Brian Rudman: High time Stagecoach had to open its books to scrutiny

Two months ago Stagecoach bus drivers took to the streets fighting for a living wage. Most Aucklanders, from regional council chairman Mike Lee down, seemed to cheer them on, regardless of the bus company's cries of poverty.

The drivers won and now it's payback time. Stagecoach has put the Auckland Regional Transport Authority on notice that it wants an $8 million top-up to the $40.6 million public purse subsidy it's already in line to pocket this year, otherwise it will cut services on dozens of bus routes - to say nothing of the Half Moon Bay ferry service.

Stagecoach is demanding a response by September. All of which should surprise no one.

In May, writing in support of a socially responsible wage for drivers, I suggested the likely consequence of a pay rise was an increase in either fares or subsidies. I added that given the appalling wages and conditions the drivers endured, it seemed a fair trade-off. It still does.

What is outrageous, though, is the crazy legislative framework under which Stagecoach can make these "take it or leave it" ultimatums, and ARTA has no rights to check the bus operator's books to verify how impoverished it is. If it's good enough for a social welfare recipient to declare his or her income before receiving state support, then it's high time for a bus company receiving nearly $50 million in subsidies - if it gets its latest demand - to do the same.

I'm not so much getting at Stagecoach here as at the early 1990s legislation, drawn up in the heady days when the free-market theorists ruled the roost.

Not only was it considered that private enterprise was better suited to run an efficient bus system than the local community, but the local community was given very limited powers when it came to overseeing the services provided, or monitoring where the public subsidies for non-commercial services went.

Under existing legislation, ARTA calls for tenders for bus services and then relies on the free market to come up with the best price.

If an operator reckons it can run a service profitably without a subsidy, ARTA has little option but to accept and register that service. The authority then decides what fill-up services it requires to complete the network and calls for tenders on "non-commercial" routes.

Rival companies bid, stating what subsidy they would require in order to take on each route.

Stagecoach is threatening to pull out of a third of its "commercial", currently unsubsidised services, claiming that higher wages, competition with rail and falling patronage have rendered them uneconomic.

Under existing legislation, ARTA can't even inspect Stagecoach's books to verify this claim.

In any good relationship there has to be an element of trust. But in this set-up, it's totally one-sided, with the ratepayers and taxpayers, who together are forking out the subsidies, being expected to do all the trusting. More transparency is needed, and urgently.

There's also a need for a rethink of the competitive model. As it stands, there is nothing to stop a company out-muscling competitors by nominating lists of routes it claims are commercial, then, after the deal is done and the competition blown off, turning round and saying circumstances have changed, we need a subsidy after all, or we'll have to abandon the service.

This leaves ARTA over a barrel. It either pays up, abandons the service, or seeks another contractor. To the purist free-marketeer, the last option is the engine that drives the theoretical market and keeps everyone honest. But in real-life Auckland there are no great fleets of buses or, in the case of the Half Moon Bay ferry service, large passenger boats, waiting off-stage to exploit the sudden gap in the market.

ARTA and Stagecoach are meeting next week. As a gesture of good faith, Stagecoach should open its books to public scrutiny. After all, what has it got to hide?

And in return for more subsidies, Stagecoach should agree to take seriously the long-stalled bid to introduce integrated ticketing.

In the longer term, legislative reform is needed, giving the region more control over its bus services.

Who knows, perhaps we could consider bringing them back into public ownership.