For most of the last year we have found ourselves somewhat puzzled by the stalling and even declines experienced by rail patronage in particular – but more recently general public transport patronage. This can be seen in the dip in 12 month rolling patronage totals up to November last year:
Auckland Transport have provided a multitude of excuses for the patronage dip over the past few months – some more plausible than others (they blamed the World Cup for some of the declines in August and November, even though the World Cup was only in September & October 2011). Some of the decline may be due to higher rail fare evasion than we think (anecdotal evidence on this is pretty strong) but I wonder whether public transport fares are really starting to hurt some people and put them off catching the bus, train or ferry. With inflation at near-zero, wage growth stagnant seemingly forever and petrol prices still below the peaks of a few years back the fare increases for rail in particular over the past few years may be starting to bite.
A benchmarking study of public transport in Auckland and a number of comparator cities prepared a couple of years ago highlighted that Auckland’s PT fares – on a per kilometre basis – were higher than all other cities analysed:Yes, the graph does show that Auckland’s fares are on average around twice those of the Australian cities and much higher than Wellington’s. This is despite (or perhaps a cause of) Auckland generally having one of the poorest and least used systems when compared to these other cities.
There are lots of ways that we can improve our fare system, like the introduction of free transfers, zone-based fares, greater incentives for people to use the Hop Card, pricing differentials between peak and off-peak, better deals for monthly pass holders and so forth. Those are all great, but I wonder whether they miss the fundamental point of still assuming the same general level of contribution by users to the cost of public transport provision. Certainly Auckland’s farebox recovery rate (which has increased to about 43% from what’s shown below which was in the benchmarking study referred to above) is certainly higher than a lot of Australian cities:Fortunately a lot of work has gone into creating a more efficient PT network over the last while, with the new bus network likely to generate a lot more patronage without extra service requirements. Hopefully the PTOM contracting system will also generate cost efficiencies. This work should hopefully mean that the public money spent on public transport is being utilised far more efficiently than in the past – effectively we are getting more bang for our buck.
But the next question is around how to use those savings – to reinvest in extra service, to bank the savings or perhaps to lower some fares? I’ve wondered for a while whether the strategic lowering of certain fares would generate a big patronage gain and the benefits which arise from more patronage would easily outweigh the revenue foregone in the lower fares. There are a number of ways this could happen:
The lower fares could end up with more passengers paying and theoretically this could mean more revenue overall. Generally patronage is seen to be relatively inelastic to price (though this varies hugely for different trips) so ending up with more overall revenue is relatively unlikely.
The patronage gain could generate significant external benefits, such as in the form of decongestion benefits – which for rail are particularly significant at around $17 per peak time passenger.
Lower fares could mean that some people end up ditching their family’s second car and shifting to the bus or train as it’s now clear that catching PT makes financial sense to them. As many of the costs of car ownership are relatively hidden (e.g. depreciation) they may end up in a much better financial position in the longer run.
There are lots of messy details to work through around the most effective way to target fares to maximise benefits created and that’s not really the intention of my post. I guess I’m just interested in understanding whether we’d be better off if PT fares were a bit lower generally – certainly a lot of other cities seem to think so.
Whether you support improved public transport or not, one thing that everyone probably agrees on is that we need to improve the efficiency of our PT services, particularly in regards to the level of subsidies required. Long time readers of the blog may remember a policy change the NZTA made a while ago called the Farebox Recovery Policy which set an arbitrary limit as to the amount of operating costs that need to be paid for by passengers. That limit was set at 50% and didn’t really seem to have been set based on any evidence but rather seems more like it has been set at that level for political reasons. Agree with the policy or not, it is now a requirement that Auckland has to meet it so I was wondering just how much impact the draft RPTP would have on us doing so. Thankfully the plan has an appendix dedicated exactly to that for us to look at (appendix 4, starting at page 115).
