IPART singles out ferries for special treatment in Opal fare proposals

The recent draft report on Opal fares by the Independent Pricing and Regulatory Tribunal (IPART) recommends higher single fares for all modes, compensated by discounts for regular users of buses, trains and light rail through Opal Connect travel passes. 

The report says "we consider that the benefits of operating and designing the public transport system as an integrated network outweigh the benefits of signalling the costs of providing individual services to passengers, and the potential revenue gains from pricing services differently to reflect customers' different willingness to pay".

This is a big leap for IPART. I'm not sure IPART reports have ever talked about "integrated networks" before. 

But when it comes to ferries, thoughts about integration seem to disappear. IPART says the proposed Opal Connect travel passes should not be available for ferry trips and, as they are now, single ferry fares should be significantly higher than other mode fares - "unlike other modes, we consider that the revenue losses from reducing ferry fares in line with other modes would outweigh the potential for service delivery efficiencies". 

This begs two questions:

• is the cost of providing a ferry service significantly higher than other modes?
• even if the answer is yes, and we accept IPART's view that the external benefits of ferries are less than other modes, will higher ferry fares make service delivery more efficient? In other words will price signalling trigger an invisible hand within Transport for NSW to offer more services from "efficient modes" (like buses) and fewer services by "less efficient modes" (like ferries)?

Let's look at each question separately:

1. Ferry service costs

IPART takes into account both the direct costs of running services and an estimate of "externalities" - the costs and benefits of having bus, rail and ferry services which accrue to the community in general, not just users of public transport. The calculation of externalities is by an econometric model that attempts to quantify the impact of public transport on things like road congestion and pollution. In my view, this involves a lot of guesswork and makes the wrong assumption that only benefits that are measurable should be taken into account. I'm inclined to disregard them.

You would expect that direct operating costs would be easier to estimate. Unfortunately, IPART is not explicit about what costs are included and what costs are not, so it is not clear whether it is appropriate to compare cost per passenger journey between modes. For example, road infrastructure costs related to buses and the construction and maintenance of bus terminals are not included. I have asked IPART if the $3 billion cost of building the L2 and L3 lines are included in the light rail costs, but have not received an answer. I suspect it's not.

But even if we are to assume the operating costs reported by IPART are correct, and apples are not being compared with pears, the results are surprising in view of IPART's recommendation to treat ferries as an expensive mode, from which patronage needs to be deterred:

Sydney Ferries is actually not the most costly mode per passenger km - Light Rail is, by a sizable 59 cents per km. So why is IPART recommending that Light Rail fares should be the same as buses and almost twice that of ferries? And why does it recommend including Light Rail in the discounted travel pass arrangements, but excludes ferries?

2. Will higher ferry fares make public transport more efficient? 

Let's just assume for now that IPART estimates of externalities are accurate and the cost to the community of operating ferries is much greater per passenger km than other modes. For the reasons outlined above, I don't accept this to be correct, but let's say it is and results in higher fares for ferry users and the exclusion of ferry trips from the proposed new travel pass product. What impact will this have?

IPART assumes that price signals will cause people to opt for an alternative mode, like a bus. Over time, more bus services will operate and fewer ferries will run. But will this actually happen in the real world? Will the service "efficiencies" that IPART seeks actually be achieved?

Consider a person who lives at Abbotsford and works four days a week in North Sydney. Let’s call her Sarah. Sarah catches a RiverCat to McMahons Point each morning before transferring to a bus up to her office in North Sydney. The ferry fare is $6.12 one way and 24 cents extra on the bus because of the transfer discount. That's a total of $50.88, which reduces to $50 because of the Opal weekly cap.

 

IPART says that Sarah has other cheaper options, which of course she does. She can take the L38 bus from Abbotsford to Central Station, then a train to North Sydney. But the minimum journey time this way is one hour, compared to 26 minutes with the ferry bus/combination. So much for the 30 minute city.

Did I mention Sarah has two kids in childcare? The extra four hours commuting a week will mean the additional childcare costs she incurs will probably exceed any savings she makes on a bus/train combination using the new Opal travel pass.

IPART might think Sarah has a choice, but she doesn't really.

There does not appear to be a deep understanding within IPART of the role of ferries in Sydney’s public transport network. The city’s peculiar geography means a journey on water is often the most efficient way of connecting points of origin and destination. Transport planners make pragmatic decisions on which modes should operate along which corridors, taking into account a range of factors including cost, travel time and environmental issues.

In other words, network design is supply driven. And this is how it should be. 

If it wasn't supply driven, people like Sarah from Abbotsford would be significantly disadvantaged, for no other reason than she happens to live near a ferry wharf. As customers of public transport we should not incur a fare penalty when the only practical option available is a ferry. This is understood in other cities like Brisbane and New York City where ferry fares are the same as buses and trains.

IPART’s recommendations are just that. The NSW Government is not compelled to agree to them and usually hasn’t in the past. But you have to wonder why IPART is asked to review the Opal system at all when Transport for NSW is better placed to develop more practical fare policies.

