Bus companies want details on SuperGold card policy

Dunedin's biggest commuter bus companies want to accept Transport Minister Steven Joyce's guarantee they will not make a loss if a cut to the SuperGold Card Free Travel Scheme is approved - but they both want more detail.

They were yesterday waiting for the Transport Ministry to explain how the new SuperGold contract's hardship clause would work and what they should do to prove their subsidies should not be reduced.

Dunedin Passenger Transport director Kayne Baas and Citibus Newton general manager Tony Collins accepted Mr Joyce's assurances, but said they were wary of a process where public servants might decide what revenue they were entitled to.

"We've got the guarantee, so don't want to pull out of services - we want SuperGold to keep working - but we now really need to get into the details," Mr Baas said last night.

"We've got the assurance, and that is great, but we need to be sure we won't be losing out in the contracts we entered in good faith."

Mr Baas warned on Wednesday his company might have to pull out of the SuperGold scheme, or impose a top-up fare, if the Government pressed ahead with plans to cut the subsidy from 75% of the full adult fare to 65%.

The cut, which has yet to be approved by Cabinet, followed a review prompted by concerns the scheme would continue to outstrip its $18 million budget.

Mr Joyce said this week the real cost could be to close to $25 million.

Mr Joyce guaranteed companies would be compensated to the point "where they say they can afford to continue SuperGold free trips".

For the worst affected, that might mean leaving the subsidy at its present level.

The Otago Daily Times yesterday asked Mr Joyce to supply a copy of the policy, process and formula used to determine hardship.

In an emailed response, Mr Joyce said the hardship clause was "something that officials will work through on a case-by-case basis with councils and providers as necessary".

Asked to define "hardship", he said it was when operators were worse off under the new scheme, relative to before the SuperGold card scheme started.

"Remember that the reimbursement rate is designed to compensate operators for SuperGold card holders who used to pay for their travel but now travel free," Mr Joyce said.

"People do not expect operators to be out of pocket as a result of providing SuperGold card services, but they wouldn't expect them to profit unduly from it either."

Concerned operators should "take officials through their numbers in the weeks ahead".

There would be plenty of time for them to do that before any changes in their reimbursement rates were made.

Asked when he would take the changes to Cabinet, Mr Joyce said "soon".

Asked when they would be implemented, he said "once they're finalised".

Mr Collins last night said he was keen to know how long Citibus Newton had to work through the changes and discuss its potential "hardship" with officials.

He was unsure whether Mr Joyce's definition of hardship recognised Dunedin bus routes were awarded on a "net tender" basis, where companies estimated their costs and submitted a tender based on what could not be recouped from fares.

SuperGold fares were included in the estimates - they account for about 12% of Citibus' business - which meant any subsidy cuts would affect the whole contract.

Contracts run for five years.

"So, we'd be really interested to see how hardship is determined when you've got total price tenders."

Mr Baas said the "hardship" process would show cutting the subsidy would mean real losses - tens of thousands of dollars a year - not just eroded profit.

The ministry and Mr Joyce had struggled to manage the changes, and he wanted the whole "absolute debacle to bed".

The Otago Regional Council, which administers city bus contracts, confirmed this week it had no evidence contracted companies were overcompensated for taking part in the scheme.