Stagecoach books to be opened wider

Auckland transport chiefs say they have won agreement from bus company Stagecoach to delve deeper into its financial workings.

The company agreed at a meeting in Wellington yesterday that "we can do a bit more investigation", Auckland Regional Transport Authority chief executive Alan Thompson told the Herald last night.

He and another senior authority official were shown an update of accountancy firm Ernst & Young's assessment of Stagecoach's return on its investment in the Auckland bus fleet. The company says the assessment shows a below-average return, given the financial risk involved in the business, even though it receives $46.8 million in regional and Government subsidies a year for its Auckland operation.

But Mr Thompson said the assessment was a high-level summary document and the authority needed more information to assure its Auckland Regional Council parent and Land Transport New Zealand that their subsidies were being well spent.

"There are questions we'd naturally like to ask," he said. In acknowledgement of protocols of commercial confidentiality, this would be done through a financial firm, which would confer with Stagecoach before reporting back to the authority.

The authority's board could then make its own assessment of whether the bus operator was making a reasonable return from its Auckland operation, especially after the recent addition of $6.2 million in subsidies to prop up previously commercial bus routes.

That outlay is being shared equally by the regional council and Land Transport NZ, and could mean a rates rise of 3 per cent next year for bus operations alone.

The council passed a resolution at its last meeting of 2005 for the transport authority to arrange an independent assessment of accounts "to determine a reasonable return for Stagecoach for its Auckland operations".

Despite Ernst & Young's verdict, local investment company Infratil voiced confidence after buying Stagecoach's local operation for $250 million in November that the purchase should start paying off in its first year.