Independent TD Sean Canney has told the Dáil there are buses going to schools with empty seats, but there are students who have been denied a place being driven to school by parents.
He said this is a "pure ill thought-out way of providing school transport".
Mr Canney said there is something seriously wrong with the school public transport system and asked for a review of capacity which began in 2019 to be brought to a conclusion.
Minister for Public Expenditure Paschal Donohoe said the school bus service carries over 150,000 students to and from school every day.
He said reduced charges of €50 for primary students and €75 for post primary students, which were introduced last year, were an important intervention to help with the cost of living.
Minister Donohoe said he is aware of "anomalies" since the introduction of the reduced fares.
Mr Canney said it is important we get the system right for the school year in September and "avoid any unintended consequences".
'More diverse system'
Minister Donohoe said that the census reminds us all of "the scale of change" underway.
He defended the divestment programme, saying that school communities often decide not to go for a change of ownership.
The Minister was responding to Social Democrats leader Holly Cairns, who said that "nearly 90% of primary schools remain Roman Catholic".
Last year only one school divested, she said, showing that the divestment programme is clearly not working.
