KEY POINTS:
Auckland's bus companies have belatedly gone to battle against a move to bring them back under the Regional Council's complete control. Legislation had all but passed in Parliament last week when the companies reminded us of the case for the status quo.
The Regional Council and its subsidiary
Transport Authority have complained long and loud that the private contracting system set up in the 1990s has left the authority without adequate power to check which routes need a subsidy or to impose an integrated ticket system that would enable travellers to transfer on a single fare.
There is truth in their complaint, but that does not mean it is necessary to revert to a public transport system in which regional planners make all the effective decisions about where buses run, how much they charge, how frequently they come and every other element of the service.
Public bodies are inclined to believe they are the font of all wisdom on public services. That is particularly so when they possess an institutional memory of operating the service themselves as a monopoly. Managers of the former ARA bus division did not adjust easily to the role of issuing contracts to private operators.
The regional transport officers still had some say over standards of service required but they were supposed to allow space for private initiative, too. There was good economic reason for that, the same reason that has motivated all the contracting of public services to private providers: the private sector is better at punishing mistakes.
But that purpose is easily undermined if commercial operators are not able to make the important service decisions, or if they do not face normal business risk. On both counts, the privatisation of Auckland buses has been deficient. Public officials have continued to design the bus routes and simply invited tenders for them.
The tendering companies should have carried the risk that the route might not be as profitable as they expected when they stated the amount of subsidy, if any, they needed. If the system had worked as it should, ratepayers would have seen savings in the subsidies of about $45 million they had been paying for the region's public transport. Instead the subsidies have more than doubled, to an annual $94 million, in the 15 years since privatisation.
Much, but not all, of the increase might be explained by the upgraded rail passenger service that stands to lose greater amounts than the buses, while also cannibalising their patronage.
The rail project, ironically, was made possible by a fund that began to accumulate after the previous Government put Auckland's buses and other regional services on a more businesslike footing.
Under the present Government transport services such as railways, seaports and the national airline have been brought back into public ownership and control. The Auckland public transport legislation is the latest, probably the last, step in that direction. A change of government could see the bus companies come into their own.
Ideally, a public-private partnership for urban passenger transport would put the initiative for service design back in private hands, along with the business risk.
This means the public body would be open to proposals from private operators who know the public demand and how it might be served profitably or at the least loss. This could produce a configuration of routes, vehicles, fares and terminals quite different from those officials can conceive.
But for the moment, the opposite is occurring: an extension of bureaucracy's dead hand.
