Before 'Big Build' transport infrastructure projects assumed centre stage just over 10 years ago, too much of public transport management's time was wasted on matters that were at worst trivial (eg rebranding) and at best second-order (such as fares/ticketing). I discussed that last year.
That's a problem because executives can only juggle a few balls at once. If they pick the wrong balls then time gets wasted on fruitless dead ends to the exclusion of what can make a real difference.
That's a problem because executives can only juggle a few balls at once. If they pick the wrong balls then time gets wasted on fruitless dead ends to the exclusion of what can make a real difference.
For example DTP leaders squandered critical years on unproductive FlexiRide bus schemes while Cabinet support for transformative bus network reform flipped from support in early 2022 to rejection in late 2023. That basically killed the centrepiece of Victoria's Bus Plan launched two years prior. To save face the government now refers to any bus initiative, whether good or bad, as 'Delivering on Victoria's Bus Plan'.
Media attention can also skew perceptions of what is considered important. The commentariat loves Melbourne Airport rail but it's not the sort of whole-network game changer that western and northern rail plans, Metro train frequency upgrades and widespread bus reform would be. The latter three would benefit many people every day while not many would use airport rail more than a few time a year.
Fares is another hot topic. It's reached some prominence lately for several reasons. For example:
(i) Brisbane's experience with 50 cent fares (which have led to some patronage but not mode share growth on a network notorious for terrible service levels)
(ii) the pandemic experience which has led to the MR5 tram and soon to be train contracts effectively become simple 'fee for service' contracts with the government assuming all fare risk,
(iii) potential increased flexibility with myki's replacement as regards to the fare types available,
(iv) the coming state election campaign where there is a chance that parties enter in a 'race to the bottom' on fares rather than a 'race to the top' on service quality with regards to public transport (as also happened in 2022)
Opportunity cost of free or deeply discounted travel
Too much debate focuses on existing public transport passengers making existing trips. In other words instead of passengers paying $5 odd for a trip they might only pay 50 cents if fares were cut like in Queensland.
Less attention is given to the fact that the most expensive trips are those that aren't reasonably possible on public transport due to the latter's limited route coverage, hours and frequency. Such trips might cost $20 or more if taken by taxi or rideshare. Adding service so that more of these trips can be made by public transport results in even bigger savings than the first example.
Some might argue we should do both - ie cut fares and increase service. Victoria has most notably done that with V/Line. However while it has higher subsidies per passenger, V/Line longer distance trips are still relatively small in number meaning that the overall subsidy may be affordable. That is less so for more numerous metropolitan area trips which attract higher overall revenue.
Adding service and cutting fares is vastly better than just cutting fares but it still carries some opportunity cost; if fares were not cut even more service could be added. There may well be cities where there is already so much service that adding more is unnecessary but Melbourne is a long way from being one of them.
Because of this I have written far more about what's most important (the service) than what's less important (fares). Victoria is not the UK that combines insanely expensive spontaneous trip rail fares with generally low incomes. Our fare system is not without problems but caps provide a safety net to ensure that travel is never excessively expensive over the course of a year, something that could be strengthened if they were made weekly.
That makes fares a second order issue relative to service basics like operating hours, frequency, speed, reliability and connectivity whose absence can push travel on vastly more expensive travel modes. That's especially a problem if trips need to be made frequently, such as travel to evening or industrial area jobs (that aren't necessarily very high paying). The best way to make choosing the most expensive travel means an option rather than a necessity is to work our existing trains and buses harder across the week to deliver a more useful 'job ready network' such as I discuss here and here. The sort of bus routing, hours and frequency changes that have happened in parts of Wyndham this year are exactly the sort of job-ready reforms needed but far more of this is required across the whole metropolitan area.
Notwithstanding fares being a generally second-order issue, there are undoubtedly value for money issues that may have an outsized impact for specific trips. As well there are some perverse incentives and inequalities.
With fare structure reform back on the government's agenda, Below are some examples.
Fare reform priorities
While free or deeply discounted fares have significant opportunity costs so are not advocated, there are still cases where some existing trips are poor value for money. The perception that generates might even discourage travel amongst the honest and encourage fare evasion amongst the rest. Touch-on rates are low (especially on buses) with ignoring it appearing as an 'unofficial official' stance with a low chance of detection.
