Analysis reveals Michael Daley’s free transport policy would blow out to $636m

The independent parliamentary budget office has exposed a massive financial shortfall in Labor leader Michael Daley’s pledge to give free public transport to children. It shows the policy would will outstrip the $132 million over three years flagged by Labor.

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The independent parliamentary budget office has exposed a massive financial shortfall in Labor leader Michael Daley’s first major policy.

An analysis commissioned by the government of Mr Daley’s pledge to give free public transport to children shows the policy would be in excess of $636 million — well outstripping the $132 million over three years flagged by Labor.

The government will release the PBO figures today, attempting to paint Mr Daley as a danger to the state’s finances.

Labor leader Michael Daley’s first major policy has already blown out. Picture: AAP Image/Joel Carrett

NSW Treasurer Dominic Perrottet precits hundreds of extra bus services will be needed to cater the new policy. Picture: AAP Image/Joel Carrett

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It’s understood the main shortfall in the finances came from Labor failing to factor in an uptick in using transport if children were allowed to use them for free.

“To cater for the increased demand Treasury predicts up to an extra 500 bus services a day would be needed and while ferry and train services could absorb more passengers it would lead to overcrowding on peak services,” Treasurer Dominic Perrottet said.

He added: “The idea that people respond to incentives is one of the most basic principles of economics — but clearly beyond the Labor Party”.

“The have ignored the increase in patronage and required services their reckless policy would require. “To find this they would create a budget black hole.”

Its feared train and ferry services could be overcrowded on peak services if Daley is elected as new Premier. Picture John Grainger

It’s understood the Parliamentary Budget Office modelled multiple scenarios, and a cost of $636 million is one of the more conservative analyses.

NSW Treasury also provided PBO with costing advice on a high end scenario which is almost $1.2 billion, including capital expenditure.

When they announced the policy to give children free transport last month, Labor’s transport spokeswoman Jodi McKay said it was still to be fed through the parliamentary budget office, but that Labor was basing its costings on a Freedom of Information request which showed revenue from children’s train travel.

Pressed again on whether they would stick to the policy even if the PBO says it will cost more, Mr Daley stepped in and said: “We know … simple mathematics. We’re forgoing $44 million a year in revenue. That’s the cost.”

Labor clarified this related to the train portion of the policy.

At the time, Transport Minister Andrew Constance released a statement saying the cost would be $1.5 billion.

Labor’s transport spokeswoman Jodi McKay said it is based on costings on revenue from children’s train travel. Picture: Peter Lorimer

Under Labor’s “fair fares” policy, schoolchildren will get free travel on public transport. It was the first major policy announcement of Mr Daley since he was elected as leader.

Currently, primary school aged children are eligible for three travel when travelling to and from school if they home is more than 2.3km away by walking, rising to 2.9km for secondary school children.

“Families will be so grateful for this. It’s a practical measure. They’re getting clobbered on tolls, we’re giving something back,” Mr Daley said at the time.