Wellington region bus and train travellers may have paid over the odds for their bus fares.
Although the New Zealand Transport Agency has specified that at least 50 per cent of the cost of providing public transport must come from fares, Greater Wellington has chosen to charge more.
The council has calculated that 50 per cent on a different basis to the agency. The agency excludes capital expenditure for the purposes of calculating operating costs.
That is an entirely orthodox accounting practice, because capital expenditure results in no change to a business’ debt-equity position.
However, the council has chosen to include some of the costs of new Matangi trains and the rail upgrades in their operating costs and therefore arrived at a much higher total.
Last year commuters paid $84 million in fares for councilsubsidised public transport, 57 per cent of the $147.5 million that it cost Greater Wellington to provide public transport.
That’s $10 million more than they could have.
There is some justification for the council’s position.
It funds both bus and train services, but it only owns and pays for the trains.
Private owners bear the capital costs of buses and recover those costs through fares and Wellington Regional Council subsidies.
Excluding capital costs from the train operating cost calculation lowers the apparent operating cost for trains compared to buses.
The New Zealand Transport Agency set the rules for determining fares on the basis of their own formula and presumed,