[Article] Creation of new transport authority could cost taxpayers €136 million

Creation of new transport authority could cost taxpayers €136 million
06/06/04 00:00
By Niamh Connolly

The taxpayer is facing a bill of €136 million if a new transport authority is created and 10 per cent of Dublin Bus's business is franchised out, according to a study obtained by The Sunday Business Post.

The consultants' report, which will be submitted this week to transport minister Seamus Brennan and to Department of Finance officials, states that the two proposals will cost the state €27.2 million a year for five years.

This compares to a predicted saving of €2 million a year, based on reduced operating costs for Dublin Bus from the franchising plan, according to the report commissioned by Dublin Bus.

The single largest expense relates to severance payments of €35 million for an expected 350 people who will be made redundant by Dublin Bus under the terms of the proposal.

This is based on the opening up of 10 per cent of the bus network to private competitors. The study also anticipates a once-off agreement with Dublin Bus employees costing €31 million.

Immediate set-up costs for a new DublinTransport Authority to oversee competition in the market would amount to €14 million each year.

In the first year of operations, a bill of €80 million is predicted for the new Transport Authority and the franchising system. A further €14 million would be racked up for each subsequent year over a five-year period - averaging €27.2 million a year.

The consultants' report suggests that, for the same annual cost, Dublin Bus could increase its fleet by at least 150 bus es and sub c ontract a further 150 buses, while also reducing its subvention requirements.

"The rate of return of franchising is significantly negative and results in no payback in the short, medium or long term," the report states.

Loss of economies of scale and duplication of costs are also factored into the consultants' report.

It considers costs such as a new €8 million centralised call centre for customers. This would duplicate the existing CIE customer services.

The aim of government policy should be to increase public transport use and reduce traffic congestion, the report states.

"The hard evidence is that franchising will not meet these objectives. Simply put, passenger numbers have de-creased after the introduction of franchising in Copenhagen,partly because it is a static system, where service levels are fixed and do not respond quickly to varying customer demands."

As an alternative, the report proposes that Dublin Bus could outsource 369 contracts to private sector operators by 2006.