Higher peak fares and shorter peak periods: Productivity Commission wants ‘rethink’ of public transport

By Jackson Graham

December 15, 2021

Southern Cross Station, Melbourne. (jovannig/Adobe)

A new Productivity Commission report cautions states and territories against offering free public transport or big fare reductions as systems seek to recover from plummeting usage during the COVID-19 pandemic. 

But the past two years have brought an “opportunity to re-think” public transport, according to the report, which recommends changes such as higher peak fares and shorter peak periods, and different prices depending on what transport a traveller uses. 

Public transport usage has dropped to as low as 11% in the most affected states, while states and territories that have seen less coronavirus transmission have also seen usage fall to 20%.

The Productivity Commission predicts patronage will return to normal mostly thanks to population growth, but the recovery could still take years. 

Commission chair Michael Brennan said pricing for public transport had been “ad-hoc”, with fares neither “equitable nor efficient” and not keeping pace with the cost of running the transport system. 

Fares cover less than 10% of operating costs in some systems, the report points out. 

“That has put service quality and frequency at risk, and these are the things that matter most to the users,” Brennan said. 

He said there was a necessary role for government subsidies for public transport but the incentives for commuters could be better dispersed.

“But more thought could be given to higher peak fares, shorter peak periods and differential pricing by transport mode,” Brennan said. 

Fares for buses should be lower than trains and trams to reflect cheaper running costs, the commission found, and concessional fares should only be given to commuters most in need. 

“Some people experiencing disadvantage cannot access concessional fares, while some high-income customers are eligible for generous discounts,” the report finds. 

Governments are considering the possibility of free fares as a way of reviving public transport and central business districts, but the report finds this would divert funds away from service quality and often to the benefit of people with higher incomes. 

Nonetheless, the report also finds discounted public transport is still needed to reduce road congestion. But, the commission recommends, governments consider more direct ways to reduce road traffic through tolls and parking levies. 

Congestion on roads is estimated to cost Australia $24 billion, according to the report, and could reach $35 billion by the end of this decade. 


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