20/04/11
CTTC launches MAZARS report
Release to: Coach Journals
Date: April 2011
Title: CTTC launches Mazars report
CTTC LAUNCHES MAZARS REPORT ON STATE-OWNED BUS COMPANIES
The CTTC today launches A Financial Analysis of Ireland’s State-Owned Bus Companies; a report commissioned by the Coach Tourism & Transport Council (CTTC) of Ireland, and carried out by Mazars Consultants.
The report contains a wealth of financial data on Bus Eireann and Dublin Bus from the years 2005 to 2009. It shows poor financial performance by both companies and substantial costs to the public purse in the form of PSO subsidies and capital grants.
Mazars observations include:
Financial Analysis Bus Eireann 2005-2009
· Revenue from PSO services in 2009 was €72m resulting in an operating loss of €50m financed by PSO subsidy of €49m.
· The amortised amount of capital grants is another form of state subsidy amounting to €14m in 2009. The annual cost of PSO subsidies and capital grants equals 90% of 2009 revenues.
· Revenue from School Transport Scheme, which is operated on a cost recovery basis with the Department of Education was €171m in 2009. However the majority of the services (81% of the vehicles) were operated by private bus operators, with Bus Eireann receiving management fees and cost contributions totalling €25.2m.
· Bus Eireann is losing heavily (€3.642m in 2009) on its Expressway network that operates in competition with licensed private operators. Expressway services are being supported from its other activities as otherwise they could not survive.
Financial Analysis Dublin Bus 2005-2009
· Revenue from PSO services in 2009 was €183m resulting in an operating loss of €98m financed by PSO subsidy which increased from €65m in 2005 to €83m in 2009.
· The annual value amount of capital grants is another form of state subsidy amounting to €17m in 2009. Even with the benefit of these subsidies and grants and a profit contribution from commercial services Dublin Bus still had a loss of €13m in 2009.
· Wages are the biggest operating cost at Dublin Bus and the report shows that Dublin Bus wages are about 40% in excess of average Transport Land Sector employee wages in Ireland, and well ahead of European and UK comparatives.
Limited Information on how State Funding is utilised
· The provision for liability & charges of €56m and €95.4m in Bus Eireann and Dublin Bus balance sheets respectively represents over 10 times annual disbursements for losses not covered by external insurance. The report queries the reason for such a large provision.
· The audited financial statements of Bus Eireann combine school transport activity, which is in receipt of State funding, with that of its commercial Expressway services. It is unclear why two activities of quite different nature are combined. Mazars concludes that it is not possible to determine how costs are allocated across the two activities and whether cross–subsidisation of services may be occurring.
· No financial details are available for CIE Tours International, which is a wholly-owned subsidiary of CIE. It is registered in the US despite having a large operational and management presence in Ireland.
CTTC Recommendations:
1. Private transport operators are willing and able to undertake subvented city, provincial and intercity services at a much reduced cost to the State if open tendering is introduced on a phased basis. Fine Gael agreed with this approach in its 2009 Policy Statement on Bus Competition. Savings of €20m-€30m in Bus Eireann PSO subsidies could be achieved through a proper tendering regime conducted by the National Transport Authority.
2. Bus Eireann should withdraw from loss making Expressway (intercity) routes. The private sector is a major service provider on intercity routes and will provide additional capacity if required.
3. To achieve a fully integrated public transport system all bus operators should have access to publicly funded bus stations.
4. School Transport. (a) Bus Eireann has a conflict of interest in both running the School Transport Scheme and operating 540 buses owned by and operated for the Department of Education. Also, the School Transport Scheme is costing far too much administratively. The CTTC estimates that the scheme could be managed and supervised within a budget of €12m (savings of around €14m per year). We believe the Scheme should be administered by the National Transport Authority, or some other State agency that does not own its own fleet. The Department of Education’s Value For Money Report also suggested that the NTA “may have potential” to administer the scheme.
(b) The school transport routes themselves should be put out to tender at local level by the administration agency with private and state bus operators eligible to submit tenders.
(c) The Department of Education Value for Money Review of the School Transport Scheme report (March, 2011) says that private operators’ costs are on average 21% less than the equivalent Bus Eireann costs. Private operators, already provide 81% of the vehicles in the Scheme. Further efficiencies could be gained in the Scheme if Bus Eireann were to withdraw from the Scheme entirely.
Financial Analysis of Ireland’s State-Owned Bus Companies; a report commissioned by the Coach Tourism & Transport Council (CTTC) of Ireland, and carried out by Mazars Consultants, will be launched today (Wednesday) at Buswell’s Hotel, Molesworth Street, Dublin 2, at 11.00am.
