On Monday, the government announced they will be changing how public transport is delivered, with the launch of the Sustainable Public Transport Framework (SPTF). This follows a review of the Public Transport Model (PTOM) and will replace the PTOM.

PTOM certainly wasn’t perfect, but it was a far sight better than what we had before. It improved how PT services are planned, and removed the ability for bus companies to rort the system.

I think PTOM is often unfairly maligned, simply because it was delivered by a National Government with Stephen Joyce as minister. The main criticism – primarily from drivers’ unions – is that it resulted in a race to the bottom for driver wages. That’s not actually the result of the model. It comes from the fact Auckland Transport and regional councils were trying to achieve other goals, such as increasing the number and quality of services to cater for and encourage ridership growth – often without any material increase in funding.

Labour could have fixed this years ago, by requiring that minimum wage levels be set in new (and existing) PTOM contracts – but they didn’t. They also allowed Waka Kotahi to pull projects like the Northern Busway extension and SH20B widening out of the State Highway budget, to use up the increased funding they did provide.

That first part is now being addressed as part of SPTF along with a few other changes. As the media release says:

Our new approach to public transport will:

  • Support ‘on-demand’ public transport services
  • Allow councils to own and operate services in house
  • Improve pay and working conditions
  • Deliver routes and services that reflect community needs
  • Incentivise the decarbonisation of the fleet

Workers and public transport users are at the heart of the new Sustainable Public Transport Framework, Transport Minister Michael Wood announced today.

“We are rolling out a new public transport model, that will prioritise fair and equitable treatment of employees, mode-shift and improved environment and health outcomes,” Michael Wood said.

“For too long, the public transport model has encouraged operators to squeeze worker conditions, pay and opportunities, preventing public transport from living up to its full potential.

“The current model that was meant to lead to better public transport is causing operators to wind back services and timetables, because they can’t get drivers. Public transport is too important to our environmental, social and economic goals to allow this to continue.

“The new Sustainable Public Transport Framework will help to create a public transport system that is reliable, an attractive career opportunity and a credible alternative to using cars to get around.

“Improving the conditions of employees will make it easier to recruit and retain the workforce, allowing frequent and reliable services. This will also provide job security by allowing drivers the opportunity to maintain employment if there is a change in operator.

“The new model will also give local authorities more flexibility and control over how public transport is planned and delivered, so they can have a solution that works for their communities.

“Public transport authorities will have the option to own assets and operate services, if they feel that’s a better solution for their community than outsourcing to an outside provider. This will make it easier to plan networks and services, to set fares and policies, and encourage innovation in how services are delivered.

“Our Government recognises that public transport is a lifeline that connects people to work, to school, to recreation and to their friends and family. These changes will mean that we have an effective, reliable and sustainable public transport system well into the future.

By far the biggest change with SPTF is that it allows local authorities to bring bus operations back in-house. This is how most public transport services were delivered until the National government in the early 90s required all operations be outsourced.

As you can imagine, bus companies aren’t thrilled at the idea while unions are.

I wonder which regions will do this, and how they’ll do it. Will they wait and bring operations in-house when current contracts expire, or will they buy out the the local bus operators? Either way it won’t be cheap: with the first option they’ll still need to buy buses and depots, as well as hire drivers and other staff. The announcement doesn’t include funding for this, so it may not be as cut and dried as some may hope.

As for the actual changes this is a list the government provided

Establishing the Sustainable Public Transport Framework will result in the following key reforms:

  • Establishing new objectives for the planning, procurement and delivery of public transport services, to be embedded in the Land Transport Management Act 2003
  • Enabling in-house delivery of public transport services (public transport authorities will be able to operate public transport services, e.g. own buses, employ bus drivers, and run services themselves)
  • Requiring services to be procured, contracted and/or delivered in such a way that ensures transparency of operating costs, service performance, the vehicles or vessels used to deliver services, aggregate employee terms and conditions, and financial performance of operators.
  • Enabling different asset ownership arrangements, including public transport authorities owning assets directly
  • Encourage greater collaboration between regional councils and territorial authorities in preparing regional public transport plans
  • Changes to the framework for exempt services (including commercial and inter-regional public transport services)
  • Including on-demand public transport services (services like ‘MyWay’ in Timaru and ‘AT Local’ in South Auckland) in the Sustainable Public Transport Framework.

