Category Archives: Transportation

“Only losers take the bus”

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The Victorian government has recently announced that passengers under the age of 18 will get access to free public transport (as long as they hold the appropriate travel card). Although this is being heralded as a cost-of-living measure, I can’t help thinking it’s also about removing a section of “fare non-compliant” passengers from the books.

I’m not saying that under 18s are over-represented among fare dodgers and under-payers. The latest PTV data available does not give a demographic breakdown, but the average non-compliance is 4-5% across all transport formats and routes. Overall, buses have lower compliance rates, and since school students would likely account for a large proportion of weekday bus journeys, one might reasonably assume they form a significant component of fare non-compliance.

It will be interesting to see what the take up is for these free travel cards. Recent research shows that even where fares are as low as 50 cents, there is still a high level of non-compliance. My own very limited research (conducted recently while waiting to meet a passenger at my local train station) suggested that most of the passengers traveling without a valid ticket were young people, many of whom had just come from a match at the MCG (so they could afford a ticket for the game?) or were sporting the latest noise-cancelling headphones (again, they can afford Dr Dre but not a Myki?). Not all of these younger passengers were of school age, of course, but it was interesting to see the high preponderance of youth being waved through at the barrier.

Talking to station staff, it was clear that they have no choice but to let passengers enter/exit the gates even though they don’t hold a valid ticket. First, if stopped, there is every chance that a passenger will simply try to jump over the barrier, and if they hurt themselves in the process, the station staff will probably get the blame. Alternatively, if the passenger decides to kick their way through the gate and manages to break it, there is a greater inconvenience to other passengers (and the station staff will bear the brunt of that, too). Secondly, barrier staff are probably not trained to deal with potentially aggressive and violent fare-dodgers – it’s not worth the risk or the hassle. Better to let the Authorised Officers, armed with relevant powers, training and equipment to deal with ticket evaders.

Does any of this matter? After all, public transport is a utility for everyone; so what if 4-5% of users are non-compliant? That might be seen as a small price to pay if it means we all get to use a public service to get from A to B. But are the 10s and 100s of millions of dollars governments lose each year due to fare dodging a reasonable cost to the rest of society, and the vast majority of passengers who do the right thing? While access to public transport is a public good (even a public right, some would argue), it does not convey an entitlement, and comes with an individual cost, under a “user pays” principle. (But since public transport is underwritten by government funding and subsidies, couldn’t we argue that our rates and taxes have already paid for it, so we are entitled to use it for free? Well, under the same argument, drivers and vehicles shouldn’t have to pay to use public roads….)

There is an argument to be made that if something is made available for free, we may come to undervalue it (or take it for granted), causing us to treat it with less care and consideration than if we have paid for the privilege. On the other hand, from a passenger’s perspective, I might be less inclined to avoid paying if I felt that I was getting value for money, or that my user experience was much better than it often is. We have all experienced dirty or smelly vehicles, graffitied carriages, delayed, cancelled and overcrowded services, petty vandalism and anti-social behaviour when taking public transport. Seeing fare-evasion as part of a wider societal decline may seem an extreme stance – but lumped in with other petty crime and broader social ills, it can give rise to populist grievances that our political leaders ignore at their peril.

Public transport can never be 100% reliable or fail-safe (thanks to weather events, power outages and transport strikes). But from a user experience of train systems in places like Japan and Europe, I know it can be much better than it is here in Australia. Nationally, it feels like this particular public service is never going to be a top priority for our local, state or federal governments. It’s always a bit of an afterthought, and gets overlooked in the need to pander to car lobbyists, airline duopolies and the construction industries. Even where public money is being put into transport infrastructure and system upgrades, they always seem to take a lot longer to complete, and cost a lot more (and deliver a lot less) than we were promised.

You’re more likely to hear our politicians campaigning about fuel excise, road congestion, speed limits, EV concessions, extra airport runways, car parks, local car manufacturing (er, maybe not so much these days!), than about integrated transport hubs, high-speed intercity trains, and contactless ticketing systems.

It’s this attitude that reinforces the common notion that “Only losers take the bus…” (….and only bigger losers actually pay!).

Apologies to Fatima Mansions for the misappropriation for the title of this blog.

 

Unintended Consequences?

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Last month, Melbourne City Council banned e-scooters for hire. The City’s Lord Mayor argues that the current trial needs to be re-set, as a result of increased traffic violations and personal injuries. So far, similar trials running in other local government areas adjacent to the City will continue, but they will no doubt be seeking to ensure the hire schemes are implemented and managed in a responsible, compliant and sustainable fashion, when the trials expire.

