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.
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
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.
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.