On Monday Auckland Transport announced they were raising fares for public transport to help cover some of the increasing costs of running the system.
By law Auckland Transport reviews fares each year to ensure they keep pace with operating costs and so that the correct portion of costs is recovered from passenger fares.
These reviews have seen customers benefit, in real terms, with the average cost per kilometre on public transport dropping by as much as three percent for adults, 14 percent for tertiary students and 21 percent for children since 2015.
As part of the work on the annual fare review for 2019, Auckland Transport has also been looking at how it can support the shift from travel in cars to travel on public transport and active modes.
AT Chief Executive Shane Ellison says, “We would like to have been in position to not increase fares in 2019. Over the past three months we have been exploring means of funding any cost gap that could be created by not increasing fares.”
“Public transport is paid for through passenger fares and subsidies from Auckland Council and NZ Transport Agency. Unfortunately, a small fare increase is needed as any additional revenue generated by new growth resulting from holding fares at current levels is insufficient to meet the costs of providing public transport services without further funding being available.”
“We see fares as an important ingredient to getting more people out of cars and into public transport and so we will continue to look at ways we can further reduce the real cost of public transport for our customers in the coming years.”
Last year new bus networks have been rolled out in the central suburbs and the North Shore, more than 500,000 Aucklanders now live within 500 metres of a frequent service, which runs at least every 15 minutes, all day every day. In addition, AT introduced more rail services on weekends, and we also put on more capacity on some ferry services to destinations such as Hobsonville.
“Operating a public transport system in a growing city like Auckland means that the costs do increase as we put on more services. It’s a balance for AT to provide an extensive public transport system that has enough capacity for a growing city, but we also know that cost is a major factor in how people travel, so we’ve found efficiencies in order to keep the fare increase at an average of 1.9%. This is well below the inflationary pressures associated with providing public transport.” says Shane Ellison.
In the year to the end of November, 95.6 million trips were taken on public transport in Auckland, an increase of 5.2 percent on the year before.
Before getting into the actual changes, the wording of the press release is particularly interesting. Right from the start AT are making an effort to blame others for the increase with comments such as “the law made us review fares”, “we didn’t want to do it” and effectively blaming the council and the NZTA for not providing more funding. This perhaps reflects some frustration within the organisation about it and understandably so, especially given both government and council policy, an issue I’ll come back to shortly.
First, here are the key changes for adult and child bus and train fares. The other changes for tertiary students and for ferries are listed here.
The changes might not seem like a lot but they quickly add up and could cost a regular PT commuter close to $50 a year. What’s also noticeable is that the percentage of change for children and shorter distance trips has increased at a faster rate. For example for adults the 3-zone fare increases by 2% while for children it increases by 7%
Below are some further thoughts on it.
Government Policy
The government have made a lot noise around their support for improving public transport, and there have been some good outcomes, such as the updated ATAP which prioritises significant investment in public transport infrastructure like Light Rail and busways. The new Government Policy Statement (GPS) also supports public transport with increased funding and calling for increased mode shift to PT, walking and cycling as part of an objective to enable more transport choice and access. Of note, as part of this it states:
GPS 2018 supports investment in:
- services that make public transport more affordable for those who are reliant on it to reach social and economic opportunities (for example, people on low incomes or who do not have access to private transport options)
Although it also notes this, which is essentially an outcome from the agreement between the Greens and Labour.
The second stage GPS will consider interventions to significantly improve the affordability of public transport, such as investigating a green transport card to reduce public transport fares for people on low incomes.
In terms of funding, the latest National Land Transport Programme is targeting a total investment in PT across the country over the next three years of $3.1 billion, a 53% increase on the 2015-18 period, but that includes infrastructure spending.
For his part, Transport Minister Phil Twyford suggests he is open to changes but there is no timeframe for when any such changes may happen.
I've asked @NZTAAkl and @AklTransport to produce an evidence based mode-shift plan for Akl, to move people out of single occupant vehicles into public transport. Happy to consider all levers including frequency and convenience of services, and fares.
— Phil Twyford (@PhilTwyford) January 21, 2019
Council
Like the government, the council want to see people having more transport choices in their refreshed Auckland Plan with Direction 2 of the transport section being to “Increase genuine travel choices for a healthy, vibrant and equitable Auckland”. Increasing travel choices should mean both physically through better PT services and infrastructure and through pricing. Unfortunately the council website was down at the time of writing this post so I couldn’t see if it said anything more specific.
Mayor Phil Goff also responded to me on the issue following what I felt was a weak response on the issue in the media.
