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Queenstown Lakes Mayor Jim Boult says the Queenstown Lakes District Council, the Otago Regional Council and the NZ Transport Agency will chip in an estimated $2million a year towards an ''inexpensive, reliable and frequent'' public transport system.
He is aiming for $2 bus fares across the Wakatipu and tweaks to routes and timetables.
Mr Boult said the tradeoff would be a ''tough reality check'' - hikes in downtown parking charges - although a decision on new charges would come later.
''Fully-subsidised public transport is not without cost, but we can't afford the alternative.
''There has to be an incentive to ride on the buses and a disincentive to park your car in town.
''If you continue to make parking too affordable, why would anyone opt for public transport?''
The council wanted to make public transport the ''no-brainer'' default mode of transport, aiming to double the number of passenger trips to a million a year within 12 months.
The mayor was optimistic it would change the way residents and visitors travelled around the Wakatipu.
''Wherever possible, we have to move away from a dependence on private cars.
''Public transport is essential to ensuring our transport network doesn't come to a grinding halt.''
The Queenstown council would consult ratepayers on the cost of the proposal through the annual plan process in April.
Regional council chairman Stephen Woodhead said both councils would need to formally adopt the proposals and consult on them, with a view to introducing the new system later in the year.
Mr Boult said he wanted the new service to start in July, but conceded it would be ''something of an evolving process'' with tweaks and improvements throughout the year.
The funding breakdown between the three bodies had yet to be settled, but he expected the district council's annual contribution to be about $500,000.
The regional council would contribute a similar amount, and the NZTA the remainder. The transport agency had an incentive to back the scheme, he said.
''If we're right and we can shift half a million [trips] out of motor cars into buses, that's a whole lot less cars on the road.''
It is the first significant announcement of Mr Boult's mayoral term, and one he promised in December to deliver within six months.
He also promised a park and ride system between Frankton and central Queenstown for commuters, telling the Otago Daily Times in December ''It's going to happen''.