Moving Ahead
Progressive Democrats
Draft Public Transport Policy
February 2000
A Draft policy for debate at the Progressive Democrats General Council
Table of Contents
- Introduction
- CIE: The need for Restructuring
- Restructuring CIE
- Employee Ownership
- A New Approach to Regulation
- Creating a Competitive Bus Market
- Improving Urban Bus Services
- Developing a Customer-Focused Rail Service
- Public Private Partnerships
- The Issue Of Access
- The All-Island Context
1. Introduction
The Progressive Democrats believe that a major overhaul of Irish public transport structures is urgently required.
The development of a modern and efficient public transport system is essential if Ireland is to cope with the problems arising from increased prosperity and to continue to achieve its full economic potential.
Public transport now impinges on several key areas of public policy:
- Traffic Congestion: Better bus and rail services are needed to moderate
the growth in car traffic and to reduce congestion, particularly in urban
areas.
- Travel Times: Increasing travel times are reducing the quality of
life for many people, especially daily commuters. Improved public transport
services are required to reduce commuting times to reasonable levels.
- Housing Provision: Improved public transport can also help to open
up new areas for residential development and reduce price pressures in the
housing market.
- Kyoto Commitments: Our future economic development will depend on
our ability to meet our targets under the Kyoto Convention for limiting growth
in greenhouse gas emissions. Increased use of public transport can help us
to meet our Kyoto commitments.
Given all these considerations it is vital that we embark on a major reform of the whole regime for the management and delivery of public transport services in this country. Our objective must be to provide the best possible service to the consumer.
In this document the Progressive Democrats detail the reforms which are required and how they can be achieved within a reasonable timeframe.
2. CIE: The Need for Restructuring
At present the CIE group enjoys a near monopoly in the supply of public transport services in this country.
The group’s three main operating units - Iarnród Éireann, Bus Éireann and Dublin Bus - were established as separate subsidiary companies in 1987, with CIE as the holding company.
This corporate structure might have yielded substantial benefits in terms of improved efficiency and effectiveness. But it hasn’t and it is clear that there are major defects in the present structure:
- the three subsidiary companies are increasingly in competition with
each other
- there is insufficient management and financial autonomy at subsidiary level
with most major decisions still made at group level
- there is an over-centralisation of decision-making in Dublin, and
- an industrial relations culture persists at group level which prevents all
three companies from responding adequately to the needs of a rapidly changing
marketplace.
A fundamental restructuring of CIE is required if these issues are to be resolved.
Competition in public transport will become a reality over the next few years.
New structures must be put in place to enable the CIE companies to respond to
that competition and to survive and prosper in the new competitive environment.
3. Restructuring CIE
There is no longer any rationale for the existence of CIE as a public transport holding company.
Each of the main subsidiaries - Iarnród Éireann, Bus Éireann and Dublin Bus - should be established as separate trading entities in their own right, with each having:
- full operational autonomy
- full financial independence, and
- full commercial freedom, including the freedom to compete with each other.
There is a strong case for creating within Iarnród Éireann separate business units to deal with the management and development of infrastructure and the operation of train services. With proper management accounting this would allow for a better and more transparent allocation of resources within the company.
Under this scenario the infrastructure business would be able to concentrate on delivering the huge rail development programme set out the National Development Plan. This is the biggest programme of investment in rail infrastructure ever undertaken in the history of the state and its successful delivery will require a clear focus on project management: that focus would be possible in the new business unit.
Iarnród Éireann, through its infrastructural business, would be free to compete for public private partnerships on the same basis as all other companies.
The legislative changes required to deliver this kind of restructuring could take up to two years to complete. There is no reason, however, why the management changes necessary to operate the new structures could not be put in place with immediate effect.
4. Employee Ownership
Employee ownership should be promoted in all of the CIE companies.
As an initial step staff in the three companies should be offered free shares, equal to up to 5% of the total equity in each case, by way of an employee share-ownership plan (ESOP) in the context of agreement on the rationalisation measures that are essential to secure the future of the CIE companies.
Then, a further significant tranche of shares should be made available to staff at a fair price within the context of the ESOP.
The issue of privatisation should be approached in a pragmatic way. Converting public monopolies into private ones is not generally in the interest of the consumer. However, a competitive market in bus services will develop over the next few years and Bus Éireann and Dublin Bus will be competing strongly in that market.
