A NEW INSTITUTIONAL AND REGULATORYFRAMEWORK FOR PUBLIC TRANSPORT

Department of Public EnterpriseAugust 2000

A NEW INSTITUTIONAL AND REGULATORYFRAMEWORK FOR PUBLIC TRANSPORT

Department of Public EnterpriseAugust 2000

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Page Foreword 3

1. Introduction 5

2. Policy Context 7

3. New Institutional Arrangements 9

4. Regulation of the Bus Market in the Greater Dublin Area 13

5. Consultation 21

Annex:Proposed New Arrangements for the Regulation of Railway Safety 23

CONTENTS

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The publication of this policy paper is an important step in the revitalisation of our publictransport system. The National Development Plan set out an innovative and challenginginvestment programme for the period 2000 to 2006. This paper builds on the investmentblueprint by outlining a framework for the institutional and regulatory reform of publictransport. There are further building blocks to come in the form of policy proposals onthe regulation of the bus market outside Dublin and on the institutional arrangements fortransport in the Greater Dublin Area. Taken together, they will represent a formidablereform programme which the Government is determined to implement.

The proposed institutional and regulatory changes will be implemented in a spirit of partnership. There will be fullconsultation with the social partners, through the Public Transport Partnership Forum established under theProgramme for Prosperity and Fairness. Individuals and organisations are also being asked to submit their written viewson this paper by mid October. My Department does not claim to have all the answers and is open to suggestions whichwill improve public transport and make the reforms more effective.

This paper only provides the broad framework for institutional and regulatory reform. A large amount of work remainsto be done to flesh out the details of the new institutional structures and regulatory arrangements. While this work isongoing there will be further opportunities for consultation. There will also be a need for negotiations with the tradeunions on the restructuring of the CIÉ companies.

I hope that everybody involved in public transport will rise to the challenge presented in this paper and the NationalPlan – to create an attractive, integrated public transport system which addresses the economic and social needs of ourcitizens. We will succeed if we all work together – Government, social partners, the CIÉ companies and other publictransport providers.

Mary O’Rourke,T.D.,Minister for Public Enterprise,August, 2000.

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Foreword

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The National Development Plan sets out a clear public transport investment strategy for the period 2000 to 2006which is designed to:

• achieve a radical transformation of the public transport system in the Greater Dublin Area;

• revitalise the railway network;

• increase investment in regional public transport, particularly in major urban areas.

However, investment alone is not enough to achieve the necessary improvements in the public transport service. Itneeds to be accompanied by institutional, administrative and regulatory reform.

This paper sets out a proposed framework for institutional and regulatory reform of public transport. It brings togetherthe conclusions of two papers presented to the Cabinet Committee on Infrastructural Development and Public PrivatePartnerships by the Minister for Public Enterprise earlier this year – one on institutional reform and the other onregulation of the bus market in the Greater Dublin Area. Further work is required to complete this framework,particularly on the institutional arrangements for transport in the Greater Dublin Area and on the regulation of the busmarket outside Dublin. This will be undertaken over the coming months. Policy on rural public transport will also bedeveloped with the assistance of the Public Transport Partnership Forum, based on experience with pilot projects.

The purpose of this paper is twofold. It provides a basis for consultation with interested parties, particularly the socialpartners through the Public Transport Partnership Forum. It also provides a policy framework to guide the work ofthe Department of Public Enterprise in preparing the necessary legislative and other measures to give effect to theproposed reforms.

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1. Introduction

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Overall Objectives of Public Transport Policy

The overall objectives of public transport policy will be:

• to ensure the provision of a well functioning, integrated public transport system which enhancescompetitiveness, sustains economic progress and contributes to social cohesion;

• to ensure the provision of a defined standard of public transport, at reasonable cost to the customer and thetaxpayer;

• to ensure the timely and cost effective delivery of the accelerated investment in infrastructure and facilitiesnecessary to ensure improved public transport provision.

Role of the State

The role of the State in the delivery of these objectives will be:

• to determine the amount, timing and broad allocation of State financial support for public transport;

• to provide a clear, but broadly based, definition of an appropriate standard of public transport provision1;

• to put in place the necessary institutional and administrative arrangements to procure, but not necessarilydirectly provide, the defined standard of public transport provision;

• to implement the necessary legislative and regulatory measures;

• to provide, or procure the provision through public private partnerships (PPPs) or otherwise, of the necessaryfinancial resources.

