1. Public transport in South Africa costs around R30 billion annually, with most funding going to commuter rail and bus services that support spatially inequitable development patterns. 2. While policies aim to use public transport funding to address inequities, there are concerns that priorities still entrench low-density, inefficient spatial forms. Future options include accepting decline, optimizing low densities, or investing in higher densities and values. 3. Investing to enable higher urban densities could maximize both equity and efficiency through "urban economic efficiency" gains. Valuing these benefits could justify shifting priorities towards rail infrastructure to support integrated, high productivity cities. Building consensus around such a future requires evaluating options and collectively deciding on priorities

1. Andrew Marsay Transport Economist
"Aligning financial cost with real economic value"
“Implications of moving towards
public transport based cities”
i-Transport UATP conference and exhibition
Sandton Convention Centre, 15th February 2017

3. Main points of the report
How much is public transport costing the country?
What is the rationale of public transport funding?
Where to in future?

4. 1. The cost of public transport funding
How much public money is going in?
How much do users pay?
What do we get out (personally and societally)?

5. The cost of public transport in South Africa
SERVICE CAPEX OPEX TOTAL
Commuter rail (PRASA) R10bn R4bn R14bn
Commuter buses - R5bn R5bn
BRT / integrated systems R2.5bn R1.5bn R4bn
Gautrain - R1bn R1bn
Cities’ spending on
operations
- R1bn R1bn
Minibus-taxis (estimates) [foregone tax
revenue –
R2.5bn]
[net negative
externalities vs. other
modes – R2.5bn]
‘R5bn’
Sub-totals: R15bn R15bn
TOTAL: R30bn

6. How much users pay for public transport
For a long, metropolitan journey, e.g. Pretoria-Sandton (50km)
public transport fares compare, approximately, as follows:
• Gautrain R60
• Minibus-taxi R25
• Commuter bus R15
• Commuter rail (PRASA) R10
Average fares are lower than this because average trip length is
lower – but average trip length varies a lot by mode.

7. Subsidy cost per passenger trip
The subsidy cost, for operations, per passenger trip for the
different public transport modes is:
• Gautrain R35.00
• Commuter bus R15.00
• BRT / IPTN service R13.00
• Commuter rail (PRASA) R4.00
• Minibus-taxi R0.00

8. Societal value of public transport modes
Here is my ‘take’ on what each public transport mode is
contributing societally:
• Gautrain An efficient link among the
higher value economic nodes
• Minibus-taxi Low density sweeper – best fit to
inherited spatial realities
• Commuter bus Effective workhorse for the daily
township to workplace trip
• Commuter rail (PRASA) Less effective workhorse for the
daily township to workplace trip
• BRT / IPTN services Nice alternative to minibus-taxi
on some busier routes

9. 2. The rationale for public transport funding
What was our public transport spending buying, historically?
What is our public transport spending buying, currently?
What should our public transport spending be buying in future?

10. What PT spending was buying, historically
Historically, in Cape Town and Durban and to a lesser extent in
Joburg, commuter rail had served a suburban transport role
Post 1948, public transport’s role transformed to sustaining
spatial segregation while obtaining benefits of cheap labour
White commuters migrated to areas not served by public
transport and have become increasingly dependent on cars

11. What PT spending is buying, currently
National, provincial and city transport policies all aim to redress
social and spatial inequities by:
• Prioritising public transport infrastructure spending (NLTA)
• Integrating commuter bus contracts into city function (IPTN)
• Trying to avert public transport market decline (PRASA recap)
• Migrate low density modes to higher quality / capacity (MBT)
• Incentivise modern, high value spatial form (Gautrain, BRT?)

12. Concerns about current spending priorities
Despite the policy consensus, there are some big obstacles:
• The vast majority of PT funding; R19/R30bn is on commuter
buses & PRASA; and still sustaining inequitable spatial form
• NLTA’s public transport funding priorities being ignored in
favour of public preference for public funding of freeways
• Inability / unwillingness to address the low-density-serving
MBT mode, or PRASA’s highly inefficient rail operating model
• Inadequate understanding of the potential value of the high
density/ high value option – and no tools to measure it

13. 3. So, where to in future?
Options?
• Defer to public preference for cars and allow PT to decline
[‘go with the flow’]
• Use technology to optimise efficiency at low densities
• Choose higher density, higher value, higher benefit for all

14. Go with the flow
Status quo likely to predominate, with most PT spending still
going on systems that sustain inequitable spatial structures
No consensus for radical re-shaping of metropolitan space by
further high quality regional rail - incremental funding at best
Roads remain free at the point of use; freeway upgrade projects
deferred; PT patronage declines; less and less value for subsidies
This option is probably the least efficient and the least equitable

15. Optimise for low densities
Realism prevails: we don’t have the funds or the institutional
will to fix public transport – but decide it’s not a ‘train smash’
Merits of the minibus-taxi industry are finally acknowledged:
separate lanes and formalisation of traffic light prioritisation
Congestion not as painful as we thought as a result of home-
working, e-hailing, ride-sharing; so let’s accept that ‘this is us’
This option could well be equitable, but may forego efficiency

