KEY POINTS:
Some Auckland commentators and politicians want a return to complete public control of public transport.
They seem to believe that the requirement for private operators to make a profit is intrinsically wrong, and that local authorities, relieved of any need to deliver a return on money invested, could
deliver better, lower-cost services.
The proponents of public control of public transport will have a hard time winning support from anyone who remembers the run-down municipal bus services that used to be on offer to Aucklanders.
The model of centralised control was changed because it did not work. The current revisiting of this model is getting in the way of service improvements as Auckland Regional Transport Authority (ARTA), NZ Bus, and everyone else in the industry focuses resources on the Public Transport Amendment Bill which is Government's response to agitation for more public control.
The debate today should be about efficiency, not rehashing the philosophy of centralised ownership. We consider that a long-term private investor, accountable both to regional authorities and to shareholders, has the greatest incentive to deliver attractive, efficient services.
In November 2005, Infratil bought the New Zealand public transport operations of the British company Stagecoach PLC for $250 million. We made this investment because we like to own growth companies and we intend to run public transport services that will attract more passengers.
We want our businesses to grow value by investing for customer satisfaction.
Winning people to public transport is not easy. Cars are Aucklanders' preferred form of transport for most of their urban travel.
The challenge for public transport operators is to offer a quality of service that will bring car drivers out from behind the wheel and on to buses, trains and ferries.
That's why Infratil has invested in new buses, including low-emission diesel and electric. We've restructured NZ Bus around community bus brands and services such as North Star for the North Shore and Go West for West Auckland. We're supporting staff with customer service training and a culture focused on customer satisfaction.
It will take several years for passengers to get the full benefit of the changes being made, but patronage is beginning to increase. Our Auckland patronage is up about 7 per cent in the past year - about 6000 more passenger trips each weekday on our buses.
Whether people continue to use the bus if fuel prices fall depends on their public transport experience. In the past, surges in numbers meant congested, slower buses. People who were "giving public transport a go" got back into their cars as soon as they could. The only way to achieve sustainable long-term growth is to run reliable, convenient, value-for-money services people want to use. That is what we aim to deliver.
Winning and keeping new passengers is one challenge. Doing so profitably is another. Studies on commuter bus profitability by ARTA, the Greater Wellington Regional Council, and the Ministry of Transport have not found over-earning.
The cost of commuter bus services (as measured by fares plus subsidies per boarding) are low compared with similar operations overseas. As a publicly listed company, Infratil's financial results are reviewed by numerous expert analysts. None has identified that our bus business is a "gold mine" achieving high returns.
Yes, we want to make a profit for our shareholders, but we will succeed financially only if Aucklanders get a better public transport service. Our position is that the present public-private model, supported by strong processes for collaboration and accountability, is more likely to deliver outstanding services than a system entirely controlled or owned by ARTA.
We see NZ Bus and ARTA having complementary roles, with both parties contributing ideas and expertise to the debate about how to make Auckland's public transport better.
* Lloyd Morrison is chief executive officer of Infratil.
