Fair Move Better Public Transport Fares for Melbourne - September 2020
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
September 2020
Fair Move
Better Public
Transport Fares
for Melbourne
About us Infrastructure Victoria is an independent advisory body with three functions: \ preparing a 30-year infrastructure strategy for Victoria, which is refreshed every three to five years \ providing written advice to government on specific infrastructure matters \ publishing original research on infrastructure- related issues. Infrastructure Victoria also supports the development of sectoral infrastructure plans by government departments and agencies. The aim of Infrastructure Victoria is to take a long-term, evidence-based view of infrastructure planning and raise the level of community debate about infrastructure provision. Infrastructure Victoria does not directly oversee or fund infrastructure projects. Aboriginal acknowledgment Infrastructure Victoria acknowledges the traditional owners of country in Victoria and pays respect to their elders past and present, as well as elders of other Aboriginal communities. We recognise that the state’s infrastructure is built on land that has been managed by Aboriginal people for millennia.
Contents Fares that reflect the
time and place of travel 35
Peak use contributes to an unbalanced network 36
New peak fares 39
Locational peak fares 42
Executive summary 04
Directional peak fares 45
Introduction 10 Will peak pricing make any difference? 46
Recommendations 12
Ticketing that supports reform 52
Problems facing public transport 16 Ticketing that reflects fare reform 53
Problem 1: The public transport system A more flexible ticketing system 54
is under strain and out of balance 17 Open up third-party access to the
Problem 2: Fare setting objectives are public transport ticketing system 55
not clearly defined, fares neither encourage Make the ticketing system easier to use 57
the best use of the system nor inform choice 18
Problem 3: Public transport fares are unfair 19
How will users respond to variable fares? 59
How well do users understand fare elements? 60
Principles 20
As complexity increases, comprehension declines 61
Presenting and communicating change 62
Improving how fares are set 22
Balance multiple outcomes to make
the best use of the transport system 23 The benefits of change 62
Consider equity 25 Fare reform shifts demands on the transport network 68
Provide informed choice 26 Who changes their travel when offered greater choice? 70
Transparent fare setting 26 Who benefits the most from fare reform? 71
The way forward 26 How does fare reform change
the cost of public transport? 74
How does public transport demand
Fares that reflect the
shift across Greater Melbourne? 76
mode of travel 28
How does demand across the network
Flat fares are simple, but don’t make the change with travel patterns? 78
best use of the public transport system 29
Flat fares are unfair 31
Where do we go from here? 84
More services alone are not the solution 32
Fares for multimodal trips 33 References 86
Executive
summary
The COVID-19 pandemic has disrupted almost every aspect
of Victorians’ daily lives. Stay-at-home orders, social distancing
requirements and greater numbers of people working from home
mean that public transport use is down and private car use is up.
However, at some point, restrictions on In that report, we called for pricing of the Fare reform can also be fair reform.
Fair Move: Better Public Transport Fares for Melbourne
the way Victorians connect and travel entire transport system across roads, While the top 20% of income earners
will be eased and removed, migration public transport and parking. We also make up the largest group of public
to Victoria will resume and Melbourne’s acknowledged that this would take some transport users overall, fare reform can
public transport system will be under time to implement. In this report, we focus significantly improve travel choice and
pressure again. Instead of drifting back solely on public transport fare reforms that affordability for low income travellers
to ‘normal’, there is a unique opportunity could be implemented in Melbourne in the and households.
to undertake fare reform so that when short to medium term.
Melburnians return to public transport, We propose a fare structure that
the network is better balanced, better Melbourne’s public transport system faces maximises the use of the public transport
managed and operates more efficiently three major problems: it is under strain and network so that it generates the most
and fairly for the benefit of all Victorians. out of balance (being overcrowded in peak benefits to Melburnians, whether they
times and underused at other times); fares use public transport, private vehicles
While COVID-19 has hit the Victorian are not set to encourage the best use of the or active transport.
Infrastructure Victoria
economy hard, it has also created greater system or to give public transport users
flexibility in work and commerce, generating greater choice about how and when they Fares make up only a part of the public
behaviour change that can have lasting travel; and the current fare structure is transport system, but they have the ability
benefits once the pandemic has passed unfair. The system also has limited ‘slack’ to support Melbourne in getting the most
(such as reduced congestion from more to cover disrupted services, meaning that out the infrastructure it has today, as well
flexible working hours and increased cancellations, problems with vehicles, as the infrastructure of tomorrow, such
working from home). A well priced public incidents and other delays quickly ripple out as Metro Tunnel.
transport network can help lock in some of across the network, affecting thousands
Fares, new infrastructure and service reform
those benefits and take pressure off the of commuters. These problems are likely
can all work together to help meet the
entire transport network. to continue even as Victoria rolls out major
growing travel needs of Melburnians.
new transport infrastructure investments.
Public transport fares fall within the
And right now, while the pandemic
broader transport network pricing Fares are a powerful tool for addressing
continues, fare reform can support social
framework presented in Infrastructure these problems. Fares can be set to make
distancing by encouraging off-peak travel
Victoria’s previous report Good Move – the best use of the entire transport system
and better use of underused services,
Fixing Transport Congestion. (roads and public transport). They can
such as buses.
provide incentives for people to change
their travel behaviour and make the best
travel choices for themselves, as well
as for the wider community.
