At least 52 percent of ticket revenue goes to pay for the ticket system, not the actual PT system itself. This is ridiculous. PT should be free….
The ticket system has raised heaps of revenue for the public transport system. $357 million a year according to the Department of Infrastructure.* But it has costs. There’s no official figures, so I’ve made some estimates.
Costs of ticket system
- Myki cost $1.35 billion. That includes ten years of operating costs, assuming they don’t blow out from the estimates. If it lasts 15 years, we amortise the capital cost of $850 million over that period at 5%, and add 50 million a year for operating. $130 million each year
- Inspector salaries. There are 545 authorised officers. Assuming an employment cost of 100k each, that’s $54,500,000 (plus their supervisors, about which we’re not sure, so round to zero.) $55 million each year
- Public servants required to administrate the ticketing system and law surrounding it. Not sure. Round to zero.
- Legal costs of disputed ticket cases? Not sure. Round to zero.
- Two to five percent fewer seats on every tram, to make room for ticket machines. Value? Not sure. Round to zero.
Total annual ticket system cost: 130 + 55 = $185 million. Minimum.
Total annual ticket revenue = $357 million
The net loss from getting rid of tickets would be around $172 million. So the system, if it was a business, would be profitable.
But its not a normal business. We already provide $456 million to the operators each year through the tax system. Why not add another $172 million? If we provide the whole lot, we save users a whole lot of money that ends up 52% spent on the collection and enforcement system!
In theory, Melburnians could each pay 50 bucks more tax and get free PT. Until then, a weekly zone 1 ticket costs $28. Have fun, Melburnians.
Put it another way – if the same outlays were channeled from users to the PT system via the government rather than having a ticket system, there’d be an additional $185 million a year to spend on improving train and tram services!! That’s significant.
The ticket system also generates a lot of negative publicity for public transport. What’s the value of that publicity vs the publicity coup of removing the ticket system? From the government’s perspective, I find it hard to believe that wouldn’t cover the $131 million difference
**Exceptions, exemptions, caveats, excuses**
- If they sell their stupid Myki to any other suckers, I mean, jurisdictions, that could offset the cost of Myki. Seems unlikely, though…
- The rationing merits of user pays. Price maybe keeps off the marginal people who would make it too busy. also might keep off homeless people etc that make PT uncomfortable for the average user. Its easy to say that if people don’t pay for a service, they don’t value it. Is this true?
- Effect on transport planners – less focus on maximising patronage? It could end up that peak hour services are cut in favour of low-volume ‘welfare’ services, like your lunchtime bus through the suburbs. The start of free PT could be the end of good, customer-focused, transport planning.
- Foregone passenger data. Ties in with #3 above.
- Finally, the problem is that the Myki expenditure is already a sunk cost, so the capital cost is not a relevant part of calculations. However, when it comes time to spend a trillion bucks to replace myki (perhaps in a few years) this calculation becomes relevant again.
(*March 2014. I’ve been notified that the revenue from ticketing “is/was well over $500 million,” by none other than PT guru Daniel Bowen. That diminishes but does not eradicate this argument.)
Would you pay 50 bucks more tax to get free PT? Are my calculations wrong? Is this whole theory crackers? What do you reckon?