Seanad debates

Wednesday, 3 December 2008

7:00 pm

Photo of Brian Ó DomhnaillBrian Ó Domhnaill (Fianna Fail)
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I raised the issue of the fuel rebate scheme previously in the Seanad on 15 November 2007. The reason I raised it then is the same reason I raise it this evening. It is the approximately 2,200 private bus operators in Ireland who have an aggregate bus fleet of more than 5,000. That is almost double the number of vehicles operated by Dublin Bus and Bus Éireann combined. The Minister of State, Deputy Noel Ahern, discussed this issue in the course of a recent transport committee meeting which I attended.

On 1 November 2008, the financial assistance which bus operators received from the Government in the form of a fuel excise duty rebate was ended. This has caused pain to many operators throughout the country. Obviously, I am concerned about this following the representations I have received from bus operators in Donegal, which is why I raise the matter this evening. Until now the fuel rebate scheme enabled bus operators to recoup some of the costs incurred in the provision of qualifying transport activities, such as school transport, scheduled services and qualifying coach tours and activities. These services are the backbone of the coach industry and are essential to the daily functioning of communities throughout the country.

The Coach Tourism and Transport Council has been actively engaged with the Department of Transport on this issue and has made a number of suggestions. Fáilte Ireland also commissioned Goodbody Economic Consultants to find an alternative mechanism to support the industry. Goodbody Economic Consultants subsequently came forward with an innovative and well thought out alternative proposal which would be easily administered and in line with overall Government policy to reduce car dependency and encourage greater use of public transport.

There is European legislation governing this area and the current position is the result of a European directive. However, I appeal to the Minister of State to re-examine this issue. A number of operators in Donegal were heavily dependent on this scheme to function. Over the years they have taken on employees but they might now be faced with the prospect of letting some of them go. The scheme allowed bus operators to expand their services, it supported the employment they were providing and allowed them to stay in touch with the heavily subsidised CIE services. The majority of transport services in County Donegal are provided by the private sector. For that reason the Minister of State should review this issue if possible.

Obviously, the Minister of State will have more information than me on this matter. It was necessary to raise the matter this evening in view of the concern that bus operators who are engaged in the school transport and coach and tourism services have relayed to me. I raise it on their behalf in the hope that some mechanism can be found to initiate a new scheme or funding mechanism to allow the operators continue the services they have provided to date.

Photo of Noel AhernNoel Ahern (Dublin North West, Fianna Fail)
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The European Union energy tax directive incorporated special derogations which allowed specific excise duty reliefs to be applied in several member states below the EU minimum duty rate. In the case of public transport services, these derogations included reduced rates which applied to fuel used for scheduled bus services. Scheduled bus services include bus passenger services provided by private operators in accordance with bus route licences under the Road Transport Act 1932, services provided by Dublin Bus and Bus Éireann under the Transport Act 1958 and holders of authorisations pursuant to European Council Regulation No. 684/92, as amended, involving cross-Border services. While these derogations expired on 31 December 2006, Ireland, along with other member states, sought retention of its derogations beyond that date. However, the European Commission refused all such requests.

My Department, in conjunction with the Department of Finance and other relevant Departments, then examined whether alternative support mechanisms were possible on a revenue neutral basis, subject to compatibility with EU state aid and other legal requirements. This included consideration of proposals from industry, which are being kept in mind as my Department develops the sustainable travel and transport action plan, which will be published soon.

In addition to meetings with and consideration of submissions from CIE and the private operators' Coach Tourism and Transport Council, my Department explored options with the Revenue Commissioners, the Department of Finance, the Department of Arts, Sport and Tourism and the Department of Education and Science. Among the proposals considered by the Department was a variant of the fuel grant scheme, as currently applied in Great Britain. However the British grant scheme, which is not applicable in Northern Ireland, only covers local and some long-distance scheduled bus services. Coach tourism and school transport services are excluded from the British scheme. Furthermore, I understand that the British authorities have plans to reform the fuel grant scheme with a view to taking into account environmental considerations. Unlike the British grant scheme, the fuel excise reliefs here applied to all scheduled bus services along with qualifying coach tourism and school transport services. Following consideration, the Government confirmed last summer that the current excise duty reliefs were to be withdrawn from 1 November 2008, as already provided for in the Finance Act 2008, and that no alternative was found to be feasible. The current budgetary environment serves to confirm this.

In recognition of the challenges arising for commercial bus services and notwithstanding the critical state of the public finances, the Government did not increase excise on diesel in the budget. While the excise rate on petrol increased to 50.879 cent per litre, the excise rate on diesel remained at 36.8 cent per litre in the budget. The excise duty rate in Ireland for diesel is lower than the European Union average and substantially lower than our nearest neighbour, the United Kingdom. Both Bus Éireann and Dublin Bus receive substantial Exchequer funding in the form of annual compensation towards the cost of their public service obligations. However, I note the Senator raises this issue on behalf of private operators. A total of €117 million will be paid to both companies in 2008, representing an increase of more than 100% on the amount paid in 2000. In addition, both companies have been allocated a total of €56 million towards the capital cost of new buses to be delivered in 2008. The Government is committed under Transport 21 to upgrading public transport services, including bus services, and to improving the traffic environment for bus transport through investment in traffic management and bus priority measures.

The Dublin Transport Authority Act 2008 gives the Dublin Transport Authority, DTA, the power to procure public passenger transport services, that is, scheduled bus services, from private operators as well as from Dublin Bus and Bus Éireann on a contract basis, involving payment of a subvention for loss-making services. The Act now establishes for the first time in Irish law a comprehensive statutory framework involving public service obligations for private operators and which is in line with EU Regulation No. 1370/2007. The necessary measures to prepare contracts to implement this new framework have commenced and this work will be assumed by the DTA when it is established.

Proposals for a new bus licensing regime are now being prepared and will be contained in a forthcoming public transport regulation Bill, which will deal with the replacement of the Road Transport Act 1932 as well as the provisions of the Transport Act 1958 that relate to the provision of bus services by the State bus companies. The new Bill will apply to all commercial bus services, including those provided by Dublin Bus and Bus Éireann, and will include provisions enabling the authority to procure services from private operators on a subvention basis outside the greater Dublin area. It is expected that the Bill will be published shortly and introduced to the Houses next year.