Increasing fares is not ideal. We want more AKLers on public transport and low fares encourage greater usage. If gov were to change the farebox policy I'd support @AklTransport looking @ ways to hold fares provided it could be done w/out reducing funding needed to expand services
— Phil Goff (@phil_goff) January 21, 2019
The Tyranny of the Farebox policy
In both of the tweets above, you will see I’ve referenced the Farebox Recovery Policy. For those that aren’t aware of it, it was a policy introduced by the NZTA in 2010 and calls for 50% of public transport costs to be covered by fares. The argument for it was that by having a target, it would encourage AT and regional councils to “improve efficiency”. I think there are some merits to this goal as we don’t want AT/councils just wasting tax and ratepayer money running empty services all over the place. At the same time though, the policy can act as a barrier, particularly when it comes to establishing new services that often take some time for usage to build up on. This is particularly evident with Auckland which has been going through a period of significant change, the impacts of which will continue to be felt for years to come.
Instead of a farebox recovery target, which is aiming for a set level of financial return, we should be looking to take an approach more similar to what we do with capital projects and setting fares based on what will achieve the best overall economic outcome. For example, would the increase in ridership and the benefits those trips provide, such as the de-congestion benefits, outweigh the extra cost of the government paying a higher subsidy?
Auckland Transport along with Phil Goff and the rest of Auckland Council should be yelling from the rooftops for this policy to be changed or even removed entirely.
Auckland Transport
On top of the press release above, Auckland Transport provide me the board paper use to get approval for the increase. In it they note that “using well researched and proven elasticity factors”, a 2% increase in cost would mean 830,000 trips would not continue to be made. Given most of these would occur on weekdays that’s almost 3,000 trips a day not being made using PT that could otherwise be doing so. This also builds on the 600k fewer trips from the increases last year. Of course, some of this will be offset by new users, and we have continued to see growth, but what it highlights is that overall usage would be rising faster without this increase.
The report also notes that the increase will bring in an estimated $3.7 million in extra revenue. Perhaps one option to help fill this gap is to stop spending money on dumb stuff. For example
- A lot continues to be done to add capacity at peak times. This is where there is strong demand but little is being done to attempt to encourage people to spread their trips into the shoulder and off peak periods where more capacity exists and it’s cheaper to put more on – adding off-peak capacity can use existing buses and drivers rather than needing more that might only be for one or two runs a day.
- Let’s not forget AT are spending nearly $1 million on a very heavily subsidised shuttle/taxi service in Devonport.
- Perhaps the council could have helped fund some more of closing the gap if it hadn’t committed nearly $2m to retaining the horizontal ferris wheel on around Wynyard that serves no transport purpose against advice from officials.
- Then there’s the $1 million Phil Goff spent on a stadium study.
Basically, there’s a lot of money that gets spent on all kinds of things that provide little benefit for most/all Aucklanders but we can’t find a small amount of money to help achieve some of the council’s and government’s core goals.
The paper also provides this table showing the options they looked at. Based on the comments in the press release, it appears they’ve gone for option 1.
Overall these changes are disappointing and only serve to undermine Auckland’s goals.
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Well said, Matt. Had Council laid out their expectations around decreasing carbon emissions, AT would have to be sorting the farebox recovery and demanding better funding. Knowingly taking steps that will reduce trips by 1.43 million in the last two years, for such a tiny amount of money, is madness.
In fact, it would be good to compare the effect on carbon emissions per dollar spent on encouraging PT vs the subsidy to big business that government is offering for EV. Best way to cut carbon emissions is to cut vehicle trips – eg through encouraging PT trips!!. Offering to subsidise EV to big players who should be doing it anyway is a poor use of money. Either the people taking the subsidy are driving a lot and really should be looking at using other modes, and should be trying to avoid penalties for their emissions, or they’re not driving much and it’s unlikely to make much difference.
AT did demand more funding from government, but NZTA basically couldn’t find any. What people seem to want is for AT to stand up and rock the boat by publicly green-shaming central government. Given that this government is to the last like chalk and cheese on PT issues, and given the disastrous relationship with central government and the stasis that resulted under ARTA management of the sector, that would be akin to biting the hand that feed you. When you’re the weaker party negotiating with your major benefactor you reserve your table-thumping for meetings behind closed doors.
I’ve said it before though: the net change in patronage may be positive once the impact of service enhancements (funded by the additional revenue) is accounted for.
And these enhancements would not happen anyway. There is always a budget constraint, even without the farebox recovery target.
Main message: fare increases at CPI are reasonable, provided AT invest money wisely.
P.s. given how much councils waste on stadia, spending 1 million on a study may actually save quite a bit of dosh!
“I’ve said it before though: the net change in patronage may be positive once the impact of service enhancements (funded by the additional revenue) is accounted for.”
Equally, investing more into public transport services can be cost neutral as ridership increases to cover costs. The argument is about which approach is better, which has to include abolition of the farebox recovery target.
“fare increases at CPI are reasonable, provided AT invest money wisely.”
