The Public Transport Management Act (PTMA) was passed in September 2008, just before the previous government lost power. As I have explained previously, the PTMA allowed for greater regulation of public transport services – in particular bus services. The most controversial part of the Act allowed public agencies to contract all public transport services in their area, should they so desire. It is this part of the Act which the current government is now reviewing.

Paul Mees’s latest book, Transport for Suburbia, dedicates a whole chapter to planning, markets and public transport. It has some very interesting points to make about the regulation of public transport. As a bit of background, in 1989 public transport was deregulated in New Zealand, creating a split between commercial services and subsidised services, and perhaps most importantly, removing any particularly strategic way of putting together bus and train routes – leading to the messy situation that we find ourselves in now.

Interestingly, around the same time the UK went through a similar process of deregulation – although London was excluded from this. The fact that London was excluded provides an excellent ‘case study’ for comparing the effects of deregulating public transport services. Mees picks up on this:

…the market model seemed very attractive to policy makers… and so bus services were deregulated in both Britain and New Zealand. However, even the Thatcher government baulked at applying the market to London: the British capital was spared, initially temporarily, but eventually permanently. London was required to competitively tender its bus services, but under the control of a public agency which determined timetables, routes and fares. Without intending to, the British government set up an experiment to compare market-based public transport with the planned variety, and the excellent data published by the UK Department of Transport enables the results to be assessed.

The near-consensus, which includes pro-market observers like the European Commission and Wendell Cox, has been that the London model dramatically outperformed deregulation. In the decade following deregulation, operating costs per bus were reduced, and the number of bus-kilometres operated increased, in both London and the other cities. This was due partly to wage cuts and partly to increased use of regular buses and minibuses instead of the traditional double-deckers. But costs per passenger did not fall in the deregulated cities, because patronage declined dramatically: the promise that deregulation would produce more customer-focused services was not fulfilled. In London, by contrast, patronage held steady so the cost per passenger was significantly reduced…

…Before deregulation, London produced about one-third of urban bus patronage in England; now it accounts for two-thirds, despite housing only 7 million people, compared with 12 million in the six metropolitan counties. But while only carrying a third of the passengers, the metropolitan areas consume nearly two-thirds of ‘concessionary fare reimbursement’ – a result that appears to be due to the higher fares charged and the increasing domination of ridership by those travelling on concession tickets.

British bus deregulation has not produced free-enterprise public transport at all; nor has it produced innovative services that respond to contemporary needs. Instead, it has produced a new version of the 1970s ‘British disease’ that Thatcherism was supposed to have cured: a mendicant, declining industry that relies increasingly on carrying ‘captive’ passengers at concession rates or even for free, and charging the government at full-fare rates.

Mees also talks briefly about the New Zealand situation, and what the PTMA meant:

Similarly disastrous result in New Zealand prompted the repeal of deregulation which was replaced by the ‘London model’ from 1 January 2009. Even the leader of New Zealand’s ultra-dry ACT party supported the change, pointing out that following deregulation ‘Auckland moved from being the second-highest user of bus transport in the Australia and New Zealand region to the second-lowest on a population-patronage ratio. Britain is now the only part of the developed world where the policy persists.

Unfortunately that might not be true for too much longer. We really can’t mess with the PTMA.

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  1. I agree it is critical to keep the PTMA as it is and reform the bus and public transport system accordingly, this is the key to making a lasting change to PT in Auckland. We only need to look to Perth and Brisbane to see the outcomes of such action, more services, climbing patronage and falling cost per passenger mile…. or indeed simply look at the Northern Express or Mt Eden Rd routes where the provisions of the Act have been in use.

    The problem is how do you get the public behind this one, how do you create a grass roots outrage over something so dry and incomprehensible as preventing the repeal of legislation reforming the management arrangements of public transport contracts and service provision? It just seems so hard to communicate the gravity of what the PTMA means and why it should not be messed with.

  2. I think that is very hard, it is too complex and cannot be reduce to a bit sized caption…

    I think the only hope is for submissions to be so outraged and for the government to realise it is stupid that they change the amendement to something different but the same (as a Government would never say we are wrong and withdraw something)…

  3. I think the situation is a bit more complex than this. It’s my understanding that the way the PTMA is currently worded means that it would be very difficult for ARTA to actually implement their powers to take over services anyway… They could try but as soon as they did they would end up in a lengthy court process which they probably wouldn’t win.

    This is basically because there’s a line in the legislation saying they have to prove beyond the shadow of a doubt that taking over a service is the only way they achieve whatever it is they want to… which is almost impossible to prove.

    However, this is, after all, the legislation that the local councils asked for in 2008. So, the fact that they’re now complaining it’s unusable suggests to me that either they’re a) not that smart, b) lying for some inscrutable reason or c) have lost all hope of winning the court case given the attitude of the current Transport Minister to private enterprise versus local government.