Despite the promised (and welcome) benefits of e-scooter hire schemes, I have yet to see current data that would support their continued operation. E.g., has the introduction of e-scooters reduced either the overall number of cars on the road, or the number of short car journeys under 2km?

I can see that e-scooters are probably popular with shift workers, largely because public transport services do not run at the times these commuters need them or where they need to go.

As well as living close to the City, I live in an adjacent LGA that is running a similar trial, so I have plenty of anecdotal evidence of the downside.

It’s not just users riding on pavements and in pedestrian-only areas with little care for those on foot. Many riders are carrying passengers (unlawfully) and choosing not to wear helmets (also unlawful). There appear to be a large number of joy riders, who often leave vehicles strewn across footpaths, rather than parking them responsibly. Then there are the helmets discarded without care or thought. Many of which probably end up in landfill, especially if they have been cracked or damaged through misuse. (A few months ago, I spoke to a Melbourne City Council street cleaner, and he admitted that if helmets are discarded like litter, they go into the general waste collection.)

I also see e-scooters for hire being lined up by their operators outside pubs and bars. I get that we don’t want people to drink and drive, but riding an e-scooter while drunk is hardly the answer!

I suspect that the obvious problems and misuse could have easily been anticipated, and even mitigated. Here are just a few suggestions:

1. Require all ride-share customers to have appropriate insurance. This could be done via the operator apps, and/or via a subscription model.

2. E-tag all helmets as well as the scooters themselves, so operators can keep track of their property. If I was an investor in these companies, I’d be concerned that they aren’t protecting their assets!

3. Require users to pass some sort of proficiency test – including basic road rules, and traffic regulations.

4. As well as limiting the vehicle speed, disable any e-scooter that is being driven on pedestrian-only footpaths or other “out of bounds” areas. The City of Melbourne and surrounding LGAs now have extensive cycle lanes, so there shouldn’t be any excuse for riding on pavements.

5. Consider attaching breathalysers to each scooter and applying weight limits on vehicles (to counter the problem of passenger over-loading).

Finally, the use of contributory negligence in assessing potential damages should be a default position. Indeed, any rider who causes an accident, injures a pedestrian or damages another vehicle or property, directly or indirectly as a result of the rider’s misuse or negligence should result in strict liability for all damages.

Next week: Ticket scalpers? Blockchain could fix that!

 

From R&D to P&L

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Last week, the leader of the Federal Opposition announced a $15bn reconstruction fund aimed at job creation if Labor wins government, saying Australia must be a country “that makes things”. With a specific focus on cars, trains and ships, this policy pledge sounded like a clarion call to the metal-bashing industries of old (and recalls either an 80s movie or a 60s pop song…). This followed the launch by the Victorian government of the $2bn “Breakthrough Fund”, aimed at enhancing the State’s R&D capabilities.

While this type of government largesse and targeted economic stimulus sounds welcome, I can’t help feeling the money could be better spent on covering some basic building blocks in the search for innovation and economic development – upgrading the primary, secondary and tertiary education for the 21st century (e.g, an integrated STEAM curriculum); funding budding entrepreneurs (e.g., job maker for the newly self-employed, especially those under 25); enhancing the SME loan market (e.g., making it easier to access working capital without first having to own real estate); and overhauling the procurement and “panel” regimes in the public and private sectors (e.g., giving more equitable access to start-ups and scale-ups).

The “reconstruction fund” talks about making equity stakes, and co-investing with the private sector and superannuation funds. This sounds great, but is it the role of government to pick winners? Surely it should be in the business of enabling innovation and facilitating the growth of SMEs (which is where much new employment is created, rather than in legacy industries and/or declining sectors). Also, because of the way their mandates are written (as well as their ROC models and fiduciary duties), traditionally, superannuation funds and other institutional investors find it very difficult to write cheques for less than, say, $200m. Such a figure is generally far beyond what most start-ups or scale-ups are seeking – so these institutional funds are often placed with external managers who can slice them up into smaller allocations, which adds to the overall investment costs.

The role model for the $15bn fund is the Clean Energy Finance Corporation, which returned a cumulative 4.75% as at June 30, 2020. Certainly a higher return than the cash rate, but hardly competitive with other asset classes or investment returns, if that is a key measure of success. The CEFC performance is currently running below its own benchmark, and while the efforts of the CEFC have no doubt led to more jobs in the renewables and sustainability sectors, hard data is not easy to come by. In its favour, the CEFC has made a large number of small scale investments, which may well provide a template for Labor’s manufacturing fund (although it’s not evident what form those investments have taken).