The definitions of costs and revenues used to calculate FRR are set out in NZTA policy guidelines. Some costs, such as rail rolling stock capital servicing charges, station and bus stop facilities maintenance, and the Total Mobility scheme, are not included. Costs associated with providing passenger information, planning, and contract administration are also excluded.
Using these definitions and NZTA funding claims, the Auckland FRR was calculated at 44.3 per cent for 2011/12. This takes account of the true operating costs for rail in Auckland, including rail track access charges and rail rolling stock maintenance costs. The 2011/12 FRR was used as the starting point for the development of FRR targets in this RPTP.
At 44.3% it suggests that on average fares would need to be about 13% higher with the same level of patronage however Auckland already has what is considered one of the highest costs per km out of many of the cities we compare ourselves to.
Increasing fares further would potentially also have the negative impact of reducing patronage making things worse still and this seems to be the path that Brisbane is taking as they have been increasing fares are a rate of about 18% per annum and people are starting to stop using services as a result.
The other alternatives are to grow patronage or reduce costs and thankfully that seems to be exactly the path we are taking. Based on the current costs patronage would need to be about 13% higher than it is today assuming that our costs stayed the same. I think that not only can we achieve that, but probably greatly exceed it. Over the next few years we will see our PT network become a lot more attractive and efficient for a number of reasons, here are some of the big ones:
The bus network will become a lot more efficient with the proposed new network which uses exactly the same number of buses and vehicle kilometres to achieve a much more extensive high frequency network.
The new PTOM contracting environment should mean that Auckland Transport is able to to have much better control over bus operating costs (a post with more detail about this will be up in the next few days).
The full rollout of the HOP card should help to make PT trips easier and even buses faster due to quicker dwell times which should help to make them more attractive.
The new fare structure will contribute to making the PT system more attractive and should be revenue netural
The electrification of the rail system will improve operating costs, make it more attractive and drive a lot of additional new patronage.
Auckland transport have investigated the impacts of these and other options to determine if we will meet the requirements and here is what they say:
To explore these issues, a number of alternative scenarios (involving fare increases, cost reductions, and service improvements) were evaluated and then provided to the Auckland Transport Board in May 2012.
The evaluation suggests that it is possible to achieve a 50 per cent FRR within the next three years without damaging the recent momentum in patronage growth. In the short-term, however, the policy will need to focus on ensuring that the FRR does not fall below current levels. This should be achieved by continuing to regularly review operating costs and fare levels, increasing fares (where necessary) by at least the rate of inflation, and achieving savings in unit operating costs through improved efficiencies – such as savings from implementation of the PTOM.
Beyond this period, a target FRR of 50 per cent or better should be achievable, provided that continued cost savings and patronage growth associated with rail electrification and service improvements can be delivered, and fare levels continue to keep pace with operating costs.
So with only fare increases at the rate of inflation, not only are we expected to meet the policy but it is quite possible that will will exceed it. They also break down how they expect the recovery rates to change by mode and as you can see the biggest mover is the rail network which sees its recovery rate improve by 50-70% due to the improved costs and increased patronage brought about by electrification.
I actually think AT have tend to be over conservative with their projections on patronage so I suspect that we will not only meet the 50% target but well exceed it. That would then allow for more money to be spent on further improving the services we provide helping to reach our target of doubling PT usage over then next decade. In some ways we lucky that we are in the position where we will see these vast improvements that means we can avoid things like fare increases although I’m sure we can all agree that pretty much all of the projects should have been done a long time ago.
While it’s certainly essential for Auckland to have a well functioning rail system, as we’re a growing city with little ability to squeeze more out of our roads particularly easily, the ‘turning around’ of Auckland rail system over the past decade has undoubtedly been an expensive – but necessary – task. I won’t go into the capital costs of the projects in this post, because I don’t have much of an issue with them – all the money we’ve spent so far on upgrading the rail system has been on projects that make pretty good sense. What I’m particularly interested in is the ongoing operating cost of the rail system, and how we might be able to reduce that.