In other cases the fare system may have perverse incentives, such as encouraging station car parks to fill up earlier than they should or encouraging driving to the CBD fringe. There are also needless complexities such as some regional fares being cheaper and having different validity periods.
Certain groups get awarded free or deeply discounted fares based on who they are rather than due to any greater need than others who pay more.
Learn about the complexity of current fares and ticketing across the state in official publications here.
1. Need for a more progressive fare structure
The most glaring issue is that short trips are relatively dear compared to longer trips, with this perception being exacerbated by the government's statewide fare cap. As an example a short bus, train or tram trip in Zone 1 costs $5.50. Zone 2 metropolitan only trips are a bit cheaper ($3.50) but posters at stations take a Zone 1 centric view, and ignore mention of this.
That's particularly expensive if couples, groups or families are travelling. Taxis/rideshare may even be more competitive for some group trips that are not often made.
To be fair the Victorian government sought to address this for families with children. But they chose the most expensive means possible - that of making all travel for children fare free anywhere in the state from 2026. The family travel issue was known in the 1980s with their fix being free weekend travel for families accompanying one 'breadwinner' who had a periodical ticket.
While short trips are relatively dear the largely flat fare structure and the statewide fare cap make long distance trips insanely cheap. People are often swayed by relativity between prices rather than their absolute level. Thus very cheap long distance fares may have the unintended consequence of making fares for short trips look worse value for money than they are. Especially when government-published material actually fails to mention cheaper fares applicable, as per the Zone 2 station poster example above.
A fairer fare structure would restore some form of progression so that longer trips cost more than shorter trips. One option is some sort of short trip ticket. This should be multimodal and not penalise transfers (like some previous iterations did).
Another option could be to extend to two hour period to three hours to increase the number of short errands possible without hitting the daily cap. That alone could halve the cost of some trips, even before considering off-peak reductions.
The Infrastructure Victoria proposal to break up the multimode fare system to make bus fares cheaper should however be opposed as this introduces unnecessary complexities and makes bus network reform politically more difficult.
2. Scrap perverse incentives and complexities
The Early Bird allows early morning weekday workers travelling before 7:15am to get free travel on Metro trains. This was introduced to address crowding by seeking to spread the peak. However it is not valid for use on trams or buses. Neither can V/Line passengers on lines like from Melton or Wyndham Vale use it. This is highly inequitable and may be less relevant than in the past due to more working from home. A fairer approach may be to replace Early Bird with some form of cheaper off-peak fare applying across all modes.
Another example of single mode fares is the CBD free tram zone. This encourages people to drive to the CBD edge as well as discouraging train and bus use. It also limits tourism to areas outside the CBD and contributes to tram crowding in the city. The Free Tram Zone should be abolished to help pay for other fare reforms discussed here.
One complexity is the after 6pm offer where a 2 hour fare applies the whole evening. It is not clear how many people this benefits. There would be some (including evening workers) who would need to start their travel before 6pm so would still pay for a full day's travel. On balance there would likely be an overall greater good if this concession was replaced with some form of relative reduction in off-peak fares.
The $11 statewide fare cap has been overlaid on some complexities with regards to regional fares. There is likely scope for these to be simplified with fewer fare zones. There is also scope to harmonise with fares in Melbourne as different rates apply to create a true unified system.
Payment methods bring additional complexity, especially for honest occasional riders that current arrangements discourage. We went backwards when we removed the ability to manually top up a myki on buses during the pandemic with fare evasion ballooning afterwards. Moving to credit/debit card payment may help address this though the culture of fare evasion that has taken root in the meantime will make a compliance culture hard to restore.
3. Greater equity across types concession passengers
Victoria's Seniors Card is not means tested. A professional consultant working 30 hours per week qualifies while a PAYE earner working 38 hours per week does not. Despite that it offers more generous fare concessions than concession holders (whose concession travel rights are based on a genuine need).
