Sunday, 30 March 2014

The Free CBD and the Unfair Fare

The Victorian Government has recently announced plans to significantly alter the fares for Melbourne's public transport system. Firstly, the CBD and Docklands will become a free zone, so anyone can jump on a tram in the CBD without charge; and secondly, Zone 2 will be, to some extent, abolished.

Source: Premier of Victoria
The first initiative is not so terrible. The free zone, being bounded as it is, will not lose as much fare revenue as you might think - anyone who uses public transport to get to the city has already paid for their Zone 1 ticket anyway, so that revenue remains the same. The kind of people who are already in the CBD and just want to grab a tram for a few blocks are also by far the most likely to fare evade - so the government loses no revenue from them either. Plus it does go some way to ameliorating the fact that you cannot buy a myki on a tram (like you could buy a metcard) and you cannot buy short-term mykis anywhere - both of which primarily affect tourists. It is worth noting, however, that many of the city's biggest tourist attractions (the MCG, Crown, museums etc) are outside the free zone, which does quash the tourist angle a bit.

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.

Source: PTV

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.


  1. Interesting analysis, Ben. The free CBD travel option sounds like it would be cost neutral and an improvement, as you say, in terms of damage control on Myki.

    As a Zone 1 resident, now frequent commuter to Zone 2 (Monash Uni), I like the plan to abolish Zone 2. And I actually don't mind the principle of Zone 1 residents subsidising fares for people in Zone 2, given how much more transport options we have closer to the CBD.

    However, I agree with you that the spending is misdirected: I'd like to see expansion of PT infrastructure to the growth areas/interface councils over fare reduction.

    My guess is that the Coalition's 'plan' is designed to take some heat off the East-West tunnel proposal. But we are not so easily distracted...

    1. I think it's definitely designed to distract from East-West woes, and part of an overall attempt to rehabilitate their image on public transport (which hasn't been helped by their federal colleagues).

      They also recently announced big plans for the Pakenham/Cranbourne lines (which I wholeheartedly support) and the other day made a big song and dance when re-announcing that they were ordering a single V/Line train. Definitely keen to shake the anti-PT perception!