Australian Government Productivity Commission: Public Transport Pricing

[ozbob]

Australian Government Productivity Commission

Public Transport Pricing

>> https://www.pc.gov.au/research/completed/public-transport

Commission research paper
This research paper was released on 15 December 2021.

COVID-19 has decimated public transport patronage and revenue in all Australian cities. The recovery period provides time for state and territory governments to re-think how they price and deliver sustainable public transport services. The report provides a roadmap for this, while highlighting the pitfalls of some populist pricing approach

Public Transport Pricing (PDF - 2309 Kb)
Public Transport Pricing (Word - 7140 Kb)

Key points

Subsidising public transport is necessary because of its role as a human service that aims to provide affordable transport to most people. Subsidies can also be justified on efficiency grounds, not least because of their role in partially addressing road congestion and in meeting the large fixed costs of transport networks.

However, most jurisdictions use relatively simple and ad hoc approaches to setting fares and subsidies, which do not systematically address either equity or efficiency goals. Fares often do not change from year to year or only increase with inflation.

Consequently, public transport fares have become decoupled from costs, with the risk that governments' budgetary comfort zones will be breached, jeopardising future service quality, which is the most important driver of patronage.

Better pricing would recognise that peak charges should be higher and timed to make improved use of transport assets, prices should better reflect that buses are less costly than trains, and longer distances travelled should come with higher prices.

Avoidable road congestion in Australia's cities cost an estimated $24 billion in 2018-19 and, unless countered, will grow by an estimated 45 per cent by 2029-30. Lower public transport pricing partly assuages congestion, but road user charges are a much better solution for road congestion and would make peak pricing on public transport more effective for demand management. Judiciously applied parking levies would also help and can be introduced now.

At current subsidised levels, most people can afford public transport. However, concessions are inadequately targeted. Some people experiencing disadvantage cannot access concessional fares, while some high-income customers are eligible for generous discounts.

The disruption to public transport arising from COVID-19 provides a few years of breathing space for jurisdictions to re appraise pricing structures and levels, and to transition to new models. The NSW Independent Pricing and Regulatory Tribunal (IPART) and Infrastructure Victoria have already developed pricing approaches that could usefully be replicated — to varying degrees — in all jurisdictions.

IPART, in particular, has a unique role in providing transparent rigorously-based pricing advice to the NSW Government. Other jurisdictions, particularly larger ones, could benefit from a similar arrangement.

The temptation to lower prices in the period before a resumption of normality in public transport use would merely savage revenue by more and would be an ineffectual way of increasing patronage. Fear trumps a few dollars of ticket discounts.

[#Metro]

"Buses are less costly than trains" - they clearly are economists who don't use or understand network pricing, the irrationally of charging a transfer penalty fare.

On the other hand I've been highlighting the inconvenient truth that there is a weak relation between fares and patronage, and a much stronger relationship between service quality and ridership. People are happy to pay more for quality (incidentally, which is why many own cars).

[#Metro]

Highlighting this here, as it is a known thing, now confirmed by the PC.

" Similar issues arise when considering the relative role of fares and service quality in stimulating patronage, and the implications for subsidies. In the scenario above, a 10 per cent increase in fares raises the overall effective cost of travelling to the customer by only 1.8 per cent. Patronage is more responsive to improved service quality than to lower fares..."

[SurfRail]

Economics is functionally useless as far as I'm concerned.  Best off ignored for nearly every purpose.

[#Metro]

People are willing to pay for quality. Let's support that. QUALITY.
Econ is often ignored - with disastrous results.

Slap charges on car parking at train stations, just like Perth.

[ozbob]

https://twitter.com/ozbob13/status/1471132456854065152

[ozbob]

https://twitter.com/urbanizationist/status/1471018980399747072

[Jonno]

People are willing to pay for quality. Let's support that. QUALITY.
Econ is often ignored - with disastrous results.

Slap charges on car parking at train stations, just like Perth.

Get rid of car parking at station (turn into affordable housing in mixed-use developments) except a handful on the extreme outskirts...and the only if proven other options are not better!

[verbatim9]

Brisbane Times---> Productivity Commission calls for new public transport fares and fees on cars

Public transport would be dramatically overhauled under a Productivity Commission study that backs higher peak fares, different prices depending on a commuters' choice of transport while supporting congestion charges and higher parking fees on private cars.

