ARTA

Auckland bus passengers are assured of 2 years of industrial peace after drivers agreed yesterday to end a long and bitter pay dispute.

About 600 NZ Bus drivers and cleaners voted by an 80 per cent majority to accept a company offer amounting to a 20c hourly pay rise in three instalments. That will lift the top hourly rate for drivers with at least nine months service to $17.45 now, $18.15 next year and $18.75 in February 2012.

The deal includes a minimum of $560 in backpay dated from July 5 and a $500 contribution from the Auckland Regional Transport Authority to wages lost when NZ Bus locked out 875 workers and suspended all its services for seven days last month.

Although the pay rises are the same as offered in a package rejected by 55 per cent of drivers at a rowdy and emotional meeting three weeks ago, union negotiators welcoming a softening of "clawbacks" sought by Infratil subsidiary, which provides 70 per cent of Auckland bus services.

Auckland Tramways Union president Gary Froggatt said the company dropped its demand to be able to review the jobs of drivers absent because of incapacity for more than two months, and had reverted to an existing three-month threshold. It also agreed to add just 24 hours to an existing 48-hour time limit for submitting complaints to drivers, which was half of what it sought earlier.

The deal retains a new weight limit of 115kg for driver recruits but the unions say that is outside their control as a pre-employment requirement, even though Auckland University of Technology nutrition and obesity expert Professor Elaine Rush believes it will discriminate against Polynesians, with higher average weights than other ethnic groups.

Drivers spoken to outside a Tramways Union meeting at Alexandra Park were generally pleased to have settled up before Christmas, given the added financial strain the festive season puts on families, but one said he believed they should have held out for more money. He believed the length of an agreement locking drivers into what he still considered to be low wages would make the company an attractive sale proposition.

Mr Froggatt acknowledged a general suspicion that Infratil may be grooming NZ Bus for sale, but said that gave the drivers no great concern as they had lost confidence in the company. He said that although hourly pay rates were now higher than that of other Auckland bus company, NZ Bus drivers received just time and a quarter for overtime hours and were determined to fight for time and a half after the new agreement expired.

Company operations general manager Zane Fulljames said NZ Bus was confident it had secured an agreement that would meet the needs "of our customers, our people and the business" and looked forward to rebuilding long-term relations with the four bus unions is it reshaped its operation. "This agreement allows us the stability and certainty to move forward with confidence into the Rugby World Cup 2011 and beyond," he said.

Regional transport authority chief executive Fergus Gammie also welcomed the return of stability for bus passengers.

Mike Lee sounds weary. He, along with bus drivers and 80,000 Auckland commuters, is winding down from a long, tough week.

The Auckland Regional Council chairman has already made strong comments about home-grown infrastructure company Infratil, the successful group of investors behind the standstill of much of Auckland's bus system, and he's not finished.

Infratil invests in airports and energy offshore and public transport at home, running buses in Auckland and Wellington through subsidiary company NZ Bus.

On day five of the lockout of the bus drivers, Lee threatened to sack NZ Bus for not fulfilling route contracts, only to find this was not so easy.

The process is more drawn-out than he anticipated.

Lee sounds mystified about the tactics of the "reckless", "clumsy" and "ruthless" men in striped suits who are behind Infratil, the ones really calling the shots over required profit margins and future vision.

Though the buses are back on the street, for now, he says the seven-day lockout, which disrupted life for so many school students and workers, has taken other tolls.

He estimates the region will lose nearly a million passengers from the annual scoresheet, vital statistics which are needed to justify extra investment in public transport.

There's another big impact, too. When you have a dispute such as this, people go away from public transport.

"It's enormously disruptive but they do find alternatives and if they're going back to their cars then, you know, you've got to try to get them back out of their cars.

"There will be a lasting impact."

Lee hesitates at the next question. He's somewhat at a loss, he admits tiredly. He's not quite sure how to fix this problem of ensuring buses stay operating despite employment disputes.

Though this dispute between NZ Bus and its drivers is patched for now, it is only a plaster and could erupt again.