04
Our recommended reforms:
Executive summary
Fares that vary by mode of travel Having different fares for different times This balance needs to be transparent, using
and places would encourage travel in the clearly defined objectives determined by the
Introduce different fares for each off-peak periods, making more efficient Victorian Government, with an independent
public transport mode to reflect the use of the network and reducing crowding. body to advise on and monitor transport
different costs and benefits of each It would also support social distancing prices (like IPART in NSW).
mode, and to encourage the best use
Infrastructure Victoria
on public transport while the COVID-19
of public transport services. Fares would To see the effects of fare reform over time,
pandemic persists.
be lowest for buses and slightly more for we have modelled how things would look
trams, with trains being the highest priced Consistent with our transport network in 2031, comparing the current flat public
of the three modes. pricing approach that all modes and routes transport fare structure to one that provides
should be priced, we also recommend stronger incentives for making better use
Currently, buses are overpriced and removing Melbourne’s free tram zone. This of the network.
underused, which impacts people on low free zone fails to price travel in a busy tram
incomes the hardest − as trains and trams corridor that is already at capacity. It is also
are used disproportionally by people on unfair, as it largely benefits a relatively small
high incomes. Our research shows that group of people − those who live in or drive
if buses were cheaper than trains and to the CBD − while all Victorian taxpayers
trams, many people would make the foot the bill, regardless of whether they use
switch to buses. the free tram zone or not. There is also no
evidence that it increases tourism.
Fares that reflect the time
and place of travel Better ticketing
Introduce peak and off-peak fares on Alongside this new fare structure, we are
trains, trams and express buses in recommending ticketing reforms to make
places and at times that are at capacity. the system more convenient and fairer,
Congestion and the cost of expanding and allow for the introduction of new
the train network in and around the digital platforms for planning, booking
CBD is greater than the rest of the and paying for travel.
network, so when CBD public transport
Improving how fares are set
travel patterns return to pre-COVID-19
levels, we also propose creating a new Public transport fare setting needs to
‘City Zone’ on the metropolitan train balance multiple outcomes to make best
network, covering the CBD, City Loop use of the network and improve fairness.
and Metro Tunnel.
05
The potential benefits of public transport fare reform
Our modelling was done pre-COVID-19, we have identified include:
Fair Move: Better Public Transport Fares for Melbourne
but the outcomes will hold assuming
Melbourne’s transport patterns return to
normal. We are currently doing a range of More people using Fewer cars on Melbourne’s roads
modelling to investigate how COVID-19 public transport Decreasing traffic volumes along some
might change the travel and land use of Substantial shifts to public transport of Melbourne’s busiest arterial road links,
Melbourne into the future, and how across Melbourne, especially in the relieving pressure on the road network and
transport reforms and infrastructure middle and outer ring of suburbs. reducing vehicle emissions and air pollution.
may need to adapt.
We found that the impacts of fare reform More people travelling Most people are better off,
would reach all Victorians, whether through during off-peak especially low income households
reduced road congestion or less crowding
Relieving pressure during peak periods and Up to 71% of people could pay less to
on trains, trams and buses or simply
reducing crowding on trains and trams travel on public transport, with people on
Infrastructure Victoria
through lower pollution and a cleaner
during peak times, making commuting to the lowest incomes paying 26% less for
environment.
the central city safer and more comfortable. fares on average*. Those who may pay
Ultimately, fare reform means that more, such as city office workers who travel
Melbourne’s transport users would be into the CBD via train at peak times, would
More people using buses enjoy a more efficient, less crowded and
the equivalent of $520 million a year
better off in lower cost public transport Making buses a more attractive and more comfortable service.
alternatives, reduced crowding and inexpensive travel choice and getting
* Fare revenue was down in our modelled fare reform. See
congestion and better environmental much better value from Melbourne’s ‘How does fare reform change the cost of public transport?’
outcomes. underused bus network. on page 74-75 for a breakdown of who pays less under
an approximation of a revenue neutral-fare reform.
We also found that these benefits can
be achieved with little-to-no change in
cost recovery levels and fare revenue.
06
While more extensive fare and ticketing
Executive summary
restructuring will take time, two fare changes
could be implemented immediately by the
Victorian Government: introducing peak and
off-peak fares and removing Melbourne’s
free tram zone. While the COVID-19
pandemic continues, these reforms would
Infrastructure Victoria
also support social distancing on public
transport by spreading demand across the
day and across different modes, and
reducing crowding on CBD trams.
A third reform that could proceed now
is the appointment of an independent
adviser to recommend and review
transport prices. This would signal the
start of a broader reform process and also
provide the government with guidance on
future fare-setting objectives and the best
way to proceed with greater fare and
ticketing reforms.
With Melbourne’s public transport network
now costing nearly $2 billion to operate
each year and fares covering less than
30% of these costs, it is critical to make
the best use of this investment by Victorian
taxpayers. Introducing the fare reforms
recommended in this report would mean
that the majority of people would pay less
to travel on public transport than they do
now, but total fare revenue would be similar.
At the same time, the network would be
more efficient, more balanced and fairer −
producing a better overall return to the
wider community and extracting much
greater value for all Victorians from their
substantial investment in public transport.
07
The benefits
of fare reform
The benefits of 71%
Fair Move: Better Public Transport Fares for Melbourne
paying
implementing fare -$
reform by 2031,
of users
pay less
26%
$ less
compared with what
happens if we keep Up to 71% of public transport users Households on the lowest incomes
on doing the same pay less to travel on public transport benefit the most – paying 26% less
thing include: than they do today.* for fares on average.*
Infrastructure Victoria
96,000 over 78,000 tonnes cut
less
Mon-Fri
car trips
Over 96,000 car trips are taken off Greenhouse gas emissions cut
Melbourne roads on a typical weekday. by over 78,000 tonnes per year due
to increased public transport use.
