The State government’s media release dated 31st March 2023 stated “The Andrews government is transforming the way Victorians travel across the State, with the regional fare cap now in effect to make regional public transport fares fair.” Quoting the Minister for Public Transport
“We’re delivering for all Victorians – making public transport more affordable and accessible to passengers in every corner of our state to ensure they can get where they need to go” and
“The regional fare cap will transform the way Victorians travel – and will also provide a huge benefit to regional tourism and businesses.”
The claims made by government in this situation are astonishing to say the least and are not supported by a business case, but it raises the broader issue of pricing government services, how these services are paid for and by whom.
Transport pricing is an important element in a transport plan. It can be used to recover the cost of services provided by government such as travel on public transport or access/use of transport infrastructure such as roads, rail tracks and so on. This may include direct costs associated with provision and maintenance of infrastructure, or related costs such as policing, compliance, supervision, administration and trauma from traffic accidents. These services have to be paid for one way or another and are to a large extent charged on a user pays basis.
Transport pricing is also used to promote activity that supports government policy or other political purposes. Discounted or even free travel on public transport has been used to support community service obligations for poor or underprivileged people. It has also been used to change travel patterns such as encouraging people to travel in more efficient vehicles or in vehicles which have a higher safety rating, to change travel behaviour or support specific transport or commercial activity.
These are complex issues and implications and impacts need to be well understood in social, economic and environment terms. The price and method/mechanism used must be appropriate to ensure it achieves the desired outcomes and are realised equitably or as part of a community service obligation and not abused by those in privileged positions who are best able to exploit them.
For example short trips in/out and within the Melbourne CBD were always the most lucrative travel sector for Melbourne trams and provided a cross-subsidy for poorly patronised routes, particularly those most remote from the CBD. The decision to make short trips free made little difference to patronage for a fare that most people were happy to pay. The main issue as far as travellers were concerned in this situation was service frequency and convenience – not price and the decision to make these fares free created a substantial revenue shortfall that had to be met by other means.
Similar thinking should be applied to the decision to reduce fares on country train services. People will use the train if it meets their travel needs, but these vary depending on the trip and people’s circumstances. There are many factors that affect modal choice which are highlighted in the table below. Whilst this has been compiled for metropolitan public transport services, including buses, most have application for country train services.
Public Transport Customer Service Issues
Ref charts provided by Prof Graham Currie summarized roughly in tabular form below
| Service Issue General Ranking | PT Issue Importance | PT Issue Importance (on scale of 3.5-6.5) Note: all scored between 6.4 – 5.6) | PT Issue Performance (on scale of 3.5-6.5) |
| 1 | Safe at night | 6.4 Highest | 4.5 Worst – v poor |
| 2 | Reliability | 6.3 Second highest | 5.2 poor |
| 3 | Frequency | 6.25 | 5.0 poor |
| 4 | Safe during day | 6.4 | 5.4 |
| 5 | PT available where and when needed | 6.1 | 5.0 poor |
| 6 | Deal with disruptions quickly | 6.2 | 4.5 V poor |
| 7 | Get to stops/stations | ||
| 8 | Quality of service | 6.0 | 4.5 V poor |
| 9 | Make connections | 6.0 | 5.0 poor |
| 10 | Available on weekends | 6.2 | |
| 11 | Get information about PT | ||
| 12 | Disruptions don’t happen often | 6.0 | 4.8 Very poor |
| 13 | Meet costs | 5.9 | 5.0 poor |
| 14 | Information to plan journey | 6.0 | |
| 15 | People I care for can use it safely | 6.2 | 4.6 Poor |
| 16 | Available at night | 5.8 | |
| 17 | Ease of buying/using a ticket | 6.1 | |
| 18 | Over crowding | 5.9 | |
| 19 | Staff courteous and friendly | ||
| 20 | Physical access | 5.8 | |
| 21 | Can make trips to new places on PT | ||
| 22 | Travel time compared to car | 5.7 | 4.3 V poor |
The extent to which cheaper fares for regional services will influence travel behaviour and who would benefit is not clear, but in many situations it is likely to be marginal at best. People will not use public transport if it does not take them where they want to go when they want to go, if the journey is inconvenient, uncomfortable and takes too long. People wishing to make long trips will expect guaranteed seating on a train and on a train service that is not replaced by buses. They will also expect toilets, buffet catering, and clean, well maintained carriages with air conditioning. Most people making these trips from Melbourne will also use the suburban public transport system to access the regional network.