IPART has invited feedback on its draft report by 31 January 2020. You can find the draft report and information papers at the IPART website.  

https://www.ipart.nsw.gov.au/Home/Industries/Transport/Reviews/Public-Transport-Fares/Opal-fares-from-1-July-2020 

  

Sydney Ferry Opal journeys up 2.5% in 2017-18 Financial Year

Opal journeys for the Sydney Ferries franchise in the financial year ending June 2018 totalled 15.326 million, up 2.5% on the previous year.

While up to date Opal journey data is accessible on the Transport for NSW website, official ferry patronage numbers for 2017-18 are not yet available. The official patronage figures are higher because patronage includes an estimate of non-ticketed journeys, untapped school student travel and integrated ticketing special event travel.

Line comparisons are difficult to make because of network changes introduced in November 2017:

• Journeys to and from Double Bay, Darling Point and Garden Island are now on a separate line from other Eastern Suburbs stops (Watsons Bay and Rose Bay).
• Services to Watsons Bay and Rose Bay are part of the new Cross Harbour route, a "through line" which incorporates the former Darling Harbour route.
• The Cockatoo Island line is now formally separated from the Parramatta River line.

These changes mean year on year comparisons are not straight forward, but some trends are nevertheless clear if some of the line data is aggregated: 

Growth is strongest on the Taronga Zoo and Cross Harbour lines, with patronage increasing 12.9% and 11.8% respectively. An increase of 5.8% was achieved on the Parramatta River and Cockatoo Island lines combined.

The declines were reported for Mosman (down 7.7%), Manly (down 6.3%) and Neutral Bay (down 1.0%).

We can only speculate on what's driving the ups and downs, especially as more granular level data has not been published. Up to date counts of week-ends v. week-days, or changes in AM peak numbers, are not available, a situation I bemoaned in a post last year. 

My guess is that there are three key issues affecting demand:

• Tourist ferry journeys are up, in line with the general upswing in Sydney tourism numbers. This is suggested by the growth on the Taronga Zoo and Cross Harbour lines, both of which are predominantly tourist routes.
• Manly, although another tourist dominated route, is continuing to lose ground to the Manly Fast Ferry which has increased frequency in the peak and off peak in the last few years.
• Mosman and Neutral Bay are almost exclusively non-tourist lines and they may still be suffering from the general sluggishness in commuter numbers which followed the discontinuation of periodical fares, which was mainly to the disadvantage of regular ferry riders.

It is not possible to make authoritative comments about commuter passenger trends without more detailed Opalcard data being available. But this analysis is important as the usefulness of ferries as a mode of public transport depends on how well it serves residents who need it to travel to work or meet other regular mobility needs.      

Mixed feelings about the new ferry service to Sydney Fish Markets

A new Barangaroo - Fish Market service, operated by Captain Cook Cruises, started last Saturday. The plan is to run on week-ends and Public Holidays, but not week-days.

The Sydney Fish Markets say they've had feedback for years that customers want to travel there by ferry. That maybe so, but where are they coming from? The Fish Markets can already be reached by the Inner West Light Rail, which connects well with the train network at Central Station. Not too many residents will find a ferry line to the Fish Markets which starts at Barangaroo to be a better option than the Light Rail. And it would be quicker for tourists starting from the western or southern end of Darling Harbour to walk.

Route followed by Fish Markets Ferry from King Street Wharf Darling Harbour 

I gave the Fish Market ferry a trial on Saturday afternoon. It was just as well I was early for the 2.05 pm departure, because my ferry was combined with the White Bay cruise ship service and left ten minutes early at 1.55 pm. 

With RMS imposed speed limits of 8 knots for most of the journey and just 4 knots "under" the Glebe Island Bridge and in Blackwattle Bay, the journey took 20 minutes. 

I'm guessing it could be 15 minutes without the diversion to White Bay. But even 15 minutes is longish, compared to the 23 minute walk to the Fish Markets from King Street Wharf via Pyrmont Bridge Road. 

Cost is an issue too. The fare is $9 one way. Opal Pay is available, but like other non regulated ferries, users of Opal Pay do not get the usual Opal card benefits like a daily cap or transfer discount.  

And then there is the timetable. It is by no means clockface and does not co-ordinate with the Sydney Ferries F4 service to Circular Quay.

On the bright side, the journey provides a different perspective on this side of Sydney and there will be those who enjoy the experience. But apparently not that many because, according to the ticket seller, I was the third passenger for the day when Sydney's weather was at its gleaming, sparkling best.

I have commented in a previous post about the need to better integrate non regulated ferry services into Sydney's public transport network. Timed transfers and seamless integration of fares is part of this task. It hasn't happened yet and without it the Fish Market line looks unlikely to be a winner.

  

The case for simplifying Sydney's ferry network

Sydney’s waterborne transport network is growing. Commuters on the Manly Fast Ferry now enjoy a service every 10 minutes in the peaks and 20 minutes off peak. Captain Cook Cruises have extended their commuter offerings to Watsons Bay and now run regular timetabled services to the International Convention Centre and White Bay plus direct trips between Darling Harbour and Manly.

Services under the subsidised Sydney Ferries’ contract have also expanded with higher frequencies for Parramatta River runs and a more regular Eastern Suburbs timetable. Passenger comfort and convenience have lifted with six new Emerald Class ferries joining the fleet and a new terminal at Barangaroo. Redevelopment of Circular Quay is imminent.

