File Reference:
7.00354 7.00400
Significance of Decision:
Low
Report To:
Public Transport Subcommittee
Meeting Date:
26 September 2013
Report From:
Garry Maloney, Council Strategy Manager
Public Transport Programme Key Performance Indicators
Executive Summary During the 2012/13 financial year, it became apparent that annual patronage growth key performance indicator (KPIs) targets for the Sustainable Transport Activity would not be met. Councillors at the 9 August 2013 Finance, Audit and Risk Committee meeting requested that staff review the patronage KPIs with a view to potentially replacing them with KPIs focussed on cost-effectiveness. The report advises the Council that it currently has a very good cost-effectiveness KPI (fare recovery) and recommends at this time not introducing further cost-effectiveness KPIs. It also recommends retaining patronage KPIs, but setting future targets that reflects the likely outcomes from Council decisions to invest in service improvements, or increase fares.
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Recommendations That the Public Transport Subcommittee under its delegated authority: 1
Receives the report, Public Transport Programme Key Performance Indicators.
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Confirms that the decision is within the Bay of Plenty Regional Council’s strategic planning framework (Council’s Ten Year Plan, and planning documents and processes under the Resource Management Act 1991, Biosecurity Act 1993, Land Transport Management Act 2003, Civil Defence and Emergency Management Act 2002, and Local Government Acts 1974 and 2002).
That the Public Transport Subcommittee recommends that the Regional Council: 1
Receives the report, Public Transport Programme Key Performance Indicators.
2
Retain the current 2012/22 Ten Year Plan Sustainable Transport Activity cost-effectiveness KPI and target relating to fare recovery.
Public Transport Programme Key Performance Indicators
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In the Draft 2014/15 Annual Plan amend the Sustainable Transport Activity KPIs relating to bus patronage to reflect the likely outcomes from Council decisions to invest in service improvements, or increase fares.
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In the Draft 2014/15 Annual Plan amend the Sustainable Transport Activity KPI relating to bus user satisfaction to: •
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2
Percentage of total Tauranga and Rotorua bus users whose overall satisfaction with the bus service is rated as “satisfied” (an 8, 9 or 10) – target 61% +/- the survey standard error at the 95% confidence interval.
Confirms that the decision is within the Bay of Plenty Regional Council’s strategic planning framework (Council’s Ten Year Plan, and planning documents and processes under the Resource Management Act 1991, Biosecurity Act 1993, Land Transport Management Act 2003, Civil Defence and Emergency Management Act 2002, and Local Government Acts 1974 and 2002).
Introduction Sustainable Transport is one of the Activities within Council’s 2012/22 Ten Year Plan and the 2013/14 Annual Plan. The Activity comprises a programme that outlines the actions Council intends taking and how success will be measured (i.e. key performance indicators or KPIs) and the targets against which success is measured. The Sustainable Transport Activity contains the following KPIs (or measures) and targets for the 2013/14 financial year (the KPIs were the same in the 2012/13 financial year and their targets were very similar): •
Fare Recovery Ratio - Target – 32%
•
Number of Rotorua passenger transport trips – Target - Increasing by 8% per annum (1,034,500 trips).
•
Number of rural passenger transport trips - Target - Increasing by 8% per annum (84,500).
•
Number of Tauranga passenger trips - Target - Increasing by 10% per annum (1,990,600).
•
Percentage of Tauranga and Rotorua bus users whose overall experience with the bus service is rated as excellent or very good – Target – 85%.
During the 2012/13 year, it became evident that the three patronage KPI targets would not be met. In response, Councillors at the 9 August 2013 Finance, Audit and Risk Committee meeting requested that staff review the patronage KPIs with a view to potentially replacing them with KPIs focussed on cost-effectiveness. In 2012/13 the New Zealand Transport Agency changed the method and structure for regional councils to undertake bus satisfaction surveys. This meant that the results from the 2012/13 survey could not be compared with the results from previous years, nor the Ten Year Plan bus user satisfaction KPI. Thus, a need also now exists to develop a new bus user satisfaction KPI and target. The following report investigates the options for new KPIs and targets.