To be honest, Lee says, he has other important things to be doing, such as getting ready for the looming Super City instead of figuring out disputes involving buses.

So when he is asked how he plans to stop such massive disruption again in the future, he is thrown for a minute. "I would much prefer we didn't have this going on but, however, you ask a valid question. What is going to be done about it? "We need to sit down with Arta (the ARC's transport co-ordinating agency) and discuss that very point and resolve on a plan of action, a contingency plan. We can't hand over a mess to the Super City," he says.

Lee says he has been quite shocked at the hardline tactics of Infratil/NZ Bus. The drivers wanted to work to rule while their pay claim was on the table but the bosses locked them out - and, in doing so, locked out Aucklanders. Infratil/NZ Bus have taken such a militant approach, he says, he thinks they have done serious damage to their reputation.

Lee describes the Infratil directors as "guys with Beatle haircuts and striped suits" and "cheery chappies". "You know, if you meet them you're thinking you're dealing with Herman's Hermits, but actually these guys are ruthless operators."

Ratepayers and taxpayers spend around $94 million in subsidies for buses every year - and $58 million of this goes to NZ Bus.

Given the large public subsidies, we asked Infratil CEO Marko Bogoievski whether his organisation cares about bus drivers and Aucklanders.

Bogoievski explains Infratil is a huge investor in both New Zealand and overseas and has been for 20 years. The company's intention is to grow businesses and for them to flourish. He doesn't see how improving and upgrading bus fleets, rebranding buses and schedules, training bus drivers and introducing technology is anything other than a positive for Aucklanders.

He says he understands the havoc the dispute has caused Aucklanders and says this was not an outcome anyone wanted to see, "so obviously you're in the middle of a dispute and it's a live conversation, we're trying to get it resolved".

What about the perception that Infratil directors are ruthless, cold and hard-nosed?

He replies: "We've been around for a long time and we've earned every bit of our positive reputation as a high-quality investor, so the proof's in that really." Infratil is trying to get the best situation in Auckland too, he says. Employees, shareholders and customers of all their services are important parts of the overall equation but they're looking long-term, not just at whether buses run next week.

They have to manage the overall cost of delivering public transport services in the long run, he says.

Every time there is a tender from a local transport authority to run a major bus or public transport service, tenders are given to the lowest-priced operator.

In the process, service levels and the amount of compensation are determined - there is no free lunch for anyone.

He says if you end up increasing cost structures in the medium term, you end up increasing public subsidies for public transport, but that is a policy issue for planning agencies like Arta. Bogoievski also says he believes the bus drivers are quite well compensated relative to their peers.

"The average wage of a driver, if they were to accept our proposal, would be higher than the average wage of a New Zealander."

One of the accusations against Infratil is that they have been lobbying the Government to repeal parts of the new Public Transport Management Act, which would require them, as a commercial operation, to open their books regarding the public subsidies.

Bogoievski says the problem with the Act is that local authorities want to control every aspect of public transport, including confiscating commercial routes that NZ Bus and other operators have been investing in for a long time.

Infratil's preferred model is to let private provision of these services reduce the need for subsidies, "so in effect, Infratil's leading the charge, through NZ Bus, to try to manage the overall cost of public transport to Auckland ratepayers".

Bogoievski says the Infratil directors are not mean people, "no, I think we're pretty average blokes who are just trying to continue investing in New Zealand and we hope we can".

The company stands by its achievements, he says.

"I know it's provocative to refer to merchant bankers sitting in Wellington, but come down and have a look, have a cup of tea with us, we don't look anything like that."

Part of the problem with buses is division over the extent to which public transport should be publicly controlled and run, or whether private operations are best.

For Infratil, obviously private operators must have a big say in how they run.

Others, such as New Zealand urban researcher Dr Jago Dodson, say local authorities have far too little control.

The Brisbane-based Griffith University research fellow warns strongly against any watering-down of the Public Transport Management Act, saying we are already seeing Infratil starting to test its strength in the current dispute with the bus drivers.

