10
In Confidence
Office of the Associate Minister of Transport
Chair
Cabinet Economic Development Committee
GREEN TRANSPORT CARD INVESTIGATION FINDINGS
Proposal
1.
This paper asks the Cabinet Economic Development Committee to note the findings of
an investigation into a Green Transport Card scheme (the scheme) to reduce the costs
of public transport for Community Services Card (CSC) holders.
2.
It  seeks Cabinet agreement to begin establishing the scheme, using existing Budget
funding allocated for 2019/20.
3.
It  also  seeks  Cabinet  in-principle  agreement to implement the scheme from 2020/21
onwards, subject to funding approval in Budget 2020.
Executive summary
4.
I am reporting back to Cabinet on an investigation to reduce the cost of public transport
for low-income households, and people on a benefit.
5.
The scheme would improve well-being by making it more affordable for these people to
access social and economic opportunities via public transport.
6.
It  would also deliver co-benefits for improving people’s health, reducing greenhouse
gas emissions, and managing congestion, by supporting public transport as a preferred
mode of urban travel.
7.
The scheme would be targeted at approximately  900,000 CSC holders, including
300,000 SuperGold Card holders who are entitled to a CSC card.
8.
It would address a gap in public transport fare concessions for low-income people who
often experience transport disadvantages,  and assist the  Government to meet its
broader transport agenda.
9.
It would primarily benefit  CSC holders in urban areas who are able to use public
transport. Other initiatives would be needed to make access more inclusive for CSC
holders  who are unable to access conventional public transport services, such as
people in rural areas and some people with disabilities.
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10.
Three concession options for CSC holders were investigated.
•
Option 1: fare-free travel on public transport during off-peak periods only
•
Option 2: 50 percent discount on base fares, at any time of the day
•
Option 3: a public transport allowance (e.g. a $100-$200 credit per year)
11.
The investigation found that option 2 would deliver the best mix of benefits and value,
and was the option most favoured by councils involved in the investigation. In
comparison, option 1 would offer low benefits, at a significantly higher cost. Option 3
might be a feasible alternative, but has additional uncertainties and risks.
12.
Based on the investigation,  I recommend pursuing option 2 if Cabinet supports the
policy to establish and implement the scheme, subject to funding approval in Budget
2020.
13.
Government would need to keep working closely with councils to deliver the scheme,
as regional councils are responsible for setting local public transport fares and
concessions.
14.
Councils were supportive of the investigation. Their main concern is that the scheme
should not transfer costs to local government, and that there needs to be sufficient lead-
in time to prepare.  Greater Wellington Regional Council (GWRC) is particularly
concerned about the impact of the scheme on its bus network, and indicated that it
could take two years to resolve its capacity issues.
15.
The scheme would primarily be funded by the Crown. Direct fare subsidies would cost
an  estimated $22  million in the first year,  if  the 50 percent concession option  is
implemented.  The  Crown  would  also face additional costs  -n particular, councils are
likely to seek a contribution from the Crown towards the costs of increasing the capacity
of public transport networks to meet passenger demand driven by the scheme. These
costs would need to be negotiated with councils before final costs can be confirmed
and accounted for.
16.
I  am seeking Cabinet  agreement to  begin establishing  the scheme,  funded through
$4.64 million already allocated to establish the scheme in Budget 2019/20.
17.
I am also seeking  Cabinet  in-principle  agreement to implement the scheme  from
2020/21 onwards, subject to funding approval in Budget 2020.  If  Cabinet  agrees  to
support the policy of implementing the scheme, Ministry of Transport (the Ministry)
officials will prepare a Budget initiative for Budget 2020 to confirm the amount of funding
required.
18.
Councils involved in the investigation indicated that they would require at least 18-24
months to implement the scheme. I intend to negotiate tighter timeframes with councils
to meet the mid-2020 target. This may require regional phasing of the scheme.
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19.
Figure 1 highlights key features of the scheme that I recommend.

Figure 1: Overview of the proposed scheme

For low-income households and people on a benefit
It would mostly benefit
•
urban CSC holders who
  900,000 CSC holders
•
are able to access
  Including 300,000 SuperGold Card holders with a CSC
public transport

A 50 percent fare concession on public transport
•  Any time of day
•  Discount off adult base fares

Using existing travel cards in each region
More effective and
•
efficient than
  E.g. HOP cards, Snapper cards, Metro cards
introducing new CSCs,
•  Concessions would be loaded on to cards through an
or a separate stand-
automated system, with an expiry date
alone card

Primarily funded by the Crown
Final costs will depend
on future funding
•  Direct subsidies funded by the Crown
negotiations with
(around $22 million in year one)
councils
•  Administrative costs for local government funded through

the National Land Transport Fund (NLTF)
•  Additional public transport services funded through the
usual NLTF processes, with the Crown contributing an
additional share

Delivered with councils
•  Councils plan public transport networks, and set local
fares and concession
•  Likely to be voluntary (like the SuperGold Card scheme)

