Auckland public transport fares could be frozen

Monday, 21 January 2019

Rail fares may rise or be frozen in Auckland on Monday (file photo).

Aucklanders will learn on Monday whether an unprecedented arm-wrestle between transport agencies will deliver a fare freeze on buses, trains and ferries.

The city's transport agency was locked in talks with its government counterpart as late as Friday ahead of the annual announcement on whether fares will rise – and if so, by how much.

Auckland Transport's (AT's) board and management want to freeze fares from February in a strategic move to accelerate patronage growth.

The bold aspiration occurs part-way through a financial year, with AT's 50/50 funding from the New Zealand Transport Agency (NZTA) and Auckland Council largely committed.

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Stuff understands NZTA initially declined a late bid from AT in December to help cover the revenue hit that a freeze would create.

NZTA's rejection effectively ended a parallel pre-Christmas approach to the mayoral office by AT's chief executive Shane Ellison to sound out council support for the idea.

Auckland Transport would not comment on the status of its Annual Fare Review, on which key decisions are running three months later than in 2018.

The agency's ambition to freeze fares has collided with rising costs that it must pay bus and ferry operators, partly due to the introduction of Auckland's 11.5 cent-a-litre regional fuel tax in July.

Auckland Transport must lift the amount of subsidy it pays operators in line with a cost index run by NZTA.

For bus operators in Auckland, that went up by a hefty 5.73 per cent between June 2017 and September 2018, compared with just 2.4 per cent a year earlier.

The ferry operator cost index is up 8.2 per cent, compared with 3.2 per cent a year earlier.

A year ago, the index alone meant AT took a $5.8 million hit – and that figure may double this year.

In 2018, AT raised some adult fares by as much as 5 per cent to bring in a forecast extra $2.7m.

Stuff understands that a year ago, at AT board level, there was some enthusiasm for freezing fares.

Another factor AT has to take into account is a Government policy requiring it and other councils to recover 47-50 per cent of the cost from services from fares.

Last year's fare rises were hoped to lift Auckland's so-called Farebox Recovery Ratio (FRR) from 46.8 to 47.4 per cent.

However, in AT's quarterly report in November to the council, the agency expected that to instead fall to 45 per cent.

That meant fares were already bringing in far less than required or forecast.

The FRR policy, introduced by the previous National Government, was being reviewed by NZTA.

NZTA, in a briefing paper to the Transport Minister Phil Twyford, said FRR could have 'perverse impacts' on council decisions.

'Achieving the target has become the focus, rather than the principle of what constitutes an equitable share between funding parties (passengers, ratepayers and road users),' NZTA said.

A spokesperson for Twyford said the minister had played no part in the negotiations between NZTA and AT and Mayor Phil Goff hadn't been involved since December's informal approach from AT.

Goff declined to offer a view specifically on the merits of a fare freeze on public transport in the city.

'We are bound by legislation to recover a percentage of costs from fares, but if the Government were to change the legislation it would be an idea worth exploring,' Goff said.

'We want more Aucklanders to use public transport and lower fares can encourage greater use of those services.

'However, the loss in funding would also limit our ability to invest in public transport and increase its capacity in Auckland.'

AT must review fare levels now as part of its funding agreement with NZTA, and the timing is set by that process.

Funding for Auckland's expanding use of public transport is under significant pressure, with news a week ago that a plan for new ferries and services had collapsed after several years of negotiations because of cost.