In the 2009/2010 financial year (recent data is probably available but this is easy to find), we spent around $69 million on operating the rail network, and got in around $20 million in fares – meaning a subsidy of just under $50 million was required: I’m not going to do the normal thing of dividing this amount by the number of trips to work out a “per trip” subsidy cost and then go and compare it to buses, because that’s silly as your average rail trip is much longer than your average bus trip – therefore generating much greater congestion relief benefits and also meaning that trains need to be operated much longer distances, adding to the cost.
However, overall I think it’s pretty clear that in the longer term we want the rail system to fund itself to a greater degree than the current 29% farebox recovery level the table above suggests.Fortunately, much of the recent capital expenditure, including ongoing projects like electrification and integrated ticketing, is aimed at improving the efficiency of the network. Integrated ticketing should do away with the need for so many on-board staff (as an aside, there were two people selling tickets on the platform at Henderson station around lunch-time earlier this week when I was catching a train, meaning that on-board staff were able to sit around not having to do much) while electrification should help save significantly on the $10 million a year currently spent on diesel, and the $15 million or so a year spent on maintenance.
In short, it seems logical to me that as these two projects in particular start to roll out, we should be able to run a much leaner rail system, reducing the cost of many aspects of providing rail service. Yes, we will have longer trains once electrification is completed, but we won’t have more peak time trains (thanks to the Britomart bottleneck) so it should be possible to significantly reduce the rail network’s operating cost. In fact, I’m pretty sure that the business cases for both integrated ticketing and electrification relied upon such savings.
I do wonder though whether this will happen. There doesn’t seem to be much competitive tension in getting a good contract price out of Veolia providing rail service, and we have learned from analysing PTOM that the bus market is pretty uncompetitive when it comes to tender prices. I think it’s essential that, over the next few years, Auckland Transport works really hard to show how investments in the rail network are helping it become much more efficient so we can get that farebox recovery rate up and start proving to a sceptical government that rail investment is good value for money.
An Auckland Council report on various aspects of our transport system makes a number of comparisons of Auckland’s public transport system with various cities in Australia, Canada and the USA – as well as Wellington. The cities used to compare Auckland against, including their population and what different technologies their PT system includes, is shown in the table below: These are a good range of cities to compare Auckland’s performance against, in my opinion. We have a number of cities with fairly similar population densities to Auckland (Sydney, Vancouver) cities with a similar population (Portland, Calgary, Adelaide) and cities with a variety of PT systems. On the key statistic of boardings per capita, it’s clear to see that Auckland is the very bottom city on this list. The per capita boardings of the Canadian cities are pretty amazingly high.
If we just compare with the Australian cities (and with Wellington) we can also see that while Auckland’s patronage has grown over the past decade, it hasn’t increased as much as many other Australian cities, particularly Melbourne and Perth: It’s interesting to remind ourselves that Melbourne has a railway link tunnel fairly similar to what’s being proposed in Auckland, and the ability to get heaps of people into Melbourne’s CBD by train has played a major role in the revitalisation of downtown Melbourne over the past decade, obviously contributing significantly to its rising patronage.
If we look at modeshare comparisons, once again Auckland lags behind the other cities – although it must be remembered that this is 2006 data and undoubtedly things will have changed in Auckland since then. It’s a shame that the Canadian data wasn’t able to be broken down by PT type, but for many Australian cities it’s notable that generally rail has a similar, or greater, modeshare than buses for peak time travel. Auckland is very much the exception to that rule, which probably highlights a PT system that is a bit too dependent on buses (due to our historic neglect of the rail network).
So why are things so bad for Auckland? Setting aside the obvious historical reasons, it’s clear by comparing Auckland with these various overseas cities that we provide a lower quality and quantity of services than elsewhere, but we charge the highest price on a per kilometre basis. Firstly, the quality & quantity: In short, we’re providing a pretty rubbish service compared to all the other cities used in the comparison. But what are we charging compared to all these other cities: So despite having the lowest quality PT service out of all these comparative cities, we then go and charge passengers the highest fares out of any of the cities. Not content with that, we are also then one of the few cities not to have a properly integrated ticketing/fares system. The reasons for our low patronage levels are starting to become pretty obvious I think.