Transport Minister Steven Joyce says he is certainly taking a look at the Act because of concerns from NZ Bus and other operators about the ability of councils to contract over the top of commercial services where they are operating successfully and don't require a subsidy.

He doesn't cosy up to anyone, he adds, pointing out that though he has talked to NZ Bus, he's probably talked "way more times" to Lee, "but no one accuses me of cosying up to Mike".

For Lee, the end is not in sight. Joyce has announced a new Auckland Transport Agency which will operate under the Super City, replacing existing Auckland transport entities.

Lee says though the river of public money will flow - "$160,000 a day into Infratil once normal services are resumed" - public control and accountability over it will be weakened by the Minister's new transport authority.

"So when there's another lockout in the Super City, people will ask the Super Mayor what's going on and the Super Mayor will probably have even less power than I do now to get it sorted."

SERVICE CHARGE

The contracting of services for bus routes is a complicated business and though many routes qualify for subsidies, others don't. Ratepayers and taxpayers pay around $94 million in subsidies for buses each year.

Around 26 per cent are commercially run, so don't get a subsidy, but even these will often get a concessionary fare top-up. The bulk of the services - 74 per cent of which are contracted services - are paid for through subsidies.

Even many of the main routes, including the Link bus, and main arterial corridors such as Dominion, Eden and Sandringham Roads, have parts of the service provided through subsidies.

Arta says without the subsidy the number of weekday peak period services offered along Dominion Rd, for example, would be significantly reduced and services after 9pm may not be provided.

Snapper will not rule out installing its smartcard system on parent Infratil's 705 Auckland buses, despite probably missing out on a deal to provide an integrated ticketing system to the Auckland Regional Transport Authority.

The authority announced last week that it had selected a consortium led by French technology firm Thales as its preferred supplier of a system that would let passengers pay for bus, train and ferry travel using a single smartcard. The system is due to be ready in two to three years.

The New Zealand Transport Agency, which would pay for 60 per cent of the project, hopes the Auckland system will become the rump of a "national integrated ticketing programme".

Transport Agency chief executive Geoff Dangerfield says it "is not starting from a blank sheet of paper", acknowledging existing investment in smart ticketing systems in Wellington and Christchurch.

The agency said that its approach would "provide the potential for individual public transport operators to decide which electronic ticketing or smartcard system best meets their business needs".

Snapper Services chief executive Miki Szikszai would not say whether he believed that gave Snapper the green light to install its system on Auckland buses, regardless of the outcome of the Auckland tender. "We are obviously considering the wide range of options," he said.

After apparently conciliatory comments in the wake of Arta's announcement that it had selected Thales for Auckland, Mr Szikszai questioned the rationale for the investment of tens of millions of dollars by the Transport Agency.

Snapper is believed to have offered to extend Snapper to Auckland at no cost to taxpayers.

"There is a really important question which is not being asked, which is, `Why is an investment being made into a system when one already exists?' There was a statement made by NZTA saying they didn't want to invest into a system twice, and I think we should ask why they are investing once?"

The agency says there are several smartcard-based bus ticketing systems in New Zealand.

"Arta have sought a proven system that will also support rail ticketing." It would report on the appropriate process for operators to fund and provide their own equipment.

SNAPPER IN TAXIS

Snapper will be installed in all 1000 taxis in the Wellington region early next year, says Snapper Services chief executive Miki Szikszai.

The agreement follows a decision by Greater Wellington regional council to issue Snapper cards to 7500 disabled people, who cannot use public transport, for use in taxis.

The council pays for their taxi travel under its Total Mobility programme, costing $2.2 million a year, which is paper-based.

Transport and access committee chairman Peter Glensor says the new system will be far more user-friendly for clients.
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Mr Szikszai says Snapper terminals will need to be adapted for use in taxis. Once they are installed, the public, as well as those enrolled in the Total Mobility scheme, will be able to pay for journeys using Snapper.

Don't you love the strange bedfellows MMP throws together? Any day now, all going to plan, Parliament will pass a bill permitting the control of Auckland's highly subsidised public transport network to return to public hands. And joining Labour and its more natural allies such as the Greens and Maori will be that supporter of free enterprise, the Act Party.