Aiming to implement in mid-2020
This timing is a stretch,
•  A new automated system for concessions needs to be
as some councils have
developed, along with administrative systems
indicated that they need
•  Councils will need to adapt ticketing systems, and
18-24 months to adapt
increase the capacity of existing public transport
ticketing systems and
networks
increase capacity

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Purpose of the proposed scheme
20.
The scheme primarily aims to improve the well-being of many low-income households
and people on a benefit, by making public transport more affordable for these people.
21.
It also aims to deliver co-benefits for improving people’s health, reducing greenhouse
gas emissions, and managing congestion, by supporting public transport as a preferred
mode of urban travel.
Background to the investigation into the scheme
22.
The Confidence and Supply Agreement between the Labour Party and the Green Party
included an agreement to:
Investigate a Green Transport Card as part of work to reduce the cost of public
transport, prioritising people in low-income households and people on a benefit.
23.
On 3 April 2019, I advised Cabinet on the approach for this investigation (DEV-19-MIN-
0051 refers). Cabinet noted:
23.1.  the scheme would deliver significant social, health, and environmental benefits
23.2.  the intention was to target the scheme at CSC holders and their dependents
23.3.  the relationship with the SuperGold Card would be clarified during the
investigation
23.4.  a Budget initiative for the scheme had been submitted to the Treasury
23.5.  the investigation would be completed in mid-2019
23.6.  I would report back to Cabinet on the findings of this investigation.
24.
Cabinet subsequently agreed to set aside $4.64 million of Budget funding in 2019/20 to
establish the scheme. This funding was to “enable the policy development” of the
scheme, and to “establish operational systems (e.g. card development, administration,
and production costs) for [the scheme], for use in the future”.
25.
Budget funding was contingent on completing this investigation by mid-2019, and
Cabinet agreeing to support the policy of implementing the scheme.
Scope of the investigation
26.
The investigation covered the following:
•
the case for the scheme
•
implementation challenges and opportunities
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•
benefits and costs
•
whether to include dependents of CSC holders
•
funding principles.
27.
Three options were investigated for CSC holders using public transport.
•
Option 1: fare-free travel, during off-peak periods only.
•
Option 2: 50 percent concession on base fares, at any time of day.1
•
Option 3: a public transport allowance (e.g. a $100-$200 credit per year).
28.
The investigation excluded an option of providing fare-free travel at any time of day,
due to concerns about costs and impacts on public transport network capacities.
The investigation involved multiple agencies and local government
29.
The  Ministry of Transport-led  investigation was guided by a governance  group, and
assisted by a working group.  These groups involved representatives from Auckland
Transport,  Environment Canterbury, Greater Wellington Regional Council (GWRC),
Hawke’s Bay Regional Council, Horizons Regional Council, Marlborough District
Council, Nelson City Council, Local Government New Zealand (LGNZ), the New
Zealand Transport Agency (NZTA), the Ministry of Health (MoH), the Ministry of Social
Development (MSD), and the Treasury.
30.
Local government involvement in the investigation was vital, as regional councils plan
and co-fund public transport networks. Councils also set local public transport fares and
concessions.
The scheme would target CSC holders
31.
CSC holders include people who receive a benefit from Work and Income, such as
recipients of an accommodation supplement or a disability allowance, people without
paid work, low-income families, people living in social housing, tertiary students that are
eligible for a student allowance, and refugees.
32.
There are approximately 900,000 CSC holders in New Zealand. A third of these people
also have a SuperGold Card. 2