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Public Transport Programme Key Performance Indicators
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Process for Changing the KPIs The 2013/14 Annual Plan KPIs were adopted by Council in June 2013. This means Council is the forum where these can be changed. The reason that this matter is being considered by the Public Transport Sub-committee is that the Sub-committee has a delegated function relating to Council’s public transport function. It is therefore appropriate for the Sub-committee to consider the public transport KPIs and recommend a way forward to full Council. As members will be aware, the current KPIs were set through a public process (the 2013/14 Annual Plan). The next opportunity Council has to amend them is in preparing its Draft 2014/15 Annual Plan. Therefore, while this report may suggest changes to KPIs, the Council must continue reporting against the published 2013/14 KPIs. A comprehensive review of KPIs will be required in advance of the next Ten Year Plan.
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Patronage and Cost-effectiveness KPIs
4.1
Problem Definition Council’s 2012/22 Ten Year Plan contains KPIs that require fare recovery to increase by 1% per annum, patronage for the Rotorua urban and rural bus services to increase by 8% per annum and patronage for the Tauranga bus service to increase by 10% per annum. By the end of the 2012/13 financial year, the annual patronage results were: •
Rotorua – down 1.7%;
•
Rural - 0% change; and
•
Tauranga - up 1.5%.
For the 2013/14 year comparing July and August 2013 patronage to the same months of the 2012/13 year, shows that patronage for: •
Rotorua – down 1.7%;
•
Tauranga – up 1.6%.
So again, at this early stage of the new financial year it appears that the patronage KPI targets may not be met by the end of June 2014. The question that Council therefore needs answered is whether or not the patronage KPIs are robust bearing in mind that Council is midway through a current Ten Year Plan cycle and if they are, whether the problem lies with the KPI targets. Conversely, for 2012/13, Council achieved a fare recovery of over 34% - exceeding the KPI target. Similarly, the question must be answered as to whether or not the Council needs further cost-effectiveness.
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Public Transport Programme Key Performance Indicators
4.2
The Case for Patronage Patronage is the number of individuals boarding the system as a whole and a basic measure for public transport, on which many other types of economic and noneconomic indicators are based (for example, trips per capita, passengers per inservice hour, passenger kilometres, cost per passenger/passenger kilometre, subsidy per passenger/passenger kilometre and revenue per passenger/passenger kilometre). As a KPI it is commonly used as a measure by the majority of local authorities with responsibility for public transport in New Zealand (see Appendix 1) as well as being in common use in the rest of the developed world. Council is also required by the New Zealand Transport Agency (NZTA) to report total regional patronage on a quarterly and annual basis. Members will also see in Appendix 1, that Environment Canterbury uses a patronage measure of trips per resident (or capita). Alongside patronage, this is also a useful measure and one that staff will consider for the next Ten Year Plan. Patronage is a useful indicator as it tells our ratepayers and residents that people are using (and how many) the bus services that Council is rating them for. I recommend we retain patronage KPIs. However, as reported to the Council last financial year, patronage is directly influenced by a range of factors, some of which are outside the Council’s control. These include: •
changes in the price of public transport such as a fare increase, will tend to result in a decrease in patronage, but should increase fare recovery. In Rotorua for example, Council agreed to implement a 9% fare increase from September 2012. The fare elasticity is about -0.3 to -0.4. This means that a 9% fare increase should result in a 2.7% to 3.6% patronage decrease. Another example of patronage being impacted by pricing outside Council’s control is in Rotorua where the current contract is a net contract. To maximise its revenue return, the contractor has entered an agreement with a local tertiary institute who bulk-funds the travel costs of its students.
•
Change in supply such as improving frequency. Changing service levels probably has the largest impact on patronage change after fare increases. For an urban service, doubling frequency from 60 minute week day services to 30 minute weekday services will generally result in a 40% increase in patronage over 18 months (historically, we have seen much higher patronage increases in Tauranga).
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Changes in the price of related goods such as fuel prices. Members may recall that rising fuel prices some years ago triggered significant patronage growth. Conversely, The Wall Street Journal is currently predicting the New Zealand dollar will rise which means that fuel costs should start to recede (1 August 2013, New Zealand Transport Intelligence newsletter). As the price of fuel decreases it is likely so too will the demand for public transport.
