Are Australia’s public transport discounts for seniors too generous? Are they fair?

Milson’s Point Station in Sydney. Most seniors’ discounts kick in at age 60, depending on their working arrangements. Photograph: Bianca de Marchi/AAP

It’s the uncomfortable question few politicians would dare to ask. Are generous travel discounts afforded to Australia’s older citizens, especially self-funded retirees who are not means tested, sustainable? Moreover, are they fair?

Seniors have long enjoyed heavily subsidised public transport fares across Australia. But as the population ages, public finance strains and a cost-of-living crisis weighs disproportionately on younger generations, some are suggesting a rethink.

Australian agencies, including the Productivity Commission and state pricing tribunals, have consistently raised the issue of having high-income customers access generous transport discounts, while those who need help miss out.

Avoiding ‘battle of the generations’

The chief executive of Sydney-based Youth Action, Kate Munro, says commuters aged under 25 would greatly benefit from a reduction in travel costs, given they are also among the most exposed to relentless increases in living costs.

“I’m not suggesting seniors should hand their concession cards over, but we should be able to do something for younger people as well so that it doesn’t feel like a battle of the generations,” says Munro.

While children and tertiary students receive travel concessions, in some states the daily cap on their fares is well over three times that offered to seniors.

Arrangements for seniors differ in each state and territory, with some jurisdictions using a model of free travel during off-peak hours and concession fares at other times, as is the case in Western Australia.

South Australia has some of the most generous arrangements, with free travel for seniors on Adelaide metro buses, trains and trams. In New South Wales, seniors have enjoyed the same, low daily $2.50 cap for about two decades.

Queensland will start its 50 cent public transport fare trial in early August, which is for everyone, including seniors. In Victoria, seniors receive a 50% fare discount on most trains, trams and buses and other benefits including travel vouchers and free weekend travel for short distances.

Most seniors’ discounts kick in at age 60, depending on their working arrangements. But as the cost of living rises, an increasing number of full-time university students are losing their concession passes as they shift to a part-time load to work more.

“What would that look like for young people on low incomes to access affordable transport, because the cost of young people not being able to live to their full potential is pretty high,” Munro says.

Bridie O’Kelly, a 20-year-old university student in Sydney who works part-time for her local federal member, says high travel costs are deterring young people from commuting to extracurricular activities, robbing cash-strapped students of important opportunities open to others.

“Students use public transport arguably far more than retired individuals, so I think there just needs to be a bit more of a conversation around this,” says O’Kelly, who recently lost her travel concessions after moving from full to part-time study.

Seniors card ‘more generous’

Fares paid by passengers cover between 20% and 50% of the actual cost of running the service, depending on mode type and city, according to Prof John Nelson from University of Sydney’s institute of transport and logistics studies.

He says concession fares tend to be 50% of full fares, but places such as NSW have greater subsidies for seniors. Taxpayers foot the rest of the bill.

The Productivity Commission says public transport users are generally unaware that their trip can sometimes cost 10 or more times the fare they pay, with subsidised fares equating to “billions of dollars of annual public transport subsidies”.

In 2022-23, NSW taxpayers spent $235m on public transport concessions across seniors, students and all other discount categories. This figure is expected to grow to $269m in 2023-24, and $289 in 2024-25, according to state budget figures.

In NSW, the daily cap for the seniors’ Gold Opal has stayed at $2.50 for about two decades. By comparison, child/youth and concession holders receive an $8.90 cap on most weekdays, while the price ramps up to $17.80 for the adult fare cap.

“You can make the case that the senior’s transport card should be based on more than just being over 60,” says Nelson.

“There is an important discussion to be had, as the seniors card is actually quite a bit more generous than fares for students or people on Centrelink.

Nelson acknowledges it wouldn’t be popular, but means testing concessions for older people makes sense to him.

“We already discriminate over concession eligibility in the context of students, why aren’t we doing that with other segments?”

The state’s Independent Pricing and Regulatory Tribunal recommended in 2016 that the Gold Opal cap be increased to $3.60, noting that relatively small increases of heavily discounted tickets could be used to fund additional discounts for others, such as low income earners with healthcare cards.

It also recommended a review of the eligibility arrangements for the discounted fares, so that benefits were better targeted towards people who need them most.

The NSW Labor treasurer, Daniel Mookhey, says he doesn’t support a change to seniors’ concessions, and that increases wouldn’t save “massive amounts of money” anyway.

“I don’t think that we need to pit one group against another when it comes to our choice to subsidise public transport much the same way that I think it’s a good thing that we universally provide subsidies to school kids who use public transport too so they can move around,” Mookhey says.

The NSW government announced on Wednesday that fares would rise by an average of 3.6% as part of an annual review, although various daily and weekly caps, including the senior rate, will stay the same.

Clive Palmer should pay: expert

Overseas, economies with generous transport discounts for older citizens, including Hong Kong, are grappling with questions of fairness in a high cost-of-living world too.

There’s also a question about whether public finances can sustain concessions over the long term, as the economy slows and populations age.

But there are strong arguments for the senior concessions too.

Seniors groups have consistently argued there are societal benefits to retaining heavily discounted fares because it encourages the cohort to participate in unpaid volunteering and caring activities, as well as ensuring older people remain socially connected.

Further, the Australian Independent Retirees Association said in a government submission earlier this year seniors’ use of public transport reduces pressure on road networks.

The deputy director of Griffith University’s Cities Research Institute, Prof Matthew Burke, adds generous public transport discounts for seniors are important given the high rates of forfeiture and restrictions on driving licences.

“It’s not so much recompense, but it’s part of the set of policies in place to look after seniors in their later life,” he says.

“While most seniors have less disposable income, there are many cashed up [baby] boomers whose superannuation funds have done well and they could afford to make a larger contribution to public transport costs, but it’s a small cohort.

“Only a handful are really living it up. Should Clive Palmer pay full fare for the bus? Probably. But most of the people on seniors cards have paid their way over a very long time.”