Up to $1.5 million of Government funding could be lost to
the Otago Regional Council, if it fails to make peace with the
New Zealand Transport Agency over bus contracts.
The national agency has yet to formally decide whether to
provide half the subsidy of four newly awarded Dunedin bus
The contracts make up about 25% of Dunedin's contracted
public bus network and are collectively worth about $1.29
million a year, excluding GST.
All contracts had been awarded for three years, except one
which was being reviewed annually.
The council expected its share of revenue from the services
to be about $100,000 each year, and included in the
collective contracts' annual worth was about $65,000 of
That left about $1 million a year, which the ORC and NZTA
typically shared evenly. But if the NZTA refused to
contribute, as indicated, the council was faced with covering
the shortfall using ratepayer funds. Therefore, over three
years the contracts could cost the council an extra $1.5
It had about $4 million in reserves targeted for Dunedin
ORC chief executive Peter Bodeker said he hoped the NZTA
would accept the council's logic for awarding new contracts
and provide its share of the subsidy.
''But the NZTA's behaviour to date doesn't fill us with
confidence,'' he said.
New legislation set to go before Parliament for its second
reading this week would, if implemented without adjustment,
render the new bus contracts illegal.
The NZTA recently amended the proposed legislation to
stipulate that no contracts could be entered into from July
1, Mr Bodeker said.
''Our contracts kick in on that date. If you were cynical,
you might say they have changed it at the 11th hour to make
our contracts illegal,'' he said.
The Government's proposed public transport operating model
could force the council to revert to its old contracts, which
were about $1 million more costly over three years.
The council supported the legislation, but it was likely to
take two or three years to be formally adopted at a regional
level, Mr Bodeker said.
Therefore, the new three-year contracts would not hinder its
An independent report, commissioned by the council, cleared
it of any wrongdoing in its handling of public bus service
The report, by Ian Wallis Associates Ltd, was provided to the
NZTA along with the council's new contracts.
''I don't think the NZTA has listened to what we think is a
reasoned, evidence-based approach,'' Mr Bodeker said.
There were about another dozen contracted bus routes which
the council would have to renew contracts for throughout the
next five years and it did not make sense to have all
contracts expire simultaneously, he said.
''That was one of the reasons to award these contracts now,
to avoid the potential for a company to monopolise the
NZTA southern regional director Jim Harland said the ORC had
been given ample notice of the new legislation but chose not
to align its procurement of bus contracts, despite offers of
assistance from the NZTA.
The council had favoured short-term savings over longer-term
benefits, he said.
''Our view is it's better to work through changes once, along
with the rest of the country. We've always been of the view
that the rolling over of existing contracts for a year is
feasible and that period of time would allow the new
passenger transport plan to be prepared.''
If national funding was not awarded to the ORC, it would be
available to other regional councils for public transport.