TransLink survey missing an option – reduce public transport subsidy

The TransLink survey on whether carbon tax savings of $30 million should be used to reduce fares or provide more services (see below) is missing an important option: keep fares and services the same, and reduce the massive subsidy to public transport. Regarding TransLink, which coordinates and funds public transport in South-East Queensland, the Commission of Audit observed last year (p. 2-105):

Services are heavily subsidised to encourage commuter trips on public transport rather than by private vehicle.  Passenger revenues account for approximately 24% of Translink’s
contract costs across all its contracted services.

According to the Service Delivery Statement for Transport and Main Roads, the average subsidy per public transport trip was $6.58 in SEQ in 2013-14 (see p. 15). I’ll try to work out what the aggregate subsidy amount to public transport is later, but it’s obviously huge. The Service Delivery Statement reports total State Government spending on passenger transport services of $2.3 billion (see p. 16), but I’ll need to determine exactly what this comprises.

I’m not denying there are economic and social justifications for subsidising public transport. I just think that the current level of subsidy, in SEQ especially, is very likely too high and we need to seriously examine the delivery of public transport (see my post SEQ’s extensive but costly public transport system requires thorough review).

 

Translink_survey

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4 Responses to TransLink survey missing an option – reduce public transport subsidy

  1. Maybe the subsidy is too low as well? We don’t know the elasticity of demand, and perhaps if the subsidy was increased (prices dropped) a greater share of costs would be covered by fares.

    What makes you think the subsidy is too high?

    And shouldn’t we be comparing with alternatives? The $6.58 per trip seems like a lot, but if no one catches public transport we might need more roads etc.

    Also, why isn’t the discussion shifting to land taxes? After all, transport networks increase the value of locations accessible to them. So the logical thing to do is to raise the funding through land taxes.

    • Gene Tunny says:

      Thanks Cameron. I think it’s very likely the subsidy is too high because we have to fund an extensive and costly public transport network that probably isn’t optimal. However, I concede there’s a possibility a higher subsidy could be optimal (though I really doubt it) and I’d like to see a comprehensive study of transport in Qld that also considers wider urban development and environmental issues.

      I agree we should raise more funds through land tax, though I’d use land tax to make up lost revenue from cutting inefficient taxes such as stamp duty.

  2. KT says:

    Gene, I think we should encourage more public transport use and better transport infrastructure so may be the funds so go there. Since the Newman govt is ‘on the nose’ I think the giving back to pubic transport users is a vote winner. the govt needs to be seen to be giving it back.

    • Gene Tunny says:

      Thanks KT, I agree it’s a vote winner. It will be interesting to see whether people vote for improved services or reduced fares on the TransLink website. My feeling is that, given people get in a routine where they catch the same services all the time, the majority wouldn’t value improved services as much as lower fares.

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