30,000 fewer peak train
new off-peak
boardings 100,000 boardings
* This includes the effect of total fare
Crowding on busy train services is
revenue being lower in the modelled reduced, with 30,000 fewer boardings
Fares Reform scenario than the
during peak times – equivalent to Over 100,000 new off-peak boardings
Current System. See Benefits of
08 Change section on page 62 for detail. 27 new High Capacity Metro Trains. across trains, trams and buses.
$520 million
The benefits of fare reform
better off
Fare reform would generate about $520
million in value each year for Victorians
through more transport pricing options,
Infrastructure Victoria
reduced crowding and congestion and
better environmental outcomes.
over
56,000
new public
transport users
Over 56,000 new public transport
users on a typical weekday.
93,000 new bus boardings
Cheaper buses create over 93,000 new bus
boardings across the typical weekday. 09
01.
Introduction
The current COVID-19 pandemic has brought significant
disruption to the way Victorians live. People are unable to
connect and travel as freely as they once could, and this has
affected the use of Victoria’s transport networks.
Public transport use is down, and private At some point, however, restrictions on the
Fair Move: Better Public Transport Fares for Melbourne
cars are currently the preferred mode for way Victorians connect and travel will be
social distancing – and this will have flow eased and removed, migration to Victoria
on impacts across both the public transport will resume and Melbourne’s public transport
and road networks in the immediate future. system will be under pressure again. While
Travel restrictions, social distancing and not currently apparent, Melburnians do
greater working from home have dampened not have to cast their minds back very far
the demand for public transport – particularly to recall the significant crowding on trains
to the Melbourne CBD.1 and trams during peak periods – making
journeys uncomfortable, frustrating and
unsatisfactory experiences.
Infrastructure Victoria
10The public transport system has limited Fares fall within the transport network pricing In this report, we focus solely on fare
‘slack’ to cover disrupted services, meaning framework presented in Infrastructure reforms that could be implemented in
that cancellations, problems with vehicles, Victoria’s earlier report Good Move: Fixing the short to medium term, ahead of
incidents and other delays quickly ripple Transport Congestion (Infrastructure Victoria, introducing any form of road pricing.
out across the network, affecting thousands 2020). In that report, we called for pricing of
the entire transport system across roads, We also focus on how public transport
of commuters. This pressure is likely to
public transport and parking. We also fares can be part of the set of tools used
continue even as Victoria rolls out its
acknowledged that such a framework to support social distancing while Victoria
Introduction
pipeline of new infrastructure investments.
would take some time to implement – deals with COVID-19 and to manage the
To support people as they return to including time to gather the information state’s transport network in the post-
travelling for work, education and leisure to implement correctly. COVID-19 world.
(whether by public or private transport),
Infrastructure Victoria
we need to better manage the existing
metropolitan public transport network,
particularly at times and points of strain.
Research for reform
Fares are a powerful tool for informing
people so they can make the best travel
choices for themselves, as well as for Infrastructure Victoria has made Fare reform is part of our ongoing
society. Fares can provide incentives for transport network pricing a core research program. The project
people to change their behaviour to make focus of our research program, with takes a more detailed look at
best use of the network; however, this the aim of designing a system that is metropolitan fare reforms that
tool has been mostly left unused for suitable for Victoria, that is effective, could be implemented in the short
metropolitan Melbourne. There are efficient, fair and sustainable, and to medium term.
limited incentives to shift trips away from that can attract community support.
peak times or to encourage greater use in This paper focuses on Melbourne’s
parts of the network with excess capacity, Transport network pricing is a system public transport network. Infrastructure
particularly metropolitan buses. where prices are set to influence how, Victoria recognises the need for
when and where people use the improvements in regional fares and the
Providing travellers with more alternatives transport system. Prices can be set independent transport pricing advisory
through more variable fares can change to encourage people to travel at body recommended in this paper
the attractiveness of using different modes times, to places and by modes that would be well placed to conduct
of public transport at different times. This provide the greatest benefits relative research into regional fares.
would increase comfort and safety for to the costs. Prices can also be set
public transport users and enable better to take into account factors such as Our final recommendations for the
government decision-making in the timing the costs of air pollution and road introduction of transport network
and selection of future public transport trauma. Infrastructure Victoria’s pricing in Victoria will be made in
infrastructure. Fare reform should also research shows that making the the 2021 update of our 30-year
be fair reform: any changes to fares should shift to comprehensive transport infrastructure strategy.
be progressive and equitable − making a network pricing would deliver
positive difference in the lives of Victorians significant benefits to Victorians.
and their use of the public transport
network, and delivering significant benefits
for low income travellers and households.
11
1 T
his is a classic example of how disruptions can lead to
behaviour change. See Ortmann and Dixit (2017) for more
detail.02.
Recommendations
Infrastructure Victoria’s recommendations focus on the metropolitan
public transport network. The rationale for these recommendations
is discussed in the relevant sections of this paper. Full details of the
research and analysis undertaken to prepare the paper and determine
our recommendations are provided in the technical report that
accompanies this paper.
Fair Move: Better Public Transport Fares for Melbourne
Infrastructure Victoria
12Improving how Fares that reflect the Ticketing that
fares are set time and place of travel supports reform
01. 06. 09.
Recommendations
Set public transport fares transparently, Immediately introduce peak and off-peak Discontinue myki Passes (unlimited travel
using clearly defined objectives. fares on public transport in places and over a specified time period for a fixed fee)
locations which are at capacity. Modes to facilitate fare reform and remove
02. and zones which are rarely at capacity complexity.
should have all-day off-peak fares.
Fare setting objectives should be to
10.
Infrastructure Victoria
make the best use of the public transport
network, take equity into account and 07. Review the level of the daily fare
ensure people are provided with informed Consider a new ‘City Zone’ with its cap when using myki Money.
travel choices. own peak price composed of the City
Loop service train stations (Parliament, 11.
