Free Bus Fares

Ecan recently commissioned a study into making buses free in Christchurch.

As a reminder, this is the current fare levels.

Christchurch fares are relatively low by national standards – certainly much cheaper than both Auckland and Wellington. A couple of interesting points about fares in Christchurch:

  • 12% of total patronage is over 65s using the Supergold card, and 37% is under 18s on child fares. That means 49% of passengers are already concession fares, with 51% paying a full adult fare.
  • Average trip distance is 8km.

They report on surveys done in March 2021 on 1,653 Christchurch people. Headline numbers are:

  • 11% of people said that one reason they don’t use the bus is that it’s too expensive. This is lower than speed (32%) and convenience (23%).
  • When asked what would improve the bus travel experience for bus users, making the price cheaper was the most common suggestion, increased frequency was second and faster travel times third.
  • Everyone was asked to rank prices for a single adult fare, with results shown in the graph below (although it took me a bit to get get my head around). Fares are along the horizontal axis. So take a zero fare for example – nobody said that this was “too expensive” or “getting expensive”, everyone said either “so cheap” or “good value”. Zoom across to $2 fare, and about 50% said “good value”, 30% “so cheap”, 15% “getting expensive” and 5% “too expensive”. A 3$ fare has 5% saying “so cheap”, 35% “good value”, 35% “getting expensive” and 20% “too expensive”

Somewhere between $2-3 is the point where very few people are saying either “so cheap” or “too expensive”, they’re almost all sitting in the middle two categories.

This table shows concession schemes around the world.

My main takeaway is that Christchurch has no discounts for students and disabled people, whereas Wellington and Auckland (and most other cities around the world) do.

The study modelled the expected patronage increase for a range of different fare scenarios, then attempted to quantify the economic benefits this increase. The five scenarios are:

  1. $2 Fares
  2. Zero fares
  3. 25% reduction
  4. 50% reduction off-peak only
  5. Switch to a distance based system, with a 25% reduction

They’ve calculated expected patronage uplifts for these using elasticities published by Waka Kotahi Transport Agency. The results are summarised in this table:

They also tested two concession scenarios:

These tables show that every scenario tested has benefits that outweigh the costs and is therefore worthwhile doing as a society (at least if you believe the Monetised Cost and Benefit Manual methodologies and values).

However the report doesn’t actually recommend any of them. It goes on to say that, under the current government policies, Ecan would have to fund these improvements itself without any help from central government, and implies that Ecan can’t afford to do this.

One limitation of the study is that it was commissioned by Ecan, not central government. This means it assumes central government policy around funding public transport won’t change.

In reality, all the benefits of mode shift fall on non-Ecan organisations – it saves Waka Kotahi and Christchurch City Council money on road maintenance and capacity-adding expenditure, it improves amenity and safety for everyone living in the city, it reduces the burden on the District Health Board, it helps Government and CCC meet their climate change obligations, and it frees up the roads for the likes of freight and emergency vehicles that can’t switch to public transport.

It shouldn’t fall on Ecan to fund the additional cost of cheaper fares – certainly not 100%. Central government, Waka Kotahi and CCC/SDC/WDC should be co-investors in this as they are the ones who reap the benefits. Possibly even the Health Board.

All up it is quite an interesting study, but it almost raises more questions than it answers. It’s not a surprise that making buses cheaper would result in substantial shifts of people out of cars onto buses, to the extent that the societal benefits outweigh the costs. But it’s hard to see anything happening with this finding because the way we’ve set up transport funding in NZ basically makes it impossible, not without some serious changes anyway.

I’ll be watching for any reactions from central government and Waka Kotahi to this study as I think that’s where the big calls need to be made, moreso than Ecan. Although not holding my breath:

“Waka Kotahi does not support the introduction of fare-free public transport at a network level due to both financial sustainability concerns and the difficulties associated with reintroducing fares if required.”

4 thoughts on “Free Bus Fares

  1. Thanks for the write up. One of the things that surprised me is the omission in the report that those places that have have zero-rated fares have all stopped investing in public transport. Not a surprising development really when you think it through. That is not what we need and to me, it is one of the biggest arguments against system-wide zero-rated fares. The Tallinn experience of gaining ridership pretty much from converting only walking and cycling trips is also a worry.

    If the objective is that we want to reduce driving, our actions need to directly target what makes driving attractive / easy / cheap, and not try and make something else even more attractive.

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    1. Yea good point. The study had a few other options in that don’t go all the way to free fares, which I wonder if those are more worthwhile pursuing. Concessions for students, disabled and community services card holders for instance. Maybe the 50% fares off-peak when there’s spare capacity. We know that $2.65 isn’t the barrier for a lot of people, but we also know that for some of the population it is a big barrier to using buses.
      The 50% farebox target has always been arbitrary, it seems like the economically optimal point is more like 40% or 30%, and that should be our target not 50%.

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  2. The system is fundamentally flawed as structured.

    1) Ecan ratepayers should not be paying for public transport services, full stop. PT is a transport service that should be funded by vehicle based road users to partially cover all the externalities that they do not currently pay for (congestion tolls, vehicle related air pollution, underpriced parking, underpayment towards health system costs of road crashes) – [is it any wonder cities sprawl when vehicle base road users are effectively heavily subsidised, which makes PT even more inefficient.]

    2) The PT system should provide a 24/7 full coverage network (can be dynamic & on-demand as required so its efficient) to provide transport access to all O-D’s for work, social, home, personal business etc, for those that cannot afford other transport means or physically cannot use other transport modes. PT in the first instance is Public Transport and does not meet that objective as it is currently operated.

    3) Fare subsidy for specific user groups should be via central government welfare transfers, with users then paying full fares.

    Chances of proper policy being put in place – about zero.

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    1. Yea the whole funding framework for public transport seems really arbitrary to me. It doesn’t reflect the externalities and the incentives are all wrong – it’s no wonder our cities are not seeing the outcomes we all want from them.

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