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Thursday, 4 August 2016

New services from Rose Bay and Mosman to Barangaroo: good idea or a waste of money?

The American transport planner Jarrett Walker often talks about making public transport more useful. By this he means the network should be designed so people can conveniently travel to where they need to go, at a time that suits them. And good network design can also lead to efficient use of resources – high rates of fleet and crew utilisation and more passengers per service hour.

Popular demand for more public transport does not pay much attention to usefulness or efficiency. A new train station? Yes please. A new ferry service? I’ll have two of those.  

Building infrastructure is tangible and highly visible. More commuter services for existing customers are also obvious. But what about those who do not use public transport because it doesn’t take them where they need to go?  They’re the silent, invisible majority. 

A more nuanced view of public transport takes a network wide view. What can be done to make better connections between points of origin and destination? At hubs in the network, is it convenient to transfer from one line to another? Is it easy to change from one mode to another? Is there inefficient duplication in the network, such as two modes providing services on the same corridor?

New commuter ferry services planned from Rose Bay and Mosman to Barangaroo fall into the populist category.  If you haven’t heard about them, they get a brief mention in Transport for NSW’s web page on the new Barangaroo ferry terminal. Many Mosman and Rose Bay residents will be excited at the prospect of having their existing ferry services to Circular Quay supplemented with extra ferries travelling directly to Barangaroo.

Who wouldn’t?

But how many will catch the new services? The current run from Rose Bay to Circular Quay takes about 11 minutes in a SuperCat and covers a distance of 5.7 km. The new service to Barangaroo is longer – 7.8 km – because vessels will need to traverse around Dawes Point before heading south to  Barangaroo. I’m guessing the trip will take at least five more minutes than the Circular Quay run. If you work in one of the towers at Barangaroo South you may think that is just fine, but for most people working west of George Street, it will be quicker to change at Circular Quay for the train to Wynyard or Town Hall, or transfer to the Light Rail when it starts in 2019. 

And what about the impact on efficiency? With fast passenger loading and unloading, one SuperCat with a maximum speed of 26 knots can operate the Rose Bay – Circular Quay run at 30 minute headways on a 30 minute cycle.  The new run to Barangaroo will probably be on a 45 minute cycle and perhaps an ugly 45 minute headway. That means the cost per service will be 50% more than the Circular Quay run. 

It’s a similar story for the new Mosman to Barangaroo services.

If the objective is to make our ferry services more efficient and useful, there are other things that need to be done. Here are four suggestions:
  • Redesign the existing Sydney Ferry network based on integrated regular-interval timetable principles. This would create timed transfers for lines terminating at Circular Quay and Barangaroo.
  • Extend the current Darling Harbour line into a pendulum line, with Taronga Zoo as one terminus and the White Bay Power Station redevelopment as the other.
  • Make faster passenger loading a strategic priority in the design of all future wharves and vessels.
  • All off peak River and Woolwich ferries to terminate at Barangaroo.  Woolwich ferries to terminate at Barangaroo all day, but passengers can transfer at Balmain East to a Circular Quay ferry with a four minute transfer wait in both directions.

On my calculations, the network changes can be achieved with no extra peak vessel requirements and just 10.7% more service hours than the current timetable. Convenient origin-destination pair connections would increase from 96 to 419. Sydney would have a very usable ferry network, with less subsidisation from taxpayers.

Wednesday, 6 July 2016

New Ferries and the Eastern Suburbs

When it was announced in November 2014 that Sydney was getting six new Inner Harbour ferries, expectations were raised that they would be "some of the fastest on Sydney Harbour", operating on Inner Harbour routes from Watsons Bay to Cockatoo Island.

Unfortunately, fast ferries don't always work well in urban transit systems. 

As observed astutely by Kamen and Barry (2006): 

"Wheels on steel rails or smooth concrete ... produce negligible resistance compared to the frictional and wavemaking effects of a hull in water. And land vehicles enjoy essentially 100% propulsive efficiency between driveline and useful thrust.  Public land vehicles also benefit from an economy of scale: A single operator can drive a train that moves well over a thousand commuters, or a bendy bus or multi-car streetcar holding a hundred or more passengers."

