Nelson is being asked to come up with $582,000 of unbudgeted funds to help pay for the more than $1millon overspend of the region’s new eBus service.
Tasman District and Nelson City councillors heard at last week’s Joint Nelson Tasman Regional Transport Committee that the roll-out of the service had gone $1,050,000 over budget, that the money had already been spent, and that a request needed to go to each council to cover their share of the overspend.
Once both councils agree to fund their share – $582,000 for Nelson and $180,000 for Tasman, a request will go to NZTA Waka Kotahi to cover the rest.
Nelson City Council manager transport and solid waste, Margaret Parfitt, told the committee the context of the overspend was important on the “successful” service.
She explained that the overrun was in part due to the “complexities” of the public transport environment, including that operational costs were split 75/25 between NCC and TDC respectively, but staff costs were split 50/50.
Margaret also said the budgets were set back in 2021, long before the rollout eventuated. Staff movements in the lead-up to the service’s rollout also didn’t help the situation.
“There’s stuff we just didn’t know.”
Oversights included the $27k cost of installing WiFi on the buses which hadn’t been budgeted for and the contract wasn’t clear on who would cover the cost of the livery on the buses, so it fell to councils not the service provider.
A commercial lease for the bus stop was also required by Nelson Airport, which had not been anticipated. The cost was negotiated to be $13,000 per year but there were legal costs to preparing lease agreements and reviewing advertising guidelines which added another $6,000 to the overspend.
Route variations and changes since the budgets were set had also contributed to the cost overrun. Examples include the proposed Nelson Stoke interchange which affected the Route 2 bus route and added kilometres to the route.
In addition, any road work that requires a detour for the bus that adds kilometres to the route is subject to cost variations. Although small distances, when multiplied by 24 services a day in both directions the cumulative effect is large. Overall route variations had a cost of approximately $54,000.
However, Tasman District Council transportation manager Jamie McPherson said the service was setting new records of patronage.
“February set a record of 90,000 passengers, then March set another record of 92,000,” he told the committee.
Nelson Mayor Nick Smith, along with the rest of the committee, sought assurances the cost overruns would not continue.
“Clearly, I am quite concerned about the extent of the cost overruns on this project. The costs for the ratepayer are significant, even eyewatering,” should NZTA Waka Kotahi not agree to contribute the 51 per cent share, Nick said.
Margaret said there was very limited cost savings to be made.
“We have stopped advertising the service. That budget has been spent. We could stop the overflow buses, but we would be leaving people on the side of the road which will be damaging… We are getting requests for more overflow buses. You could stop that service and save $10k a month.”
Nelson City councillor Mel Courtney supported the service and, in turn, the overspend.
“When a business is growing it’s very difficult to manage. We’ve got to be understanding of the fact that when you build a business and get fantastic growth… you must go with it or it will be a poor result in the end.”
Unbudgeted or extra costs incurred:
• Livery for the new fleet of buses - $55k
• Installation of WiFi on buses - $27k
• Extra promotion of service - $56k
• Extra staff time - $117k
• Commercial lease for bus shelter at Nelson Airport - $13k
• Changes/variations to routes - $54k
• Overflow buses - $10k per month
• Extra cost to clean and provide security at new bus shelters and the interim Bridge St hub - $18k
• Licensee agreements and equipment for Stoke OnDemand service - $63k
• Driver wage increases - $30k initially
• Timetable revision due to congestion to ensure compliance with required driver rest and meal breaks - $35k
