Dáil debates

Thursday, 9 July 2020

Saincheisteanna Tráthúla - Topical Issue Debate

Bus Services

5:45 pm

Photo of Jackie CahillJackie Cahill (Tipperary, Fianna Fail)
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I wish the Minister for climate action, communication networks and transport, Deputy Eamon Ryan, all the best in his new portfolio. My question relates to financial assistance for private bus operators. Since the outbreak of Covid-19 in Ireland in March, private bus and coach operators have suffered a devastating blow to their operations. National tourism has halted, school buses are not running and large-scale events have been cancelled. Therefore, these companies faced a surreal situation whereby business essentially ground to a halt overnight.

I have had talks with private bus operators regarding the situation. I am informed that they are facing a drop in turnover of 95% which equates to a loss of €586 million. This industry is now facing an uncertain future with the collapse of revenues only adding to the fact that these operators are normally highly indebted due to the high capital costs of buses and coaches. According to economist Jim Power's assessment of the Covid-19 issues facing private bus and coach operators, there are 1,721 coach operators in Ireland with 9,264 vehicles, with over 75 million journeys operated annually for tourists, school children and private hires. It supports 11,457 jobs and adds €164 million annually to the Exchequer in tax revenue. Overall, coach tourism provided €400 million to the Irish economy in 2018, with a turnover of €617 million in 2017.

The simple fact is that the loss of many of these operators would be detrimental to rural Ireland and its local economy. In my own county of Tipperary, for example, there are 73 bus and coach operators, operating 423 vehicles. The loss of any of these services would be bad news for local areas and the jobs they support. The impending closure of these operators will also put more cars on the road which may well undermine the programme for Government's commitment to a 7% reduction in greenhouse gas emissions from next year until 2030. It will also increase the likelihood of higher traffic congestion and will affect the rebuilding effort of Ireland's tourism industry.

It is calculated that 17% of total costs are still incurred, even though all buses and coaches are parked up. The expected turnover for the industry this year is €620 million, with approximately €180 million to come from school transport, €170 million for scheduled services and €20 million from HSE contracts or Local Link-type services. A remaining €250 million comes from tourism and the private hire industry. Applying 17% to this figure would indicate a yearly subsidy of €42.5 million. The industry is proposing a subsidy equating to €32 million for a nine-month period to the end of March 2021. The industry also proposes a financial support package of €125 million for scheduled services, a further €1 million for student services and €14 million for specific services which combine to a total of €140 million. It is proposed that these payments will be made on a monthly basis with operators submitting monthly returns on passengers and revenue. This would allow a gradual reduction in subsidies when there is a gradual increase in passengers.

The programme for Government made many commitments, including improving connectivity in rural Ireland, giving greater priority to bus services by expanding quality bus corridors, supporting the tourism sector and accelerating sustainable transport plans for schools. Taking all this into account, can we get a firm commitment from the Government that it will support the private bus and coach industry in its recovery from the Covid-19 pandemic and explore avenues to ease the financial burden it has incurred as a result of the collapse in services such as those I have mentioned? This industry is in significant trouble and its survival depends on Government intervention.

Photo of Seán Ó FearghaílSeán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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I wish to congratulate the Minister for climate action, communication networks and transport, Deputy Eamon Ryan, on his appointment and thank him for being here to deal with this Topical Issue matter.

Photo of Eamon RyanEamon Ryan (Dublin Bay South, Green Party)
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I thank the Ceann Comhairle. I am pleased to be here to answer Deputy Jackie Cahill's question and continue to engage with him on this vital issue. We have been able to continue to provide a limited but important public transport service through the Covid-19 crisis. I worked in the tourism sector for many years and recognise the important role that private bus and coach operators provide to the Irish people. We must ensure that they survive this crisis as best we can.

While the majority of public transport in Ireland is provided by the publicly-subvented bus and rail services funded through National Transport Authority's public service obligation programme, the public transport system also includes non-subvented bus services provided on a commercial basis by bus and coach businesses of varying sizes. I understand that approximately 90% of the commercial bus operators have suspended their services or are providing significantly reduced services at present. The licensed bus sector provides essential public transport services across the State and in 2018 operated over 90 million km, carrying in excess of 27 million passengers.

7 o’clock

Such operations are an integral part of the overall provision of transport services to the public and supplement the services provided under public service contracts with the National Transport Authority, NTA.

From my Department's engagement with representatives of the licensed bus operators, and indeed from the NTA's regular engagement with them throughout the crisis, I understand the very difficult business environment these operators are operating in. Indeed, across Government we are acutely aware that the Covid-19 situation presents huge challenges for many business sectors. The sector will continue to play a crucial role over the coming months in supporting the Government's Roadmap for Reopening Society and the Economy, particularly with a more significant return to work and recommencement of retail activities in addition to the expected increase in trips to hospitals, pubs, restaurants and entertainment venues, or for visiting friends and family and, indeed, the return of school transport in the autumn. It is critical for the sector to be functioning so that it can carry the passengers that we need to return to work and to other activities as they reopen. These operators provide essential transport services for people who need to get to work and are vital to ensure economic recovery.

