CIE under even more pressure to reduce costs

DUBLIN has the least subsidised urban transport system among European cities, with a requirement to recover 96 per cent of its operating costs from flares. This compares with 33 per cent in Brussels, 25 per cent in Amsterdam and just 10 per cent in Rome.

Yet, from next year, the Government expects Dublin Bus to cover its entire day today running costs from fares. The only remaining payments will consist of £3 million for socially desirable, loss making services to remote areas, and £10 million for pensioners' free travel.

For the past 10 years, since Mr Jim Mitchell was Minister for Transport, CIE has been under increasing pressure to reduce its costs in order to become less of a "drain" on the Exchequer. This applies particularly to the railways, which account for most of the group's £100 million deficit.

The traditional approach was to increase fares rather than tackle restrictive practices head on. As a result, public transport in Ireland - and in Dublin, in particular - was caught in the classic spiral of decline, with passenger numbers falling each time the fares were increased.

With public transport, especially buses, widely regarded by decisionmakers as a residual service for people too poor to own cars, it is hardly surprising that the Department of Transport would be influenced by Thatcherite economics and the deregulation of services in Britain.

The notion that public transport should make a profit or, at the very least, cover its costs, took strong root here - in contrast to the prevailing view throughout the rest of the European Union, where it is seen as a vital public service to be subsidised from the public purse.

In Paris, for example, both the capital and running costs of its superb transport system - buses, metro and RER express trains - are funded by a combination of central, regional and local government grants, and a payroll tax levied on all employers in the French capital.

However, despite generous subsidies, most public transport operators in EU member states are under pressure to cut costs by eliminating inefficiencies. There is a growing view that they should be slimmer, more efficient organisations, better equipped for the competitive world.

CIE is no exception. After numerous consultancy studies, including the McKinsey report as long ago as 1980, the squeeze is on. The latest round of reports, separately covering Iarnrod Eireann, Dublin Bus and Bus Eireann, recommends major cuts to make the companies more efficient.

One of the main financial burdens falling on Iarnrod Eireann is the cost of maintaining the "permanent way" - the railway tracks and signalling equipment. This led to CIE reorganising its accounts to show the Government's subvention "above the line", to dress up its annual deficit.

"Increasing fares is no longer an option because we can't raise tares to pay for inefficiencies," one CIE source said. "We must reduce costs, give the best value to the customer, and do it in the most efficient way possible. It's nothing that wouldn't be done by any prudent manager of a company."

He noted that Dublin Bus was still paying an index linked £12 per week extra to 450 of its drivers to compensate them for the loss of guaranteed Sunday working more than 20 years ago. Major battles had to be fought to introduce new services such as the successful Imp mini buses.

"What we're proposing to do should be done whether or not the Government is giving us money," he said. "In financing public transport, the Government should seek a more commercial approach and should not pay for services which are not being provided at the cheapest level possible."

After the alleged "fat" is trimmed - assuming that the trade unions will agree to the changes now being proposed which seems unlikely - perhaps the Government will be in a better position to judge the value of public transport and subsidise it accordingly.