Leader Rodney Hide assures me his planned move is very "pro-market". He says Auckland Regional Council (ARC) chairman Mike Lee had lobbied him, arguing that a party representing consumers and taxpayers had to support such a bill, and after consideration "I said, absolutely".

Mr Hide says what the bill allows "is exactly what you'd want to do if you were looking at spending a $94 million subsidy and looking at getting best value for money, so I was on board".

Not on for the ride is the National Party, which, when in power 15 years ago, forcibly privatised the publicly owned Yellow Bus Company, and, strangest of allies, Winston Peters and his New Zealand First Party.

The Public Transport Management Act won't drive private bus operators from Auckland's commuter bus network. It just gives the Auckland Regional Transport Authority (ARTA) the power to design an integrated passenger transport network that serves the needs of the passengers and the subsidisers first, rather than the bus company shareholders.

Merchant bankers Infratil, owners of Auckland's biggest bus operator, New Zealand Bus, have been lobbying around Parliament as though Karl Marx was coming up the hill behind them. But the case for the status quo does not stand up to scrutiny.

When Infratil bought the old Stagecoach Bus company in 2005, patronage in the year to June was 43.1 million passenger trips. A year later, the service had shed 900,000 passenger trips. By the year ended June 2007, a further 200,000 passengers had disappeared.

It took a war in Iraq and rocketing fuel prices to reverse this downward trend. In the year to June 2008, passenger numbers bounced back to 2005 levels. In that time though, subsidy payouts soared. When Infratil entered the scene, public handouts to regional bus operators totalled $45 million. Just five years on, the budgeted annual subsidy has more than doubled to $93.1 million.

As ARC chairman Mike Lee wryly noted in a letter to Transport Minister Annette King this year, "It would appear that the private bus companies in Auckland are much more interested in increasing bus subsidies than increasing passenger numbers."

As the law stands, despite these huge subsidies, ARTA cannot inspect operators' books to check whether they are gouging the system. Their need for a subsidy has to be taken on trust.

ARTA has no powers to design a transport network linking buses and rail and ferry services into a rational, user-friendly web. It can't even insist on integrated ticketing. Operators can cherry-pick the profitable routes, calling them "commercial", then stand aside and wait for the public to come to them, cap in hand, offering subsidies if they will graciously fill in the "non-profitable" gaps left unserved after the plums have been plucked.

ARTA and ARC lobbied strongly for the right to introduce a fully contracted system in which ARTA would design a network of services where, for example, subsidised buses didn't compete with subsidised rail services. Regional councils up and down the country backed Auckland's campaign, even though they were not faced with Auckland's problems.

The bill initially offered a compromise which annoyed both sides. Ms King was sympathetic to ARC's case and has enlisted the Greens to introduce the amendment supporting the full contract model. With luck, and Rodney Hide's support, the amendment will be passed tomorrow or Thursday and the bill itself soon after.

The revolution won't occur overnight, more's the pity. First, a new regional public transport plan will have to be drawn up and go through the normal consultation processes. Seeking changes to existing commercial services requires a 12-month transition and existing contracts don't expire until the end of 2009 and the beginning of 2010.

The only quandary now is what the National Party might do if it wins the election. With such broad support in Parliament and across Auckland for this bill, leader John Key owes it to voters to signal whether he will throw this act in with the recently passed Regional Amenities Funding Act as bad law he will repeal if he becomes Prime Minister.

The current chaos on Auckland's western rail line is not just a real example of New Zealand's infrastructure headaches. It's also a handy metaphor for the inadequate decision-making for solving them.

The work to double-track the line makes great sense. Expanded capacity and greater reliability are needed to help the trains keep up with fast growth in passengers.

But two problems arise. First, the old, fragile infrastructure can't handle the upgrading demands placed on it. For example, heavy construction equipment is damaging cables controlling points and signals so train services are suffering.

By mid-year, new signalling will be in place as part of the $600 million, three-year project for double-tracking and other investments agreed in 2005 by the region and central government.

