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.”