Press Release from Hayley Robinson, Onslow-Western Ward candidate for Council, Wellington

Let’s supplement, not subsidise

Wellington’s bus subsidies: time for a major re-think

Every year, our Greater Wellington Regional Council puts around $80 million dollars of subsidies into privately owned, bus related enterprise (I have seen estimates that approximately $20 million of this goes to Wellington City related services). This appears reasonable, because the aim is a good one: to ensure an affordable, quality bus service for our region’s cities.

If you think our bus service is perfect the way it is, stop reading now.

The GWRC and the wider community should be commended for their work and submissions regarding our region’s bus services. However, given that most of the potential improvements they have come up with will take years to implement, I think it is well past time to have a look at the big picture where subsidies are concerned.

A basic economic principle, which anyone who has run a business or read a newspaper understands, is that commercial enterprises such as Infratil/NZ Bus/Go Wellington need to return a profit; they have owners and shareholders who quite rightly expect a return on their investment. This is the situation into which GWRC has to pump $80 million plus per year, in an attempt to optimise bus services. The result is that the multimillion dollar profit of the company and its subsidiaries for the last financial year could be seen by some people as having come directly from our subsidies. This is not efficient use of our money.

The issue is that subsidies are the only tool in our tool box; what could we use instead? To decide, let’s look at why bus companies need subsidies in the first place.

A perfectly valid point is that, because of peak times in usage, part of a bus company’s fleet is seen to be sitting around not earning much money for large parts of the day (though day rental situations such as school and other charter trips would go some way towards mitigating this). Companies feel they require the subsidies in order to allow them to have a large enough bus stock to cover peak-time requirements.

The subsidy only partially works; it cannot make companies purchase enough buses to prevent overcrowding, and it means that control over how our money is spent (with respect to buses) is somewhat second hand.

My proposal: remove the burden of that extra fleet requirement from the bus company; and remove the subsidy. Have GWRC spend, or give WCC permission to spend, that (approximately) $20 million per year on building our own ‘supplementary fleet’ that can do exactly what we want it to do; we’ll have the ability to control how the money is spent, and we’ll start to build up an asset. As a bonus, more competition from a WCC or GWRC run service may reduce fares.

Subsidy removal (which will have to take into account current contracts with NZ Bus etc., so will also be a medium term fix) is an ethical solution, because we can simply purchase bus stock as Go Wellington retires unwanted buses, and we can potentially utilise hardworking experienced staff they no longer require. The withdrawal of subsidy can be phased in slowly (much the same as reducing the rates differential). Once Go Wellington reaches the base stock and service level that allows them to operate as a going concern, the GWRC or WCC can switch to maintenance mode and start using part of the ex-subsidy to maintain and even improve their own stock; with the potential to utilise the remainder of the money for other public transport.

Everybody wins. We get more control over our finances, the bus company is relieved of this economic burden, and the Wellington region gains assets in the form of a supplementary bus company or companies, and their stock. It’s well past time to think outside the square.

Authorised by Hayley Robinson, 13 St Albans Ave, Karori, Wellington 6012.

www.facebook.com/LetsWorkTogetherForWellington

ENDS

© Scoop Media