But as soon as all that's finished, a second, bigger problem will arise: the regional rail network will once again be pushing its capacity limits thanks to New Zealand's penny-pinching, piecemeal approach to infrastructure projects.

There is a solution: electrification of the rail network so faster, more frequent and reliable trains can run. And with lower operating costs and environmental impact compared with a diesel-powered fleet.

Last September, Auckland Regional Council and its public transport agency, ARTA, made the electrification case to government. Again, it was a rather modest proposal. It called for spending $572m over 10 years to electrify and re-signal the lines and to buy the first 40 two-car trains. The ARC reckoned it could come up with $250m so asked government for the other $322m.

While that is a bigger, bolder project than attempted before, there is still a penalty from the piecemeal approach. Some aspects of the new signalling going into the western line now will need to be adapted to handle faster trains and the electromagnetic interference from their power supply.

And there are much bigger projects to come. Crucially, The solution is to make it a through station via a tunnel around the CBD and up to K Road. It would cost some $1 billion and take a dozen years or so to design and build.

With that and other major improvements at a total cost of about $3.6b Auckland, could have a rail network that could handle some 30 million passengers a year by 2030, up from 5.5 million in the past financial year, a year that saw train patronage grow 32%.

Not only would this network help keep Auckland's rapidly growing population mobile, it would do so in environmentally sound ways. ARTA estimates such a network would save 70 million litres of fuel a year and 233,000 tonnes of greenhouse gases, but also reduce road deaths by 9%.

Investing in small chunks is an inefficient way to meet those long-term goals. Above all, it ignores the reality of Auckland's growth. If the region had happened to be in the US, its rate of expansion over the past 15 years would have ranked it the fifth fastest growing urban area after the likes of Las Vegas and Phoenix.

Growth that brisk requires vision, analysis, decision-making, planning, investment and execution of far greater scale and confidence than regional or central government have ever managed to achieve. And if both are serious about making Auckland a truly great city of the world, or at least the Asia Pacific region, then the demands on them are even greater.

But that's not how the electrification issue is playing out. The regional government prepared an excellent case for the investment, presenting it to Wellington last September. Sound analysis proved the economic and environmental case for electric over diesel power, but the government has been dragging its feet.

The delay is becoming crucial. ARTA is achieving growth of passenger numbers well above the forecasts it produced for its case. As a result, it needs to make decisions soon about new train sets. It will certainly buy some old UK carriages and refurbish them in Dunedin. They will be pulled by diesel locomotives which could be replaced by electric ones.

But the sooner ARTA has the go-ahead on electrification, the better the rolling stock decisions it could make. It could minimise the number of carriages and diesel locomotives it buys and maximise the number of electromotive units, rolling stock with built-in motors. These are the quickest, most efficient form of train, but the waiting list for them is long because they are in strong demand around the world.

While there have been plenty of issues and complexities to work through on electrification, there have been two clear drags on the process. First, Treasury has struggled to develop the analytical skills it needs. It remains stuck in the old narrow cost-benefit models it perfected in the late-1980s and 1990s.

For example, it argued initially that the electrification project should be judged on the basis of a 10-year life and a 10% discount rate. That flew in the face of experience overseas. Rail investments are long-life ones of typically 25-40 years and their cost-benefit ratio calculated on a discount rate of 3%-7%.

In the end, Treasury grudgingly agreed to 25 years and 7%. That was still a high hurdle to clear, but electrification has succeeded in doing so.

But the bigger problem remains. The government keeps loading up policy with the likes of multi-faceted economic, climate, environmental and social objectives. These are worthy in themselves, but Treasury, as a crucial player in the decision-making processes, has very little idea of how to work those issues into the advice it gives to ministers.

Unless Treasury learns those analytical skills quickly, it will make a mockery of the bold policies the government is promising on the likes of climate change, carbon neutrality and renewable energy.

But the other drag is the government itself. It has, for example, played fast and loose with some of the wider environmental and economic criteria it built into the 2003 Land Transport Act. It has found bureaucratic ways to subvert those criteria to tilt the playing-field back towards roads and away from public transport.