For that reason, I am pleased to advise the Deputy that temporary funding supports, in accordance with EU and national legislation, have been approved for the licensed bus sector. This support is a positive development and has been welcomed by the industry. It is aimed at ensuring the continued operation of essential licensed bus services for a period of up to six months. The support will be restricted to operators where a clear public interest justification supports such intervention and will be targeted at compensating the gap between specified costs and the revenues generated on the services. The NTA, as the public transport licensing agency, will administer the support through the establishment of contracts between the NTA and the relevant operators. This is, of course, additional to the wider programme of Government supports for impacted businesses which were introduced, including new schemes of wage subsidies, rates waivers, restart grants, lending facilities, equity injection, and business advisory supports.

Over the course of the Covid-19 crisis, my Department has been working closely with the NTA to ensure public transport services continue and to plan for the provision of enhanced public transport services in line with the Government's roadmap. A number of measures have been introduced across the system, guided by public health advice, to ensure the continued operation of services during the pandemic, including enhanced cleaning regimes and social distancing measures across the network. At the onset of the Covid emergency in mid-March, there was a sharp drop to approximately 10% of pre-Covid numbers. This situation continued until mid-May. Since the implementation of the Government's roadmap, however, passenger demand has increased, albeit from extremely low levels.

With the commencement of phase 3 of the roadmap for reopening on 29 June, changes to the existing public transport social distancing restrictions were agreed, allowing a move from 2 m social distancing to utilising 50% of the passenger carrying capacity of fleet. This will help to underpin public transport services provided by public and commercial licensed operators during these unprecedented times, with a view to safeguarding public transport capacity in phases 3 and 4 of the Roadmap for Reopening Society and Business.

5:55 pm

Photo of Jackie CahillJackie Cahill (Tipperary, Fianna Fail)
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I thank the Minister for his reply and accept that he acknowledges the great difficulties this industry is encountering. The industry has put forward a detailed proposal about exactly how much funding it needs. I would press on the Minister to give careful consideration. The industry has stated that 17% of operators costs have to be grant-aided for them at this time. The Minister talked about six months. That will not be long enough. The industry's proposal is up to 1 April. I plead with the Minister to recognise that. It is going to take a significant period for the tourism industry to reach anything like full capacity again. There is going to be continual aid needed there.

I would like to make a point about the way Southern operators are treated for VAT compared with their Northern counterparts. Northern operators pay zero VAT on supplies but can claim a full VAT rebate. Southern operators are exempt from VAT meaning they are not charged any VAT but are not able to reclaim VAT. This puts Southern operators at a distinct commercial disadvantage to their competitors from Northern Ireland. It is something that needs to be examined. It is an ongoing problem within our coach industry. It needs to be resolved to put everyone on an even playing pitch.

The cost of insurance in the Twenty-six Counties has been mentioned many times in this House. It is a great burden on this industry. This week it has been discussed in the House. The heavy burden it puts on commercial operators in the State needs to be tackled. The coach business is highly regulated and will be a cornerstone to our recovery post-Covid. I plead with the Minister to listen to what the coach operators are saying and come forward with a package that allows these industries to be in place when our economy gets back on an even keel.

Photo of Eamon RyanEamon Ryan (Dublin Bay South, Green Party)
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We will very much take the figures and the information Deputy Cahill has provided will help. My colleague, the Minister for Culture, Heritage and the Gaeltacht, Deputy Catherine Martin recognises that the coach industry in the tourism sector is in real trouble, along with so many other aspects of the sector. We need to be sector-specific in recognising this. The loss of the coach tourism business has been cataclysmic this summer and it is facing into a difficult winter. I will certainly try to incorporate the ideas the Deputy has raised.

Tourism is one part of this business. The commercial operators and bus companies operating particular passenger routes outside the tourism sector may, I hope, be able to recover sooner rather than later, particularly if we can avoid a second wave. Confidence in that regard in getting the public back on buses will depend on us getting the public to buy into using a face covering on public transport. If we can get that, public confidence will be much stronger and passenger numbers will come back. I hope within the coming days to have news that will help that in terms of using health regulations to manage that. I hope that will help the commercial bus operators.

I will also mention to the Ministers for Finance and Public Expenditure and Reform the Deputy's ideas on the different VAT regimes North and South. I should signal that we also have a challenge facing us in terms of bus services across the Border in a no-deal Brexit situation. We will have to work on that. The likes of McGinley's bus which I have used many a day have to have certainty around how they can operate across the Border, to take one example from my own experience. We have a lot of work to do there to protect bus and coach operators in the event of a no-deal Brexit. I will commit to doing that and supporting this vital public transport service.