Varadkar defends 40% ‘discount’ State gets on free travel

Minister for Social Protection Leo Varadkar has defended the "discount" the State applies to its free travel scheme cost as value for taxpayers' money through bulk buying.

He told Solidarity TD Mick Barry it was not unusual to get a discount when buying in bulk and the Government expected to get a service in return for using taxpayers' money.

“If I am buying Coke Zero I buy the twin-pack and get a discount on that. If I am buying toilet rolls, I buy the 24-roll pack and get a bloody good discount on that too,” he said.

“That is how bulk buying operates. You get a significant discount.”

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The Minister said there was a discount as well with the TV licence from RTÉ. “I don’t see why there shouldn’t be a discount. That’s the basic principle that’s applied.”

The State does not pay the full price of bus or rail tickets used by those entitled to free travel. Mr Varadkar said the State applied a 40 per cent discount to public companies Bus Éireann, Iarnród Éireann and Dublin Bus and 30 per cent to the private bus companies that carry those eligible.

During Dáil question time Mr Barry said if the Government paid the full cost of tickets to Bus Éireann, currently in the third week of strike action by drivers, it could make a difference of millions of euro. He said some reports suggested it cost the company up to €17 million.

Critical stage

He said Minister for Transport Shane Ross had stated the full payment was in the pipeline but the company was at a critical stage and he asked why the payment was taking so long.

Mr Barry asked if there was a deliberate policy by the Minister and his department to push a privatisation agenda.

The Minister said it was not just about Bus Éireann or CIÉ. Payments were also made to Luas. A sum of €8.5 million was paid to private operators, €1.5 million to Pobal for rural transport, and €1.8 million for cross-Border travel.

He said “discounts are the norm for bulk purchases and also reflect the savings that arise from not having to collect fares and issue tickets. Many journeys undertaken would not have taken place at all were it not for free travel.”

Mr Barry noted an interview in which Mr Varadkar said “the Government may allow Bus Éireann to fold”. This was not the Minister’s preferred option but there were more private transport operators in place, Mr Barry added.

“It would cost the taxpayer a king’s ransom if the Government were to allow Bus Éireann to go to the wall. Some €59 million in payroll taxes would be foregone.

“The Minister could buy a lot of Diet Coke with that. There would also be hundreds of millions in redundancy and social welfare payments.”

The Minister said the money allocated this year for free travel was €77 million to €80 million. He said he could not just decide to pay additional funds to public transport companies.

He said the same treatment would have to apply to private bus operators and the Luas. “Any increase would have to apply to the bus operators who have continued to operate for the past 18 days.”

Mr Varadkar said he was “keen” to be able to increase free travel funding not just to commercial operators in the public sector but also for those in the private sector. It would give people who had the free travel pass more travel options. “That would be of benefit to the taxpayer.”