On electrification, Finance Minister Michael Cullen has proved very hard to convince of the wisdom of the investment. Perhaps the prime minister's support for electrification in her speech in February may have helped him make up his mind.

That comment, plus some by Transport Minister Annette King, had suggested a decision on electrification was imminent. But now people close to the discussions say the go-ahead won't come until June.

It had better come then - and preferably sooner - or confidence in the government to live up to its self-proclaimed bold economic and environmental agenda will ebb further away.

The public transport reforms revealed today are hardly the revolutionary changes the Auckland Regional Transport Authority (Arta) has been pushing for. Indeed the proposed new purchaser-provider mode doesn't even restore the status quo, replaced in 1991 by the disastrous Thatcherite model that has subsequently dogged Auckland's bus system for 15 years.

But at least it's a start, and a sign that our latest Transport Minister, Annette King, means business. Also, the word from within Arta is that it can live with this watered-down version of its proposal.

The good news is that once the legislation is in place, Arta - and the other public transport authorities around the country - will again be able to impose some basic conditions of service on all their operators. Insisting that buses and trains and ferries keep to their timetables, for instance. And that rival operators join together to provide an integrated ticketing service that enables passengers to mix and match modes of travel using the same ticket. Transport operators will also have to open their books so the public authority can inspect just how much they need the subsidies they request.

The downside is that there'll be a time lag while old contracts run out, before the new controls can fully kick in. That's unless the private bus companies have a sudden rush of public spiritedness to the head, and voluntarily sign up before they are forced to. But given recent histrionics, it's hard to contemplate that happening.

In the speculative fever that built up before today's announcement, major operator Infratil indulged in some spectacular public foot-stamping and dummy-spitting, threatening to quit the industry at the thought that Arta's desired reform package might win the day. What Arta wanted was a simple contracting model, where it, the public purchaser of the service, on behalf of you and me, designed the most suitable integrated public transport network for the region and then called for tenders from operators to provide the service.

To Infratil, this proposition was "extremely unattractive".

Of course, to Arta and other local authorities it was the existing model that was extremely unattractive. They pointed to the fact that Britain was the only other country in the world employing such a system. That most civilised cities used the simple contracting model they were proposing.

The worst aspect of the existing system is that an operator can identify a certain popular route - or more often, the most profitable rush-hour timeslots on that route - trot off to the relevant authority and register it as a "commercial" service. Once done, this becomes the operator's own personal fiefdom. Unless the back wheels of a bus regularly fall off, or the driver does unspeakable things to his passengers, there's very little the authorities can do. They can't for instance, insist on buses keeping to a timetable. In Auckland, 26 per cent of bus services, carrying around 46 per cent of all passengers, are in these unpoliceable commercial wildlands.

Annette King's proposed reforms do bring these 46 per cent of Auckland passengers back under regulatory protection. Even though operators will still be able to register "commercial" routes, they will be forced to agree to and abide by the regulatory conditions imposed by Arta. Requirements, for instance, that they have to turn up on time every day. And that they agree to honour a valid ticket sold by a rival operator at an earlier stage of the passenger's journey.

In the interests of the network at large, "commercial" operators will no longer be allowed to cherry-pick the most profitable rush-hour slots. They will have to service the slower middle-of-the-day and evening runs as well.

Given how slow transport reform can be - even under a Government which trumpets its commitment to the cause - the vagueness of the timetable for the changeover to the new regime is worrying. A briefing paper says "commercial operators will still be able to operate existing commercial services, but will, over time, have to comply with any regional passenger transport plan controls".

Given the ability of both local authorities and commercial firms under threat to prolong the inevitable, let's hope a more prescriptive deadline for the reforms kicking in is part of the final legislation.

Bus passengers are being promised sweeping law changes offering them better odds of getting picked up on time, and by clean and safe vehicles. 

 The Government intends giving the Auckland Regional Transport Authority, and councils elsewhere in New Zealand, wide powers to set standards for all urban bus and ferry services.  The tough new measures will be imposed regardless of whether the services are run commercially or with subsidies from the public purse.

