The government has today finally got around to announcing changes to the Super Gold card scheme that provides pensioners with free public transport. Here’s the media release:

The Government is putting an extra $9 million towards the SuperGold card public transport scheme as part of a balanced package of measures that will improve efficiency and help ensure the scheme’s long-term viability, Transport Minister Steven Joyce says.

“The Government is committed to retaining the SuperGold card free off-peak travel scheme including the transport concession as it stands. Users will continue to enjoy the same benefits they receive now,” says Mr Joyce.

“The Government will put an extra $9 million into the scheme over the next two years to ensure it can keep up with growing demand – taking total Government funding for the scheme to $45 million over the next two years.

“However we are also seeking greater administrative efficiency from central government and councils to ensure taxpayers get proper value for money and users get the best possible services out of this funding.

“In addition we’ve set transport operator subsidies at a level that better reflects the benefits that flow to operators from the growing number of seniors using free off-peak public transport.

“We believe these changes strike a balance and will help ensure the long-term sustainability of the scheme in the years to come.”

At the time the scheme was set up in 2008 it was agreed that a review would be undertaken after 12 months to ensure the scheme’s ongoing viability. Transport officials have been discussing changes with regional councils and operators and are now in the process of amending existing agreements.

Changes to the scheme comprise:

• Regional councils and operators will be reimbursed at 65 percent of the average adult fare for the next two financial years 2010/11 – 2011/2012 (currently 75 percent).
• Regional councils absorb administration costs so funding can be redirected to the travel concessions.
• The NZ Transport Agency’s budget for administering the scheme will be significantly reduced.
• A moratorium will be placed on major new services entering the scheme for the next two financial years.

The new reimbursement rate is subject to a hardship clause.

“Where operators can provide evidence that they would not be able to continue to offer services to SuperGold card holders at a 65 percent reimbursement rate they can apply for a higher rate for these specific services – up to the original 75 percent.

“The Government has made it clear we don’t expect operators to profit from the scheme, but neither do we expect them to be out of pocket.”

Mr Joyce says the review process demonstrated the scheme is very popular with users and is providing improved mobility for older people.

“All those involved in the review have made it clear they want the scheme to be retained. My desired outcome is that operators, councils and ultimately SuperGold card holders all have certainty for the future,” Mr Joyce says.

Back in March this year a number of changes to the scheme were mooted, some involving potential cut backs. I blogged about it at the time. The response to the possibility of having the scheme cut back was pretty brutal, with many pensioner-advocacy groups immediately slamming the idea.

I’m quite fond of the Super Gold Card scheme for a number of reasons. For a start it boosts public transport patronage, which is always useful when trying to argue for more funding to be dedicated to PT. Secondly, I think it importantly enables pensioners to continue to fully participate in society even after they are unable to drive, or as a real alternative to driving. One of the tragic aspects of a car-dependent society is how quickly those who don’t own vehicles become second-rate citizens and anything to help prevent that happening is surely very welcome. Finally, the Super Gold card has proven to be an economic boon in some areas – such as Waiheke Island where many pensioners are encouraged by the free ferry to spend the day on Waiheke: which inevitably results in spending on lunch, mementos and so forth.

However, I am also wary that the system is somewhat open to abuse. For example, return trips to Waiheke cost an adult $33.50. If the operators currently get refunded 75% of that amount through the Super Gold Card scheme, then effectively all the operators need to do is push a button and they make $25. This is the problem of not having a smart-card ticketing system I suppose – and will be easily solved once we do get smart-card ticketing I hope!

The other thing I find problematic, which doesn’t actually apply to the Waiheke Ferry because it’s a commercial service, is that bus operators are already subsidised to run most of their routes – and the Super Gold Card money comes as a subsidy on top of the first subsidy. No wonder when the system first started we saw so many advertisements encouraging pensioners to utilise their “free” rides! The easiest way to fix up this problem, so that the operators are no longer able to “double-dip” on the subsidies they receive, would be to change all the contracts over to being “gross contracts”. Under this system ARTA effectively pays the operator a set amount of money to run the service, and takes the financial risk themselves. This means that the Super Gold Card subsidies would go to ARTA – helping to improve services.