But what may not be widely appreciated is how complex the Sydney ferry system has become. The complexity is partly due to Sydney’s diverse maritime environment. This makes differences in vessel design requirements unavoidable. The form of a ferry passing by Sydney Heads to Manly is not suited for operations in the calm, shallow waters of the Parramatta River or the narrow coves of the inner harbour. The problem is compounded by past ad hoc decisions on wharf infrastructure, network design and fleet replacement. There has also been a somewhat laissez faire approach to approving non regulated services.

Complexity has serious consequences. It has led to a poor fit between the design of vessels and wharves so passenger exchange is slow and needlessly adds time to journeys. Complexity makes operations more expensive with the cost ultimately borne by taxpayers who pay for operator subsidies. And Sydney Cove has become dangerously congested and is sorely in need of de-cluttering.

Above all, it is confusing and inconvenient for passengers. Your Opal card works on some trips but not others and there is no guarantee of a convenient bus connection or ferry to ferry transfer. It can be plain hard to get to where you need to go at a time that suits you.

Back in the 1970’s, engineers tackled the problem of complexity in another field of technology. Computers were becoming so complex that it was no longer practical for a person or single team to quickly build a complete system. To overcome this, the overall architecture of computers started to be designed to accommodate modularity. Different parts of a computer could be built by independent teams or firms so long as they followed explicit rules for integration. We are reminded daily of this advance through the magic of smartphone apps.

Modularity in the computing industry saved money and enabled the technology to evolve quickly.

The same principles can also be applied to public transport technology. Sydney’s ferry system could be so much more efficient and more useful for passengers if its architecture was also modular.

How? In a modular ferry system, services with similar requirements for speed, freeboard (vessel deck height above water level), passenger capacity and other vessel design parameters are grouped into separate “chunks”. For the main current local operator, Harbour City Ferries, the most logical arrangement is to split its network into four modules – outer harbour (Manly); Watsons Bay/ Rose Bay; inner harbour and Parramatta River - and for this structure to be reflected in the design of the redeveloped Circular Quay.

Modularisation simplifies. The team managing and seeking to improve one module can do so without disruption to or by other modules. Instead of wharves being a “one size fits all” compromise, they can be customised to match exactly the requirements of a particular vessel class. Wharf 3 at Circular Quay is already designed especially for the Freshwater Class Manly Ferry and works very effectively in loading and unloading large numbers of passengers. But other wharves at the Quay need to be customised too. For example, Wharf 2 could be adapted for high speed catamarans with a high freeboard. If each pontoon at the Quay was tuned to a particular vessel class, passenger exchange could be sped up significantly.

Non-subsidised operators can continue under this model, but they too should comply with rules for integration. These include timetables which make it easy for passengers to transfer from one service to another and full ticket integration. The fare structure must not penalise a passenger for transferring between ferries, or from a ferry to a bus or train, in order to complete a single journey. 

To fix the congestion problem in Sydney Cove, it may also be necessary to reconfigure some routes to reduce the number of ferry lines terminating at Circular Quay.

One of the strengths of modular networks is their adaptability. Future demand is hard to predict, but a modular network can be easily extended to meet demand fluctuations over time. For ferries that may mean adding a module or increasing service frequency in an existing module. Sydney’s developing Bays Precinct, including the Fish Markets, Glebe Point and White Bay, is a logical candidate for a new module. Seamless integration with the rest of the ferry network could be accomplished with timed transfers at Barangaroo to ferries headed for Parramatta and Circular Quay. Low emission, full electric ferry systems are now operating in Europe and could be ideal for use in the Bays Precinct. Independent but integrated, the Bays Precinct services could be run by either an existing or new operator.

There is a place for multiple ferry operators on Sydney Harbour, but the time has come for proper integration under a unified, modular network plan. This should be the number one policy priority for Sydney ferries. It is then possible to turn attention to the infrastructure required to support the network, including design of a redeveloped Circular Quay.

Note: this is a longer, more technical version of a short opinion piece published in the Sydney Morning Herald on Friday 2 March 2018. For those who would like to read more about modularity in design, I strongly recommend a book by Baldwin and Clark, “Design Rules: the power of modularity”.

Manly Fast Ferry and the Opal card

There is much that's admirable about Manly Fast Ferries:

• as far as I know, the company attracts no Government subsidy;
• peak services run at 10 minute intervals and every 20 minutes off peak. This is a more frequent ferry service than any other route on Sydney Harbour;
• journey time is 18 minutes, compared to 30 minutes on the "slow ferry" - the iconic double ended Manly ferry operated by Harbour City Ferries under the Sydney Ferries public transport contract;
• fares are generally cheaper than the Opal card fare on the slow ferry - $6.99 for peak services compared to the slow ferry Opal fare of $7.35; and
• daily patronage is 11,000 (all eight routes operated by Harbour City Ferries carry an average of 43,000 passengers daily).

What was missing was fare integration. It's inconvenient for passengers to use different ticketing systems for different operators or different modes. And passengers should not be penalised for having to transfer to a bus or train to complete their journey.

So when it was announced that the Opal card would be recognised on the Manly Fast Ferry from Sunday 17 December, many passengers were probably quite excited. Unfortunately, the reality is not what they might be expecting:

• the adult fare is $8.70, $1.71 more than it is for holders of the existing Manly Fast Ferry Smartcard travelling on a peak service;
• travel on the Manly Fast Ferry is not recognised for the daily travel cap of $15.40 or the weekly or Sunday caps;
• none of the other Opal "perks" apply - transfer discount of $2 and Opal concession fares.

