9th July 2011
Figures prove Expressway losses are masked by School Transport revenue
Release to: Coach Journals
Date: JULY 2011
Title: Figures prove Expressway losses are masked by School Transport revenue
The following is a report by the Coach Tourism & Transport Council of Ireland (CTTC). The Chief Executive of the CTTC Gerry Mullins will speak on this matter at a School Transport protest meeting in Franciscan College, Mountbellew, Co. Galway tonight at 8pm. Minister Ciaran Cannon will also speak.
Figures released* this month by the Department of Education show that profits made in the School Transport Scheme are masking the extent of losses at Bus Eireann’s Expressway division.
Until this week it has been impossible to ascertain if profits were made on Bus Eireann’s School Transport work; and the extent of losses on its Expressway services, because the company combines the two activities in its annual reports.
The new figures reveal that the School Transport is a lucrative activity for Bus Eireann, and not the cost recovery activity that it was previously considered. Similarly, the figures show that Bus Eireann’s ‘commercial’ division (that part of the company that is supposed to be profit-making) is actually suffering huge losses.
The new figures show a controversial payment to Bus Eireann of 13% on top of all the costs of the School Transport Scheme, every year. These payments rose steadily from €14.8m in 2006 up to a peak of €18.9m in 2008, and €18.2m in the most recent published accounts (2010).
Because these figures can now be applied the Bus Eireann’s combined accounts for School Transport and their ‘commercial’ services, we can see enormous and mounting losses at the Expressway division. This is the part of Bus Eireann that is supposed to be profit-making, and not eligible for a State subsidy. However, it is now clear that Bus Eireann’s Expressway services are being subsidised by School Transport money.
The table below shows the pattern of losses at Expressway over the last five years. Given that School Transport is said to be a cost recovery activity, the published accounts for 2006, 2007 and 2008 seem to show profits in the ‘commercial’ division (of €7.2m, €7.9m and €1.07m respectively), followed by losses in 2009 and 2010 (of €3.6m and €5.3m respectively) .
However, when the profits from School Transport are applied to the published figures, they reveal substantial losses at the ‘commercial’ division in each of those years, coming to a total €80.16m from 2006-10.
|
|
2006 |
2007 |
2008 |
2009 |
2010 |
1 |
Published accounts for Commercial and School Transport |
+€7,243m |
+€7,982m |
+€1,075m |
-€3,642m |
-€5,257m |
2 |
School Transport ‘admin’ fee |
+€14,845m |
+€16,840m |
+€18,965m |
+€18,715m |
+€18,200m |
3 |
Commercial (Expressway) losses |
-€7,602m |
-€8,858m |
-€17,890m |
-€22,357m |
-€23,457m |
This news calls into question the findings of the 2009 Deloitte cost and efficiency review of Bus Eireann that stated: “Bus Éireann has been using its own resources, generated on its commercial services, to subsidise PSO services.” The audited accounts in the year seem to suggest that commercial services lost €22m and could not have been subsidising PSO services.
The Deloitte report also said: “The scope for significant cost savings in Bus Éireann is limited as the current network design and schedules are largely efficient.” This statement is also questionable given that the company’s ‘profit-making’ division was suffering massive losses at the time.
This information also raises doubts about a claim by Bus Eireann on the Today with Pat Kenny radio show on Wednesday 29th June, which said: “School Transport Scheme funding is not used on Expressway services, which is purely commercial and receives no State funding.” Clearly Expressway is no longer commercial, and uses funds from Bus Eireann’s other activities to cover its losses. It seems that School Transport is that source of funds.
Questions must also be asked of Bus Eireann and the Department of Transport for allowing a perception that Expressway is profitable despite losses of more than €80m in five years. An explanation is also required as to the source of moneys that are being used to cover Expressway losses, and the legality of such cross-subsidisation.
It is interesting to note the comment in the 2009 ‘Bord Snip’ reports by economist Colm McCarthy. It said: Bus Éireann's Expressway Services is a profitable arm of the company, operating in a fully open and competitive market, and it would have a sale value reflecting its dominant market position, sizable and modern bus fleet and history of profitability.” In the year this comment was published, the “profitable arm” seems to have lost €22.36m.
Questions must be asked of Minister Ciarán Cannon who told the Senate on June 28th: “Bus Éireann operates the [School Transport] system on a cost-recovery basis.” However, the new information (published by the Minister three days after this comment) suggest the system is not just ‘cost-recovery’ but yields a healthy profit of more than €18m.
The CTTC says: “It is clear now that Expressway is a failed entity. It should be wound down and replaced by competing licensed operators. It seems that Expressway has been kept viable by way of a subsidy arising from the School Transport Scheme. Given that large parts of the School Transport Scheme are being closed in a bid to make €17m in savings, the funding of Bus Eireann by School Transport needs to be examined.
The private sector is ready with the vehicles and efficiencies to take any services that are vacated by Expressway’s closure, thereby creating enormous savings for the Exchequer.
*The figures referred to are the audited accounts for School Transport Scheme for 1999 – 2010, released by the Dept of Education, and can viewed by clicking here:http://www.education.ie/home/home.jsp?maincat=17216&pcategory=17216&ecategory=56483&language=EN
