PRESS RELEASE

ICA’S INVESTIGATION INTO THE LOCAL PUBLIC TRANSPORT: “MORE COMPETITION TO IMPROVE SERVICES”

Scarce competition, few calls for tenders, poor services. The ICA’s investigation into the Local Public Transport - the Regions’ second item of expenditure after Health - highlights the backwardness of a sector that commits state funds for over 7 billion Euros and generates proceeds for almost 11 billion Euros, with ticket sales covering barely 30% of costs (even due to the plague of tariff evasion). However, although at the moment only 14.6% of urban movement takes place through public means, this can be the starting point for a decisive contribution towards the development of sustainable mobility and a decrease in traffic congestion, with benefits for the environment, health and the quality of life.

Besides unsatisfactory performances compared to the main European Countries, the Local Public Transport sector shows serious structural unbalances, such as: insufficient investments in infrastructures; an obsolete carriage park; significant territorial gaps, due to which users in some Regions, especially the central-southern ones, have access to less services and of worse quality, without paying lower prices, though. Almost 70% of the sector’s losses, considering public-controlled companies, involve the Region of Lazio. The fundamental right to mobility is not guaranteed in a standard way even in large cities. Actually, sometimes services are worse exactly in areas where users have lower incomes. In other words, despite the relevant expenditure of public money, there is no substantial equity in the access to Local Public Transport services, nor effective policies have been undertaken to develop sustainable mobility.

It is particularly interesting to notice that the total supply of Local Public Transport services in Italy is in average oversized compared to the actual demand, which however often remains unmet. This apparent paradox, caused by an excess of services where there is less need, highlights serious deficiencies in the Regions’ and local bodies’ planning.

The Local Public Transport services are managed prevalently on the basis of exclusive contracts appointed directly to companies controlled by local bodies or, in the case of the railway, to Trenitalia. In fact, few tenders have been called, and often carried out not properly.

The ICA’s investigation highlights how – even in the light of the best international practices – efficient management and quality services do not depend as much on the public or private ownership of enterprises, as on specific mechanisms, such as those activated by calls for tenders, that stimulate companies to act in a virtuous way. Therefore, opening the sector to competition could give a relevant contribution in solving the various issues, so as to loosen the pressure on the public expenditure and guarantee a broader enjoyment of the right to mobility.

According to the ICA’s opinion, the two factors at the basis of the lack of competition in this sector are:

1) a set of rules that has hindered competition both “for” the market (that is, based on calls for tenders for appointing the management of services) and “in” the market (that is, based on services supplied by various companies along the same lines, which can lead to more services and better quality without neglecting the protection of the weaker categories);

2) a set of elements that has discouraged the use of calls for tenders, among which, in particular, the absence of mechanisms capable of making the allocation of public funds conditional on the results obtained, and conflicts of interest in cases in which the local body is also the owner of the company managing the services.

Therefore, the ICA highlights the need for a prompt regulatory intervention, through the reform of the local public services in discussion at the Parliament or some other way, so as to favour a more competitive structure of the sector. The four lines of intervention suggested by the Authority are as follows:

1) A leap in quality in the planning phase of services, both as regards the reorganization of the State’s, Regions’ and local bodies’ competences, and as regards a regional if not supra-regional planning. In fact, planning can no longer be carried out on the basis of the historic supply, which is inadequate, but keeping into account the users’ real needs. In other words, starting from the central State’s guidelines (to correct inequalities), administrations need to find the best way to satisfy the demand (via train, bus, non-regular services, services upon call, commercial services, possibly together with tax reliefs or refunds for the most disadvantaged categories), so as to burden public expenditure the least possible, guaranteeing access to public means.

2) The use of calls for tenders with mechanisms aimed at investing administrations with responsibility, acknowledging the most virtuous ones when allocating public funds and increasing the transparency of their work.

3) Well organized calls for tenders guaranteeing broad participation (for example, it is useful to create independent companies capable of purchasing trains and renting them to operators, and then implement adequate tools to face employment implications). Moreover, it is necessary to intervene on the issue related to conflicts of interest, detaching the functions of the contracting party from the local dimension and giving them to a single body at central State level.

4) Competition developed “in” the market, a procedure not much diffused because deemed – erroneously – incapable of pursuing social aims. Instead, the investigation highlighted that the almost total absence of competition has caused strong repercussions on public expenditure, without guaranteeing more equity and better life conditions.

Rome, 13 June 2016