Labor’s cheap fares fuel inflation and risk transport infrastructure: economist

The permanent adoption of 50c public transport fares risks a run-down of services without an income stream to cover maintenance costs, a leading economist has warned.

Queensland Premier Steven Miles in May after announcing the 50c fares policy. Picture: David Clark

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The permanent adoption of 50c public transport fares in Queensland is fuelling inflation and risks a run-down of services without an income stream to cover maintenance costs, a leading economist says.

Queensland Labor Premier Steven Miles this year introduced a trial for 50c fares across the state as part of a suite of cost-of-living relief measures, which he later vowed would continue indefinitely if his government was re-elected.

Liberal National Party leader David Crisafulli has also announced he would keep the fares.

Tulipwood Economics director Joe Branigan, writing for The Australian, analysed 50c fares and found “seven reasons” that show it is bad policy, including that it is unsustainable for the system, inflationary and. given the rail network’s dependence on coal and gas-fuelled electricity, could undermine emission reduction targets. He said under 50c fares, the state’s subsidy of public transport had risen from about $13 a trip to $19.21.

Mr Branigan said without an adequate share of the running cost recovered in fares, the state government might neglect maintenance as it struggled with other capital demands. “(The) ... potentially most serious problem is that given other huge public spending commitments … future governments won’t invest enough in maintenance and expansion to ensure a high-quality service.

“Rates of cost recovery are very low in Queensland. Standard economics maintains the ideal price to support continued investment, innovation and quality PT services is to charge full cost recovery less the avoided costs of traffic accidents, traffic congestion and vehicle emissions.

“The ideal price in southeast Queensland should be well over 50 per cent of full cost recovery, given southeast Queensland has tolls all over the place and other means to reduce those three ‘negative externalities’. But we’ve never been close to that level and now with 50c fares, cost recovery is close to zero.”

Both major party leaders have embraced the policy.

In Brisbane, Mr Miles said he was proud to have introduced cheap fares. “I think everyone (in cabinet) knew how I felt about fair zoning. I’ve always been very, very clear our zoning system, which charges the people who have to travel the furthest the most, that they’re often the people who can least afford it and the people we most want to get off the roads. It was such a good idea even David Crisafulli had to agree on it.”