Common Urban Myths About Transport

Myth: Melbourne's fares are comparatively cheap

Fact: Melbourne's fares have for many years been the most expensive in Australia. Thanks to above-inflation fare rises over the last decade, public transport for many trips now costs much more than petrol in the car, even after the abolition of Zone 3. Fares need to reduce if public transport is to become competitive with car travel.

Most people who use public transport in Melbourne harbour no illusions about how expensive it is, particularly for casual users (which most people are when they try public transport for the first time). There is little question that fares need to drop - and not just in the outer suburbs - in order to make public transport competitive for those who own cars. Yet the view is sometimes expressed that Melbourne's fares are cheap, or even that public transport is undervalued in Melbourne and its users ought to be paying a lot more.

It's an idea most commonly expressed by people who don't use public transport, by private operators keen to maximise their revenue, or by government bureaucrats who have convinced themselves that Melbourne's system is among the best in the world and ought to be priced at a premium.

This last notion can be dismissed quite easily. Some parts of Melbourne's system work passably well, but on the whole, by world standards our system is atrocious. It's because of the poor standard of service that the vast majority of Melburnians not only don't use public transport, but have perfectly valid reasons for not using it. The inadequacies of Melbourne's public transport are documented extensively on this page.

But it's not just those in officialdom who think Melbourne public transport is cheap: hence the need for this page. The following letter to The Age gives the gist of the argument:

The claim....that public transport is not competitive with car travel does not match my experience. An all-day public transport ticket to the city would cost me $12.60. If I drove the 100 kilometres round trip at a cost of 12.8¢ a kilometre, it would cost me $12.80. Adding standing costs at 7.6¢ a kilometre would bring the total cost to $20.40. Add in parking and you can see that public transport is cheap.
Add in depreciation and public transport is dirt cheap. But I still go by car because it is door-to-door, quicker and more convenient.
---Chris Curtis (Langwarrin), The Age, 29 June 2006

What this letter does quite well is set out the quite special conditions under which public transport is reasonably price-competitive with car travel (if still unattractive for other reasons). If you commute a long distance to work, and you pay for CBD parking, and you can avoid the need for a car (or additional car) by taking public transport to work, then it's worth your while financially to use public transport.

Drop any of these conditions and any price advantage of public transport disappears; worse, it actually becomes more economical to drive than to use public transport with our exorbitant level of fares.

Consider a return journey from the edge of Zone 1 to the city, a distance of 10km each way. By car, using the highest petrol price seen in Melbourne to date, the fuel cost is roughly $2.60. The minimum fare using 'Myki money' is $6.04: more than twice as much. If you do the same trip each working day for a year (allowing four weeks' annual leave) the fuel cost by car is roughly $626, almost half the cost of a Zone 1 yearly ticket (or Myki pass). The difference easily covers the extra maintenance bills incurred by driving the car to work each day!

Factor in the fact that Melbourne's public transport generally isn't useful for non-work trips, and our public transport really starts to look like poor value for money indeed. Only the cost of CBD parking and the sheer hassle of driving a car in the inner city count against the car option, and even these disappear when the city centre is not the destination. Little wonder traffic congestion goes on increasing while public transport struggles to attract more than 10 per cent of the population.

Or as one would-be public transport user puts it:

I thought seriously about using public transport to get to work. I figured that if it cost me 14 cents a kilometre just in fuel, a round trip of 30km would see a daily cost of $4.20 or $21 a week. I travel from Vermont to Hawthorn every weekday.... I priced the ticket of a daily zone 1 and 2 for 'all day' at $9.70, a weekly ticket for the same zones is $45.20. My verdict is that I am still $24.20 a week better off if I clog the roads with my vehicle, a small to medium-sized car which is near-new.
However, if you take into account the cost of registration, insurance, maintenance and the total cost of the car then public transport would be much cheaper. But you would need to pay these costs regardless, as the car still exists for use on the weekends. I performed some number crunching and the price of fuel would have to reach $2.88 a litre to be on par with the cost of my journey to work if I was to take public transport....
Lately I have watched the trams taking the same route to work as I do, I often pass them but mostly we stay side by side all the way to Hawthorn. From time to time, I think about getting on. But I stay in the comfort of my own vehicle, thinking about the overseas trip that I will be taking at the end of the year with $1258 I have saved by not taking public transport.
---David Kelly-Grimshaw, Herald Sun, 3 May 2006

The reason public transport fails to be good value for money in Melbourne is not the peculiarities of the zone system (as sometimes suggested), because there is no journey in Melbourne for which public transport is substantially cheaper than petrol in the car. The reason is simply the high overall level of fares. The PTUA's fare comparison page shows that Melbourne has the highest fares in Australia for trips of comparable length, the result of years of above-inflation fare rises both before and after privatisation.

As the following table shows, Melbourne's fares have increased faster than those in every other capital city, and much faster than the cost of car travel (which declined in real terms following the tax changes in 2000).