03. Melbourne Central and Flagstaff,
Open up the ticketing system to third
Southern Cross and Flinders Street)
Immediately appoint an parties. Third parties should be enabled
and the Metro Tunnel stations (Arden,
independent body to advise to hold accounts for purchasing travel
Parkville, State Library, Town Hall and
on and monitor transport prices. on behalf of travellers, including for Mobility
Anzac). This City Zone would be subject
as a Service.
to a specific peak price. Introduction
should be contingent on CBD public
Fares that reflect transport travel patterns returning to
12.
the mode of travel pre-COVID-19 levels, with significant Make the ticketing system easier to use
crowding during peak times. for Victorians and visitors by:
a. reducing or removing the myki
08.
card purchase fee
04. Introduce directional pricing so that trips
Immediately introduce different fares on in counter-peak directions are not charged b. allowing other inputs for validation
each public transport mode to reflect their a peak fare e.g. those travelling away from through an account-based system
different costs and benefits and to the CBD in the morning peak. (such as credit and debit cards).
encourage their best use.
13.
05. Develop a set of principles to guide
Abolish the free tram zone to improve safety concession design, followed by a review
and access for those who need it most. of all discounts, removing or adding
concessions as necessary.
13Improving how fares are set
Overarching \ Public transport fares should \ Fares should make the best use of the
Fair Move: Better Public Transport Fares for Melbourne
be set transparently and meet public transport network, take equity into
stated objectives. account and ensure people are provided
with informed travel choices.
Immediately 0-2 years 2-5 years
\ Adopt peak and off-peak \ Introduce directional off-peak fares \ Allow other inputs for
public transport fares validation for myki
Infrastructure Victoria
\ Remove myki Passes
\ Adopt fares that differ by mode \ Consider implementing a new
\ Review daily cap limit on fares City Zone with a specific peak
\ Appoint an independent body price when crowding increases
to advise on and monitor \ Develop principles for concessions
to pre-COVID-19 levels at
transport prices and review and reform existing ones
peak times
\ Abolish the free tram zone \ Remove myki purchase fee and
change the touch on credit
requirements
1415 Recommendations Infrastructure Victoria
03.
Problems facing
public transport
Melbourne’s public transport system faces three major problems.
Firstly, it is unbalanced, being under While such reform would take time to
significant strain at peak times and develop and implement, public transport
underused in off-peak periods. Secondly, is already priced, so fare reforms could be
Fair Move: Better Public Transport Fares for Melbourne
fares do not rectify the imbalance, considered by the Victorian Government
encourage the best use of the public in the shorter term.
transport system or provide public
transport users with options that vary Fare reform would take the first steps
with price. Finally, current fares are not fair. towards achieving the goals of transport
network pricing, while also addressing
Our report Good Move: Fixing Transport the problems facing Victoria’s public
Congestion outlined a comprehensive transport system. Some immediate fare
transport network pricing system across changes can also contribute to managing
all roads, public transport and parking to the COVID-19 pandemic by helping to
reduce growing congestion and crowding achieve social distancing on public
on Victoria’s roads and public transport, transport in Melbourne and improving
as well as getting more out of our the health and safety of commuters.
transport system.
Infrastructure Victoria
16Problem 1:
The public transport
system is under strain
and out of balance
Under normal pre-COVID-19 conditions, The peaks and troughs of public transport Figure 1 Public transport
the public transport system is both boardings throughout
50,000 the day
overcrowded and underused. At times
of peak use, passengers are crammed
on services or unable to board full trains 40,000
and trams. Reliability suffers as timing
Problems facing public transport
or mechanical issues have large flow- 30,000
on effects on the congested network,
resulting in high rates of re-routed 20,000
and late-running services.
10,000
Boardings
Outside the peak times, the network is
underused. Buses, trains and trams sit
idle in holding yards waiting for the peak 0
4am
5am
6am
7am
8am
9am
10am
11am
12pm
1pm
2pm
3pm
4pm
5pm
6pm
7pm
8pm
9pm
10pm
11pm
12am
periods. On weekends, public transport use
is only 41% of its weekday use while roads
Infrastructure Victoria
are congested. At these times, moving any
Average Tram Boardings (Department of Transport)* * Department of Transport (DoT) 2018
road trips to public transport would have
VISTA boardings Train** ** Victorian Integrated Survey of Travel
significant benefits. Activity (VISTA), 2018.
VISTA boardings Bus**
Melbourne’s bus system is underused
The public transport
system is out of balance:
overcrowded at peak times
and underused outside
the peak.
Overcrowding and underuse vary not
just by time of day, but also mode. Many
metropolitan bus routes have excess
capacity, particularly those in the outer
suburbs. Modelling undertaken for
Infrastructure Victoria estimates that Figure 2 Melbourne bus
70% of bus routes run at below a third network performance, 2016
of their capacity during the AM peak.2
Bus routes with over 20
boardings per service hour
Bus routes with less than 20
boardings per service hour
17
Source: Analysis based on Transport for Victoria 2016 patronage data
2 S
ee CIE (2020) for discussion of the results and Jacobs
(2020) for a description of the modelling.Problem 2:
Fare setting objectives are not clearly
defined, fares neither encourage the best
use of the system nor provide choice
Despite the overcrowding and This structure provides little variation in
Fair Move: Better Public Transport Fares for Melbourne
underuse imbalance of the public recognising the different costs and benefits
transport network, fares currently that different trips have. The flat price
play a very minor role in trying to means that some trips are overpriced,
rebalance the system or in providing while others are under-priced. This results
people with greater choice. in too many trips taken at some times and
on some modes, while too few trips are
People who are conducting casual trips taking place at other times and on other
around Melbourne face the same price modes. As an example, short trips to the
all day as those travelling for time-critical local shops via bus are priced the same
business at peak hours. The only exception as long commutes to the CBD at peak
is the Early Bird discount for train travel. time via train, failing to reflect either the
value to the user or the cost to government
There is little-to-no price incentive for those
in providing the trip.
using public transport for non-time critical
Infrastructure Victoria
trips to travel outside the peak. Worse, The objectives for fare setting are currently
someone who may wish to use public not clearly articulated. In general, fares have
transport for social or shopping purposes, been set to encourage public transport use,
but who value the trip at less than the but charging a mostly flat fare has likely
current fare, will stay home or drive − increased the use of the most popular
even though the trip could be provided modes at the most popular times rather
for a low cost due to spare capacity in than encouraged use across all modes
the off-peak periods. throughout the day.