This is only true if we assume that fares are currently at an appropriate level. I would definitely argue that fares are too high. In which case frozen fares are a better approach, allowing inflation to catch up.
The tertiary fare increases are the worst, which is AT farting in the general direction of youth. This fare rise must be very frustrating for the Auckland Council’s Youth Advisor Board, who expressed their worries last year: https://www.stuff.co.nz/auckland/106985742/will-aucklands-fuel-tax-increase-bus-fares-youth-push-council-for-answers
Adults have failed here, and youth suffer the most. Again.
Shameful. I suppose the good news is this will see the end of Goff. Come back Len all is forgiven, we need a PT champion as mayor.
In hindsight Len has been pretty good
C’mon, really? Goff to go because PT fares rise a couple of percent? And when it’s actually NZTA that can’t find the extra cash? Let’s get real!
“this will see the end of Goff” – really? Who else is in the running? Palimino again? Neigh! Banksy?? God No! Simon O’Connor? (What – an ex-Catholic priest, and chairperson of Monarchy NZ? No thanks!) Rodney Hide? (Who?) No one credible yet has their hand up. So far the choice is Goff, or a couple of rabid right-wing nut jobs.
Goff is a decent bloke – probably too decent, which is why he never worked out as Helen’s replacement. Not inclined to shag on the board room table, but also not inclined to frighten the horses with big bold moves in PT either. Gentle and continued education of him and the AT board should see results in PT over time.
We need champions for public transport leading our council and both Phil Goff and Len Brown were exactly those people. AT have made this decision themselves, not the mayor nor council. They are subject to their budget and NZTA set farebox recovery targets which they are obliged to meet.
If Goff runs again, and there are no better alternatives, he’ll be getting my vote again.
For sake of argument, what if Len Brown did decide to come back? Would you switch to Brown or stick with Goff?
Switch to Brown.
Dear Phil Twyford.
9 years in opposition, a reasonable percentage of that as the opposition spokesman for transport. Did you not ever notice how the PTOM’s arbitrary 50% “farebox” recovery was holding PT back?
Why do you need other organisations to do the thinking for you?
Cut the committee to defer action and mask lack of thinking excuses. You’re little better than Stephen Joyce and your visions of granduer projects are just that.
You put 11 cents a litre on petrol to improve our PT. All we Aucklanders get is a fare rise and business as usual to show for it.
Tick tock Phil, show some leadership and imagination, not pathetic politicians excuses and stop insulting our intelligence!
+1
+1
Matt, great stuff.
I didn’t appreciate how the farebox recovery worked. I think that it is a reasonable proposition that AT funds 50% and the government 50%, but as you suggest, let AT find that 50% from fare recovery and elsewhere.
$1million dollars diverted from electric shuttles to decent frequency on Devonport buses would be helpful.
You and I might always disagree on attempting to spread peak demand on public transport. Surely the priority is to move those who travel in cars at peak to PT? Part of that shift will be caused by them changing because PT fares represent a good economic solution for them. (AT has shown no concern that they have to build extra roads to cope for peak demand. Reducing car peak demand will release a bucket load of money, i.e. “New Capital Expenditure – Roads”, to be spent on PT)
What we do know is that Auckland PT fares are too expensive if the aim is to decrease car mode share. We know that because mode share is increasing (RPTP).
The Calgary model that you spoke about appears to have drastically changed travel habits in that city, and Vienna and Prague are the examples of what things might be. Flat fares and monthly / yearly passes to commit people to use PT all day / every day.
Frustrating. Such the wrong way to go to encourage PT growth.
Am shocked councillors agree with or remain silent on the outrageous privileged wasteful Devonport trial.
Appalled almost all councillors voted for the ridiculous tram that goes nowhere.
We so need fresh blood in the council. This year’s election is an opportunity. How do we make it happen?
PS. We also need to fight the absurd nanny state 10k limit on Limes!
Even that’s too fast if they crash or collide.
Nothing will happen if you do 30, so don’t lose sleep over it.
Well, as a pedestrian walking at around 5 km/h, I do find the Limes attempting even 15-20 km/h weaving along along K Road’s crowded footpaths highly dangerous. Especially when a posse of five Limes zoom through at speed following different lines through the pedestrians. If we’re thinking about transport safety, then my safety as a pedestrian surely counts for something. While I abhor the media frenzy about Chris Fletcher “almost” being run down, the larger point is that there is a genuine safety issue here. How about a limit of 10 km/h on footpaths, with no restriction on their use in cycle lanes or on the road?
Put the same 10k limit on cars in the central city…. with electric autonomous vehicles, that day will come.
The problem is, no matter how laudable public transport is, there are costs that need to be funded.
Governments are quite properly under constant pressure to constrain spending, in order to controll taxes.
Local authorities are particularly constrained on income sources. Property rates is the biggie, Then there are User pay charges, and, in spite of the last government’s efforts some investment income.
