Sunday, January 6, 2008

Government inspired inflation coming to a bus and rail station near you!

Well I suppose we are now six days into the New Year, so I should have expected news of Government sanctioned price increases by now. So to prove their efficiency, low and behold along they come, unlike the buses on time every January.

The Sunday Business Post informs us that the Department of Transport (not that there is any mention on their website as of this morning to that effect)has sanctioned fare increases on bus and rail services of up to 10% across the country. This of course is shockingly hypocritical in light of their statements on the need to tackle inflation. On top of these price hikes, many rail commuters are also facing new and increased car parking costs at stations. Recent figures from the CSO showed that more people are driving to work and less travelling on the buses in 2006 compared with 2002 and this price hike will only add to that.

I am reminded of this Fast Show sketch when I think about Government policy on inflaytion!

Public transport costs are one of the key areas where Government has the power to control prices and despite the fact that last June the Government hosted an anti-inflation summit to demonstrate its commitment to keeping pieces and costs down, it has year after year sanctioned increases in public transport fares. But of course, this is all easily explained. The Consumer Strategy Group report in 2005 highlighted the Governments’ conflict of interest, in that it is both the owner and regulator of the CIE group of companies, therefore it has the option of investing more in public transport and keeping costs down or it can pass the increased costs onto the consumer. And of course the latter argument always wins out, that if there is ever any argument of course in the first place.

And speaking of this Anti-Inflation summit when it was convened inflation was 5% and six months on it is still 5%. With the most recent inflation figures from the CSO showing that transport costs were the second largest contributor to inflation after food and drink prices in November 2007, it would have been sensible public policy in relation to reducing inflation, traffic gridlock and CO2 emission to freeze public transport fares. However at the moment, having the Government in charge of tackling inflation is a bit like having Tony Soprano in charge of crime reduction, they may know a lot about it, be responsible for a lot of it and have no interest in but reducing it.

I have to declare an interest, I am a daily Bus Eireann commuter from Ashbourne to Dublin myself. In general the service is good, but the cost is already steep at €5.75 daily return, so another 5-10% on that and I am really beginning to I feel that the Government wants me to go back to my car.

What we need is an independent transport regulator as proposed almost 3 years ago to set prices taking the needs of consumers into account along with increased competition to give consumers greater choice and to keep prices down.