and coming into towns to shop and fewer people are working. In that kind of environment, it is inevitable that services will end up in a loss-making situation.

The company has a responsibility to ensure that it trades responsibly. We provided an increase in the subvention and a fares increase. It is up to the company to try and ensure it works within those provisions to maintain services and try and grow them if possible. Taxpayers are providing €313 million to public transport, but there is no more money available from them. It is and will be taxpayers from whom these moneys must come. CIE, as it has done in the past and must do in the future, must live within its means and within its budget.

Photo of Tommy BroughanTommy Broughan (Dublin North East, Labour)
Link to this: Individually | In context

When I spoke to CIE about nine months ago the key issue was escalating fuel costs, with oil at $150 a barrel. That cost has been cut by two thirds, down to $50 or so and I understand CIE and the various bus companies are well hedged for next year. Therefore, how can fuel be used as an excuse to cut back on transport? The Minister failed to get the European Union to do anything about the fuel rebate, which has hurt all public and private transport operators since 1 November.

Is it not the experience of our European sister countries that the lower fares are, the greater the number of people who will travel? Study after study has shown this to be true. Instead of increasing Luas, Dublin Bus and Bus Éireann fares by between 5% and 10%, the Minister should be cutting them by 20% if he really wants people to use public transport. The Minister is taking a short-sighted and undynamic approach to policy, is he not?

Photo of Noel DempseyNoel Dempsey (Meath West, Fianna Fail)
Link to this: Individually | In context

I am somewhat confused by the Deputy. I am not sure what he wants me to do on this matter.

Photo of Tommy BroughanTommy Broughan (Dublin North East, Labour)
Link to this: Individually | In context

I want him to get more people on buses and trains. He is the regulator.

Photo of Noel DempseyNoel Dempsey (Meath West, Fianna Fail)
Link to this: Individually | In context

He is telling me I should cut fares. I would be delighted not to approve a request for higher fares. The original request was for a 20% fare increase. I would be delighted to be able to say to CIE that I was going to get it to cut its fares. If the Deputy thinks that is a wise policy to pursue, that is okay. I will do that. The Deputy cannot complain, on the one hand, that CIE will not be able to operate as it wishes and, on the other, that somebody must pay for this. Taxpayers must pay the €313 million. CIE must promote itself as much as it can, as companies are obliged to do. It is clear there must be rationalisation within Dublin Bus. Many services can be saved if that rationalisation takes place.

I do not use fuel as an excuse. CIE has a very good record of hedging. The most it was caught for in fuel costs was approximately $100 per barrel. It did well and saved. I am responding on the basis of what I have been told. I am not imposing anything.