Frictional resistance of a vessel hull in water is significant. As Kamen and Barry noted, "propulsion power is roughly proportional to speed cubed, and most costs are therefore also proportionate to speed cubed or at least squared." 

This is why Sydney Ferries' SuperCats, operating at speeds of up to 26 knots to Rose Bay and Watsons Bay, need to be refuelled daily. The more sedate First Fleeters, with a maximum speed of 12 knots, only refuel once a week.

Fuel and maintenance costs are not the only issues. Australian Maritime Safety Authority (AMSA) standards are more demanding for a ferry operator when a vessel's propulsion power exceeds 750 kW.  Vessels in this category must be driven by a Marine Engineer Driver (MED) Grade 1. Most Sydney Ferry masters are not qualified at this level. 

For this reason, I'm guessing that the new Inner Harbour ferries, due to enter service later in 2016, will have a propulsion power of 749 kW. They will then only require an MED 2 at the controls, but reach a modest speed of 20 knots at full throttle. That will be about the limit, given the superstructure and passenger capacity proposed for the new vessels.

There's nothing wrong with 20 knots for most of the Inner Harbour. The geography of Sydney means a slow ferry to Cremorne Point, Kurraba Point or Balmain East competes quite effectively with land transport.

The real problem lies with Watsons Bay and Rose Bay. Even with improvements in passenger loading, the new vessels will not be able to keep the current Eastern Suburbs timetable if their maximum speed is 20 knots. 

Why not change the timetable then?

Timetables are constrained by mathematics as much as propulsion systems. It takes about 11 minutes for a SuperCat travelling at up to 26 knots in open water to make the 6.2 km journey from Rose Bay to Circular Quay. After adding time for passenger loading and unloading, the round trip can be completed in 30 minutes. That's tight, but one SuperCat can operate a 30 minute interval service to Rose Bay. With two SuperCats, it could be a 15 minute interval.

If the current Watsons Bay wharf was upgraded to a better design, a round trip to WB, with a stop at Rose Bay in both directions, could be completed in 60 minutes with a speed of 26 knots in open water. This would require two vessels with a 30 minute interval.

This neat scenario falls apart if a slower, 20 knot vessel was to replace the SuperCats. The 11 minutes from Rose Bay to Circular Quay goes up to 13 minutes. Rose Bay round trip goes from 30 to 34 minutes; Watsons Bay round trip goes from 60 to 68 minutes. Result misery. 

The 20 knot vessel option does not work for the Eastern Suburbs because, with clockface 30 minute headways, the slower speed will lead to long layovers at either end and an extra vessel added to the runnings: a very wasteful outcome all round.

So what's to be done about the Eastern Suburbs? My guess is that the SuperCats will continue operating on Eastern Suburbs runs for some time - and the new Inner Harbour ferries will probably not venture to either Rose Bay or Watsons Bay. 

What this means for Sydney's ferry fleet strategy is unclear. The First Fleet Ferries have plenty of life left in them. With nine First Fleeters and six new Inner Harbour boats to come into service over the next 18 months, there is capacity to expand the Inner Harbour network. This comes at a cost, of course. With the new Inner Harbour ferries, plus the recently announced four new Parramatta River ferries, the complexity of Sydney's diverse ferry fleet could be greater than ever.     

Ferry passengers of Sydney must wait with baited breath to see what transpires.


Kamen, P. & Barry, C. (2006). Urban Passenger-Only Ferry Systems: Issues, Opportunities and Technologies. In R. Delpizzo (Ed.), Sustainability in the Maritime Industry: A Collection of Relevant Papers. New York: Society of Naval Architects and Marine Engineers.

Wednesday, 20 April 2016

How would Steve Wozniak design an urban transit ferry network?

I had the good fortune to hear Steve Wozniak speak at this week's NSW Future Transport Summit.

He didn't say much about public transport. When asked for insights on its future, he candidly replied that he didn't actually know much about the subject. He liked the wind blowing through his hair on the Manly Ferry. And he remembered queuing for buses when he was a college student. 

