If the retired are not poor, is it right for them to keep all-day free bus passes?

There has been a considerable fuss over a suggestion for a modest scaling-back of the benefits to the retired. It was proposed that ‘free bus travel’ be available only at off-peak travel times. At all other times, free bus travel would continue to apply.

The fuss has been strikingly one-side: the proposal was denounced by politicians, interest groups and journalists. Otherwise, silence; including on this blog.

The case for this change is easily stated – rush hour is busy because of workers travelling to/from work at times they don’t control. So it is a more efficient use of the bus system that people with more discretion over when to travel, notably the retired, would use (free) buses only at other times.  (Of course they could travel as paying passengers at any time.) Nearly one-tenth of passengers on the buses at rush hour use free bus passes. So either we expand the bus system or we move bus-pass holders to (free) travel at another time and release a lot of bus space.

Available information suggests this change would also improve fairness. There is considerable evidence that the retired are not poor, either in income or in wealth terms. Removing a small fraction of the bus subsidy would seem to be fair, especially if it also made the bus service work better.

The CSO’s 2013 Household Finance and Consumption Survey (Table 12) indicates that in households where the head of household was under 35, median net wealth was €4,000. For households headed by a person 65 or older, median net wealth was €348,000. It seems legitimate to conclude that the retired are not poor in terms of their net wealth. (This is hardly surprising; they have had decades more than twenty-somethings in which to save. Grey and wrinkled has a few compensations.)

For incomes, the CSO Survey on Income and Living Conditions (Table 1e) reported that in 2016 median net disposable income (adjusting for household size) was €21,387 for those aged 18-64 and not a very great deal less, €17,956, for those over 65. So for every €100 of net disposable equivalised income of the median member of the first group, the median retired person has an income of €84. The costs of the retired are surely lower than those working (mortgage, children’s education costs)? In any case, according to the report (Table 2) those aged over 65, have a lower risk of poverty (10.2% v. 16.6%) and also a lower rate of deprivation (13.1% v. 20.9%) compared to those of working age.

Given the similarity of incomes, there seems a solid basis to say the over 65s are not poor in income terms either, compared to the working age population.

Yet the older generation have various non-means-tested benefits including free bus passes. They were also essentially exempted from the post-2008 income and benefit reductions. I will leave the inter-generational aspects of the planning laws for another occasion.

Subsidies for the retired was recently raised in the UK which “continue[s] to treat pensioners as though they need free travel, winter fuel allowances and the like, despite the fact they are on average now the best-off demographic group in the country.” In a comment pertinent to the Irish case, the writer argued that amongst the UK groups needing more public funds are children and the mentally ill. If money goes to the over-65s, it will be harder or impossible to finance the other programmes.

The broader setting for this discussion is whether our prevailing redistributive and other policies in fact discriminate against younger rather than older generations. Many of the retired and soon-to-be-retired, benefitted from lower costs of going to college, drastically lower house prices, and much more generous pension schemes that today’s twenty- than thirty-somethings will have. On top of this there are pensions, free bus travel and other benefits; some of this money may have more deserving uses, not excluding healthier public finances.

From this perspective, do we redistribute income on the basis of means or, say, voting propensity? Regarding the latter, a rough calculation (exit poll age data, total turnout, and population less non-nationals) suggests that in the 2016 general election turnout was 41% for voters under 24, and 61% for those over 65. 

How, then, was the bus-policy reform proposal responded to? It did not go down well! Its author was personally vilified and the proposal was drowned in ridiculous hyperbole, while more important aspects of the speaker’s policy recommendations at the conference passed unremarked. One Minister remarked that the civil servant’s suggestion was unprecedented. It’s not hard to see why.

There was the usual claim by a journalist that “free bus pass holders have contributed to the economy for decades” On that principle, shouldn’t everyone have everything free forever? (Where are our free newspapers?)

