Margaret Thatcher, former British Prime Minister, is attributed with the statement: Any man who rides a bus to work after the age of 30 can count himself a failure in life!
In early 2014 governments were jacking up public transport fares yet again. Sydney increased rail fares by 3.5% and bus fares by 2.4%, Melbourne increased fares across the board by 2.4% and Brisbane by 7.5% (three times annual inflation). “FARE-mageddon” quoted the Brisbane media.
Fare increases in Brisbane were reduced to 7.5% in 2013 (following the change of government), after 15% annual fare increases for a two years. Public transport patronage appears to have dropped significantly as a result.
The subsidy of the public transport farebox in Brisbane is about 73% (ie for every dollar fare that is paid by a user, the government has to kick in another 3 dollars), and this is just for operating costs.
So how do Australian public transport fares compare?
A Brisbane blogger did a crude analysis for a weekly public transport ticket for a 5km journey to the CBD, adjusted for per capita income.
This shows Brisbane amongst the most expensive compared to other world cities on the list, and certainly does not provide comparable service frequency, coverage or quality to the best performers: Singapore, Hong Kong or Tokyo; where the farebox more than covers operating expenses.
What is a fair fare policy?
Public transport fare policy is complex and fraught with compromises. Some call for free public transport. Others suggest the cost of car travel in peak periods should be surcharged to provide a more level playing field (like London and Singapore congestion charges).
At the same time, governments are trying to balance budgets, with less revenue and increasing demands for services.
Government subsidies for public transport are justified on the basis of economic, social and environmental benefits to the whole community, in addition to the direct benefits to users.
Travel costs for car users on the other hand are not so clear, with indirect and ‘sunk’ investment costs – unlike the upfront ticket price paid for each public transport journey.
Unless a road is tolled or there is a congestion charge, then the cost of operating the road network is not as direct.
Should we have lower fares?
Why not reduce fares, or make public transport free, to encourage more use?
Firstly there are no large citywide free public transport systems, so no one agrees this is a good idea.
Most large cities are already crowded in peak periods and it is very expensive to provide additional infrastructure and services to cater for any increase in patronage from a free fare policy.
Even at 30% farebox recovery for Australian cities, the revenue received is still substantial and difficult to forego in the current fiscal climate.
How to improve the financials?
Three ways to improve the financial performance of public transport are: increase patronage; make better use of the current infrastructure and services; and improve farebox recovery.
Increasing patronage can also mean providing increased capacity, particularly during peak periods where current services are crowded, which are most expensive to supplement (extra lines, extending CBD stations).
Making better use of current facilities means increasing the utilisation of current buses and trains – getting more people to travel at less crowded times, to less crowded locations or in the contra-peak directions – not easy tasks and certainly no quick results.
Improving farebox recovery is also challenging as it means increasing fares, tightening up fare concessions, and reducing fare evasion. It is difficult to get support for these measures and the potential impact is probably not that great.
Fair public transport fares?
Australian public transport agencies have their work cut out for them justifying fare increases.
Fares are expensive and financial performance challenging when benchmarked against other world city systems.
A multi-faceted approach to pricing policy for all urban passenger modes is the logical starting point.