The one thing that concerns me about the changes announced today is the shift from NZTA having to absorb the cost of administering the system to that becoming an issue for the Regional Councils. While in the scheme of things the cost might not be particularly large, it does seem logical to administer things at a national level (economies of scale and all) and NZTA generally seems to be an organisation with more money than the Regional Councils.

It will also be interesting to see what happens in two years’ time – as the proposed solution is only for the next couple of years.

Share this

4 comments

  1. “However, I am also wary that the system is somewhat open to abuse.”
    Yes, abuse by the ferry operator as there is no effective audit trail that links the issue of a free fare to a particular gold card. For all we know, the $2 million Fullers received in Supergold card subsidies could largely have been for non-existent passengers.
    The economic effect of pensioners taking the “Cheapest Cruise in the South Pacific” (TM) to Waiheke are probably overstated: most take their home-made lunch with them, take the (free) bus to Onetangi beach and get back home in time for tea. I haven’t heard from accommodation providers, restauranteurs or vineyard tour operators there has been a sudden influx of superannuitant customers.
    Cynics could say that the Supergold card as a means for pensioners to get around better or more healthily would be trumped by buying them all a bicycle instead as that would be more cost-effective.

  2. Personally I don’t agree with the super gold card in the first place, if we want the elderly to have transport access then perhaps give them a weekly/monthly transport budget somehow but as it stands, unlimited free trips is completely open to abuse by some segments of the population and does nothing to help things like fare box recovery. Seeing as we have it,m then once integrated ticketing comes in it should be easy to merge the two cards together to get accountability from users. Perhaps if we have a zonal system we could just give them free transport in their zone and anything else outside of that they pay a normal fare for i.e. if they live out west they have a western pass which allows them unlimited use of trains and buses in the area which gives them mobility to get around their community but if they want to travel to say the city or Waiheke then they have to pay a normal fare for it. I also agree it would help if all services were gross contracted as it would stop double dipping by operators. In other cities this could be copied if they take on the Thales system.

    I also don’t agree with fares that are discounted from the normal price for certain groups i.e. students. It still takes the same number of resources to run the system regardless of if you are a student or working adult, if there was just one fare for all it would mean that to recover the same amount of money as we do now then adult fares would drop slightly and student fares increase slightly.

  3. It comes down to ability to pay. In the case of school students they are dependent on their parents, and if you had a few kinds who took the bus then the full adult rate for each of them is going to be pretty tough. Likewise with uni students, most of them live off a couple of hundred bucks a week and a very dependent upon public transport. Similarly with pensioners, their income doesn’t get any bigger and a lot of them can’t driver or walk very far any more either.

    It’s not quite true to say ‘it still takes the same amount of resources regardless’ for student vs. adult, because in reality almost all the costs of running a public transport service are fixed while only a small amount is related to the number of people carried. I.e. it costs the same to run a bus to town and back whether it is empty or full. So really it costs the same amount to run whether anyone is on board or not.
    If we have a fairly well used route that already turns a profit then all the costs are covered. So each additional person who gets on after that doesn’t cost a thing (well maybe a tiny amount in extra fuel and a bit of cash handling). But anyway the marginal costs per passenger are very small. If you have ten students get on then all their concessionary fares are basically pure profit. There is a greater return off those additonal ten students than the first ten adults that got on board, even though they pay a lower fare.

    If you increased the fares to the full rate for everyone then a large amount of those people who are on fixed or dependent incomes would stop using it, or use it a lot less. All that marginal profit without marginal cost would dissappear, the system would lose economic efficiency (i.e. still cost the same to run but have less income) and the regular adult fare would have to be hiked up substantially to cover the loss.

Leave a Reply

Your email address will not be published. Required fields are marked *