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Free public transport in Melbourne….again

The Sunday Age’s piece by William Birnbauer ‘From Clear Roads to Gridlock: What’s the lesson, Mr Bracks’, argues that the low road traffic congestion experienced during the 11 days of free public transport during the Commonwealth Games in Melbourne gives a ‘real world experiment for the future’ supporting proposals to make public transport free. In my view it does no such thing.
Birnbauer notes traffic volumes were lower than expected during the ‘Games and that the usual peak-traffic problems disappeared. Free transport, he noted, was consistent with a Sunday Age poll finding 88% support for the proposal. With actual public transport subsidies around $1 billion the extra costs of making it completely free, he claimed, would be an extra $340 million which could be met by a congestion tax, a Medicare-style levy or a levy on rates.

Whatever the claims are for free public transport, the experience during the ‘Games is irrelevant in predicting future public transport demands with free provision. (i) people were actively discouraged from taking their car during the games by widespread warnings of potential long delays and extreme congestion; (ii) journeys to the games themselves were atypical and made, in considerable numbers, by visitors to the city, and, (iii) the ‘triple convergence’ that might be expected to create new actual demands for car travel from latent demands could scarcely be expected to arise over such a short-period. Long-term, the response of commuters in initiating new travel demands would be higher.

The details of the claimed extra costs of only $340 million also should be spelt out. Whatever the final public travel demand increase is, it must be met by increased costly bus and train services. Most of Melbourne’s public system is radially directed towards the centre of the city so making transport free would disadvantage those living in the city’s periphery who would continue to have poor access to public transport but would face extra costs of meeting the transport needs of those who do travel radially and who are currently well-serviced. The policy is both inefficient and inequitable.

We need effective congestion pricing in Melbourne and public transport which is priced efficiently at marginal cost but not given away free.

9 comments to Free public transport in Melbourne….again

  • Roy Stead

    Hi Harry,
    In your discussion, you again mentioned marginal cost pricing for transportation. However, it is important to clarify this (unless this misrepresents your position). Is your argument that marginal cost pricing should be required (regulated) for existing services such as rail and trams where competition may be limited – but that buses and possibly new services would be free to price as they choose – but competition would force them to marginal cost (particularly buses) – this would allow for the situation where if anyone thought they could make money building a railway to Doncaster and beyond, they could.

    I know I have harped on about this but any regulation of transport needs the flexibility to permit entrepeneurs to discover new routes for the under supplied outer-suburbs.

  • Not my real name

    Nobody in discussing the games has examined the fact that trams and buses for the last two weeks have been packed, late and rather dysfunctional.

    Is the level of chaos created by an extra 80,000 people a good sign of what might happen in X years, when the public transport using population of Melbourne has increased by that 80,000 figure.

    Might be something there to think about. Has the Cth games public transport traffic been a ‘real time’ experiment in what will happen to our system without profound improvement?

  • hc

    Roy, My prescription would be identical to your first para. With competition and low scale economies competition should do the trick. With rail there will need to be hefty subsidies as there are high fixed costs.

    On your last para I couldn’t agree more. Jitneys, minibuses, whatever it takes should be allowed to operate in these poorly-supplied outer suburbs. Its not government per se much of the time but lack of competition.

    I agree also with not-my-real-name. Melbourne seems to me on a cusp of real problems. I think travel for the games was atypical but current patterns of congestion do seem very sensitive to demands. We need to take measures now before the city becomes gridlocked.

  • Andrew

    Discussion of Harry’s ideas on this subject is also continuing at Catallaxy:

    http://badanalysis.com/catallaxy/?p=1657

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  • Man With a Van

    Free public transport seems a good idea, but there are many things which should be discussed carefully. We can find mistakes from first experiment and try to improve the system.

  • van man

    But there are too many bad sides after this experiment, that I think it’s better to forget about this idea.

  • Van Sales

    The most important is to have reasonable prices for public transport. In this case people will be satisfied with the price and quality.

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