The reforms will be implemented through a combination of amendments to the Land Transport Management Act 2003 and through the development of operational policy.

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48 comments

  1. “Support ‘on-demand’ public transport services”
    I’m surprised more wasn’t made of this in the post- isn’t this like that failed Devonport shuttle bus?

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    1. It’s national legislation. Perhaps these kinds of services have more viability in providing primarily social service type PT in regional areas? At least more so than urban Auckland.

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      1. There is an on demand service in Hamilton that replaced the night buses. It seems to have much better ridership than the fixed route buses did.

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        2. No official data released yet but, as I said, the ridership seems a lot better. The night buses typically had single digit daily ridership and the first weekend of the flex service had 59 passengers according to the Herald.

      2. I trust that doesn’t mean that people can choose to live wherever and the rest of us pay for public transport for them. It doesn’t sound like sustainable cities to me.

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  2. One small correction:
    The Transport Services Licensing Act 1989, which introduced tendering of public transport services, was passed by Labour but took effect in 1991 under National.

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  3. Most Auckland bus services are owned by overseas companies. Stuff. May 22.
    Kinetic owns NZ Bus and Go Bus.
    UK group own H and E.
    KKR of New York own Ritchies and Birkenhead.
    The unions say private ownership has not delivered the promised benefits.

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    1. Another small correction: French company Transdev now owns H&E (and also operates Auckland’s and Wellington’s trains)

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  4. Fingers crossed that this move will have a beneficial effect on both drivers wages, driver availability, and frequency of services. But I fear that there are some things that have been let out of the bag with PTOM that we will never get back. One of these is the sale of facilities like bus parking buildings, which were generally sold off along with the devolution from public to private ownership. The problem is now that these assets aren’t coming back – so now we have bus barns owned by private companies in key locations, and there is no compulsion to sell the land back if they lose the route.

    We’ve got this problem in Wellington, where the Kilbirnie Bus Garages (and former electric trolleybus home as well) is now going to be redeveloped as housing, and bus companies are hunting around for places to park up overnight. Some of them are trying to secure bus park space on the side of the road near an old wharf near the airport, in some really unsatisfactory conditions.

    I presume that you have the same problem happening in places in Auckland?

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    1. Are you sure that the Ryman has bought the Kilbirnie Bus Sheds (former tram sheds). NZ Bus was in advance negotiations with Ryman and pulled out of the sale, with pressure from GWRC in regards to the regional council plans to start introducing battery buses. The Sheds are being retro fitted with battery recharging bays for overnight recharging of NZ Bus battery bus fleet.

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      1. Ryman and NZ Bus aren’t relevant any more.

        The issue is that Infratil sold NZ Bus and is subsidiary Wellington City Transport (still the legal bus operator) excluding the bus barns, so WCT, now owned by Kinetic, is a tenant of Infratil on a two-year non-renewable (I think) lease.

        That’s why WCT is having to find new premises, with Shelly Bay Rd/Burnham Wharf being sufficiently preferred for them to apply for a resource consent, but I believe that the effects on that road (a saga in itself) means that other options are being looked at

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        1. Ryman owns the retirement complex behind and next door to the Kilbirnie sheds and has been in buying the sheds for expansion.

          WCT (Wellington City Transport) was purchased from the Wellington City Council by Stagecoach in 1992, who also purchased Transportation Auckland Corporation (trading as The Yellow Bus Company) from the Auckland Regional Council in 1998 operating as Stagecoach New Zealand, which was purchased by Intratil in 2005 who rebranded as NZ Bus.

          Infratil sold NZ bus to Next Capital in 2019 who in turn sold NZ Bus to Kinetic Group in 2022.