The first obvious source of more income to provide more public transport is User Pays to increase parking fees on all council provided car parking including roadside parking. It is absurd that that the fees collected are totally divorced from the value of the assets employed. This includes the public kerbside land effectively privatised by providing motor vehicle storage.
The existing residential car park permit scheme should be rolled out further into the burbs, and the costs of parking permits raised to reflect the land value of the adjacent real estate.
Perhaps the restriction that only local residents can buy those permits should be lifted so that competition could raise both their value, and realisable fees to the council?
The value of privately provided car parks is also related to the value of its adjacent real estate, including the adjacent roading. Therefore it is quite proper for the council to levy each provided off street car park that is adjacent to any controlled, and charged for, kerbside parking, to reflect the council assets employed, in establishing the value of those car parks.
As well as providing income, charged for parking is a big disincentive for discretionary road cluttering. And it provides that inventive for further PT uptake.
I like the concept of increasing the Council controlled parking charges as it provides a disincentive to those using SOV, by increasing the marginal cost of each trip made.
My mental model of the distribution between low and high incomes and those more likely to park in the CBD, has an assumption that it is more likely to be those on higher incomes that park in the CBD, where the higher rises in parking costs are likely to occur, so this is a less regressive way to increase funding as opposed to PT fare increases.
I’m willing to be challenged on this assumption, as I believe that it’s poor assumptions that can lead to perverse outcomes and unintended consequences.
Nik
Your model might be slightly off because many of the more affluent have their parking provided for them. Regardless of that, it is hard for anyone to argue that there are not ways for them to access the city using public transport.
I don’t have figures on it, but many of the people on low incomes going into the CBD have to drive. This is because public transport doesn’t run when they need it to. All the low wage service workers don’t work a 9-5, they often either start too early or finish to late to have any other option. Think all the cleaners you see working late into the night, food prep staff etc. The volume of staff impacted there are not the same as those that are in for a 9-5 though.
The value of commercial land is it’s value during trading hours only. Extending this means that the value of adjacent car parking varies during the day. With new technology and post pay there is no reason not to vary parking charges by the hour. Those working anti social hours could easily be rewarded by cheap parking for those hours. A better solution though is to increase the 24hr coverage of public transport.
Don, you make some great points.
I made an OIA request regarding financial returns for each of the parking buildings and for most they weren’t even returning the long term cost of capital. Another answer suggested that the financial return should be enough to replace them when needed.
AT does not even price them as they are required to do under the AT Parking Strategy.
“As well as providing income, charged for parking is a big disincentive for discretionary road cluttering. And it provides that inventive for further PT uptake.” Absolutely right and you will read in the annual reports of PT focused cities how they price parking to achieve more public transport ridership.
It might also be helpful for AT to sell the odd parking building – almost $230 million tied up in these assets that are not producing much. More downtown housing anyone?
Don, I’d suggest the name of the residential parking schemes should be changed. However the street parking is managed, it needs to be in a way that makes it clear that its provision as parking is temporary; that healthy streets will involve less space being commandeered to store private equipment. The areas that currently have residential parking schemes are so central that far better allocation of space would be wider footpaths, cycle ways, and some (enforced) loading zones and drop off/pick up spaces. This needs to be signalled now so that people can start making other arrangements.
Freemans Bay and St Mary’s Bay are still primarily residential with a large number of existing houses that pre date the automobile. The provision of some long term kerbside parking, where the council should receive a market rental is probably still better then the alternative.
It is better then loosing the kerb side park, destroying the street front aspect of those houses and introducing even more vehicle, pedestrian and cycle conflicts that “on property” car storage causes.
What needs to be addressed is that the existing pricing incentivises converting garages into other uses when near guaranteed parking is available through the residential parking schemes at minimal cost. My view is a properly priced scheme needs to be the default in all residential suburbs.
It is pleasing that the Franklin Road rebuild in conjunction with residential parking permits has considerably reduced the number of car parks to about the local requirement at the expense only of loss of the commuter parking.
A parking levy could work to prevent a move to more ‘on-property’ car storage, perhaps. The negative effect of on-property car storage is an important consideration. Whichever levers are used, I think it’s important to realise the incremental nature of the process, and to accelerate aspects of it now. Education being a key part.
We also need PT champions in AT.
It would be wise for the PM to appoint a new transport minister, pronto, for Auckland, and one who both has an interest in the subject and has their head around the portfolio real quick. But not some stooge who lives elsewhere and had no idea or passion for it.
Twyford is up to his eyeballs with housing problems, not all of his making, that require his undivided attention. It may help him work out the reality that private developers are not interested his Kiwibuild dreams and will never deliver!