The Seniors Card is socio-economically regressive, and, noting increasing community concern over intergenerational inequalities, should probably be means tested. Regardless of whether that happens or not (and it would be a courageous move), travel concessions that Seniors receive should not be more generous than the general concession conditions.
The above for Seniors is unlikely to happen - if anything policy trends have been going the other way towards more concessions to an (on average) asset rich and numerically increasing cohort (which makes clawing back excessive benefits politically harder). As an example Seniors got free weekend travel some time ago for travel in two adjoining zones some years ago with this to be extended to all trips statewide in 2026.
Seniors vary significantly in their financial means yet the trend has been to apply benefits universally, with age rather than need or means (unfairly) being a criterion for concession carve-outs. Not just here but overseas with the UK's 'triple lock' being one egregrious example while no such protections exist for the living standards of those who are younger and working.
Summary
Public transport fares is a politically fraught issue even though fiddling with them is less important than making services more useful when it comes to delivering genuine cost of living savings.
Reform of fares has winners, losers and opportunity costs. Presented are some ideas above that could address some of the perverse inequalities and incentives in our current fare structure.
See other Useful Network items here
Media attention can also skew perceptions of what is considered important. The commentariat loves Melbourne Airport rail but it's not the sort of whole-network game changer that western and northern rail plans, Metro train frequency upgrades and widespread bus reform would be. The latter three would benefit many people every day while not many would use airport rail more than a few time a year.
Fares is another hot topic. It's reached some prominence lately for several reasons. For example:
(i) Brisbane's experience with 50 cent fares (which have led to some patronage but not mode share growth on a network notorious for terrible service levels)
(ii) the pandemic experience which has led to the MR5 tram and soon to be train contracts effectively become simple 'fee for service' contracts with the government assuming all fare risk,
(iii) potential increased flexibility with myki's replacement as regards to the fare types available,
(iv) the coming state election campaign where there is a chance that parties enter in a 'race to the bottom' on fares rather than a 'race to the top' on service quality with regards to public transport (as also happened in 2022)
Opportunity cost of free or deeply discounted travel
Too much debate focuses on existing public transport passengers making existing trips. In other words instead of passengers paying $5 odd for a trip they might only pay 50 cents if fares were cut like in Queensland.
Less attention is given to the fact that the most expensive trips are those that aren't reasonably possible on public transport due to the latter's limited route coverage, hours and frequency. Such trips might cost $20 or more if taken by taxi or rideshare. Adding service so that more of these trips can be made by public transport results in even bigger savings than the first example.
Expressed in another way, the biggest benefits of just cutting fares accrue to those in areas already well served and whose residents have higher capacities to pay (typically affluent inner suburbs) while the big benefits of adding service come to residents whose current public transport services are limited and whose average trip distances are longer (typically less affluent outer suburbs).
Cutting fares is also more likely to result in less cycling and walking whereas making service better is more likely to result in mode shift from driving.
Cutting fares is also more likely to result in less cycling and walking whereas making service better is more likely to result in mode shift from driving.
Some might argue we should do both - ie cut fares and increase service. Victoria has most notably done that with V/Line. However while it has higher subsidies per passenger, V/Line longer distance trips are still relatively small in number meaning that the overall subsidy may be affordable. That is less so for more numerous metropolitan area trips which attract higher overall revenue.
Adding service and cutting fares is vastly better than just cutting fares but it still carries some opportunity cost; if fares were not cut even more service could be added. There may well be cities where there is already so much service that adding more is unnecessary but Melbourne is a long way from being one of them.
Because of this I have written far more about what's most important (the service) than what's less important (fares). Victoria is not the UK that combines insanely expensive spontaneous trip rail fares with generally low incomes. Our fare system is not without problems but caps provide a safety net to ensure that travel is never excessively expensive over the course of a year, something that could be strengthened if they were made weekly.
That makes fares a second order issue relative to service basics like operating hours, frequency, speed, reliability and connectivity whose absence can push travel on vastly more expensive travel modes. That's especially a problem if trips need to be made frequently, such as travel to evening or industrial area jobs (that aren't necessarily very high paying). The best way to make choosing the most expensive travel means an option rather than a necessity is to work our existing trains and buses harder across the week to deliver a more useful 'job ready network' such as I discuss here and here. The sort of bus routing, hours and frequency changes that have happened in parts of Wyndham this year are exactly the sort of job-ready reforms needed but far more of this is required across the whole metropolitan area.
