April 13, 2005

Bus and ferry companies could be forced to open their books to public scrutiny

(via Stuff):
"A review into procurement rules by Land Transport New Zealand (LTNZ) is considering asking operators to prove they are not making excessive profits.
The potential shake-up is being welcomed by some Auckland politicians, who claim companies should be held to account for the tens of millions of dollars they receive in subsidies.
Joel Cayford, chairman of the Auckland Regional Council (ARC) transport policy and Regional Land Transport committees, says authorities are frustrated at the lack of transparency.
"At the moment we're in a very difficult situation, because the procurement legislation means there's no open book policy. There are concerns around that, if you look at our ability to require a certain service level in exchange for subsidies."
He says the ARC is happy about operators making a reasonable profit, but wants to be confident profits are not being made "hand over fist".
"As the cost of providing bus services goes up and as more and more services are being provided, then it's going to be more and more necessary for there to be some degree of disclosure and transparency to ensure fairness all around."
Bus and ferry procurement has previously been guided by the Transit New Zealand Act (1989), which has competition as a main objective and has no requirement to disclose financial details. But this is giving way to the Land Transport Management Act (2003), which prioritises best value for money.
The hard-left Residents Action Movement group has been pushing for bus operator Stagecoach to reveal its profits since last year. RAM representative and ARC politician Robyn Hughes says the company should adopt a more open approach in exchange for receiving public subsidies.
RAM organiser Grant Morgan believes the review is a step in the right direction, but should incorporate public consultation and hearings. "We have had too much going on behind the scenes."
LTNZ is setting up a working party to include bus and ferry operators and regional councils, and expects to announce its findings before the end of the year."
I find it incredible that this transparency is not there as a matter of course and has to be requested (or forced out of them). If subsidies are awarded in an opaque manner it will only breed corruption and contempt.
This proposed transparency requirement doesn't actually go far enough because any public transport organisation in Auckland that doesn't get/want a subsidy can't be scrutinised for any allegations of gouging customers - I'm thinking here of ferry users forking out what must be one of the highest ferry commuter fares in the world.

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