- The GWRC has its own Farebox Recovery Policy to comply with the NZTA National Farebox Recovery Policy.
- The GWRC Farebox Recovery Policy currently states that fares must contribute between 55% and 60% of the direct operating costs of the region’s bus services; 55% – 60% of rail services and 55%- 60% of the public transport network as a whole.
- Raising fares above these levels is a Significant Decision requiring public consultation.
NZTA National Farebox Recovery Policy
The New Zealand Transport Agency (NZTA) requires all Public Transport (PT) authorities to comply with the National Farebox Recovery Policy. This policy states that fares should contribute at least 50% of the overall operating costs of regional PT services and specifies how the Farebox Recovery Ratio must be calculated.
The NZTA Farebox Recovery Policy also defines how the farebox recovery ratio is to be calculated. Key elements of this calculation are outlined in the Farebox Recovery Policy Q&A and includes the following:
2. What is a farebox recovery ratio?
A farebox recovery ratio measures the contribution fares make to the operating cost of providing public transport services, and is typically expressed as a percentage.
GWRC Farebox Recovery Policy
An “Edited highlights” version of the RPTP focussed on sections related to the GWRC Farebox Recovery Policy is available here.
The following sections are extracts from the GWRC RPTP related to the Farebox Recovery Policy.
5.8 Sustainable funding
Sustainable funding arrangements that balance user contributions (fares) with public funding
Farebox recovery measures fare revenue as a proportion of direct operating costs.
The Transport Agency requires all regional councils to have policies on farebox recovery that contribute to the objective of achieving no less than a 50% farebox recovery target nationally. This PT Plan maintains the existing farebox recovery target of 55%-60%, which will be revised once a transition plan has been developed to implement the fare structure review.
6.1 Significance policy
Significant and non-significant matters
Matters that will always be considered ‘significant’ are:
- Variations that amend the significance policy
- Any increases in fares above those provided for in the farebox recovery policy (Appendix 5) and GWRC’s Long Term Plan
Appendix 5: Farebox recovery policy in RPTP
The 2014 Regional PT Plan also includes Appendix 5: Farebox recovery policy that provides further details including (underline added for emphasis):
Farebox recovery targets for the network and each mode
The farebox recovery targets are:
> For the public transport network as a whole: 55-60%
> For buses and rail: 55-60%
> For ferries: 80-90%.
Formula used to calculate farebox recovery targets
The farebox recovery targets have been calculated using the formula prescribed in the National Farebox Recovery Policy18: which is set out in detail below, but is essentially total fare revenue divided by total direct operating costs.
Total fare revenue includes:
> Fares paid on contracted and commercial services, including school bus services
> Payments in lieu of fares, e.g. university payments to support discounted travel
> Subsidies paid for Super Gold card travel.
Non-public transport services are excluded from the calculation. These include long-distance and inter-city services, Ministry of Education-funded school bus services, tourist services and charter services.
Total costs include only direct operating payments, i.e. contract and concessionary fare payments. Capital, administration and network-wide system costs, such as those associated with real-time and passenger information, are not included in the calculations.
The GWRC undertakes a fare review as part of every Annual Plan to confirm PT fares will meet GWRC Farebox Recovery Policy Targets.
Example of a Farebox Recovery Ratio Calculation
The following is example is how the 2018/19 Bus Farebox Recovery Ratio was calculated:
Bus Fare revenue (excl. GST): $45,250,791
Bus Supergold reinbursements (excl. GST): $4,291,931 + $753,709
Bus Total revenue (excl. GST) = sum of above = $50,296,431
Bus Operating costs excl. GST: $83,671,429 + $753,709 = $84,425,139
Bus Farebox Recovery Ratio = $50,296,431 / $84,425,139 = 59.6%