A new contract payment regime for school bus operators will be introduced from 1 July 2007 to help operators reduce the average age of Tasmania’s school bus fleet.

The Minister for Infrastructure, Jim Cox, told a Budget Estimates Committee today that the current Review of Core Passenger Services had found that the returns to school bus operators were highly inequitable. 

“Some operators are paid well above the current industry benchmark and others are comparatively under funded,” he said.

“Agreement has been reached between the Government and the Tasmanian Bus Association on the composition of a new contract payment regime called the Bus Cost Model and a Memorandum of Understanding was signed last week (21 June).

“This will place all operators on a level playing field and remunerate them equitably.  The average age of the bus fleet will also improve substantially.”

Mr Cox said that under the Bus Cost Model, operators of a school bus contract would receive funding to cover the costs of providing that service. 

He thanked the Tasmanian Bus Association for the input it had made in developing the Bus Cost Model, particularly the role it had in determining the costs of providing a school bus service.

“From 1 July 2007 school bus operators who sign up to a New Service Contract will receive payments that cover drivers’ wages, the bus running costs, their business operational costs, bus capital costs and profit.  The Bus Cost Model also specifies how payments are indexed into the future.

“The capital element of the Bus Cost Model requires operators to invest in better quality buses than at present. 

“Capital payments will be suspended where the age of the bus exceeds a specified age and operators who purchase older buses will receive lower capital payments than those who buy newer buses.”

Mr Cox said that he expected some operators to be opposed to the introduction of the Bus Cost Model. 

“Some operators are currently being paid well above the current industry benchmark and presently have no requirement in their contracts to improve the quality of their school bus. 

“With the introduction of the Bus Cost Model these operators will no longer receive payments that are higher than others in the industry who are providing similar services. Their contract will also require them to maintain their bus within a given age range.”

He added that arrangements, which have been agreed with the Tasmanian Bus Association, would be made to ensure that financial impacts on operators were minimised.