        2. Correct – and irrespective of what Rymans may or may not want, WCT has still got notice to quit.

        4. Positive, Kris.

          I missed out a step, though: last year Infratil sold the bus barns to Prime Property Group – see https://www.nzherald.co.nz/nz/latest-wellington-bus-headache-infratil-sells-kilbirnie-bus-depot-for-35m/WKSSYYA2FEJ7AHMELUYL46KXWM/

          Don’t forget that Kilbirnie already had significant electricity capacity to supply trolleybuses, so providing charging points for electric buses temporarily (just a year left on the building lease) is not as big a deal as it could have been.

      2. All I know is that WCC and GWRC no longer own the sheds, and that the latest WCC District Plan has a special development status for that area, to encourage redevelopment into housing, along with a little bit of heritage frontage retained. They’ve been non-maintained for so long that they are on the verge of falling down anyway. Roof leaky, EQ Prone (I suspect), totally run down – they should probably know them down and start again, but ain’t nobody got time or money for that.

        Main problem that I can see is that they are in the middle of a tsunami flood plain and on liquefaction-prone subsoil – difficult to find anyone to want to build on that. Probably therefore quite a good site for a bus barn…

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        1. GWRC has never owned the bus barns – they were part and parcel of the WCT privatisation in 1992.

          Infratil has long had plans for residential redevelopment here. Property development was always higher on their agenda than bus operation, which is why they separated the barns from NZ Bus ownership some time ago.

          If the bus barns had been retained in public ownership 30 years ago (albeit by WCC rather than GWRC, which wasn’t allowed to own such assets) the outcome might have been different.

  6. The downward pressure on wages was entirely the Councils’ fault. The system set them up as monopsonies – one buyer with many sellers. That is just as inefficient as a monopoly. The fix was to regulate the Councils and place proper controls on them to prevent them from using the tender process to drive prices down below the market clearing rate. Bringing bus operations in-house will probably just lead to a bunch of other problems.

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    1. Seems like there only 2 possible outcomes – one employer which will lead to strikes and crazy high salaries, or multiple employers which leads to low wages. I guess at the end of the day the wage has to be set at a level where people will do the job, so maybe the latter is better.

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      1. Or a combination of the two… which balance things out.
        Council runs a lot of services while also allowing private to tender for others.
        Alternatively, council owns it but keeps it at arms length run like a private service (SOE if you will) to get the benefits of privately run while also retaining the profits.

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        1. Christchurch has done this for the last 30 years. The regional council is not allowed to own buses as it’s the operator but there was nothing stopping the city council owning them. The CCC has always owned Red Bus Ltd, which runs the majority of buses in the city on contract to the regional council.

        2. Jezza – Christchurch city council sold Rebus to Ritchies two years ago.

        3. Thanks, I’m a bit behind with the play in Chch. Also looks like they lost a lot of their routes in the 2019 tendering round.

    2. Regional councils are not a fault, as they had to follow the PTOM guidelines to get funding from WK/NZTA.

      The PTOM objective was that each regional council develops through their respective RPTP (regional public transport plan) to grows their own ‘commercialised’ public transport services using competitive tendering, to allow increased fare revenue whilst reducing reliance on rate and taxpayer subsidies, meaning regional councils had to accept the ‘lowest’ tender for each route or unit being procured.

      Whilst in theory, the PTOM concept had merit but in reality has failed in poor delivery of public transport services and lack of inter-regional cooperation, creating the mess we have now.

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      1. Fair point, the Councils did as they were told. But the system exploited market power to reduce prices. When you do that you always reduce the quantity provided below what a true competitive market would provide. The final suppliers of labour (the drivers) were offered a take it or leave it wage and many decided to leave it.

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      2. Councils wee able to require minimum staff conditions under PTOM. Councuks choose not to require minimum staff conditions. The blame lies entirely at their feet.