Notwithstanding fares being a generally second-order issue, there are undoubtedly value for money issues that may have an outsized impact for specific trips. As well there are some perverse incentives and inequalities.
With fare structure reform back on the government's agenda, Below are some examples.
Fare reform priorities
While free or deeply discounted fares have significant opportunity costs so are not advocated, there are still cases where some existing trips are poor value for money. The perception that generates might even discourage travel amongst the honest and encourage fare evasion amongst the rest. Touch-on rates are low (especially on buses) with ignoring it appearing as an 'unofficial official' stance with a low chance of detection.
In other cases the fare system may have perverse incentives, such as encouraging station car parks to fill up earlier than they should or encouraging driving to the CBD fringe. There are also needless complexities such as some regional fares being cheaper and having different validity periods.
Certain groups get awarded free or deeply discounted fares based on who they are rather than due to any greater need than others who pay more.
Learn about the complexity of current fares and ticketing across the state in official publications here.
1. Need for a more progressive fare structure
The most glaring issue is that short trips are relatively dear compared to longer trips, with this perception being exacerbated by the government's statewide fare cap. As an example a short bus, train or tram trip in Zone 1 costs $5.50. Zone 2 metropolitan only trips are a bit cheaper ($3.50) but posters at stations take a Zone 1 centric view, and ignore mention of this.
That's particularly expensive if couples, groups or families are travelling. Taxis/rideshare may even be more competitive for some group trips that are not often made.
To be fair the Victorian government sought to address this for families with children. But they chose the most expensive means possible - that of making all travel for children fare free anywhere in the state from 2026. The family travel issue was known in the 1980s with their fix being free weekend travel for families accompanying one 'breadwinner' who had a periodical ticket.
While short trips are relatively dear the largely flat fare structure and the statewide fare cap make long distance trips insanely cheap. People are often swayed by relativity between prices rather than their absolute level. Thus very cheap long distance fares may have the unintended consequence of making fares for short trips look worse value for money than they are. Especially when government-published material actually fails to mention cheaper fares applicable, as per the Zone 2 station poster example above.
A fairer fare structure would restore some form of progression so that longer trips cost more than shorter trips. One option is some sort of short trip ticket. This should be multimodal and not penalise transfers (like some previous iterations did).
Another option could be to extend to two hour period to three hours to increase the number of short errands possible without hitting the daily cap. That alone could halve the cost of some trips, even before considering off-peak reductions.
The Infrastructure Victoria proposal to break up the multimode fare system to make bus fares cheaper should however be opposed as this introduces unnecessary complexities and makes bus network reform politically more difficult.
2. Scrap perverse incentives and complexities
The Early Bird allows early morning weekday workers travelling before 7:15am to get free travel on Metro trains. This was introduced to address crowding by seeking to spread the peak. However it is not valid for use on trams or buses. Neither can V/Line passengers on lines like from Melton or Wyndham Vale use it. This is highly inequitable and may be less relevant than in the past due to more working from home. A fairer approach may be to replace Early Bird with some form of cheaper off-peak fare applying across all modes.
Another example of single mode fares is the CBD free tram zone. This encourages people to drive to the CBD edge as well as discouraging train and bus use. It also limits tourism to areas outside the CBD and contributes to tram crowding in the city. The Free Tram Zone should be abolished to help pay for other fare reforms discussed here.
One complexity is the after 6pm offer where a 2 hour fare applies the whole evening. It is not clear how many people this benefits. There would be some (including evening workers) who would need to start their travel before 6pm so would still pay for a full day's travel. On balance there would likely be an overall greater good if this concession was replaced with some form of relative reduction in off-peak fares.
The $11 statewide fare cap has been overlaid on some complexities with regards to regional fares. There is likely scope for these to be simplified with fewer fare zones. There is also scope to harmonise with fares in Melbourne as different rates apply to create a true unified system.