Another element to consider is the cost-effectiveness of our service delivery. Obviously the cost of providing our rail system is pretty high, because we’re running incredibly old trains and use an incredibly outdated, overly labour-intensive, ticketing system. Our bus service seems relatively normal to provide on a per kilometre basis: While our services don’t seem particularly expensive to provide on a per kilometre basis, because we have the lowest average loadings of our PT vehicles, Auckland then stands out as close to the most expensive city to provide public transport on a per-person basis: Looking at the graph above it seems fairly obvious that the key way for Auckland to improve the cost-effectiveness of its public transport network is by increasing passenger loads and thereby reducing working expenses per passenger kilometre. Nevertheless, because our fares are so incredibly high on a comparative basis, Auckland’s farebox recovery level actually isn’t bad when compared to many of the other cities: There are quite a few pages of pretty good analysis and suggestions about how we can improve Auckland’s situation towards the end of the document, but for me the information above is extremely helpful in outlining quite a few things:
Despite an improvement to Auckland’s PT system over the past decade, we’re still doing very poorly compared to comparative cities in Australia, Canada and the USA. Furthermore, most of those cities have been increasing their patronage at even faster rates to Auckland.
Compared to other cities, Auckland’s PT service quality is considered to be extremely low, while quantity of service provided is also fairly low (although somewhat understandably given our low use). Improving service quality (better reliability, faster speeds, value for money etc.) is likely to be the most effective way of increasing use.
Compared to the other cities, Auckland’s fares are incredibly high – particularly as we don’t have integrated ticketing. Making fares for unlimited daily, weekly or monthly travel quite a bit cheaper is likely to be quite effective at boosting patronage and making PT seen as better value for money. Peak/off-peak pricing splits are also likely to be a good idea.
Compared to Wellington in particular, we are paying too much for the provision of services on a per kilometre basis. Compared to all cities we’re paying too much on a per passenger basis. This suggests that we’re running too many empty/underloaded buses or trains around, particularly during peak times when it’s most expensive to get a vehicle on the road. I also wonder whether this makes a good case for a publicly owned bus company to do what Kiwibank has done to the banking industry and keep prices a bit sharper.
Our farebox recovery levels are actually quite high compared to many overseas cities, suggesting that efforts to improve cost-effectiveness should come from boosting patronage through service quality improvements, rather than by hiking fares.
This pretty much matches up with what I’ve thought for a long time (although I am surprised how comparatively high Auckland’s fares are). One hopes that now Auckland Transport and Auckland Council have all this information, it will become more obvious what interventions will be most useful. Things like better bus priority measures, a more efficient bus network, a more intensively used rail network and and improved ticketing system.
I hope that eventually we can get off the bottom of all these public transport statistics.
There’s an interesting NZTA board paper passed on to me by Jon C of AKT, which discusses NZTA’s role in funding public transport – most particularly their role in helping to fund rail projects. This board paper came about as part of a solution to the $30 million rail funding gap that Steven Joyce has created. Here’s some background to NZTA’s role in funding rail projects:
One useful thing the Board Paper does is give a good analysis of why NZTA should be helping to fund rail. Remember that at the moment NZTA can help fund rail operating costs, but for some illogical reason they cannot contribute to rail capital costs. That’s the most amount of sense I think I’ve ever seen out of NZTA. Recognition that motorway corridors are finite and often can’t continue to be widened. Recognition that rail offers enormous capacity opportunities, recognition that electric rail can be operated independent of fuel price fluctuations. Wow, Steven Joyce would be furious if he saw this board paper!