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  7. The trend appears to be going towards leasing assets ,rather than owning,high capital purchase costs ,don’t work with shareholders.
    So essentially we end up with similar assets (buses) being operated in a siloed way,buses returning to depot,whilst another companies vehicle is sent out ,seems wasteful.
    With a leased asset and a wage set by legislation,private operators make little sense anymore,there is no point of difference between operators.

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  9. Mike and Chris, the point I was trying to make, apparently unsuccessful, is that the depots are a crucial part of the passenger network, and since deregulation and sell-off, the system is not really working as it should. An example: Washington DC used to have a big train station (Union Station) and a big bus station next to it (presumably Union Bus Station). After the buses were deregulated, the new owners of the station made it un affordable for budget bus companies to use the station, and so now the bus companies roam the nearby neighbourhood, stopping to pick up customers on random suburban street corners, so they don’t have to pay for the bus station. No formal bus stop, no protection from the elements, pisses off all the residential neighbours, but bus riders get to go for miles for $1.

    I’m all for a bit of order in life! Others just like to watch the world burn….

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    1. You are correct. Former council owned public transport infrastructure and buildings has been lost to privatisation of public transport services and the same applies to our national passenger rail stations.

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  10. Matt, PTOM replaced the provisions set out in the Public Transport Management Act passed in the final months of the Clark Government.

    https://www.legislation.govt.nz/act/public/2008/0087/latest/whole.html#DLM1465946

    I would be interested in what ways you see PTOM as having been better than that?

    PTOM is essentially an updated version of the model introduced by Lange Government and pushed much further by the Bolger Government, based on the idea of profitable private operators and competition. The approach was largely based on the changes made under Thatcher in the UK in the 1980s.

    The new framework thankfully undoes large parts of that and reflects an approach some of us were advocating for as part of the 2008 changes.

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  12. At least the Sustainable Public Transport Framework gives regional councils more flexibility in planning, funding and procurement of public transport services in their regions, allowing regions to work between themselves without the strict guidelines of the PTOM.

    The Sustainable Public Transport Framework is similar to what is proposed in the Public Transport Forum New Zealand – New Zealand’s National Public Transport Initiative –

    https://publictransportforum.nz/articles/article/national-public-transport-network-07-06-2022

    There is only 4 regions that have regional populations over 500,000, that could own and operate their own bus fleets, being Auckland, Wellington, Canterbury and Waikato regions.

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  13. A good idea to give regional councils a simpler system to deal with, and this should work better, but the financial devil remains in the detail – if Waka Kotahi doesn’t bankroll this properly, you can guarantee that local government won’t, despite their many protestations to the contrary.

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  14. While I’m here – any mention of allowing support for inter-regional services in the new funding model?

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  15. Many, including myself, associate PTOM with Stephen Joyces other requirement of 50% farebox recovery. That killed a lot of good ideas, and leads the race to the bottom as the only way to improve the service was to reduce the conditions of the staff, as most other things are fixed.

    So if councils are now required to ensure driver pay to make it attractive enough for the gaining of more bus drivers, what does “privatisation” actually offer?

    The quality of the bus, and the quantity of seats they have for particular services and the provision for disability access and cyclists are controlled by legislation or tender requirements.

    And now the wages are tied to the higher minimum, so private companies are tied to wages.

    And the more companies you have the more drivers you need, as each company will need additional drivers to cover sickness, etc.

    So what have we gained out of putting public transport out to private industry, other than letting someone else clip the ticket? The only innovation I saw in the whole time (this is a South Island perspective) was getting rid of a reasonably modern and consistently upgraded fleet and replacing it with old dungers that they had got cheap from somewhere else. Councils had to take that option away. New services were established by the regional council in CHCH, but they were based on ideas the CTB had tried (the orbiter service) but hadn’t been sucessful with (suburban malls were just too new and people were still using the square as a hub).

    The only other “private” operator that I did see trying to make an improvement to the quality of drivers, was council owned (Red Bus) but it was never rewarded for this.

    So the question remains… What does having a private operator bring to the table that is beneficial?

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