Coalition fares announcement: free CBD trams; zone 2 gone [Updated]

The Herald Sun reports the government is planning big changes to Melbourne public transport fares:

The radical changes, being unveiled today ahead of the State Budget, would cap maximum daily fares at the Zone 1 rate across Melbourne’s entire tram, rail and bus network.

And CBD and Docklands trams would be free under the changes, due to take effect on New Year’s Day.

The cost of the windfall, to be funded in the May Budget, has been estimated at $100 million a year.

Herald Sun: Commuters in Melbourne’s outer suburbs to see public transport costs slashed by up to $1200 a year in proposed changes by State Government

This is bad policy on a couple of fronts.

Friday lunchtime: eastbound tram meets westbound car in Flinders Lane

Free rides for CBD motorists

Firstly, if CBD and Docklands trams are made free, then the major beneficiaries are people who drive into the CBD.

People who’ve used public transport to get into the city gain no benefit (other than perhaps slightly faster loading trams) because unlike in cities such as Perth, the Myki daily cap system means their CBD trips, for instance at lunchtime, are already paid for.

Flat fares = higher base fares

Merging/removal of zone 2, as I noted in this post last year, over time, this is likely to put upward pressure on all fares.

Adelaide went to a flat fare many years ago. As of the last comprehensive check, it also had Australia’s highest fares for trips below 20km.

In Melbourne, people already complain that any trip in zone 1, even one stop, is $3.58.

The removal of Melbourne’s zone 3 in 2007 also added to upward pressure on fares:

  • In 2006 a Z1 daily (using 5xDaily or 10×2 hour fares, the equivalent of today’s Myki Money) was $5.34. That’s now $7.16 — a jump of 34% (compared to about 21% inflation in that time).
  • Meanwhile Z2 (only) daily fares went from $3.68 to $4.96, a jump of 35%.
  • Zone 1+2 daily fares leapt from $9.02 to $12.12 in that time, 34%
  • Before the zone 3 removal, a Zone 1+2+3 daily was $10.44. It dropped once zone 3 went to $9.02, but has now climbed back up to $12.12 — up 16%.

(The post last year also notes some benefits, of course. It’s not black and white. One benefit would be that presumably touch-off would become optional for most suburban trips, though this has caused mass confusion on the trams.)

What about better services?

$100 million sucked out of fare revenue is another whittling away at funds which could be better used to upgrade services, which is where I’d rather see it go.

For most, particularly in the outer suburbs which will primarily benefit from this plan, the problem isn’t the fares, it’s the infrequent, inadequate services.

In the long run, service upgrades such as PTV’s plans for lots of frequent suburban buses, would benefit outer suburban families more, given most of them don’t commute to the CBD every day, by giving them better transport options for their suburban trips.

Other reforms could include more zones (so the jump between them is less severe), changing zone boundaries and overlaps to remove anomalies, single zone fares for buses (which would cost very little, but enhance the feeder/connection role for them), or cutting all fares by 20% (which would also cost about $100 million/year).

But if the government’s proposed change goes through, it’s unlikely a change of government would reverse it. We just had a CPI+5% rise, and another is expected next year. Obviously two-zone travellers are about to benefit in the short term, but expect many more big rises for everybody in the future to cover the shortfall.

How soon before that one stop trip on a tram (outside the CBD that is) costs $5?

Update 1pm — the government has published the map showing where the free tram rides would be. Note the Museum is just outside the area. And is it telling that the biggest dot is a freeway interchange?

Coalition govt: Free tram map

Update — Thursday

Perhaps Alanis Morissette summed up the free trams proposal best, with regard to existing public transport commuters:

It’s a free ride when you’ve already paid.

But what perhaps is ironic is that for a free zone supposedly aimed at business and tourist travellers, attractions such as the Casino, Arts Centre and Museum are just outside the free area. Even Federation Square is shown as outside it, which is odd.

Explaining to people where the free rides start and end will be a challenge.