There are two ways in which the current
metropolitan fares system doesn’t help
to reduce imbalances across the network
or provide choice: first, in its structure; Some trips are overpriced,
and second, in the values applied in
setting fares.
others are under-priced and
there is little-to-no price
Currently, the fare structure of the public
transport network is relatively flat. The incentive to travel outside
price for metropolitan fares is $4.50 for
the peak periods.
a two-hour ticket regardless of whether
a person is travelling in busy times or quiet
times and regardless of mode, distance or
trip purpose. Zone 2 provides cheaper
18 fares for travel solely within that zone.Problem 3:
Public transport
fares are unfair
Fig 3
The issue of equity is currently Income levels vary by mode of transport
Problems facing public transport
addressed in the fares system through
concessions. Concessions provide a All Victorians 20% 20% 20% 20% 20%
partial solution to the issue but miss Public transport users 19% 17% 20% 21% 23%
out on the very significant benefits that
Train users 15% 17% 21% 22% 24%
can be provided by variation in fares
− and not just discounts on a flat rate. Tram users 18% 15% 18% 22% 27%
Bus users 27% 20% 19% 19% 15%
While there is a perception that public
transport is used by or provided for a
Quintile 1 (lowest) Quintile 2 Quintile 3 Quintile 4 Quintile 5
Infrastructure Victoria
greater number of users on lower
incomes, this is not actually the case. Figure 3 Public transport users, by weekly equivalised household income quintile
On average, those using public transport
Fig 4Source: VISTA data 2018, Infrastructure Victoria analysis
have household incomes 8% higher than
those who don’t. Those in the top 20%
of income earners (the top quintile of
equivalised household income) make
Peak travel is largely represented by high income, off-peak by low income
up a disproportionate number of public
transport users, and make up the largest
Offpeak 24% 21% 21% 17% 17%
group of public transport users overall.3
However, as shown in Figure 3, different Peak 16% 15% 19% 24% 26%
modes are used by different income
groups to different degrees: while trains Quintile 1 (lowest) Quintile 2 Quintile 3 Quintile 4 Quintile 5
and tram have higher rates of high income
users overall, buses are disproportionally Figure 4 Peak and off-peak public transport users, by weekly equivalised
used by those on low incomes − and household income quintile
significantly so.
Source: VISTA data 2018, Infrastructure Victoria analysis
While high income earners make up a
greater share of public transport users
during peak periods, the situation is Given these patterns of use, it is very clear benefits to low income earners, as almost
reversed in the off-peak when the lowest that prices that vary by mode and time of half of bus users are in households in the
20% of income earners (the bottom quintile day may provide significant benefits to bottom 40% of incomes (Figure 4). Making
of equivalised household income) become low income Victorians, above and beyond off-peak fares cheaper would similarly
the largest users of public transport those provided by concessions. benefit low income households. Low
(Figure 4). income earners make up 45% of those
For example, making bus fares cheaper than travelling off-peak and less than one third
train fares would provide more extensive of those travelling in peak.
19
3 V
ISTA 2018 analysis carried out by Infrastructure Victoria04.
Principles
Infrastructure Victoria first called for transport network pricing
in the 2016 30-Year Infrastructure Strategy.
In the same year, we also analysed the Our five pricing principles were distilled
Fair Move: Better Public Transport Fares for Melbourne
case and options for road pricing in from Australian and international economics
The Road Ahead. In 2018’s Five Year literature on pricing and are designed to
Focus, we made a number of research- ensure that prices are set to yield an
based recommendations for public efficient outcome (where people travel at
transport fare reform. times, to places and by modes that deliver
the greatest benefits relative to the costs)
In March 2020, we provided a while also meeting important equity
comprehensive analysis of transport objectives that are essential to gaining
network pricing in Good Move: Fixing community support.
Transport Congestion, including five
pricing principles that would set a strong We have applied these principles
foundation for transport network pricing to setting public transport fares
in Victoria. in this report.
Infrastructure Victoria
20The principles are:
Principle 01 Principle 04
Principles
All modes, routes and Different prices for
parking are priced different products
in different markets
Infrastructure Victoria
Prices should be the central tool for
allocating trips within the transport Prices should reflect demand and
network. A trip that isn’t priced is cost conditions, and permit different
effectively under-priced, distorting the prices to be charged by mode, time
choice made by travellers to take that of day or location.
trip instead of a more efficient one.
This principle also implements the
beneficiary pays equity principle.4
Principle 05
Equity
Principle 02 This principle implements vertical equity
(where different groups of people are
All costs are priced treated differently) and also permits
Prices should take into account all costs different prices to be charged in different
and benefits for trips, including road locations where possible. Lower prices
congestion, public transport crowding, are set for groups of people identified
pollution, contribution to road trauma and as less able to pay.
the costs of raising revenue through
taxation. This principle ensures that prices
include the social marginal costs linked
to externalities related to each mode
4 T
his principle states that those who use (or benefit from)
and trip. a service should pay the full cost of using that service.
Conversely, those who do not benefit should not have
to pay.
Principle 03
Provide choices,
but not too complex
There should be a range of products
that provide choices to consumers. It
should be possible to use the transport
system without it being too hard to
choose and make informed decisions.
2105.