Up to now the definition of an appropriate standard of public transport provision has been the responsibility of CIÉ,having regard to the resources available to it. It has been given an annual revenue subvention by the State and has fromtime to time been given financial targets to achieve. However, the State has not sought to explicitly define what thestandard of public transport provision should be.

It is now proposed that the State, through the Minister for Public Enterprise, will broadly define what standard of publictransport services it wishes to see provided. As a first step, the proposals being developed by the Dublin TransportationOffice for a future transportation strategy for the Greater Dublin Area could, when approved by Government, providethe basis for defining an appropriate standard of public transport provision for the capital city. Over time, theGovernment will define an appropriate standard of public transport provision for the rest of the country, having regardto the National Spatial Strategy and the recommendations of land use and transportation studies. It will also put in placethe necessary legislative, regulatory and institutional measures to procure the provision of that standard of publictransport service.

The definition of an appropriate standard of public transport provision will clearly need to have regard to the ability ofthe Exchequer to provide financial support for uneconomic services. It will also be important that arrangements areput in place to ensure that Exchequer allocations are not exceeded and that the debt of State companies is notexcessive.

1 An appropriate standard of public transport provision might, for example, be defined as a minimum number of rail services per route on themainline network, while in an urban area it might be defined in more detail by reference to the peak hour capacity of the public transport system.

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2. Policy Context

While the State has a responsibility to ensure that the defined standard of public transport provision is procured in aneffective way, it does not need to be directly involved in the provision of those services through State owned companies.Instead it is proposed that the public transport market will be opened up to private participation as a way of betterexposing it to market forces, improving quality and efficiency, increasing attention to customer requirements andreducing the cost of service provision.

It is proposed that State financial support will be provided on a contractual basis, specifying the payments to be madefor a defined quantity and quality of service. Such contracts will as far as possible be awarded by tender, therebyexposing them to market forces. This approach will ensure better transparency in the allocation of resources, andbetter value for money.

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CIE was established over half a century ago and there has been little significant institutional change in the period sincethen. The one exception was the establishment of three operating subsidiaries in 1987 under the terms of the Transport(Re-organisation of Córas Iompair Éireann) Act, 1986.

Now that the Government is planning a major revitalisation of public transport and has committed itself to anaccelerated investment programme, the time is ripe for a review of the existing institutional structures.

The main impetus for this change in policy is the urgent need to deal with traffic congestion problems in Dublin and toforestall similar problems in other major urban areas. There is also a strong awareness of the importance of publictransport in promoting sustainable development and addressing social inclusion and of the urgent need to improverailway safety and renew the mainline rail network. However there is also a recognition that investment on its own isnot sufficient to deliver this transformation.

The sheer scale of the investment required raises two potential constraints – the availability of finance and theavailability of sufficient management skills to provide the new and enhanced infrastructure and to operate the servicessubsequently in a safe, cost effective and customer friendly way. The availability of finance is now less of a constraintthan in the past. However, resources are not unlimited and the Government will be looking to public privatepartnerships as a way of providing some of the funding, as well as bringing in specialist skills and innovation. This willprovide an opportunity for the private sector to contribute to major infrastructural development as well as enablingaccess to experience from other Member States where the types of projects we are now contemplating have beenimplemented and are already in operation.

It has also become evident in recent years that many activities, such as air travel and telecommunications, that wepreviously assumed could only be carried out successfully on a monopoly basis have been shown to improve verysubstantially – both in terms of lower cost and better service – when exposed to competition. While it is acceptedthat there may be different factors at play in the various sectors, it is nevertheless important to consider the role ofcompetition in public transport and to address the institutional issues arising.

Closely coupled with the introduction of both public private partnerships and competition is the issue of independentregulation. It is an essential part of creating a level playing field and facilitating the development of a market in publictransport.

Public transport across Europe is also undergoing major institutional change and it is important to learn from thatexperience. Many countries have already institutionally separated their railway infrastructure and operations. Somecountries have had successful experience with liberalising their bus markets. The European Union has introducedsignificant reforms and more are planned.