If a passenger doesn't have a Manly Fast Ferry smartcard and they are running late, yes they may use their Opal card. But otherwise, who would?

It is quite understandable that Manly Fast Ferries would seek to protect its revenue base. It would not, for example, wish to forego revenue lost through the daily or weekly caps, or transfer discounts. 

But given the quality of public transport provided by Manly Fast Ferries, at no cost to the taxpayer, one would have thought that a small compensatory payment could be made by Transport for NSW to MFF. This would cover any revenue loss caused by offering Fast Ferry passengers the usual benefits enjoyed by Opalcard users. The benefits need not extend to the $2.60 Sunday cap or $2.50 Gold Opal daily cap, which are excessive perks that Sydneysiders need to be weaned off at some point.

  

 

White Bay Ferry? Yes, but with connections and fairer fares

The idea of introducing a high frequency ferry between White Bay and Barangaroo is gathering support. Both Sydney’s Lord Mayor, Clover Moore, and the former mayor of the former Leichhardt Council, Darcy Byrne, both advocated for a new ferry service last week. The soon to be opened wharves at Barangaroo South are an easy five minute walk to Sydney’s rail network via Wynyard Walk. This makes ferries a logical solution for the hard to get to White Bay Power Station site.

Ferries offer many advantages over other modes. The cost of new wharves and vessels is less than the new infrastructure required for light rail or metro rail and less disruptive in the construction phase. And ferries don’t contribute to road congestion as buses do. New routes and stops can be introduced quickly, which New York City is demonstrating right now as it rolls out its Citywide Ferry service, extending from a single East River ferry to a six route structure.

The common complaint that ferries don’t operate frequently enough is a criticism of current policy, not the mode. Brisbane Ferries run every 7.5 minutes in peak periods and 15 minutes outside of the peaks and there is not a technical reason why a ferry shuttle between White Bay and Barangaroo should not also operate at high frequency. 

But let’s take care. Public transport is efficient and useful when planned and managed as a connected network. As recently observed by American planner Jarrett Walker “(there is) an unthinking real-estate world view in which transit is a feature of a site, like parks.  In fact, transit quality lies in a site’s position in a network, and it is the network, not the immediately proximate features, that delivers all valuable transit outcomes.” 

In other words, don’t dollop public transport on precincts like jam and cream on scones. It probably won’t work.

The integrated pulse timetables of Switzerland are a great example of how good connections are the key to building a successful public transport network. If ferries are to play a grown up role in serving the Bays Precinct, then we need to learn some lessons from the Swiss and build better line connections and improve links with other modes of transport.

When more than one ferry line intersect at an interchange, the customer should expect ferry to ferry transfers to be timed conveniently. In the case of the White Bay ferry, quality connections at Barangaroo with the Parramatta River and Circular Quay ferries are critical. This would best be achieved by moving the existing Pyrmont Bay wharf 340 metres north, to the end of Pyrmont’s Pier 8 and make it an intermediate stop on the line from Barangaroo to White Bay. This would prevent the stop becoming a "detour" for White Bay passengers.

Possible line configuration for a White Bay ferry service

I have previously proposed an integrated pulse timetable at Circular Quay also, offering seamless connections between all ferry routes terminating at the Quay.

There is too the issue of fares. Under the current Opal card fare structure, an adult passenger will pay $5.74 for the 2.2 km ferry ride from White Bay to Barangaroo and $11.48 return. That’s more than double the equivalent bus fare. Incredibly, off peak rail travellers from Central to Newcastle pay just $5.81 for a 160 km train ride, just five cents more than the fare for the shortest ferry ride.

For waterborne transport to be a serious solution, it is imperative that Sydney catches up with other international cities and ceases to make distinctions between mode in its fare structures. The extra complexity is hardly justified by the small differences in operating costs. In its review of the Opal fare structure in 2016, the NSW Independent Pricing and Regulatory Tribunal (IPART) recommended the synchronisation of light rail fare prices with buses, ahead of the CBD and South East Light Rail (CSELR) starting. IPART explained that this was for “simplicity”, noting that light rail trips made up a small component of all public transport journeys. When the CSELR commences, light rail will carry more passengers than ferries, but IPART failed to see merit in applying the simplicity argument to ferries as well as light rail.

Yes, a high frequency ferry between Barangaroo and White Bay makes a lot of sense, but only if ferries are moved out of the toy section of Sydney’s public transport policy. Creating consistent timed connections between the White Bay ferry and other ferries terminating at Barangaroo would be a good start. And why not go further and remove the difference in fares between ferries and buses?

IPART may clutch to its bosom the delusion that price signals make public transport more efficient, but it is actually good planning that will reduce costs and make ferries more useful.

IPART needs more than time to improve its Opal fare report

The NSW Government has done us all a favour by giving the Independent Pricing and Regulatory Tribunal more time to complete its final report on Opal public transport fares.

Let’s face it, the draft report needs work.

To be fair to IPART, their objectives are generally sound. Among other things, the Tribunal says it wants to encourage greater use of public transport and increase cost recovery.