    So, basically, I think the PTMA does need to be revised to make it stronger. But I really doubt that Joyce will do this – instead I think he will weaken it if he can get the votes to get it through the House but he possibly can’t since even ACT voted in favour of the first version of the PTMA. As did the Greens, Labour, and Maori Party…

  4. I think a reasonably good “caption” is that messing with the PTMA potentially puts integrated ticketing at risk. Now Steven Joyce has claimed this isn’t the case, but if there aren’t many controls over commercial services then there’s certainly the risk that they won’t have to accept an integrated ticket…. which means we’re back to square one.

    I’ve talked to someone definitely “in the know” at ARTA, and he says the reason they haven’t used the PTMA more since it was passed is because Joyce wrote to them and told them not to – as he was reviewing the legislation.

    The stupid thing is that the biggest gain of the PTMA is to ensure councils get far more value for money from their PT subsidies. If Joyce is really worried about getting better value for money from public transport, then he wouldn’t be looking to mess with this legislation. Unfortunately, I think he’s more interested in keeping his buddies at Infratil happy.

    Over the past 10 years we have gone from spending $45 million a year on subsidies to $145 million a year, and yet patronage has only increased from 44 million trips per year to 58 million trips – barely keeping up with population growth. These trends have happened because the “old system” of splitting off commercial and subsidised routes from each other, and not having an overall route-planning agency has led to enormous inefficiencies, route duplication and – quite frankly – ARTA being held to ransom by the bus companies on many occasions. Tripling public expenditure on public transport to achieve basically the same per-capita patronage stats shows that something has to change.

  5. Integrated ticketing might be safe (i.e. one stored value card you can use on any service), but an integrated, time based fare structure might not be.

  6. “Integrated ticketing might be safe (i.e. one stored value card you can use on any service), but an integrated, time based fare structure might not be.”

    Thats what I fear. The latter is what is far far more important – it is the essence of integrated ticketing.

    I did not know that about the London vs rest of UK split. I am living in Manchester, where the bus services are terrible, much worse than Auckland in my opinion. My friends in London say the buses their are great however, and often use them instead of the tube.

  7. The UK bus scene, from someone who has to use it (I’m in Edinburgh) … I am not sure that it is actually one picture, of the metropolitan areas v London. Here’s why:

    * In the provinces, car ownership has continued to increase, off an admittedly low basis, and this is continuing to translate into lower levels of demand for bus services. In Scotland, which I know well, about a third of the bus market is using a free concessions car system which costs a bundle to run. In these areas, also, as people have got better off, it has turned at least some of them from bus commuters into rail commuters.

    * On the other hand, I do not recommend trying to own a car in London, much less run one. The congestion charge has been another factor here. This all works to support bus demand.

    * One exception to the rule is Edinburgh: a commercially-focussed bus system, with a very simple smartcard to underpin it, has seen patronage increase by 25 percent in the last few years. It is owned by the city, but managed commercially. It works well. Separately, there are attempts being made to reregulate the arrangements in Scotland, more precisely in Glasgow, but there doesn’t seem to be a lot of enthusiasm for doing this. The main problem in service provision in Scotland has been in supporting social bus services that can’t pay for themselves. No-one really wants to pay.

    In terms of the PTMA, can anyone comment as to whether there is an Auckland v Wellington split working its way out here? I lived in Wellington for years, and always thought that its bus networks worked pretty well.

    Separately, integrated ticketing only makes a difference in the market when you have a very high standard of service underneath it, which means frequencies far higher than we generally see in New Zealand.

  8. I’ve talked to someone definitely “in the know” at ARTA, and he says the reason they haven’t used the PTMA more since it was passed is because Joyce wrote to them and told them not to – as he was reviewing the legislation.

    Well different people at ARTA are saying VERY different things then. And the person I talked to seemed very close to this particular topic given his job etc…

  9. Ross, would you exactly recommend owning a car in Auckland, if it were not for the fact it is basically impossible to live without one? The traffic, ownership costs, parking issues don’t exactly make it a dream, it’s just a necessary evil. It’s my opinion that Auckland has enough ‘push’ factors related to driving that would make most people consider switching to public transport if they had a viable alternative. We don’t need a congestion charge, the congestion and cost of driving already do that.

    Integrated ticketing could work wonders even in a system without a very high standard of service. Half the problem is having silo’d operators running (often) the same routes with completely different fare systems, which adds to confusion, difficulty and expense for the user. An single farecard would fix much of this. There are also plenty of current opportunities for transfer and connection, it’s certainly not widespread but in the CBD and the Northern Busway it happens, and there are many routes such as Dominion Rd or Great North Rd that have frequencies measured in minutes or even seconds. I would argue that going much further in service standards would be impossible while everyone basically has to pay a cash fare on each vehicle they board, including transfers.

  10. @Ross, in Scotland one authority controlling the routes is the key, not whether the routes are run commercially or not… One Authority means competitive service than cannibalise and undermine other modes/providers can be stopped…

    Transport is interesting, increasing oil prices do not curb demand as you would expect, in PT competing companies hurt usage…

  11. What matters is that you have a single agency planning the public transport system. While it might be ideal to have that same agency operating the system, it’s not really essential (and one could argue a bit of competition might help bring efficiencies).

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