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Don't be too transported with delight

By Alan Moran - posted Thursday, 11 May 2006

We should not be blinded by the euphoria over public transport's success in servicing the Commonwealth Games a few months ago. Public transport can work well when lots of people are converging on a common destination and can operate smoothly (if at a cost) if it vastly increases its staffing. Even before the games started, there were claims of an imminent resurgence of (presumably commercially viable) light rail and suggestions that it is car users not public-transport users who are subsidised. And there have been many suggestions that the steady decline in the share of public transport is being or could easily be reversed.

In his article (The Age, March 7, 2006), Joshua Gans suggested an approach involving road pricing and making public transport free, for which he accepts an estimate of costs at $340 million a year. He believes these two policies could considerably relieve congestion.

It might well make sense to charge more accurately for the costs of the road space used at the time of that use. This is notwithstanding that people already pay twice as much in fuel and registration taxes as governments spend on roads.


That said, road pricing is a one-sided approach. Public transport is even peakier than road usage. Would it not make equal sense to charge public-transport users in a similar manner to road users?

This would be even-handed; and surely this is preferable to having governments making people's choices for them. As public transport is highly peaked (and in any case fares cover only 20 per cent of the costs) the logic would be to charge considerably more for peak-hour travel.

A further problem is one of monopoly. As government has the exclusive power to allow or to prevent the building of new roads, might it not see road pricing as a taxation bonanza? The prospect of obtaining increased tax revenue would prove irresistible to some governments and encourage them to allow a scarcity of road space to develop. Governments' enthusiasm for this would be constrained only by fears that they might deprive the city of the transportation services it needs to flourish.

These matters aside, although free public transport would certainly attract more patronage, it would not attract as many as its advocates think. This can be tested by observing the transport choices of workers in the public transport industry, who already actually travel for free. The number of workers' cars parked at tram, train and bus terminals is testimony to the attractions of car travel even to people who are far from affluent and work within the industry itself.

Sadly for those favouring public transport, the tide of demographic history is a swift current running against them.

Public transport needs high concentrations of people. A rule of thumb is that rail-based systems require 40,000 people per square kilometre to be viable. Such a system therefore works, after a fashion, in Hong Kong, which has that population density. Express bus systems need 26,000 per sq km.


Melbourne's density is 1,500 people per sq km and reaches only 5,500 even in the densest suburb (Port Phillip). On top of this, concentration levels have been falling for decades in spite of land rationing by successive governments, which is designed to promote denser urban living. Even an intensification of this government-created shortage of land would not reverse this trend.

The estimates of what is required for a viable public transport system with growing patronage levels are also being pushed up due to the changing nature of work places. More and more trips are cross-town. These trends are exemplified by a declining share of employment in central areas, where radial public transport systems work best. The proportion of jobs in central Melbourne fell from 55 per cent to 28 per cent of the total between 1961 and 2001. In that latter year, the central business district accounted for only 10 per cent of jobs.

This has immense ramifications for planning, especially road development and public transport. Not only is Melbourne getting less dense but the trip profile is becoming far more dispersed and difficult to jam into a public transport service.

The car is the preferred means of transport unless parking is expensive. Trying to discriminate against it not only offends against personal choice but will reduce the value of the city and jeopardise its future attractiveness as a living, working and leisure centre.

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First published in The Age on March 30, 2006 and available on the IPA website.

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Alan Moran is the principle of Regulatory Economics.

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