1 Base fares are standard adult fares before any discounts have been applied.
2 SuperGold Card holders with a CSC have a ‘SuperGold-CSC combo card’ that entitles them to the benefits of
both cards.
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I expanded the scope to include SuperGold Card holders who have a CSC in the scheme
33.
I previously advised Cabinet (DEV-19-MIN-0051 refers) that SuperGold Card holders
with a CSC would be excluded from the scheme, as these people can already use their
SuperGold Card to travel fare-free during off-peak periods.
34.
I now recommend including SuperGold Card holders with a CSC in the scheme, for the
following reasons.
34.1.  The investigation led me to recommend introducing a 50 percent concession for
CSC holders at any time of day. Most SuperGold Card holders with a CSC will
choose to travel fare-free during off-peak periods (using their existing SuperGold
Card entitlements), rather than paying 50 percent of an adult fare. This factor will
help limit additional costs.
34.2.  The scheme would be a targeted intervention to provide additional benefits for
low-income SuperGold Card holders (rather than all SuperGold Card holders).
This  would make it more affordable for this sub-group to travel to essential
services during peak travel times, such as medical appointments.
35.
Including  the 300,000 SuperGold Card holders with a CSC in the scheme would
increase direct subsidy costs by $1.8 to 2  million  per year  (around a 10 percent
increase, compared to excluding them).
Note for reviewers: The decision to include SuperGold Card holders was only made by
the Minister last week, so we have only done formative data modelling for additional
costs.  The Ministry is working on preparing more accurate modelling during the
consultation process.
The  investigation confirmed  that the scheme would improve  well-being, by reducing
transport disadvantages for urban CSC holders
36.
To investigate the scheme’s potential to meet its aims, the Ministry reviewed evidence
on the links between transport affordability and well-being.
37.
Extensive  international  research shows that people who lack affordable access to
transport experience ‘transport disadvantages’. They have more difficulty accessing
goods, services, and opportunities that are available to others, which are fundamental
for  participating in society. This difficulty  includes access to education, employment,
health services, and sporting, leisure, and cultural activities.
38.
While public transport is only one way of providing access, research shows that public
transport can play an important role in reducing transport disadvantages and in
supporting social inclusion.
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39.
Reducing public transport fares for low-income households is one approach that can be
used to reduce transport disadvantages. Other approaches could include improving
transport options (e.g. providing better public transport services to low-income areas),
making services more accessible for people with disabilities, and increasing household
incomes.
40.
There is a lack of research on the extent of transport disadvantages  for low-income
people in New Zealand, or the most effective ways to reduce these disadvantages. This
area has received insufficient attention in the past.
41.
Travel costs for low-income households are increasing, which could perpetuate
disadvantages. The average weekly expenditure on passenger transport services
among low-income households in New Zealand increased by 63 percent between 2013
and 2017.
The scheme would address a gap in public transport fare concessions
42.
Councils are responsible for planning and managing public transport systems.
43.
Under Section 35 of the Land Transport Management Act 2003  (LTMA), NZTA and
regional councils “must consider the needs of persons who are transport
disadvantaged” when preparing any land transport management programme or plan
under the LTMA, including public transport systems.
44.
All councils in New Zealand offer public transport concessions to some groups who are
known to experience transport disadvantages, although the base fare and concession
rates vary between councils. All councils offer child concessions, some councils offer
tertiary student concessions, and all councils participate in the SuperGold Card scheme
that enables seniors to travel fare-free during off-peak periods.
45.
Most councils do not offer public transport concessions to CSC holders. Only Hawkes
Bay, Taranaki, Horizons (Manawatu-Wanganui), Nelson, and Tasman offer
concessions to CSC holders, of up to 30 percent. These regions account for only 2
percent of all public transport passenger trips in New Zealand.
46.
The lack of concessions for CSC holders in most regions is a significant gap for
addressing transport disadvantages, as CSC holders include low-income households,
solo parents, people with disabilities, tertiary students from low-income families, and
economically deprived seniors. As noted above, these sub-groups tend to experience
more transport disadvantages than others in the population.
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The scheme would not benefit low-income households  in areas without public
transport, and would have similar geographical impacts as the SuperGold Card
47.
Many low-income households live in areas that are not well-served by public transport.
For these households, the lack of access to frequent and reliable public transport
services is more of a barrier than fare prices.
48.
Low-income households are often concentrated in outer-urban areas, where public
transport services tend to be poor. This can perpetuate economic deprivation, as low-
income households can end up in relatively expensive car-dependent feedback loops
that prevent them from being able to save money to move to locations with better
accessibility and more transport options.
49.
To assess how many CSC holders could potentially benefit from the scheme, the
Ministry  and MSD  analysed where CSC holders live in relation to public transport
services, using data from NZTA.3
50.
In Auckland, Wellington, and Canterbury regions, approximately three quarters of CSC
holders live within walking distance (i.e. 500m) of a public transport service  that
operates at least every 30 minutes throughout the day. This data indicates that a high
proportion of urban CSC holders can access a public transport service, although these
services may not necessarily take them where they need to go at the times they need
to travel.
51.
At a national level, approximately half the population of CSC holders live within walking
distance of a regular public transport service.
52.
This means that, on a geographical basis, the scheme would have similar impacts as
the SuperGold Card. Over 80 percent of SuperGold Card holders who use their cards
to travel fare-free on public transport in off-peak periods live in Auckland, Wellington,
and Canterbury.
The scheme would assist the Government to meet its broader transport agenda
53.
By incentivising higher use of public transport, the scheme would help meet the
Government’s goals to encourage a transport mode shift in urban areas. The scheme
would make it more financially attractive for councils to extend the reach and/or
frequency of public transport services  into areas where many CSC holders live, by
increasing patronage in these areas.
54.
The scheme would help to balance the need for improving  public transport services,
and addressing affordability. Auckland Transport, GWRC, and Environment Canterbury
are prioritising more extensive and frequent public transport services in their new