Improving how
fares are set
Recommendations
Our approach to fare reform focuses on achieving three
aims: balance multiple outcomes to make the best use of
the transport system, improve equity and provide informed
01. choice to users. A fare structure that achieves these aims
Fair Move: Better Public Transport Fares for Melbourne
Set public transport fares ensures that the public transport network provides the most
transparently, using clearly benefits to all Victorians.
defined objectives.
02.
Fare setting objectives should
be to make the best use of the
public transport network, take
equity into account and ensure
people are provided with
Infrastructure Victoria
informed travel choices.
03.
Immediately appoint an
independent body to advise
on and monitor transport
prices.
22Balance multiple outcomes to make
the best use of the transport system
Price is an effective way of sending Our focus on balancing multiple outcomes the most benefits to Melburnians, whether
Improving how fares are set
public transport users information is important because public transport is not they use public transport, private vehicles
and providing incentives for making a goal in and of itself; rather, it is a means or active transport. Fares should reflect the
decisions about when and how they that provides people with travel choices to costs to society of the different transport
travel, taking into account not just their access employment, social connections options, and then allow individual travellers
private costs, but also the costs and and services that they want and need. Fare to choose the best fit for them − implicitly
benefits they might impose on others. setting approaches that focus on individual taking into account the costs on society
targets alone (such as cost recovery or through the fare.
Public transport fare setting needs to patronage growth) come at a cost to other
Infrastructure Victoria
balance multiple outcomes to set the right important factors, and will always be open Accordingly, our research uses an approach
price. Too little use of public transport results to criticism as they prioritise one outcome that balances a full range of outcomes to
in congested roads and high environmental above others. What is needed is an determine what fare levels should be. Our
costs. Too much use creates overcrowded approach that balances multiple objectives. approach is similar to that used by the New
and unreliable public transport services as South Wales Independent Pricing and
networks struggle to manage demand. Our goal is to recommend a fare structure Regulatory Tribunal (IPART, 2015) and
that maximises the use of the public seeks to balance the following costs
While new infrastructure can be built to transport network so that it generates and benefits:
accommodate extra demand, this must be
balanced against the costs of adding the
infrastructure and the alternatives available Benefits of additional public transport use Costs of additional public transport use
to meet people’s transport needs.
\ Reduced road congestion \ Costs of adding public transport services
Overall, our approach is to set public \ Reduced environmental costs \ Infrastructure costs
transport fares so that they take account \ Reduction in road accidents \ Public transport crowding
of the many different social impacts from \ Increased walking \ The impact of taxation on people and
public transport use and balance those businesses to provide subsidised fares
impacts to ensure the best possible use
of Melbourne’s entire transport system.
Public transport is not a goal in and of itself;
rather, it is a means that provides people with travel
choices to access employment, social connections
and services.
23Fig 5
The process used to balance all these How we determined the optimal fare
Fair Move: Better Public Transport Fares for Melbourne
costs and benefits is the measurement
of the social cost of additional public
transport use (known as the social
marginal cost pricing approach).5
$3.00
The social cost is made up of the
financial cost of providing an extra
public transport trip (new services or $7.00 - $4.00 =
new infrastructure needed to provide
new services or reduced road
the trip), minus the benefits to society infrastructure congestion,
generated by an extra trip on the network pollution and
accidents
(such as reduced congestion, lower
pollution and reduced road accidents).
Infrastructure Victoria
Cost to society to Social benefits from Optimal Fare
The gap between these two is the optimal provide additional trips additional trips
fare, which represents the net cost to
society to provide the additional public
Figure 5 Optimal fare derived from the social cost
transport trip (as shown in Figure 5).
of additional trips (illustrative values only)
This method ensures that the fare level
encourages the best use of the entire public
transport network. If people are willing to
pay the fare (because their personal benefit This is a fair way to price public transport as
from the trip is greater than the fare price) people are paying the cost they impose on
then that trip makes everyone better society. It also makes the best use of the This method ensures
off. If they are unwilling to pay the fare entire transport system across roads, public
(because their personal benefit from transport and active transport.
that the fare level
the trip is less than the fare) then they encourages the best
will find an alternative, and society Our analysis takes into account not just
is better off. the network as it exists today, but also use of the entire public
the pipeline of committed works. Our
transport network.
modelling (2031) and social cost analysis
(2026) incorporates future infrastructure
5 As measured in analysis performed by CIE and Jacobs for such as the Metro Tunnel, West Gate
Infrastructure Victoria, which modelled the impacts of a fare Tunnel and the Cranbourne-Pakenham
change and then valued the impacts of the change using
accepted transport impact valuations (CIE, 2020). Line Upgrade.
24Why is it so important to make the best
use of the public transport network?
Consider equity
Making the best use of the public As outlined in Problem 3 on page While the fare setting approach outlined
Improving how fares are set
transport network is vitally important 19, subsidised fares are on average above encourages public transport
because public transport is a very benefiting those on higher incomes. use that provides the most benefits
significant investment by Victorians. If Victorians are willing to continue to all Victorians, there are also equity
For example, in the 2017-18 making such a large investment in implications that must be considered.
financial year operating costs public transport, government should Additional analysis has been undertaken
alone for the Victorian public be making the most of this to determine if the overall benefit from
transport network totalled over investment so it produces the optimal fare setting comes at a high
$3.25 billion, $2.61 billion of which greatest overall return to society. cost to more vulnerable groups.
Infrastructure Victoria
was specifically for metropolitan
Melbourne. The high level of public transport Each proposed change in fares has
subsidy is funded through general undergone analysis that shows which
When the capital costs of the taxation, and is often justified on groups of people, by income, are most
network and rolling stock used the grounds that public transport affected from reductions and increases
by the network are factored in, provides benefits not just to the in fares.
estimates suggest the amount users of public transport, but also
is around $4.91 billion per annum to road users (primarily through The results are somewhat surprising.
