Are young adults really dominating public transport use?

Actual use - age profile of public transport users in Melbourne (boardings) from VISTA

The world would be a much better place if transport operators would stop spinning patronage numbers to the media and public and start giving us the salient facts instead.

The Financial Review reported on Thursday that travellers in Melbourne aged 20-29 years comprise 38% of all public transport users in the city. This figure is in line with the claim of the WA Public Transport Authority that 18-25 year olds comprise 35% of all train users in Perth and 40% of all bus users.

As I’ve indicated before, I find these sorts of figures very hard to believe, given these two cohort’s each comprise around 15% of the population. In fact they’re extraordinary. It’s true young adults have always been over-represented on public transport because many are on relatively low incomes, but it’s the sheer scale of these figures I find too good to be true.

The reality is they’re not true, at least for Melbourne. The real situation is shown in the first exhibit. According to the Victorian Department of Transport’s VISTA database, travellers in the 20-29 age group account for only 22.3% of public transport users on an average day. If confined solely to the average weekday, the figure is a little lower, 21.9%. If instead we look at public transport boardings – to allow for the possibility that young adults make more multi-modal trips than others – the proportion in the 20-29 age group using public transport is a little higher, but still only 22.9%.

That’s a long, long way short of 38%. One explanation for this evident discrepancy could be that public transport operaters are measuring something else. VISTA is a snapshot of travel on a typical day, but it could be operators are counting the number of people who have ever used public transport – even if only once or twice – in some preceding period e.g. in the previous week, month or year. This will invariably give a much higher total patronage figure than VISTA or the Census because it picks up everybody who’s used train, tram, bus or ferry at least once during the (longer) period.

If this explanation is right, it would account for why claimed patronage levels for public transport are sometimes breathtakingly high compared to the customary, more rigorous ways of measuring travel. I’ve commented before on Metlink’s use of these sorts of inflated, self-serving numbers in its marketing material, but perhaps it’s a common practise in other states too. But by itself this explanation doesn’t fully account for why the young adult cohort’s share is apparently so high relative to others (see second exhibit). Read the rest of this entry »


Is this the end of The Age (as we know it)?

by xkcd

My family let our subscription to The Age lapse the other week. It’s not that $419 p.a. isn’t good value – we’d be prepared to pay a bit more if we had to – it’s just that no one in the household reads the print edition of the paper anymore. And we no longer have to pay anything to read The Age electronically!

My wife has a free six months subscription to the iPad version and I read the free online version. More often than not, the home-delivered paper version never got unrolled. So when the decision came to renew for another year there was no point in pouring another $419 down the drain.

Maybe if the circulation department had followed up with a sweetener we might’ve changed our mind out of habit or because the idea of not reading The Age every morning over coffee and croissants is ‘unMelburnian’. But the company didn’t seem overly bothered about losing us (unlike, for example, lean and nimble Crikey, who worked harder at getting me to resubscribe).

Fairfax is having serious problems with its papers. As I understand it, the Sydney Morning Herald is on the verge of going into the red and The Age isn’t far behind. For Melburnians, there is a high probability that The Age as we know it will disappear from newsstands sooner rather than later.

The problems for Fairfax, the company that owns these papers, started with the enormous drop in revenue from classified advertising. These were rightly called “rivers of gold”. Older Melbourne readers might remember the advertising slogan “icpota” (“in the classified pages of The Age”). Fairfax wasn’t very successful in adapting to the online world – companies like car.sales.com, seek.com and eBay stole its market dominance. Nor does the company seem much better today – only last year my Fairfax-owned local paper, the Banyule & Nillumbik Weekly, was blindsided by a newcomer, the Weekly Review, which took over virtually all its real estate advertising. This week the Fairfax paper is 20 pages (with one half-page real estate ad), the Weekly Review is 96 pages (with 79.5 pages of real estate ads).

Another problem for Fairfax is the well known shift of readers (like me) to online media. The company feels it has to have an online presence to “stay in the game” yet it’s too nervous to put up a paywall for fear it will lose readers to other online sites that stay free. It’s earning modest revenue from (awfully intrusive!) online advertising, but Fairfax’s experience with putting its third paper, the Australian Financial Review, behind a paywall hasn’t been positive. The AFR lost visibility because it couldn’t be accessed by search engines, giving newcomers like the online Business Spectator a free kick. From what I can gather, the financial situation of the AFR isn’t healthy either.

New Fairfax CEO Greg Hywood has a plan to turn around the ailing fortunes of Fairfax’s three major newspapers (BTW, Fairfax also owns other assets e.g. 3AW). It seems he’s proposing to put all three online papers behind a semi-permeable paywall where most content is free, but premium content requires payment. This approach would allow search engines access to the site but still leave scope to earn revenue from subscriptions. The New York Times recently moved in this direction – it offers 20 free views per month before requiring a subscription (although if you come to the Times by clicking a link on someone’s sites that doesn’t count toward your 20). Read the rest of this entry »


Why are home prices rising when lending is down?

One of the puzzles in the current housing market is why loans for housing have fallen but prices nevertheless have continued to increase.

According to a speech given earlier this week by Dr Luci Ellis from the Reserve Bank, the number of new loan approvals in March was 16% lower than their peak late last year. In a feature last Saturday titled “The Great Property Puzzle”, the Financial Review reported that loan approvals are now at a nine year low.

Figure 1

Yet as Figure 1 shows, prices continued to rise well into 2010. In its May 2010 Statement on Monetary Policy, the RBA said “Overall, the divergence between aggregate nationwide loan approvals and housing prices remains something of a puzzle”. The Financial Review continued this theme: “Home loan approvals are falling, but property prices just keep rising. The fundamentals are all out of whack and nobody seems to know why”.

There seem to be a number of factors at play. First, immigration is strong and some migrants bring capital with them from assets they’ve sold in their former country. Second, some temporary residents are buying properties using funds raised overseas – although that’s arguable, because according to the Financial Review, the FIRB says they only account for 2% of purchases.

However what seems to be the most important factor is shown in Figure 2 – lower income buyers are dropping out of the market as home prices and interest rates rise and as assistance to first home buyers is wound back. Read the rest of this entry »