All of these factors have influenced the consideration of the proposed new institutional arrangements outlined in thischapter.

Proposed New Institutional Arrangements

The following is a broad outline of new institutional arrangements which the Government proposes to implement:

• Bus Átha Cliath and Bus Éireann will be established as separate independent companies and the existinggeographical restrictions on their areas of operation will be removed. In other words, both companies will beable to compete to provide bus services throughout the State alongside any other licensed or franchisedoperators.

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3. New Institutional Arrangements

• The State will divest itself of ownership of at least one of the bus companies. This is likely to be Bus Átha Cliathas the proposed regulatory framework for the bus market in the Greater Dublin Area is being defined in Chapter4 of this paper. The possible future transfer of Bus Éireann to private ownership is not, however, being ruled outand will be the subject of further consideration as the regulatory framework for the bus market outside Dublinis being developed.

• Iarnród Éireann will be divided into two independent companies - one responsible for the railway infrastructureand the other responsible for the operation of railway services.

• The railway infrastructure company will remain in State ownership. Consideration will be given at a later stageto transferring ownership of the company responsible for the operation of railway services to the private sectoror alternatively to franchising the operation of some or all railway services. Consideration can also be given inthe longer term to franchising the maintenance of the railway infrastructure.

• Public private partnerships (PPPs) will be used to procure the design, construction, maintenance, operation andfinancing of major new public transport infrastructures, including the Dublin light rail network and any newsuburban rail lines.

• The procurement of major infrastructural projects on a public private partnership (PPP) basis will be establishedas a separate function, independent of the public transport operating companies. The CIÉ Light Rail ProjectOffice, suitably restructured and expanded, will provide the starting point for this.

• An independent public transport regulatory function will be established which will have the following functionsin relation to bus and rail:

• regulation of the bus market, through franchising and licensing as appropriate;

• negotiation of public service contracts and the award of franchises for the provision of public transportservices, including the allocation of State financial support for non-commercial services and the receipt offranchise payments;

• other market regulation responsibilities arising from public private partnerships and EU legislation.

The precise form of the regulatory body or bodies will be determined following completion of the review of theinstitutional arrangements for transport in the Greater Dublin Area and the review of bus market regulationoutside Dublin.

• An independent railway safety authority will be established, details of which have already been announced by theMinister for Public Enterprise (see Annex). This will be separate from the regulatory function proposed above,as it would be inappropriate to combine both market and safety regulation functions in a single body.

The new institutional arrangements are illustrated in graphic form in Figure 1.

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The Greater Dublin Area

The institutional framework for transport in the Greater Dublin Area will be considered later this year by the CabinetCommittee on Infrastructural Development and Public Private Partnerships. This consideration will address not onlypublic transport, but also roads and traffic and possibly land use. The Government will publish its proposals in due courseand these may give rise to some modifications to the proposals outlined in this paper.

Implementation Issues

The proposals set out above describe only the broad framework of the new institutional arrangements for publictransport. A range of issues will have to be addressed before detailed Government decisions are taken on theimplementation of these proposals, among them the following:

• The overall financial implications for the Exchequer will have to be assessed in detail, including the cost ofproviding improved public transport services and of restructuring the CIÉ companies.

• Substantial industrial relations issues will have to be addressed during the implementation of the planned reforms.

• There are significant staffing issues requiring consideration. The CIÉ holding company currently employs about300 people. These include the Light Rail Project Office and a number of central functions such as finance andproperty. Their future disposition will have to be considered, depending on what happens to their functions. Thefuture administrative arrangements for pensions will also have to be considered as the current pension schemesapply CIÉ-wide.

• The implications of section 14(7) of the Transport (re-organisation of Coras Iompair Éireann) Act, 1986 will needto be reviewed. This provides for the transfer back to CIÉ of subsidiary company employees where a subsidiaryis wound up.

• One of the issues that might be considered, as part of the restructuring of the bus and rail companies to face amore competitive market, is whether it is appropriate to have an employee share in the ownership of thosecompanies, through an ESOP or otherwise.

