Train services in Melbourne showing Zones 1 (yellow) and Zone 2 (blue). Surprisingly, Public Transport Victoria doesn't have a map on its web page showing all modes e.g. frequent service map

According to the Minister for Public Transport, Terry Mulder, if the Victorian Government is re-elected on 29 November 2014, it will make “tram travel in Melbourne’s CBD and Docklands free and Zone 1 fares will apply across the entire metropolitan network.” (1)

Mr Mulder says the savings for regular travellers who commute from suburban Zone 2 to the city centre could be large:

For a full-fare commuter who currently buys a Zone 1 + 2 daily fare there will be a saving in the order of approximately $5.00 a day…A commuter who pays for a Zone 1 + 2 ticket each day will save around $1,200 each year, or, if using an annual myki pass, will save more than $750.

The Premier, Denis Napthine, told the Herald-Sun that a household with two members working in the CBD could save $50 per week in fares. (1)

The proposed change will take effect from 1 January 2015. The Government estimates it will cost $100 million p.a., but hasn’t indicated how it will be funded.

This is a very attractive move politically. Opposition leader Daniel Andrews moved immediately to promise he’d match it if Labor wins the election.

It’s a political winner because it increases the real incomes of outer public transport users who travel to the centre (mostly by train). Although the underlying rationale isn’t explained, the Government’s selling this as an equity issue.

It maintains outer suburban travellers shouldn’t have to pay more for riding public transport than inner suburban travellers.

It will also address border issues by reducing the incentive for Zone 2 travellers to drive to Zone 1 stations. This currently strains facilities at Zone 1 stations near the border, particularly car parking.

But is it good policy? There are a number of issues with the envisaged Zone change:

  • First, it will either reduce funding for much-needed public transport improvements or, in order to replace the foregone revenue, it will require higher fares for all public transport users. (2)
  • Second, it will remove the nexus between distance and price and so reduce the cost of living further out i.e. beyond Zone 1. That can have other social costs like higher car use.
  • Third, to the extent it generates more peak hour trips, it’s likely to exacerbate the current high level of crowding on trains. It’s not likely to shift travellers from cars to public transport in appreciable numbers, but only a small number of extra users are required to shift a train or bus from packed to crammed.
  • Fourth, it’s inequitable in that those who travel short distances pay the same as those who travel long distances; the latter impose higher system costs.

I can’t see the sense in reducing revenue for public transport. As I’ve noted many times, users of public transport pay none of the capital costs and only around a third of the operating costs.

The level of fares isn’t a major driver of public transport use. What matters more for generating patronage increases is quality of service.

Users are attracted by attributes like reliability, frequency, span of hours, safety, comfort, and coverage. But they cost money so public transport authorities need to generate revenue, not forego it.

Now that the public transport system has a fully electronic ticketing system, the Government should be looking to increase the link between distance travelled and fares.

The proposal to provide free travel on trams within the CBD will, according to the Premier, be “a big win for many city workers and for tourists.” Apparently business lobby groups have been calling for free trams for years.

The public policy logic of this idea is mystifying. It’s hard to see what it is about business travellers, city workers and tourists that warrants a further subsidy for tootling around the CBD. They don’t seem to be an especially disadvantaged group.

Nor is it obvious what social benefit this initiative will provide. Workers who commute by public transport already get free use of trams at lunchtime because of the myki daily cap, so it’s not going to generate mode shift by them.

If they’re put off by the tram fare, tourists and those who drive to work in the CBD will otherwise walk, take a cab or perhaps even hire a Bixi. Trams in the CBD are notorious for crowding and, due to bunching, this can occur outside peak hour; extra passengers will be a problem.

Other users of the public transport system will pay for this benefit, either in higher fares or poorer services.

I suppose free trams will hose down some of the complaints, especially from the tourism industry, about the lack of a single fare ticket. I expect there’s a cheaper solution to that problem though.

The Government’s proposed changes aren’t good policy. But they’re good politics. They’re so good (i.e. easy) the Opposition, unfortunately, feels compelled to match them when it could’ve instead focussed solely (and courageously) on the benefit of improvements.

Public transport needs to recover more of its operating costs for investing in improvements. It will be a real worry if the Government’s just fired the starting gun on an election year race to the bottom. (3)


  1. The Minister for Public Transport’s media release was replaced late this morning with one by the Premier that says commuters will be “able to travel in Zones 1 and 2 for the price of a Zone 1 fare”. The report in the Herald-Sun says the change will “cap maximum daily fares at the Zone 1 rate across Melbourne’s entire network”; the daily cap seems to be the proposed mechanism.
  2. Or possibly elsewhere in the State budget.
  3. I really wish the Government would stop feeding exclusives to one newspaper ahead of another. This story was all over the Herald-Sun’s web site late last night but didn’t appear at all in my iPad copy of The Age this morning.