Dr Jen McArthur, Associate Professor in Urban Infrastructure and Policy at University College London
Transport funding is a famously dry subject. Regardless, mayoral candidate Efeso Collins’ promise to introduce fare-free public transport has sparked much debate over who pays for bus and rail services. There is a lot at stake in this debate. Your commute or experience of travelling around the city is an integral part of everyday life in Tāmaki Makaurau. The costs of transport, and what it gives you access to, influence your opportunities for education, jobs and staying in touch with family and friends.
Over the past three months, I interviewed local officials, campaigners and advocates in cities with fare-free public transport to learn from their experiences, for a research report commissioned by FIRST Union and the Public Service Association, with the support of Efeso Collins’ campaign. This research showed how fare-free policies have emerged as a pragmatic solution to the challenges facing many cities in 2022: inequalities shaped by unaffordable transport services, ambitious emissions-reduction targets, and the need to attract riders back to public transport after the relaxation of COVID-19 restrictions. The growth of public transport use in Tāmaki Makaurau since the early 2000s, paired with the city’s ambitious climate change targets, points to a future where high quality, frequent and affordable public transport can and should be a normal part of life. But bold decisions must be taken now to make that future possible. Going fare-free, in conjunction with reforms to ensure that public transport operators and staff have fair pay and decent working conditions, can help make this future a reality.
Fare-free public transport is gaining popularity internationally with experiments in Boston, Luxembourg, Tallinn and Kansas City. But is it just a political gimmick to win votes, at the expense of sound transport policy? In short, no. Fare-free public transport is not a silver bullet, but when paired with good quality services it is one of the most powerful ways to attract a rapid increase in ridership. The logic behind this is simple. Many cities, including Tāmaki Makaurau, invest a lot of public money in developing a high-quality public transport system, but then set fares that are too expensive for low-income riders who need it the most. By removing the financial barrier of fares, public transport immediately becomes more accessible to those who could not afford it. Even for those who can afford fares, free fares can incentivise their everyday decision-making towards public transport – why pay for fuel and parking when the bus or train is free?
A common argument against free fares is that public funds are better spent on service improvements like more frequent services or new routes, instead of removing fares. However, this argument unnecessarily pits fare prices and service quality against each other, which makes little sense when fare revenue only contributes ~30% of the operating costs in Auckland. A comparison with other public goods like healthcare and education is useful here. In theory, hospital budgets would be higher, and perhaps better services could be provided if people could be charged for hospital care. But this service remains free because it is well-recognised that charges would be a significant barrier to access. The public education system is free for exactly the same reason. So why not treat public transport as a public good? Transport is no less essential than healthcare or education, and just as we expect schools or hospitals to be free of any charges and provide good quality services, we can do the same for public transport.
Another criticism is that free fares unnecessarily subsidise those who can already afford to pay fares. Why should public transport be fare-free for everyone, regardless of income? The answer to this centres on the positive societal benefits of public transport, compared to the alternatives. If they are not taking the bus or train, those on high incomes are more likely to drive, which worsens air pollution and traffic safety, creating GHG emissions and increasing congestion. Reducing vehicle traffic has wider benefits for everyone, and as long as a fare-free system is funded by progressive taxes, higher-income people will bear a greater share of the costs. There are already subsidies for electric vehicles up to $80,000, and free EV parking – why then can we not subsidise public transport too?
The big question in most cities is how to pay for public transport without fare revenue. There are quite a few tools in the transport funding toolbox, as it were. These include polluter-pays mechanisms such as congestion charges or workplace parking levies, beneficiary-pays mechanisms such as employer taxes or land value taxes, or broad-based mechanisms that spread the cost across the whole population, such as income or sales taxes. Funding mechanisms should be selected based on fairness, to ensure the costs of running public transport services are borne equitably across the population, and also their resilience to shocks so that funding doesn’t disappear the next time there is a recession or a pandemic. Given the range of mechanisms available, there is a wide range of options that can be negotiated to provide additional funding.
Much of the debate focuses on the funding of fare-free public transport but having the workforce to deliver transport is a pivotal issue with ongoing shortages of public transport operators and staff in Auckland and Wellington. High-quality, reliable transport services won’t be a reality until staff have fair pay and decent working conditions that reflect their essential role in keeping the city moving. Outsourcing this work to private equity-backed operators has worsened pay and working conditions, limiting the government’s ability to deliver reliable and high-quality services.
There is an opportunity to reform the current operating model for public transport and review the suitability of privately-operated ferry services, to ensure that these do not undermine the goals of going fare-free.
The full research report was published this week by FIRST Union, drawing together the evidence base for fare-free policies with case studies from Boston, Tallinn and Kansas City. The findings suggest that the timing is right for Tāmaki Makaurau to go fare-free.