(based on annual depreciation reduced congestion), and because We found that in almost every case, a
and a weighted average cost of it provides a basic level of transport move to a fare that makes the best use of
capital of 5.5%). access to people who have limited the public transport system is also a fare
private transport options.6 change that is more equitable. Our research
The vast majority of this expenditure shows existing metropolitan fare levels are
is paid for by taxpayers, not public Our proposed reforms balance the much less equitable than they should be,
transport users. costs of additional public transport and changes that make the best use of
with the benefits, while also the public transport network will also
Fares cover 30% of metropolitan improving the ability of the network better serve the needs of most low-
operating costs (29.7% in 2017-18) to serve those with limited private income Melburnians.
and even less when taking into transport options (by making it
account the cost of capital (20.8% cheaper on average for those on low
in 2017-18). The cost recovery for incomes, and lowering the fares of
regional services is lower still. Over local tram and bus trips). A move to a fare that
time, taxpayers have paid a higher
and higher proportion of the costs
6 How does public transport benefit New makes the best use of the
Zealanders, The NZ Transport Agency and public
of public transport use, with transport, 2013 https://www.nzta.govt.nz/assets/ public transport system is
resources/public-transport-information-pack/docs/
cost recovery from fares falling
significantly over the past decade.
public-transport-information-pack.PDF.
also a fare change that
improves equity.
25Provide Transparent The way
informed choice fare setting forward
The final consideration throughout our Infrastructure Victoria’s view is that fare The next two sections of this paper
Fair Move: Better Public Transport Fares for Melbourne
research was regarding how people setting should be transparent and have cover the two primary components
might react to a different set of fares. clear objectives. of our proposed reforms to public
transport fares:
Prices are only as good as people’s ability Our approach is an example of how
to understand and use them for decision- we believe fares should be set. Public (1) fares that vary by mode and (2) fares
making. If people don’t understand the transport fare setting currently lacks that vary with the time and place of travel.
fares, they will not use them to make clear objectives and transparency, and We focus on these two reforms for two
decisions. Fares can then no longer help we believe an independent body should reasons. First, they are the changes
people to make the best travel decision be appointed to advise on and monitor that are going to make the greatest
for themselves and society. Fares must transport prices. improvements in system performance
be set in such a way that they provide towards achieving the aims outlined above.
an informed choice to users and do not Fares can help manage transport use
create confusion. in the short term and should change as Second, the behavioural economics
circumstances change. Having an research conducted by SGS and BIT
Infrastructure Victoria
To understand the effects of different advisory body that regularly monitors, suggests that travellers can respond to
fare structures on people’s choices, researches and advises the government these changes in a way that supports
Infrastructure Victoria commissioned SGS on transport fares would keep information achieving the aims. The implications of
Economics & Planning (SGS) and The and research up to date, as well as provide a forum of former politicians, bureaucrats
Behavioural Insights Team (BIT) to conduct a transparent process for fare setting similar and decision makers convened by
a study examining how people responded to that facilitated by IPART in NSW. BehaviourWorks (Monash University) for
to complexity in public transport fares Infrastructure Victoria7 suggests simply
(SGS-BIT, 2020). An advisory body that regularly monitors, presented and understood reforms are
researches and advises on transport fares more likely to be socially and politically
We have relied on this research in is particularly important in a world that is acceptable.8
considering various fare options and in experiencing significant change due to the
making our recommendations. This is ongoing effects of COVID-19. Fare setting The SGS-BIT research suggests this will
discussed further in the How will users can be a powerful tool to help make the be the case for a combination of peak
respond to variable fares? section. most out of the transport system we have charging and mode-specific fares. In
today, but further research and analysis is addition, Victorians will be familiar with
required to apply our proposed approach to these types of fares if they have used
the specific circumstances of each location public transport in Sydney or several
and point in time (see COVID-19: a new set major cities across the world.
of problems for public transport, page 27).
7 T
his was part of the research for Good Move: Fixing
Transport Congestion (Infrastructure Victoria, 2020)
26 8 (Kunstler et al, 2019)COVID-19: a new set of problems for public transport
COVID-19 has changed the social For example, the Australian Bureau of areas, with those living closer to the
costs of using public transport − Statistics’ census showed in 2016, CBD unable to board without breaching
and those social costs will continue only 4.2% of people worked from social distancing guidelines. This means
to change as we transition back to home in metropolitan Melbourne. By that both demand and supply side
a world either without the disease early June 2020, 25% of paid workers measures are likely to be needed,
or a world in which we need to reported that all their work had been along with operational changes (such
continue to manage the virus performed remotely. The rate is higher as different boarding and alighting
because there is no vaccine. for CBD workers, with 41% reporting procedures, floor markings, new
that they performed all work remotely timetables and extra staff).
Improving how fares are set
This means that fares should also (BehaviourWorks, 2020). According to
change with the circumstances when a national survey taken by the NBN in In addition, travellers can’t be relied
necessary. This kind of ongoing late April, 81% of respondents said the upon to sufficiently socially distance
analysis would be a key tasks for experience of working from home has on public transport. Even if travellers
an independent transport pricing positively changed the way they think are concerned about their own risk
advisory body. about managing work/life flexibility of catching the virus, they won’t take
(NBN, 2020). into account how changing their travel
Actions taken as a result of COVID-19 plans could reduce virus risks for
Infrastructure Victoria
could put persistent downward During the transition to the post- other travellers. This means additional
pressure on public transport and COVID-19 economy it is likely there incentives are needed to get the right
the demand to travel to previously will also be a shift in demand across level of distancing. A mix of restricted
crowded destinations like the transport modes and travel time. Before numbers and fare surcharges/
Melbourne CBD. This is largely COVID-19, some components of the discounts could be the best mix
because the costs of working from network operated assuming significant to achieve this.