But most of us know Steve's philosophy on technology, which is to make it simple and human. I may be presumptuous, but I think he would agree that a ferry network should be simple and human too.

But what does a simple and human ferry network look like? It can be reduced to three things - legibility, speed and reliability. These can be applied to any mode of transit, but with awareness of what is peculiar to water transport.


If a customer, even an infrequent user, can easily create a mental picture of what the network looks like, and how to navigate through it, then it probably is a good one. 

If a customer looks at a network map and thinks they can see a pathway to get to where they want to go, then don't disappoint them. Ideally this means every line sticks to the same stopping pattern all day. If the customer's origin point is a stop on the "red line", say, and their destination is also a stop on the "red line", then they will expect the ferry to stop to pick them up and stop again at where they need to get off. 

This sounds so obvious, but you may be surprised how often this doesn't happen.  

If a route has an an express or limited stop service, as well as an all stop service, then delineate them to the customer by describing them as different lines.

Connections should also be intuitive. Regardless of frequency, if two lines intersect at one terminal, or many lines meet at a hub, it is a reasonable expectation of the customer that they can transfer with only a short wait - no more than about 10 minutes. 

Departure times are clockface, regular intervals. If there are two sailings each hour, then they are exactly 30 minutes apart and the departure times are the same in every hour. If more services are needed in the peaks, these supplement the off peak timetable - they don't disturb the underlying pattern. The schedule below shows what this might look like:

Note that no attempt has been made to round up the sailing time to a multiple of five minutes, as many timetables do. Let the minute fall where it falls.

What's good about Happy Bay is you don't have to look at a timetable or check an app. A ferry always departs at 17 and 47 minutes past the hour in the direction of Downtown between 0647 and 2047, and at 47 past the hour after then. You also know that when you reach a hub, you can transfer to another ferry or another mode with a wait of just 5-10 minutes.

That's what legibility looks like.


Speed is not just about the speed of the vessel across open water. It is everything that affects how long the customer takes to get to where they need to go. 

A fast ferry route is as close as possible to a straight line. It is best if a bay terminal is at the end of a route, not an intermediate stop, because bays can be like a cul de sac for a bus - an annoying diversion for passengers who boarded earlier. Mosman and Neutral Bay routes in the Sydney Ferry network are perfect examples of this principle. In each case the terminus is at the top of a bay and intermediate stops are at points along the way, keeping the journey direct.

And there is a myriad of other issues affecting speed which need to be managed. Are berthing conflicts built into the timetable, forcing vessels to be held off? Does the location of the wharf or the angle of the berthing face give the ferry skipper an efficient line of approach? Does the line of approach generate too much wash, so it takes a long time for the vessel to be secured? Are wharves and vessels designed for fast passenger exchange? How far does a transferring passenger need to walk to reach their connecting ferry/bus/train/tram? How long do they have to wait for their connection? 

I could go on. But getting them right speeds up the customer's journey and creates a more convenient experience.


Ferries are usually very reliable and punctual when they're not carrying many passengers. Many ferry networks lose punctuality when at capacity because the loading speed is too slow. 

Should you add more time in the schedule for the dwell in case of heavy loadings? 

No! Use engineering solutions to eliminate the slow loading problem, so the variation in loading time between a big crowd and a handful is minimised. 

The solutions are many and include physical barriers at heavy loading terminals to separate disembarking passengers from passengers waiting to board; using multiple wide gangways (or even better, none!); and clear thoroughfares on board the vessel so passengers can move quickly to their seats without impeding those coming behind them.

So there you have a simple and human ferry network - easy to use, takes you quickly to where you need to go and it is reliable.

But for the ferry planner, simple isn't the easy option. As Steve Jobs said, "Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple".

Friday, 15 April 2016

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. 

Saturday, 19 March 2016

Small Can be Beautiful in Ferry Operations

In a world where we all need to be more agile and innovative,  it is sometimes the small ferry operators that lead the way in creativity.

Is it a flatter management structure, more freedom from Government bureaucracy or just good luck? I'm not sure.