Cheap fares for heavily patronised commuter travel to and from regional cities such as Geelong, Ballarat, Bendigo, and the La Trobe Valley will only compound overcrowding that already exists during peak travel time and create pressure to provide more trains. At the very least fares should be priced in a way that encourages travellers to use less well patronised services and pay a premium during peak travel time when trains are full. This approach is common in Europe. Discounts are also available for people who book in advance. Discounted off peak fares were also adopted in earlier times for rail travel in Victoria.
Public transport operates in a very competitive market, one that is dominated by the private car which, for most trips wins on service and convenience not price. The extent to which cheap railway fares will encourage greater access to regional centres and promote regional development is therefore problematic. It is likely that the decision to cut fares will result in a significant loss of revenue that will have to be recovered from other sources and outcomes promoted by government will not be realised. Reduced fares will not improve network coverage or the quality of service, make it more accessible, or transform the way people travel.
There may be some benefit to tourist operators and regional business but the impact is likely to be small. If government is serious about using V/Line services to promote regional businesses the starting point would be to improve the quality of service, not just for regional services but also the suburban network that provides access to it by addressing service issues listed in the table above.
This also raises the question whether promoting more regional growth and development is a sustainable policy in the first place. Most regional centres face significant environmental challenges, particularly adequate water supply, which will become increasingly critical as global warming increases and rainfall in south eastern Australia declines in the future. It will also put pressure on physical and community infrastructure and services and housing which have consistently failed to keep pace with population growth, particularly in regional centres and is likely to do so in the future. The cost of providing this is often overlooked but will become increasingly problematic as economic conditions and environmental factors become more challenging.
Whilst service issues tend to dominate personal travel behaviour in many situations price will be an important factor and a legitimate tool for influencing travel behaviour in a way that promotes government policy. It is already used in many forms, such as traffic fines to encourage compliance with road laws. Suburban rail fares have also been structured to promote urban growth and development. Motor vehicle registration charges have been used to encourage people to drive newer and smaller more fuel-efficient motor vehicles. In these situations the objectives are clear and pricing mechanisms are designed to achieve them.
Transport pricing has the potential to distort the transport and travel market and can be used to promote good policy outcomes, but if it is poorly designed or used for purely political purposes it invariably ends up being exploited by a small minority at significant cost to the broader community. In these situations the impact can be far reaching and difficult if not impossible to reverse.
For example, subsidising road freight and motorists by failing to pass on the full cost of road transport has encouraged the transport of more freight on roads instead of rail and made it easier to travel by car but it has created a large number of cost “externalities”. The loss of freight from an efficient carrier (rail) to a far less efficient carrier (truck) has reduced the viability of the rail freight business and is now responsible for most of the wear and tear of the road infrastructure.
It has also promoted the least efficient and most costly mode of personal travel – the motor car. The cost is not confined to the purchase price and operating cost of the vehicles but includes the demands it makes on physical infrastructure and land use which has encouraged people to drive longer distances, travel more often, resulting in more urban sprawl. This in turn has increased the pressure to travel faster, creating political pressure to build even more road infrastructure, including motorways, resulting in more road accidents, pollution, noise and other social, economic and environmental impacts. The cost of other infrastructure such as electricity, water, drainage, social infrastructure and community services also increase.
The end result has been a city development trajectory that is unsustainable and will come under increasing pressure as environmental factors intensify.
Appropriate pricing can be introduced, supported by other measures to help reverse this trend, but these must be well designed to achieve clearly defined outcomes. For personal travel the objective must be to encourage people to travel less, less often, more efficiently, and more safely in a way that places less demand on road infrastructure. This rationale applies to both public and private transport.
Similar objectives should apply for freight; to transport less, over shorter distances and more efficiently in a way that is less damaging to transport infrastructure. The pressure to introduce these measures will intensify as the cost of maintaining the state’s transport infrastructure increases at a time when government finances are coming under increasing pressure. Implementing these measures will not be popular and the political cost will be high, perhaps too high for government to contemplate but sooner or later these issues will have to be addressed and it will require a well thought out strategy and a plan to make it happen.