home, including communicating crowding for considerable lengths of
between widely dispersed workers, time. This isn’t compatible with social As restrictions ease, people return
have fallen substantially. distancing. Travellers who are to work and patronage increases on
concerned about the risks of COVID-19 public transport, governments around
Workplaces have adopted technology the world are exploring ways to
will choose modes and times where it is
that enables staff to access work maximise levels of social distancing by
easier to socially distance. Some of
resources from home and staff have encouraging people to travel off-peak.
these travellers could shift from peak to
learned to collaborate using video
off-peak travel and/or shift from public
conferencing and other online In July 2020, the NSW Government
transport to private transport (active
communication tools, making remote announced that it would halve public
transport or motor vehicle). This
work more viable than it has ever transport fares for three months for
increases the social benefits from
been. The change was also rapid and Sydney commuters who travel outside
reducing congestion.
co-ordinated, with a large proportion peak periods.9 The move was
of workplaces switching to remote Analysis by WSP shows that applying designed to encourage commuters
working at the same time, making strict social distancing would reduce to ‘retime their day’ after capacity on
working from home arrangements trams to 13% and trains to 20% of their public transport services was cut due
more acceptable across industries. respective total capacity – and buses to to social distancing. Peak travel times
Even if COVID-19 is eliminated, various 16% of their seated capacity. This has were also extended by an hour and
surveys showing increased employee serious implications for management a half in both the AM and PM peaks.
productivity and reduced business of the network. Unless prices are used
costs point to a greater proportion to spread peak demand, trains will be
9 h
ttps://www.transport.nsw.gov.au/news-and-
of work taking place remotely for ‘full’ by the time they reach inner urban events/media-releases/new-off-peak-travel-
the foreseeable future. savings-start-today
2706.
Fares that
reflect the
mode of travel
Recommendations
Fair Move: Better Public Transport Fares for Melbourne
04.
Immediately introduce different
fares on each public transport
mode to reflect their different
costs and benefits and to
encourage their best use.
05.
Infrastructure Victoria
Immediately abolish the free tram
zone to improve safety and access
for those who need it most.
Our research shows that a
flat fare system that does not
distinguish between travel
modes overcharges for some
services and hits people on
low incomes the hardest.
A better and more equitable
approach is to set fares
differently for each public
transport mode.
28Flat fares are simple, but don’t make the
best use of the public transport system
Fig 6
Melbourne’s metropolitan fare Additional train travel has high social costs, followed by tram and bus
Fares that reflect the mode of travel
system currently charges the same
fare regardless of which public transport $18.00
mode a person chooses to travel on. $16.00
Social cost estimate range (impleid fare)
This system is appealing because it $14.00
is simple to understand, gives certainty $12.00
on cost to users and encourages $10.00
multimode travel. $8.00
$6.00
Hong Kong, London and Sydney, all
$4.00
major international cities with extensive
Infrastructure Victoria
$2.00
public transport systems, charge separate
$-
fees based on which mode is used.10
$(2.00)
While flat fares have the appeal of simplicity, $(4.00)
our research shows that pricing all modes
of public transport travel with a single fare
Figure 6 Range of estimates for Peak Train Peak Tram
contributes to the imbalance in the public
the social cost of additional public
transport system, increases road and public Peak Express Bus Peak Bus
transport trips during the peak
transport congestion and reduces equity.
This is because each mode is unique − not Source: Estimates produced by Infrastructure Victoria using the CIE model for social marginal cost.
just in the service it provides, but also in trip See Fare Reform Technical Report for details.
purpose, level of crowding, income levels
of users and the benefits from reduced
road congestion, pollution and increased
The low result for buses is driven by the fact The outcome of our analysis is clear: fares
active transport.
that many bus services are not crowded, and should be higher for trains than trams, and
Our analysis shows that the costs so additional trips can be accommodated buses should be the lowest priced mode
on society from increased bus use are without significantly increasing costs. Buses − and there are clear practical reasons why
much lower than for train use, with trams also require much less infrastructure than this is preferable, including differences in
sitting in the middle (shown in Figure 6). trains and trams, which require their own trip purpose and distance by mode.
network of track and electrification. Despite
these lower costs, bus trips generate
10 There is a tension between the preservation of mode
fares and the shift towards simpler fares with respect
significant benefits in reduced road
to distance travelled (King and Streeting, 2016). congestion and other social benefits.
29Fig 7
Travel is dominated by work trips, buses for education and shopping Public transport trip purposes are quite
Fair Move: Better Public Transport Fares for Melbourne
different by mode. Train travel is dominated
by work trips, while the standout difference
Multimode 48% 24% 11% 7% 10%
for bus travel is the significant share of
Train 57% 11% 10% 7% 15% people using bus trips to buy something,
Tram 38% 11% 16% 11% 24%
as well as to get to education. Trams are
unique in the number of social and
Bus 21% 34% 14% 23% 8%
recreation trips they provide.
Work Related Education Other Buy Something Social
Trip lengths also vary by mode. Research
by CIE shows that average trip distances
Figure 7 Trip purpose by mode Source: VISTA data 2018, Infrastructure Victoria analysis for additional trips on public transport are
around 12km for train, 4.5km for bus and
2km for tram (CIE, 2020). Trip quality is also
Infrastructure Victoria
affected by the public transport mode used.
Trains are typically time efficient, covering
large distances in short amounts of time
while trams are much slower, followed by
buses which are both slow and indirect.
The result of the current fare structure is
that people are charged the same for high
cost, high value public transport trips (such
as a CBD train trip to work at peak hour)
as low cost, low value trips (such as a trip
to the local shops).
30You can also read
