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Utilisation of Spare Capacity

This policy is the product of joint agreement by the NSW Department of Ageing, Disability and Home Care (DADHC) and the Ministry of Transport on how spare capacity for community transport services funded under the Home and Community Care (HACC) program should be managed.

1. Purpose

This Policy Paper has been prepared by the Ministry of Transport for the purpose of achieving consistency across NSW in how spare capacity in eligibility based funding programs is used by Community Transport Operators to alleviate transport disadvantage. This is a key consideration in minimising duplication of resources and obtaining best value for money from existing services.

The Policy has the endorsement of the NSW Department of Ageing, Disability and Home Care (DADHC) and is consistent with the Home and Community Care (HACC) National Program Guidelines 2007.

2. Aims

The aims of this policy are to:

  • Increase the amount of community transport available to communities and in particular to transport disadvantaged individuals who do not conform to specific community transport funding program criteria
  • Facilitate consistent approaches to managing spare capacity in community transport operations
  • Foster the effective utilisation of community transport resources in order to minimise duplicate funding of resources and improve economies of operation for primary community transport funding programs such as the HACC Program

3. Definitions

Transport disadvantage is defined as a circumstance or set of circumstances that leave those who are affected by it in a situation where they have limited or no access to private transport and they have difficulties in accessing mainstream transport systems to meet their daily needs.

Spare capacity. For the purposes of this Policy, spare capacity is considered to be in the form of either spare seating capacity or spare service capacity. These terms are defined as follows:

Spare seating capacity - the unutilised seating capacity where a vehicle and driver are scheduled to provide a service to a number of clients which is less than the maximum passenger capacity of the service.

Spare service capacity - where a vehicle or vehicle and driver combination are available for tasking to provide a transport service but are not being utilised.

4. Context

Most Government community transport funding in NSW is targeted at individuals or groups conforming to specific criteria, in order to achieve specific policy, legislative or social goals.

Funding Agreements normally define the target groups of different funding programs and, generally, targeted funding may not be used to provide services to people outside the specified scope of the particular funding program.

It is recognised that:

  • Transport disadvantage can be experienced by individuals or groups of people who are outside the scope of funding program eligibility guidelines
  • Spare capacity exists within some Community Transport services and resources funded under eligibility based programs
  • The NSW Government supports the notion of the efficient use of available transport resources to meet the needs of transport disadvantaged people, where the use of that resource neither contravenes nor diminishes the capacity to fulfil its primary function

5. Policy

Spare capacity, as defined above, can be legitimately utilised to meet the needs of individuals or groups who are transport disadvantaged but who fall outside the specific eligibility criteria for the particular program through which the resource is funded (primary funding source).

All NSW Ministry of Transport funded Community Transport Operators should seek to maximise the value of their resources to local communities by utilising spare capacity to alleviate transport disadvantage.

Utilisation of spare capacity must not result in a reduced capacity to address the needs of a primary funding source's target group clients or to deliver outcomes specified in Funding Agreements.

Utilisation of spare capacity should not result in an increased demand for funding from the primary funding source.

Spare capacity made available to communities in accordance with the above points should be priced in a manner which:

  • Is affordable to transport disadvantaged clients
  • Recovers any additional costs which would otherwise be incurred by the primary funding source associated with the delivery of service
  • Does not adversely impact on the clients of the primary funding source

6. Pricing spare capacity

Three primary considerations must be given priority when determining charges to be levied on consumers for the use of spare capacity within funded community transport services. These are:

  1. Utilisation of spare capacity within resources funded through specific targeted funding programs (such as HACC) should not:
    1. reduce the volume of service that would be otherwise available to existing or potential clients of the relevant program; or
    2. reduce the overall efficiency of funded service delivery such as through increased operational costs or reduced demand responsiveness for clients of the relevant program; or
    3. artificially increase or inflate demand for new resources funded through the relevant program
  2. A key contributor to transport disadvantage is an inability to afford commercially priced service solutions. To avoid compounding disadvantage to individuals or groups, the costing of community transport spare capacity should be approached with the objective to recover an amount necessary to ensure cross subsidisation from the primary funding source does not occur
  3. Costing spare capacity should not generate significant amounts of operating surplus

Given these considerations, charges made to clients utilising spare community transport capacity should be set as follows:

  • For spare seating capacity, costs should recoup any additional costs incurred in the provision of transport to non-target group clients and be levied on a pro-rata basis or have parity with the recommended contributions for clients targeted by the funding program
  • For spare vehicle or vehicle/driver capacity costs should reflect any additional expense involved in the vehicle hire such as those for fuel, maintenance, labour and vehicle depreciation to offset increased vehicle usage
  • Fixed costs such as those associated with registration or insurance, which must be met in order to provide funded service outputs, are not generally increased by utilisation of spare capacity, and should not be passed on to non-target group consumers