Transport in a cost of living crisis

This modelling of a hypothetical family’s transport expenses is very limited, but it’s clear that substantial savings can only be achieved by reducing the number of cars in the household.

There’s a lot of talk of the cost of living crisis at the moment. Many are doing it tough.

Transport costs are part of this – transport is vital for getting access to education and employment and other opportunities.

It got me thinking about what governments could do to relieve family budgets. What types of investment and intervention provide benefits, and how much? Let’s try and work it out.

The RACV’s car costs from 2022 (the most recent one I could find) provides information on the monthly costs of running a range of different cars – including loan payments, registration, memberships (RACV, presumably), insurance, fuel, servicing and tyres.

They don’t seem to include other costs such as tolls, parking or traffic fines. My assumption is it’s based on full-time on-site work, and/or the average kilometres of driving per year – in Victoria this is 12,400 km.

In their calculations, the loan often accounts for more than half the monthly cost. Some people wouldn’t have a loan, but the costs of sinking upfront capital cost into a vehicle, and owning it over time (eg depreciation) are substantial and might be roughly equivalent, so let’s go with it.

Cars on the Monash Freeway - about 60 cars carrying about half a train carriage of people

Base scenario: Let’s imagine a hypothetical family: they don’t regularly use public transport, and they run two relatively new cars: one small and cheap (Kia Picanto S) and one medium (Toyota Camry Ascent).

  • Small car $746 + medium car $1123 = $1869 per month.

So, what could governments do to try and reduce these costs?

Scenario 1: What if the government somehow managed to cut fuel costs by 20%? This of course would cost billions to do – the temporary halving of fuel excise in 2022 (which resulted in about a 10% saving off the retail price of unleaded petrol) for 6 months cost a massive $2.9 billion.

But if they’re silly enough to do it, what’s the result for this hypothetical family’s budget?

  • The total cost of the two cars goes down to $1807, just a 3.4% saving
  • It’s a tiny saving because the vast majority of monthly costs aren’t fuel

Scenario 2: What happens if the government funds extra parking at a railway station so that one of the adults can drive to the station and catch a train the rest of the way to work?

This can cost millions for one station – the recently announced Frankston car park upgrade is costing $87 million for 500 additional spots – a record $174,000 per spot.

Let’s assume our hypothetical family uses the small car to drive to the station, and that as a result its driven 75% fewer kilometres. (I assumed this cut fuel and tyre costs by 75%, and servicing costs by 25%, with other costs such as car loans, rego and insurance remaining the same.)

Let’s assume they can pay for one of the adults to buy an Myki Pass up-front for the train journey – a Commuter Club pass, which is the cheapest type of annual pass.

  • The total cost of the two cars drops to $1752 per month, but the Myki Pass costs at least $161 per month, for a total of $1903 per month. This is a total cost increase of 2.3%
  • Using monthly Myki Passes instead of annual increases the cost further by about $23 per month
  • Overall a cost decrease is likely if the commute is to the CBD (where parking costs are high) or involves expensive daily toll roads – these aren’t included in the RACV data

Scenario 3: What if instead of the station car park being expanded, the bus, walking and/or cycling routes to the station are upgraded, so one of them becomes a time-competitive option to get to the train? This lets our hypothetical family get rid of the smaller car.

  • Just running the medium sized car costs $1123, plus the Myki Pass of $161 means a total of $1284 per month, a reduction of 31.3% from our base scenario. Now we’re talking!
  • Again, the saving is higher if the car commute involved parking or toll costs.

Scenario 4: What if as well as one adult using PT to get to work, the hypothetical two kids also use it to get to school?

  • It’s as above, plus two Myki annual School Passes, which are $60 per month, for a total cost of $1404 per month – assuming the remaining car still gets driven about the same amount. That’s a saving of 24.9% from our base scenario. Still quite good.
Passengers boarding a bus in Lonsdale Street

Scenario 5: What if PT is so good that both adults and both kids can use it for their daily commute? Let’s say they keep the medium sized car for non-commute trips, but its kilometres drop by 75%.