3 This modelling does not include data on SuperGold Card holders with a CSC, as it was done before I decided
to expand the scope of the scheme to include this sub-group.
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networks, rather than reducing public transport fares. This scheme would enable
councils to target concessions at low-income people, while councils continue to expand
and increase services.
55.
Urban transport costs are likely to rise further in the decades ahead due to factors such
as higher oil prices, initiatives to decarbonise transport (e.g. fuel efficiency standards),
and demand management initiatives to manage road congestion (e.g. road pricing). The
scheme would help to counter the effects of rising transport costs for many low-income
households in the future by providing an affordable alternative to private car travel.
56.
By increasing public transport use, the scheme would also contribute to the following
positive outcomes that transport agencies aim to deliver to improve  well-being and
urban liveability.4
56.1.  Economic prosperity: public transport plays an important role in managing traffic
congestion, and for making efficient use of high-value urban space.
56.2.  Healthy and safe people:  public transport is the safest form of travel in New
Zealand, and people who use public transport regularly are more physically
active than people who commute by private vehicles. Transport mode shifts from
private vehicles to public transport can reduce air and noise pollutants that harm
human health.
56.3.  Environmental sustainability:  buses, trains and ferries with high numbers of
occupants produce fewer greenhouse gases, and other pollutants, than private
vehicles.
Options for the scheme were investigated against their potential social impacts,
transport impacts, ease of implementation, and value for money
57.
The Ministry collaborated with councils to estimate the impacts of three options for the
scheme.
58.
Their modelling of the scheme estimated how many additional trips CSC holders would
be likely to take, based on changes in fare prices. This modelling also calculated ‘fare
revenue foregone’, which represented the subsidy required to cover the fare
concessions.5 The model did not cover additional costs associated with the scheme,
such as administration costs or providing extra public transport services.

4 These outcomes are based on the Transport Outcomes Framework, which all government transport agencies
agreed to in 2018.
5 The model measured the change in revenue under each option, relative to the base case of no intervention. It
includes all trips that would have occurred regardless of the fare concession, and additional trips generated by
the concession. For option 2, the loss in revenue is partially offset by a gain in revenue from additional trips (as
CSC holders would be contributing 50% of the fare price).

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59.
Table 1 summarises high-level findings from the assessments. The modelling tracked
anticipated changes over time, from year one to year 10. CSC holders would be
expected to make growing use of the scheme over time.
Table 1: Summary of estimated benefits and subsidy costs for primary CSC holders

Option 1:
Option 2:
Option 3:
Fare-free, off-peak
50% concession,
Travel allowance
any time
Social benefits
Access to employment, health,  Low
Med-high
Med
and education
Additional health benefits
Low
Low-med
Low-med
(including active travel)
Mode shift benefits
Low
Med
Low-med
Annual direct benefits to CSC  $24.7 million
$34.3 million
**
holders (year 1)
Annual direct benefits to CSC  $35.9 million
$50.4 million
**
holders (year 10)
Public transport system impacts
Increase in annual passenger  +3.8 million
+4.8 million
**
trips: year 1
(2.5% increase)
(3.2% increase)
Increase in annual passenger  +8.1 million
+11.5 million
**
trips: year 10
(5.3% increase)
(7.5% increase)
Impact on PT capacities
Low
Moderate
Moderate
Annual revenue foregone / direct subsidy costs
Foregone revenue (year 1)
$33.9 million
$22 million
0
Foregone revenue (year 10)
$44.8 million
$20.1 million
0
Travel allowance
0
0
$30-60 million
($100-$200 allowance)
Ease and speed of implementation
Local government
Less difficult than Most difficult, extra
Quickest option
other options
capacity needed
Central government
Similar to Option 2
Similar to Option 1
Whole new system,
unknown timeframes

** Option 3 benefits and costs would depend on the size of the allowance.
A 50 percent concession for CSC holders on public transport at any time of day would
be the best option for the scheme, among investigated options
60.
This option would offer the best balance of value and benefits, compared to other
options.
61.
Many CSC holders need to travel at peak times to access work, education, and health
services. CSC holders are therefore likely to use public transport more often in option
2, compared to option 1.
62.
Option 2 has more potential to encourage a mode shift from private vehicles to public
transport when roads are most congested at peak times, which would enhance the
social, economic, and environmental benefits of the scheme.
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63.
Option 1 is less likely to support active travel modes compared to option 2. International
research shows that people often switch from walking and cycling to using public
transport when services are completely fare-free.
64.
Unlike option 1, the direct subsidy costs for option 2 would decrease slightly over time.
This decrease is because CSC holders would continue to pay a portion of each fare for
option 2. Increasing public transport usage by CSC holders would therefore generate
additional fare revenue, counter-acting some of the costs of providing public transport
services.
65.
The Ministry conducted a Benefit Cost Ratio (BCR) analysis of the financial benefits to
CSC holders, relative to the direct subsidy costs, for options 1 and 2.6 The results are
summarised in Table 2.7
Table 2: Benefit Cost Ratio for options 1 and 2

Option 1: Free off-peak
Option 2: 50% concession, any time
Short term
Long term
Short term
Long term

(Year 1)
(Year 10)
(Year 1)
(Year 10)
Benefit-cost
ratio (BCR)
0.73
0.80
1.56
2.50

66.
Option 2 would deliver $2.50 of benefit to CSC holders for every $1 of direct subsidy
after 10 years. In comparison, option 1 would deliver only $0.80 benefit for every $1
spent on the fare subsidy.
67.
Councils involved in this investigation also favoured this option, with the exception of
GWRC. GWRC  is concerned about the difficulties it is currently facing in increasing
public transport capacities at peak times. GWRC also noted that a 50 percent
concession could not be implemented on Wellington trains until integrated ticketing is
introduced in 2021.
A travel allowance could provide similar benefits to a 50 percent concession, but would
likely cost more and comes with more uncertainty
68.
Option 3 would involve setting up a system to transfer public transport allowances to
travel cards that are registered to CSC holders. Each allowance could be transferred in
instalments (e.g. every 3-6 months).