Take the Manly Fast Ferry for example.

The Manly Fast Ferry came into being after a less than distinguished moment in Sydney's transport history - the sudden cessation of Sydney Ferries' JetCat service to Manly in December 2008. Capacity on the regular Manly Ferry was not really adequate to accommodate the extra demand from former JetCat riders, leading to a jump in complaints and a difficult political situation.

In stepped local family run business Bass and Flinders Cruises and offered to operate a fast ferry without subsidy, departing from the eastern side of Manly Wharf. Sailings started in February 2009 and its customer friendly service immediately became very popular with Manly residents.

Other companies expressed interest in operating the run, so the NSW Government put the fast ferry service out to tender. To the dismay of many loyal customers, the Manly Fast Ferry lost out to a rival bidder, Sydney Fast Ferries, who started operations from 1 April 2010.

But the Manly Fast Ferry wasn't going quietly. It made its own arrangements to operate from the Manly Hotel jetty and the eastern pontoon at Circular Quay. There was apparently no action the Government could take to stop this unwelcome competitor to Sydney Fast Ferries.

After five years of co-existence, the NSW Government brought some sanity into the situation and undertook another competitive tender process to select a single fast ferry operator for the Manly run. This time, Manly Fast Ferry was successful and started its new contract from April 2015. 

As public transport networks go, you couldn't get much simpler than the Manly run. No intermediate stops, just a direct trip from Manly to Circular Quay and back. But there is still a lot to like about the way the Manly Fast Ferry operates. It's not just the faster speed over water (18 minutes from Manly to Circular Quay compared 30 minutes on the regular Sydney Ferry service). There is also an attention to detail that is welcome. 

The new vessels it has recently purchased can use four gangplanks, allowing a full load of 365 passengers to disembark in just over two minutes. Two gangway gates are   

positioned at the stern of the vessel, with the rear gate mainly used by passengers seated on the upper deck or the stern and the forward gate used by passengers seated inside on the main deck. This allows faster movement of boarding and disembarking passengers. 

Sydney Ferries' First Fleet vessels also have two gangway gates - midships and stern - but their distance apart makes them more difficult to use simultaneously, especially if there is only one deckhand available. The stern gangway gate is hardly ever used at Darling Harbour, even when crowding suggests it is sorely needed.

More importantly, access between gangways and seating on the First Fleeters is quite constricted, adding significantly to the dwell time at busy terminals, because movement through gangways is blocked by passengers ahead trying to reach their seats.   

Where the Fast Ferry berths at Manly, ramp design ensures excellent and safe separation of disembarking passengers from boarding passengers, another vital ingredient for fast and safe passenger exchange.

Another strong point is the nice cadence in the Fast Ferry timetable. Service intervals are 10 minutes in the peaks and 30 minutes off peak. As there is only one berth at either terminal, vessels must tie up, load and unload, untie and clear the wharf in less than 10 minutes during the peaks. They seem to do this effortlessly, with the arriving and departing vessels crossing in open water.

I spoke to a Manly Fast Ferry deckhand yesterday about their new vessels. He spoke enthusiastically about plans to change the glass gates on the pontoon at Wharf 6 so that gang planks could be better positioned to speed up loading even further. I was impressed. People with direct experience of operations seem to be actively engaged in process improvement.

I hope the various Government employees and contractors working on the design of the new ferry terminals at Circular Quay and Barangaroo, as well as the new "Heritage" fleet due to come into service in early 2017, are paying close attention to Manly Fast Ferry operations. They could learn quite a bit. 

I have no doubt that checklists are being ticked, risk assessments completed and formal consultations conducted. But does anyone in Transport for NSW have skin in the game to the same extent as the management team at Manly Fast Ferry when preparing specifications for a new ferry? Are the consultants employed by Roads and Maritime Services as passionate about reducing the dwell at ferry terminals by 30 seconds, as the Manly Fast Ferry deckhand I spoke to yesterday clearly was

Let's all hope so.

Thursday, 11 February 2016

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. 

Thursday, 24 December 2015

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.