• The individual CIÉ companies will need to be financially restructured to enable them operate as single entitiesrather than members of a group of companies. Borrowings are currently undertaken on a Group basis. Loansand assets will need to be reallocated to the individual companies and the financial implications of doing so willhave to be assessed.

Priorities and Indicative Implementation Timetable

The first phase of the institutional restructuring will be the establishment of a separate public transport infrastructureprocurement function to take over responsibility for PPPs. This will be dealt with as part of the wider legislativerequirements for light rail and metro and it is envisaged that the necessary Bill will be introduced by early 2001.

The second phase of the institutional restructuring will be the establishment of the CIÉ subsidiaries as independentcompanies. The indicative timetable envisages the enactment of the necessary legislation by late 2002.

The legislation to establish a new regulatory framework for railway safety is expected to be published by end 2000.

The timetable for regulatory reform is addressed in detail in Chapter 4.

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Policy and Strategic Context

The policy and strategic context for the regulatory proposals outlined in this Chapter is provided by:

• the National Development Plan 2000-2006 which proposes substantial measures to develop, extend and increasethe capacity of the bus network;

• the forthcoming Dublin Transportation Office’s transportation strategy 2000-2016 which will recommend amajor increase in public transport provision;

• the bus network review, mandated by the DTO and carried out for CIÉ by independent consultants, whichprovides the template for the development of the bus network to 2006.

The National Plan sets out the objectives of the public transport investment programme for the Greater Dublin Area2

as follows:

• to address the projected growth in traffic through a combination of investment in transport infrastructure andfacilities and demand management measures;

• to reduce the relative attraction of commuting to work by private car thereby curtailing congestion and vehicularemissions;

• to increase accessibility for all, particularly people with disabilities;

• to better reflect evolving commuter travel patterns by providing for a spatial distribution of public transportwhich addresses the requirements of the Strategic Planning Guidelines;

• to support sustainable development.

The Dublin Transportation Office is at present working on an updated transportation strategy for the period 2000-2016. While that work is still in progress and the Government has yet to receive and consider the DTO’s finalproposals, it is useful to set out for illustrative purposes some of its preliminary findings and conclusions. The scale ofthe transportation challenge, as identified by the DTO, is set out in the following table:

AM PEAK 1991 1997 2016 2016HOUR TRIPS DO DO(Thousands) MINIMUM STRATEGY

Public Transport 62 69 172 312Car 110 181 316 176Total 172 250 488 488

2 The Greater Dublin Area (GDA) comprises Dublin County Borough and the counties of Dun Laoghaire-Rathdown, Fingal, South Dublin, Kildare,Meath and Wicklow.

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4. Regulation of the Bus Market in the Greater Dublin Area

Total peak hour trips have grown by 78,000 or 45% between 1991 and 1997. However, the bulk of that growth hasbeen accounted for by private car commuting (+71,000). By 2016, total peak hour trips are forecast to be 488,000, a95% increase on the 1997 level. If no new investment, other than that already committed, was to be undertaken duringthat period, total car trips would double. The result would be to reduce peak hour speeds on radial roads to 8kph,compared with 14kph in 1997 and 22kph in 1991.

The DTO has set itself the objective of reducing congestion to 1991 levels while catering for additional trip demand.That in turn translates into a public transport trip target of 312,000 in the 2016 peak, or almost a five fold increasecompared with 1997.

Within that overall strategy, peak hour bus trips would increase from 47,000 in 1997 to 76,000 in 2016. In the longerterm the greater proportion of the public transport growth is likely to be accounted for by extensive development ofrail-based transport (light rail, conventional rail and metro). However, in the short to medium term, while new railinfrastructure is being planned and constructed, most of the growth in public transport provision will be based onimproved and extended bus services. It is therefore likely that the total number of bus-based trips will be higher in themedium term. In the longer term, the configuration of the bus network is likely to change from its current dominantradial pattern to an emphasis on orbital and local routes and on feeder services to rail modes.

