Should city bus services be opened to private competition?
YES:
At one time the general consensus was that a regulated monopoly bus provider was the best way to provide city bus services. It avoided the congestion associated with having multiple companies competing on the same routes. It allowed for cross-subsidisation of unprofitable routes with profitable routes. It thus ensured that everyone had access to regular, safe, cost-effective public transport. Or so the argument went.
The reality of the CIÉ monopoly today is rather different. Our cities are congested with cars as many consumers opt not to use public transport, even when it is available.
Let us be clear that opening up city bus services to private competition does not mean a free-for-all with multiple buses chasing one consumer down a street. Competition in city bus services involves inviting all bus operators - be they privately or publicly owned - to compete for licences to provide specific bundles of bus routes, while meeting set standards, for a specific period of time.
Typically, each bundle of bus routes would include profitable and unprofitable routes, thus ensuring all areas of the city are served. For example, the new Dublin Transport Authority would invite tenders to provide the bus routes in, say, parts of Dublin's northeast or southwest for five years.
The advantages of competitive tendering over a CIÉ monopoly are clear and numerous: operators can be fired if they don't meet performance standards; and there are plenty of other operators available to take up the licence.
Any subsidy, ie taxpayers' money, paid to operators is fully transparent.
Competition between operators will drive them to provide their services in the most cost-effective way. Dublin Bus has no incentive to be cost effective as it does not risk losing business to another company.
The routes and quality of service will respond to consumer demand, rather than being dictated by one company. Recall what happened when the privately run Aircoach service to Dublin airport started and how strongly the State-run service responded to the competition.
There is no downside to introducing competitive tendering: standards of safety, cleanliness and comfort can be written into each licence.
Prices could, if necessary, continue to be regulated. Incentives could be offered for unprofitable routes.
CIÉ could continue to operate, in public ownership, if that was thought desirable.
Some people argue that an integrated monopoly can introduce advances more quickly, for example, interoperable smart cards and real-time passenger information. Unfortunately, experience suggests otherwise, as none of this has yet happened.
Many reports since the 1980s have advocated the introduction of competition in bus services, but little of substance has happened. This seems odd, since Irish consumers have benefited hugely from the liberalisation of other parts of the transport sector - think of airlines, taxis and intercity buses.
The roadmap for introducing competition in bus services is clear.
First, the regulatory system for public transport needs to be radically overhauled. Current legislation is more than 80 years old, badly outdated, and favours Dublin Bus.
Second, we need to see the establishment of an independent, properly resourced, national transport regulator to make decisions on the bus routes to be opened up to competitive tendering. The Government's current position as shareholder, regulator and policymaker in this area is not tenable, nor is it best practice.
Third, we need a clear decision on how the bus market in the greater Dublin area is to be liberalised. In 2002, the government proposed opening 25 per cent of bus routes in the greater Dublin area to competition by 2004 via competitive tendering, with further progress in subsequent years. However, this hasn't happened. To send a clear signal to potential market entrants that the Government supports competition in bus transport, clear, quantitative targets for opening the market need to be set out.
Liberalisation should ultimately apply to the entirety of the bus route network in Dublin, rather than just new routes. To do otherwise would maintain the advantages held by Dublin Bus.
Finally, for a network of competing operators to work, we also need progress on and delivery of integrated ticketing, ie smart cards that work on every form of public transport in our cities. Clear responsibility for delivery of this should be given to a single agency.
A safe, reliable and efficient public transport system is one of the cornerstones of any competitive economy. Improving our city bus services through the introduction of competitive tendering will benefit not only users of bus services, but also the wider economy.
Declan Purcell is a member of the Competition Authority and director of its advocacy division