Looking at things in more detail, there is a growing “crunch point” in the funding of rail in both Auckland and Wellington. At the same time as costs have been increased by improving infrastructure and service provision – in some cases leading patronage increases – we’re seeing the introduction of the mental 50% farebox recovery policy and the placement of limitations on the amount NZTA can spend on rail. The worry is that this ‘crunch point’ will lead to big increases in rail fares over the next few years. This is picked up further, later in the board paper (I’ve chopped together a few paragraphs that are separated by annoying withheld sections): The cynic in me suggests that perhaps the farebox recovery ratio has been deliberately imposed to limit patronage increases. After all, NZTA never undertook any research to determine whether 50% was the most appropriate number or not.
There’s a lot of withheld information later in the board paper, but the important thing is that the NZTA board did approve the allocation of $15 million as their contribution to helping to close the rail funding gap – this is recorded in the minutes: The paper is quite interesting in showing that there is an understanding of the importance of rail within NZTA, it just generally struggles to reach the surface of that organisation. It’s also good that NZTA are making a contribution to closing the rail funding gap – and ensuring that rail services can continue to be improved over the next few years.
I have a really big OIA request of NZTA due to be sent to me on March 7th. It should be quite interesting to see what’s in it.
When I was in North America earlier this year one thing I noticed about a number of the metro systems was that they used flat-fares. In New York City, for example, one ride cost $2.25 no matter how far you went and no matter how many lines you changed. While this clearly advantaged long-trips over short-trips (and we probably should have bought a seven day pass even though we were only there for five days), it certainly made riding the system incredibly easy. You didn’t have to worry about the particular cost of a trip, just how many multiples of $2.25 you had left on your MetroCard.
London’s bus system does something similar, with all trips being ₤2.30 as a cash fare or ₤1.30 as the Oyster Card fare, no matter how long they are. As someone who lives a one-stage bus fare from the city, I am wholly aware that a flat fare would probably be to my significant disadvantage if it was applied across all bus routes in the Auckland region, but I wonder whether the opportunity might exist to take advantage of the Rapid Transit Network(RTN)/Quality Transit Network(QTN)/Local Connector Network(LCN) hierarchy of routes and apply a flat fare to some of them.
The obvious candidate is the Local Connector Network, where the trips are intended to be relatively short, generally as trips which feed into train stations, busway stations or into the higher quality, faster QTN. LCN trips aren’t intended to be that long, and with integrated tickets many should end up being ‘lumped into” the cost of the longer-distance trip on the RTN or QTN. An easy to remember $2 flat fare (or perhaps more if a significant discount was given for travel via the smart-card) could prove quite attractive with travellers – especially if they knew they didn’t need to worry about remembering how many stages their trip was going to be. You just jump on the bus and the fare is $2 (or whatever) no matter how far you go on that particular bus.
There are pros and cons when it comes to such an idea. The advantages would be simplicity, an easier service to market (the Link Bus’s flat fare was crucial in its success I think) and much faster boarding by people paying cash. However, there would be some disadvantages and ultimately I don’t think it’s necessarily as good an option as zone-based ticketing – which I have advocated for previously. Here are some of the disadvantages, or difficulties, with implementing such an idea:
Choosing which routes were “in” the flat fare scheme and which routes weren’t could prove to be quite a headache. At the moment, most of Auckland’s bus routes fit into none of the RTN/QTN/LCN split – sitting somewhere between a QTN and an LCN: long-haul services without any bus priority measures. While overhauling the bus network to fit more neatly into the RTN/QTN/LCN hierarchy would be advantageous in many ways – it is quite a long-term project and isn’t likely to occur without a bit of pain.
The fare for shorter trips would probably have to increase, in order to compensate for longer trips. This would depend, to an extent, one what kind of routes were included in the flat fare rate. The current cash fare for a single stage is $1.80, so that would have to increase.
Under the current system, where the bus operators have a crazy amount of power over how things work, it could be difficult to distinguish between the LCN routes/services and other services. Ideally, we would have one bus colour for feeder routes (where the flat fares applied), one for QTNs and one for RTNs or other express buses.
