Five ways to slash living costs through public transport

Imagine if all Victorian state government departments were requested to make cost of living relief central to their budget bids, along the lines of the hypothetical memo below. 

 

What could be done in the public transport portfolio? Let's run through some options and consider their merit. 

1. Indiscriminate fare cuts

The reflex reaction for unimaginative politicians seems to be big fare cuts, ostensibly to reduce living costs. 

The Liberals in Victoria (2022) and Labor in Queensland (2024) tried that but both parties didn't win, with the latter losing office. Although the victorious Qld LNP matched Labor and made their 50c fare permanent. And re-elected Victorian Labor in 2022 had their own counter-offer, capping regional fares. 

These sorts of measures are 'race to the bottom' policies. They make public transport cheap rather than good. With some exceptions (more on those later) public transport's main problem is not its cost to users but that existing services don't work for the majority of trips most people take due to the network's continued CBD/weekday peak focus. Accessibility and safety at night are other barriers. Hence most trips are driven, despite the higher costs of car ownership and use. 

The most expensive trips are those that cannot be reasonably be made by existing public transport services due to a lack of coverage, operating hours, frequency or route directness. The expenses are magnified if they are the sorts of trips people make often, such as (but not only) the commute to work.

Costs rise even more if the lack of public transport forces a household into buying another car it would not otherwise need. The chance of this is greatest in outer suburbs or where the jobs that people have or want are at hours or in locations without service. 

Thus indiscriminate fare cuts without service reform are regressive; favouring the better off minority in well-serviced suburbs or travelling at times when service is good. That is especially so in Melbourne and Brisbane, the Australian capitals worst at providing disadvantaged areas with good public transport according to a Climate Council study last year. Those with no or little useful service are unlikely to start using it if the fare falls or vanishes. 

If you want to cut living costs there's better options, especially if you want to help those with the biggest cost of living challenges the most. Also there's no related efficiency dividends. D.

2. Fairer family fares

Unlike the above this is a more nuanced approach based on what is and is not value for money with the current fare structure.

Through their pursuit of (almost) flat fares everywhere, governments (both sides) have arguably made  fares for long distances trips too cheap while fares for many short trips are too expensive. It doesn't pass the 'pub test' and is costing the network patronage.

Weakened perceptions of value can cause some to rationalise their own fare evasion. For example when you've got cases where a short three hour errand in Zone 1 can cost $11 in fares, the same as a day trip to Warrnambool or Sale. More honest people might either refrain from travelling or drive instead.

People working from home two days a week has made myki pass weekly and monthly fares (that effectively made weekend and other incidental travel free) less an option. That exacerbates the above issues with expensive short trips such that Uber looks better value, especially for urban millennial and zoomer inner suburban working couples or even higher income singles. Both are politically important demographics that Labor competes with Greens for votes. 

Reform options here could include extending the 2 hour valid ticket period to 3 hours or some form of short distance fare (harder to implement). 3 hour fares permit more short return trips to be done on the one fare but the latter would be cheaper for those just travelling one way. The former is probably easier to implement with less revenue foregone.  

Suburban families with kids also get a raw deal if travelling together on public transport. Almost all have at least one (and usually two) cars. Driving and parking is no dearer with 5 people than it is with 1. Whereas public transport costs increases with the number of people carried. The current fare structure might be mostly tolerable for singles but it discourages families who will be induced to drive everywhere unless traffic is terrible (eg inner city major events). 

Some relief to this existed when more people had weekly or longer ticketing products that made weekends effectively free. Or for those that didn't the $2.50 Sunday (or later weekend) Saver. However the full fare weekend cap now stands at $7.60, an increase that has exceeded CPI. Thus, like with singles and couples, PT's value for metropolitan family trips has fallen. This contrasts to past fare structures that incentivised weekend family travel (example below).  

Making the fare structure more progressive to restore the differences between short and long trips and thus improve value for money is worth considering. Allowing up to two children per full fare paying parent to travel free on weekends would provide cost of living relief for working families. A more expansive version could extend this to school holidays and/or children of parents paying concession fares. 

Since weekend PT ridership amongst families is currently low, the foregone revenue of Families Travelling Together weekend fare cuts would likely be small. There may even be higher revenue overall from more parents travelling on weekends. 

Fare reform that makes short, especially off-peak, travel cheaper could be funded by making some longer trips dearer, or if that is not politically acceptable, scrapping the regressive CBD Free Tram Zone (that places unnecessary pressure on our trams with consequences including for accessible access).  And like with families some of the costs may be offset by higher revenue from higher patronage.  

Selective fare reform that targets cases where public transport is particularly poor value for money could be worth considering as part of a living cost relief policy. Opportunities may exist for it to be done in a way that maximises patronage growth opportunities but minimises revenue foregone. Extending two hour fares to three hours and/or permitting free weekend travel for children with parents could be examples along these lines. B.

3. A job-ready PT network

Cutting living costs is one part of balancing household budgets. Maximising income is equally important for those in the workforce. 

Transport can help by making more jobs reasonably accessible from peoples' homes. Especially homes in suburbs with the highest cost of living stress, and for people with the lowest pay.

Another gain is that people can take on shifts that they previously couldn't or didn't pay due to improved and affordable transport options (see Uber Tax below). 

The starting point for all this is understanding the strengths and weaknesses of the current public transport service offering. It generally suits those whose jobs are weekdays 9-5 in the CBD as demonstrated by its high modal share. However that's a minority of the workforce given the number of jobs that are either suburban and/or have working hours outside of when public transport operates frequently or even at all. 

If you want more people to have to have the opportunity to be in better jobs with better pay then public transport needs to become an enabler, not a barrier. This means overcoming the class bias in current PT service provision by introducing more frequent 7 day timetables that better reflect the seven day demands of retail, hospitality and care sector jobs. 

