|Source: Premier of Victoria|
On the other hand, it is likely to increase crowding in an area that is already routinely overcrowded, and may have the effect of subsidising people who drive to the CBD (which can induce traffic). So that one could go either way.
The second initiative, however, is unequivocally bad policy - it's designed to win votes from people who want cheaper fares, but it'll cost them (and the rest of us) more in the long run. The details are a little vague at this stage, but essentially people who are currently in Zone 2, and who are travelling into the city, will only pay a Zone 1 fare, instead of a Zone 1+2 as they currently do. However, those who travel solely within Zone 2 will still pay just the Zone 2 fare - so it's not like the zone has been abolished entirely (as happened with Zone 3 in 2007). So in the short term, if you live in Zone 2, this will cut your fare considerably - a 2-hour Zone 1+2 is $6.06, but that would be reduced to the Zone 1 fare of $3.58.
However, a flat rate means that all people are charged evenly no matter what the distance - so someone travelling three stops on an inner-suburban tram would pay the same as someone travelling from Pakenham all the way into Flinders Street. In addition to just plain not being fair, if you think about it this essentially means that the people who are actually in Zone 1 are subsidising the people who are in Zone 2. The fares are in no way proportional to the amount of resources being consumed.
This manifests itself by pushing the fares on remaining zones up to compensate for the loss of revenue - so eventually everyone will be paying more, with people in Zone 2 ultimately absorbing part of the cut, and people in Zone 1 subsidising them even further. This is exactly what happened when Zone 3 was abolished, and public transport fares in Victoria are going up, with the last few years seeing some of the biggest increases in a long time - well above inflation.
Overall the scheme is touted to cost about $100 million per year, which will ultimately either need to be made up from fare increases, or will be $100 million less we have to spend on improving the network or increasing services (or, most likely, a bit of both). And since the proposal is likely to induce people to use public transport more (in itself a good thing) that's $100 million less we have to combat the overcrowding that it will exacerbate.
A serious attempt at fare reform would look like pretty much the opposite of this - re-introducing Zone 3, and making the overlap areas (where Zones 1 and 2 meet, and where you can have either ticket) much bigger, so that people making local trips are less likely to be penalised for living right on that border. As it stands, someone who travels only 3 stations could be charged $2.48 if it's Epping to Keon Park, $3.58 if it's Flinders Street to Burnley, or $6.06 if it's Ginifer to Tottenham. The latter fare is the same for 7km as the 57km trip from Flinders Street to Pakenham. Hardly fair.
The other thing is that while the Free CBD plan does a bit of damage control on myki, it does not actually fix any of the problems - namely the inability to buy mykis on a tram, and the lack of short-term tickets. These are serious issues that are not going away.
Unfortunately neither party really has the will for real fare reform, because it's hard to articulate the truth and voters like the sound of cheap fares in the here and now. But the Coalition's proposal is very bad policy, evidently thrown together without even telling Yarra Trams or Metro, and I can only hope that Labor don't cave and promise the same.
Update 31-03-2014: it seems Labor HAS caved, and is now backing the proposal. Which is disappointing.