Ministerial inquiry into sustainable transport in New South Wales Options for the future INTERIM REPORT August 2003 iii Contents Overview ix Summary of reform options xvii 1 Introduction 1 1.1 Terms of reference for this inquiry 1 1.2 Report structure 2 2 Overview of public transport in New South Wales 4 2.1 Transport in the Greater Sydney Area 5 2.2 Transport in rural and regional New South Wales 7 2.3 The Commonwealth Government and public transport in New South Wales 8 2.4 Rail services in New South Wales 10 2.5 Public bus and ferry services 13 2.6 Private bus services 16 2.7 Other services 18 3 Challenges in delivering better services in the Greater Sydney Area 19 3.1 Challenges to improving services in rail 19 3.2 The need for bus reform 30 3.3 Achieving efficiencies in ferry services 32 3.4 The potential for expansion of light rail 33 4 Revenue needs for the government-operated public transport network 35 4.1 Revenue needs for metropolitan rail 38 4.2 Revenue needs for STA buses 48 4.3 Revenue needs for Sydney Ferries 53 4.4 Revenue needs for CountryLink 56 5 Funding options 58 MINISTERIAL INQUIRY INTO SUSTAINABLE TRA NSPORT IN NEW SOUTH WALES iv CONTENTS 5.1 Principal funding sources 59 5.2 Criteria for assessing funding options 60 5.3 User-pays funding options 61 5.4 Beneficiary-pay funding sources 62 5.5 Private funding options 69 5.6 Public investment options 76 5.7 Summary of funding options 80 5.8 Observations 81 6 Fair fares: equity and efficiency 83 6.1 Requirements for public transport fare structures 84 6.2 Existing ticketing products and fare structures 88 6.3 Options for ticketing reform using smart cards 92 6.4 Options for improved fare integration 93 6.5 Observations 100 7 Service quality regulation, incentives and fares 101 7.1 Current arrangements for regulating quality 101 7.2 Service quality measurement: the role of KPIs 103 7.3 Linking fares and quality of service 105 7.4 Observations 109 8 Charging for road use 111 8.1 Achieving the efficient use and provision of roads 112 8.2 Problems with the current practice 112 8.3 Bearing the costs of NSW roads 113 8.4 The need for road use reform 117 8.5 Tolling on selected arterial roads 120 8.6 Where to from here? 120 8.7 Charging for road use in the Greater Sydney Area 121 8.8 Options for road pricing 123 8.9 Observations 132 9 Decision criteria for choosing transport projects 133 9.1 Possible future investments in transport infrastructure 134 9.2 From broad policy objec tives to projects, not vice versa 136 9.3 Appraisal approaches in New South Wales and elsewhere 138 9.4 What is required to avoid limitations of the past approach? 141 MINISTERIAL INQUIRY INTO SUSTAINABLE TRA NSPORT IN NEW SOUTH WALES v CONTENTS 9.5cThe consequences of a non-integrated approach 144 9.6 Observations 149 10 Concessions and community transport 150 10.1 Overview of concessions and community transport services 151 10.2 The need to better target funding 155 APPENDIXES 169 A Train users in Sydney 171 B Bus users in Sydney 175 C CityRail service and reliability standards 179 D Achieving the efficient use and provision of roads 181 E Examples of charging for road use 186 F Submissions 192 Abbreviations 198 Glossary 200 Boxes, charts and tables 2.1 Trips by residents on an average weekday, Sydney Statistical Division, 1991 and 2001 6 2.2 Journeys to work by private vehicles 7 2.3 CityRail customers’ purposes of travel Average weekday 11 2.4 CityRail sources of revenue, 1998-99 to 2002-03 12 2.5 Percentage of CityRail costs recovered directly from fares 13 2.6 STA customers’ purposes of travel 14 2.7 Sydney Buses sources of revenue, 1998-99 to 2002-03 14 2.8 Sydney Ferries sources of revenue, 1998-99 to 2002-03 15 2.9 Newcastle Bus and Ferry Services revenue sources, 1998-99 to 2002-03 16 2.10 Revenue sources on average for private bus operators under commercial contract in the Greater Sydney Area 18 3.1 CityRail’s three sectors 23 3.2 Existing train services that affect best practice network operation 26 MINISTERIAL INQUIRY INTO SUSTAINABLE TRA NSPORT IN NEW SOUTH WALES vi CONTENTS 4.1 Combined government-operated transport agencies forecast annual net funding position, 2003-04 to 2010-11 35 4.2 What is the ‘funding gap’? 