The Socioeconomics of Transit

By Aidan Luther

In the lead-up to the 2024 Queensland state election, the incumbent Queensland Labour Party promised a 6-month trial of a bewilderingly simply new fare scheme for public transport: a $0.50 ticket available to all passengers on every public bus, train, tram and ferry route throughout the state at all times (the 50c Policy). The policy was so attractive that the Liberal National Party (LNP) of Queensland matched Labor’s promise for a 6-month trial, won the election, and later passed a law which made the scheme permanent in late-2024. Despite such strong electoral reception as an unconventional cost-of-living and welfare measure, the 50c Policy faces significant criticism as a mere re-election ploy: an ineffective, inefficient and highly-politicised price ceiling that threatens the feasibility of TransLink, the state government-owned network operator. Since we are yet to see extensive data and analysis of its impacts, let’s examine the underlying normative shifts in the political economy and refer to some microeconomic theory to debate whether the indiscriminate subsidisation of public transit fares may lead to more equitable social outcomes in the market for transportation.

UNDERSTANDING THE POLITICAL MOTIVES BEHIND THE 50C POLICY

Queensland’s 50c Policy diverges from the existing economic models of the transport sphere. Heavily subsidising public transit – an example of a public good – differs from the widespread transportation policy framework underpinned by neoliberalism, which has culturally and institutionally endorsed individualistic choices through private automobile ownership and stigmatised public transit as an inferior alternative to driving. Economic and social policies designed according to this understanding of neoliberalism in all levels of government shape the world around us through fiscal policies dedicated to car-based infrastructure development, car-centric city planning, and the privatisation of certain goods/services like toll roads and some mass transit systems like airport connections.

Through extraordinarily low fares, the 50c Policy prioritises different criteria to neoliberal transport policy, which intends to reframe perceptions of various travel modes and readdress the inaccessibility and inequality caused by the predominance of neoliberal transport policy. Cheap public transport fares exacerbate its price competitiveness to driving as means of compensating for the financial burden created by car-dependence past stigmatisation. The policy also utilises the price mechanism to stimulate demand for public transport by highlighting its strengths as a more cost-effective, equitable, and socially-preferable transit system to high-expense and individualistic private modes.

Given the permanent adoption of 50c fares by both Queensland Labor and LNP, the political identification (or problematisation) of high transportation costs as an issue clearly resonated with a voter base afflicted by persistent cost-of-living pressures (as evidenced by Australia’s accelerating consumer price index and series of cash rate rises in 2024). The ideological change of indiscriminately low public transit fees as a transport policy solution aligns with an exogenous paradigm shift in consumer preferences whereby affordability, a tenet of public transport, may now outrank autonomy and speed–the once hallmark factors of the car-centric neoliberal transport model–that people consider in their choice of mobility mode. Due to these changes, many Queenslanders should theoretically benefit from a policy encouraging the use of public transportation.

ARE EQUAL FARES ACTUALLY EQUITABLE?

The 50c Policy may succeed as a welfare initiative because of an observed inverse relationship between household income and total expenditure on transportation in Australia, meaning that many lower-income households spend a greater proportion of their total income on transportation than higher-income households. Although intending to alleviate financial pressure among all demographics equally, the 50c Policy particularly aspires to advance the autonomy of groups like youth, the elderly, people with disabilities and low-income groups that may may experience exclusion from neoliberal policies promoting independent mobility through personal car ownership. Through financially accessible fares, the 50c Policy hopes to construct a critical social safety net which can improve people’s access to the labour market, other welfare services like healthcare and education, and the wider community. However, when we consider microeconomic theory, is a blanket market manipulation like the 50c Policy–which is simply a price ceiling–the best response to increase social welfare?

Despite charging every rider the same fee no matter their income, destination or time of day, a fare reduction alone may not fulfil the intention of benefitting all Queenslanders equitably since the 50c Policy does not improve the physical accessibility and geographical extensiveness of the existing public transport system. Whilst a policy for inexpensive, flat fares evenly distributes the costs of public transport among users, it does not redistribute or expand its benefits. 50c fares will most advantage the Queenslanders already serviced by the TransLink, the state- owned monopolist network operator.

Demographic trends like gentrification and urban renewal in Queensland’s well-connected areas ‘price-out’ and geographically isolate socioeconomically disadvantaged groups from the high- value areas that are most accessible by Translink’s services. Consequently, the equal advantages of consistently lower fares may be inequitably distributed among Queenslanders despite the reported inverse relationship between income and total household expenditure on transport. The tendency for financially disadvantaged demographics to cluster in the generally poorly accessible middle and outer suburban areas of Brisbane and rural Queensland underscores the socio-political need for more equitable public transportation policy to complement the aims of existing welfare policies in sectors like housing, education, and socioeconomic development.

IS THE EXTENT OF THE 50C POLICY’S SUBSIDY FISCALLY RESPONSIBLE AND SUSTAINABLE?

In addition to not expanding the scope of the state network, the 50c Policy does not independently propose long-term alternatives for lost fare revenue, leading critics to predict a fiscal failure. Due to its exclusively demand-side scope, the 50c Policy may not prepare Translink for success under the market inefficiencies imposed by the new regulatory price ceiling. With funding commonly ascribed as the ‘heart of the public transport problem’, Labor’s political slashing of fare prices may detriment the overall system by limiting the state government’s financial ability to maintain services, which could begin facing heightened stress from increasing usership. Reliance on subsidies to bankroll deflated fares risks declining the long-term efficiency of the network as well as its potential for growth, emphasising the need for further policies formulating a new, self- sustainable business model for Translink. Similarly, heightening taxes to offset the significantly discounted public transportation services may result in comparable consumer incidence to pre-intervention fares, possibly negating the initial social benefits of subsidising public transportation.

Despite intentions to lessen public transport’s stigma as an inferior alternative by reframing social perceptions of its benefits, the 50c Policy’s long-term funding predicaments could instead perpetuate public transportation’s stigmatisation as an economically inferior good to private, neoliberal transportation methods should insufficient funding worsen service quality. Hence, the 50c Policy’s lack of supply-side adjustments and alternatives for lost fare revenue may potentially hamper the economic feasibility of 50c fares in the long-run.

ARE 50C FARES FOR EVERYONE AN EFFECTIVE POLICY?

While there is no doubt that 50-cent fares will save people money, the policy’s equitability and effectiveness are open for debate. The policy is intentionally simple, and thus holistically change all the errors of a historically neoliberal policy framework. Fare reductions alone cannot address the non-financial inaccessibility of the existing public transport network, nor can a unconditional price ceiling specifically target the individuals who need financial assistance in transportation the most. The 50c Policy also does not present a solution to the revenue cuts in a long-term business model for operating a statewide public transport network, warranting queries about the fiscal sustainability of the policy. Despite these limitations, the 50c Policy shows political initiative to explore innovative welfare programs and adapt the economic rationale behind the policy frameworks of the transport sphere.

Author’s note: This article was adapted from research conducted for the Policy Analysis assignment for POLIS 2138: Policy & Practice in Australian Politics in 2024.