When I look back at this year, from a transport perspective, I guess overall the feeling is that “things were turning into a mess, but largely they’ve been sorted out”. Electrification’s still happening, integrated ticketing’s still happening, there’s an investigation into the CBD Rail Tunnel underway, funding for Project DART is continuing, and so forth. That’s not to say it’s been a particularly great year for public transport – and there are two issues in particular that stand out as particularly worrying for any public transport advocate:
- Changes to the Government Policy Statement that shift money from public transport into building motorways (happened back in May).
- Changes to the Public Transport Management Act (hasn’t happened yet, but is on the cards).
The first of these two matters is a complex one, that I will need to put quite a lot of research into writing about (although this article last week gives a reasonable overview of the implications of the GPS changes) so I will save that one for later. For this post I am going to focus on the second matter – the possible changes to the Public Transport Management Act (PTMA), or more specifically I plan to outline what that Act is, why it was necessary, why it was introduced and what the implications of messing with it might be.
Reading through the legislation itself is quite a challenge for this particular Act (although to be honest legislation is always pretty difficult to make sense out of) as a lot of it is very technical, and very procedural. The purpose of the Act is a reasonably good place to start in terms of making sense out of it:
As we will find out later, it’s sub-section (c) which is particularly controversial.
To make a little bit more sense out of what this all means, I guess it’s necessary to look at how the public transport system worked before this came along (which actually is generally still in effect as the PTMA hasn’t really had much impact yet as contracts largely haven’t come up for renewal). Basically, as far as I know, under the old system all public transport services fitted into one of the following two options: either commercial services or contracted services. Commercial services are those the operator (such as NZ Bus) considers that they can run at a profit – so they don’t need subsidising. Contracted services, on the other hand, are those which do receive a subsidy – from the Regional Councils and the national land transport fund (NLTF). Generally what would happen is that the different operators would choose the best and most profitable routes, and then operate them as commercial services, with the remainder of public transport route being subsidised contracted services.
Now if that sounds complicated enough, what made this situation even messier was the fact that a ‘route’ didn’t actually constitute a service, in fact by the sounds of it every single different ‘run’ made by a bus, train or ferry was a distinct ‘service’. Therefore, you could have bizarre situations where the 8.20am Sandringham Road bus would be a commercial service, whereas that 8.30am Sandringham Road bus would be a contracted service – one that ‘filled in the gaps’ in a sense. Once a particular operator had registered commercial services along a route, it generally made sense for them to be awarded the contract to run the contracted services – as (without integrated ticketing) the last thing we wanted were two different bus companies operating the same route. This led to rather bizarre situations where operators would register every second service as a commercial service, or all the services going one way as commercial services – so they’d have their ‘foot in the door’.
This situation, and the lack of controls over commercial services, led to a wide variety of negative effects on public transport since the split between commercial and contracted services was established by the 1989 Transport Licensing Act. These problems are outlined below:
- The ‘cherry-picking’ of high patronage routes. Of course, commercial services ended up being those with the highest levels of patronage or those where profit could be best made. This made it not possible for the regional councils and ARTA to use these routes to help cross-subsidise less profitable routes. In general, this has increased the amount of subsidies that need to be contributed to running public transport.
- Operators never had to provide any information on their commercial services. This meant that transport planners have found themselves playing rather crude guessing games in terms of patronage on these routes, while the level of profitability of these routes is also generally not known.
- Once a route no longer became profitable for operation as a commercial service, the operator could give fairly short notice of cancelling that service unless ARTA or the regional councils stepped in to ‘contract’ it. Effectively that resulted in a ‘privatise the profits, socialise the losses’ situation where the private operators enjoyed all the benefits of the good times, but as soon as things started to go wrong for them they could simply abandon that route as a commercial service and then start enjoying having it propped up with subsidies. Furthermore, the operators were not even required to prove that the service was no longer profitable – they effectively had the ability to beg for subsidies without having to prove they were necessary.
- The lack of control over commercial routes made it impossible for an integrated ticket to be implemented. As we’re seeing now with the acrimonious Snapper/Thales debate, different operators are incredibly jealous in their guarding of having to share information, ticketing and the redistribution of revenue. It is my understanding that ARTA could have forced the contracted services to accept an integrated ticket, but what’s the point when there’s the possibility that the 8.30am bus along Sandringham Road would accept your integrated pass, but the 8.20am bus wouldn’t? That would have been an even more infuriating outcome than having no integrated ticketing at all. So in that respect, the PTMA was essential for integrated ticketing to happen.