6 In economic terms, this represents the ‘consumer surplus’ that CSC holders would benefit from as a direct result
of the scheme.
7 The cost components of the BCR analysis did not include costs other than the direct subsidy costs, such as the
costs of implementing the scheme, or of providing additional capacity to handle increased patronage. This is
because at this point in time, we do not have accurate data on what these costs will be. The analysis also does
not take in account wider societal benefits that are difficult to quantify, such as reduced congestion, emissions
and crashes.
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69.
For this option, the benefits and subsidy costs would depend on the size of the public
transport allowance. For example, if the allowance was $100 per year, and only a third
of CSC holders used the full allowance, it would cost approximately $30 million per year
to fund the allowance.
70.
Depending on the size of the allowance, the benefits of a travel allowance  could be
similar to option 2. However, CSC holders who are regular public transport users, and/or
need to travel long distances, could quickly exhaust the allowance.
71.
Compared to option 2, the allowance in option 3 would benefit irregular users of public
transport more than regular users, unless the allowance was very high (which would be
prohibitively costly).
72.
Option 3 would be easier for most regions to implement, as it would not require changes
to concession profiles or ticketing systems. However, this option would be significantly
more complex for central government to implement. Ongoing administration costs could
also be higher than other options. A bespoke system would need to be designed,
developed, tested, and implemented to transfer allowances from central government to
registered travel cards in each region. It is also unclear how long this system would take
to develop, or what it would cost. Due to these uncertainties, I do not recommend
progressing with Option 3.
The scheme would deliver additional benefits, which cannot be monetised
73.
The social benefits of making it more affordable for low income households to access
opportunities such as work, healthcare, and education could not be monetised. There
is no agreed methodology to calculate these benefits. These benefits would be
additional to the direct benefits to CSC holders.
74.
The transport mode shift benefits could not be quantified, due to a lack of data on CSC
holders’ current public transport use. These benefits would be additional to the direct
benefits to CSC holders.
75.
As a comparison, a 2010 Cost Benefit Analysis of the SuperGold Card scheme
identified costs savings of reduced car travel and parking costs of $5.7 million per year.
That analysis also identified savings from road accident costs, congestion costs,
pollution costs, and road maintenance costs, which could not be quantified.
There would be additional costs to implement and administer the scheme
76.
The costs in Table 1 only identify the direct subsidies for the scheme, to cover the fare
revenue that councils would have received if CSC holders were paying full fare prices.
Central government agencies and councils would face additional costs.
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77.
Councils would expect reimbursements from central government for costs incurred by
the scheme.
78.
The most significant additional costs would be providing extra capacity to cater for
increased public transport demand, particularly during peak travel times. Central
government’s share of these costs would depend on a funding model agreed with local
government, or could be dealt with by decisions made through the next Government
Policy Statement on Land Transport (GPS).
79.
Additional implementation and administration costs would include changes to ticketing
systems, plus information technology, project management, communications, customer
service, and staff time.
80.
Additional  costs have not yet been calculated, as the Ministry  is awaiting some
additional data from councils. By way of example, Auckland Transport has indicated
that it normally costs approximately $500,000 to introduce a new concession profile on
all their ticketing equipment.
The scheme should not include dependents of CSC holders at this stage
81.
The investigation considered including dependents of CSC holders in the scheme.
82.
MSD estimates there are approximately 300,000 dependents of CSC holders.
83.
There is no data available on the names, addresses, or ages of dependents. This data
would need to be collected from all CSC holders, at significant cost, before deciding
whether to include them in the scheme.
84.
Dependents of CSC holders do not have their own CSC. Providing all dependents with
a CSC, if necessary, would also add significant costs.
85.
Most dependents of CSC holders already receive child/youth concessions when
travelling on public transport.
85.1.  All children under five years old can already travel for free on public transport
anywhere in New Zealand.
85.2.  In most regions, children/youth aged 5-15 receive a 40-50 percent concession
on adult fares (although there are differences in age bands).
85.3.  Auckland Transport is planning to introduce fare-free travel for children/youth 15
years and younger on weekends and public holidays. Hamilton City Council is
also planning to introduce a similar scheme.
86.
I do not recommend including dependents in the scheme at this stage, as the costs are
likely to significantly outweigh the benefits (given the wide-range of existing and planned
child/youth concessions).
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87.
In the future, there could be opportunities to target concessions for all dependents of
CSC holders on council-provided school bus services and public transport to/from
schools.
Existing travel cards would be used in each region
88.
The scheme would need to function with existing and future ticketing systems in each
region, as these systems are essential for swift passenger boarding, fare payments,
data collection, and public transport planning.
89.
The investigation looked at using CSCs as travel cards, producing a stand-alone ‘green
transport card’, and creating a system to load CSC concessions on to existing travel
cards in each region.
90.
The most straight-forward and cost-effective solution would be to link the CSC
concessions/allowances directly to registered travel cards in each region, via an
automated system. This solution  would avoid the costs of producing new CSCs, or
separate ‘green transport cards’.
91.
The registration process would need to be accessible for people with disabilities and
impairments, and those without internet access.
92.
This approach would follow the system that some councils are already using to
automate concessions on to cards. Auckland Transport is establishing an automated
system for tertiary concessions, and is  exploring automated systems for secondary
students and SuperGold Card holders. The Regional Integrated Ticketing System
(RITS) consortium of nine transport authorities have similarly developed an automated
eligibility system for the SuperGold Card.
93.
CSC holders would be unable to use their registered travel card in more than one region
due to differences in card/ticketing systems. The exception to this would be regional
members of the Regional Integrated Ticketing System, which will soon share a common
card system.
Some ineligible card use would be inevitable, and would need to be managed
94.
After concessions are loaded on to travel cards, it would not be possible to prevent CSC
holders from giving/selling their concession travel cards to others. Some people already
take advantage of concession cards on public transport services while  they are
ineligible to do so.
95.
People who access concession fares on public transport usually need to carry an
accompanying card to demonstrate their eligibility (e.g. a student ID card, or a
SuperGold Card). Similarly, CSC holders could be required to travel with their CSC and
produce it on request. This is likely to require a change to the Health Entitlement Cards
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Regulations (1993), which currently limits  CSCs from being used as a form of
identification. The Ministry and MoH are currently exploring this issue.
96.
Bus drivers seldom request cards for verification purposes, but the requirement to carry
a CSC could at least deter fraudulent use of the scheme.
97.
The appropriateness of existing penalties for fraudulent card use would also need to be
considered.
Councils would need to make changes to ticketing systems, and increase the capacity
of their public transport networks in some areas, to implement the scheme
98.
The scheme would increase public transport patronage at peak times. Most regions are
facing challenges adding extra services due to driver shortages, and NZTA has advised
that no funding is available in the 2018-21 NLTF to fund additional services. It often
takes more than a year to increase capacity. For example, it could take a council 12-18
months to arrange for new buses to arrive after signing contracts with operators.
99.
GWRC is particularly concerned about the impact of the scheme on its bus network,
and indicated that it could take two years to resolve its capacity issues.
100.  Auckland Transport is not facing the same capacity challenges, but it has pinch points
throughout its network. It indicated that it would take 18 months to implement the
scheme due to the time required to adapt ticketing systems in Auckland.
101.  Over-crowding of public transport systems needs to be avoided, as this would create
difficulties for councils. Existing public transport users would also be adversely affected
if they are unable to use services at peak times due to over-crowding, which may lead
some existing users to stop using public transport. This risk is likely to be the highest in
Wellington, due to existing challenges in its public transport network.
A  fair funding  model  would need to be agreed with councils to cover the costs of
providing some additional public transport services
102.  Currently, public transport services are funded through fare revenue (approximately 50
percent), the NLTF (25 percent), and rates contributions from regional councils (25
percent).8
103.  Councils will expect the Crown to cover some of the costs that they would face in
funding additional services generated by the scheme.
104.  The Crown should not be expected to cover councils’ share of costs for trips that CSC
holders would have taken if the scheme did not exist.