Sydney currently scores poorly against both these objectives.  The draft report estimates that just 21% of the costs of public transport in NSW will be recovered from fares in 2015-16. That means the contribution by taxpayers to public transport this year is nearly $4.4 billion. As very little of the Government’s expenditure on public transport is made outside Sydney, the level of cost recovery in the metropolitan area is not much higher – about 22%.

The report omits the other side of the equation, which is how much we use public transport. Bureau of Transport Statistics data show that only 12% of all journeys made in Sydney are by public transport and 69% are by car. By international standards, we are low users of public transport. Over the entire Canton of Zurich, Switzerland, including rural areas, 32% of journeys are made by public transport, nearly three times the rate in Sydney. And the high use of trains, trams and buses in Zurich comes at a lower cost to taxpayers, with 65% of public transport costs recovered from fares.

There are some who dismiss these comparisons by saying that sprawling Sydney cannot be compared with Europe where city population density is much higher. They may be surprised to learn that Sydney’s population density (not including the Illawarra, Hunter, Central Coast or the Blue Mountains) is not much different from the Canton of Zurich. So if low density is used as an excuse for poor public transport, then it’s a pretty feeble one.

If we accept that Sydney’s public transport does not perform well in either cost recovery from fares or patronage, then what can be done about it? Does the draft IPART report offer a solution?

Unfortunately, IPART’s approach was to do what mainstream economists do when unencumbered with expertise in public transport operations. They reached into their kitbag of economic theories and selected the one that seemed most relevant to the problem at hand. In this case it was the theory of socially optimal consumption. As applied to public transport, this means setting fares which are neither too high (or we will use private cars too much and cause congestion, high emissions and road accidents) nor too low (or we will underutilise road capacity and unnecessarily increase the burden on taxpayers).

Underpinning all of this is the notion that public transport is a scarce resource, which needs to be rationed efficiently using the price mechanism. Setting fares appropriately for each mode, says IPART, will lead to a more efficient use of public transport because users will make rational choices about which mode to select based on price.

Only econometricians would understand how IPART arrived at these “socially optimal” fare levels and even they would find the underpinning assumptions absent or dubious. It is obvious to users of public transport, whether they are economists or not, that IPART’s implicit assumption that we have choices about which mode to use is unrealistic. For the vast majority of Sydneysiders, we only have one mode available and it’s probably a bus. 

Most concerning is IPART’s belief that frequent users of public transport don’t pay enough in fares compared to infrequent users. Perhaps they think infrequent users are careful rationers. The Tribunal recommends increasing in the weekly cap to $75 in July 2018, a 25% jump on the current rate. By comparison, the average single journey will rise by just 8%.

More than this, the wastrels who travel frequently will need to deal with a complicated credit scheme in order to redeem fares paid in excess of the weekly cap.

If we are serious about increasing the mode share of public transport in Sydney, frequent users should not be punished. Instead of rationing public transport, the fare structure should encourage us to travel as much as possible by public transport. This is done in continental Europe by offering heavily discounted zone based periodical tickets (monthly, quarterly and annual travel passes) and having a simple fare structure which does not differentiate between modes. Even Melbourne, Brisbane and Perth manage to do this.

But fare structures alone do not increase patronage or efficiency.  High quality network design along the lines of the Swiss taktfahrplan model shows that multi-destinational public transport is achievable at low cost to the taxpayer, in combination with a sensible fare structure. And a small dose of demand management for car use also helps.

IPART’s objectives for NSW public transport may be well intended, but arcane economic modelling won’t get us there. 

Does NSW transport need a big new idea or just clearer purpose?

NSW Minister for Transport and Infrastructure, Andrew Constance, announced yesterday he was "calling on the world's brightest tech minds to find the next big idea that would shake up transport in NSW".

It is good to seek ideas from elsewhere - I've done it myself - but technology is not a substitute for purpose. If you don't know what port you're sailing to, no wind is favourable.

Building new infrastructure, introducing smartcards or changing the fare structure do not of themselves constitute a purpose. They may be beneficial in some way, but what precisely are they directed towards achieving? Australian public transport planning has long failed to articulate a purpose or set of guiding principles for achieving it. 

This shortcoming is puzzling. There is an established "science" of public transport which is taught in tertiary institutions across Australia, often assisted by funding from transport departments.  Many overseas countries practice this science assiduously (the Swiss do it best). But strangely, in this country, the science rarely seems to percolate to the surface of public policy. More often than not, a public transport "solution" is proposed in the context of individual urban developments. The bigger picture of providing better mobility for city and suburbs as a whole seems to fall below the radar. 

One particular mode - say a Metro or Light Rail - are frequently advocated as "solutions". Often the proponents are urban planners or architects who practice the art of professional imperialism - extending the reach of their particular discipline to subjects about which they have no real expertise.

Economists are the great masters of professional imperialism, but a kit bag of arcane econometric models is a poor substitute for in depth operational knowledge of transport systems. This has not stopped the Independent Pricing and Regulatory Tribunal (IPART), an agency blissfully unencumbered by knowledge of the complex science of public transport, from being given the task of redesigning NSW's public transport fare structure. 

So what are the main features of the science of "good" public transport, which seems so curiously hidden and poorly understood? This blog post can't do it justice, but here are a few pointers.