Ultimately though, I think such a scheme would be useful: in terms of making the whole process of catching the bus a little bit simpler and easier to do. But perhaps more significantly, something very useful that such a scheme could achieve is forcing a dramatic reorganisation of bus routes in Auckland to a more obvious hierarchical structure – which ARTA’s planning documents have talked about for around five years now, but which has hardly happened in reality. The “one size fits all” approach to providing a bus service in Auckland really hasn’t worked that well over the past few years (bus patronage is still around 2003 levels despite public subsidies for buses increasing dramatically since then), so having something that forces bus route to operate differently could be a very good thing.
In the longer term, it’s interesting to think what a flat fare (or a very simple two or three zone fare based system) could be like for Auckland. Given that every dollar spent by NZTA on subsidising public transport in Auckland generates around $4.40 in congestion relief returns for motorists (a cost-benefit return most roading projects could only dream of achieving), it could well be worth NZTA coming to its senses and ploughing big bucks into lowering PT fares in Auckland. We’d probably need a different government for that to happen though.
As the year draws to a close I have been having a few discussions with friends about whether 2010 has been a good year for public transport or not. There are probably arguments either way.
On the bright side first
Perhaps the biggest boost was the results of the Auckland Council local government election, and in particular the election of Mayor Len Brown on a very strong public transport platform. As well as the final result of the Super City election, I was also heartened by the emphasis we saw throughout the election period on the necessity to improve Auckland’s public transport system. For example, we saw survey results in the NZ Herald showing rail to the airport was the project most people thought we should prioritise.
We saw a number of railway stations open: including Newmarket, Grafton, New Lynn and perhaps most satisfyingly, Onehunga. 2009 was a bit of a ‘hard slog year’ when it came to PT: much work done but not many results to show for it. In 2010 we saw the results of that hard work, which has been great.
The ARC came up with the 2010 Regional Land Transport Strategy, just before they disappeared. This is probably the best transport strategy Auckland has had in 60 years – although it remains to be seen to what extent it’s implemented.
Patronage continued to boom: particularly on the rail network and on the Northern Busway. It’s only a matter of time before we achieve a million rail trips a month: perhaps in March next year, perhaps in September or October when the world cup is on.
Of course not everything has been great. On the down side:
Steven Joyce’s reaction to the CBD tunnel business case was disappointing and exceptionally hypocritical considering his illogical support of the Puhoi-Wellsford “holiday highway”.
The relentless pursuit of the Puhoi-Wellsford “holiday highway” has been disappointing, especially considering its cost-effectiveness seems to become worse and worse the more it’s analysed.
The farebox recovery policy didn’t get much news, but over the long term could prove to be exceptionally destructive to public transport in New Zealand. Once again, it seems that this was an arbitrary decision from Steven Joyce to impose a 50% requirement with absolutely no supporting research.
The emergence of a $30 million rail funding gap – entirely caused by the policies of (you guessed it) Steven Joyce.
The whole bus lane ticketing saga. While Auckland City was certainly acting a bit daft, the Herald’s general crusade against bus lanes may end up being particularly damaging to the cheapest and fastest way of dramatically improving public transport in Auckland – extending the bus lane system.
On balance, I do think we’re in a better place than we were this time last year. Electrification is about to kick into its next phase and become visible, integrated ticketing (despite its many flaws) looks like it’s going ahead. We have a Mayor and Council who are willing to take the fight to the government’s transport policies if need be, and who appear to be strong PT advocates. This year could have a been a whole heap worse, that’s for sure.
Thanks to the good old Official Information Act, I have managed to get hold of some interesting information from NZTA on public transport, and in particular a full overview of what they called the “Public Transport Effectiveness Project”. There’s a huge amount of information in this document, so I will probably take a few blog posts to work through it all. And, notwithstanding the problems that I will obviously point out (including in this post) overall I think the effectiveness project is a good thing and will result in good improvements to public transport – particularly in terms of ticketing & fares systems, network design and public transport priority measures.