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Changes in population. In 2012/13 the number of overseas students attending a local tertiary institute in Rotorua fell. This was directly reflected in the patronage record.
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Public Transport Programme Key Performance Indicators
Based on the performance of Council’s contracted bus services last year and reflecting on the issues that can impact patronage numbers, the issue of KPI robustness seems to apply more to the target than the measure. For the current and previous Ten Year Plans, Council set patronage KPIs that were based on historical movements (see Figure 1 below).
Figure 1: Year on Year Patronage Growth for the Tauranga and Rotorua Urban bus services
As noted earlier in the report, in 2012/13 Rotorua patronage decreased by 1.7% and Tauranga patronage increased by 1.5%. Including these results in the average annual patronage increase for Rotorua still gives an annual increase of 15% (2004/05 – 2012/13) and for Tauranga, 16% (2001/02 2012/13). Setting KPI targets of 8% and 10% for Rotorua and Tauranga for 2012/13 (and onwards), based on historical results seemed reasonable and attainable. The actual results for 2012/13 have proved otherwise. I believe this is because both services appear to have now reached a level of maturity that does not require wholesale service level improvements. This has translated in to a flattening of patronage growth. The effect of the significant fare change in 2012/13 (which was something that Council needed to do to increase fare recovery), further flattened that growth (and in fact caused an actual patronage decrease in Rotorua).
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Public Transport Programme Key Performance Indicators
For the 2014/15 financial year I recommend that Council sets KPI targets that assumes patronage growth has peaked, but reflects the potential results that should be achieved from Council investing in further service improvements, or increased fares. 4.3
The Case for Cost-Effectiveness Cost effectiveness indicators evaluate a public transport system’s ability to transport people in a cost-effective fashion. The Council currently has a very good cost-effectiveness KPI in its Annual Plan and Ten Year Plan in the form of the fare recovery ratio (FRR). The current Annual Plan FRR KPI and target are: •
Fare Recovery Ratio – Target – 32%
The FRR measures the portion of the service funded by bus users. The higher the FRR, the less subsidy (both from the Council and the NZTA) is needed to support the service. As can be seen in Appendix 1, of the 12 district/regional councils providing subsidised public transport in New Zealand (excluding the Bay of Plenty), half have set and published a cost-effectiveness KPI in their 2013/14 Annual Plan. Of the six, five use fare recovery ratio as that measure. In addition to fare recovery, other cost-effectiveness indicators include: •
cost per passenger/passenger kilometre;
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subsidy per passenger/passenger kilometre;
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revenue per passenger/passenger kilometre; and
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cost per capita.
The one Council that did not use fare recovery (Auckland), used public transport subsidy per passenger kilometre as a cost-effectiveness measure. Of the measures listed above, subsidy per passenger kilometre is perhaps the only other one that will have much meaning to the residents and ratepayers of the region, as it shows how much Council (as stewards of ratepayers money) and NZTA revenue supports each passenger kilometre. The measure total subsidy per passenger kilometre is more meaningful than total subsidy per passenger because it takes in to consideration the distances people are travelling. For comparison, in the 2012/13 financial year, the average total subsidy (Council plus NZTA) per passenger kilometre for Tauranga and Rotorua was $0.37, Whereas, average total subsidy per passenger was $2.83. However, considered from the perspective of a ratepayer or resident reading the Annual Plan, I believe they will find fare recovery more meaningful than total subsidy per passenger kilometre. As such, I do not believe there is an advantage to be gained by either changing the current cost-effectiveness KPI or adding a new one(s).
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Public Transport Programme Key Performance Indicators
4.4
Summary Councillors’ at the 9 August 2013 Finance, Audit and Risk Committee meeting requested that staff review the patronage KPIs with a view to potentially replacing them with KPIs focussed on cost-effectiveness. The preceding report advises the Council that it currently has a very good costeffectiveness KPI (Fare Recovery) and recommends at this time not introducing further cost-effectiveness KPIs. It also supports retaining patronage KPIs, but setting future targets that reflects the likely outcomes from Council decisions to invest in service improvements, or increase fares.