In a report released on Wednesday, the commission also warned states against free fares to entice commuters back to the nation's trains, trams, ferries and buses, saying it would put a hole in their budgets and achieve little but encourage over-crowding at the busiest times of the day.

[verbatim9]

^^New fare incentives likely to come over the next year, as well as potential peak surcharges.

[Jonno]

^^New fare incentives likely to come over the next year, as well as potential peak surcharges.

The key issue is the significantly over prioritization of investment in driving over walking, cycling and public transport! Increasing peak prices in Bris/SEQ is likely to see a rapid decline in public transport usage! We have seen this with increases in the past! Alternative is just too attractive!  The report above touches on it but fails to really address the sheer scale of subsidization of driving!

It talks of "losing the link between fares and the costs of service" yet the main competitor has no such linkage and isn't even close to having it being made.  is t is a complete double standard,

[verbatim9]

There will be incentives to counteract peak surcharging. Vehicles will be charged too as the productivity commission indicates. So it will likely be cheaper to catch a bus down Coronation Drive into the city or cross town rather than driving.

It is the first step towards distance changing for all modes, which is one of the best and efficient charging mechanisms for the transport sector.

[verbatim9]

https://twitter.com/urbanizationist/status/1471018980399747072

I believe that trains in NSW are more expensive than other modes and are currently charged differently. Incentives for regular travellers, as well as daily and weekly caps seems to counteract this anomaly.

The roll out of smart ticketing around the country can handle different charges for trains if that is to occur?

[#Metro]

The key issue is the significantly over prioritization of investment in driving over walking, cycling and public transport! Increasing peak prices in Bris/SEQ is likely to see a rapid decline in public transport usage! We have seen this with increases in the past! Alternative is just too attractive!  The report above touches on it but fails to really address the sheer scale of subsidization of driving!

Not really. PT is much more than just the peak, as we have seen with BUZ rollout which doubled Sunday patronage. The main motivator is QUALITY. It is the same reason why route 198 Highgate Hail and Ride is more or less empty no matter what the fare is, and why people pay to ride electric scooters when walking is free.

What is the value proposition? Low or no fares for no service? Or value for money.

The network needs to be reformed because quality is expensive, and there is enormous duplication in the BCC bus network.

The commission lays it out:

In the scenario above, a 10 per cent increase in fares raises the overall effective cost of travelling to the customer by only 1.8 per cent.

It, therefore, follows that a 10 per cent decrease in fares is only going to gain 1.8% patronange which would not come anywhere near covering the cost of subsidising the extra passengers now on the system, particularly during peak hour when existing vehicle capacity is more or less at capacity.

It would also be inequitable because peak hour travellers generally are travelling to work and therefore earn an income.

[Jonno]

Call me skeptical but Govts will use this to increase fares to keep pace with costs whilst completely ignoring the 6x subsidy of driving and the lack of any link to or even discussion on the cost for driving.  It will mention congestion charging....but nothing will be done and parking will be free where possible.  The link between services and the fares is just an excuse to not invest in or prioritise walking, cycling and public transport. Yet billions will be spent on road infrastructure based on inaccurate and "false-assumption" filled business cases.  The investment paradigm needs to change before we even look at the fare to cost ratio.

Not advocating for free as not necessary but don't link fares to service until you made it a fair playing filed.

[#Metro]

Call me skeptical but Govts will use this to increase fares to keep pace with costs whilst completely ignoring the 6x subsidy of driving and the lack of any link to or even discussion on the cost for driving.  It will mention congestion charging....but nothing will be done and parking will be free where possible.  The link between services and the fares is just an excuse to not invest in or prioritise walking, cycling and public transport. Yet billions will be spent on road infrastructure based on inaccurate and "false-assumption" filled business cases.  The investment paradigm needs to change before we even look at the fare to cost ratio.

Not advocating for free as not necessary but don't link fares to service until you made it a fair playing filed.

That would be never or waiting for an indefinite period, which isn't really a good position. Cars will have to be moved to a distance based charge (as with scooters) as they become electric and the money from petrol excise disappears. Rolling out things like Free Tram Zones, fare free fridays are gimmicks and damaging ones at that.

Governments do not move on hard issues until a crisis happens because the politics and public acceptability are not yet there. But it is coming - you cannot have all electric fleet and no petrol excise revenue.

[ozbob]

There is some merit in this research paper, and some things which ignore the reality of networks.

I think this will come and go, ignored largely,  the various jurisdictions will continue to do what they have largely done - mediocrity.

#carryon ...