But anyway, a rather amusing aspect of the NZTA board paper on the Public Transport Effectiveness Project is right up the front, and how they outline what the ‘problem’ is that the project is trying to solve. This is outlined in the couple of paragraphs below, which I do admit mainly serve the purpose of “setting the scene” for what NZTA consider to the be real problem, and that is declining farebox recoveries and increasing public transport subsidies. Surely the fact that NZTA is investing more money than ever in public transport is a good thing, not a ‘problem’ – right? It’s also quite funny that NZTA trumpet the fact that more money is being spent on public transport than ever before, as I would struggle to think of anything that we’re not spending more money on than ever before. We’re certainly spending more money on building stupid loss-making motorway projects than ever before, I imagine we’re spending more on health and education than ever before, and so on. That’s what happens with a growing population.
What’s also interesting is confirmation from NZTA about the significant growth in public transport patronage over the past decade. This is illustrated in the paragraph below:
Once again, surely growing public transport patronage is a good thing, not a problem – right?
As I noted above, it is the farebox and subsidy issue that NZTA consider to be the real problem here. Kind of ironic that this comes after they spend a whole page saying how good the public transport patronage growth has been over the past decade and how much we are investing in public transport.
As shown in the figure below, yes it is very true that farebox recoveries have decreased over the past 10 years and that subsidies per passenger have increased. In some respects that could mean that we’re not getting as good value for money out of public transport investment as we used to – and perhaps that is true to some extent. However, there’s still an interesting question about the cost-effectiveness of NZTA’s current subsidies for public transport that I think requires a bit of further investigation. For a start, let’s remember that NZTA is funded by petrol taxes, road user charges and vehicle licensing fees: effectively it is a ‘user-pays’ type of operation: they collect money from road-users and they spend money (generally) on the roading system, as well as rail operating (but for some reason not capital) costs. The reason NZTA subsidises public transport is because road users benefit from people using public transport rather than clogging up the roads in their cars. Let’s say that a bus that used to operate gets cancelled and everyone shifts back to driving their cars: that’s another (say) 50 people on the road, who at peak time would contribute to some extent to the economic cost of congestion that Auckland faces.
NZTA has done some complex calculations to work out exactly what the benefits are to road users of people shifting from driving to using public transport. The benefits are split between peak times and off-peak times, and between benefits to road users and benefits to the public transport users themselves. Let’s focus on benefits to road users – because obviously that is the “bang for your buck” that NZTA gets for its investment in public transport. These are outlined in the table below: Auckland’s public transport patronage is approximately split 50/50 between peak and off-peak trips (I have had this confirmed by someone from ARTA). That means that the average “road traffic reduction benefits” of a public transport trip in Auckland is $6.74. NZTA’s contribution to the subsidy of a each public transport trip in Auckland is, on average, $1.53 – as confirmed by the Minister of Transport himself. This means that NZTA effectively gets back $4.40 for every dollar it spends on public transport subsidies – a “cost benefit ratio” of 4.4.
Perhaps NZTA’s “problem” with public transport’s cost effectiveness is that it’s too good. A cost-benefit ratio of 4.4 is pretty fantastic, especially when you compare it to the 0.8 (which itself is over-estimated I reckon) cost-benefit ratio of the holiday highway.
An interesting question time today in parliament discussing the implication of farebox recovery ratios, the emissions trading scheme and so forth.
The transcript is available to read here. Did Joyce really say that forcing people from public transport into their cars will decrease transport emissions?
Gareth Hughes: If fewer people take trains and buses and instead drive their cars, will this increase or decrease our greenhouse gas emissions from transport?
Hon STEVEN JOYCE: Obviously it would decrease them, but I think the member is arguing against the emissions trading scheme with that question. Presumably as a member of the Green Party he seeks to see the emissions trading scheme introduced to raise the cost of fuel to encourage people to use more public transport. To suggest that that will somehow reverse the situation is, I think, unfortunate logic.
Crikey I didn’t mishear it. I think Gareth Hughes wondered if it was a clip of the tongue from Joyce, but seemingly not:
Gareth Hughes: Did I hear the Minister correctly just then? Does he believe that if fewer people take trains and buses and instead drive their cars, it will decrease our greenhouse gas emissions from transport?
