Myth: Smartcards encourage public transport use and reduce fare evasion

Myth: Smartcards encourage public transport use and reduce fare evasion
Fact: Myki smartcards actually make it even harder for people to do the right thing and pay their fare with the requirement to validate twice, when entering and leaving each vehicle. For the cost of the Myki contract – now $1.35 billion over 10 years – we could have put conductors back on our trams and staff on all stations, and have money left over to pay for service improvements.

Metcard. Simpler. Faster. Smarter.

The Met is introducing a simpler, faster and smarter way to travel. Automated ticketing will be easy to use, will make the Met more accessible to customers and will limit fare evasion.

—Early Metcard brochure, 1994

Despite the glowing promises made before their inception, the ‘Metcard’ automated ticketing system and its ‘Myki’ successor have been among the most unloved government initiatives in Victoria’s history. Between 1995 and 2005 Metcard was plagued by machine failures, tickets that suddenly stopped working and forced patrons to jump through bureaucratic hoops to rectify, and a culture of rampant fare evasion that costs the system over $60 million a year. Yet bad as Metcard’s problems were, the bungled introduction of Myki since 2009 has made Metcard seem a paragon of simplicity by comparison, and was cited as a major factor behind the 2010 change of government.

Passengers have even been driven away from public transport by ticketing hassles.

The ticketing needs to be simple. I live in Geelong and have declined to use Melbourne’s public transport ever since the paper tickets were phased out. Yes, that is a long time ago.

Just get any system that works simply and is vandal proof, please.

Blog comment by ‘John’, 14 July 2005

The runaround I got at all levels proved to me that myki has the monopoly on the tickets and Metro has the monopoly on the line and neither works together to help us. I do like the early warning SMS sent by Metro. However, this hasn’t been enough to convince me to use public transport again.

—James Pereira, RoyalAuto magazine, June 2010

Fare evasion in Melbourne has two main causes. There is a small group of public transport users that refuses to pay fares in protest over the removal of tram conductors and station staff. But for the most part, fare evasion is a matter of simple opportunism. Human nature being what it is, if you make it difficult to buy a ticket and easy to avoid buying one, a small but significant minority of people will try to ‘game’ the system to see how much they can get away with. According to a Herald Sun survey reported in January 2007, one in 10 Melburnians admits to sometimes evading fares.

It wasn’t always this way. There was a time in the not-too-distant past when buying a ticket was as easy as turning up, and where ‘casual’ fare evasion was virtually impossible, because chances were that somewhere on your journey you would encounter a tram conductor or a guard at a station barrier. This all changed in the 1990s when the Kennett Government signed a $400 million contract ($40 million per year over 10 years) to replace staff with ticket machines. Without staff to ensure passengers were actually buying tickets, fare evasion skyrocketed.

Taking into account the lost revenue from increased fare evasion and even allowing for inflation, the cost to the Victorian public of automated ticketing is almost certainly more now than the cost of employing staff prior to 1997. On our staffing page we estimate that the net cost of re-staffing the system is at most $20 million a year – $20 million less than the annual cost of the Metcard system, let alone Myki.

Those figures exclude the exorbitant capital cost of replacing one entire automated ticketing system with another built up from scratch. Originally, Victorians were told the total cost of smartcards would be $494 million over 10 years, somewhat more than the cost of Metcard. But in 2008 it became clear the real cost would be at least $1.13 billion – or $113 million a year until at least 2015. (The government tried to insist that the cost was known to be this much all along because their original estimate was for capital cost only, and excluded operating costs of $434 million as well as contingencies. Yet nowhere in the publicity for the new system did we ever see it implied that costs of such magnitude were excluded.)

More recently, the Baillieu Government has conceded the cost of Myki has risen to $1.35 billion: a figure that increases to $1.5 billion when the cost of keeping Metcard alive during the delayed transition is factored in. For this increased cost, Melburnians are seeing a reduction in capability of the ticketing system, most evidently the withdrawal of short-term ticket sales for casual users. And none of the cost figures factor in the hidden cost of additional fare evasion: Victoria’s Auditor-General has confirmed that during the transition from Metcard to Myki, the revenue lost to fare evasion rose from $60 million to as much as $85 million a year.

