An efficient public transport system is essential for a liveable, modern city. It is good not only for the people who use it – it also benefits the whole community by taking cars off the road.
The challenge is determining how to pay for an expanding system in a way that is fair to those who use a lot of public transport, those who travel occasionally and those who never use it at all.
Right now fares cover about 20 per cent of the $5.5 billion annual public transport cost. That is, a trip with a $3 fare costs around $15 to provide. The other $12 is paid for by taxpayers, for which they get community benefits such as reduced congestion and cleaner air.
In developing our recommendations for changes to public transport fare structures for Sydney and surrounding areas, IPART looked at whether passengers should pay an even lower share of the cost. We have looked at the number of cars taken off the road by public transport, the existing and planned public transport capacity and the cost of raising taxes to subsidise it. We also looked at how much people pay for public transport in other cities.
Our analysis found that the benefits of public transport to society would be lower if passengers' share of the funding were reduced.
But some aspects of the current Opal system do need to change, to provide a better balance between the fares paid by different passengers.
Removing the "transfer penalty" – the additional fare you pay when you switch from a bus to a train, for example – was the single biggest change people wanted when we consulted on possible changes. Future expansions of the network, such as the Sydney Metro and the George Street light rail, will mean more people will need to switch services to complete their journey. Our draft report outlines a solution to remove the transfer penalty. It would see fares for a multi-mode journey come down by 20 to 50 per cent, improving the passenger experience across the network.
However, this change would come at a cost of around $100 million in lost fare revenue. This cost could be met by changing the way the Opal weekly travel rewards work.
Right now, one in every five trips made on Sydney's public transport network is free for the passenger. The cost of these free trips is picked up by other passengers, to the tune of about $150 million a year. Our draft report proposed changes that would reduce the number of free trips, by charging passengers for the most expensive 10 fares in a week, instead of the first eight. The cost savings would be passed back in lower fares for single journeys, including for multi-mode travellers.
Discounts for frequent use have benefits to the broader community only if they encourage people to switch out of their cars and onto public transport. The current system gives most of the free trips to full-time workers, most of whom would have made the same journeys anyway. Our suggested changes would also remove the incentive for people to take short, unnecessary trips at the beginning of the week to achieve free travel for the rest of the week, putting upward pressure on prices for users in the future.
We believe that the changes proposed in our draft report would make the system fairer and more efficient. But most importantly, everyone who uses public transport and those who pay for it – as passengers, taxpayers or both – need to have their say about our proposed changes.
Hugo Harmstorf is the chief executive of the Independent Pricing and Regulatory Tribunal. Submissions to the public transport fare review close on February 5.
What do you think would make the Opal system fairer for passengers?
