Transport Secretary Michael Wood said the money – allocated in this year’s budget – would be spent over four years to raise base wages to $30 an hour for urban services and $28 an hour for regional services.
Wood said about 800 drivers were needed across the country, including 500 in Auckland and about 120 in Wellington.
He said bus companies were forced into a “race to the bottom” situation by competing for the cheapest contracts to win business.
This was one of the reasons behind the Fair Pay Agreements legislation, which makes it possible to negotiate minimum employment and wage standards that apply to an entire sector of workers, he said.
“Improving the conditions of drivers will make it easier to recruit and retain staff, enabling frequent and reliable bus services,” Wood said.
“The minimum conditions have been developed through discussions between operators, public transport authorities and unions on how best to improve conditions in the sector and stabilize the workforce.”
Waka Kotahi NZ Transport Agency would work with public transport authorities and operators to implement the policy in each region as they contribute to the wage increases, and continue to index wages.
The funding can also be used to support split shift allowances of $30 per hour or a penalty rate of 1.2 times for work after 9 p.m.
“This will help the industry transition to standard terms and conditions for bus drivers, which currently vary widely across the country,” Wood said.
New conditions for drivers are supported by the sustainable public transport framework, announced in August, Wood said.
“We recognize the critical role public transport plays in our daily lives and our economic and environmental future.
“We are committed to supporting public transport and I am delighted to see the great collaboration in the sector that has been instrumental in delivering better conditions across the country.
“We continue to work with the industry on meaningful solutions to support public transport.”
In Wellington, the current shortage of about 120 drivers is expected to triple over the next decade.
Daran Ponter, chairman of the Greater Wellington Regional Council, welcomed the funding and said it would make a difference to the current shortages.
“We will work closely with operators and unions to work out the details and how to realize the benefits of today’s announcement and investment as practically as possible.”