Last year the DTO recommended that there should be a review of the existing bus network to examine its effectivenessin meeting existing and forecast demand. CIÉ subsequently commissioned consultants Scott Wilson, in association withIBIS Transport Consultants and Brady Shipman Martin, to carry out this review. The strategic phase has been completedand is being followed by a more detailed study.The results of this work will provide the template for the developmentof the bus network in the period to 2006 and beyond. The main recommendations of the strategic phase of the busnetwork review are as follows:

• A substantially expanded network of Quality Bus Corridors and other bus priority measures, including orbitalQBCs and local bus priority measures;

• a number of additional bus services;

• a number of enhancements of existing services, generally by increasing frequency;

• provision of local service networks in suburban locations within the Metropolitan Area3;

• provision of services in the Hinterland Area3, including a small range of outer orbital services;

• an extra 250 buses, additional to the 275 provided for in the National Plan.

In the light of the above and subject to future Government consideration of the final DTO proposals, it is possible toidentify some of the principal features of the future Greater Dublin Area bus network:

➢ The bus service will be one element of an integrated transportation strategy for the Greater Dublin Area.

➢ The bus service will form part of an integrated network of public transport services, designed to provide forplanned intra-modal (bus to bus) and inter-modal (bus to rail) interchange. The overall objective will be to enablemost journeys to be completed with no more than one interchange.

➢ The bus network will comprise the following principal elements:

3 The Metropolitan and Hinterland Areas are defined in the Strategic Planning Guidelines. The Metropolitan Area approximates to the built-up areaof Dublin and the Hinterland Area refers to that area of the GDA outside of the built-up area of Dublin.

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Metropolitan Area

• a mesh of radial and orbital services with a facility for planned interchange between them and with rail/light railroutes;

• feeder services to rail/light rail routes;

• local services at appropriate locations;

• dedicated services such as rail, port and airport links and late night services;

• dedicated services to bus-based park and ride sites.

Hinterland Area

• services linking the Hinterland Area with the Metropolitan Area, the Airport and the city centre;

• local services in the Hinterland Area, especially within development centres identified in the Strategic PlanningGuidelines.

Fuller elaboration of the bus network will be developed in the detailed phase of the bus network review referredto earlier.

➢ The bus network will be expected to provide sufficient physical capacity to meet targets to be set by the DublinTransportation Office’s transportation strategy 2000-2016 (76,000 peak hour trips in 2016 compared with47,000 in 1997).

➢ The bus mode will participate fully in a planned integrated ticketing system for the Greater Dublin Area and inany other appropriate integration measures (for example interchange facilities, integrated timetabling of publictransport services, real time passenger information etc.).

➢ The operation of bus services will be supported by a range of complementary traffic management measures,principally improved on-street priority via Quality Bus Corridors, bus lanes and other measures.

➢ Bus services will be provided to high standards, particularly in relation to:

➢ the quality of buses used and their accessibility for mobility impaired and disabled passengers;

➢ the frequency of service provided (which will be defined by reference to the capacity requirements referred toabove);

➢ the standard of customer service provided by bus employees, especially drivers;

➢ the provision of appropriate interchange, shelter and passenger information facilities.

Proposed Regulatory Framework

The regulatory framework proposed by the Government for the provision of bus services in the Greater Dublin Areais the franchising model. Under this model the State will define the public transport service to be provided and invitetenders for its provision. Contracts or franchises will be awarded to the winning tenderers who will have exclusiverights to operate services on particular routes or in defined geographical areas for a specific period of time (say 5years). The winning tenderer will either make a payment to the State to operate the specified bus services on an

exclusive basis or receive a subvention. The amount of the payment or subvention will be determined by the tenderingprocess and will have regard to whether the routes tendered for are profitable or not.

Under the franchising model, the Government will:

◆ define policy for the sector;

◆ set overall targets for the sector in terms of modal split and public transport passenger numbers; and

◆ set the overall budget for Exchequer support for the sector.

An independent regulatory function will be established to regulate the bus market in the Greater Dublin Area. Itsobjectives will be to:

◆ ensure the provision of a defined level and quality of bus services, including ensuring physical accessibility formobility impaired and disabled people;

◆ ensure integration of the public transport network;

◆ increase ridership and facilitate improved modal split, particularly at peak-times;

◆ maintain expenditure within limits defined by Government and obtain best value-for-money for any subventionprovided; and

◆ ensure a level playing field for all operators and maintain contestability and competitiveness in the marketplace.

