Capping fares is the easy part. The harder question is what we're optimising for.
Labour's proposal to cap public transport at $20 a week in our main centres - and $10 everywhere else - has done what good cost-of-living policy is meant to do:
it's clear, it's relatable, and it gives people a number they can picture in their own weekly budget.
Tick.
At a stated cost of around $65 million a year, roughly 1% of the National Land Transport Fund, it's also modest against the scale of what we spend moving people and freight around the country.
Tick.
So, it would be easy to file this as either a smart bit of relief or a bit of pre-election retail politics, depending on where you sit.
Having worked in transport across government and Minister offices for over 25 years, I think both readings miss the more useful conversation.
A fare cap is a small policy that sits on top of a much bigger question we've been avoiding:
what are we actually trying to optimise our transport network for, and are we willing to fund it?
A fare cap is a demand-side lever...that has limits
Capping fares makes the services we already run cheaper to use. That genuinely helps household budgets, and cheaper fares can lift patronage, which is good for congestion, emissions and farebox recovery over time. None of that is trivial, especially with cost-of-living pressure where it is.
But a fare cap doesn't add a single bus, train or ferry.
It doesn't improve frequency, extend coverage into the suburbs and towns that are poorly served today, or make the 7:40 actually turn up at 7:40.
For a large share of people, the barrier to catching public transport was never really the fare...it's that the service doesn't go where they need, often enough, reliably enough to plan a life around.
Make a service that someone can't realistically use 20% cheaper and you've changed very little for them.
This is why officials have, in the past, leaned towards investing in services over subsidising fares. It's not that affordability doesn't matter; it's that a dollar spent on reliability and reach often does more durable good than a dollar spent making an under-built network cheaper to access.
The policy lands in an awkward funding context
This proposal doesn't arrive on a blank page. They never do of course!
It lands against a Budget that directed the large majority of new transport capital toward roads and highways, with no fare relief and no new services for public transport users. And it lands while the whole funding model is mid-transition - from fuel excise, which is quietly eroding as vehicles get more efficient and electrify, toward an electronic Road User Charges system intended to have everyone paying for the network they actually use.
Put those pieces together and the real debate sharpens. It isn't "cheaper fares: yes or no." It's how we fund a network that is both affordable to use and actually shows up - at a time when the most reliable revenue source, we've relied on for decades is structurally shrinking. A fare cap is a spending commitment layered on top of a revenue base that's being rebuilt underneath it. That's not a reason to dismiss it, but it is a reason to ask how it fits the longer arc rather than judging it in isolation.
Affordability and service quality aren't enemies...but they compete for the same dollars
Here's the tension that seems to have existed for at least the last few decades.
Affordable fares and high-quality services are not opposing goals - ideally you want both, and the best networks in the world deliver both.
But in any given year they compete for the same finite pool of money. Every dollar capped off the fare is a dollar not spent on the extra route, the more frequent timetable, the depot, the driver.
This wasn't an issue when we worked in Qatar where budgets were large at that time, but now for most parts of the world this is not the case.
And it is important to note this trade off...as it is "that" trade-off that is exactly the kind of thing that gets lost in an election-cycle framing of "relief versus no relief."
A previous transport minister for Victoria, said it really well way back in 2004 when we were looking at new PT policies:
The policies actually worth backing - from any party - are the ones that are upfront about the trade-off and can explain why their particular split of the money produces a network people will use more, not just a network that costs them less to stand at the stop and wait.
My take
I'm not against a fare cap.
As a targeted, time-bound cost-of-living measure it has a logic, and $65 million is real money to households even if it's small in the transport accounts.
But I'd want to see it framed as one move inside a credible plan for both affordability and service quality - not as a substitute for the harder, less photogenic work of building a network worth subsidising.
The question I keep coming back to, and the one I'd put to anyone working in or around this sector:
if you had the next marginal dollar of transport funding, where would it do the most good - cheaper fares, or better services?
Because right now, that's the choice we're quietly making, whether we name it or not.
Til next time,
Andrew
Keen for others thoughts...cheaper fares, or better, more reliable services?
I'd genuinely like to hear how people across the sector are weighing it up.
#PublicTransport #TransportPolicy #Infrastructure #NewZealand #NZPolitics #CostOfLiving #UrbanMobility #PublicPolicy #Transport #Sustainability
Transit Trends · Andrew Collings, KA Advisory. Read and comment on the original on LinkedIn.
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