Perhaps the only good thing Winston Peters ever did for New Zealand’s politics was introduce the “Super Gold Card”, allowing elderly free off-peak travel of public transport. There are a number of reasons why this is a good policy:

• It’s a good boost to off-peak public transport services by giving them the patronage they need to operate at decent frequencies.
• In places like Waiheke Island the local economy has significantly benefited from travellers taking the ferry for free.
• It enables those too frail to drive to still be well involved in their communities by being able to get around for free.
• It’s just a damn nice thing to do.

However, its costs have turned out to be fairly significant – around $18 million a year, of which $2 million alone is for the Waiheke ferries.

As a result of this cost, the government and NZTA are currently reviewing the scheme:

Transport Minister Steven Joyce says the government is committed to the scheme but some changes will need to be made because it is currently stand on track to exceed the available budget.

“The highest priority of the review process is to consider how to keep the scheme within the available budget of $18 million a year, while continuing to provide improved mobility for older people.”

Among other things, officials will consider:
• the level of reimbursement operators and councils receive
• how “off peak” should be defined
• the eligibility of certain high cost services- including the Waiheke ferry and the train service between Wellington and the Wairarapa

“The transport concession of the SuperGold card has an annual budget of $18 million dollars across the country – $2 million of that is currently spent on the Waiheke ferry alone,” says Mr Joyce.

The current review began in October last year and is expected to be complete by May of this year.

I reckon it’s pretty obvious why the costs have blown out, and it is symptomatic of what is wrong with public transport in Auckland at the moment. Because of the way public transport currently operates, generally routes are either subsidised or commercial (a small minority are gross-contracted where ARTA pays a set fee to an operator to provide the service and ARTA gets the money from fares). Subsidised routes are those where fares are ‘topped up’ by ARTA so that a decent service can be provided, while commercial routes effectively operate outside ARTA’s control.

This system will eventually be changed by the Public Transport Management Act to make it possible for all services to be ‘gross contracted’. This Act was passed in 2008 but hasn’t really taken effect much yet because… well I’m not exactly sure why, something to do with the timing of contracts being rolled over I think. Steven Joyce has indicated he doesn’t really like the PTMA very much, and is likely to amend it at least to some extent to reintroduce the current distinction between commercial and subsidised services, while still retaining a greater level of control over commercial services than currently exists.

But anyway, how does this all relate to the Super Gold Card? Well, most services that operate off-peak are subsidised services, meaning that ARTA assists the operator in making providing the service commercially viable. This happens everywhere around the world and is done to recognise the wider benefits that public transport provides, such as reducing congestion, improving environmental outcomes and alleviating the need to build more and more roads. When someone with a Super Gold Card gets on a bus, train or ferry their full fare is paid directly by NZTA to the operator. So let’s say the Super Gold Card doubles the number of elderly using public transport, then the operator receives twice as much money as they used to – and as a bonus doesn’t have to worry about handling it as NZTA send around a big fat cheque every once in a while.

What doesn’t happen, as far as I know, is a reduction in the amount of subsidy paid by ARTA (and NZTA who in another capacity help fund ARTA).So effectively the operator gets to “double-dip” on the public purse – enjoying both the increased amount of money they’re getting through the Super Gold Card scheme while still getting to keep all their previous subsidies. No wonder companies like NZ Bus have advertised like crazy to get elderly to use the Super Gold Card, it’s a win-win situation for them and they get to make out like bandits with the extra cash.

The solution is pretty obvious in my opinion, and that is for all services to become gross-contracted by ARTA. If this happened then the Super Gold Card money would go directly to ARTA and would help off-set the costs of contracting the service in the first place. Each dollar of Super Gold Card money would actually go into improving the provision of public transport in Auckland, rather than into the rather deep pockets of the various service operators. There would be no “double-dipping” by the operators and either the amount of NZTA funds required for the Super Gold Card could be reduced, or (preferably) the extra cash could go into helping to fund improved public transport services – like filling that $11 million hole in ARTA’s rail budget.

It beggars belief that Steven Joyce is so keen to improve the cost-effectiveness of public transport through crude measures such as imposing arbitrary farebox recovery ratios that (by forcing higher fares and therefore reducing patronage) could end up making public transport even less economically viable, while at the same time is also looking to weaken the very piece of legislation (the PTMA) that is designed to improve the cost-effectiveness of public transport.

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12 comments

  1. Another advantage of a concessions-card scheme like this one, can be seen in Scotland. There, the scheme equivalent to Super Gold, which includes disabled people as well, is responsible for supporting about a third of the bus market, and a quarter of the bus companies’ revenues (they get reimbursed about 75 percent of the full fare, not all of it, and the same is true for SuperGold:

    http://www.stuff.co.nz/the-press/news/3438172/Govt-reviews-travel-subsidy )

    The side-effect of this sort of regime (which costs the Scottish Government close to £190m per year), is that the bus companies have responded by commercially registering a horde of services which otherwise would have to be tendered out. As a result: In the main centres here, only a few services need to be tendered out because of the concessions card money. Also, the bus companies don’t get to collect unless they are providing services that people actually want to use.

  2. I note on the late news (TV3?) that Winston Peters said Joyce was lying about the cost to Waiheke. He said the 2 million figure was incorrect and that he had proof.
    Another section of the voting public that Joyce and National are trying to upset.

  3. It is hilarious that Joyce uses the example of Waiheke, as it is the very type of route Joyce’s planned changes to the PTMA will increase, commercially operated monopolies gouging the public in the pocket, through taxes and rates…

    The guy is either dim or just trying to give away public money to private business…

  4. Hmm, I wonder if the only way ARTA could actually achieve it’s farbox recovery ratio would be by gross contracting all services in order to keep all farebox revenue. Wouldn’t that be ironic!

  5. The economic benefits to Waiheke are a little overstated, talking to business owners on the island. Most pensioners using the off peak ferry only take the bus to Onetangi where they have their homemade sandwiches on the beach and then return home. They don’t really “do vineyards” or stay over for a weekend. The only winner is Fullers which runs all ferries and buses. Island and vineyard tours by bus cost extra.
    Some oldies stay on the boat all day, the cheapest cruise in the South Pacific!

    Fullers got $756,000 in the first three months of the gold car scheme. i.e. during the 2008-2009 Summer (we asked them: http://fullerswatch.blogspot.com/2009/04/from-c4fff-press-release-campaign-4.html) and since they have had the highest passenger patronage ever this Summer, the $2m figure I suspect is not far off the mark.

    The gold car scheme also had extra money benefits for Fullers on top of the Government paying the full fare for all card holders: it abolished the pensioner discounts that were in place before the gold card scheme. Pensioners now pay full fares for morning peak travel, like the rest of us.

    The big scandal of course is that Fullers is refusing to share any of the loot with all passengers by reducing fares for all.

  6. I think there are definitely some operators that are taking a few extra helpings from the government trough. I notice on the trains that when someone uses a Super gold card they get a special ticket regardless of how far they are traveling. The could go one stage or five but how much are Veolia charging the government for?

  7. i do agree that gold card is a great scheme for us O.A.P.who have worked hard,paid our taxes all our lives,but i do not agree that certain immigrants,who have not paid a cent of tax in New Zealand should have the gold card handed to them on a platter!!

  8. To reduced the cost, why not issue gold cards to people who been in N.Z 10 years, the same as Super, and photo ID should be compulsory with new cards issued

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