Coalition’s $2 fares would cost state twice as much as claimed, says government

The Victorian opposition’s flagship election policy of slashing Melbourne public transport fares to $2 a day has been estimated by the state’s transport department to cost twice as much as the Coalition claimed.

When Opposition Leader Matthew Guy announced the policy three weeks ago, he said the independent Parliamentary Budget Office (PBO) had costed it at $1.3 billion over four years. That advice has not been made public.

Cutting public transport costs is a key Coalition policy to ease pressure on household budgets.Credit: Eddie Jim

But after a request by Public Transport Minister Ben Carroll, his department conducted its own evaluation which found the policy would cost twice as much.

The Department of Transport advice, which The Age has obtained, said the $2 fares would cost Victoria $2.6 billion over four years to 2027. This included compensation paid to Metro Trains, Yarra Trams and Melbourne bus operators for their share of lost fare revenue.

But shadow treasurer David Davis cast doubt on the transport department’s costing, saying it was not surprising that “the Labor Government says the Liberal policies don’t add up”.

“The fact is, our $2 flat fare public transport policy has been costed by the independent Parliamentary Budget Office and will provide a reward to hard-working families that only the Liberals and Nationals will deliver,” he said in a statement.

Daniel Andrews and Matthew Guy are going head-to-head at the state election over, among other issues, public transport.Credit: The Age

He did not provide the PBO’s costings or explain why the office had not published its estimate online, as it has for many other major election policies.

The PBO did not respond to a request for comment on Tuesday.

Cheap public transport is a key Coalition policy to ease pressure on household budgets. The Opposition claims it would save some families about $3500 a year amid rising interest rates and high inflation.

Carroll said the Coalition was using “shoddy costings for policies they won’t be able to deliver or afford”.

Under the Coalition policy, the daily cap for all full-fare zone 1 and 2 trips would be cut from $9.20 to $2, while concession tickets would fall from $4.60 to $1. The Coalition earlier pledged $100 million to make public transport free statewide for healthcare workers. It has also promised to halve V/Line fares too, cutting a daily on-peak return trip from Ballarat to Melbourne to $22.80, from Bendigo to $34.40, and from Geelong to $13.80.

Transport and planning experts have warned against the $2 ticket policy, saying it would starve the government of funds it needed to improve public transport in Melbourne’s outer suburbs while benefiting more affluent communities already served with frequent trains, trams and buses.

The Department of Transport advice assumes cheaper fares would lead to a 10 per cent increase in patronage on Melbourne’s public transport network, but excludes the cost of increasing services to meet that demand and manage crowding from its estimates.

Victoria’s public servants are required to be independent of political parties and do not generally calculate the cost of opposition policies. The Andrews government established the PBO in 2017 to provide policy costing advice to inform “policy development and public debate”.

However, Percy Allan, a visiting professor at the University of Technology Sydney’s Institute for Public Policy and Governance and former secretary of the NSW Treasury, said in his view it was “within the right of any government to cost a large promise by the opposition, if the full costing is not fully disclosed by the opposition”.

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