Subsidies for bus routes should be allocated following an open competition between all the main operators, a leading member of the Competition Authority has suggested.
In a report published alongside the ESRI's quarterly economic commentary, Anne Ribault O'Reilly said public funds for rural, urban and socially desirable services "should be allocated following a competition". At present the routes are held by CIÉ subsidiaries Dublin Bus and Bus Éireann.
She said bundles of routes could be awarded for a specified time and that safety requirements and passengers rights should be considered in their awarding.
Ms O'Reilly is a case officer at the authority who has carried out work in the transport sector. She wrote the paper for the ESRI in a personal capacity.
She said the taxpayer was not necessarily getting value for money from the current system where CIÉ companies operated the vast majority of social and commercial routes.
"The allocation of a subsidy for the provision of socially desireable services does not guarantee value for money to the taxpayer. There is no mechanism to ensure that Bus Éireann or Dublin Bus will provide the service with the lowest level of subsidy."
She said the market was currently dealing with a number of inefficiencies. Dublin Bus and Bus Éireann faced limited incentives to minimise the losses on urban and rural services, she said, and there were indications of cross-subsidisation in the market
"Bus Éireann and Dublin Bus may be foregoing more worthwhile investment and innovation to subsidise loss making routes, resulting in dynamic inefficiencies," said her report.
She said the Department of Transport 's role as an employer and the shareholder of CIÉ might conflict with its objectives as a policy maker and regulator. "To liberalise the market these functions need to be separated," she stated.
Last year the Department of Transport circulated proposals to set up a new regulator for the bus and rail market. Legislation setting up this structure has yet to make its way to the Oireachtas.