8 These ratios are averages, based on the funding assistance rates set by NZTA. The actual rates vary by region.
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105.  If the 50 percent fare concession option is pursued, additional services generated by
CSC holders travelling on the scheme would be funded through fares (25 percent),
Crown subsidies to cover foregone fare revenue (25  percent), and the NLTF (25
percent). Central government could negotiate with councils on how to fund the
remaining quarter of costs. This is illustrated in the charts below.
How extra public transport
Funding for additional
services are currently funded
services driven by the scheme
Fares
Fares
Crown
NLTF
subsidy
NLTF
Councils
Negotiated
share

106.  One way to address this funding issue would be for the Crown to contribute an agreed
amount that is more than 25 percent but less than 50 percent of each trip taken by a
CSC holder. The exact proportion would need to be negotiated.
107.  This approach is different to the bulk funding arrangement used for the SuperGold Card.
This difference is because on-peak services would be affected by the scheme for CSC
holders, if option 2 is pursued. In comparison, the SuperGold scheme took advantage
of existing off-peak capacity in public transport networks when it was introduced.
108.  I recommend waiting until there is more clarity around how public transport funding is
likely to be treated in the next GPS before deciding whether a separate funding
arrangement is necessary.
I recommend going ahead with the scheme
109.  Based on the investigation, I recommend establishing and implementing the scheme,
with the following features:
109.1. Targeted at CSC holders, including SuperGold Card holders with a CSC.
109.2. Providing a 50 percent concession on public transport fares to CSC holders, at
any time of day.
109.3. Using existing travel cards in each region, with concessions loaded on to travel
cards via an automated system.
109.4. Funding the subsidies and central government administration costs through
Crown funding. This arrangement  would need to be approved through usual
Budget processes.
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Operational systems can be established in 2019/20, using existing Budget funding
110.  Budget funding of $4.64 million was set aside in 2019/20 to establish the scheme. This
funding  is  to “enable the policy development” of the scheme, and to “establish
operational systems (e.g. card development, administration, and production costs) for
[the scheme], for use in the future.”
111.  If Cabinet agrees to the policy of establishing the scheme, this funding would be used
to:
111.1. Set up the automated system for transferring CSC holder eligibility data on to
travel cards in each region. This work would involve MSD.
111.2. Add CSC concession profiles to ticketing systems in each region. Councils could
seek reimbursements from NZTA for these costs.
111.3. Develop materials to communicate with CSC holders when the scheme is ready
to implement. This work would involve MSD.
112.  This establishment funding was appropriated to Vote Transport: Policy Advice and
Related Outputs (MCA) – Policy Advice.
113.  Cabinet agreement is needed to set up new appropriations, so that MSD and NZTA can
access this funding.
I recommend aiming to implement the scheme in mid-2020
114.  Councils involved in the investigation indicated that they would need  at least 18-24
months to implement the scheme.
115.  I intend to seek  tighter timeframes with councils, as I believe a  mid-2020 target  is
feasible. This may require regional phasing of the scheme. For example, the scheme
could be implemented in Auckland and among members of the RITS consortium (for
smaller councils) first. These areas have the most advanced ticketing systems, and are
not facing the same capacity pressures as Wellington. The scheme could then be
expanded to Canterbury and Wellington when these regions are ready for
implementation.  I am aware that some councils are not favour of a phased regional
approach, so this phasing option would need to be worked through with councils.
116.  If this timing is unfeasible, I will report back to Cabinet with an updated timeframe for
implementation.
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Next steps
117.  If Cabinet agrees to establish the operational systems for the scheme, and to implement
the scheme in principle, the key next steps are:
117.1. The Ministry will notify councils of Cabinet’s decisions.
117.2. MSD and NZTA will begin establishment processes for the scheme.
117.3. The Ministry will develop implementation timeframes for the scheme and, if
needed, lead negotiations with councils on an agreed funding model.
117.4. The Ministry  will finalise cost estimates and prepare a Budget initiative for
2020/21, to fund the scheme’s implementation.
117.5. Cabinet would consider the 2020/21 Budget initiative for the scheme along with
other Budget initiatives in March 2020.
117.6. If Cabinet agrees to fund the scheme through the 2020/21 Budget initiative, the
scheme will be implemented as soon as possible.
Risks
118.  Significant risks associated with the scheme are highlighted below.
118.1. Councils could choose not to implement the scheme.  Although  councils
supported the  investigation, they are very  concerned about the pace of
implementation and costs. They are still working through the implications of
recent legislative changes, such as the costs of mandatory rest and meal breaks
for bus drivers associated with the Employment Relations Amendment Act 2018,
and a move to an industry-wide living wage.
118.2. The subsidy costs could be higher (or lower) than our estimates: there is no
reliable data available on how many CSC holders currently use public transport,
or where they travel. The Ministry  made assumptions on public transport use
based on information from its Household Travel Survey. The Ministry also made
assumptions about how much public transport use could rise when fare prices
fall. To manage this risk, the costs of the scheme should be reviewed after its
first year of implementation, to update funding estimates.
118.3. Fraud issues could attract negative publicity: some fraudulent use of the scheme
is likely to be unavoidable. This could be managed by requiring CSC holders to