The poor trading performance of the CIE companies tends to understate their true commercial value. The CIE group controls one of the most extensive urban property portfolios in Ireland. Much of these lands are either under-utilised or not generating a proper economic return: using prime sites in Dublin 4 as bus garages, for instance, does not make commercial sense.
The value of the CIE property estate will have risen very significantly in recent years. That property portfolio could make the CIE companies very attractive as privatisation prospects. The ESOP mechanism would ensure that the employees shared fully in the financial success of any privatisation.
Privatisation may be more realistic for the bus companies than for Iarnród Éireann. The rail network is a strategic national asset and there may be a strong case for retaining it under public control. State control should not preclude the development of an ESOP in the company.
A significant portion of any proceeds accruing to the state from privatisation or property sales should be used to boost the value of the CIE pension funds in order to ensure an adequate level of retirement income for all the workers in the group.
5. A New Approach to Regulation
Government must adopt an entirely new approach to regulation if we are to develop a modern and efficient public transport system in Ireland.
We have already seen the benefits accruing from the creation of competitive markets in the aviation and telecommunications sectors: there is no reason why the same kind of benefits cannot be achieved in public transport also.
The key area where competition can make a difference is in the bus market, and this will require two major legislative changes:
- first, the outmoded Transport Act of 1932 must be replaced with a more liberal
framework appropriate to the needs of a dynamic and vibrant modern economy
- second, independent regulation of public transport must be introduced.
A Public Transport Authority (PTA) should be established to regulate all aspects of bus and rail transport on a national basis. The PTA would manage the introduction of competition in the first instance and would then police the operation of the competitive market in the interests of the consumer. The role of the proposed PTA would be:
- to design the national public transport network
- to manage the state subsidy for public transport and ensure that it is allocated
as efficiently as possible
- to act as the license-issuing authority for the sector, and
- to set standards for the frequency, quality and reliability of services
and ensure that these standards were met.
The regulatory authority would be funded by levies and fees collected from the transport sector in the same way that the Office of the Director of Telecommunications Regulation is funded by the telecommunications industry.
6. Creating a Competitive Bus Market
The introduction of real competition into the Irish bus market could offer huge benefits to Irish consumers.
The Progressive Democrats believe that the best way of achieving this is through re-regulation, not deregulation. The British experience shows that full deregulation generated an immediate increase in competition, with several operators fighting it out on the major routes. Over time, however, the strongest firms won out and the consumer was effectively left with a new monopoly service which was worse than the old one.
Instead, we propose that the PTA pursue a different course in the Irish context.
Its mandate would be:
- to issue licenses for new routes/services initially, via a competitive
tendering system, with quality, cost and frequency of service being the key
criteria, and then
- to organise competitive tendering for existing services, either on
an area-by-area or route-by-route basis.
Licenses would be issued on an exclusive basis for fixed franchise periods, at the end of which they would again be put up to competitive tender. The CIE companies - Bus Éireann and Dublin Bus - would be free to compete for these franchises on the same commercial terms as everybody else.
Efficient management of the state subsidy for bus services would be vital.
At present the state subsidy is paid over as a lump sum to cover the operating shortfall in the CIE companies. There is no transparency in this arrangement and no way of determining what benefits are flowing to consumers from the subsidy.
The new regulatory regime should create a fully transparent system whereby taxpayers and consumers can see clearly precisely what services are being delivered in return for the state subvention.
7. Improving Urban Bus Services
Much of the debate on public transport in Ireland in recent years has focussed almost exclusively on the needs of the capital city.
Public policymakers cannot ignore two important facts. First, there are also serious public transport problems to be addressed in the other major cities - Cork, Limerick, Galway and Waterford. Second, there is an emerging need for improved public transport services in towns such as Tralee, Clonmel, Sligo, Carlow and Letterkenny - all of which are now growing into major urban centres in their own right.
The public transport needs of these cities and towns will be met for the most part by buses, and new initiatives are required to improve and expand bus services in the major urban centres:
- public transport provision must be made an integral part of the planning
process so that every new housing development is properly served from day
one
- local authorities must formulate transport development plans for their respective
areas and implement them in co-operation with the transport regulator
- bus priority measures should be introduced where appropriate to speed up
the running of public transport services and make them more attractive to
car users
- the competitive tendering system should be used to develop new bus services
where none exist at present.