Transport Consumer Price Indices (based on 1990 = 100%)
		1990	1995	2000	2005	2006	2007	2008
Melbourne	Public Transport	100	159	172	221	232	240	247
Melbourne	Private Motoring	100	118	129	145	157	156	168
Sydney	Public Transport	100	128	162	202	206	213	225
Sydney	Private Motoring	100	116	131	147	157	156	167
Brisbane	Public Transport	100	131	158	195	206	214	227
Brisbane	Private Motoring	100	116	128	144	155	156	168
Adelaide	Public Transport	100	136	161	194	201	217	230
Adelaide	Private Motoring	100	121	131	150	162	162	174
Perth	Public Transport	100	138	172	199	205	212	222
Perth	Private Motoring	100	121	130	145	157	160	170
Hobart	Public Transport	100	129	155	198	208	212	218
Hobart	Private Motoring	100	117	129	144	153	153	163
Canberra	Public Transport	100	144	173	206	210	218	225
Canberra	Private Motoring	100	121	135	143	157	156	167
Darwin	Public Transport	100	116	149	182	191	193	203
Darwin	Private Motoring	100	116	129	140	151	152	162
Australia CPI - all goods		100	116	126	148	154	158	165

Source: Australian Bureau of Statistics (June figures)

Even the increase in petrol prices from 2005 to 2008 didn't change the overall trend. Looking at just the period since 2000, the cost of public transport in Melbourne increased by 44%; meanwhile, the cost of private motoring in all Australian capital cities increased around the same as the CPI more generally, around 30%. So the increase in petrol prices has really just 'clawed back' the gains made by motorists earlier this decade as the cost of vehicles fell. (And petrol prices dropped after 2008, so in fact the price index for private motoring is already some 10% down from the June 2008 figure quoted here.)

What about the abolition of Zone 3 in 2007? This temporarily reduced the fare for those who crossed the old Zone 2/3 boundary. But even at the time, all it really meant for Zone 1/2/3 passengers was that they were now paying as much as in 2002, five years previously. A Zone 1/2/3 weekly ticket cost $46 in 2002, and a Zone 1/2 weekly ticket cost $46.60 in 2007. A Zone 1/2/3 off-peak saver ticket cost $8.00 in 2002, while a Zone 1/2 off-peak saver cost $9.30 in 2007. So while Zone 3 commuters to the inner city suffered less from fare rises, even they paid more than before. (And as we see from the table, the overall increase from 2005 to 2007 was still greater than in any city other than Adelaide.)

International comparisons also highlight the usurious nature of fares in Melbourne. Though very few cities have gone as far as making public transport free, most cities comparable to Melbourne have much lower fares than us. In Toronto, a journey to the city from North York (a suburb 25km out) costs about half the price of a Zone 1+2 journey from Keysborough in Melbourne, also 25km from the city. Vancouver's fares are around half the level of Melbourne's, even though the subsidy per passenger in Vancouver is about one-third less than in Melbourne. New York, Chicago, San Francisco and even Singapore have fares around half to two-thirds as expensive as Melbourne's for comparable trips. Fares in expensive cities like London are higher, but this just reflects the much higher cost of living in these cities. When like is compared with like, Melbourne rates poorly on the cost of public transport.

Most recently, the idea that our public transport is cheap was argued in a blog post by planner Alan Davies (who blogs as The Melbourne Urbanist). Davies recited figures from a Federal Government report suggesting that the 'variable cost' to households of commuting by car is $63 per week in the inner city and $82 per week in the outer suburbs, while the cost of commuting by public transport is just $36 and $41 per week respectively. This however overlooks a number of difficulties with using the raw government (BITRE) figures:

The figures represent modelling results, not actual survey data. Accordingly they will be sensitive to the modelling assumptions used, which BITRE do not always make clear.
The figures do not compare apples with apples. Instead they compare spending on car commuting by households where travel to work is by car with spending on fares by households where travel to work is by public transport. It is a fact that people who currently go to work by public transport have different travel patterns to those who go to work by car - both regarding the location of workplaces and the typical distances travelled to get there. Davies calls attention to this toward the end of his post, but this point is of such importance to understanding the results that it should have been made up front.
Although the model does take actual results from the VISTA 2007 survey as its starting point, these results have been biased by restricting to working couple households with two children under 18. Compared with the population as a whole, this has important consequences for factors such as the number of days per week worked by adult household members, the nature of the work (hence range of most probable work locations), the choice of travel mode, and the incidence of side trips being counted as part of the commuting journey (particularly when this is by car).
The 'car commuting' costs include an attempt to account for incremental costs of tyres, servicing and repairs as well as fuel; costs which are subject to a large degree of uncertainty. There is also a significant allowance for parking costs, which many motorists do not pay at all - even in the inner suburbs. The inner-city car commuting cost excluding parking is $46 per week, which is much closer to the estimate for public transport commuting.
It is likely the 'car commuting' costs have been inflated by counting associated non-work travel. For example, BITRE's methodology suggests that if the journey to work is combined with a school drop-off or supermarket run, the additional distance travelled will be counted as part of the 'car commuting' cost. And if person A goes to work by car but drives person B to the railway station first, the trip to the station will be added to the household's 'car commuting' cost but not its 'public transport commuting' cost!
Finally, the public transport 'marginal cost' figures are themselves suspect. Though the results are restricted to working couple households, the $41 per week marginal cost of public transport fares is less than the $41.60 cost of one week's Zone 2 travel for two people, and much less than the $51 cost of a week's Zone 1+2 travel for a single person. BITRE also suggests the cost per day of public transport commuting across all inner city households is $9.43, yet the $36 weekly cost across just public transport using households is less than four times as much - suggesting that the average inner-city working household is made up solely of part-timers!

In short, given the evidence presented above and the difficulty of extracting like-for-like comparisons from the BITRE figures, it appears unlikely that replacing a specific journey by car with the same journey by public transport would really produce any cost saving, given that most households would keep hold of the car regardless.

Of course as Chris Curtis' letter also reminds us, fares are only part of the public transport choice equation. Just as important - indeed, probably more important - are 'convenience' factors such as short waiting times, decent travel speeds, reliable and plentiful service, cleanliness, and friendly staff. This is why free public transport won't work - one needs a good quality of service as well as competitive pricing.

International experience shows that public transport can be both convenient and cheap. The key to making this happen is to provide service that is attractive to full-fare passengers. Melbourne's public transport service levels are unattractive to those with the option of car travel, and as a result public transport is neither convenient nor cheap. What it needs is a planning overhaul and competitive fares, not more excuses!

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Last modified: 15 November 2011