Extra Metro funding required to adjust for fuel cost swings

Environment Canterbury councillors have agreed to provide $1.1 million to the public passenger transport portfolio for the 2006/07 financial year from Public Passenger Transport Reserves to cover the unbudgeted difference in fuel price indexing caused by price swings over the year.

Large regional councils like Wellington and Auckland are in a similar position and Land Transport NZ is reviewing its indexing system to ensure it adequately reflects fuel price swings and other costs.

Fuel prices had increased significantly at different times in the past year and even when they dropped, the price indexing payments continued to increase, due to the delayed flow-on effect and other costs - labour, road transport costs, and storage.

ECan’s Public Passenger Reserves fund is at $6.7 million and the aim is to keep it at no less than $5 million, said David Stenhouse, ECan passenger services assistant manager. The same amount of funding - $1.1 million - would be matched by central government through Land Transport New Zealand.

The projected cost of public transport in Christchurch for 2006/07 is now approximately $24.5 million and $22.1 million had been budgeted in the LTCCP.

Mr Stenhouse also indicated that it was highly likely that bus fares would have to rise in a year’s time because of new central government regulations covering the work time rule for drivers. This would reduce the hours drivers could work and increase the number of drivers required. “Our best estimate is that this could add 6-7 per cent to the overall cost of the tendered contracts.”

Councillors agreed to the additional funding from Reserves to cover the inflation indexing on 2006/07 passenger transport contracts; that additional funding for the 2007/08 year would be jointly funded through the targeted passenger transport rate and Land Transport NZ (an increase of $3 per $100,000 rating capital value, ie to $36 total per $100,000 capital value); and that staff would investigate an appropriate way to fund any changes to the work time rule for drivers, with a preference for fare increases.

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