The precise institutional form of the regulatory function will be determined at a later stage following completion of areview of the institutional arrangements for transport (public transport, roads and traffic and possibly land use) in theGreater Dublin Area.

The independent regulatory function will have the following principal tasks in order to achieve the above objectives inrespect of the bus market in Dublin:

◆ to design an integrated bus network to respond to Dublin’s current and projected public transport needs, whichwill be part of a wider integrated public transport network, as defined by the overall transportation strategyrecommended by the Dublin Transportation Office;

◆ to organise tender competitions to procure services on the network from bus operators, allocating subsidywhere required;

◆ to monitor customer satisfaction levels and the quality of service provided by bus operators active in thenetwork and enforce compliance with minimum quality standards and with contracts;

◆ to establish an integrated fare structure for the entire Greater Dublin Area;

◆ to take overall responsibility for the management of the integrated ticketing system and act as clearing house forthat system;

◆ to manage the provision of co-ordinated bus passenger information in the Greater Dublin Area;

◆ to share responsibility with bus operators for the marketing of their services in the Greater Dublin Area;

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◆ to ensure that State-owned land and facilities reserved for buses in the Greater Dublin Area, including transportinterchanges, bus depots, park-and-ride sites, bus roadside infrastructure etc., are managed in a manner whichfacilitates equitable access by all operators to these facilities, either by managing these facilities directly or bymonitoring their management by another body;

◆ to ensure a level playing field between all bus operators in the market;

◆ to promote competitiveness in the bus market;

◆ to monitor and enforce minimum quality standards on all school bus services (whether subvented or not); and

◆ to monitor usage of the public transport network (e.g. bus passenger numbers).

The bus market in the Greater Dublin Area is not a homogenous one. While it is clear that the franchising model isthe optimal regulatory solution to manage the development of the core urban bus network, other regulatoryapproaches may be more appropriate when considering the bus market, say, in smaller towns on the periphery or keyradial commuter routes from the hinterland into the city centre. The independent regulatory function will haveappropriate flexibility to develop alternative regulatory approaches for these very different markets.

Further work will be required to define the exact level and quality of bus service which will be required (e.g. minimafor peak and off-peak frequencies, standard bus type to be used, average age of buses in fleet, level of cleanliness,punctuality targets etc.) and to identify any regulatory mechanisms which could be used to help prevent a situationwhere a particular operator gains a dominant position. Expert economic advice will be obtained to develop the fulldetail of the new regulatory regime to be put in place.

Bus Átha Cliath and Bus Éireann, along with private operators, will be able to compete for franchises. The State willdivest itself of ownership of Bus Átha Cliath in advance of the commencement of franchising of the core bus networkin Dublin.

The Transition to a Fully Franchised Bus Market

A transition period is necessary to:

• allow for the preparation of the necessary legislation;

• enable public and private operators prepare for a competitive bus market;

• permit the regulatory body to make the detailed preparations necessary for the introduction of franchising,including developing a thorough understanding of the bus network and market in the Greater Dublin Area;

• give the State the necessary time to divest itself of Bus Átha Cliath and address the industrial relations issuesassociated with the regulatory reform process.

The transition period is defined in three phases: immediate, short term and medium term.

Immediate

It is proposed immediately to increase private participation in the provision of bus services in the Greater Dublin Areain two ways:

• Bus Átha Cliath will be encouraged to subcontract more of its services to private operators, for which it alreadyhas trade union agreement. This approach has advantages for both the company and private operators. It enables

the company to operate some services at lower cost than at present and gives it some limited experience of amarket-based approach. It allows private operators to gain some limited operational experience in the Dublinbus market, without the wider financial risks attendant on full franchising.

• Private bus operators will be granted licences to operate services on certain routes in the Greater Dublin Areaunder the provisions of the existing Road Transport Act, 1932. The first step, the consideration of existinglicensing applications for routes in the Greater Dublin Area, has already been completed and a decision to grantlicences for 11 routes was announced in early July. Subsequently the guidelines for the consideration of licenceapplications will be reviewed and a licensing round of specified duration will be announced in the Autumn duringwhich applications for licences which accord with the revised guidelines may be submitted.