carry their CSC with them while travelling on concession fares, and by
considering the appropriateness of existing penalties for fraudulent card use.
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118.4. The scheme would raise equity concerns, and some CSC holders may criticise
the scheme if they are unable to access public transport services:  this may
include CSC holders living in areas without a regular public transport service,
and CSC holders with disabilities who have difficulty using public transport.
Mitigation options for these groups could be investigated.
Consultation
119.  The investigation was led by the Ministry and involved representatives from Auckland
Transport, GWRC, Environment Canterbury, Hawkes Bay Regional Council, Horizons
Regional Council, Marlborough District Council, Nelson City Council, LGNZ, NZTA,
MoH, MSD, and the Treasury.
120.  The following government agencies were consulted on this paper: the Department of
Internal Affairs, MoE, MoH, MSD, NZTA, and the Treasury.
121.  The Department of Prime Minister and Cabinet was notified.
Comments from agencies
122.  Note for reviewers: as part of the departmental consultation process for this Cabinet
Paper, we will be collating comments from agencies, and this section will be populated
accordingly in due course.
Financial implications
123.  If Cabinet agrees to establish the operational systems for the scheme, the scheme will
be funded through $4.64 million allocated for this purpose in Budget 2019/20.
124.  Based on current modelling, implementing the scheme will require around $20 to 22
million of Crown funding per year.
125.  If  Cabinet  agrees  in principle to implement the scheme, funding will need to be
considered through Budget 2020 initiatives.
Human rights, gender and disability implications
126.  No specific human rights issues have been canvassed in this paper.
127.  The scheme would likely benefit a greater number of women than men. As of January
2019, 57 percent (529,439) of CSC holders were classified as female, and 43 percent
(391,994) were male. Statistics from the 2013 census show that women are more likely
to use public transport to get to work: 7.1 percent of women used public transport to get
to work, compared to 4.6 percent of men. Statistics from the 2018 census are not yet
available.
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128.  The scheme would have implications for people with disabilities. As of January 2019,
215,963 people who receive a disability allowance have a CSC. People receiving
Disability Support Services funded by the Ministry of Health are also likely to be eligible
for a CSC.
129.  Many people with disabilities are able to use public transport. A 2009 report by the
Office for Disability Issues estimated that 26 percent of all disabled adults and 46
percent of all disabled children used public transport for short trips. Many CSC holders
have disabilities that prevent them from using public transport, due to the nature of their
disability and/or because services are not accessible for people with their disability. The
scheme could therefore increase disparities between CSC holders who can use public
transport, and those with disabilities who are unable to access public transport.
130.  Government could explore broader initiatives  at a later stage  to reduce transport
disadvantages for low-income households in New Zealand that are unable to access
public transport, including through the Total Mobility Scheme (which provides
subsidised licensed taxi services to people who have a disability).
Legislative implications
131.  The Health Entitlement Cards Regulations (1993) may need to be amended to enable
CSCs to be used as a form of identification on public transport. The Ministry and MoH
are investigating this issue.
132.  I will report back to Cabinet if this regulation needs changing, or if any additional
regulations are needed for the scheme.
Regulatory Impact Assessment
133.  A Regulatory Impact Assessment for the scheme is attached to this paper.
Proactive release
134.  If Cabinet agrees, I intend to release this paper on the Ministry’s website. Information
that could prejudice or disadvantage negotiations with local government on the scheme
will be withheld under the Official Information Act 1982.
Recommendations
135.  I recommend that the Committee:
1.
note  that  the  Green Transport Card scheme  (the scheme) would improve the
well-being of many low-income households, and assist Government to meet its
broader transport agenda.
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2.
note  the preferred option of the scheme is to provide CSC holders with a 50
percent concession on adult base fares, at all times.
3.
note  that the scheme would require ongoing Crown funding,  which based on
current modelling is around $20 to 22 million per year.
4.
note if Cabinet agrees to implement the scheme, Ministry officials will prepare a
Budget initiative to confirm the amount of funding required.
5.
agree in-principle to support the policy to implement the scheme in 2020/21, on
the understanding that it will be subject to funding approval in Budget 2020
onwards.
6.
note that implementation timings will depend on the willingness and capabilities
of councils to implement the scheme.
7.
agree that the scheme should provide CSC holders with a 50 percent concession
on adult base fares.
8.
agree  to begin establishing the scheme  in September 2019, using existing
Budget funding allocated for 2019/20.
9.
note that the $4.64 million set aside in Budget 2019/20 to establish the scheme
was appropriated to Vote Transport: Policy Advice and Related Outputs (MCA),
and that this funding needs to be transferred to new appropriations to establish
the scheme.
10.
agree to establish the following new appropriation, to enable MSD to establish
operational systems for the scheme in 2019/20:
Vote
Appropriation  Title
Type
Scope
Minister
Social
Minister of
Green
Departmental  This appropriation
Development  Social
Transport
output
is limited to
Development
Card scheme  expense
establishing and
establishment
administering the
operational
systems for data
sharing and
communicating with
Community
Services Card
holders on public
transport fare
concessions for the
Green Transport
Card scheme

