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Household spending on transport

Every three years, Statistics New Zealand carries out the Household Economic Survey (HES).This is a major survey of households across the country – collecting information on their incomes, how much they spend on various goods and services, and various other attributes. In this post, I want to highlight some of the results from the latest HES, which was carried out between July 2012 and June 2013. Matt did a post last year looking at this, but I’d like to dig a bit deeper into the HES data, and look at some of the other spending which is transport-related, but not included in the Transport spending group (read on and this will make sense!)

The HES splits household spending into twelve groups, including things like Food, Clothing & Footwear, and of course Transport. The Transport group is a big part of household spending – the average household spends $158 a week on transport, 14.2% of their total spending. Over the course of a year, that’s $8,231 – far from being small change. For all the households in New Zealand combined, the figure is $13.8 billion.

There’s a lot that goes into the Transport group. The costs of car ownership (excluding petrol and diesel) include car purchases, car parts and accessories, servicing and repairs, and various other costs like licensing, WOFs and parking. In total, households spend $6.6 billion on these items, in “gross” terms. In “net” terms, the figure is a bit less: you need to subtract the money which a household gets when selling a car to  dealers or other households. You can take off $650 million for this, for a net figure of just under $6 billion.

As Matt pointed out in his earlier HES post, and as we’ve written many times previously, a big part of the value from shifting to public (or active) transport is that it lets households get by with fewer cars. Sure, some households will be able to go car-free altogether – but others will be able to go from two cars to one, or three to two. This all saves money, and could take a fair bit of steam out of that $6.6 billion-minus-the-sales-and-tradeins.

Then there’s petrol and diesel: those are big ones too, coming out at $4.6 billion combined. Public transport isn’t split out as such, but falls under road, rail and sea passenger transport. Combined, these items add up to $470 million, and would also include taxi fares and so on. Domestic air transport is $230 million, and international air transport is $1.3 billion… all those overseas holidays add up, although it’s probably a bit unfair to lump this stuff in with the domestic costs.

Overall, household spending on transport looks like this, with the dollar figures in billions:

Aggregate Net Household Spending on Transport (in $billions)

Aggregate Household Spending on Transport

Statistics New Zealand note:

In 2012/13, average weekly household expenditure on transport was $158, up 20.8 percent from 2009/10. This was largely driven by an increase in spending on petrol over the three years – from $41 a week in June 2010 to $49 in June 2013 (up 20.1 percent).

Transport showed the largest increase of all expenditure groups over the three years. [Transport in the] CPI showed a similar increase, with petrol prices up 23 percent for the three years.

Anyway, this data is interesting, but it’s not a complete picture of transport costs in New Zealand, and nor is it supposed to be. It doesn’t show transport costs for businesses or the government, or the “net” cost to the country as a whole. It doesn’t include the hidden costs of our current transport system, such as inefficiently high numbers of carparks being provided due to parking minimums.

Insurance isn’t counted as being part of the Transport spending group either, but NZ households also spend around $780 million a year on vehicle insurance, according to the HES. Households also spend $2.3 billion on rates. For Auckland Council, and most councils, transport is the biggest spending item.

Part of the reason I write for this blog is that I think New Zealand can have a transport system which costs less and delivers more than the current one, and the country will be better off for it – financially, and in terms of our travel times, and our greenhouse gas emissions (and even our health). The best place to get started is with greater use of public and active transport.

18 comments to Household spending on transport

  • grantb

    On the email – (READY TO PUBLISH). OK then :-)

  • I am always very happy when I think how much money our family saves by having only one car. It seems to be absolutely unquestioned now that each household must have at least two cars – even if one isnt used much the idea of one person not having their own personal transport pod is unthinkable.

    PT and cycling for anything up to 5kms away (actually quite a big distance) easily fill in our need for another car.

    • Glen

      Can’t agree more. We have saved an enormous amount of money as a family by just having one car, and we’ve also gained more interior space by converting one garage into a rec room (an under-appreciated benefit of having one less car in a house designed for two).

      Biking (4km) to work also gives me a little bit of exercise which I otherwise wouldn’t get – having a little one at home doesn’t leave much time for running.

      Win-win all round I reckon :)

  • JimboJones

    I’d love to drop down to one car – but unfortunately even though we live reasonably central and work reasonably central, taking the bus to work would take about three times longer than driving for both my wife and myself. I can’t see anything in AT’s plans (or even the CFN) that will change this.
    Why it takes the 258 bus 30 minutes to go 10 kms from Mt Roskill to the city is beyond me – even worse the 40 minutes the 009 bus takes to go from Mt Roskill to Penrose.
    Us people who have chosen to live as central as possible seem to be ignored in Auckland’s PT plans while there is a big spend up for people who choose to live as far away as possible!

    • Luke C

      Yes there is lots to help you in the CFN. Notably Rail to Roskill and CRL will get you to town in 20 minutes, then there is light rail in the 2030 CFN.
      Also in short term Dominion Road improvements and bus-lane extensions will speed up the journey.
      The frequent network coming in a couple of years also substantially improves East-West services.