Senator Buttimer of Fine Gael demanded that the civil servant be fired. The Independent Alliance judged that this change would cause “severe hardship” and could jeopardise the ability of the retired to get to hospital. (Severe hardship? Really? No pensions, no cars, no taxis, no offspring, in Independent Alliance constituencies?)

Even the elusive Minister Ross took to the battlements to declare that the change would happen only over his dead body, although some think the Minister’s body has been alarmingly immobile since he took office. (Missing Minister.)  The Minister added that this modest change was no less than “an extraordinary assault on the rights of older people.” (An extraordinary assault?)

As for the temerity of the civil servant, I believe the department he works for is called Public Expenditure and Reform. His remarks were made at a conference where the OECD recommended that Ireland needs to focus more on evaluation of the impact of public policies. The responses amounted to saying: our supporters like this policy, we are not interested in any evaluation.

This sorry episode is reminiscent of the ‘anti-expert’ commentary of members of the Bertie Ahern governments. Minister Martin Cullen in the mid-2000s dismissed warnings of economic overheating contained in an ESRI mid-term review of the public investment programme, as merely the views of ESRI ‘sandal wearers’. He insisted that the government would press ahead in the face of the advice it had itself commissioned. Ten years on, some current Ministers seem to believe much the same thing.

The retired in the population used to be poor. That’s not been true for a long time. Policy has to catch up. The Government should seek to improve the efficiency of the transport system particularly when it can be achieved at no loss of fairness. In any event, they should give a civil hearing to policy suggestions.

Complete inflexibility from the retired may leave them with few sympathisers should the large deficits in the public pension scheme require real fiscal surgery in the future.

Author: Cathal Guiomard

Cathal Guiomard is a Lecturer in Aviation Management in DCU. Between 2006 and 2014, he was Ireland's Commissioner for Aviation.

16 thoughts on “If the retired are not poor, is it right for them to keep all-day free bus passes?”

  1. Some subsidiary comments. Full disclosure: Robert Watt is a friend of mine, though that has no bearing on the posting. The recent Alan Blinder book ‘Advice and Dissent’ on improving economist-politician communication and collaboration is likely to have a bearing on the above but I have yet to read it.

    1. I agree.

      Another point is that people over 65 receive three income tax reliefs that under 65s don’t get:

      (1) age tax credit
      (2) income tax exemption 18k/36k
      (3) DIRT exemption if income less than 18k/36k

      Maybe instead of reducing their benefits, remove these three tax reliefs?

      Maybe that would be politically easier?

  2. It is good that the author admits that he is a personal friend of Robert Watt – as an afterthought!
    But that should not mean that the DPER Secretary-General’s comment should be taken at face value, given the equally one sided-nature of this posting.

    I heard this comment being made. Robert Watt based his comment on a chat he had with a pensioner on a bus as he (DPER Secretary-General) went to work. He did not produce any other evidence to support this proposal.
    Given that those with free travel passes (of which I am one) have to use their public services card when availing of public transport, I would like to see any evidence which support this claim. For example, how many people with public service cards use public transport during peak hours? How many of those are pensioners?

    One would imagine that this data must be available to those providing transport services covered by the free travel.
    However, given the poor state of government data collection and analysis (eg. house completions, incidents of crime), I would not be surprised to learn that no such analysis has been done by anyone.

    Raising the free travel issue is a distraction from a detailed analysis of the €3bn-€4bn estimated for MetroLink or the Bus Connects project or the new outer ring road now being touted because the M50 is supposed to be at capacity.

    It is clear that consideration of public transport investment is based much more on policy-driven evidence making by the feuding baronies rooted in the group-think of celtic craziness.

    We deserve better from senior public servants – elected and appointed – particularly given the IMF assessment public investment management.

    1. If, as you suggest, Watt’s comment was inspired by a casual conversation which he had with another passenger on a bus, and unsupported by any evidence, then it qualifies as a throw-away remark.Given Mr Watt’s position, power, and influence, it was an ill-judged intervention.