- The dichotomy between commercial and contracted services meant that they often ended up competing with each other, or you had buses competing against trains, or different routes from different companies competing against each other – all the while structuring which routes they declared as commercial and which ones as contracted to extract the maximum profit out of the system (which generally included a significant subsidy). The fact that we have many bus routes completely following train routes (such as the 135/136 buses following the Western Line quite closely) seems to me like an incredible waste of scarce resources.
Probably the biggest problem with the old system was simply that it actually didn’t encourage people to use public transport at all. The lack of co-ordination, the messy dichotomy between commercial and contracted services, the inability to get integrated ticketing up and running, the extraordinary waste of resources in duplicating services and the inability for higher patronage services to cross-subsidise lower patronage services very much contributed to the massive decline in per capita public transport use we saw in the late 1980s and the early 1990s. Although undoubtedly things have improved since that time, that is really only the result of a very strong political and financial commitment from the ARC to public transport – and even then it is arguable the results have been relatively disappointing compared to the amount of money invested. So I think it’s fair to say that it was clear the old system wasn’t working. It wasn’t providing good value for money in terms of ratepayer and NLTF contributions, and it certainly wasn’t helping to provide anything like a world-class public transport system for Auckland. The old legislation was alsoactively preventing integrated ticketing from happening. So it had to go.
In terms of developing a replacement for the old system, it was clear that the main necessity was to give regional councils and ARTA some level of control over commercial services – so that they could be integrated into a co-ordinated system and so that we could actually achieve many of the things the old system had prevented from happening.
Three options were looked at when developing the PTMA – known as Options A, B and C. These are detailed further below:
- Option A: preserving the status quo. Obviously this would have been an incredibly stupid option to pursue, but somewhat unsurprisingly most (although not all) of the public transport operators were keen on this particular option.
- Option B: empowering regional councils to achieve their objectives mainly through two planning mechanisms —regional public transport plans, and controls imposed by councils on commercial services to implement these plans—and a compliance and enforcement regime.
- Option C: enabling regional councils to require all services to be contracted (should they choose to do so).
Throughout the select committee process Option B was generally favoured by the politicians – although somewhat unsurprisingly it left nobody being particularly happy. ARTA was incredibly keen on Option C – as it was really the only option that could eliminate the dichotomy between contracted and commercial services that created all the problems detailed further back in this post. The select committee’s report detailed that: “ARTA asked the committee to recommend a redrafting of the bill in favour of Option C, which would have given ARTA the option of a fully contracted public transport system.” Labour members of the select committee were also generally in favour of Option C, although they couldn’t get a majority to vote for it.
However, as the parliamentary process for enacting a piece of legislation has a rather large number of steps, eventually ARTA did manage to convince enough MPs that Option C was in fact the best way to go – and interestingly enough that is the piece of legislation that we now find ourselves with. Of course, Infratil (owners of NZ Bus) bitterly opposed the legislation – particularly the final decision to go with Option C – and eventually managed to convince the Minister of Transport to look into changing this piece of legislation.
The general feeling is that the PTMA will change back to “Option B”, which wouldn’t be a complete and utter disaster, as regional councils would still have some ways to impose controls on commercial services through their regional public transport plans and the controls that the Act allows them to have. However, Option B still results in a dichotomy between commercial and contracted services. It still means that we’ll have cherry picking of routes, it still means that we’ll find it very difficult to ensure co-ordination of services so that your feeder bus arrives at the train station just before, rather than just after, the train leaves. It also means that we’ll probably still have stupid and pointless duplication of services where buses effectively follow train route – competing for passengers instead of working together to encourage more people onto public transport.
While Option C sounds harsh, in that it effectively prohibits commercial services, in reality if we want a properly co-ordinated public transport system history tells us that that’s really the only path that is likely to work (the alternative certainly hasn’t worked). While one would imagine that Option B would still ensure integrated ticketing takes place, in my opinion Option B would not provide for the most efficient use of resources and will probably result in a continuation of the same process we’ve seen over the past decade of heaps of money being shovelled into public transport, but with rather disappointing results.
That is why I think the PTMA shouldn’t be changed. Unfortunately, we are yet to see the real benefits of what Option C would provide, as there are only a few routes in Auckland whose contracts have “ticked over” recently enough for them to be caught by the PTMA (such as Mt Eden Road services), so I do worry that it’s a situation of us not knowing what “might have been”, as the benefits of Option C will perhaps never eventuate before such a time as it is repealed in favour of the less effective (in my opinion at least) Option B.