Brian Rudman: Bus system on a ride to nowhere

I can't imagine any tears being shed around Auckland Regional Council at the news that bus operator Stagecoach has sold out to Wellington-based "infrastructure investors" Infratil.

Relations between the bus operator and the regional purchaser of bus services have often be fraught, particularly so this year when Stagecoach gave three months' notice it would walk away from 13 "commercial services" unless a subsidy was forthcoming.

Faced with the sudden disappearance of peak hour services to places like Otara, Te Atatu Peninsula and East Coast Bays, the Auckland Regional Transport Authority was forced to add $8 million to Stagecoach's annual subsidy of $40.6 million.

Whether Infratil will be any less hard-nosed is anyone's guess. But at ARTA they're saying that at least it will be handier to contact than the present Scottish owners.

Of course the big problem with the bus system in Auckland is not who owns the buses, but the crazy system of regulation and procurement of services we're saddled with, copied from Thatcherite Britain back in the 1980s by the Rogernomes of the parliamentary bureaucracy.

As ARC chairman Mike Lee said this week, it's dysfunctional. He and other Auckland leaders have been clamouring for change.

Apparently the Wellington bureaucrats agreed to a review process several months ago and are talking of reporting back sometime next year. Next week would be better.

The solution is not hard. And until the Government gets off it's chuff and changes the law, Auckland's passenger transport system will be doomed to be hog-tied by this flawed market-driven experiment. One effect of which is to block any chance of integrated ticketing, and complicates attempts to make bus and train services complementary rather than competitive.

Ironically, it also stymies efforts to make transport services more responsive to market demand.

The key reform required is to give ARTA the responsibility to draw up an integrated network of passenger transport services for the region, then call on bus and ferry and rail companies to tender to provide the services required.

Instead of each provider collecting the fares and seeking, when necessary, top-ups from the public purse, ARTA would collect the cash and pay the provider the contracted price for the service.

Such a system would immediately make possible an integrated ticketing system, commonplace overseas, where passengers can move from different modes and service providers, using the same ticket. It also makes it easier to adjust routes during a contract period and to develop bus/rail interchanges like the new one at Manurewa and one planned for New Lynn.

The model we're stuck with begins with the premise that any bus company can apply to register a "commercial" passenger service. As long as it has adequate buses and drivers and doesn't charge above ARTA's set maximum fare, it has to be given the green light.

ARTA is then left with the job of filling in the gaps, calling tenders for the less popular, out of the way and off-peak routes. Providers then state what subsidy they want to do it.

The result is at best messy, with, on occasion, different providers plying the same route at different times of the day and week. It can lead to questionable practices. Back in July Stagecoach gave three months' notice it was pulling out of a third of it's "commercial" services, claiming wages, rail competition and falling patronage had made them uneconomic.

Under the market model, the bus operator was in its rights. The ideologues would argue that a gap in the market would suddenly appear for another operator to fill.

But for all we know, Stagecoach had already burned off the competition by registering these routes as "commercial".

The reality was, that ARTA had a social responsibility to provide an on-going service and could not speculate on whether or not the invisible hand would come to the rescue. So without being able to inspect Stagecoach's balance sheets, it had to come up with an $8 million handout.

The present system also tries to inject competition into the tendering system, by insisting no contract require more than about 20 buses.

This has resulted in the North Shore, for instance, having a patchwork of 10 contracts. It's messy. As is the whole complicated market model. What better time to throw it out as well and start anew?