The key is fewer different routes, but better quality and higher frequency routes. If ARTA ever actually get around to rolling out their RTNs, QTNs and LCNs we could be on our way to something of a network effect.

Mees’s argument (did you even read it all?) is that a 100% increase in service provision would (theoretically at least) lead to a 550% increase in patronage. That’s very different to your contention that the extra patronage attracted wouldn’t be worth it.

* My argument is that even in a council-controlled bus system, where profit was not the issue, the /net/ costs of running the system would rise significantly if you expanded services along the lines you suggest. Network effects mean that you would attract more passengers to the system, I grant you that, but not enough to cover the costs of extra service provision.

* If NZBus is profitable, Infratil will keep owning the business, but again, I would not call their profitability excessive or monopolistic. The bus market simply isn’t strong enough to sustain monopoly profit.

* The Beeching cuts were in the 1960s, well before Margaret Thatcher (in office 1979-1990). While there was a network effect, as you put it, it was actually slight. Where lines lost in the Beeching cuts are being restored, as in Scotland, it is because underlying market growth is justifying their re-instatement, and they’re not being put back to feed passengers into the ‘trunk’ parts of the rail system. Beeching’s cuts did remove some /trunk/ lines that today we really wish he hadn’t.

Right now any profits from commercial routes are basically returned to private shareholders. While NZBus might be currently re-investing profits into equipment they must be making a net profit in the long term or they simply wouldn’t exist as a business.

The answer to ‘who will pay for them’ is the same as it is now: we will, through bus fares and council rates. But instead of our bus fares going to NZBus shareholders via profits and our land rates going to NZBus shareholders via subsidies, we can simply pay companies like NZBus to provide a fixed service and reinvest any profits back into an improved system.

Cosider the ‘Beeching Axe’ of rail cuts in the UK under Thatcher. They went through and closed all the ‘unprofitable’ rural and branch lines while maintaining the ‘profitable’ trunk routes, in the name of economic efficiency and cost reduction. Yet the economists in charge ignored the network effect, and quite simply without a system of rural and branch lines to feed the trunk routes patronage plummeted on the trunks. They were left with a smaller, less useful system that had a lower cost recovery ratio then before they started!

I am not sure that it’s a matter of “who’s going to volunteer to run the low-patronage services”. It is a matter of who’s going to pay for it. Even if you had a centralised authority for services, like London, what you would find with these services is that they would cost a lot of money for the numbers of additional passengers they would carry. You could certainly design a set of tenders for these services, but it’s finding the money that is still the issue. If bus companies aren’t operating them commercially, there’s generally a good reason.

Also, it’s not clear that any of the bus companies in our commercial model are making windfall or monopoly profits. A quick check of Infratil’s numbers suggests that all of the free cash they are generating from NZ Bus is then being absorbed back in the business as they invest in equipment and so forth.

I think that Joyce’s proposed changes would take away the opportunity for ARTA (and others) to prohibit commercial services. Restrictions can still be placed on them, they just can’t be banned.

I agree the problem is the fractured nature of private operators. Here again Mees calls for a single state agency for the planning of routes and timetabling to create a actual network out of the system. Auckland should too, it would be good if the PTMA wasn’t repealed and ARTA’s successor had the power to coordinate connections.