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“ARC Accepts Patronage Funding”

The Auckland Regional Council voted yesterday to sign up to the Government’s new transport funding scheme, Patronage Funding.

“We welcome the Government’s commitment to lift the cap on Government spending on passenger transport, which has been needed for a long time,” said ARC Transport Committee Chairman Les Paterson. “An extra funding boost will assist us to improve services over the short term.”

The Patronage Funding scheme is a new method by which Transfund, the Government’s funding body, will contribute to funding of passenger transport. Under this scheme, councils will receive funding based on the patronage levels of their services.

“The ARC has taken the prudent and fiscally responsible approach of carefully evaluating the Government’s new scheme in terms of risk to the region. We have been fully involved in discussions with Transfund over the past few months to work through details so that the scheme will work for the region,” said Mr Paterson.

Transfund has made several alterations to its Patronage Funding scheme based on council submissions. One significant change is that there is now “Kick Start” funding available to assist the introduction of new services over the next three years. From now until June 2001, the ARC will receive an 80% grant from Transfund to start new services, which will drop to 60% in the 2001/2002 year, and to 40% in 2002/2003. Kick-start funding has been added to the patronage funding scheme in recognition that councils have already budgeted for new services in the coming year and are not able to start extra new services without significant funding assistance from Transfund.

The ARC is already poised to take advantage of the Kick Start funding with a boost to new trial services. “We already had the ability to commit $640,000 to trial services this financial year. With Kick Start funding, we have the potential to commit up to $1.6 million. We will be announcing a number of new trial services later this week,” said Mr Paterson.

The ARC has undertaken financial analysis and risk assessment to the region of Transfund’s Patronage Funding model, reports ARC transport director Barry Mein.

“We have identified that the revenue we will receive from patronage funding is contingent on what baseline funding and patronage levels we agree with Transfund when we sign up. The scheme rewards increases in patronage above the set baseline levels. We are still negotiating with Transfund what Auckland’s base levels will be. Because patronage has increased a lot in the last few months possibly due to factors beyond our control such as petrol price increases, we are concerned not to set the baseline level too high and then risk not being able to increase patronage levels significantly above that in the short term,” said Mr Mein.

“Our administration costs will also rise due to the extra passenger data collection and reporting obligations required by the Patronage Funding model. We are working with other councils to identify the most cost-effective and efficient approach to meet these requirements. The Patronage Funding scheme does offer increased financial assistance for administration to offset these costs.”

The ARC’s risk assessment of the Patronage Funding scheme has shown that the scheme does place financial risk on councils, should patronage numbers drop for any reason. For this reason, the Council has decided to undertake an annual review of its commitment to the scheme.

“We need to keep tight reviews on payment rates, monitoring of changes in average trip length taken by passengers, and careful planning around the risks of time delays over implementing new services to manage these risks,” said Mr Paterson.

“We support Government lifting the cap on funding of services for passenger transport. It is a scheme that was devised to fit within existing legislation and is a good start. We view Patronage Funding as a transition towards a broader range of initiatives. We are also keen to see what Government will deliver on wider changes to legislation, to free up funds for capital spending on public transport infrastructure. However, we are looking for a positive response from Government in support of Auckland’s plans to build vastly better passenger transport infrastructure along dedicated corridors, which is the only way we can lift patronage levels significantly throughout the region. There are only so many people who will be willing to switch to improved bus services, when buses have to fight through the traffic.”

The Transport Committee agreed to sign up to a patronage payment rate based on numbers of passenger boarding services, which will be $0.45 per current passenger (established by the baseline rate) and $3.00 per additional new passenger at peak times or $0.70 at off-peak times.

- END -

For further information please call: Les Paterson, Transport Committee Chairman ARC, phone 09 366 2000 x 7111
Or Barry Mein, ARC transport director, phone 09 366 2000 x 8061.

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