Regular and reliable public transport services are an essential ingredient of modern urban living in every European country, and there is no reason why any part of urban Ireland should be lacking in this respect.
8. Developing a Customer-Focused Rail Service
Customer focus rather than competition is the essential requirement for the Irish rail sector.
Under EU rules Ireland is already open to rail competition in theory. The barriers to entry are significant but the emergence of competing operators cannot be ruled out, particularly in the context of public private partnerships.
The real need in Ireland is for a rail system that is customer-focused, competitive by international standards and able to deliver the type of quality service that is the norm in other countries of comparable size. The PTA, as national transport regulator, would ensure that Iarnród Éireann and any new operators functioned to high standards of efficiency, effectiveness and customer service. Specifically, it would:
- set standards for the operator with regard to the punctuality and reliability
of its services
- make information on operating performance available to the travelling public
- benchmark the performance of Iarnród Éireann and other operators
against that of comparable firms in other countries, and
- manage the application of the state subsidy for rail services so as to ensure
the best possible service to the consumer in return for the public funds involved
- work to achieve a significant increase in rail passenger capacity in order
to help alleviate congestion on the roads.
A regulatory regime of this kind would present a major challenge to all operators. Effectively, they would have to operate to the highest international standards of management performance and customer service. However, with a complete modernisation of the Irish rail network now under way there is no reason why they should not be able to rise to that challenge.
9. Public Private Partnerships
Public private partnerships (PPPs) can play an important part in the development of our rail infrastructure.
The government set out an ambitious investment programme for rail public transport in the National Development Plan. Key features include the renewal of track and signalling across the whole network, the development of new suburban links and the construction of LUAS in Dublin.
Iarnród Éireann will be very hard-pressed to deliver all of these projects within the timeframe of the plan. Accordingly, the proposed PTA should be given a mandate to make maximum use of the PPP mechanism as a means of advancing the completion of essential rail developments.
The PPP approach would be suitable for a range of rail projects, including the following major developments:
- LUAS: the upgrading of the current north-south LUAS proposal to provide
a high-speed, high-capacity, DART-type service from Dublin Airport to Sandyford
- Navan: the reopening of the Navan-Clonsilla line to provide a suburban
rail link from Navan, Dunshaughlin and Dunboyne to central Dublin
- DART By-pass: the development of a new track by-passing the city-centre
section of the DART line to the east, in order to reduce congestion and increase
system capacity
- Central Station: the development of a new central station on the
CIE site in Dublin’s Docklands which would serve as a hub for all mainline,
commuter and DART services.
These projects would be major additions to our national rail transport network. The PPP mechanism should be used to bring them on stream as quickly as possible.
10. The Issue of Access
Much of the public transport system in Ireland is largely inaccessible to people with disabilities.
They are confronted with many problems - inaccessible buses, inaccessible trains, inaccessible stations. Denied full access to public transport, they are precluded from enjoying the full privileges of citizenship and are hindered in their efforts to avail of employment and educational opportunities.
The Commission on the Status of People with Disabilities made a number of recommendations in relation to transport and mobility, and the Government, in its joint programme, Action Programme for the Millennium, has committed itself to the implementation of the Commission’s report.
A number of specific initiatives are required in order to deliver on the commitment to accessible transport:
- all new buses and trains introduced to service should be accessible to people
with disabilities
- all rail stations should be made fully accessible, with the installation
of lifts and ramps as appropriate
- full access should be built into the new LUAS system at the design stage.
Improving access to public transport for people with disabilities is a very important issue in terms of equality of citizenship. Accordingly, the achievement of full access should be a key objective of public policy in relation to transport.
11. The All-Island Context
The future development of public transport in Ireland should be viewed in an all-island context.
The Good Friday Agreement gave a new impetus to North-South co-operation and public transport is one area where there would be clear benefits from the two parts of the island working together.
There are a number of areas in which progress can be made. The governments in Belfast and Dublin could focus on:
- the development of new cross-border bus routes
- the improvement of existing cross-border services
- a joint approach to competitive tendering and the licensing of operators
in the border areas
- the better integration of north-south rail links, including the possibility
of direct Derry-to-Dublin services.
Over time, more ambitious targets could be aimed for. In terms of economic efficiency it makes little sense to divide the island of Ireland into two separate and discrete transport markets. North-south co-operation could help to create a single transport market for the island as a whole.
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