I disagree Waspy; I think it’s really really important in order to start to shift longterm structural land use disasters that transport and housing are run by the same minister. Both portfolios cover are longer term issues that require much more than quick law changes, and as far as I can see the only criticism of the work so far is that it hasn’t fixed everything in little over a year. Which is nuts.
Both ships need to stop going backwards before they will go forwards and it’s clear the engines have been turned to forward but the previous momentum is yet to be overcome…
Also, in transport, there is a more than able associate minister in Julie-Ann Genter, so I would suggest focussing on the trend and the movement rather than unreasonable expectations of instant fixes…
Patrick
The major problem is that with PT growth at only 5% we are going backwards. Car mode share is increasing. Something really significant needs to happen to change that and it needs to happen now.
It is not acceptable to say that the central rail is coming on line in four years. Yes, that will increase capacity and allow better frequency, but the issue will remain of how to get people to use it. Increasing fares won’t help given the number of people, working and not working, who are struggling financially.
I think it unfair to entirely blame the government for this issue. It has been open to AT to say, “farebox recovery in its current form doesn’t work for us.” I am convinced that AT has a sufficient revenue stream to divert other spending to PT. Of course, it has to be minded to do that.
“Car mode share is increasing.”
This is wrong. Car mileage is increasing, but travel is increasing faster so car mode share is decreasing.
I seem to remember before the farebox recovery was set at 50% back in 2010 it was a slight more realistic 45%. Can anybody confirm this.
I feel like a lot of the comments on fares are overblown.
Increasing fares at CPI is relatively moderate, especially when you consider that AT’s cost base increases more in line with wage price inflation (which is higher). Also, people’s income tends to increase with WPI, so real cost of fares is declining.
Yes, but it’s hardly an incentive either is it? And bills seem to rise faster than wages.
Stu
I am sceptical how the 1.9% is arrived at given that the most used fare categories have gone up by a greater percentage. I have sent AT an OIA request to confirm.
1.9% is modest, but on top of fares that Matt says are the third most expensive in the world. Still reasonable?
If the end game is to reduce car mode share then I believe it is reasonable that fares drop. Is it more economically efficient to charge for peak driving? Absolutely! Do you see any Council organisation in Auckland that is likely to do that? As Don Robertson says, AT won’t even price their parking to achieve an adequate return on capital.
Stu
It doesn’t take much delving into AT’s P & L to see why money for PT is so scarce. AT has spent an extra $20m on “Renewal Capital Expenditure Roads” in the last two years; and an extra $57m for “New Capital Expenditure Roads” just in the last year.
That $57m would allow AT to reduce every PT fare above one zone by $1, with change, to increase services if needed.
Transferring a significant amount of car travellers to PT would decrease the need for much of the expenditures discussed above.
Surely the vast majority of users are HOP 1, 2 and 3 zone which have gone up 2.6%, 4.3% and 2% for adults (and more for children / tertiary). I can’t see how this can sum up to 1.9%.
Even Fullers when they put up the fares on 1st nov didn’t touch the child’s fare just the adult’s .
I don’t know how Matt arrived at “third most expensive in world”. Sounds like a bold statement.
In terms of the 1.9% claim: I’ve taken it at face value. If it’s not accurate, then let us know.
“The end game”, I believe, is to get a well used PT system. And that requires investment, which is partly funded by fares.
Car mode share? Fools errand, IMO!
Not sure where I’ve claimed that Auckland fares the the third most expensive in the world
I imagine John read your post ‘Auckland’s Expensive PT Fares’ from June last year. In that you quote the Herald saying ‘Auckland has the third most expensive public transport in the world, according to a report by Deutsche Bank.’ You don’t accept the figures probably used to determine this (and rightly so, for a couple of reasons) but then say: “While the exact figure might [not] be accurate, the overall trend is.” And then show a comparator chart of 14 cities, in which Auckland is the most expensive.
John, it’s Deutsche Bank you need to quote as saying Auckland has the third most expensive PT in the world. Matt just said it was the most expensive out of 14 cities he looked at. But perhaps his latest post “A Fare Comparison” is an update of that work.
I see that 91 octane is now $1.87 a litre and this just fits in well with the increases in PT fares. Should be just the encouragement needed to cut back on PT and return to SOV for those who may have switched to PT when 91 was $2,28/litre.
Does this mean fuelling buses is now cheaper too?
Thanks AT for your wisdom.
@Stu – Wasn’t there nationwide outrage at 3c per litre tax increase recently, was becoming an election decider and opposition jumped all over it. Luckily fuel costs went down at the right time…
I think it’s fair to be disappointed at fare increases.
I think people’s disappointment with fares is because they overlook the fact that fare revenue part funds service improvements.
Sure advocate for lower fares, just at least acknowledge it implies a lower level of service.
I we really want to be dropping Auckland’s fares though as they are fairly high to start with.