Hon STEVEN JOYCE: It all depends on the fuel efficiency of their cars, I would have thought. The emissions trading scheme is designed to encourage fuel efficiency. We have continuing improvement in fuel efficiency in this country. If the member believes that he will solve the world’s problems by shifting people away from their private forms of transport permanently on to public forms of transport, I say that I genuinely think he would be better to focus on improving fuel technologies and improving the fuel efficiency of private vehicles, as this Government is doing.
Oh goodness not the good old “electric cars will save us” argument.
As I noted in a post recently, NZTA have released a “National Farebox Recovery Policy“, which in some respects makes sense: to create some sort of mechanism that can help ensure we get value for money from our public transport investment. As Auckland’s ratepayer/NZTA contribution to public transport funding has increased hugely over the past decade, while patronage has barely kept up with population growth, clearly something doesn’t add up and steps should be taken to ensure we can get better value for money out of public transport – the very reason why we needed the Public Transport Management Act.
Most of the National Farebox Recovery Policy is actually quite fine. It talks about the need to consider a wide range of factors when setting the recovery ratio, the need to recognise the wider benefits public transport provides, the need to recognise the social benefits of public transport and so on. However, amidst all this fairly reasonable talk is the clanger: a requirement that the farebox recovery ratio averages 50% across the whole country in “the medium term”. There’s something truly strange about this requirement as it doesn’t fit in with pretty much everything else that is said in the farebox recovery policy, but because of its potential impact it actually drowns out everything else in the policy. It is the policy, and potentially it will become the public transport policy throughout New Zealand, possibly leading to high fares, services cuts and the “death spiral” for public transport that I described a few days back.
Being somewhat curious about this “mis-match” between the 50% figure and the rest of the policy, I was pretty happy when a recent Official Information Act request I put to NZTA for some of their board papers ended up capturing a lot of the work NZTA has done to inform the final farebox recovery policy. And there’s some really interesting stuff in there. Of particular interest is what NZTA say about the 50% idea for Auckland, Wellington and Christchurch (which was one of the options in the proposed policy, what we’ve actually ended up with was quite outrageously not even one of the two options consulted on). I find this bit particularly insightful. Basically, what this means is that while raising the farebox recovery level to 50% in Auckland would save around $8.4 million of public subsidies per year, the loss of patronage that would result from the increased fares would result in a $64 million negative outcome. Effectively for each dollar “saved”, we lose $8 in wider economic costs as people get back in their cars and clog up the roads.
Of course that is stupid. NZTA know it’s stupid and have said so. So why on earth are they proceeding with this crazy policy? What this table shows is that we should actually be looking the other way, to reduce the farebox recovery ratio because it seems to pay back extremely well in terms of economic benefits if patronage is increased: for example in Wellington it would cost $4.3 million extra to lower the farebox recovery down to 50%, but that would “pay off” with $22.14 million of benefits – a cost-benefit ratio of $5.14 returned for every dollar invested (translation: extremely high.)
Yes, the graph does show that Auckland’s fares are on average around twice those of the Australian cities and much higher than Wellington’s. This is despite (or perhaps a cause of) Auckland generally having one of the poorest and least used systems when compared to these other cities.
Fortunately a lot of work has gone into creating a more efficient PT network over the last while, with the new bus network likely to generate a lot more patronage without extra service requirements. Hopefully the PTOM contracting system will also generate cost efficiencies. This work should hopefully mean that the public money spent on public transport is being utilised far more efficiently than in the past – effectively we are getting more bang for our buck.
Auckland’s public transport patronage is approximately split 50/50 between peak and off-peak trips (I have had this confirmed by someone from ARTA). That means that the average “road traffic reduction benefits” of a public transport trip in Auckland is $6.74. NZTA’s contribution to the subsidy of a each public transport trip in Auckland is, on average, $1.53 – as 
Recent Comments