Public Transport objective

To be effective, public transport must compete with the private car, not just for travel to work or travel to the central business district, but for all journeys - shopping, social and recreational travel. Public transport can only compete with the car if it enables the user to:

• get from wherever they are 
• to wherever they need to go
• at a time that suits them.

In other words, a city's public transport network must be multi-destinational. As only 15% of all journeys in Sydney, for example, are trips to and from work, a public transport network which focuses primarily on moving commuters to work will fail to compete with the private car. It won't accomplish its purpose.

How to achieve this objective

1. Good network design

If people are to get from wherever they are to wherever they need to go, it is not practical or efficient for the network to connect all origin-destination pairs with single, direct trips. The best public transport networks are high frequency grids, where users can make transfers at connecting nodes with short waiting times - like the London Underground or the Tokyo Metro.  But it doesn't have to be a metro system. It may be a combination of modes, including suburban trains, buses, light rail and ferries.

The key is quality network design. The mode selected for individual corridors is based on technical, geographic and cost considerations, which are contextual and pragmatic. So no one mode can be said to be better than any other. 

In areas of lower demand, where high frequency services can't be justified, the network should be designed as a pulse timetable, so waiting times are short at nodes even if service intervals are 30 or 60 minutes.

Well designed networks are also highly legible - stopping patterns are consistent and timetables are clockfaced. It is easy for passengers to figure out how to use the system.     

2. Network design guides infrastructure

The Swiss Federal Railways design timetables 20 years in advance. This allows them to prioritise infrastructure projects needed to achieve improvements in the timetable. This is the most efficient way of planning and building infrastructure because it ensures that what is built - and the technology used - is only what is necessary.

Technology has a role to play, but it should never lead. Technology should be the servant of network design. 

3. Fare structures that encourage public transport travel

The fare structure needed for successful public transport systems is the opposite of what mainstream economists think we should have. Economists like "pay as you go" fares, because then users have the tendency to ration their use of taxpayer subsidised services. Many users also like the idea of only paying for what they use.

But if our objective is for public transport to compete effectively with the car, the fare structure should provide an incentive to people to use public transport for as many trips as possible, including shopping, social and recreational trips. This is best achieved with highly discounted periodical fares (weekly, monthly, quarterly and annual travel passes), so every additional trip taken appears to the user to be free. 

Public transport fares: do we need more than economics to make them efficient?

There are some recommendations in this week's draft report on public transport fares from the NSW Independent Pricing and Regulatory Tribunal (IPART) which make a lot of good sense.

But then there are the weird bits.

Let's be positive and start with the good recommendations.

The first is the proposal that journeys made with two or more modes should be priced as a single journey based on distance travelled. Most observers were scratching their heads when the Opal card was introduced with penalties for passengers who need to transfer between modes to complete a journey. Good on IPART for recommending a fix to this.

Changes to policy on week-end fares and seniors discounts are also fair and logical. 

By replacing the Sunday cap of $2.50 with a week-end daily cap of $7.20, the perverse incentive to delay a week-end ferry ride until Sunday will be removed. And let's face it, $2.50 for travel anywhere on a Sunday is overly generous and distorts demand with very detrimental effects on service, especially for ferries.

The changes to eligibility for the Gold Opal card, which mean Seniors who are not pensioners will need to pay fares at the regular concession rate, is another dose of common sense.

Recommendations I place in the category of Weird City mostly stem from IPART's understanding of the word "efficiency". The name of IPART's report "More efficient, more integrated Opal fares" is significant. Early on at university, economics students are taught a new meaning of the word "efficiency". "Economics", students are instructed, "is about the efficient allocation of scarce resources". The instruction must be effective, because when graduates find roles in cloistered academia, consulting firms and Government agencies (like IPART), they seem compelled to look for anything that looks remotely like a scarce resource which is in need of efficient allocation, preferably by a price mechanism. 

When the only tool you have is a hammer, everything looks like a nail.

This is why IPART is so fond of "pay as you go" fare structures, because if a user pays for each individual trip, they will feel inclined to "ration" their use of public transport. It explains their recommendation to lift weekly Opal card weekly caps from $60 to $75 in 2018 and to reduce the number of "free" trips for frequent users. And there is no recommendation to re-introduce a periodical or travelpass style of ticket.

Economics is not of course the only set of ideas relevant to efficiency in business or the business of government. There is another quite different tradition of operations research and systems science, with a lineage going back to the American philosophers CS Peirce and CI Lewis, the statisticians Walter Shewart and Ed Deming and notable advocates like Stafford Beer, Gregory Bateson, C West Churchman, Russell Ackoff and Fred Emery. Their understanding of efficiency is a practical one which sits more comfortably with the average business owner. Efficiency in business (or public transport) is about making process improvements to the system to provide better products and services to customers, at lower cost. 

This tradition is mostly concerned with the way a business (or system) operates as a whole, and less about its component parts, because the whole is not the sum of the parts. 


For a public transport operator, efficiency improvement can be achieved by many practical activities, including minimising the time the fleet is lying idle and maximising the time in their rosters when crews are driving boats (trains/buses). These should also be concerns of government, because efficient use of assets and labour by operators leads ultimately to lower costs to the taxpayer.   This is what real world efficiency is all about. 

