Stagecoach says it still gives value for money

Michael Barnett

Bus operator Stagecoach will assure Auckland transport chiefs today that ratepayers and taxpayers get good value for the $46.8 million of subsidies it receives annually.

Executive chairman Ross Martin said last night that Auckland Regional Transport Authority heads would be welcome to see an independent assessment of accounts showing a below-average return on investment.

He refrained from joining some Auckland Regional Council members in criticising a council resolution calling on the authority to arrange an independent assessment of accounts "to determine a reasonable return for Stagecoach for its Auckland operations".

The resolution was led by chairman Mike Lee, as councillors voted reluctantly to pay an extra $3.1 million to subsidise peak-time services Stagecoach said it could no longer afford to keep operating without subsidies.

Council staff say this will need a 3 per cent rates rise unless more money was drawn from assets such as Ports of Auckland.

Mr Lee told the Herald that greater transparency was needed from Stagecoach to ensure Aucklanders were getting value for their "ever-increasing rates burden".

But Auckland Regional Chamber of Commerce chief executive Michael Barnett, one of three council members who demanded that their votes be recorded against the resolution, said it was "way outside of reasonable" to expect a contractor to disclose details of its inner workings.

As long as the contracting authority laid down a clear set of performance measures, whether a service provider even made a profit or not became almost irrelevant.

A regional authority spokeswoman confirmed that the council's resolution would be among subjects to be raised in Wellington with Stagecoach today by authority chief executive Alan Thompson and passenger services general manager, Heather Haselgrove.

They were unavailable for comment, but Mr Thompson has previously flagged a need for a better contracting model to guard against budget shocks when commercial bus services were withdrawn at short notice, and had to be kept going with subsidies.

Mr Martin said his company was probably a step ahead of the council's resolution as it had sent its accounts for independent assessment by Ernst & Young.

"Their conclusion was that for the risk involved in the business, and the investment involved, the return was below average."

An assessment had been updated a year ago during wage negotiations.

Stagecoach New Zealand was bought in November for $250 million from its former British parent company by local investment house Infratil, which has predicted that its foray into subsidised "social infrastructure" should start paying off in the first year.