Sunday, September 07, 2008

ACT voted with Labour?

Well so says Brian Rudman. Apparently ACT voted for the Public Transport Management Bill, which Rudman thoroughly approves - instantly sending alarm bells off in my head. ACT with Labour and the Greens?

What IS that Bill about? Well it is quite simple. The Auckland Regional Council has long been upset that so many of Auckland's bus services were commercially provided by the private sector. In others words, people paid fares, companies ran buses and they were all happy - except the ARC of course, which has long wanted to regulate fares, frequencies and plan Auckland public transport endlessly (and shut down commercial bus services competing with its own highly loss making rail services).

The ARC has long missed owning and operating Auckland's buses, ignoring that it did such an abysmal job at it. When the ARC and its ARA predecessor ran most of the buses in Auckland, patronage had its longest continuous decline in patronage from the late 1960s through to the late 1990s. At the same time, the bus fleet progressively aged, services were planned endlessly and Aucklanders continued to drive, and subsidies increased. After forced privatisation (which by the way helped create the assets of what is now Auckland Regional Holdings (formerly Infrastructure Auckland)), Stagecoach Auckland invested heavily in new buses and commercial services thrived, and patronage grew.

However it wasn't trains.

You see the bus companies would sometimes drop routes and frequencies of services operating commercially, upsetting the ARC which believed it needed to subsidise services to plug such gaps. This happened more frequently after millions of dollars were poured into rail services, as subsidised trains undermined unsubsidised bus services.

The ARC is not forced to subsidise any bus services. When it chooses to do so it is required to competitively tender them, so like any business seeking a contractor, it faces choices. It can also set terms and conditions for those tendering. Rudman's claim that "As the law stands, despite these huge subsidies, ARTA cannot inspect operators' books to check whether they are gouging the system" is only true if you think ARTA's contracting processes are robust and it seeks the best value for money.

ARTA could deny increases in subsidies, but it wants to deny increases in fares and to increase services beyond those commercially sustainable. Reality is that fuel prices put up the price of providing services, subsidising rail services undermines the fare revenue of certain bus services, so subsidies rise if fares don't rise.

This bill aims to dodge reality. It means that commercially provided services can now be more heavily regulated - services that get no subsidies may be forced to integrate with a ticketing system specified by ARTA, and which may not deliver any benefits to the companies, because it wont attract enough passengers to pay for the cost of the system. It means that regional councils can contract over commercial services, so that instead of a mix of subsidised and unsubsidised services by different companies, you get subsidised services by a single one.

Rodney Hide has made a mistake. He has voted for local government control over private enterprise and central planning of public transport over entrepreneurship, and incentives to minimise subsidies. National voted against it, it would be nice if it promised to repeal this legislation which would only increase what ratepayers pay to subsidise public transport.


john-ston said...

Well, Liberty Scott, we do battle again on transportation. I found your post interesting, but a little deceptive of what the reality is.

The first thing is the idea of the ARC wanting this bill just so they could shut down commercial bus routes competing with its rail services is nonsense. If that was their only objective, they could have just let nature take its course; the bus routes would eventually be crippled and be shut down. Also, there aren't many bus routes that compete with the rail network; I would estimate that about fifty of the five hundred or so bus services in Auckland "compete" with the rail network.

The real reason for this Bill, like you mention, is that the ARC want integrated ticketing. Why? Because it is what the consumers of bus and train services desire; and has led to massive increases in public transport patronage overseas. In 2004, Brisbane introduced integrated ticketing and that year (2003/04) had 123.9 million public transport patrons. It is forecast to hit 171 million rides this year (2007/08), an increase of 45%. In that same period, Auckland has increased by about 10%.

Of course, in spite of the benefits, the private operators would not agree to such a thing; why? This would presumably be a classic example of the prisoners dilemma at work.

Furthermore, yes, the ARC could deny increases in subsidies, but it is likely that the bus companies would simply respond by shutting down the routes, and their objective is to see the system grow, not to cut it back.

My own preferred system would be like what Brisbane does; contract out all public transport services and keep the fare box revenue. Then, you get the best of both worlds.

Tony said...

In 2004, Brisbane introduced integrated ticketing and that year (2003/04) had 123.9 million public transport patrons. It is forecast to hit 171 million rides this year (2007/08), an increase of 45%

A typical example of the misuse of statistics. A quick check of Wikipedia gave an indication of some other factors that may have contributed such as:

Since 2004, 151 million trips has been made per year[4]. Prior to the system's introduction, combined patronage for all Public Transport modes was only around 90 million trips per year[5] . This can be attributed to improved services and cheaper trips. In some cases, fares to the Brisbane CBD for passengers in areas such as Redcliffe City have decreased by as much as 60%.
Wiki: TransLink at present

The fall in patronage has been reversed in recent times by the introduction of a single integrated ticketing system for all of South East Queensland's public transport operators, known as TransLink. The construction of grade-separated busways and the introduction of several high-frequency express routes, known as bus upgrade zones, has also seen patronage rise substantially for the first time in decades. According to a press release on 3 July 2006, patronage on bus services rose 24% in a two year period, from 46 million in the year prior to the introduction of TransLink, to more than 57 million in its second year of its operation. Wiki: Brisbane Transport

It looks to me that improving services, lowering fares and a major investment in public transport infrastructure are the major reasons for increased patronage in Brisbane (a city that had the worst PT usage in Australia and is still not that great).

Yes, integrated ticketing does improve the usage of PT. But permitting ARTA the ability to regulate commercial services is using a sledgehammer to crack a nut.

I would also question that this is the real agenda. The reason is the proposed exclusion of rail services from this act. Yes, I know all passenger rail services lose heaps of money (i.e rail cannot be commercial). But if integrated services is the objective then to ensure the integration of PT information, monitoring and contracting (and to ensure rail's ARTA/private operator is operating on the same level playing field as competing bus operators) then rail should obviously be covered as well. But even before the government submitted the draft act to the select committee it flagged it would exclude rail services ???

I think Liberty Scott is closer to the mark on the real agenda.