An economist's idea of efficiency is more abstract. You need look no further than this week's IPART report to see how abstract and remote from the real world this can be. Here is a quote from page 36:

"In theory, a certain number of journeys on a public transport service will maximise the welfare (or net benefits to individuals and the wider community) generated by the service. In economics, this is known as the socially optimal level of consumption. Fares set to achieve this level of consumption are known as the ‘socially optimal fares’. Socially optimal fares encourage both efficient use of public transport and efficient delivery of public transport – our two ‘efficiency’ criteria.

At the socially optimal number of journeys, the cost of providing the service to the last passenger is equal to the benefit of the service to that passenger and to the wider community. This last passenger is known as the ‘marginal’ passenger, and the costs and benefits associated with serving the marginal passenger are known as the ‘marginal costs’ and ‘marginal benefits’. 

At the socially optimal number of journeys, the costs to society of any additional journeys would outweigh the benefits to society associated with those additional journeys"

Further on page 37: 

"We developed a mathematical optimisation model that we used to estimate the socially optimal fares for single journeys on each mode...

It aims to identify the fares that will balance the following two effects: 
1. Setting fares above the socially optimal level would lead to excessive use of private cars and underutilisation of existing and planned public transport capacity, leading to higher external costs associated with road congestion, emissions and road accidents. 
2. Setting fares below the socially optimal level would lead to excessive crowding on public transport, underutilisation of existing and planned road capacity, and excessive public transport operating losses which must be funded from taxation." 

In short, IPART believes there is an optimal number of public transport trips in Sydney - not too many and not too few - and by pulling the right leavers on fares, this optimal level of trips will be reached.  After all, according to IPART, we really don't want people travelling too much by public transport or else there could be "underutilisation of existing and planned road capacity". 

What the heck?

This is the first time I have heard anyone say that the existing or planned capacity of Sydney roads may be underutilised if too many people use public transport. When did that become a problem? The thrust of the NSW Transport Masterplan (which doesn't rate a single mention in IPART's 106 page report) is to promote a mode shift away from private cars to public transport so Sydney becomes a more vibrant, liveable and better connected city. 

The report doesn't state explicitly what IPART thinks the socially optimal number of public transport trips should be in Sydney, but it appears to be not too different from what it is now - about 120 per resident per year. By comparison with most European cities, this is woefully low.  It's about 400 in Zurich and 500 in Vienna. 

IPART needs to forget the idea that public transport can be made more efficient by rationing trips via the price mechanism. What actually needs to happen is the opposite of this. Sydney needs to have a fare structure which discourages rationing of public transport travel. This is achieved by offering heavily discounted periodical fares (weekly, monthly, quarterly and annual travel passes). If you already have a periodical ticket, you are more likely to use public transport for non work commuting travel - like going shopping or meeting friends. 

Travel for purposes other than commuting to work make up more than 80% of all trips by Sydney residents! Public transport must be made a more attractive option for these types of trips if a substantial mode shift is to be achieved. Unfortunately, IPART disparagingly refers to them as "discretionary" travel (as if we would all be better off staying behind closed doors at home when not at work).

What really matters is increasing patronage and lowering taxpayer subsidies. Most European cities achieve far higher levels of real world efficiency in their public transport systems because their utilisation of assets is higher.  This can be done by drawing on the fine practical traditions of operations research and systems science, not the abstract, "mind experiment" concepts of efficiency so loved by economists. 

Fares are not everything. If average public transport trips per resident were to lift to a modest 250 trips per year, then capacity would have to increase and networks designed better to provide for multi-destinational travel, not just commuting to work in the CBD. 

But fare structures are part of the overall public transport jigsaw puzzle that we need to get right in Sydney. Unfortunately IPART is leading us down the wrong path.
   

Why are ferry work commuter numbers declining?

Every six months, a week long census is conducted by Harbour City Ferries to count passengers boarding and disembarking by individual wharf and route. The data has a high level of granularity as it includes details such as time of boarding and disembarkation.

Thanks to the good work of the Bureau of Transport Statistics, the information is publicly available on its website .

Caution should be exercised in using the data - the census covers just seven days and there may be special circumstances affecting the count in a particular week. For example, services might have been cancelled due to fog or industrial action or a wharf may have been closed for upgrade. The May 2013 count was particularly affected by fog cancellations.

Notwithstanding these cautionary notes, the data does enable the ferry enthusiast to delve a little more deeply into customer demand trends. While total ferry patronage has grown since 2010, one trend that is clear is a shift in ferry patronage away from work commuters to so called off peak periods, especially week-ends.

A proxy measure of work commuters is the count of passengers disembarking at Circular Quay, Darling Harbour, McMahons Point and Milsons Point between 7.00 am and 9.00 am on week-days. This has dropped from a high of 6,600 in November 2010 to just 5,249 in the May 2015 survey. Disembarkations at these times and at these locations include very few leisure travellers. The vast majority are people travelling by ferry to work.

Derived from BTS data set, Ferry Load Census Data May 2010 - May 2015

The decline in commuter numbers has happened despite an increase in numbers of daily AM peak services of around 12 per cent since May 2010.

So what is behind the drop?

