There has been a long-running debate raging over the future of the “Public Transport Management Act” since it was passed in 2008. Infratil, who run NZ Bus (who are the largest bus operators in Auckland), were very displeased with this legislation and took their concerns to the new Minister of Transport after the 2008 election, Steven Joyce. They received a fairly welcome response from the Minister, who agreed to put the PTMA up for review – in particular the bits of it relating to greater restrictions on the operation of commercial services. I’ve discussed previously why it’s very important for there to be strategic co-ordination of all public transport services, including commercial ones – otherwise you end up in the inefficient situation of private operators “cherry picking” the best routes and leaving the rest to be subsidised (whereas in the alternative situation you could have the more profitable routes cross-subsidising the less profitable routes).
Furthermore, if we look at what happened to public transport expenditure and patronage in Auckland over the last decade (which has all been under the “pre-PTMA system”), it’s pretty obvious we haven’t been getting good value for money. Subsidies have tripled while per capita patronage has remained steady (it’s only increased in the last year or two): My understanding is that there has been quite a “ding-dong” battle between various players in the public transport sector over the last year or two: trying to sort out finding a solution that can keep the government’s ideology of not restricting private enterprise with the reality that the current system (more specifically, the system prior to the PTMA) is extremely inefficient.
After much waiting and speculation, the Ministry of Transport has finally released some information on the preferred system to govern the operation of public transport services in the future – known as the Public Transport Operating Model (PTOM). There’s also a full Cabinet Paper that outlines the background to the issue and the proposed way forward for resolving the matter. The background is consistent with what’s outlined in the table above – that significant increases in public subsidies over the past 10 years haven’t led to the boost in patronage that one would have hoped: I find it somewhat frustrating as a public transport advocate that Joyce is effectively “crowing” to his cabinet colleagues about “capping” the amount of money spent on public transport services, but we’ll set that aside for now. His bigger point is valid, that we (as taxpayers and ratepayers) not getting good value for money out of what we spend on public transport. Where we differ is where it comes to assigning the ‘blame’ for this situation – I would say it’s the contracting model that existed before the PTMA and the inability to ‘strategically co-ordinate’ our public transport services. Joyce would probably blame the regional councils.
So what of the solution – this new PTOM system? What might it look like? How’s it going to work? Well certainly it’s all good if we base this on a ‘partnership approach’ between the bus and ferry operators and the councils. Things have been pretty ugly in recent years – for example the whole Snapper Card debacle. But in the end all this talk of ‘partnerships’ and ‘collaboration’ tend to be just fancy words in a robust and competitive business environment. What’s I’m really interested in are questions like the following:
- Who designs the bus network and decides on the frequencies to operate the routes at?
- Will a company be able to operate some of a route as a commercial service but be subsidised for the rest of the day (ie. do you end up with the 9.05am bus being commercial but the 9.15am bus being subsidised)? This is the good old ‘cherry-picking’ issue.
- What happens if the council and the bus operators disagree on something?
- Will there be certainty that all operators need to accept an integrated ticket?
- Will one agency have the ability to ‘strategically co-ordinate’ services to make sure we don’t have unnecessary duplication of bus services, or unnecessary duplication of bus and train services?
The next few paragraphs seem to go some way towards answering these questions: There are some really important “wins” here compared to the “old system” (by that I mean the pre-PTMA system that still operates around most of Auckland). The requirement to roll public transport networks into “units” I think is a good thing. This will make it impossible to ‘cherry-pick’ particular peak hour services to operate commercially, leaving the council to pick up the tab for the quiet services (the good old ‘privatise the profits, socialise the losses problem). If a company wants to operate the Dominion Road services – which I assume would constitute a ‘unit’ – commercially then they will have to operate all the services on that basis, including the 11pm on a Sunday night service. As far as I know, only the Airport bus operates exclusively as a commercial service for every single one of its trips – so I am not sure whether I see too many commercial services happening.
The whole Cabinet Paper is well worth a read actually. I must say overall I didn’t have high-hopes for PTOM but I find myself pleasantly surprised. In an ideal world I think all services should be gross-contracted (the council pays the operator a fixed cost to operate the service and then the council gets the fare revenue), but short of that outcome I think PTOM is a reasonable compromise. It is a lot better than the pre-PTMA system that still dominates how PT is operated around New Zealand, while retaining an ability for commercial operators to operate a service without subsidy if they should want to do so.