The new government have taken a strong and positive stance on the role of public transport in our cities. Over the last decade or so I think that the public and media have come a long way in how they view, report and opine on PT. However, with more investment on the horizon, I suspect we’re likely to see an increase in articles and opinions questioning its value, or more specifically it’s costs.
An example of what I think we can likely expect came a few weeks ago from interest.co.nz by David Chaston who calls PT “a public drain”. There were a couple of phrases that immediately sprung to mind after reading it, such as that he “knows the price of everything and the value of nothing”, that a “a little bit of knowledge is a dangerous thing” and that “context is everything”.
To be a fair, I think part of the fault with this lies in the data that Auckland Transport provided and probably the lack of explanation surrounding it. So, let’s step through some of the issues with the piece.
Garbage in/Garbage out
The core of the issues with the piece stem from these tables with data provided by AT. The thing I noticed in particular is that some of the numbers don’t match up with other sources, such as this excellent tool from the NZTA. As an example, the tool tells us that revenue from bus fares during the last fiscal year was $116.6 million (excluding SuperGold subsidies which account for another $9.4m). That’s almost 1/3rd higher than the numbers below. I suspect the key reason for this difference is that AT provided Chaston with their costs and revenues, not those for the entire PT system. However, at the same time the ridership numbers are for the entire system.
A system in transition
In addition to the garbage data is the issue of the system being in the middle of a fundamental transition. This is referenced in the text below the tables but is incomplete. It’s not just the revenues that are changing but also the costs as we shift from net to gross contracts. This something I talked about the about in more detail the other day. However, this transition is ongoing and won’t be complete until the New Network is rolled out. That means there’s another year or so where the data is not going to line up all that well, especially as many of the city’s most successful routes are part of the isthmus and North Shore networks.
One of the advantages of the NZTA data tool mentioned earlier is that it appears to give whole of system information, not just AT info. In other words, it appears to include figures from both AT and private operators.
Not all rides are the same
The piece starts by looking at the average fares and subsidies of each mode, proclaiming trains to be the most subsidised.
But to get riders out of their cars heavy subsidies need to be offered.
Auckland bus riders paid an average of $1.40 per trip, but the rate-payer and taxpayer subsidised this by another $2.57. Each ride they took actually cost $3.97 on average, meaning there was a 65% subsidy.
But that encouraged ridership. It grew on Auckland buses by +4.1% from the 2015/6 year to the 2016/7 year.
The situation is more dramatic for train ridership. That grew by almost +17% but the subsidies are huge to get that impact.
Each Auckland train rider paid an average fare of $2.58 per ride but “someone else” paid another $4.53 per ride. Each ride actually cost $7.11, a 64% subsidy.
For ferries, the subsidising is not as heavy. Rides cost user on average $1.36 to be zipped across the harbour. But those rides cost the system $3.07 meaning each one is subsidised $1.69.
There are a couple of issues with this. First, the garbage data mentioned earlier means the figures here are incorrect. Based on that NZTA data the actual cost per ride is just over $2 for buses, around $2.50 for trains (like mentioned) and nearly $5.70 for ferries. The trains are the most accurate because they’ve worked on a gross contract basis for a long time.
The second issue is the subsidy per ride, again putting aside the incorrect figures. The piece of puzzle that’s missing from this is distance. Yes train trips are subsidised more per trip, but that’s only because the trips themselves are longer. The NZTA data also provides the combined length of travel by passengers. It shows that average journey for each mode is of the following length .
- Bus – 7.2km
- Train – 13.4km
- Ferry – 13.7km
Combine that with the subsidies paid and the subsidy per passenger km becomes available. This is a much more useful metric and is one being monitored monthly by AT. As you can see, trains are now subsidised less per km travelled than buses are. This is a result of electrification improving the efficiency of trains while ridership has doubled.
Mixing finance and economics
It never ceases to amaze me that apparently intelligent commentators can so easily mix up the difference between financial costs and economic impacts.
There seems no way out of this endless subsidising. It will overwhelm Auckland who has borrowed to build a system that can never pay for itself. The ability to tax is the only thing that keeps Auckalnd Council with an investment grade credit rating. No private enterprise could ever get away with such a bankrupt commercial idea.
We don’t build public transport to “pay for itself” because it’s not a business. We build it and subsidise it’s use because it provides both economic and social benefits to the city and the country. For example, every morning, around 40,000 people and growing enter the city centre on a bus, train or ferry. That’s now more people than arrive by car. The cost to build enough road space to handle that many extra vehicles would be astronomical. Not to mention the cost of all the extra carparks that would be needed.
Alternatively, we could not fund PT and have a less successful and interesting city centre but with an estimated annual GDP of $16 billion, that doesn’t like a great strategy.
I also don’t recall anyone ever questioning whether Waterview, or any other road project, would pay for themselves. And let’s not forget that 50% of local roads are paid for by rates, not by users through fuel taxes.
There is a lot more I could say about the piece but in the interests of my time and sanity I’ll finish here. I do agree that we need to ensure we’re getting good value for money from our PT spend. First, let’s start by ensuring we’re having an accurate conversation, both about what PT costs and what it provides for the city.