Brian Ó Domhnaill (Fianna Fail)
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The scale of the private bus and coach industry in Ireland is little understood largely because of the absence of official information on the sector. There are now some 2,200 private bus operators in Ireland with an aggregate bus vehicle fleet of more than 5,000. This represents almost double the number of vehicles operated by Dublin Bus and Bus Éireann combined. Between 1992 and 2003, the number of vehicles operated by the private bus and coach industry increased by 71%. The Coach Tourism and Transport Council of Ireland is the representative body for independent coach operators. I understand that 6,000 people are employed directly with 3,000 people employed indirectly by the private bus operators in Ireland.

I understand that the fuel rebate-derogation currently available to public and private bus operators is being phased out as a result of EU regulations as set out in the energy tax directive. The removal of the refund of excise duty on fuel used in passenger transport services will have devastating consequences for rural transport provision throughout the country. The rebate amounts to 34 cent per litre and the rebate is reflected in the fares that bus operators charge on public transport services, tour group rates and school transport contracts.

I ask the Minister of State to advise the exact details of proposals to phase out the fuel rebate scheme. Obviously if this derogation is removed, private transport providers will not be in a position to continue providing a service in rural areas. I come from a rural area in County Donegal where the private operators provide services to Dublin, Galway and the major towns and population centres in the county from the most rural areas in west Donegal. Therefore it is crucial that those operators be allowed to continue providing a rural transport service at an economically reduced rate as happens at present

As the Government's Seanad spokesperson on school transport I am concerned that if this derogation is removed, many of the 2,300 private vehicles operating under the school transport scheme will suffer major economic losses as the tendered prices provided by operators were based on the fuel derogation being available. The school transport tendered prices cover the school year from September 2007 to June 2008.

I recommend that the Departments of Transport and Finance should immediately engage in discussions with the Coach Tourism and Transport Council of Ireland. If the fuel rebate must be abolished under the EU directive, the Government should adopt the policy adopted by its UK counterpart by making a bus service operator grant available to private bus operators.

Tony Killeen (Clare, Fianna Fail)
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Gabhaim buíochas leis an Seanadóir Ó Domhnaill as ucht an ábhar tábhachtach seo a phlé ós comhair an tSeanaid. Táim ag tabhairt an fhreagra seo thar ceann an Aire Iompair, an Teachta Ó Díomasaigh.

The current fuel duty rebate scheme for passenger bus transport services is a matter in the first instance for the Minister for Finance and the Revenue Commissioners. The 2003 EU energy tax directive incorporated special derogations which allowed specific excise duty reliefs to be applied in a number of member states. In the Irish context, these derogations allowed for reduced rates to apply to fuel used for scheduled public and private bus services and bus tour services.

When these derogations expired on 31 December 2006, Ireland and other member states sought retention of their derogations beyond that date. However the European Commission, which is the deciding authority, has refused all such requests. The Commission maintains that, in keeping with the EU energy tax directive, member states must apply at least the EU minimum rates of excise on fuels in such circumstances and that any further favourable excise treatment is not allowable. The Commission's decision was published on its website in March 2007.

Officials from the Department of Transport are currently engaging with officials from the Department of Finance to explore the possibility of replacing the scheme where appropriate by alternative non-tax financial support mechanisms to achieve the same policy objectives, subject to EU state aid requirements. I understand that in the interim the reduced rates applicable to fuel used for public transport services will be maintained.

Brian Ó Domhnaill (Fianna Fail)
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I thank the Minister of State for his response on behalf of the Minister for Transport. I am confident that the issue is being reviewed and that the Department is aware of it. I ask that the Minister ensures coach operators remain informed and, should any negative implications ensue in terms of grant aid under EU guidelines, that he consults them prior to any decision being made.