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Bus User Satisfaction Members may recall that each year the Council conducts a bus satisfaction survey of the users of its Tauranga and Rotorua buses. This has allowed a dataset to be built over a number of years and Council to report against the current Ten Year and Annual Plan KPI relating to levels of bus user satisfaction. The current Annual Plan bus user satisfaction KPI and target is: •
Percentage of Tauranga and Rotorua bus users whose overall experience with the bus service is rated as excellent or very good – Target – 85%.
The survey is mandated by the NZTA as a condition of funding. During the 2012/13 financial year the NZTA significantly changed the survey methodology that councils were to use by changing the scale for measuring user responses. The NZTA also required a change from a telephone survey to an on-board survey. Satisfaction levels are no longer measured on a scale ranging from "Dreadful" to "Excellent". Instead, respondents were asked to rate their level of satisfaction from 0 ("extremely dis-satisfied") to 10 ("extremely satisfied"), with a score of between 8 and 10 indicating "satisfaction". Members will see from a separate Agenda report to the Committee on the 2013 survey (see page 39 of the Survey report), that the average overall satisfaction with the urban bus services for Rotorua and Tauranga bus users was 61%. This means 61% of respondents scored their overall satisfaction with the bus services as an 8, 9 or 10. However, it should be noted that the survey results (like every survey) make allowance for a standard error. The smaller the standard error, the more representative the sample will be of the overall population. For the current survey the standard error is +/- 3.86% at the 95% confidence interval. Going back to our 2013 result, this means that 95% of the time, 57% to 65% of Tauranga and Rotorua bus users would be “satisfied” overall with the bus service. As with the patronage measure, I believe the bus user satisfaction KPI is a good measure and I recommend that it be retained, but in the following modified form: •
Percentage of total Tauranga and Rotorua bus users whose overall satisfaction with the bus service is rated as “satisfied” (an 8, 9 or 10).
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Public Transport Programme Key Performance Indicators
If Council agree to reword the KPI, the challenge will be in setting a realistic target. Currently we have a data set of one data point – the 2013 result at 61%. However if an allowance is made for the survey’s standard error, then I recommend Council should use the 2013 result as a baseline and for the 2014/15 financial year 61% becomes the target. This means that if the 2014/15 result fell within the standard of error for the survey then the KPI target would be met. Using the 2013 result to illustrate the logic means that the average “satisfied” percentage would need to be greater than 56%. 6
Financial Implications Current Budget There are no current financial implications from adopting the recommendations in this report. Future Implications There are no future financial implications from adopting the recommendations in this report.
Garry Maloney Council Strategy Manager
20 September 2013 Click here to enter text.
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Patronage KPI
Cost Effectiveness KPI
Invercargill City Council Otago Regional Council
Nil.
Farebox recovery percentage - 34%
Patronage will grow by 3% per annum in Dunedin.
Environment Canterbury
% of passenger trips made by public passenger transport - >= 2.9% by June 2015. Number of trips per urban resident in Timaru each year - >8 trips per year per resident. Total number of public passenger trips made in Canterbury - >24m by June 2015. Nil.
Affordability of services - fare revenue to cover 50% of cost of running the network services. Nil.
Nelson City Council Greater Wellington Horizons Regional Council Taranaki Regional Council Hawke's Bay Regional Council Gisborne District Council Waikato Regional Council Auckland Council Northland Regional Council
FRR - 30-35%
Nil.
Nil.
Achieve 1.70 million trips on public transport in the Region by 2013-14.
Nil.
Increase by 10% per annum the number of passengers carried.
Nil.
Nil.
Increase patronage and subsequent fare recovery to make improvements viable, to achieve bus fare recovery rates of 40%.
The number of bus passengers per annum - 1.8% increase per annum.
Nil.
Patronage growth increase on contracted Hamilton services - 1%. Patronage growth increase on contracted commuter services between satellite towns and Hamilton - 1%. Total passenger transport patronage - 79,090,000 (also allocated across PT modes).
Proportion of total service costs that are covered by passenger fares (farebox recovery) - 35%.
Number of passengers for the Whāngārei urban bus service - increases annually.
Nil.
Public transport subsidy per passenger kilometre - $0.27.
