How to get concession public transport and not be poor

Concession public transport is only for low-income people, such as age pensioners, disability pensioners, students and the unemployed. Right? Wrong!

This post will examine two cases where one can be quite well off (a millionaire household, even) yet get concession or cheaper public transport. It raises some welfare policy issues of who gets what, whether the greatest benefits go to the most needy, or if it's more about votes.

Chapter Six of the Victorian Fares and Ticketing Manual explains who gets concession and free travel.

While many groups get free or concession travel, in this post we will talk about only two; low income earners and seniors.

Low income earners

This group of passengers do not need to be on any welfare benefit, but they do need a Low Income Health Care Card, issued by Centrelink.

Maximum qulifying weekly incomes for various household types are shown here, but for our purposes an amount of $23192 for singles and $38636 will suffice. Income can go up a bit and you will not lose the card, but you won't be able to renew it unless it is below the qualifying amount mentioned above.

The income limits above are not particularly high. There would be many people working part-time (and even some full-timers) who could qualify. Since commuting is a major added expense when one goes to work, the effect of this benefit as it applies to public transport is to assist the 'working poor' and provide an incentive to get off welfare.

If income rises further (eg extra hours at work) a poverty trap effect is created as the concession entitlement cuts out and the passenger must pay full fare. This difference is about $23 per week, assuming Zone 1+2 travel. This is not unique to public transport, and also applies to any heavily targeted welfare benefit with a steep taper rate. The alternative in this case is lessening the benefit withdrawal taper rate, but the problem with this is that welfare becomes both dearer for the taxpayer and less targeted at the needy.

I see nothing wrong with low income working people getting concession travel on public transport, and indeed there are social benefits, especially if it improves work incentives.

However it gets interesting if the cardholder is not working, for instance living off investment income.

Since the Centrelink low income health care card has no assets test, only an income test, you can have quite a lot of assets and still qualify for one (and thus concession travel). How much? Well it depends on the deeming rates.

Working back from the income limits above the result is up to $386533 of assets for singles and up to $643933 for couples. This is a rough (conservative) calculation based on a 6% deeming rate; where 4% applies for part of the capital the figures will be higher.

On their own these are quite respectable asset levels to be deriving government benefits (or concessions). But that's not all. Since the family home is exempt we can add that as well. Assuming ownership of an average home (worth $400000), you can be worth nearly $800 000 as a single or over $1.2 million as a couple and still get transport concession benefits!. Or to put it in another way, you can be a millionare couple who owns their own home and gets $38000 pa and still get concession tickets since Centrelink deems you 'low income'!

Seniors Card

Sick of slumming it on just $38k pa so you can get concession fares? Well you've got a treat coming as soon as you turn 60! Provided you watch your working hours (because I doubt others will), getting a Seniors card is your key to a wonderland of benefits unavailable to working people.

Younger Centrelink clients report various letters, compliance checks and audits to verify you're still entitled to benefits (which is as it should be to maintain the welfare system's integrity). But if you've got a seniors card, about the only mail you'll get are free country travel vouchers. Plus you can rely on the local rag to convey news of seniors festivals (more free travel!) and other goodies.

Admittedly the above has been a bit flippant but the reason will become apparent later. But beforehand, let's distinguish between seniors and (age) pensioners. All age pensioners are seniors, but not all seniors are age pensioners. The single age pension at around $280 per week (single) isn't exactly a life of caviar. However at least they do get various Centrelink benefits, and the assets and income tests ensure there is a sound needs basis for them.

Seniors Card is a quite different animal in no way related to various needs-based Centrelink pension and health care cards.

Over 60? Victorian resident? Well that's two out of three criteria met. The other one is a rather curious work hours test. If you're delivering junk mail around the streets part-time you're in. If you've got your own surgery so can control your work hours to 34 per week you're in. Ditto if you're a BHP board member. But if you're a PAYE earner working 38 hours per week you fail. Eligibility boils down to the control you have over your time, and self-funded investors or business proprieters have more of that than full-time (and taxpaying) employees. Plus, unlike Centrelink cards, no assets or means tests apply.

Since its criteria is so rubbery, you'd think that Seniors Card would attract less generous conditions than than the concession fares enjoyed by holders of Centrelink cards (which have needs-based eligibilty requirements). Again you'd be wrong, at least for Melbourne.

Compare the daily ticket fares between a Zone 1+2 concession daily ($5.30) and the Seniors Daily ($3.30). The non-means tested Seniors Daily is nearly 40% cheaper than the means-tested regular concession tickets. This indicates that if the Seniors Daily ticket has a sound reason for existence it cannot be on fairness, equity or welfare grounds.

However my journey to find a rationale for the sub-concession Seniors Daily did not return empty-handed. This came about because a lot of senior travel is 'discretionary' or 'impulse'. And elasticity for impulse, recreational and other concession fare trips is higher than (say) another person's journey to work.

On all modes interpeak weekday service frequencies are higher than during the weekend or at night. Working people are working and youth are at school during this time. So that leaves the unemployed and seniors as the main potential interpeak passenger base. While services may not be crowded, interpeak patronage is still important to a successful public transport system.

And as the buses are already running, it seems to be in everyone's interests to stack them with sub-concession passengers rather than have them empty. The same seniors who so powefully resist a ticketing change can also resist a bus service cut, so it may be that it is in the interests of operators and public transport generally that seniors form a political constituency for a route's survival.

Since public transport relies on public funding it is inherently political and susceptible to government decisions with regard to services and service levels. A bus route full of seniors is less likely to be withdrawn than one that runs empty, so from the point of view of self-preservation it seems better to carry seniors cheaply, even if the equity is terrible vis a vis concession passengers.

This leads us to a conflict; the policy rationale for the Seniors Daily ticket is poor, but it has great value in getting 'bums on seats', especially during the interpeak period. Outright abolition of the Seniors Daily (while the best on equity grounds) could cost patronage and, given recent events, is politically impossible. Another option could be to maintain the Seniors Daily but confine its use to off-peak travel. This might shift a small amount of discretionary peak senior travel to the off-peaks, so slightly relieving congestion and increasing overall patronage and revenue. Plus equity is slighly improved vis a vis concession passengers as the latter's relative penalty is less ($3.30 vs $4.75 instead of $3.30 vs $5.30). Politically, event this may not be worth the trouble, despite its policy soundness.

Conclusion

I have illustrated two ways in which wealthy households can get concession (or cheaper) public transport.

The first is through the Centrelink low income health care card. Though some millionaire households (living on interest or rents) also qualify overall it is generally in the public interest that such cards continue to be good for concession travel because the main benficiaries would be the 'working poor'.

The second is through the Seniors Card, which can sometimes offer cheaper travel than available to concession holders. The Seniors Card (and thus the allied Seniors Daily ticket) has slack eligibility criteria, fails all equity tests and appears to be more about buying votes. The Seniors Daily however successfully promotes off-peak use and the retention of this ticket for off-peak travel would slighly improve equity while still promoting patronage.