How it’ll all work

My educated guesses, gleaned from the info out there:

  • No touch-on (and indeed, no Myki) required for tram rides entirely in the free area
  • Zone 2 will become part of the Zone 1+2 overlap area, meaning trips entirely in the old zone 2 area will require touch on/off to get the cheaper zone 2-only fare
  • Default fare will be a zone 1 fare, meaning for most trips, touch-off is not required — just like the trams now. This — at least — should have benefits in cutting suburban station exit queues in rush hour.
  • It’ll also help the role of connecting bus services around the zone overlap areas, and take pressure off zone 1 station car parks (though as noted previously, this is confined to a relatively limited number of locations. But it may have the reverse effect at some zone 2 stations.
  • It’s unclear if V/Line stations in zone 2 are included in this. At least one report has stated: The changes do not apply to V/Line fares — but it’s still early days, and it’s obvious this package was put together in a hurry, and perhaps without fully thinking through the implications. Some indications are that it will apply to all of Zone 2, including V/Line.

Obviously the most significant thing is it’s likely to make current two-zone trips much more attractive to people, and the government (whichever flavour after November, given Labor has said they’ll also implement the change) will have to be very careful about adding extra services where needed to cope with this.

Ditto CBD trams, likely to become more crowded at peak (including lunchtime).

There are also sorts of other implications that need to be thought through — the deployment of tram AOs won’t be needed in the CBD, but may become prominent just outside it. Attractions such as the Zoo will still be very keen to ensure Myki is continued to be marketed to tourists.

It’s still not clear where the $100m/year will come from. Perhaps it should be part funded by a further increase in the CBD/inner-city car park levy, given the car park operators inside the free tram area will be beneficiaries of this. There’s a huge car park at Etihad stadium, for instance. They must be delighted.

Let’s hope the next policy announcements are about the things that will benefit PT (and potential PT) users more… service upgrades.

By Daniel Bowen

Transport blogger / campaigner and spokesperson for the Public Transport Users Association / professional geek.
Bunurong land, Melbourne, Australia.
Opinions on this blog are all mine.

30 replies on “Coalition fares announcement: free CBD trams; zone 2 gone [Updated]”

I think there’s one further problem – capacity and increased demand.

Zone 2 travellers will be more incentivized to use trains (a good thing) but this will mean that peak trains will be even more full by the time they get to the inner city.

Not only the $3.80 fare is a bit rich for a short trip, BUT, there is the ‘perception’ of needing to buy a 2-hour ticket to perform a journey of only 20 minutes or less.

This perception will only get worse, with the zone 1, in effect being extended all the way out to Pakenham.

*** And, I second each of your points like these
++ about there being $100M less to spend on important improvements. That is quite a major issue to me.
++ have more zones and closer together. Off the top of my head, London is similar geographical size to Melbourne, but I think has 10 zones.

I like the idea of a radial zone system for those who travel into the city, and perhaps those who travel through the city. And have a local zone system, based on the old Neighbourhood system of the 1980s for the majority of local trips.

Further to the above, the transport minister was on 3aw talking to Neil Mitchel this morning.

PTV gets $700M per year in farebox revenue
But costs $2,000 M per year to operate

If this is about getting more people to use public transport, then the sum of $100 would be far better spent on doing something that would extend or expand the network.

What about the #904 orbital bus route?

In fact, $100M would go a hell of a long way of expanding the SmartBus system.

You could,
++ Upgrade all buses to SmartBus standard. The advantage for many people to have that talking next stop system, would greatly help a lot of people.
++ Install more of those bus stop PIDS. This would be a great advantage for a lot of people. Make them standard for all buses at selected major bus stops or interchanges.

Or, we could just go and start up three brand new SmartBus routes which would be a major benefit to people in the outer areas, and of whom are some distance from any decent rail service.

@tranzitjim – don’t think it actually is about getting more people to use PT. It is about vote-buying, by offering people money.

I sound like a broken record, but we are actually heading to creating inner-city public transport ghettos.