      • JimboJones

        I imagine the trains on the Roskill spur will be so infrequent that you would be better off taking the bus.
        I’m not sure why they aren’t putting in light rail as part of the dominion road upgrade, it seems like a good time to do so. The upgrade seems to be more about making it look pretty than anything else – as far as I understand the bus lanes keep the same hours – just a few metres of extensions. That is assuming they ever start the upgrade ;)

        • Sailor Boy

          Why would the service be infrequent? Could feasibly do at least 8 an hour on the entire network

        • If you look at the CFN you will see that the Mt Roskill spur is the western end of the Southern Line, so its frequency would be governed by the needs of the bulk of the line. It could alternatively be balanced with the Mangere Line, but either way, it would have very good frequency, at least 6 tph. One of the reasons for this line is to add frequency on the inner Western which is well used already, ie pre CRL, and as it will become profoundly more useful with the CRL is certain to become extremely popular.

          This means that this area would get lavish service right from the beginning [turn up and go] and transferring from the bus, or riding a bike, walking some distance, or being dropped off at one of the stations will have have considerable utility and is likely to attract many riders.

          http://transportblog.co.nz/our-proposals/congestion-free-network/2030-congestion-free-network/

        • Luke C

          seem to miss part of the point of the CFN, all services very frequent (at least every 10 minutes, incl off-peak, evening, weekends).
          Light rail would cost a lot more money. Agree upgrade isn’t good enough, but easy to decide bus-lanes need longer hours.
          Most people on corridor use the bus, though is hassle if you don’t work directly on bus route like Newmarket/Ponsonby.

        • There are about four hundred million reasons why they aren’t putting in light rail as part of the Dominion Rd upgrade.

  • Phil

    An interesting report – what will also be nteresting will be to watch what happens to PT and cycling when the price of petrol comes down. Will people get back in their cars when it no longer costs so much to fill their tanks?
    How much does increased PT patronage depend on convenience vrs costs of private transport? I would guess once someone makes the effort of switching to PT they stay that way but I could be wrong.

    • Sailor Boy

      Why would the price of oil come down? Demand is growing fairly rapidly and extraction at new sights is expensive. Oil is only going up from here. Not to mention that oil is sold in usd and our dollar is overvalued atm, exchange rate correction could see us at three dollars a litre by the end of the year

      • Pay no heed SB, our dear fan Phil has a penchant for forgetting to use words like ‘if’ and phrases like ‘ In my opinion’. Nor does he even bother with time or place specifics.

        And, after all, he might be right, IF he means ‘a bit’ and ”this year’ and for landlocked WTI, which we can’t buy.

        Otherwise there is little evidence to support his sweeping unmoderated predictions. As we have established on previous threads. Of course for NZ anyway the current reason for pump prices being as reasonable as they are (!) is our relatively high exchange rate. Where it goes as well as the Tapis price is what matters, not how incompatible US refineries are for their current fracked soup supply.

  • Phil

    Yes SB I agree – NZ has a massive exposure to the US dollar and that is our biggest risk in our Energy security. Having said that, I assume all oil importers in NZ are smart enough to forward hedge currency risk.
    As for the global wholesale price – its coming down – Shale oil and positive US refinery margins mean an over supply of transport fuels in the US and extra refining capacity in the Middle East and China mean cheaper products in Asia as well.

  • JohnP

    Feeling happy and secure so I will try not to be inflammatory today. Transport costs are only half the issue. Transport benefits being the (hopefully) larger piece of the puzzle. If people act rationally then they choose a mode of transport and a home location where the benefits exceed the costs. It is quite possible and even likely that paying more for transport is rational as they accrue a greater benefit from it. As an example I bought a second car when I lived in North Devonport and driving to the CBD took less time and was more convenient that bus to the ferry, ferry, then bus in the wet or walk 20 minutes to my office. It cost me more but improved my life. We could all think of ways to reduce travel costs such as move into a little apartment, walk, bus, don’t travel etc. But for most of us that would mean a larger reduction in the benefits we accrue.

    As for predicting the future price of oil, the Think Big projects are historical evidence that only a very brave person would try to do that. Gas to Gasolene anyone?

  • Time on public transport is not wasted time, if you do some reading (easier on trains), listening to music and interesting interviews (podcasts!), day dreaming, reconnecting with somebody that you know and/or making new friends, meditating!

    • JohnP

      My recollection of public transport is avoiding eye contact with the nutter, hoping the religous fanatic doesn’t try strike up a conversation, trying not to listen to Kylie Minogue on the too loud walkman (yes it really is that long ago for me) 87 or 88 or something). Perhaps it has changed for the better but I suspect not. Now I image it is avoid contact with the Crystal Methodist. But if you enjoy it thats great, I wish more drivers would swap across to buses.

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