Regional councils will be able to deregister commercial services which fail to keep to their timetables. Ministry of Transport officials are working on an incentive and penalty regime to apply before that happens. At present, councils can set standards only for subsidised services, and operators do not even have to provide them with patronage information for planning purposes.

Operators face no sanction other than passengers voting with their feet if buses or ferries fail to turn up.  Transport Minister Annette King plans to introduce the legislation within six months to encourage more New Zealanders to leave their cars at home.

Her mission has been given added urgency by the Government's new goal of making New Zealand a world leader in energy sustainability, and the fact that only 3 per cent of people caught buses to work on Census Day last March.  Ms King said boosting public transport was a major part of the push towards sustainability, and her aim was to remove disincentives for people to travel on buses and ferries.

"For example, there would be the ability to require integrated ticketing or to set standards for ease of access for passengers into vehicles."

The lack of tickets for passengers to use interchangeably when transferring between rival transport fleets is a particular bug-bear in Auckland.  Having to pay separate fares is seen as a major road-block to more people using public transport.

Ms King acknowledged the legislation would not go as far as the Auckland authority wanted, which was to give it power to pocket all bus and ferry fares, from which it would pay transport operators fees based on passenger numbers.  That is how the authority runs urban rail services, which will not be affected directly by the new legislation.

The Bus and Coach Association had warned of a dramatic rise in subsidy costs for ratepayers and the Government, and the minister accepted there might have been "some problems" from a potential withdrawal of investment by commercial operators.

But she said the new rules would enable transport authorities to obtain commercial information from operators for network planning, and to set minimum standards over all urban services to increase passenger confidence.

Association executive director John Collyns accepted last night that regional councils expected some influence over commercial operations, as well as those they subsidised, but he feared the legislation would tip the balance too far.  "What the Government is handing Arta is the ability to create a sort of master-servant relationship - and if we are not going to be equal partners taking equal risks, public transport is not going to be well-served in Auckland."

A particular fear was the potential for the transport authority to stop commercial bus services competing against subsidised trains, meaning passengers would have to transfer at railways stations rather than continue along more direct routes.  Mr Collyns denied there were any quality differences between commercial and subsidised services in Auckland, which were all run by the same fleets, and said performance standards in New Zealand were markedly better than in Australia and North America.

Infratil director Tim Brown, whose company owns the Stagecoach fleet, said it was encouraging that the minister was leaning to much more of a consultative model than feared and he was optimistic his team could keep working with councils to provide greater service frequencies.  Regional transport authority chief executive Fergus Gammie said the proposal would let his agency work collaboratively with operators to achieve an integrated public transport system with integrated fares.

Auckland Regional Council chairman Mike Lee said it was a step in the right direction.

AUCKLAND BUREAUCRATS are dangling the carrot of incentive payments to bus operators who are angry over plans to shut them out of running fully- commercial bus services.

And they are promoting the success of a new express service running every 10 minutes across Auckland Harbour Bridge between Albany and the CBD as the model for the future.

Private operator Ritchie's runs the buses, but does not keep the fares it collects. They go to the Auckland Regional Transport Authority (ARTA).

Ritchie's is paid a fee to provide the service and gets an annual bonus for every passenger carried above a set threshold.

Ritchie's director Andrew Ritchie said the incentive payments "are not exactly huge to be honest, but anything is better than nothing".

But the service, structured and marketed by ARTA, had worked out well for his company.

"It's been a huge winner with the public."

ARTA chief executive Fergus Gammie is equally enthusiastic about the success of the Northern Express service. A total 39% of passengers were converts from commuting by cars, and the service is credited with taking 400 cars off the northern motorway and harbour bridge at peak times.

As important for Gammie, the service provides him with a model for the future as local authorities push for much greater control over public transport.

That has raised the ire of private bus operators such as Stagecoach NZ (owned by listed investment company Infratil), who want to continue to run fully-commercial services in Auckland and Wellington, and collect their own income through fares. "Fees are totally outside our demand-driven model," said Infratil manager and Stagecoach director Tim Brown.

