Christopher Luxon mulls public transport subsidy cuts, saying some subsidies are wasteful

National leader Christopher Luxon is not keen on public subsidies for public transport, and thinks public transport should "stand on its own merits".

Public transport is heavily subsidised. Generally speaking, about half of the cost of a public transport ticket is met with public funds. Central government picks up about a quarter of the cost and local government picks up another quarter.

The remaining half is met with fares, although Covid-19 has meant the level of subsidy has increased.

The level of subsidy has recently increased with the Government announcing public transport fares would be cut in half for three months at a cost of about $40 million. This policy is likely to be made permanent, in some form, at the budget.

Waka Kotahi NZ Transport Agency plans to spend $2.6 billion in the next three years on public transport services. This money comes from fuel taxes and road user charges, not general taxation. This is not just fare subsidies. It includes funding for things like purchasing zero-emission buses.

Luxon told media on Tuesday he was not sure about the state of public transport subsidies.

"Fundamentally, it's got to stand on its own merits," Luxon said.

When reminded public transport has been heavily subsidised in modern times, Luxon admitted he had not thought deeply on the subject.

"I haven't thought too deeply about it too honest. I think the bottom line is, we want to encourage more mode shift," he said.

He cited the $100m spent on the Te Huia train between Hamilton and Auckland as an example of wasteful subsidy.

"When you look at some of the options, think about Te Huia, a slow train, $100m being wasted on that," Luxon said.

"It doesn't matter how much you spend on that, it's a white elephant right?"

He said public transport had to be "compelling" so people would use it.

"The bigger issue is public transport has to be a compelling as a proposition so that people want to use it.

"There's a need for us to continue to drive mode shift, I get it, but you've got to build good quality public transport people choose to use."

Luxon backed the Government's decision to temporarily cut fares by half in the face of high petrol prices.

"It's a good thing at the moment to help people with the cost of living crisis, but we should keep resisting it," Luxon said.

"Public transport needs to stand on its own feet, it cant' be subsidised or underwritten right? It has to be able to build its own case."