NZTA’s strange public transport “problem”

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.

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