Stu, the urgency around climate change isn’t rising in line with CPI. Nor is the urgency around biodiversity loss. Pegging fares with CPI is accepting the same regressive thinking that got us into this dire situation in the first place.
Heidi, very aptly put.
So our leader should be home here working out how she can get the electricity generating companies to install more renewable solar, wind and geothermal generating capacity not over in Europe boasting about how New Zealand has banned offshore drilling for gas or oil. Meanwhile I have just turned over the compost heap and the birds are having a party gobbling up the insects and worms I disturbed. And I am having a cup of tea while Mercury energy is announcing it has increased profit because prices were higher because the gas fields couldn’t be used to generate electricity even though Mercury generated less electricity because there was low levels of water in their hydro dams. And according to the gas people we need more gas so we don’t have to use coal even though when we needed their gas they couldn’t supply. And we only have ten years to save the planet and we go and put up the price of public transport. Come on the coalition govt and New Zealand you will have to do better than this.
They should at least declare a Climate Emergency like other cities are doing.
Heidi i don’t feel like you’re engaging in this argument in good faith. Above (and in previous threads) I’ve put forward an argument that higher fares can lead to higher patronage when the additional revenue is used for service improvements. In which case we may generate more patronage at higher fares.
You can’t ignore the other side of the revenue coin! As tempting as it is to consider fares separately from services, it is a temptation that should be resisted.
You’ve defined the ‘end game’ as “to get a well used PT system.” For me, that’s just an important part of the toolkit. Reducing car mode share starts to touch on it, but that’s really just one measure of success. My end game is a low-carbon transport network in a liveable biodiverse environment supporting a just, democratic society, that is not just sustaining its ecological base, but is regenerating it in order to leaves a better world for future generations.
I fully accept that there are tradeoffs within any funding level. But right at the moment the funding level is in question. And that’s because Twyford said in April last year that he was asking AT to look at how they would use extra funding to improve services and ridership. “If cheaper fares will help increase PT ridership I’m happy to adjust fare box policy.” Did he ask them? Did they provide the required information? AT say they have been in discussion with both NZTA and AC about extra funding. What stopped it from happening? Who is dragging the chain here? I simply don’t know.
What I do know is that AT’s modelling shows that adjusting fares up reduces patronage. That means – most probably, in our congested car dependent network – people who have decided they could not afford the fare and so must either forego the social, cultural or sporting engagement, the marginal job, the volunteer contribution, etc, or that they would drive instead. And I think that’s sad. The former choice reduces social health; the latter results in poor environmental and health outcomes. Given social health is not valued properly, and carbon emissions are not priced properly, it’s hardly surprising that I’m gunning for a change in the level of funding.
“31. Modelling of the fare increase using well researched and proven elasticity factors, with all other factors held constant, suggests that if a 2% increase in public transport fares was to be implemented then on an annualised basis 830,000 current passenger trips would not continue to be made.”
AT haven’t said that this fare increase would go towards improvements but to meet increasing costs. So while you are arguing that increasing fares might lead to an increase in patronage when the additional revenue is used for service improvements, that’s not the situation here. The situation here is that there would presumably be cuts to service levels if fares are held steady and the additional funding isn’t provided.
Declaring a climate emergency, like London and Vancouver and other cities have done, would put the spot light on why the additional funding is needed. The crazy thing is that there are other projects within transport that could easily be cancelled, and leave us with a better network as a result. Let’s simply stop building the Alaskan Ways and reroute that money to PT. I hope that clarifies that I’m not arguing in bad faith in the slightest.
Three people where I worked reluctantly switched to PT when the increased Downtown car park fees came into effect. Fantastic! But a clever flyer from Wilsons handed out in the street offering cheap parking in the same area has now sent them back to their solo occupancy peak hour car travel. Sigh.
That’s fine, if they’re paying the free market rate that Wilsons can provide the service at.
The issue was (is?) that the Council provided parking at a subsidised rate for commuters.
No-one’s charging the free market rate until they charge for all the externalities from provision of that parking.
Is the council ever planning to increase CBD parking levies, like they have in Sydney & Melbourne?
Looking at that board paper that Matt’s linked in below, it appears to me they’re more interested in reducing car park supply than in raising prices on their own parks; no mention of levies. However, you’re not alone in considering it. In fact, yesterday I met someone who is so keen on the idea I wouldn’t be surprised if we won’t be seeing it become a major issue soon.
It does seem somewhat odd that the increase is being blamed on high occupancy; when low occupancy is normally blamed for the low farebox recovery :-/
The concept of time based fare adjustment sounds great; creating that specific desire to move travel times would also do a lot to help justify flexible working arrangements at the CBD businesses
The way I see it currently is it really doesn’t matter if AT spend the money wisely or not, they will always get extra money by raising fares.
Sometimes they spend money on wrong stuff:
I often see train station with more staff than passengers. I often see certain bus full but other bus empty. The resource are not allocated to where it needs.
