Myth: Public transport is a subsidy to rich people

Myth: Public transport is a subsidy from poor suburbanites to rich central-city workers
Fact: Consumption of most goods and services, including both car transport and public transport, skews toward the wealthy simply because wealthy people have more purchasing power. But the wealthy also contribute a greater share of the revenue that funds public services. Rich and poor alike benefit from access to an affordable transport system funded by taxpayers, even if we don’t all make equal use of it. Road transport is also heavily subsidised (including through tax deductions for car use, from which a lot of wealthy people benefit), but few would argue against public funding for roads simply for this reason.

A rich vein of mythology for ideological opponents of public transport is provided by ‘class war’ rhetoric. Where public transport is poorly used, it’s said to be unworthy of public support because it’s only used by poor people. But where it is well used – at least within the ‘niche market’ of central-city commuters – it’s said to be unworthy of support because it’s only used by rich people.

People who use public transport the most are also more likely to earn more money, and people who use it the least are likely to earn less [planning analyst Ross] Elliott said, who used analysis from Brisbane firm Urban Economics….

“This is a public transport system that is heavily subsidised, and the people who are paying the bulk of that subsidy are arguably the people who are more likely to be driving to work,” he said.

“However their petrol isn’t subsidised, their car isn’t subsidised, they are likely to be paying for parking, and they’re probably earning lower incomes than those people who are using public transport the most.”

—“Those least likely to use public transport shouldering the cost”,
Brisbane Times, 31 May 2013

One also caught a hint of this rhetoric in former Prime Minister Tony Abbott’s persistent habit of referring to urban public transport as ‘commuter rail’, which like the above appeals to the stereotype of public transport users as elite city workers catching the train into town from an old-money suburb. (Amusingly, it won’t escape most people that Abbott’s successor Malcolm Turnbull nicely fulfils the stereotype – though this makes him possibly the first Australian political leader in decades to do so!)

The intent appears to be to argue for full ‘user pays’ funding of public transport, on the basis this would somehow be fairer to people on low incomes. What it would actually do, of course, is put public transport out of reach of the very large number of low-income people who do rely on public transport!

No-one doubts that the heaviest users of public transport in most Australian cities are central-city workers – or that many central-city workers are at the higher end of the income spectrum. If one focusses solely on the journey to work, one would expect public transport users to skew somewhat higher in income purely because public transport in this country is geared to this niche market. Yet even here the difference is relatively minor: 2011 Census data analysed for the 2013 State of Australian Cities report indicates that the mean income of Melbourne’s public transport commuters is about $1250 per week ($65,000 per annum), while that of those who travel to work by all other modes is about $1150 per week ($60,000 p.a.). The difference is small enough that individuals on these two incomes would still give the same answer to the Census income question (that is, “$1000 to $1299 per week”).

What’s left out of glib statements about wealthy train commuters is that while high-income people figure large as users of public transport to CBD jobs, they also tend to use the road system more than low-income people – for both work and non-work related travel. Those motorists paying high inner-city car parking fees, for example, are just as likely to be well-off as the stereotypical high-income train commuter. (Of course, many are not actually well-off, and that’s true of both the motorists and the public transport users: this shows the dangers of thinking in stereotypes.)

The idea that public transport is the special domain of rich people goes hand-in-hand with the myth that social equity is best promoted by subsidising car travel. As we point out on that page, official figures show that the richest 20% of households account for one-third of all spending on car travel, while the lowest 40% by income account for under one-quarter. There is quite simply nothing unique about public transport when one looks at rich people’s habit of consuming more than poor people do.

The reason for having publicly funded transport systems in the first place is to ensure that all citizens, rich and poor alike, have access to the means of travel on an equal basis so that all can participate in daily life and contribute to our economy and society. We all benefit from the fact that people on low incomes can go places and do things from day to day that they could not afford to do if public transport fares were charged on a full-cost-recovery basis. The additional cost is paid ultimately by wealthier people contributing income tax and GST – including those city-based professionals taking up seats on the peak hour train.

And the same is true of private road transport. A low-income motorist may not have access to subsidised cars or petrol (though these are far from unheard of), but with the exception of a handful of tollways, the roads we drive on are 100% taxpayer funded and maintained. As we set out fully on another page, neither petrol tax nor registration fees nor any of the other fees paid by motorists actually cover the costs of the road system. In fact, a very large part of fuel excise revenue collected from motorists is given back through tax deductions for motor vehicle use – claimed by a broad range of taxpayers, not just high-income earners.

None of this is to deny that our public transport system would be more socially equitable if it were not so heavily focussed on central-city commuting in peak hour. There are countless good reasons – based not just on improved equity and access but also better asset utilisation and cost recovery – to boost public transport services in suburban areas, for cross-city travel and for travel in off-peak periods, evenings and weekends. Cities worldwide with high-quality public transport systems don’t see them as the exclusive domain of rich city workers, but as services from which all benefit.


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Last modified: 25 November 2015