In September 2012, the Irish Times published a lengthy opinion piece by Gerry Mullins which boasted that the opening up of CIÉ to private tendering represented “the most important development of Ireland’s public transport system since the 1930s.”
Mullins, the chief executive of the Coach Tourism and Transport Council which represents 64 private bus companies, outlined a vision for Irish public transport where “competing private companies would drive each other’s prices down” and achieve “a saving of about €23 million per year, without a deterioration of services.”
The reality is somewhat different to what Mullins would like the public to believe. There is no doubt that CIÉ is in financial trouble but what is required is not a change of ownership, but rather a change of policy and approach. Through this, it is possible to ensure that public transport provides affordable, effective and accessible services without financial losses and declining quality.
Public transport in the Republic is run by the CIÉ group which is made up of Irish Rail, Bus Éireann and Dublin Bus. They are funded through Public Service Obligation (PSO) payments, which is standard practice across the EU in providing public transport in financially unviable areas.
Privatisation has been suggested for years in establishment circles as the great hope for fixing the Republic’s underfunded public transport system. This argument has returned with renewed vigour recently because the PSO contracts awarded to Dublin Bus and Bus Éireann expire at the end of 2013. Under EU and Irish legislation, the new contracts have to be opened up to a ‘competitive’ tendering process where the public companies will compete against private operators for control over all or part of the bus network.
In July 2011, the Minister for Transport, Leo Varadkar, stated that he intended to “explore the benefit to the public transport passenger of more diverse bus service provision” and so privatisation definitely seems to be on the agenda.
While there has been some privatisation elsewhere, the dominance of Dublin Bus in the capital has remained largely untouched. Yet, increasing criticism over mounting costs and falling passenger numbers has renewed calls for greater competition. The problem with this argument is the assumption that Dublin Bus created this situation through inefficiency. The reality is that, until 2007, Dublin Bus was a highly profitable company, posting a €5 million annual surplus with growing passenger numbers. This was achieved in spite of having one of the lowest subsidy levels in Europe, representing a mere 28% of operating costs. In comparison, the privatised services in London and Brussels had a subsidy level of 38% and 68% respectively.
While Dublin Bus ran a highly efficient service, it was also highly dependent on passenger fares to cover costs. So when passenger numbers fell by 30 million plus, between 2007 and 2011, its financial situation swiftly declined.
The main cause of this fall was the economic downturn and rising unemployment, which caused a large drop in commuters using Dublin Bus. This dire situation was made worse by Government decisions that aimed to achieve savings through reduced bus fleets and subsidy levels, sacking staff and increasing fares. It was no surprise that the policy of simultaneously increasing fares while worsening services resulted in lower passenger demand and made Dublin Bus’s situation increasingly untenable.
Similar experiences across CIÉ prompted the announcement of a €36 million Government bailout in July 2012 to cover the financial shortfall. However, several months later, the Minister for Transport unilaterally reversed this decision and withdrew funding until a series of further ‘reforms’ were made, i.e. more staff cuts, price hikes and the sale of assets.
CIÉ worker Board Member, Bill McCamley, wrote to the Irish Examiner challenging this move stating that “CIÉ has yet again been made a political football” by the Minister who “chose to ignore these matters and has decided to ‘home in’ on cost-cutting negotiations” with “the implication that CIÉ is responsible for its financial woes.”
It is clear that: firstly the Government intends to ‘streamline’ CIÉ and strip away ‘non-essential’ assets to make it more attractive for a future private takeover; and secondly, that by pursuing a policy of blaming losses on an ‘uncooperative’ public sector rather than on wider circumstances, it intends to erode the reputation of CIÉ to gain public support for privatisation.
Opening up public transport to ‘competitive’ tendering is being done at the behest of EU directives that promote ‘controlled competition’ as the best approach to provide urban public transport. ‘Controlled competition’ or franchising has become popular after experiences in London, and some other EU cities, where this type of ‘regulated’ privatisation appeared to produce positive benefits in comparison to completely open competition. This type of franchising is likely to take two forms in Dublin:
– Profitable routes will be franchised to private companies while the remnants of the current network will continue to be served by Dublin Bus under heavy subsidy.
– The entire network will be broken up into individual routes franchised between multiple private operators, each with varying levels of subsidy.
While arguments in favour of applying the London model to Dublin are often mentioned, there are several reasons for caution. Firstly, London has a much larger and denser population that creates a critical mass of passengers, making public transport much more profitable to operate. London also has a much more extensive public transport network that operates on a higher level of subsidy, attracting greater numbers of passengers. Without these elements, it is likely that replacement private companies would end up in exactly the same situation as Dublin Bus and require an even higher level of subsidy.
The fragmentation of the Dublin Bus network would also make any future public transport improvements harder to implement because of the complexity of dealing with multiple companies rather than one single operator.
In recent years, improvements to bus infrastructure have greatly improved the quality of service provided by Dublin Bus. If current problems are primarily the result of external factors, there seems to be little to be gained through privatisation that could not be achieved through better policies.
It is also important to recognise that public transport plays a vital social role in providing working class areas with access to jobs and services. Any further decline in public transport provision through cuts, fare increases or privatisation will hit these communities the hardest.
Therefore it is vital that privatisation is resisted through well-informed, effective campaigning by CIÉ workers and those sections of the population opposed to the commodification of public transport. If these areas of support are galvanised into a strong anti-privatisation movement, then through the combination of public protest, trade union agitation and effective arguments, the Government’s privatisation agenda could be successfully challenged.
Article published in LookLeft 13