Who pays the ferryman (and how much)?

What public transport policy tells us about government decision-making.

Understanding how governments make decisions is essential for any organisation seeking to influence policy. While advocacy often focuses on making a compelling case for a particular outcome, it is just as important to understand the forces shaping government choices—political, economic, and social. Public transport policy – and in particular, fares policy – provides a useful case study that highlights the competing factors driving government decision-making.

Not many public transport (PT) networks around the world generate enough revenue to pay for themselves – most can’t cover the operating costs let alone the capital. But public transport is recognised as a public good; taxpayers are generally prepared to subsidise the costs of investing and running public transport services because it reduces road congestion and enables a diversity of access for users.  In Australia about 70-75% of public transport costs are paid for by the taxpayer with the users covering between 25-30% via fares.

With the rapid growth in population in most Australian cities, in recent times there has been a surge in government investment in public transport infrastructure and, to a lesser extent, PT services. In the past five years this has presented governments with a conundrum: on the one hand citizens are expecting government action to reduce the cost-of-living burden while at the same time they are demanding public transport investment. Investment in transport infrastructure in Victoria alone has averaged over $15bn pa for the past four years and the operating costs (which are rising each year) are approximately $4.7bn per year.

In Greek mythology, Charon, the ferryman of Hades, demanded payment to carry souls across the river Styx. Those who could not pay were left stranded. The lesson? Every journey has a cost, and someone must bear it. This is the challenge faced daily by governments as they decide how to allocate public funds, especially when it comes to public transport.

So how has this played out in the case of fare policy?

In most cases, governments have backed the cost-of-living horse. In Victoria we saw the introduction of a flat fare structure statewide meaning it costs the same to catch PT from Bendigo to Bairnsdale as it does to catch a tram two stops from Bendigo Street, Richmond.

In Queensland the previous Labor Government introduced 50c fares and this was backed by the now Queensland LNP Government. Likewise in Perth the current government plans to introduce a $2.80 flat fare. And the Greens Party has suggested that the Commonwealth should pay the States $8bn to enable them to introduce 50c fares in all jurisdictions.

Naturally these policies are popular even if most taxpayers don’t consider the impact to the budget and the effective cost transfer from the user to the broader taxbase.

Without needing to establish the merit or otherwise of cheap public transport fares, what do these policy choices say about government decision-making and what could it mean for other policy areas?

This example shows that governments:

– Are attracted to policies that reduce the cost to specific groups and segments, eg: electricity rebates, first home owner grants, subsidised child care; cheaper medicines

– In doing so, negatively impact the budget outcome down the track (nothing is really free)

– Carefully weigh equity issues including between regions and the city; between rich and poor; old and young

– Do not always make the most economically rational decisions.

For clients who depend upon government action and policy decisions, it is worth reflecting upon what we can learn by the example of changes in public transport fares policy in a wider context. It is clear that similar thinking could impact other policy areas including housing, future energy decisions etc. In the end, policy decisions are a balancing act, shaped by political calculations, public expectations, and the constant need to justify who pays the ferryman.

Understanding the broader policy context can assist with anticipating which strategies will be effective in proactively addressing these trends. Whether through advocacy, stakeholder engagement or issues planning, foundational preparation will always help in navigating government relations challenges successfully.