In speaking to a range of people over the past few weeks (civil servants, start-up founders, VCs, CEOs of listed companies, etc.), the following mixed messages emerged:

  1. Well-meaning government officials tell you that they are “here to help” founders, start-ups, entrepreneurs, SMEs etc. Problem is, these bureaucrats can’t effect necessary systemic change in the way innovation is funded – they can only operate at a transactional level. Also, many entrepreneurs would politely suggest that the government could do more by getting out of the way…
  2. One VC took issue with my suggestion that Australia needs a better manufacturing supply chain that produces more local components that are interoperable/interchangeable, and which also encourages more user-serviceable (and therefore more sustainable) devices and appliances – he was advocating in favour of sealed units and thus a continued dependance on the manufacturer/distributor service model; whereas I think self-sufficiency in manufacturing also means more consumer choice in post-sales support.
  3. An innovative Australian fintech chose to list overseas because the local capital markets did not “get” its business model, while another locally-listed fintech faced similar obstacles with its own listing.
  4. A start-up founder looking for a modest amount of money for an R&D project (in the sustainability sector) had already secured an equal amount of funding “in kind” from a government agency – but was finding it somewhat difficult to match it with the equivalent private capital.
  5. Neighbours building a passive house have had to import energy-efficient triple-glazed window units – because they are not easily available locally, and the only supplier they could find would have cost at least 50% more.

Finally, the new Labor policy (especially if it aims to support the EV sector) will need to demonstrate it has learned the lessons of Australia’s subsidised car industry, and that the proposed fund is part and parcel of an integrated approach to public transport infrastructure, encompassing high-speed inter-city trains, smart cities with self-drive vehicles, better orbital routes connecting suburbs, and regional hubs that aren’t reliant on cars.

Next week: Synchronicity

Notes from Auckland

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Over the past couple of years, I’ve been fortunate to make several trips to Auckland, as part of the work I do with Techemy and Brave New Coin. Although I had been to New Zealand a few times before these latest visits, it was only recently that I understood why Maori call it Aotearoa – “Land of the Long White Cloud” – as you can see from this photo I took from the office window.

To anyone from Australia who has spent time in New Zealand, it is quickly apparent that Maori culture and language are far more respected and recognised than idigenous identity is across the Tasman. From the bilingual signage and national anthem to the Haka performed prior to every All Blacks game, Maori identity is more visible and celebrated.

On my most recent visit a couple of weeks ago, this was reinforced during a guided tour of the University of Auckland’s art collection, as part of Artweek. First, the guide used Maori words for local place names. Second, he drew attention to some of the challenges that he and the other curators face when dealing with Taonga objects – which also opens up the debate about art vs craft. Third, he acknowledged that in his own early studies, he was influenced and even encouraged by his tutors to incorporate elements of Moari art into his own work – even though as someone of European (Pakeha) descent he did not really understand what these images represented. Finally, this form of appropriation can lead to questions about whether an artist’s identity (cultural or otherwise) should define their work and whether that work should only be interpreted through their identity. For example, can “maori art” only be produced by artists who are ethnically Moari? The artist Gordon Walters deployed images of Koru in his most famous work, which can divide critics and academics.

In many ways, Auckland is very similar to Sydney – both are their country’s largest city, but neither is the capital. Both are formed and defined by their respective harbours – and this in turn very much influences how people engage with their city: based on where they live, and their commute to work. Likewise, both Auckland (Albert Street) and Sydney (George Street) are trying to play catch-up with their public transport systems, which have not kept pace with the rate of urban and population growth. And, no doubt connected, both cities have very expensive property markets.

One of the things that I always notice in Auckland is how many buildings in the CBD are polyhedron in shape. Some of them even display an element of “Pacific Brutalism” which seems to be very popular in public and municipal architecture, from Hawaii to Singapore and beyond. It could be that polyhedral structures are more earthquake prone – or because Auckland is very hilly, giving rise to “creative” building designs.

To overcome the topography (and the limitations of the public transport system), a number of hire companies offer electric scooters for getting around the city. While it seems a great (and environmentally friendly) idea, the fact that there are no fixed pick-up and drop-off points, users can leave them anywhere – and many are even to be found lying across the pavement, causing something of an obstruction.

Finally, no visit to Auckland is complete without a ferry ride to Waihiki Island, for lunch and/or wine-tasting at one of the many cellar doors.

Next week: Startup Vic’s Pitch Night for Migrant and First Generation Founders