There also needs to be improved connections to underserved employment areas, with the proposed Tarneit - Laverton Route 154 bus an excellent example of which there should be more. 

I discussed making our network more job ready here. This is basically a targeted service upgrade package to improve service frequencies, operating hours and network coverage to better suit more jobs. 

Implementation costs are kept low by (in many cases) working our existing train, tram and bus fleet harder to provide reasonably frequent service all week, not just for a few hours each day of it. There is also likely to be partly offsetting fare revenue gains as services targeted for upgrade (eg Craigieburn line, bus routes in Wyndham, weekend buses serving major shopping centres like Highpoint, Northland and Chadstone) already have above average patronage productivity and great catchment demographics. 

The biggest winners from this would be workers and their families in diverse western, northern and south-eastern suburbs that swung greatly against Labor in 2022 and again in the 2025 Werribee by-election. A job ready network would also assist employers with a bigger labour pool and support major events which rely on huge temporary workforces, mostly not on high incomes. 

Of all initiatives here, a job ready public transport network is the best targeted at not only cutting living costs but also boosting incomes and ensuring that people keep more of what they earn. It also stacks up politically as it delivers gains for people who have historically been overlooked but which are now more willing to change their vote. A. 

4. Growth area bus coverage

Even if your nearest industrial area gets a bus it is no good if there is still no bus from your home. GAIC has funded some bus upgrades but there's still suburbs, such as Mt Atkinson, that have yet to gain a regular bus service. Also, unlike direct budget funding, GAIC funding is limited term and conditional such that new routes are often placed over existing unreformed routes. 

New coverage almost certainly does require new buses. As do higher frequencies in growing areas like Pakenham that have had no significant improvements to their hourly buses for years. 

There are however suburbs quite near GAIC areas, such as Narre Warren South, that have a plethora of complex, overlapping but usually infrequent bus routes. Scope may exist for cost-effective bus network reforms in such areas to deliver benefits for growth and nearby established areas alike. 

Peoples' habits are often set when they do something big in their lives, eg a house move. If people move into a suburb with no public transport households need to buy more cars than what they might need or want if a public transport service existed. Then when they own cars they are likely to use them, contributing to local traffic woes (such as famously along Donnybrook Road in Kalkallo).

A car is also an expensive and depreciating asset that people sometimes borrow money for, typically second only to their home. They cost around $13000 per year to operate, with an EV only $2500 cheaper. If 10% of households in a growth suburb are able to defer a car purchase for a year due to it having public transport then that is a big cost of living saving for many people, including the opportunity to build a financial buffer for peace of mind or a life goal. 

It's indisputable. Having public transport in growth suburbs as soon as people move in is a huge benefit, including for peoples' financial security. A. 

5. Buses for Battlers: Service uplifts in high needs areas 

There is a band of established middle to outer suburbs that always seem to miss out on important services. Their populations may have high needs but for many years were taken for granted by major political parties. Either because they can hold seats without much effort, or the seats are unwinnable.

They are often diverse, have low educational outcomes and many not in paid work and on benefits. Many were home to industrial workers after WWII but were pummelled by 1970s - 1990s tariff cuts and deindustrialisation, causing these suburbs to degentrify. Them not having a growing population has caused them to be skipped over in favour of suburbs further out with regards to government investment. 

You'll find Melbourne examples around Laverton, St Albans, Broadmeadows, Campbellfield, West Heidelberg, Dandenong and Frankston. Some have got public transport upgrades but others have been passed over. This is even though the services that do run might have higher than average boardings productivity. Partly as a significant demographic (especially migrant women) do not drive or own cars.

As well as its other benefits seven day public transport can assist people to access urgent medical services or flee violence at home. Plus there are its social inclusion and participation benefits, along with connecting people to healthier, fresher or cheaper food options. 

To be fair the majority of these areas do have bus service. But it is often limited days and hours. Some high-needs areas like around St Albans, Glenroy, Campbellfield, Dandenong North and Doveton did not get a fair go from the (otherwise) wide-ranging Meeting our Transport Challenges 7 day bus upgrades from 2006. Brimbank (St Albans) gained significantly in 2014 with its new network while parts of Greater Dandenong gained from the Route 800 upgrade in 2024.

The usage success of the Route 800 upgrade demonstrates that people in high needs areas do use public transport if the service exists. Seven day upgrades like these also make the network more job-ready, so they further two objectives at once. 

A 'Buses for Battlers' package for high needs areas like Laverton, Brooklyn, St Albans, Glenroy, Campbellfield and Greater Dandenong might start with something like this: 

* New 7 day service on the following: 414, 431, 531, 536, 538, 802, 804, 814, 844 
* Extend following to 9pm: 423 424
* Boost weekend and evening service frequency on: 406, 408, 813, 828

Costs would be confined to drivers, fuel and maintenance as the buses needed to operate these upgraded services already exist. There may also be scope to find service hours by adjusting timetables on lesser used routes serving areas with lower social needs for an overall benefit.  

Research by people like Prof John Stanley has established high social benefits from upgraded bus services in low SIEFA areas like the above. A $5-10m pa package could deliver substantial gains in areas that need it most. A. 

Conclusion

More useful and better value for money public transport can be a worthwhile way to cut living costs and even improve household income. Five approaches to this have been discussed above. 

Paying for these 'higher good' gains may require offsetting savings to be found through attention to costs. The culture around that perhaps hasn't been as strong lately as it was thirty years ago. Examples may include control of project costs, fare evasion, payments to franchisees per service kilometre, addressing network overservicing and route duplication, staffing reviews and more. I discussed some of these management issues here and here.