When then Transport Minister, Hon. Michael Wood, announced that a contract had been signed between the New Zealand Transport Agency (NZTA) and Cubic for a National Ticketing Solution (NTS) for New Zealand I had two reactions.
The first was some optimism that having a centralised approach might accelerate enabling all of the cities and towns with urban public transport systems finally have contactless bank-issued card payment for all bus services (and the handful of rail and ferry services). Given cities from London to Sydney and Brisbane had all implemented such systems in the past decade and a half, there is no doubt that there should be value in enabling the public to just use a contactless credit card to pay to ride a bus. It should remove a barrier to people who don’t use such services, by enabling the cheapest fare to be offered to virtually everyone, as well as a side benefit of enabling visitors to each city to use their services.
However, I also had some doubts for three reasons:
· NZTA has no experience in operating public transport systems at all, let alone procuring ticketing systems for them. It’s primary role is as a funder of Regional Councils and Unitary Authorities to themselves fund and contract such services.
· NZTA wont be collecting any of the revenue, so its incentives to ensure the contract is delivered on time and to budget are poorer than that of Regional Councils, let alone public transport operators themselves.
· The record internationally of governments contracting systems suppliers for ticketing is very mixed. Witness Melbourne’s Myki system debacle which saw the project run well over time and budget.
Unless central government plans on setting fares and collecting fares then remitting them to councils, then the reasons for centralising this project are weak. I doubt the last government intended to do that and certainly this one shows no sign of doing so.
I also recall 20 years ago when I was in the UK, the UK Government then was developing an integrated ticketing system which came to nothing, called ITSO. It was led by the Department for Transport and achieved next to nothing. That ought to have been a warning for governments globally of the folly of pursuing such projects. Bearing in mind Melbourne's Myki contract was A$1.5 billion over ten years and did NOT include contactless payment with bank issued cards.
The timeline of the NTS is telling because its origins go back to 2009 (PDF), but all started to fall apart in 2015 when local authorities couldn’t agree on an approach with NZTA. In 2018 it all changed when the NZTA, under a new Government and Minister, tool charge of the project and was directed to pay for it.
NZTA has a lot to do. It is a road controlling authority, it is a land transport system funder and a regulator of drivers, vehicles and operators. Adding the procurement of a public transport ticketing system to this complicated and in some cases conflicting sets of demands should have given pause for thought, but the tendency of the Ardern Government was one of centralisation. The creation of Te Whatu Ora as a national health authority to replace District Health Boards, the creation of Te Pukenga to replace multiple polytechs and even the proposed Three Waters reforms to consolidate water providers all indicate a philosophical preference for centralised funding, control and decision-making. The NTS mirrors that. Whilst the National-led Coalition Government since 2023 has been able to unwind some of those other centralising reforms, the contract with Cubic is another story.
The press release behind the NTS said:
“The local authorities saw the benefits that the NTS can provide to the decarbonisation and economic development of their regions.
“Through improved access and increased patronage of public transport, roads will become less congested, safer and we will reduce our emissions,” Michael Wood said.
The National Ticketing Solution will be rolled out in a stage process across the different public transport authorities, starting with Environment Canterbury in 2024.
Naturally it was welcomed by local authorities which could wash their hands of much of the cost and responsibility for the ticketing solution, although they obviously would have to work with NZTA to ensure their contracted operators implemented it. The claims around increased patronage and consequently less congestion and lower emissions are optimistic, but the real optimism was that it would start being rolled out in 2024.
The current Government was stuck with the contract, so then Transport Minister, Hon. Simeon Brown was optimistically hoping the project would deliver as promised. The cost of the project was in December 2024 forecast to be $1.33 billion, which includes the cost of operating it for a decade. That cost comprises just over $527m to design and build the system and another $800 to operate the system for ten years. So it is $80m a year to run a NTS.
Note that in parallel, Auckland Transport pursued its own project to implement contactless ticketing, apparently at a cost of $23m, which it successfully implemented in 2024. It is being presented as a first stage in the NTS, as it will integrate, but it is a stark difference from $1.33 billion when you consider that the majority of public transport rides in the country are in Auckland.
Timaru was effectively meant to be the soft launch in December 2024. Timaru, it is worth remembering, Timaru has a daily average patronage of around 730 people.
The latest report from RNZ indicates that the current Transport Minister, Hon. Chris Bishop is concerned that the advice from NZTA earlier in the year was “overly optimistic”. He should be concerned, as it looks like the classic large government IT project going wrong. The RNZ report notes Cubic’s credit rating drop, which should not be a major issue, as the main issues are not from that side.
A report from RNZ a month ago indicated two main problems which are a result of centralising a project without centralising the project objectives and governance. These problems are:
· Councils demanding that their own bespoke concessions be implemented in a single system, adding costs and delays;
· The project governance group operating slowly largely because it operates on consensus.
What this smacks of is a project that didn’t adequately define it scope and policy position from the start, and which doesn’t have NZTA taking full control (no doubt because it doesn’t have as much of a stake in the system as the councils and public transport operators).
The big problem at the moment is delays in implementation, but project delays inevitably raise costs to the supplier, and although NZTA could and should be strict as to what it pays for the project, far too often government agencies are seen by suppliers as “soft” on contractors largely because government is seen as having a, more or less, unlimited capacity to absorb cost escalation. Given that the delays are due to poor governance of the councils and their fare policy, and the project governance overall, it may only be a matter of time before the supplier demands more money.
It's all too late now, but what should have happened is that NZTA, as part of its previous three-year National Land Transport Programme should have signalled to all Regional Councils and Unitary Authorities that subsidies for public transport would be conditional on them all implementing contactless payment by bank-issued cards, and leave it to them to implement it either individually or collectively (or more than likely, some mix of both). It almost certainly doesn’t matter if it happens in Timaru or Whanganui, but it does matter if it happens in Auckland, Wellington and Christchurch. The funding function of NZTA should have been able to incentivise a change in the delivery of public transport, transferring risk and responsibility to those better placed to take it on (or at least better incentivised). If there are questions about the competence of Greater Wellington Regional Council, Environment Canterbury et al to do that then these should be raised, but I’m unsure if there are.
Unfortunately, NZTA had responsibility for a project that combines customer service, engagement, digital systems and leadership, and taxpayers are taking on a risk that is being exacerbated by the behaviour of those who are meant to benefit from it.
Hopefully the whole project can get “back on track” and Motu Move (of course a new brand for the product was quickly produced, because that’s not difficult) can be a success financially and operationally. After all, NZTA doesn’t buy buses centrally for bus operators to use, nor does it buy trains for Kiwirail or Auckland Transport. The reasons for this are fairly clear.
I expect Minister Bishop will ensure that NZTA and councils are given enough direction to keep this project within budget, and for Cubic not to be let off the hook. Cubic should have known clearly the risks of the project when it signed the contract, so should bear such costs. NZTA should be strict on funding of public
It doesn’t end when it is rolled out, because Cubic will be running it for a decade. Who knows what might happen to payment system in that time? Will it be flexible enough to cope with changes? Who knows, but you know who will be paying if it goes wrong. If it stays within budget then there is a lot of credit to be had for managing that contract. By contrast if this project becomes a disaster, it will not bode well for NZTA.
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