  • The car running costs go down from $1123 to $977, which with Myki Pass fares added makes a total of $1419. This is still a saving of 24.1% from the base scenario.

Scenario 6: Same but they keep the smaller car.

  • The smaller car with fewer kilometres drops in cost from $746 to $629 per month. Plus Myki fares makes a total of $1070 per month, a saving of 42.7%. Wow.

Scenario 7: The PT is so good for this family that they can get rid of their cars altogether and use PT all the time. (Perhaps they sometimes hire a car, but that’s beyond the scope here.)

  • The only costs we now have are the Myki Passes, which add up to $441 per month, or a saving from the base scenario of 76.4%. Double-wow.

Here are the above numbers in graph form.

I also tried out the calculations with both cars using the smaller car cost. The dollar amounts were a bit different, but the percentage savings for the various scenarios didn’t change hugely.

What can governments do?

These numbers are very rough, and the modelling here is obviously very limited. Any resemblance to a real family budget might be entirely coincidental. (It would be nice to see some figures that let us model the cost of a cheap secondhand car, which might be a more common scenario for families facing budgetary pressures.)

But I think a few things are clear here:

  • Trying to suppress the cost of fuel doesn’t make a huge difference to a family transport budget, because all the other costs of the cars are huge.
  • Boosting park and ride may sometimes have its uses, but it may be counter-productive for household budgets if a car is still needed to access public transport.
  • Myki fares are a drop in the ocean compared to the costs of owning and running a car.

Even a shift to electric cars may not help much. Fuel and maintenance costs will go down, but standing/capital/finance costs (at least in the next few years) will go up because for now, EVs are so much more expensive.

Any talk of trying to reduce family driving expenses is tinkering around the edges if people still have to drive to most places. The household budget impact is minimal, but the cost a government’s budget is huge.

Improving walking, cycling and public transport options nationwide also isn’t cheap of course. But upgrades targeted at suburbs that most need them would absolutely be affordable, especially if funding is diverted from equally local but often exorbitantly expensive car park upgrades or other road projects.

The real savings to a hypothetical family’s budget come if their transport options are good enough to reduce the number of cars they own.

It might be difficult to get many suburban families down to zero cars (scenario 7), but getting more of them to one car (scenarios 3, 4, 5, 6) is not unrealistic.

But governments need to stop investing in projects aimed at making driving easier, and start putting more effort into making the alternatives easier instead.

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.

13 replies on “Transport in a cost of living crisis”

In Victoria, a monthly or weekly fare cap would incentivise taking unplanned trips via PT rather than using a vehicle. This is particularly true now that many office workers spend a portion of the week working from home so the upfront cost savings of a 7+ day pass arenโ€™t evident in advance. This would also help offset the flat fare structure making short trip costs uncompetitive with driving, particularly when multiple passengers are involved.

At their meeting on Tuesday 12 March 2024, Hume City Council carried a motion (unanimously, I think, with only one Councillor other than the mover discussing better options) that “That Council writes to the Australian Federal Government seeking a 50% reduction in the fuel excise tax.” I hope the Federal Government reads your blog!

Interesting indeed.
I’m sure RACV used to include depreciation into car running costs and maybe still does. I wouldn’t include fines into the car running costs. Fines are very optional.
I know providing car parking at suburban stations is at times expensive but practically, could buses ever provide an adequate service in every area to a local station? I wonder how the cost of the Frankston car park is made up. Is it on already government owned land but land costs have been included?

@Andrew Cee Buses and active transport obviously aren’t feasible at EVERY metropolitan station because many near the fringe serve sparsely populated green wedge areas. The carpark extensions in Hurstbridge and Belgrave are understandable (even if the latter is a bit out of place), but Frankston is practically its own CBD! Public transport is shockingly bad on the Peninsula, and that should be a priority to fix.