Under the new approach to licensing, if an application is made for a route in the Greater Dublin Area which is in linewith the network recommended in the Bus Network Review, which is consistent with the DTO transportation strategyand which was not being serviced by Bus Átha Cliath, Bus Éireann or by a licensed operator on or before 17 May 2000,then that route licence may be granted. In line with the intention to franchise routes or groups of routes, these interimlicences will generally be restricted to one operator per route. As these new licences will be granted as part of atransitional phase leading to full franchising of the bus market, no rights will accrue in the longer term to personsholding such licences.

Short Term (within 12 months)

Within a year it is proposed to draft and enact legislation to establish a transitional bus regulatory body4 for the GreaterDublin Area. The principal functions of this body will be:

• to make the necessary preparations for the phased implementation of a fully franchised bus market;

• to take over the Minister for Public Enterprise’s licensing functions under the 1932 Act;

• to organise franchise competitions for private operators in respect of routes not in the existing Bus Átha Cliathor Bus Éireann core network;

• to allocate subsidy through public service contracts5 with Bus Átha Cliath and Bus Éireann or limited franchisecompetitions;

• to monitor and enforce the contracts, franchises and licences;

• to investigate and take enforcement action in respect of any abuse of dominant position in the bus market in theGreater Dublin Area6.

4 A final decision on the organisational model for this independent regulatory function will be taken following completion of the review of theinstitutional arrangements for transport in the Greater Dublin Area.

5 Specific legal advice is required to ensure that this will be possible as a transitional arrangement, given recent Senior Counsel’s advice that publicservice contracts may only be granted to the CIÉ companies without a competition on the basis of an exclusive right which they enjoy in lawand that this exclusive right is not de facto eroded by the existence of private operators in the market served by the companies. It is assumedthat the proposed Bill will be able to provide for exclusive rights in respect of the existing core networks of Bus Átha Cliath and Bus Éireann asnecessary.

6 It is proposed that the transitional regulatory body and the Competition Authority will each be given an express right to defer to the other’sconsideration of a matter that otherwise falls within its own broad jurisdiction. The legislation will also ensure that each of the agencies willnotify the other of all cases of common interest and will facilitate the disclosure of information between them.

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Under the legislation, Bus Átha Cliath and Bus Éireann will be prohibited from initiating any new service or altering anyexisting service in the Greater Dublin Area without the consent of the regulatory body.

It is also proposed that this new legislation will amend the 1932 Act:

• to give the transitional regulatory body power to refuse licence applications in certain defined circumstances,including where the route applied for is not consistent with the overall transportation strategy;

• to specify that the transitional regulatory body may terminate a licence in certain defined circumstances, includingwhere it wishes to introduce a franchising scheme in respect of particular routes or a geographical area or wherethe existing licensee is not providing an adequate service;

• to attach conditions to licences, including matters such as participation in an integrated ticketing scheme orsharing of bus infrastructure;

• to allow the regulatory body to invite applications for licences in respect of particular routes or groups ofroutes.

The drafting of the legislation will also take account of Governance and Accountability in the Regulatory Process: PolicyProposals published by the Minister for Public Enterprise in March, 2000. In parallel with the drafting of the legislation,work will get underway to establish the transitional regulatory body with a view to enabling it commence operationsimmediately the legislation is enacted. This preparatory work will include the appointment of the regulators, therecruitment of staff and the establishment of offices.

Medium Term

It is proposed to draft and enact further legislation by late 2002 which will:

• provide the statutory basis for a fully franchised bus market in the Greater Dublin Area;

• establish Bus Átha Cliath and Bus Éireann as independent companies without geographical restrictions on theiroperations;

• provide for the transfer of Bus Átha Cliath to private ownership.

This preparatory period will allow for the details of the operation of the franchising system to be worked out and givenappropriate legislative expression. It is envisaged that the transitional regulatory body will do the bulk of the work onthe development of the franchising model and that it will assist the Department of Public Enterprise in preparing thenecessary legislative framework.

The preparatory period will also be used to address the issues arising from the establishment of Bus Átha Cliath andBus Éireann as independent companies and the transfer of Bus Átha Cliath to private ownership. This will includenegotiations with trade unions and financial restructuring of the companies.