Services are already getting cut at inner-city stations for the benefit of express trains. Those trains that do stop, people in the peak cannot get on the train. Its not that they can’t get a seat (which puts off many) its that they can’t GET.ON.
This policy will make that worse.

Neither Metro Trains nor Yarra Trams CEOs knew about this in advance. Both read it in the paper.

Empty promise, policy on the run.

This announcement really just highlights how little they understand public transport; there are so many problems with the plan. This is from the same government that just increased the price of weekend travel.

Spending an extra $100M a year on PT improvements would be a much better idea. People are willing to pay for public transport; it isn’t necessary to give it away — it’s not charity, it’s a service with a significant economic benefit to the city. What people do want, however, is a good service in exchange for their money. (And no, I’m not arguing that the fares should cover the cost of running the service; there’s a clear argument for public subsidy.) PT in Victoria needs to be made better, not cheaper.

But I’m with Pip; it’s more just a pre-election announcement designed to encourage people to vote for them, and to distract people from their obsession with the East-West Link.

Zone 2 resident here (and I can see Zone 1 from my station so it annoys me often!)

I see some value in more zones, but having lived in Brisbane too many zones was a disincentive.

I lived in Zone 6, got the train in Zone 5 to work in Zone 2.

I didn’t often get the bus due to how poor the service was, but when I did I had to pay extra. As for going in to the city on the weekend I had to pay extra to do that too even though I worked 3km from the CBD

The current ‘2 hour’ ticket is too expensive for a short trip. It may as well be a one way trip. 2 hours is barely enough time to get an errand done by the time travelling is taken into account. It used to be that I could time the trip the make the two hour trip last 3 hours, and that was better, but i understand this loophole has been closed. A daily ticket is way too expensive to do a few errands. It works out both cheaper and quicker to use the car. There is no incentive to use public transport for short trips of a few hours. Its all focused on the daily commuter which is ridiculous :(

I say the 2 hour should be replaced by hourly increments up to four or five hours.

Perhaps a per trip based fare could be done, but maintain the current zone based daily caps.

This afternoon the radio is buzzing all day with rail closures from one thing to the other. Mostly heavy rail, but now trams too. It never rains, it always pours.

Their estimated cost is $100m Per Year, and the cost of missed revenue will only go up year-on-year as patronage increases, and services become even more crowded. It could well end up costing more than the $1.35b cost of myki over 10 years.
It’s going to absolutely destroy tram performance in the CBD due to extended dwell times, they’ll become slower than walking.
Imagine if they’d committed $100m/year on new trams => an extra ~20/year for the next 10 years.
They really don’t understand PT.

Completely agree with tranzitjim. I really thought the main advantage of Myki was the option of flexible fare structure that could automatically take care of situations such as off peak discounts, or other special fares and calculate the best rate. Myki isn’t new any more, its been operating in part for over three years (?) and they still haven’t taken much advantage of the system.
So are the people in charge of operating Myki incompetent with their programming flexibility, or is PTV holding them back with antiquated fare structure? I fear it is both, and it won’t change no matter which side of government wins the election. Myki will surely only have a lifespan of a decade or a bit longer before it becomes redundant or superseded with hardware specification, so really, they better get moving with improving upon its current functionality.

Bramley, they could use technology to allow Trams, buses, ambulances, fire trucks, to control the traffic lights. That would speed up PT and emergency vehicles.

I dont see why trams have to wait for cars to cross the road.

I catch the train from a zone 1/2 overlap. I already can’t get a seat most days, and I expect this will add to the problem.
Never mind, by Jan 1 I will be 50 so obviously all those young students and workers will offer me a seat (not).

I also want to point out that it will hardly be difficult to get off the tram within the free CBD zone and walk to the museum, though tourists will be highly likely to get caught out by this.

