Bus owners warn takeover plan risks higher prices

The Auckland Regional Council wants greater control of bus services. Picture / Paul Estcourt

Bus operators say hefty cost increases will drive away investment if the Auckland Regional Transport Authority is allowed to seize control of bus services.

They predict cost rises of up to 29 per cent for ratepayers and the Government's transport funding agency if the private operators are no longer able to control these, or even more if fewer operators are left to compete for urban routes.

There may also be multimillion-dollar claims for lost "property rights", although the transport authority and its Auckland Regional Council parent would strongly dispute these, because of the high level of public money supporting the industry.

Law change

The council is pushing for a law change to give it and the transport authority control of commercial as well as subsidised bus services, saying they must be better aligned with those which are topped up by ratepayers and the Government.

As the deadline for submissions looms this week on a Ministry of Transport discussion paper on legislative options, the council is calling for the authority to be able to receive all bus and ferry fares, then pay management fees to operators with incentives for boosting patronage.

The region's suburban rail network operates under this system.

The council says the existing system gives it little control over commercially registered bus services and is being abused by operators, who can withdraw these services at short notice, forcing the council and the Government to bail them out with subsidies, without time to call for rival bids.

Single ticket

The lack of a single transferable ticket - apart from $13 day or $199 monthly passes considered too costly for commuters - is considered an added barrier to using new operators to fill gaps in commercial services, which usually operate at peak commuting times.

Difficulties obtaining commercial information from bus companies under existing rules are seen by the regional council as an obstacle to developing an affordable transferable ticket.

But the Bus and Coach Association predicts cost increases of between 7 per cent and 29 per cent if its members must become part of what executive director John Collyns calls "a Stalinist centrally planned approach to public transport".

"Over $350 million has been invested in new buses in the past six or seven years - it will be very difficult for the industry to continue to make investments if it is not able to manage risk," he said.

"The existing system works very well."

Withdrawing services

Mr Collyns said there was no evidence operators were being anti-competitive in withdrawing from unsubsidised services, as Stagecoach threatened to do last year in Auckland for what he insisted were good reasons.

Stagecoach "de-registered" 21 bus services and its Half Moon Bay ferry run, forcing the regional council and the Government agency Land Transport NZ to find $6.2 million at short notice to keep these going.

Mr Collyns said regional transport planners should have foreseen Stagecoach's difficulties in keeping these running unaided, as 60 per cent of new rail patrons were former bus users, and the loss of Asian language students made a big dent in revenue.

The regional council argues in its submission to the Ministry of Transport that even commercial services appear to be cross-subsidised from contracted operations supported by ratepayers and the Government.

This is because Land Transport research shows earnings for contracted or subsidised services are significantly higher than for their commercial counterparts.

But Mr Collyns said commercial fares were kept for practical purposes at the same level as for subsidised services, for which increases had to be approved by regional council annual reviews.

This meant they always lagged behind cost rises, without being subsidised.


Trips decline

The regional council submission claims existing legislation, under which previously publicly owned bus operations were sold and deregulated after 1989, has not produced what the Government intended to become an integrated public transport system.

Annual bus boardings in Auckland declined from an average of 52 trips a person in 1990 to 34 last year.

But the submission says public investment in Auckland's bus and ferry network is expected to rise from more than $90 million in the next financial year to almost $200 million by 2016, to cater for a big jump in patronage, and it is essential to achieve better value for that money.

Mr Collyns said his industry believed it delivered "huge value for money". The average subsidy for each bus trip in Auckland was $1.10 compared with more than $2 in most Australian cities.


BATTLE OF THE BUSES

* The Ministry of Transport is considering recommending law changes to give regional councils greater control over bus and ferry services.

* Councils were forced by legislation in 1989 to divest their bus operations.

* Private companies have since run a combination of unsubsidised commercial services and services that are topped up by ratepayers and taxpayers.

* The Auckland Regional Council claims some operators are rorting the system, by registering commercial services and then withdrawing them at short notice, forcing the council to prop them up with public money or leave commuters without public transport.

* Bus operators deny acting uncompetitively, saying cost pressures are behind decisions to scale back commercial services.

* The ministry acknowledges a case for considering changes to existing arrangements, and has issued a discussion paper seeking comment on four options, ranging from retaining the status quo to extending legislative controls over all commercial as well as subsidised services.

* The discussion paper can be viewed before submissions close on Friday at the Ministry of Transport website.