Public transport fares need a shake-up but free travel and fare reductions are not the answer, the Productivity Commission warns.
State governments are looking for ways to get people using the public service network again post-lockdown and incentives like free travel have been used.
Yet a report on public transport pricing released by the commission found that could be a mistake.
Commissioner Paul Lindwall said free public transport not only has little impact on use and road congestion, it also breaks the budget.
The commission found even before the COVID-19 pandemic costs were outpacing fare revenue for most jurisdictions.
In some systems, fares covered less than 10 per cent of operating costs.
“Fares have not been particularly equitable or efficient, and have not kept pace even with the recurrent costs of running our public transport systems,” Productivity Commission chair Michael Brennan said.
The report criticised the current “crude approach” to public transport pricing and found fares for buses should be lower than trains and trams because of their cheaper running costs.
Concessional fares should also be better targeted as some low-income welfare recipients currently get little help, while some high-income earners qualify for heavily discounted tickets.
Avoidable road congestion in Australia cost around $24 billion in 2018/19 and will grow by an estimated 45 per cent by 2029/30 unless something is done to counter it.
The report found road user charges and parking levies would help with congestion, as would higher public transport costs for longer journeys and during peak times.