It is envisaged that the regulatory body will begin franchising the core network in late 2003/early 2004. It is anticipatedthat around 25% will be franchised in each succeeding year, probably leading to franchising of the entire network by2006/7.

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The social partners are being consulted on these proposals through the Public Transport Partnership Forum, establishedunder the Programme for Prosperity and Fairness.

Organisations or individuals wishing to comment on the proposals in this paper can do so by making a submission inwriting not later than 13 October, 2000 to:

Damien Clarke,Consultation on Public Transport Reform,Department of Public Enterprise,44 Kildare Street,Dublin 2.

Fax: (01) 6041657E-mail: damienclarke@dpe.ie

The text of this paper is on the Department of Public Enterpise website at www.dpe.ie

Freedom of Information Act, 1997Persons wishing to submit written comment on the proposals in this paper are asked to consider if any of theinformation supplied by them in their submissions should not be disclosed because of its sensitivity. If this is the case,those persons should identify such sensitive information in their submissions and specify the reason for its sensitivity,The Department will consult with them about such sensitive information before making a decision on any Freedomof Information request received. If persons making submissions consider that none of the information supplied bythem is sensitive, they should make a statement to that effect. Such information may be released in response to anFOI request.

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5. Consultation

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Coverage

The new regulatory arrangements will apply to all railways and railway operators in the State, including:

• the Iarnród Éireann network,

• the light rail and metro network,

• private, narrow gauge and heritage railways to which the public has access.

They will also cover any future public private partnership railway infrastructure and operations, as well as third partyrailway operators entitled to access to the Irish railway network under EU Directives or otherwise.

Statutory Duties relating to Railway Safety

Each railway undertaking (i.e. the provider of railway infrastructure and the operator of railway services) will be undera general statutory duty to ensure railway safety, so far as it is reasonably practicable. A statutory duty in relation torailway safety will also be placed on railway employees similar to that placed on employees generally in respect ofoccupational safety in the Safety, Health and Welfare at Work Act, 1989. Members of the public will also be placed undera statutory duty in relation to railway safety similar to that in relation to the fire safety under the Fire Services Act,1981.

Railway Safety Statement

Each railway undertaking will have to prepare, and review from time to time, a detailed document, called a railway safetystatement, setting out:

• its safety objectives and policies,

• its safety management systems,

• an assessment of risks,

• a statement of proposed measures to address risks.

The statement will also be expected adequately to address the interaction between the various components of railwaysafety (for example in assessing rolling stock account will be taken of its interaction with the railway infrastructure(track, signalling, etc.), railway employees and passengers).

The railway undertaking will be obliged to prepare a supplementary statement to take account of any material changefrom its original statement, such as the proposed introduction of a new type of rolling stock or the proposed installationof a new signalling system or the modification of existing infrastructure.

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Annex

Proposed New Arrangements for the Regulation of Railway Safety

Independent Railway Safety Regulatory Body

A railway safety regulatory body, independent of the Department of Public Enterprise, will be established. Its functionswill be:

• to audit railway safety statements and monitor their implementation,

• to inspect railway infrastructure and operations and safety management systems,

• to investigate reportable accidents and incidents,

• to take enforcement action.

The body will have inspection, investigation and enforcement powers similar to those available under the Safety, Healthand Welfare Act, 1989 and the Fire Services Act, 1981, including the power:

• to receive and consider reports from railway undertakings on reportable accidents and incidents,

• to enter premises and to require the production of documents and records,

• to require persons to provide information or give evidence on oath,

• to conduct formal investigations of railway accidents,

• to serve an improvement notice requiring specified measures to be taken to improve railway safety,

• to serve a prohibition notice prohibiting specified activities,

• to seek a High Court order immediately prohibiting or restricting specified activities,

• to draw up and issue codes of practice and guidance documents,

• to publish an annual report on railway safety.

Ministerial Functions

The Minister will have certain reserve powers in addition to those of the independent regulatory body, including thepower in exceptional circumstances:

• to make regulations relating to railway safety matters,

• to institute a public inquiry in relation to a specified railway accident.

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