True, the Myki system has some advantages over Metcard: validating is slightly easier (though we have to do it nearly twice as often); the cards are theoretically less prone to failure than the paper Metcards; and prepurchasing should ultimately raise fewer hassles. But this is all a bit beside the point when you consider that for less then one-quarter the cost, we could have returned conductors to almost all trams and staff to all stations. In fact, the $135 million annual cost far exceeds even the gross cost of full staffing – which means tram conductors and station staff would have been better value for money, even if they don’t raise one cent in extra revenue.

Put another way, if we’d used $350 million of the $1.35 billion cost to overhaul the existing ticket apparatus, and put the remaining $100 million a year toward re-staffing the system, we would have had some $16 million surplus annually to spend on service improvements, even before considering the impact on revenue and patronage. If the new staff proved successful in deterring casual fare evasion, this surplus would soon have grown to as much as $80 million – which even as operating expenditure would go a very long way.

For a while back in 2006, the government published its own FAQ page detailing the supposed benefits of smartcards over the Metcard system. By failing to consider any alternatives, it was rather like extolling horse-drawn carts over carts that you have to pull yourself. It omitted to mention that a smartcard cannot assist people with prams or wheelchairs on or off vehicles, cannot give directions to infrequent travellers, and cannot provide passenger and system security. It admitted that Smartcards are not intended to solve the problems of determined fare evasion, allowing only that unintended fare evasion through not having the right change or not knowing the right ticket to choose should be eliminated. This is fiddling round the edges of the biggest problem with our ticketing system – for $135 million a year we should be expecting better!

(In September 2006 when the system was officially launched under the ‘myki’ brand name, the government’s FAQ page vanished. The site that replaced it didn’t even pretend to talk about the alternatives, since its purpose was marketing, not explaining bad policy decisions.)

The government was upfront about admitting that the new system will further increase the number of hoops passengers have to jump through in order to do the honest thing by the ticketing system. One of the most hated aspects of the Metcard system was the requirement that a ticket that had already been paid for and date-stamped had to be revalidated through a machine every time a passenger changed vehicles. Virtually no other city in the world has this requirement – not even those using a similar ticket technology. But the Myki system requires people to validate twice on trains and buses, once when entering and again when exiting. (Originally this also applied to trams, but this requirement has been dropped as it was belatedly realised it would throw the system into chaos.)

We used to only have to carry a valid ticket. Now we have to validate as we get on. Next we will be expected to validate as we get off too? How many little annoying tasks are PT users expected to put up with? In 20 years they’ll probably want us to push the g***** bus too!

Blog comment by ‘Paul’, 15 July 2005

Why is this thought such a good idea? Apparently, the government thinks passengers have so much difficulty working out which ticket they need, that we would prefer waving our wallets past a detector up to 10 times a day so the system can work it out for us. (This is no exaggeration: a city worker who takes the bus from home to the station and whose workplace is a short tram trip away from the city station needs to ‘touch’ on and off this many times, even if they don’t bother touching off the tram.)

The supposed ‘benefit’ of automated Myki fare calculation is largely vacuous, for two reasons. First, most passengers know exactly which ticket they need; that’s the advantage of a simple fare system based on two-hour, daily and periodical fares. Holders of periodical tickets in particular only have to decide on their fare once a week, or month or year – not every time they board a vehicle. New and infrequent users do not always know which ticket they need, but one advantage of a fully staffed system is that people can be assisted with such matters rather than having to put blind faith in a ticket machine.

Which brings us to the second problem: people generally don’t trust machines to work out how much they should be paying. Most of us already have an uneasy sense that we’re being subtly ripped off by the way utility bills are calculated; now we have to add public transport fares to the list. The design of the system means that some transactions don’t show up until a subsequent journey is made, making it unclear how people will be able to conveniently track what value remains on their smartcards or whether a fare cap is being applied correctly. And that’s assuming the machines actually work – no small matter given past experience in Melbourne and elsewhere.

As it turns out, early concerns about incorrect fare calculation were well-founded. Hundreds of cases have now emerged of Myki users being overcharged by the algorithm used to calculate fares for successive trips (especially those within the Zone 1/2 overlap). Experience has shown that humans are generally better at selecting the appropriate fare for their travel than machines are, and that the ‘lowest fare’ promise for Myki Money doesn’t always hold up in reality.

