Bus story March 3, 2017Posted by WorldbyStorm in Uncategorized.
Stephen Kinsella in the SBP writes about Bus Éireann, and takes it as a matter of ‘public policy’. He argues that:
Competition from private long-haul bus companies has forced the profit-making inter-city routes to fail, and the company to lose stacks of money. Its own CE has raised the prospect of outright closure. The solution in the short-run is to cut back costs – French for reducing wages and letting people go – and borrow to return the company to validity. But that isn’t happening. In a private company, this would learnedly happened But this isn’t a private company.
And he continues:
It is true to say act the company is caught between two large problems.
The first is its pay bill, which grew too quickly relative to revenues in the boom and which hasn’t come down fast enough to save the company’s bottom line. The second is the dual nature of its role.
Were it simply a part of the state like the DPP… BÉ could lose money all day and few people would mind, especially if it were fulfilling its public service mandate to bring citizens from places private bus companies wouldn’t take them. When competing with private companies with newer buses and cheaper staff, BÉ gets hammered. As it should. Its services are just not up to par.
And he says that while:
The taxpayer would say let BÉ fail but save the routes. Let other companies bid for them en bloc and have some geographical tendering process, so bus companies in (say) the mid-west fulfilled the public service obligation in that area. In the end the state will pay to plug the gap the market won’t. It may even pay more.
And his conclusion?
I would let BÉ go. It’s 2,487 workers will find work elsewhere in a growing economy, perhaps at higher wages and with better conditions.
There is enough demand for these skills elsewhere in the economy.
But he’s just spent a couple of paragraphs arguing that the pay bill is too great and that private operators wouldn’t pay such rates or offer such conditions. I’m not sure how he squares that circle.
And what of the public service obligation?
Its functions can be transferred to other companies.
Really? That simple?
Sure, he offers a cosmetic argument at the start of his piece arguing that nationalised entities can be cheaper and more effective. But the drift of his piece is telling when one looks at the following:
‘Will the government getting involved push out private involvement?’
But surely this more a case where a state run enterprise hollowed out by ‘competition’?