Page 21 of 23

11.
agree that the Minister of Finance, Minister of Transport, and Minister of Social
Development  will  jointly agree on the final amounts to be  transferred  to Vote
Social Development to enable MSD  to help establish the scheme, once final
costs are confirmed.
12.
agree to establish the following new appropriation, to enable the NZTA and local
councils to establish operational systems for the scheme in 2019/20:
Vote
Appropriation  Title
Type
Scope
Minister
Transport
Minister of
Green
Departmental  This appropriation is
Transport
Transport
output
limited to
Card scheme  expense
establishing and
establishment
administering the
operational systems
to
enable public
transport fare
concessions to be
provided to
Community
Services Card
holders for the
Green Transport
Card scheme

13.
agree that the Minister of Finance and Minister of Transport will jointly agree on
the final amounts to be transferred to this new appropriation, from the existing
Departmental Appropriation, to enable NZTA and local councils to establish the
scheme, once final costs are confirmed.
14.
agree  that the proposed changes to appropriations for 2019/20 above be
included in the 2019/20 Supplementary Estimates.
15.
note I will report back to Cabinet if any regulatory changes, or new regulations,
are needed to enable the scheme to be implemented.
16.
note I will report back to Cabinet if it is not feasible to implement the scheme in
mid-2020.
17.
agree  to  proactively release this paper,  and to withhold any appropriate
information under the Official Information Act 1982.

Page 22 of 23

Hon Julie Anne Genter
Associate Minister of Transport

Dated: _______________________
Page 23 of 23

Document Outline