Payment methods bring additional complexity, especially for honest occasional riders that current arrangements discourage. We went backwards when we removed the ability to manually top up a myki on buses during the pandemic with fare evasion ballooning afterwards. Moving to credit/debit card payment may help address this though the culture of fare evasion that has taken root in the meantime will make a compliance culture hard to restore.
3. Greater equity across types concession passengers
Victoria's Seniors Card is not means tested. A professional consultant working 30 hours per week qualifies while a PAYE earner working 38 hours per week does not. Despite that it offers more generous fare concessions than concession holders (whose concession travel rights are based on a genuine need).
The Seniors Card is socio-economically regressive, and, noting increasing community concern over intergenerational inequalities, should probably be means tested. Regardless of whether that happens or not (and it would be a courageous move), travel concessions that Seniors receive should not be more generous than the general concession conditions.
The above for Seniors is unlikely to happen - if anything policy trends have been going the other way towards more concessions to an (on average) asset rich and numerically increasing cohort (which makes clawing back excessive benefits politically harder). As an example Seniors got free weekend travel some time ago for travel in two adjoining zones some years ago with this to be extended to all trips statewide in 2026.
Seniors vary significantly in their financial means yet the trend has been to apply benefits universally, with age rather than need or means (unfairly) being a criterion for concession carve-outs. Not just here but overseas with the UK's 'triple lock' being one egregrious example while no such protections exist for the living standards of those who are younger and working.
Summary
Public transport fares is a politically fraught issue even though fiddling with them is less important than making services more useful when it comes to delivering genuine cost of living savings.
Reform of fares has winners, losers and opportunity costs. Presented are some ideas above that could address some of the perverse inequalities and incentives in our current fare structure.
See other Useful Network items here
2 comments:
My two headline grabber ideas without a race to the bargain basement:
- off-peak fares in Melbourne at the same rate as the weekend cap fares (not extended to V/Line beyond Zone 2)
- making Zone 1 local fares the same rate as Zone 2 local fares, possibly only after 9am (& buses from first service?)
While affluent suburbs like Camberwell, Albert Park & Brighton benefit, other areas like Footscray, Altona North, Brunswick and Fitzroy have a mix of incomes & more renters where such relief would be welcome.
One thought on the early bird fares...it's more a tradie special for all the CFMEU workers who start on building sites around the CBD/Southbank at 7am...the sea of hi-vis on trains is blinding in winter months. Nurses with morning shifts also benefit. So politicians beware touching those fares too much.
It is preverse however it doesn't apply to V/Line, trams, feeder buses or CBD buses - station carparks are full in many suburbs by 7am, but there's either limted feeder buses arriving before 6:30am and a fare penalty for using them. Likewise the worker heading to Laverton North or Dandenong South for a 7am warehouse or factory job has to pay a bus fare.
Free station parking also comes into this - while it's good that many tradies are not driving into the inner suburbs, they are filling up the carparks by 7am & then not paying a fare! But it'll be a brave politician who brings in station parking fees in Melbourne ($4 a day could bring in over $50 million in annual revenue)
On evening cap, it's not well publicised and many miss out anyway. Evening workers at restaurants, sporting grounds and concert venues have shifts starting by 6pm.
Those going to the footy, BBL cricket or an evening theatre show from the outer suburbs would be starting their journeys around 5pm-5:30pm, whereas people closer in at say Caulfield or Moonee Ponds might be lucky to depart after 6pm. Often areas where there is also a tram every 15-20 mins to come home on, while the worker or family from Dingley, Mornington, Doreen or Kurunjang has no bus home from the station after 9pm (either own a car, pay a rideshare home or ask parents to collect them)
Chasing seniors for means tests is not a high priority IMO (another vote loser too) however the free weekend travel on V/Line plus for their grandkids will exacerbate crowding.
The current pricing structure is too expensive for short-distance travellers, especially given the poor service frequency. A government overhaul is needed to review our pricing. Melbourne transport doesn’t feel like it offers good value for money. Outside of Brisbane, what are other cities doing differently? How do European systems (excluding UK trains) manage to be so affordable while providing such high service frequency? Looking to other cities and drawing inspiration from their successful systems would be a good place to start.
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