      Further, ageism, and pitting the ‘rights and entitlements’ supposedly enjoyed by one demographic over another, is becoming as tiresome as it is flawed and, in this instance, revealed as threadbare.Unfavourable comparisons of the so-called ‘wealthiness’ of older people against the ‘diminished prospects’ facing thirty-somethings increasingly appears to be the default position of senior public servants of every stripe who appear to have learned nothing from the unholy mess they made of just about every social policy issue you could think of during the ‘crash’ period.Think women’s pensions entitlements for example – a foolish, and unjust, policy decision in 2012 cannot now be remedied until 2020 at the earliest, if ever. Fomenting intergenerational polarization based on trivial instances is fast-becoming the last refuge of those who have run out of ideas.

  3. Distribution of life-chances around here is not universally equal or even near it. Irish policy has a longstanding clientelist-affair with “universals” … many of which turn out to be regressive … so there is certainly a case to address and evaluate some of these and add a few pragmatic particular tweaks here and there to more fairly balance out the distributions.

    We’ve had more than enough of the universally free-market benefits accruing from the PD/FF ideological legacy.

    1. A few points: Robert Watt’s evidence for the usage by Free Travel Pass (FTP) holders at peak hours may well be anecdotal, but whatever the exact %age, use of Free Travel at peak hours carries a significant cost whereas the marginal cost of off-peak journeys is in many cases trivial. There used to be peak hour restrictions (largely on city buses in Dublin, Cork and Limerick) when Seamus Brennan pulled off a stunt to general public acclaim and abolished this restriction. That was (I think) in 2006 so prior to that date the over 65 apparently suffered terribly if current politicians are anything to go by.

      Some other things worth looking at: (i) FTP holders often have free travel for a companion, where no real medical need exists. (ii) A large number (40% of the total?) are not oldies, but have some other reason for eligibility: some may be justifiable, but questions are warranted (iii) prior to the Public Services Card the old FTP was a joke (no photo needed if you lived outside a few large towns!) and forgery, misuse was rife, (iv) the subsidy to the CIE group of companies has for some years been a lump sum, so they get no re-imbursement for increasing demand.

      Basically the FTP scheme seems to have been badly administered for years, a good case study in Irish public sector slackness.

      Finally, I don’t think that the discussion should be clouded by reference to aspects of the income tax code. And full disclosure: this FTP holder, like many others, has had significant cuts to his public sector pension, which are nowhere near being restored. Basically no generation was spared the effects of the great recession.

      1. “use of Free Travel at peak hours carries a significant cost whereas the marginal cost of off-peak journeys is in many cases trivial.”
        What is the evidence to support this statement?
        Who defines what costs are significant?

        I suggest that the average number of passengers per bus during the morning peak commuting time of 07.00 – 10.00 takes about 40% of the bus capacity.
        The latest National Transport Authority (NTA) Canal Cordon Report 2017 has data on the number of people and vehicles crossing the Canal Cordon during the morning peak commuting time of 07.00 – 10.00 (see sources and definitions – see below)

        Based on this data, the average number of passengers per bus during the morning peak commuting time of 07.00 – 10.00 over the period 2006-2017 was 36 in 2006 and 37 in 2017.
        The capacity of a Dublin Bus double-decker vehicle is at least 90 passengers.
        The Canal Cordon Count includes private buses. I do not know what the capacity of these buses is.
        However, I suggest that 45 passengers would be reasonable.

        On this data, it seems that the DPER Secretary-General’s assertions lacks merit.
        Perhaps, there are specially commissioned surveys showing how many people using the FTP pass, during the morning peak,are pensioners who are not working. Working could mean paid employment or even unpaid employment which supports working families eg. grandparents involved in child-minding.