Sometimes they didn’t spend money on right stuff:
I often see opportunities to improve patronage such as extra ferries, better off-peak trains, off-peak fares etc, but AT has been slow or unwilling to act, because they don’t want to spend the right money.
We will need some other mechanism to ensure AT spends their money wisely and efficiently.
Economics suggests you should target the rises at those least likely to stop using the system. ie base it on revealed preference. So AT should use progressive pricing to charge a higher marginal rate as people use PT more. They could base it on individual monthly Hop card data of say 10 rides at the base price and 5% more for rides 11 to 20 and 10% more for each ride over 20 per month.
If they do that, people will just get as many Hop cards as they need to be able to use each one only up to the price threshold, before moving their spending on to the next card.
And why would you punish your most avid supporters?
There is no rule saying every trip must get the same price. If you want to raise revenue then you either raise it generally and push off people with the lowest opportunity cost which means fewer passengers or you target those who get the highest benefit and will keep using the system in any case. that way revenue goes up and ridership doesn’t reduce as much.
Sounds like an excellent way to stop people making marginal trips (like through the middle of the day, on evenings and weekends where there is spare capacity already) and scale back only to those trips they have a strong incentive to use to start with (i.e. peak time journeys, that are the most expensive to provide for).
So uh, yeah, lose patronage where it is cheapest to serve, but keep it where it is most expensive to serve.
Bollocks. If they still have a consumer surplus then they will use it, this would just target the increased price at those with the most to gain from using PT. Let’s face it they are also the people who receive the greatest subsidy from the rest of the community. They will still be the most subsidised but just to not as great a value.
What is bollocks? That charging people more for the same product the more often they use it, will cause them to use it less?
That is not the argument. Increasing the price seems to be a given so that must reduce overall demand if it is applied in a uniform way. The argument is if you can identify those with the lowest elasticity and put more of the price increase onto them then you wont decrease the number of passengers by as much. Revealed preference data is available from individual Hop cards now so that is where the pricing policy should be directed. A subsidy is not a right, and it is not intended as a wealth transfer. It is to prompt people to use PT. If someone was going to use it any way then there is no need to subsidise that trip. the subsidy should be the mininium needed to get people to use the system.
That’s what you seemed to be proposing above, a sliding scale that ramps up the more you use it: “They could base it on individual monthly Hop card data of say 10 rides at the base price and 5% more for rides 11 to 20 and 10% more for each ride over 20 per month.”
If you charge more for more usage at the inelastic end of the curve then it doesn’t change the quantity demanded (or not by much). If you then apply the same idea and use the saved money to make the first trips even cheaper you could potentially increase ridership in total by attracting in more at the elastic end than you lose at the inelastic end.
The point of a subsidy is to get individuals to change onto PT. You don’t have to compensate them fully for the positive externality, you just have to make it enough so they make the desired choice.
In terms of utility it would be efficient as you charge more to the people who can afford the premium of a house close to a train station or in a TOD development and you make PT cheaper for those inclined to use it less who live further away in a cheaper house.
Wouldn’t people just have two cards on the go to avoid these higher fares?
It would only work if the Hop cards were unique like Community Services Cards. So you would need to prove your identity to get one and it would be fraud to use someone else’s. The point is it would be a card entitling you to a subsidy rather than just cutting a big cheque to the service provider. But if you want to target public money where it makes a difference then that is what you have to do. If the goal is just to ladle free stuff to wealthy city workers then you wouldn’t bother.
Let just throw this thought out to see what sort of reaction it get.
Instead of central government changing the rules for farebox returns, they off some form of personal tax credit for using PT. This credit could be designed to increase based on the distance traveled.
I don’t know how it could be administered but, governments are always good at making these things kind of work.
“The point of a subsidy is to get individuals to change onto PT. ”
This I don’t agree with. I would phrase it as the point of a subsidy is to convert *trips* to PT. It’s not like there are car people who always drive that you convert to being PT people who always take PT and never drive. It’s the individual trips that are contestable.
Sure there is a small proportion of people that can’t drive at all and might be called a transit captive, but the majority of people have the means to choose from a range of modes for every trip they take (with admittedly the option of driving being far superior for most people and most circumstances).
To me it still sounds like you are advocating to charge people more at the margin for the highly contestable trips where driving is already more attractive… and making it cheaper for the trips where people were going to take PT regardless.
That’s perhaps a nice windfall for those PT trips people make anyway (city commutes to avoid parking, etc), but I don’t even know if you would get to the point of making them cheaper, because you’d be relying on revenue from discretionary trips people stop taking by PT because you put the price up more than usual.
