The Bus and Coach Association has admitted it has no option but to push down wages if it wants to run services in metropolitan regions.
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Trade unions raised concerns at an election meeting on transport issues in Wellington.
They won support from three of the five parties who took part in the forum.
Louisa Jones, of the First Union, complained that city authorities were getting cheap public transport at the expense of the workers.
She said the competitive tendering model meant that any company wanting to win a bus contract had to do so at the expense of staff.
"Buses all cost the same amount of money, diesel costs the same amount of money.
"The main area where bus companies can compete is on wages and that is what they have been doing, driving down the wages of workers," she said.
Drivers were working longer hours, which caused fatigue, she said.
Jake McElwee, of the Bus and Coach Association, said this was not his fault, or the fault of companies he represents.
"We didn't design the public transport operating model, that was forced on the industry by central and local government.
"They wanted to get better value for money from public transport contracting.
"Ultimately if you are tendering on price - and price is one of the main determinants - wage rates are obviously one of the variables that go into that price."
After making her complaint, Ms Jones won some strong support from Green Party transport spokeswoman Julie Anne Genter.
"The problem is if we are tendering out for operation of services, and we are not protecting wages and working conditions, then we are eroding the quality of the service and we are eroding the things that are fundamentally valuable to New Zealanders.
"I think all of us want to live in a country where people who go out to work for a day will get paid a decent wage that they can live off," she said.
New Zealand First delegate Denis O'Rourke said the current system was not working well.
There was also some support for this position from the Labour Party.
Act and National did not address the issue.
