Cost of capped regional fares estimated to be $100m more than first predicted

Regional fares will be capped to Melbourne prices in a massive win for commuters but the cost to government is way beyond first predicted.

State opposition spokesman for transport, Richard Riordan pictured, has questioned why the cost of a government promise on fares could cost millions more than first predicted. Picture: Brad Fleet

The cost to cap regional public transport fares to prices charged for metropolitan Melbourne travellers could be $100m more than first estimated, according to an independent prediction.

The added load for the government comes after Premier Daniel Andrews promised to drop the cost of daily, weekly and monthly regional fares, prior to the November election.

In line with current prices, a daily ticket for regional passengers would be capped at $9.20 for a full fare or $4.60 for a concession. A full-fare regional daily is currently $27.60.

Price caps will also apply to 2-hour, monthly and yearly fares.

Regional commuters who use Myki pass to pre-pay for between 28 and 365 days of travel will also benefit from the cap. The currently daily Myki pass rate is $5.52.

The price cap which will apply to all state government run buses, and V/Line trains and coaches. It is expected to start on March 31.

Prior to the election the Department of Finance and Treasury said the policy would cost $150.3m between 2022–23 and 2025–26.

But costings released by the independent Parliamentary Budget Office last week estimate the cost of the policy in that time will be $250.4m.

The PBO costing assumed public transport revenue would rebound to about 80 per cent of pre-Covid levels by 2026–27.

The ultimate cost of the policy to government will depend on regional public transport patronage.

A state government spokeswoman did not say why there was a such a significant discrepancy between the two estimates.

“We’ve promised to cap V/Line daily fares at the same price as a metro daily fare by 31 March - making V/Line fares fair, and making public transport accessible to Victorians in every corner of our state,” the spokeswoman said.

State opposition spokesman for transport Richard Riordan said the costing raised serious questions about the viability of the commitment.

“With not enough money allocated to match regional fares to those enjoyed in Melbourne, this can only mean higher prices for public transport into the future,” Mr Riordan said.

The PBO estimated Labor’s fare promise would cost $1.1bn in the next decade.

Originally published as Cost of capped regional fares estimated to be $100m more than first predicted