I don’t understand, and I’ve been trying to find the full facts but haven’t succeeded yet. My question is this:
They say that all trips in all zones will be ‘capped at the Zone 1 fare’. Does that mean that there will no longer be a (lower) Zone 2 fare, and I will in fact pay a Zone 1 price for my exclusively Zone 2 travel? Or does it mean that the Zone 2 fares will continue to exist and will be charged for trips that occur wholly within Zone 2?
The latter is my preference, but I suspect the former will occur. Can anyone point me to an official document actually spelling it out?

So what happens to the passes and if you have a yearly Zone 2 Pass and the fares go down in price?

@Philip, you’ll still pay the cheaper zone 2 fare. The govt press release says:

“People who begin and conclude their journey entirely within Zone 2 will continue to pay the current discounted fare.”

This is why I assume it’ll work like trams, with all of Z2 being included in the overlap, and touch on and off in Z2 resulting in the cheaper fare.

@What The, I assume you mean Yearly Zone 1+2 Passes. I’d expect a refund system will be introduced. Similar issues happened with the removal of zone 3 in 2007.

So every time a road project is proposed there is a big discussion around induced traffic. I haven’t seen any discussion around induced PT travel under the proposal to remove zone 2, except in the negative (it will lead to more overcrowding). Could it not also feasibly increase the revenue base due to more people travelling, even though they are now paying a lower fare?

In other words, I wonder if the $100m cost is simply determined by subtracting the old and new ticket prices and assuming the same patronage, or have they taken into account that more people might travel if it’s cheaper? It might not end up actually costing as much as they are saying, which could reduce the “we should instead spend $100m on improving services” argument a bit.

I seriously doubt that this measure could possibly lead to a better financial position, for the PT system, than with no change.

This change gives most of the discount to some of the most expensive passengers to provide services for, that is peak hour, two-zone, peak direction travellers. That is because most of the additional patronage will require extra peak hour peak direction services.

It would have been much more sensible to introduce cheaper off-peak fares, when there is more space on existing services and more trains and space to add more services.

Guess you’ve never paid a 1+2 fare to get from Strathmore to Glenroy…just 3 stops on the train. These zones have never been fair for people living on the edges,

Here’s an idea. With touch-on and touch-off, the computers can tell where you have been. Charge one price for journeys 0 to 5 km, another price for 6 to 10, another price for 11 to 15, and another price for journeys longer than that.

@enno – beautifully simple.
However the myki system cannot even distinguish between V/Line and Metro Zone 2 stations.
Therefore all journeys to Bacchus Marsh, Wallan, Lara etc etc etc etc…guess who gets the money?
@Daniel – any guesses?

As imperfect as it is, this does eliminate some unfairness on zone boundaries. But there are also people live in Zone 1, don’t own a car, and make 4-10 journeys per day. Those people are freeloading on the bulk of commuters who make only two trips per day. If people are concerned at the unfairness of the single zone, they should also be concerned at the unfairness of the all-day ticket.

A fair system could involve distance-based charging, or 6 or more zones, with each ticket lasting as much as a reasonable upper limit on commute time (say 1 1/2 hours). Two of those tickets would cost the same as a daily ticket. After four 1 1/2 hour tickets, the daily cap would be reached.

in above “the same as a daily ticket does now” – there would be no daily tickets any more, just the cap


“people live in” -> “people who live in”

Thank you for dissecting this. Agree with more zones to be fairer. I suppose no Z2 communter will drive to Z1 now.

I concur with a number of people on this forum. More zones, not fewer, with lower fares per zone than present would surely increase both patronage and thus fare box revenue. This combined with shorter period tickets eg in 90 min increments, up to a 3 or 4×1 hr daily cap (higher than the current cap) should attract more intra-peak, in-fill suburban trips.

It could be implemented in any one of the following ways – provided myki software can cope:
– pure distance based charge on an increment basis, eg fare structures based on every 5kms actually traveled,
– zones radially from the CBD on a distance basis, eg every 5kms, with an overlap station at zone boundaries,
– zones based on # of stations traversed, eg new zones every 5 stations, with a 1 station overlap as per above.

