Stagecoach to get extra $3.1m

Auckland Regional Council members voted reluctantly yesterday to fork out $3.1 million extra to bus operator Stagecoach, despite being warned of potential pain for ratepayers.

This year's shortfall from subsidising the company for 22 "commercial" routes it had threatened to abandon will be drawn from a reserve fund and the council hopes it will be matched dollar-for-dollar by Government agency Land Transport New Zealand.

A total $6.2 million in extra money will push subsidy payments to Stagecoach in Auckland this year to $46.8 million, out of a total of $70 million to all regional bus operators, although that is $1.49 million less than earlier feared.

But the council's finance general manager, Brian Monk, told its transport policy committee yesterday there was a limit to what could be drawn down from revenue from regional assets before rates would have to be raised.

He said the latest bail-out equated to about $3.5 million on an annualised basis, meaning a 3 per cent rates rise next year without digging deeper into revenue from Auckland Regional Holdings, steward of council assets such as Ports of Auckland.

The council has a policy not to draw down more than 50 per cent of asset revenue for operating purposes, and Mr Monk told the Herald that about $7 million had already been allocated from that source this year.

On a current budget trajectory, the 50 per cent cap would be reached by 2010-11, several years before the limit of an ambitious $11 billion regional land transport strategy to be launched today.

The strategy proposes a doubling of annual public transport patronage to 105 million trips by 2015-16, at a cost of $1.7 billion in operating spending alone between now and then, and $2 billion in capital investment.

The other $7.3 billion in the strategy is for roads or travel "demand management" measures such as encouragement of walking and cycling.

But the Auckland Regional Transport Authority is warning its regional council parent that fuel and other cost rises threaten to push public transport operating spending to $2.59 billion, and is flagging an urgent need to negotiate higher subsidies from the Government.

Committee member Paul Walbran advocated sacrificing the bus routes on Stagecoach's chopping block, saying it was no solution to the region's strategic transport needs to keep propping up the company's profitability.

"It's for Stagecoach's profits - I think we have more strategic requirements for our rates money," he said.

Council chairman Mike Lee said he did not believe Stagecoach was behaving the same way in Wellington and there was "some suspicion the system is being rorted".

"It might be an unfair suspicion but how can we ensure ratepayers are not being rorted?"

But committee chairman Joel Cayford said that while he shared his colleagues' anger, the council had to remain committed to public transport users and keep putting heat on the Government to change rules controlling transport subsidy contracts.

Regional transport authority chief executive Alan Thompson told the committee that a Ministry of Transport law review would be complete early next year, and what was needed was an ability to let larger and longer-term contracts.

On The Buses

* Stagecoach will receive more than $46 million in subsidies this year.

* Local authorities are angry that rates appear to be propping up the bus company's profits.

* The Government is reviewing rules controlling public transport contracts.