Free public transport could be the smarter reflief package

Fuel prices have jumped roughly 50 cents a litre since the closure of the Strait of Hormuz. The government responded with a $373 million package giving about 140,000 families $50 a week through the In-Work Tax Credit.

The Green Party wants to go further, proposing three months of free public transport funded partly by redirecting unspent roading money.

Dr Timothy Welch, an urban planning researcher at the University of Auckland, says the Greens' proposal has merit.

"We are effectively 100 percent reliant on imported transport fuels. When supply is tight and prices spike, the only real lever we control domestically is demand reduction and mode shift," he says.

"Free or heavily discounted public transport is one of the fastest demand-side tools available."

Welch says the fiscal comparison writes itself.

The government's relief package will cost $373 million over up to a year. National fare revenue before Covid-19 sat at $320-350 million annually, meaning three months of free fares would cost roughly a quarter of that.

"The government's own officials advised against cutting fuel excise tax because it would encourage people to use more of something in short supply. That logic is exactly right," he says.

"But a $50 tax credit doesn't change anyone's transport behaviour. Free public transport does. It gives people a real alternative, at a fraction of the cost."

He says the relief package is welcome but blunt.

"The Government says it will help 140,000 families, and that matters. But fare relief reaches anyone who rides a bus or train, including people without children, beneficiaries, students and retirees who don't qualify for the In-Work Tax Credit.

"And it actually reduces the demand that's driving the price spike and supply concerns in the first place."

Welch adds that each person who shifts from a car to public transport reduces costs we all pay.

"Every person travelling by public transport imposes a much lower social costs than someone driving alone. A temporary free-fare period can plausibly be cost-neutral depending on uptake and capacity."

He says the conversation should not be about whether New Zealand can afford free public transport for three months, but whether it can afford not to try the one lever it actually controls.