Public Transport Costing Myths

Public Transport Costing Myths (Melbourne, Australia)

“The MTF [Metropolitan Transport Forum] is of the view that public transport should be acknowledged as far more cost effective for transit in cities such as Melbourne, than car based solutions. As cities become conurbations, reliance on the motor vehicle as the primary mode of transport undermines city liveability, amenity and efficiency.

o Myth No 1: that public transport is heavily subsidised by the State.
“The costs of public transport infrastructure and services must be balanced with the greater benefits in emissions, health, safety, land use, congestion, social equity, inclusion/exclusion and other externalities. The Independent Pricing and Regulatory Tribunal (IPART) has  assessed that given wide economic and social benefits, public transport requires only 30% cost recovery from fares.

o Myth No 2: that investment in roads is more cost effective than investment in public transport infrastructure and services.
“The analysis should examine the full externalities of road pricing including GHG and other emissions, taxation, spatial land use, accidents, health impacts, parking and consumer costs. When properly costed, it is submitted that the public road subsidy far exceeds the public transport subsidy.

o Myth No 3: that road freight is more cost effective than rail transport.
“Rail transport uses, on average, one third the fuel of road freight per tonne carried, and puts out one third of GHG emissions. Steel wheels on rail have far less friction that rubber on bitumen. Road freight incurs high accident, road infrastructure and damage costs. Any analysis should also examine road and related costs incurred by local authorities which are responsible for 80% of roads. It should be noted that the latter costs and GHG emissions were not properly costed by the Productivity Commission in its inquiry into freight transport.

o Myth No 4: that affordable housing/living can be achieved by expansion of Melbourne’s urban growth boundary.
“The cost of providing transport & infrastructure for a dispersed city has been assessed at over double the cost of urban consolidation. The MTF estimates that building 284,000 dwellings through expanding Melbourne’s urban growth boundary will cost at least $102 billion more than if the same number of dwellings were accommodated within established suburbs. The MTF seeks that the Budget fund analysis of the costs to the State and  community of expanding Melbourne’s urban growth boundary as against the urban consolidation envisaged in Melbourne 2030.

“There has been broader transport cost-benefit research by Professor Peter Newman in WA, John Stanley in Victoria, the Independent Pricing and Regulatory Tribunal (IPART) in NSW, RailCorp in NSW, the Australian Senate, and Todd Litman. The MTF urges that a comprehensive study is undertaken in Victoria to examine externalities of road pricing compared with public transport and rail freight. The MTF seeks that this analysis also covers the costs to the State and community of expanding Melbourne’s urban growth boundary as against the urban consolidation envisaged in Melbourne 2030.

“The MTF emphasises the considerable dormant and under-utilised land within established parts of Melbourne, inside the present urban growth boundary available for development. There are many Council approved projects which are not being proceeded with by developers holding permits. Approved structure plans by Councils involving urban consolidation around rail stations are also awaiting investment. These should be examined by DPCD and DTF for assessment of incentives to encourage their development against the costs of further

“The analysis of marginal costs and externalities is sought so that these are properly  understood and documented so as to provide a firmer base for public policy decision making. This research is essential to properly inform policy development and to take into account Government policy and the economics of climate change, emission reduction, infrastructure and other costs to the community. In terms of funding, the MTF considers that budget savings should be identified through a rigorous analysis of State expenditure and the 1.2 million people on the Government payroll. Priority should be given to service delivery & infrastructure development over administration.

As President Obama said on 16 April 2009, setting out new plans for rail in America:
‘What we need is a smart transportation system equal to the needs of the 21st century. A system that reduces travel times and increases mobility. A system that reduces congestion and boosts productivity. A system that reduces destructive emissions and creates jobs … (and will) lay a new foundation for our economic competitiveness and contribute to smart urban and rural growth’.”

Ref: MTF State Budget Submission, 26/10/09