@Joshua, couldn’t agree more with stations such as Hurstbridge needing car parks due to green wedges. Plus, many buses in the outer suburbs finish at 9pm, which means that many people (such as postgraduate students and night shift workers such as cleaners who clean offices in the city or hospitality workers) would not be able to get home without a car as classes tend to be held at night, and they would be stuck at the station if they don’t have a car. So in this respect, buses needs to run later at night (probably meeting every train until last service), and extend Night Bus to Thursday nights as there are many social events at universities held on Thursday nights.

It should be acknowledged that in many instances, cars would be needed (such as travelling to areas with poor public transport or starting work before the first service of the day, which, as a film extra, can happen), but in many instances, less is more. And with the cost of living crisis, increasing the number of bus services in the outer suburban areas can actually cut costs for people doing it tough, but as has been said a number of times, it might not be feasable in certain areas.

Now run the calcs on if both parents rode their bikes to work and the kids walked to school! Massive savings! Invest in bicycle infrastructure that is safe and makes everyone feel comfortable to be more active.

Great article Daniel.

@Aaron, I can’t agree more. A weekly cap (especially with uncertain travel patterns post-pandemic) is essential.

@Neil, hadn’t spotted that – thanks!

@Kevin, groan. Some people can’t think beyond cars.

@Andrew, at Frankston they own the land; they’re upgrading an existing car park. The cost is presumably rapidly rising construction costs combined with the need to go multi-storey.

@Alex, yep. I think one of the exciting changes recently is the prospect for eBikes replacing cars. (Conventional bikes can too of course for some journeys, but eBikes increase the range for people who are not up to cycling 15+ km in one go, in live in hilly areas.)

Buses plus improved active transport options could replace sooooo many trips around peoples local areas. So frustrating governments fail to invest in the better and cheaper option.

I have a small car, my budget puts it at $5000/year, including servicing, depreciation, insurance, and registration. Fuel is around $600 per year, while my myki pass cost $2067.

I drive just under 5000km per year. Google estimates I walk 1500km per year. I estimate (based on the cycle computer odometer) I cycle another 500km per year. This year I will travel at least 10000km on a Metro train or tram. I also take V/Line, likely to be ~4000km over the year.

In terms of hours, I will spend 300 walking, about 300 on a train or tram of some kind, 130 driving, and 50 cycling. I will spend some time on busses as well, and even more time waiting for them…

I am quite frustrated with the lack of priority given to active transit, both in funding and in my experience as a road/path user on foot. From excessively wide intersections and slip lanes, to absurdly high speed limits, to absent, “closed”, or obstructed footpaths, it is clear that cars come first and anything else is an afterthought.

As for busses, the biggest problem I find is getting to or from stops. They are far too often on the wrong side of a busy road, with little more than a traffic island to assist with crossing it.
I live in the East but understand it is a bigger problem in the West, where bus stops were moved from streets to major arterial roads, with no new footpaths or crossings to access them.

In terms of the topic at hand, I find myki, even for rail commuting from zone 2 to the CBD is more expensive than the marginal cost of driving. At ~0.20 per km, it is twice my fuel cost.

The reason I use a car at all, is that weekend, off peak, or inter-suburban travel is simply not well accomodated by Melbourne’s transit network. I make trips by public transport when possible, but often find they end up 1 or 2 hours longer than the car would have taken in each direction.

@Alex, Daniel: reasons not to use an eBike: weather, time (they’re limited to 25km/h so a long commute will be even longer), home-end-of-journey (want to leave it parked on the street like a car? Want to haul it up several floors to your apartment? No thanks). Certainly we ought to lobby for better infrastructure for bikes generally including dedicated parking (wholly inadequate at stations despite Parkiteer’s trumpeting) but I just don’t see eBikes as a practical commuting solution, which is a huge pity, speaking as a cyclist-or-else-train-user by preference. (OTOH they’re probably great for local trips to the shops… but then so are ordinary bikes.)

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