One thing that has always irritated me is that if you live further away from the CBD, you pay more to travel into the CBD. Yet, the affluent suburbs, like Epsom, Remuera, Ponsonby, are very close to the CBD. It’s the people, who live in poorer suburbs, like Otara, Massey, Henderson, having to pay more. Where’s the justice in that?
Two zone journeys are affected the most under the fare increases. This would be a simple trip from isthmus or the lower Shore to the city.
But also I think you’ll find that zonal fares (where longer journeys have higher fares) are common.
FYI, the AT board paper mentioned in the post is now online
https://at.govt.nz/media/1979279/item-87-closed-session-dec-18-pt-opex-funding-update.pdf
What that looks like to me is that AT laid out the considerations, yet recommended ignoring them. And the Board said yes sir, whatever you say, sir.
What’s really interesting is this:
“It is possible that reducing parking supply (the number of car parks) in the central city and town centres may provide a much more effective alternative to driving a mode shift to public transport and active modes than the increasing of parking fees. This will be considered as an option to drive mode shift in the first quarter of 2019.”
That’s good. I wonder if they’d also prefer to narrow roads than to introduce congestion pricing?
I’ve said it before and I’ll say it again.
Public transport is “public” transport .
First and foremost it must provide a transport means for the transport disadvantaged (unemployed, under-employed, low income, and those that cant get transport mobility services).
To do so it must provide a full coverage network (all urban ODs) with say 5-10min walk max, at max 30min headways 24/7.
Nowhere in NZ is this being done. The GPS doesn’t recognize the need and the farebox recovery funding rules certainly dont.
The increase in fares simply makes PT even less affordable for those that need it most.
The Government needs to rewrite the GPS to ensure this provision, and provide Government funding for it, either through direct PT fare subsidies for the transport disadvantaged or through income supplements, but it must go hand in hand with an underlying comprehensive coverage network.
Such a network can be a time varying mix of on-demand services and fixed routes so that it is efficient and cost effective. Uber et al can even contract to provide part of the comprehensive network where smaller vehicles are more efficient than the high capital outlay for large buses.
Providing high frequency core services over and above this comprehensive network for those with jobs is a secondary consideration and which can be financed in line with a farebox recovery requirement but also taking into consideration the wider business case of reduced crashes, emissions and congestion.
NZTA can limit their contribution to 50% of fares but within business case limitations how much Councils spend on PT should be their choice.
I have just read the Board paper. There seems to be a huge disconnect between what AC/the Government want to achieve and what AT do.
“discussions have been taking place with the Mayor’s office, AC and the Transport Agency to assess the potential to offset the fare increase in this Annual Fare Review with additional subsidy. This approach takes account of the expressed desire of the Minister and Associate Minister of Transport to accelerate mode shift through using tools such as fares,”
AT appear to be saying, “its not what we have committed to do, but we know what you want us to do.”
I wonder whether AT is operating with the underlying premise that everything starts with an eye to reducing carbon emissions. Their actions seem to suggest that they will try and tack the AC/ Government wishes on the top if they can.
If their approach is based simply on a grab for more money then it is dishonest. I know that most local govt organisations seem to operate on the premise that they simply cannot spend less than they did last year. It wouldn’t hurt to try.
I looked at the section on parking cost increases. I am surprised that AT was so dismissive of increases saying that they were limited to 15%. Their day rates for parking buildings are $4 per hour. For their 4900 car building spaces at 90% occupancy we are looking at about a $3.5 million increase in revenue. That is without considering on street parking. (There is the money to cover the PT fare increase!)
I am amazed that they think the private sector will undercut them. AT seem to operate at the bottom of the market and private operators always seem keen to take a chance to increase prices if the competition does.
I like that they are considering disposing of parking assets. If the market is over supplied and this is a mechanism to lift prices and achieve an economic return then this is sensible. And if the market isn’t currently over supplied and car mode share contiues to drop then it soon will be.
The only thing that seems certain at this stage is that there are more legs to this story.
As you note, Tamaki Makaurau has a very expensive public transport system. Having said that, everything is expensive around here, so one might argue that it is just in line with the rest of our over-priced living costs. But the issue is farebox recovery. Other cities with functioning public transport do not demand so much from their public transport users, and neither should Auckland. People that take public transport are in the most part, conscientious objectors to the private motor vehicle, and reduce both congestion and pollution. These good people pay more than they should, because they care, and they want to be good people. We should not be punished for being good people. I personally have the luxury of being able to ride my bike when I am not happy with public transport, but I can understand that when outrageous things occur, people can return to their cars. Fix the problem at its root, farebox recovery targets that were set by a free market quasi neo liberal government, that is no longer in power. If kiwibuild isn’t going well they better make sure something works properly!
How has Waikato (https://www.waikatoregion.govt.nz/assets/WRC/Council/Policy-and-Plans/Transport/RPTP/RPTP-2018-2028.pdf) got away with only 36.6% farebox recovery in its RPTP?