"We want to be incentivised to build patronage and customer loyalty by being 100% focused on fare income."

Gammie said: "We understand private operators have their own (profit) drivers, but it is a question of being able to meld those with community needs in regard to public transport."

The debate is coming to a head as the government reviews public transport legislation which ARTA contends has put New Zealand out on a limb.

"New Zealand is one of the few places in the industrialised world to provide passenger transport through the market," said Gammie.

The legislation, passed in 1989, allowed private operators to provide the services they wished.

Regional councils would then contract private operators to run additional services for a fee, and with the help of a council subsidy to make it economic.

Gammie said the assumption was that commercial services would predominate, and contracted subsidised services would fill in the gaps.

"But we've got exactly the opposite."

He estimated up to 80% of New Zealand's passenger transport services were contracted and subsidised by councils, and the rest were run commercially.

Most of those commercial services were in Auckland (where 26% of services were commercial) and Wellington.

New Zealand's small and scattered population meant there were not many routes where private operators could make a profit.

"Tiny, over-crowded Hong Kong is the only place in the world with a fully commercial passenger system."

But the mix of commercial and contracted services in Auckland is frustrating regional government's plans to introduce an integrated route, fares and timetable network of public transport.

ARTA is not able to alter a registered commercial service, and cannot decline to register a commercial service because it may conflict with a planned regional network, something also required by the same legislation.

It also says commercial services can be used in an uncompetitive manner and undermine the competitive process for public funding.

Gammie said: "Fact is, there will more competition in a fully contracted system than there is in the mix of commercial and contract we now have."

Infratil has interpreted ARTA's proposals as the first step to regain public ownership of public transport in Auckland. This Gammie denies: "We've no private agenda to take over private bus operators. We want to work in partnership with them."

There are also suspicions that moves to offer larger (150-bus) rather than smaller (22-bus) tenders are being designed to tempt Australian and French bus firms to enter the market at the expense of local operators.

Gammie said such entrants would face additional hurdles of convincing transport authorities they could operate in New Zealand.

"Our agenda is getting an integrated transport system in terms of fares, routes and timetables the public clearly wants," said Gammie.

To do that, they had gone to the model which worked successfully in many big Australian cities as well as in London. He said Australians looked at New Zealand's free-market public transport model in the early 1990s, but decided against it. Instead, they adopted a system where public authorities planned integrated networks, and where private operators were incentivised by bonus payments to run the services.

"Operators paid a bonus for every passenger carried above a target are driven to provide a higher quality service," said Gammie.

Ritchie said his company had met every bonus target in the 20 months the Northern Express had been operating. "The big worry I have with a fully contracted network is whether ARTA has the money to run it," he said.

Private operators running a fully commercial service took most of the risk; under contracted services that risk would transfer to ARTA.

Ritchie said running contracted services involved more work for private firms than a fully commercial services. Some routes were also more suited to commercial than contracted services.

"I'd like to see some commercial services retained, but only in consultation with the public authority running the network," said Ritchie.

That fits ARTA's plans. It wants new laws that allow it to contract for all services if it wishes, but retain or introduce commercial services where they fit with transport network plans.

As for the perceived miserly bonus payments to Ritchie's on the Northern Express run, ARTA said there was more work to do devising its incentives plans. PUBLIC OWNERSHIP (buses and service owned and operated by public authority): Canberra, Rome.

FEE FOR SERVICE (private companies paid a fee and incentive to run buses): Sydney, Melbourne, Brisbane, London.

PUBLIC SUBSIDIES (private companies collect and keep fares, but get a subsidy to run uneconomic services): Christchurch (98%), Auckland (74%) and some in Wellington.

COMMERCIAL SERVICES (private companies run fully- commercial services, collecting fares and receiving no subsidies): Auckland (26%) and some in Wellington.

FREE MARKET: Hong Kong, Manila, Nairobi.

Source: ARTA.

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CAPTION: The new service model is a hit with the public. Photo: Michael Bradley