Implications of large-scale price reductions in public transport fares

The Queensland Government has introduced reforms aimed at addressing cost of living through its Queensland Cost of Living Action. The package included a six-month trial of 50 cent flat rate public transport fares. This project is investigating the economy wide implications of large-scale price reductions in public transport considering the Queensland case study.

Fare-free and very low-priced public transport schemes seek to improve accessibility and affordability for all residents, particularly those with lower incomes or financial difficulties.

The Queensland 50 cent fare initiative is unique globally due to its implementation in a post-COVID world, a new normal around work from home (WFH), and the rising costs of living. Few studies have examined potential changes in expenditure patterns induced by reduced public transport fares.

Participants

• Department of Transport and Main Roads (Queensland)
• University of Sydney

Project background

The COVID-19 pandemic, beginning in early-2020, resulted in significant societal changes including considerable adjustments to economic activities that continue to reverberate four years later, giving rise to a number of new normals. This includes how people have increased working from home (WFH) and how they choose to travel in private vehicles more often.

Importantly, this new normal has seen levels of congestion throughout the week and weekend public transport return largely to pre-pandemic levels. However, weekday public transport travel remains at 10-15% below previous levels. It is believed this is most likely due to WFH. Fundamentally, a strong public transport sector is vital in the pursuit of decarbonisation goals.

In the current normal price rises have contributed significantly to the cost of living. Government initiatives and economic policies play a crucial role in addressing these challenges, aiming to ease the burden on households through targeted subsidies, welfare programs, and adjustments to taxation. However, achieving sustainable solutions to mitigate the escalating cost of living remains a complex and ongoing priority for policymakers and communities alike in Australia.

In the context of considering lagging public transport patronage compared to pre-COVID, congestion, and resulting emissions returning to pre-COVID levels, and pressures on household budgets as a result of the rising costs of living, the Queensland Government announced a package designed to provide savings to households within the state (Queensland Cost of Living Action).

A key component of the initiatives was the introduction of a 50 cent flat rate public transport fares six-month trial on 5 August 2024. In addition to the primary objective of providing cost of living relief to Queenslanders, the trial also aims to ease congestion on Queensland roads.

Other jurisdictions globally have introduced similar low cost, and in some instances free, public transport schemes. The primary objective of fare-free public transportation is to enhance accessibility and affordability for all residents, especially those with lower incomes or who encounter financial obstacles to transportation.

The Queensland 50 cent fare initiative has several characteristics that make it unique. First, it is being implemented in a post-COVID world rather than during or immediately after the pandemic, meaning that it represents one of the first trials with an embedded new normal around WFH with lower concerns about the risk of COVID-19 than policies implemented during the pandemic.

Furthermore, the trial is occurring at a time where there is heightened attention on the rising costs of living and significantly higher pressures on household budgets than when other trials were introduced. Very few studies globally have examined the potential expenditure patterns that reduced public transport fares may induce, making the Queensland trial unique from that perspective alone.

Specific objectives

The overall intent of this project is to understand the behavioural impact of the introduction of a 50 cent public transport fare across Queensland, across a range of user and potential groups.

This project will address this overarching intent to aim to meet the following objectives:

1. Determine likely short, medium, and long-term behaviour change impacts arising from the introduction of the 50 cent public transport fare trial;
2. Provide measures of demand changes in the form of own and cross price (arc) elasticity of demand;
3. Determine the impact of the 50 cent public transport fare introduction on road congestion;
4. Examine the implications of the 50 cent fare introduction on cost of living pressures;
5. Examine the impact of the policy on other sectors of the economy; and
6. Determine and quantify any equity and accessibility effects alongside demand responses by different societal segments.

Overall, this study presents a unique and pivotal opportunity to gain insight into effective low fare public transport, at a very large scale. It will be conducted longitudinally with waves of analysis and activities across the trial period and beyond.

This project will mark Queensland as a jurisdiction at the forefront of the low flat fare public transport experience and position the state as a significant leader in terms of gathering quality insights from important policy experimentation.

Please note …

This page will be a living record of this project. As it matures, hits milestones, etc., we’ll continue to add information, links, images, interviews and more. Watch this space!