Councils will be able to own and operate bus services rather than contracting them out to private operators. Photo/Michael Craig
Local councils will be allowed to take over and run public transport services themselves rather than contracting them out to private companies under new rules announced by the government today.
Transport Minister Michael Wood said he hoped the move to a less corporate model would help councils cope with the current shortage of bus drivers, saying a focus on cutting costs had made lowering drivers’ wages and leading to an exodus of drivers.
This has exacerbated problems with cancellation of bus services.
He hoped other fallout would be to increase ridership and keep more people away from cars, a key part of New Zealand’s climate change strategy, which aims to cut the amount of driving by a fifth. by 2035.
The government is abandoning the public transport operating model, better known by its acronym OCT, and replacing it with the “sustainable public transport framework”.
Critics have claimed that the OCT, which was introduced under the last national government, placed excessive emphasis on reducing the cost of running public transport.
This had effectively prevented councils from owning and operating their own public transport services if they wanted to access grants to run these services from the National Land Transport Fund, Waka Kotahi’s transport funding pool, which comes from the fuel taxes and road charges.
Currently, even council-branded bus services like Auckland’s AT or Wellington’s MetLink, are actually run by private operators.
“At the moment what we effectively have is a system where councils to get NLTF funding have to be managed through a private provision. A number of councils have told us…c It’s a very rigid model and they want more flexibility in how they schedule services in their regions,” Wood said.
“The OCT model, as an almost entirely commercial model, has not worked well in public transport.
“The most direct place you can see is the downward pressure on bus driver pay and conditions, which has directly led to a shortage of bus drivers and the cancellation of many services across the country right now,” he said.
The new model will amend the Land Transport Management Act and make other operational adjustments, to allow other broader elements to be taken into account when setting up a public transport service.
These would include transparency of operating costs, the performance of the service, the types of buses and ferries used on the service and the terms and conditions of employment of employees.
Wood said the system would also better enable on-demand public transport. These were smaller services that came to people’s street corners on demand and fed people into larger public transport services.
These mainly operated in communities too small to support more traditional public transport like parts of Timaru.
“Sustainable public transport will bring a wider range of considerations, including the need to decarbonise, including decent conditions and conditions for drivers, and including the need to ensure more mode transfer across the system, along with the need for value for money,” Bois said.
He believed this, along with the government’s key industrial relations reform, fair pay agreements, would encourage more people to become bus and ferry drivers, easing current shortages.
“As we increase services, we will need more drivers,” Wood said.
The changes will take some time to roll out as different councils have agreements under the OCT which need to be renewed at different times.
He said the funding model for public transport would be something the government would continue to think about.
Normally about half of a public transport ticket is subsidised. This grant is split between the councils and Waka Kotahi-NZTA, which uses funds from fuel tax and road charges.
“That’s something we’ll have to think about as we work. If we want to lift the terms and conditions or if we want to decarbonize the bus fleet, there will need to be financial support for that,” Wood said. .
He said there had been a “taste” of this in the 2022 budget, with the government digging into its own pocket to fund public transport.
“There was $40 million for bus decarbonization and $43 million for bus driver operating conditions over the next three years,” he said.
“Ongoing funding is split between Waka Kotahi and the councils and that is how we want it to continue, but the Crown has recognized that at this time there are particular pressures we are putting in place that will need a little support.