These problems, however, are by no means specific to Myki and are also seen in other smartcard systems worldwide:

I have…. dutifully scanned my Oyster card [in London] only to see the machine flash up a random error number. Inspectors just shrug and wave you through. Each time I checked how much that cost, and each time I found that I was charged extra.

Those lucky enough to notice such glitches and who can be bothered to hang around in lengthy queues get their money back. But the truly evil feature of the smartcard system is that most people just don’t notice the missing money.

—Fiona Hudson, Herald-Sun, 20 September 2006

Hundreds of complaints come in every month. Since July 2007, we’ve had 5000 complaints. The problems are so serious that the best solution is to throw it away and start again.

—Owner of Rotterdam smartcard complaints website, 25 February 2008

Now consider the reasoning of the less principled among us. They have a choice: do the right thing and touch on and off diligently; or don’t bother, avoid the effort, and run the slight risk of encountering a ticket inspector. According to an analysis of fines data from 2005 (before Myki), fare evaders have only a 1 in 590 chance of being caught. Such people have weighed up the risk of fare evasion against the reward under the current system and found it worthwhile. Is it only a matter of time before some enterprising fare cheats start up a scheme like this one in Mumbai?

Here’s how it works. You pay 500 rupees (about $11) to join an organization of fellow ticketless travellers. Then, if you do get caught travelling without a ticket, you pay the fine to the authorities and then turn in your receipt to the ticketless-traveller organization – which refunds you 100% of the fine.

Don’t you wish that everyone in society was as creative as the cheaters?

But, more important: wouldn’t there seem to be a big financial upside in investing in enough ticket-takers to make sure that the train system actually makes everyone pay? If I ran a swift little private-equity firm, I’d think about taking over the Mumbai train system, pronto.

—Stephen Dubner, Freakonomics Blog

(In July 2012 this almost came to pass, with a mooted ‘Tramsurance’ scheme offering something very similar in Melbourne. However, the scheme promoter withdrew after authorities threatened police action.)

Changing from Metcard to Myki does not alter the balance of this unprincipled calculus, other than making it even less attractive to be honest. Needless to say, none of this means we condone fare evasion; we’d just like to see money spent on a solution that fixes it, rather than allowing it to continue!

Meanwhile, those responsible for Myki promise that touching on and off will become much easier than is currently the case, with validators sometimes taking too much time to respond, and no obvious way to distinguish touch-on from touch-off without looking carefully. Only blind faith gives us any confidence that these performance problems will be fixed.

Most other purported advantages of Myki are classic cases of ‘solutions in search of a problem’. For example, Myki will cover not only Melbourne fares but also some V/Line fares. Yet contrary to the situation in Melbourne, people generally have no difficulty paying for and using V/Line tickets – and Myki might just provide a pretext for removing conductors from V/Line trains, where they are highly valued by passengers.

Last but not least, the idea that Myki or similar whiz-bang ticket technology will make the public transport system more attractive to use was already contradicted by the Brumby Government’s own market research. As reported in The Age on 16 July 2007, the people who are least likely to favour the Myki system and most likely to be confused or deterred by it are those who do not currently use public transport very frequently – that is to say, the majority of Melbourne’s population. The research suggests that smartcards might just be another barrier to getting more people onto public transport, when there are already so many other barriers being neglected by the government.

Unfortunately, smartcards appear to have been embraced by our transport bureaucracy as another example of technology for technology’s sake. It appears the most cost-effective and passenger-friendly solution – returning staff to the system – was overlooked for not being technologically sophisticated enough.

Any future ticketing system for Melbourne ought to employ front-line staff as a pervasive measure, just as the Met Ticketing Task Force recommended back in the early 1990s. If we continue to rely on Myki, Metcard or some other automated solution, staff should be present to assist passengers to operate the machinery, and to ensure (in the non-confrontational manner that a pervasive staff presence does) that people actually pay their fares. Only then will the system be truly friendly and fare evasion be minimised.

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Last modified: 29 August 2012