        If so, the public authorities should publish that data.
        Even if they did publish it, how can we be sure that the criteria used in collecting, analysing and presenting the data are not subject to decisions based on anecdotes, whimsy and group-think?

        https://www.nationaltransport.ie/wp-content/uploads/2018/05/Canal_Cordon_Report_2017.pdf

        • Dublin City Council has undertaken surveys at the Canal Cordon in November annually since 1980. Surveys are undertaken over two days at each location and an average across the two days is reported. The survey counts pedestrians, cyclists, cars, taxis, buses, goods vehicles and motorbikes crossing the cordon points in the inbound direction in the three hour, AM peak period 0700-1000.
        • To complement the Dublin City Council Canal Cordon annual surveys, Dublin Bus have undertaken their own surveys annually on a single day at each location in November. This is not necessarily the same day as the DCC cordon counts. Since 1997 this survey has counted the number of passengers on all buses (including privately operated bus services)1 crossing inbound over the canal cordon points. This survey is undertaken at the 22 cordon points that are on bus routes into the City (shown in red in Figure1.1).

  4. This post and comments provoke a few observations.

    First, it is unfortunate that the issue surfaced in the public domain in the manner it apparently has. One would expect senior officials would brief their politicial masters before entering the public domain. In addition, every year in the run-up to the Budget the focus is on the extent to which the available “fiscal space” may be used or abused, but it is a vanishingly small percentage of the €70 billion or so of total government expenditure. There is a need to assess the composition and purpose of all government expenditure as much of it represents a Great Redistribution to conceal or ameliorate the gross inequalities of market outcomes, but a selective picking at a programme is unlikely to be helpful. But perhaps that was the intent.

    Secondly, it highlights how darn small Ireland is. It appears everyone involved in any form of public administration or in the professions knows everyone else. Inevitably freindships and bonds exist, or are renewed or are formed. This oftens leads to an overbearing and stultifying politeness and collegiality which suppresses dissent and robust adversarial disputation when both are required.

    Thirdly, it appears from the latest reporting of the Dept. for Employment Affairs and Social Protection that the funding of this free travel scheme amounts to around €77 million out of a total departmental spend of €20 billion. In addition a previous review conducted by this dept. and the Dept. of Transport found that the free travel scheme is valued highly – even by the majority who are entitled to avail but don’t use it or use it rarely.

    There are many other schemes which are excessively costly because they seek to ameliorate the impact of gross overcharging by private sector or semi-state bodies on those of low and fixed incomes – for example the €300 million spend on fuel subsidies much of which is grabbed unjustifiably by the suppliers.

  5. Thank you for raising this important issue of universal benefits. My experience from discussing any issue relating to benefits for the elderly is that it strikes an emotional reaction and logic or economic argument go out the window. To state to someone “Just because someone is elderly doesn’t mean they are poor” can invite all sorts of invective. Similarly, with all these charitable collections for people who have medical illnesses to state “Just because someone has diabetes doesn’t mean they are poor and need charity” invites an even greater level of opprobrium. Mrs E worked with a child with diabetes from a wealthy family who only went on holidays when they were provided free by the charity. Next time a collection bucket for some or other charity is put in front of you consider if the sufferers of the particular medical condition or the putative beneficiaries of the charity are actually poor.

    On an unrelated note, given the problem with litter and illegal dumping, I believe there is an argument for increasing the property tax and re-introducing free bin collection of some sort or providing some sort of free refuse collection centres in urban areas, towns and villages. Sometimes the negative effects of privatisation and introduction of charges can outweigh the social benefits of publicly-provided services. Litter and refuse collection is one. Free refuse collection (paid through, for example, a higher property tax which can’t be avoided) can still go hand-in-hand with measures to encourage recycling and reducing waste.

