More and more people are using public transport, and that’s great, exactly the outcome we, as a society, have said we want. But there are only so many people that can fit on any one bus, train or ferries and so growing use ultimately means that over time, we need to run more services. Adding services also tends to have a bit of a virtuous circle element to it as doing so also makes them more useful and attracts even more new users. We may also wish to run more services on some in places to encourage more usage or make the overall PT network work better for people.
That all sounds great but adding services often requires additional buses and drivers and that costs money and where issues arise. The same thing applies for if we wanted to lower fares, or even keep them the same as we learnt earlier this year with ATs fare increases.
At the heart of much of the issue around PT funding is the NZTA’s Farebox Recovery Ratio (FRR) and Funding Assistance Rate (FAR). Just quickly
- Farebox Recovery Ratio – This stipulates that 50% of public transport costs should be met by users through fares. It’s a policy introduced by the NZTA under the former government that sounds good politically but makes no sense in the real world – something even the NZTA admitted prior to it’s introduction. This is an absurd way of funding a critical part of our transport system. We don’t build roads based on how much fuel tax they’ll generate, in fact many are often justified by stating they’ll save drivers time and fuel. Why shouldn’t public transport be treated the same way?
- Funding Assistance Rate – Of the remaining 50% of PT costs, the NZTA will pay half and the Council will pay half. This can bring its own challenges, for example if fares were covering 50% but the council couldn’t afford to fund their quarter, the extra service is unlikely to happen.
While we’ve seen the Minister of Transport talk about these issues in the past, it’s good to see the NZTA finally start to admit the FRR policy needs to change – they have already started offing greater FAR rates for some projects. Interest.co.nz reports:
The NZ Transport Agency (NZTA) says it’s now reviewing how it funds public transport nationally in the light of growing patronage and demand.
A spokesperson for the agency says times have changed and it needs to reconsider its farebox recovery system.
Auckland Transport’s (AT) public transport services are paid for through passenger fares and subsidies from Auckland Council and the New Zealand Transport Agency (NZTA). But under the farebox recovery model at least 50% of its costs have to be recovered through fares.
A spokesperson for the NZTA admits things need to change.
“The NZTA is reviewing farebox recovery. The policy implemented in 2010 set a national target for farebox recovery, but demands on public transport have changed considerably since then and the 50% target across the country is no longer appropriate within a regional public transport planning environment.
“The NZTA is keen to support regional councils in planning and providing public transport specific to their region, which includes developing their own revenue, fares and patronage policies.”
We look forward to seeing what the NZTA come up with but whatever it is, it really needs to happen soon. In general New Zealand’s farebox recovery rates are high compared to cities in Australia (high opex costs) and the US (low fares). Only Canada has better recovery rates and that’s because Canadian systems tend to have very high ridership.
In theory this should be able to happen relatively quickly and easily as the new Government Policy Statement (GPS) saw a significant increase to the amount of money available for public transport. This is reflected in the graph below showing how much investment is forecast in each funding activity class in the National Land Transport Programme. As you can see, PT funding has gone from about $1 billion over 3-years to about $1.75 billion. On top of this is the new Rapid Transit funding and transitional rail funding activities – the latter likely to be paying for the likes of electrification to Pukekohe.
But despite the talk from the NZTA and the minister, it appears it might not be as easy as it seems. In an OIA request I got back yesterday, the NZTA confirmed that as a result of the new GPS they have shifted some projects out of the state highway funding bucket and into the public transport category. The biggest of these is the $200 million Northern Busway but they also plan to do the same for the busway from the Airport to Puhinui. A few thoughts on this are below.
- We know there were some at the NZTA not happy with the GPS and shifting major projects out of state highways and to other funding activity classes seems, at least on the surface, to be a way for them to keep maintaining the status quo. I hope this isn’t the case.
- These seem like ideal projects to put into the Rapid Transit class, especially given the NZTA seem to be sitting on their hands about Light Rail.
- I wonder if those making the decisions even bothered to read the GPS.
I’m going to be doing more work to look into this so there is bound to be more posts on it in the future. Even if the NZTA do drop their farebox policy, it seems there might not be much left to fund improved PT services.