For pts 2&3, exceptions could be made where a line terminates a short distance from when a new zone should theoretically start, keeping it in the prior zone (eg Flinders st to Sandringham might be 3 zones rather than 4 as its ~16kms). I would note that the first option would provide the best policy outcome, particularly for those who only travel 3-5 kms, which is too far to stay within the sector overlap and thus would be hit with a 2 zone fare.

It is worth pointing out that distance based fares are increasingly the direction that PPP toll roads, both in Australia and internationally, are headed. E.g. The CityLink toll varies from between $2.17 to a capped $8.15 per trip (with an average toll of ~$5) depending on how long you stay on. Similarly Westlink M7 in Sydney is ~30c per kms with a 20km trip cap. The simple logic is that a low fare / toll for a short trip is more likely to attract a user than a higher fixed single zone fare. Transurban and the RTA have both identified distance tolling as the way of the future and I fully expect to see a change to distance tolling on the M2 and M5, currently fixed toll, over the next 5-10 years. Ramp tolling (at about 50% of the full toll cost) on new M2 ramps is a step in that direction. About time PTV and the Vic govt sees the financial and operational merits of incremental fares.

My guess is 70-80% of PT users are 2 way commuters and thus don’t use PT off peak, with only a small proportion (maybe 20%) making 3 or more trips per day separated by more than 90mins (as opposed to multi modal trips within the current 2 hr time constraint) – eg CBD tram users at lunchtime. As such my guess is that there is presently only minimal cross subsidy by 2 way commuters for those multi-use, within day travelers.

The full fare pricing could be structured something like this:
Zone 1&2: $1.50 per zone per 90 min
Zone 3&4: $1.25 per zone per 90 min
Zone 5&6: $1.00 per zone per 90 min
The higher fares for inner ring reflect the higher frequency, and thus higher user value that the service provides within a 10km radius of the CBD. Further, a 5 zone trip cap per 90 min trip could also be implemented, thus a $6-$6.50 cap for a 90 min trip, thus remaining consistent with current pricing.

It would be envisaged that such a pricing structure would result in broadly price neutral, or cost reducing outcomes for most existing PT users, while also incentivising use of PT for shorter trips, forming the basis for higher frequency non-peak services.

Presently, zone 1 terminates on average 12-13 stations from Flinders st, or approx 15kms in most instances, so would translate to a proposed zone 3 extremity under a 5km radial zoning structure. Thus a zone 2 to city fare under a 6 zone system would be slightly cheaper, at $3.00, compared to current zone 1 fare of $3.58, whilst zone 3 to city slightly more expensive at $4.25. A zone 4 to city trip would be $5.50 whilst a zone 5&6 to city would be $6.50 compared to $6.06 presently for existing zone 1+2. Travel within current zone 2 would be between $1.00 to $3.25 depending on length, compared to $2.48 now.

A daily cap equivalent to something like 2.5-3 x 90 min max trip could be put in place to counter the purported commuter subsidy (so $15 – 18.50 per day cap). However, since multi use intra-day travelers are most likely concentrated within the inner CBD ring (say Zones 1-3), in order to hit such a cap would require 4 trips, separated by at least 90 min across all zones. Suddenly $10 per day buys you a lot of train & tram trips, particularly if they’re all within the same zone, keeping total spend below the current cap for many inner city trip patterns. Further, with a single zone ticket costing between $1-1.50, fare evasion (particularly on trams) would likely also fall – currently at ~9% of all PT mode use.

With a few examples in hand, we can see that a well structured regime could result in >70% of existing trips experiencing a saving. With the benefit of Myki big data analysis available to PTV, this structure could be refined such that a greater proportion of trip combinations were cost neutral, while enhancing utilisation during non peak periods (where trains run at up to 95% empty). Ultimately fare box revenue could increase by 10-20% (conservative estimate) via patronage increase and fare evasion reduction alone – at close to nil increase to operating costs.

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