  6. Hi

    I supported this proposal on Today with Sean O’Rourke and defended Robert Watt. I agree entirely with it. First, lets not forget that the bus pass was for off-peak travel only until relatively recently – 2007 – when it was extended to all day travel in another classic FF pre-election move.
    As Cathal states OAPs have been consistently proven to be one of the richest demographics – the demographic most at risk of poverty are children. For myself I pay €36 p/w to send 2 children on the train from Enfield to Maynooth for school. Cheap it’s not.
    Also the transport companies are not adequately reimbursed by the Dep for the cost of the scheme. Barry Kenny admitted to me at the time of the last strike that the increases the workers were seeking cost the same as the free travel scheme to Irish Rail. So all passengers and employees are paying for it – not general taxpayers.
    The very 1st column I wrote in the Irish Times mocked the idea that the word pensioner must always be preceded by the term “vulnerable”. Older people in this country are amongst its richest. (and lets not forget most rural people have no public transport to avail of anyway, so this benefit falls largely on urban pensioners).

    My parents consistently say they would be happy to pay something.

    So if they OAPs are heading on a mini-break to Killarney I don’t think its unreasonable to ask them to pay a tenner for the fare.

    Different groups are in competition with each other and if one group has louder voices and gets more, someone is losing out. The pot cannot be increased definitely. It’s up to government to seek out fairness, not automatic entitlement.

  7. “The pot cannot be increased definitely”

    About the sanest comment so far. But you know, there are a few other very Sacred Bovines, which need culling – but sadly they will continue to suck on the taxpayers. For instance, how much does it cost Transport Ireland to have two language versions of what ever they do? Would not one language suffice? Some pensioners (ex TDs and such like) have very juicy pensions. I fancy they could get by on less. Looks like our agri cousins will be demanding mobile water tankers soon. Would Retail Ireland get a taxpayer digout because of dipping sales? Fat chance.

    How about Mr Watt – and similar personages, lay into our wanky bankers? Fat chance, again. Just bash granny and grandad. So much better fun.

  8. “The fuss has been strikingly one-side: the proposal was denounced by politicians, interest groups and journalists. Otherwise, silence; including on this blog.”

    Lack of attention to pronouncements about bus passes.

    Bus passes!

    Right, got it. So that’s where this blog may be losing its way…

    1. @ Brian Woods: the Irish Language Act mandates the 2-language policy. The cost of dual language announcements is probably dwarfed by the huge expenditure on translations into Irish of documents which are almost never read but which are a lucrative source of employment for lots of buachailli agus cailini. A classic piece of rent-seeking and a sacred cow on a par with unlimited free travel. Blame Eamon O Cuiv for this.
      @grumpy: while the “bus pass” (FTP covers a lot more than buses and I know of nothing as generous in all of Europe) issue may in itself be relatively minor, it does offer an insight into bad management, rent-seeking, political cowardice, all of which are responsible for huge wastage.

    2. Blog has lost its way for a while.

      All policy demands to be evaluated, following evidence gathering, in economic, social and psychological terms. On the ‘bus passes’ let’s see the evidence.

      The main social “benefits” of the PD/FF lite-touch free (sic) market ideology is best summed up by Miles – ” a hape a debt” … a very big hape …..

      For example, UL Chancellor Harney in her health Minister days advocated solely on ‘economic cost’ in sending cervical smear tests to the U.S. [where profit dominates health] ….

      …. and we witness the dire social and psychological outcomes of this one-sided evaluation in the unconscionable cases of brave Irish women presented daily In the news broadcasts.

      @The NHS

      You fully deserve a ‘bus pass’ …. at 70.

  9. The ‘bigger picture’ here is about social welfare models – universal benefits v. mean-testing/targeted approaches – and which works best in promoting equality and eliminating poverty. This argument remains unresolved,; both in terms of immediate benefits of either approach in terms of reducing poverty-risk amongst certain groups and longer term impact. Unfortunately in ireland, so much of the debate appears to centre on relative entitlements and flawed zero-sum-game perspectives, rather than a clear focus on human needs. Imagine what would happen if ‘needs’ of individual , and of society, were placed at the cenre of social policy framing and development?

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