$1.3 billion National Ticketing Solution - what will we get for the money?

Sunday, 15 October 2023

The way we pay for public transport should change for the better following Waka Kotahi’s $1.3 billion investment in a National Ticketing Solution.

Tap wood, that is.

All may be tickety-boo one year on from the confirmation of the landmark investment, but Waka Kotahi NZ Transport Agency is keeping aspects of the project close to its chest.

What’s the big change?

The National Ticketing Solution (NTS) will let people pay for bus, train and ferry trips across the country by tagging on and off with their credit or debit card, or smartphones with Apply Pay or Google Pay.

It should replace the Hop cards used in Auckland, Snapper cards in Wellington, Canterbury’s Metrocard and the Bee card used by 10 other regional councils.

There will be no need to carry or preload money on to a dedicated card that is just used for public transport, a handy advance for tourists in particular.

But people who don’t have or don’t want to use a debit or credit card to pay for journeys will be able to get a card that works similarly to a Hop or Snapper card, with the difference being that should work on any form of public transport nationwide.

It will be up to regional councils whether to continue to let people pay for public transport with cash.

That’s it?

Not quite. The NTS will charge people for all the journeys they did each day, overnight.

That means it could be used to support new types of discounts to encourage the greater use of public transport.

For example, people who took the train and a bus to complete a journey could be charged a lower price than for the individual journeys.

Councils could also set a maximum daily cap on the fares people had to pay for public transport.

An extra benefit is that the system will provide regional councils with more information about passengers’ use of public transport, which should make it easier for them to better plan services.

Does the approach make sense?

It’s called an “open-loop” ticketing system and, yes, most municipal authorities around the world appear to think so.

The contract to build, configure and operate the NTS for the first 10 years was awarded to Californian company Cubic Corporation.

Cubic is also behind London’s Oyster card, New South Wales’ Opal card, Vancouver’s Compass card and many other such systems.

You show your credit card or phone to a ticker inspector?

Potentially, yes.

Waka Kotahi says cards, phones or transport cards will be inspected by “a dedicated inspection device which will store no data”.

“It only confirms to the inspector that a person has tagged on to the mode of public transport.”

One of the concerns people have had in other countries where bank cards can be used to tag on and off, such as in London, is that criminals might pose as ticketing inspectors to skim information from people’s bank cards.

While there have been some false alarms on social media about fake inspectors, Transport For London says it has not received any reports of fraud of that nature.

“We would treat any incidents extremely seriously and would work with the police to investigate. All ticket inspectors carry a badge and ID card which they will show when they approach a customer,” a spokesperson said.

Accepting Mastercard and Visa cards also means Waka Kotahi will need to pay a merchant fee to its bank, just like any other retailer, which means handing over a small cut of people’s fares.

Waka Kotahi says it has negotiated the rates that will apply, but these are confidential.

One would hope, given the value of the fares it will be receiving, that it got a decent rate.

When will we get the NTS?

It depends on where you live.

Environment Canterbury (ECan) should be first to switch to the new system in the second half of next year.

It says there will be a process in place to refund people’s unused Metrocard balances, though the details of that are still being worked through.

The roll-out is scheduled to be completed elsewhere by the end of 2026, though at least some other councils could get the system earlier than that.

These are later dates than the provisional dates Waka Kotahi set out in its detailed business case for the project in August last year.

It envisaged then that the ticketing system would be working in Canterbury by July this year, and would go live in Wellington in March. Auckland was expected to get the system in November next year, and the rest of the country in February 2025.

Waka Kotahi says the provisional dates in the business case were based on contracts being signed by mid-2022, “whereas the participation agreement and contract with Cubic were signed at the end of October 2022”.

That relatively short delay would not, on the face of it, appear to fully explain the changed schedule. But the new dates are consistent with time frames set out in a ministerial briefing paper in February, so are not evidence that the project itself has run into any technical trouble.

Waka Kotahi prioritised Canterbury because its existing ticketing contract was due to expire at the end of this year, describing the Metrocard system as “end-of-life, physically, economically, and technically” and in need of urgent replacement.

But ECan says it has extended its contract with its ticketing provider Init which has agreed to support the Metrocard until the end of next year at a price consistent with previous years.

Is this really costing $1.3b?

Waka Kotahi forecast in its business case that the NTS would cost $1.338 billion to be exact, but that does include the cost of operating the service for the first 14 years.

It advises there has been no change to that forecast since then.

It also estimated in its business case that it would cost $784m to instead run councils’ existing ticketing systems over that period.

The expected extra cost of the NTS in “today’s money”, versus carrying on as now, is $504m, which might be the best way to express the sum Waka Kotahi is shelling out in return for the system’s benefits.

Little information can be gleaned from the project’s business case about how exactly the $1.3b will be spent.

Waka Kotahi has declined even to release the value of its contract with Cubic on the basis that is “commercially sensitive”.

That does not appear to be in keeping with published advice from the Ombudsman that the Official Information Act effectively “excludes contracts on confidentiality preventing the release of information”.

A contract that Cubic won in 2018 to design, build and operate an open-loop ticketing system for the Queensland state government was worth A$371m (NZ$396m).

But the NTS has the added complication of serving multiple regional authorities.

There will be costs outside of the contract with Cubic and Waka Kotahi would have to open up a lot to allow any meaningful commentary.

Unusually, for a project of this size, the investment in the NTS was not subject to a formal Cabinet paper as it was “instigated operationally”, a spokesperson for Transport Minister David Parker says.

How is the project working out?

Waka Kotahi’s role is to procure the NTS for regional councils and provide its “back-office shared services”.

Yogesh Anand, executive sponsor and programme director for the NTS, was not available for interview.

Some documentation, including updates from the project’s governance board, has been released under the Official Information Act, but with much information redacted.

The minutes of the governance board’s July meeting refer to a redacted “emerging issue” involving reconciliation, the important task of matching journeys to payments.

But Waka Kotahi says that concerned a decision about who would own accountability of reconciliation of pre-paid transit cards, describing that as a “minor issue that has been resolved”.

Further documentation is being sought, so it’s a case of “watch this space”.