37 4.3 Peak one-hour loading pressure 40 4.4 CityRail forecast annual net funding position, 2003-04 to 2010-11 42 4.5 STA performance against key performance indicators 49 4.6 Sydney buses forecast annual net funding position, 2003-04 to 2010-11 50 4.7 Newcastle Bus and Ferry Services forecast annual net funding position, 2003-04 to 2010-11 51 4.8 Sydney Ferries performance against key performance indicators 54 4.9 Sydney Ferries forecast annual net funding position, 2003-04 to 2010-11 54 4.10 CountryLink net funding position, 2002-03 56 5.1 Main types of public–private partnership 71 5.2 Potential risk transfer in public–private partnerships 71 5.3 Summary of issues associated with principal funding sources 82 6.1 Transport fares in Sydney benchmarked against other international cities, 2002 84 6.2 Average recovery of above -rail costs for CityRail, 1996-97 to 2001-02 86 6.3 Sydney bus fares for different ticket products, 2003 89 6.4 Integrated CityRail and STA fares, 2003-04 89 6.5 CityRail fares for different ticket products, 2003 90 6.6 Single fares, STA and selected private buses, 2003 91 6.7 Fare structures within the Greater Sydney Area 91 6.8 Fare structures—strengths and weaknesses 94 6.9 Transport fares in Sydney fall as distance travelled increases, 2002 97 8.1 RTA expenditure and funding, 2001-02 114 8.2 Fuel excise and federal government road funding 116 8.3 Total traffic volume in Sydney, 2003 and 2015 117 8.4 Congestion delays on Sydney’s arterial road network 118 8.5 Additions to Sydney’s arterial road network 119 8.6 Cordon charges are likely to be regressive 125 MINISTERIAL INQUIRY INTO SUSTAINABLE TRA NSPORT IN NEW SOUTH WALES vii CONTENTS 8.7 An opportunity for rational road use charging—road pricing on the M5 East? 129 10.1 Concession and community transport expenditure estimates, by funding source, 2002-03 155 10.2 Students receiving subsidised school travel, by state, 1999 157 10.3 Ferry services provided for ‘phantom’ school students 158 A.1 Growth in train trips, total trips and residents by region, 1991–99 171 A.2 Proportion of train trips by fare type, average weekday, 1999 172 A.3 Proportion of train trips by ticket type, average weekday, 1999 173 A.4 Income of train and bus users, 1999 174 B.1 Summary of bus travel in Sydney, 2000 175 B.2 Proportion of bus trips by fare type, average weekday, 2000 176 B.3 Proportion of bus trips by ticket type, average weekday, 2000 177 B.4 Labour force status of bus users, 2000 177 B.5 Income of bus users (annual), 2000 178 F.1 List of public submissions received for the ministerial inquiry into public passenger transport 192 MINISTERIAL INQUIRY INTO SUSTAINABLE TRA NSPORT IN NEW SOUTH WALES ix Overview THERE IS A WAY FORWARD to a more sustainable public transport system. This interim report proposes a number of options to be explored for delivering better and more sustainable outcomes in public transport. Submissions on this report will help refine our understanding of the problems and better develop options for the way forward. Over $1.9 billion of taxpayer money goes to fund passenger transport services of one sort or another across New South Wales every year. This is around one-fifth of the total amount of money spent by the NSW Government on health each year and equivalent to the entire budget for police. Most of this money is spent in the metropolitan region in and around Sydney. The bulk is spent on general subsidies by government of CityRail’s capital and operating costs as well as direct subsidies by government for CityRail’s passengers. A substantial amount of taxpayer money also is spent on rural and regional transport, especially through payments to country private bus operators under the School Student Transport Scheme (SSTS), as well as subsidies to CountryLink. It is hard to believe that taxpayers or the state are getting the best possible value from the large amounts of money being spent each year. This is not new; it has been a problem for many years facing govern- ments from all sides of politics. There are better ways to deliver public transport. Even though public transport accounts for a small proportion of travel journeys compared with private motor vehicle use, it plays a significant role in terms of the state’s social, environmental and economic life. For many commuters, school students and those without access to private transport, public transport provides an essential service. There is no question that a vibrant, modern economy and society as in New South Wales demands an effective public transport system with an appropriate level of taxpayer subsidy. However, the public transport system needs to meet the needs of users and society efficiently and effectively, with the best possible value for money for taxpayers, users and others who may benefit from such a system.