There are probably many contributing reasons, but some stand out as leading candidates:

• Competition from the Manly Fast Ferry. Frequency of the Manly Fast Ferry has increased to six per hour in the AM peak and fares are now very competitive with the Opal Card. Disembarkations at Circular Quay between 7:00 am and 9:00 am from the iconic, regular Manly Ferry services has declined from a high of 1,765 in November 2010 to 1,230 in May 2015.

• Changes in fare structures. If you are commuting to work by ferry, you may need to catch a bus to your local wharf, or take a train from Circular Quay to reach your office. Changes in fares structures have made these intermodal transfers less attractive. My Multi ticket rules (the periodical travel pass ticket product) changed in September 2013 by moving Manly Ferry passengers from the cheapest MyZone 1 category to the most expensive MyZone 3. Inner Harbour passengers were moved to MyZone 2. Monthly, Quarterly and Annual My Multi tickets ceased to be available from August 2014.

More importantly, Opal card users, now the majority of passengers, are required to pay an extra fare if they need to transfer to a different mode as part of their journey.      

Let's hope the current IPART review into public transport fares will start a process to remove disincentives for intermodal transfers. Without such changes, the role of ferries in Sydney commuter travel will continue to decline.

The myth that ferries don't compete on cost with other public transport modes

There is a common assumption that urban transit ferries cost more to operate per passenger journey - and attract greater taxpayer subsidies - than other modes of public transport. 

Often this is true, but it is not always the case. 

A previous post on this blog debunks the myth that Sydney Ferries attract much higher subsidies than buses or trains. 

But the misunderstanding persists and often leads to  
rhetorical questions like "why should battlers in the western suburbs subsidise rich ferry riders from the north shore or eastern suburbs?" I have even heard it raised at IPART hearings. 

So it's time to restate the facts.

The NSW Auditor-General's Financial Audit Report - Volume Seven 2014 - provides a helpful table showing the operating costs and revenue per passenger of three modes of public transport in NSW (trains, buses and ferries) in the 12 months ending June 2014. A graphical version is shown below:

Source: NSW Auditor-General's Financial Audit Report Volume 7 2014, p. 17

Net cost per passenger journey, after deducting farebox revenue, is $10.61 for rail, $6.24 for ferries and $5.88 for buses. This means the subsidy per passenger for rail is more than $4 higher than ferries. The difference between buses and ferries is almost negligible. 

Now there will be arguments about what the Audit Office includes as a cost. And the average rail journey is longer than either ferry or bus journeys (this raises another question - why aren't train fares commensurately higher for longer trips?). 

All of this does muddy the water, but the difference in operating costs are really not that great.  

When other issues come into play, such as the impact on CBD congestion caused by conga lines of buses entering and leaving the city, the argument for ferries becomes more compelling. Ferries certainly have a competitive advantage over buses in near city suburbs with good waterway connections. 

Why the inconvenience of carrying whitegoods on a train is not very important

As restful as it may be to leave our prejudices quietly undisturbed, there are times when habits of thought need to be shaken up by a dose of empirical evidence. The great American philosopher Charles Sanders Peirce called it the irritation of doubt.

And where better to start this unsettling journey than a visit to the NSW Bureau of Transport Statistics website?

We can be lulled by the belief that the "main game" in Sydney's transport is moving people into and out of the central business district. That's probably why Sydney's transport network is a radial pattern, funnelling passengers on trains, ferries and conga lines of buses into the small area bounded by Circular Quay to the north and Central Station to the south.  

There can also be a lingering assumption that most trips are journeys to and from work.

None of these beliefs are true.

According to the BTS Household Travel Survey, Sydney's residents make an average of 16.7 million trips each week-day. Even if the Central Business District is broadly defined as the Sydney LGA (covering the area from Alexandria (south) to Circular Quay (north) and from Glebe (west) to Moore Park (east)), then this is the destination of just 10% of those trips. 

Some may pretend that travel that is not work related is unimportant, or "discretionary" (perhaps an "indulgence"), but we are human beings and as humans we meet friends, shop, watch movies and go on picnics. The data shows that commuting to work is not the main purpose of our travel. There are more shopping trips each day than journeys to work!    

   
The BTS Journey to Work data provides a more detailed picture of commuter travel.  This shows that only 12 per cent of jobs in Sydney are located in the central business district.

If travelling to work in the CBD is such a small component of all our travel needs, why is Sydney's public transport network so focussed on the CBD?       

This dose of reality goes some way to explain why the private motor car is still king and public transport makes up only 12% of the trips we make each week-day. It is not taking us where we need to go. This is a more fundamental cause of low mode share in this city than, say, the inconvenience of carrying whitegoods on a train. 

We need only look to continental Europe to see what needs to be done to achieve the mode shift necessary to make Sydney a more liveable, less congested city - designing public transport so residents can get from wherever they are to wherever they need to go, at a time that suits them. This, in combination with a little demand management of private car use, can lead to some habit changing about when to ride a bus or catch a train.  

There must also be a rethink about fare structures to encourage greater use of public transport, not ration it, which is what the "pay as you go" Opal card does. And let's not penalise transfers between modes nor differentiate prices based on mode. 

None of this is about extravagant infrastructure projects. The city's mobility problems will not be solved by a new cable car to Barangaroo or a big new rail project. We just need a change in thinking, as uncomfortable as that may be.