Public transport fares set to rise

More fare rises for bus and train passengers are looming as the New Zealand Transport Agency moves to limit funding.

A draft policy by the agency includes an option under which at least 50 percent of transport costs in the three main centres would be recovered from fares, with the rest split between ratepayers and the Government.

This comes as Greater Wellington regional council faces a $2.4 million budget blowout for train services because of falling passenger numbers on a system plagued by delays. The council says NZTA's proposed policy would mean higher ticket prices.

Though Wellington already collected 51.5 percent from fares, that did not include capital expenses for improvements to the rail network, which would probably lower the ratio by about five percent, the council's manager for design and development, Brian Baxter, told the transport and access committee this week.

Administration costs could lower it further, and the shortfall would have to be covered by either passengers or ratepayers, he warned. "If they set a policy of 50 percent then we'll have to put fares up or cut services."

Auckland Regional Council reached a similar conclusion last week, suggesting fare rises would push people back into cars.

NZTA's draft farebox recovery policy offers two options for regional councils to set fare recovery-ratio targets, which determine how much funding for public transport comes from ticket sales.

The first option would require councils to set farebox targets or be ineligible for funding.

The other proposes a 50 percent fare target for Auckland, Wellington and Canterbury. Other areas would set their own target.

NZTA created the draft policy because of falling ratios around the country, which meant higher subsidies were required. It has been described by the agency as a move to improve efficiency.

Mr Baxter said it was understandable the agency would want to rein in subsidies, but it was clearly a cost-cutting exercise.

"In reality it's restricting their contribution to funding."

Committee chairman Peter Glensor said Wellington passengers already paid the highest proportion among the main centres and should not be made to pay more. The NZTA should be focusing on what it was willing to contribute, not dictating ratios to councils, he said.

Council chairwoman Fran Wilde agreed, and said the agency had to consider the implications of the policy more carefully.

The council's submission suggests the agency set a 25 percent contribution level for the three main centres, and 30 percent for the others, but leave the ratepayer-passenger split up to councils.

NZTA spokesman Andrew Knackstedt said the policy was still in a draft form, and the agency was waiting for submissions. While fare rises may be inevitable, efficiencies could also improve.

"Patronage gains can also be made through improvements to services or information quality, and simpler, easier to understand and easier to use fares and ticketing."

Green Party transport spokeswoman Jeanette Fitzsimons said it was short-sighted. NZTA should be putting more money into public transport until patronage levels became more sustainable, she said.

Submissions close on Monday.

What Is Farebox Recovery?

It is the percentage of the cost of providing a service covered by passenger revenue – ticket sales. The rest is divided between ratepayers and a Transport Agency subsidy – usually half each. So, if a service costs $1 million a year to provide, and gets $400,000, then the farebox recovery level is 40 percent. The remaining $600,000 is split between ratepayers and NZTA. The higher the farebox recovery, the lower the subsidy that NZTA has to provide. The farebox recovery percentage can be raised in two ways: increase passenger revenue (get more passengers or raise fares) or lower costs (greater efficiencies or reduction of services with low patronage).