16. Or, bite the bullet of high density / high value
This is where transport policy points; transport professionals
tell us that this is the characteristic of most successful cities
But it’s probably the costliest, institutionally most challenging
of the three options; it needs good roads AND good railways
But how to envision it, evaluate it, and build consensus around
it. The rest of the presentation offers ideas in this direction . . .
Though costly, this option may optimise efficiency and equity

17. Envisioning: what sort of cities do we want?
Cities are places where we generate culture and trade through
intensive interaction with people of many, varied backgrounds
Well managed, higher density cities (London?) may be less
prone to extreme ghetto-isation than low density deserts (LA?)
Lower densities favour social isolation even among the well off;
and impose high costs on those least able to afford it (Joburg!)
Looking at Gauteng Province – a future with strong, well-linked
urban nodes may be more equitable as well as more efficient

18. Evaluating: what should PT subsidies be for?
‘It was the best of times; it was the worst of times’
London Paris

19. “A tale of two cities’ – Paris & London
A London firm exploring location options (this was before Brexit)
found that labour productivity is higher in Paris than in London
Paris’ mix of roads & PT, with radial, orbital and cross-city routes,
allowed access for all to the whole city’s labour market
London, though larger, allowed full access to only part of its
labour market because of limited orbital and cross-city capacity
Inner London (inside the Circle Line) where accessibility is even
better than Paris’, had higher labour productivity than Paris

20. “A tale of two cities’ – what happened next
UK Treasury used to think that it was French romanticising of city
living that led to their ‘over-investment’ in public transport:
“Any supposed additional, ‘urban economic efficiency’ benefits
were simply double-counting of VOC and travel time savings”
But their own research (Eddington Transport Study, 2006) led to
demonstration of large urban economic efficiency (UEF) gains
Applied to the transport CBA process, the new insight yielded
higher BCRs; orbital lines now in place; Crossrail opens this year!

21. Evaluating: - urban economic efficiency
If a higher density metropolitan space is likely to be both more
equitable and efficient, can we put a value on this, ex ante?
Conventional cost benefit analysis of transport projects tends to
favour road investment over public transport schemes; but . .
Eddington’s research showed that, for a package of road and
public transport investments, UEF benefits make a difference
UEF enhances public transport BCRs more than roads’ BCRs . .

22. Eddington on urban economic efficiency
Eddington Transport Study, UK Dept. for Transport / Treasury, December 2006

23. Urban economic efficiency gains
Eddington Transport Study, UK Dept. for Transport / Treasury, December 2006

24. UEF-enhanced economic gain in Gauteng
The tables following compare 30-year transport (and utilities)
investment for ‘default’ and ‘urban economic efficiency’ scenarios
In the ‘UEF’ scenario priorities of road and rail/public transport are
reversed. This involves higher total transport investment for UEF
Other utilities’ investment is slightly lower reflecting the efficiency
of high vs. low urban densities. Total infra’ investment is similar
Higher BCRs are attributed to the UEF scenario – linked to basic
GDP growth; the higher GDP growth, the higher the UEF premium

25. UEF-enhanced economic gain in Gauteng
The table compares 30-year ‘UEF’ and ‘default’ scenarios. The
main difference is a reversal of roads vs. PT shares of investment

26. UEF-enhanced economic gain in Gauteng
The table shows the impact of a 30-year urban economic
efficiency (‘UEF’) based transport investment programme
UEF uplift on the BCRs of PT projects is assumed to be related to
a GDP growth of 2% p.a.; (higher GDP growth = higher BCRs)

27. Building consensus around a ‘UEF’ future
Consensus requires a shared vision of an urban future; a way of
valuing it ex ante; but then, also, coming to a collective decision
Our national and metro policies already embody a shared vision.
Gauteng’s ITMP25 distils what it will take to realise this vision:
• Subsidised housing provision within urban core areas
• Land use densification in support of public transport
• Reinforcing the passenger rail network [Gautrain and PRASA]
• Integrated road-based public transport systems
• Provincial travel demand management plan

28. Coming to a collective decision
A decision-making tool is needed that allows stakeholders to arrive
at a decision that all can ‘own’ – based on factors including:
• National / provincial / metro policy alignment
• Efficacy of a transport service’s delivery model
• Public preferences / support
• Public cost (subsidy) per passenger km
• Sustainability of value (cost / demand / deliverability)
The table following is my own multi-criteria appraisal (MCA) of the
transport investment priorities required to achieve a UEF future:

29. Decisions for a UEF future . . .

30. Conclusions
Public transport is very costly but, rightly developed, can add great
economic value and support more equitable urban development
Our current arrangements are the worst of all worlds because most
subsidy funding still supports inherited, inequitable spatial forms
We could go for an Uberised / MBT- optimised low-density future.
This would be less costly; equitable; but economically sub-optimal
My advice: bite the bullet of a high density/high value future; try to
build a new consensus around the necessary transport priorities