Mrs Tolley said she had been receiving regular briefings on the issue, both in opposition and as Minister of Education, and it had become apparent an independent inquiry would provide certainty to the Ministry of Education over the propriety of its running of the tender process.
It would also allow school bus operators to have their concerns about the tender process tested by an impartial investigator.
Many operators felt the process was run in an unfair and illegal manner and believed they had evidence to back up their claims, Mrs Tolley said.
"I have had a chance to examine their concerns and believe that, prima facie, their concerns warrant an inquiry into the tender process. I understand the Auditor-general has already received information about these allegations and I wish to add my concerns to this information.
"It is my view that in the interests of justice and fairness, these allegations should be investigated independently and if the Auditor-general deems there to be sufficient evidence to warrant an inquiry, one should be carried out forthwith."
Mrs Tolley believed the concerns of operators could only be allayed by having an independent body, which had no involvement in the tender process, assess the allegations and evidence to test their validity.
Pearson's Coachlines owner Murray Pearson was delighted with the announcement.
"It will please many bus company operators. It will also please some schools with parents who have lost bus operators in their community. Clearly, there has been a lot of concern about the issue around Otago. We welcome the inquiry."
While many bus operators told the Otago Daily Times they were delighted with the announcement, many declined to comment for fear of breaching Ministry of Education school bus tender contracts.
