A city the size of Dunedin needs reasonable public transport.
Though substantial subsidies are required to maintain bus
services, it is a cost which must be borne.
Buses are a social service required to contribute towards
making Dunedin a socially healthy and fair place to live. And
given the worldwide danger of catastrophic climate change, it
can be argued that environmental considerations also apply.
Further, the more people use buses, the more space there will
be for the remaining cars, whether on the roads themselves or
Who, then, should control buses? As recently as the 1980s
this was the city council's task, subsidising them (as it
happens) through electricity profits. The public transport
system, however, changed at the end of that decade, with the
"independent" Otago Regional Council overseeing bus
regulation and letting competitive tenders.
While the occasional route ran without subsidy, most required
varying degrees of combined taxpayer and ratepayer support.
The change left the city bus company competing, often
ferociously, with private operators.
It, nevertheless, won a reasonable proportion of the routes
and was not a big loss maker. It bought Newtons at one stage
and expanded, with some success, into the tour bus business.
For the past two years, however, the business has suffered
and, overall, losses of about $800,000 have occurred. Then,
in the last tender round, Citibus, the council-owned company,
lost several routes - albeit some by the most slender margin.
The council's decision to sell its bus company has elicited
strong reactions. Sometimes these are based on the historic
notion that the city must run buses, and that they are core
city business. Under the current system, though, Citibus is
reduced to being just another competitive bidder. It has no
control over the routes and their frequency, or over fares.
Nevertheless, there is a certain sadness on at least two
fronts. First, a thread of history going back through trams
and trolley buses has been lost. Second, Citibus has,
largely, led the way with the quality of its buses.
In the jargon of business, Citibus has made efforts to be a
"good corporate citizen". At one stage, before rules on the
age and quality of buses were tightened markedly, Citibus'
buses were streets ahead of some of the competition.
There is immediate relief that it seems the 65 drivers can be
re-employed, and that the purchaser, Invercargill Passenger
Transport Ltd, trading in Dunedin as Dunedin Passenger
Transport, is a long-established South Island operator.
Hopefully, competition for routes is strong, because the
buses are a burden. More than half of each ticket is
Citibus is under the control of the city council's Dunedin
City Holdings, the directors of which, we are told, thought
it best to sell.
Citibus was, in the words of Dunedin Mayor Dave Cull,
"haemorrhaging" money. Meanwhile, council pressure for
dividends from City Holdings has increased, with extra money
needed to fund the Forsyth Barr Stadium an obvious reason.
Under these circumstances, a company making substantial
losses year after year was a wound that had to be staunched.
It is interesting other companies seem to have been able to
make money from tour business and from subsidised city
While one of the major drains on Citibus was from the need to
maintain the quality of its fleet, particularly for tour
buses, that consideration surely applied to other companies
as well. One wonders, too, about the role of the debt
millstone of $4.05 million owed to the council.
Although Citibus and City Holdings chairman Cr Paul Hudson
maintains debt - and interest - were "a normal part of
running a company", the recession of the past two years has
proved the value of low and prudent debt levels.
The question must be asked about the ability of the council,
even at arm's length through a company structure and with
independent directors, to run successful businesses in highly
Looking to the future, perhaps the opportunity arises for the
city council, now it is divesting its commercial bus
interests, to become the over-arching body for regulating and
subsidising Dunedin's buses.
Many in the regional council have found its role thankless
and diverting, and the city council is larger and, because of
its many hands-on duties, closer to the community.