04 July 2014

Opal is a welcome development, but the fare structure is flawed

The long overdue rollout of Opal in Sydney continues apace, with more and more buses now accepting the cards and the best value paper tickets being retired in about 8 weeks

Unfortunately, my usual bus company are yet to launch their readers, and with my last ever quarterly expiring in September I face yet more price increases as I won't be able to use Opal the whole way or buy a periodical Multi - meaning I have to fork out for the ever annoying traveltens until I'm allowed on the bus

Anyway, I digress, hopefully my bus company will roll out by September and I'll be fine

What I did want to talk about was the savings - while the media and many commentators point out that many people will be worse off under Opal, I keep seeing comments like 'What is everybody whinging about? I save $2 a week!'

The government propaganda is correct - the majority of people do save money with Opal, and judging by the amount of people who queue up every day I'm perfectly happy to agree most benefit from the new structure

That's not the problem, the point is that the savings on offer are vastly lower than the current offerings

What the fuss is all about

Weekly/Fortnightly ticket savings: from $1 per week (MyTrain 5) to $3.40 (MyTrain 3)
Monthly losses: vary widely from a weekly equivalent of $4.50 (5 again) to 35c (3 again)
Quarterly losses(13 weeks): from $4.86 per week to $13.08 a week (that's a simple 1 through 5)

So you can see that if you used to buy a ticket from the Blue mountains (or Wyong, Gosford etc) every week you'd now save $1, but if you used to buy a monthly you'd be paying $4.50 more each week for Opal, a quarterly works out at a cost of over $13 a week extra

Now, quarterlies and yearlies might be a lot of upfront cash but for a simple monthly ($100-$200 upfront) that's $216 bucks a year more (working off a 48 week year) and for the frugal person on a quarterly it's over $600 extra! (Basically a 25% and a 50% fare increase respectively)

The fact that a lot of people regularly bought a Weekly or Fortnightly really doesn't matter, they either weren't smart enough or didn't have the means to pay for a longer ticket - bully for them, they save at most $163 over a year, while people who choose to take the cheaper options can lose well over $600

And that's just the trains...

While longer distance commuters are discovering that Opal will cost them (and longer distance travellers are the ones who tend to buy those big periodicals because their transport costs are significant and the savings largest), anybody who needs to get a variety of transport loses even more

I'm not going to bore you with more scenarios, but those who use MyMultis can lose up to $1000 a year, in short, because the MyMultis existed to give those who needed a bus and a train (or a ferry) a break from paying for both. In my own case I basically get bus travel with my train ticket - it doesn't make sense that someone in the western suburbs should pay hundreds or dollars more simply for living some distance away from Sydney's fairly limited train network.

Not any more, if you change modes, you pay full fare for each trip (or journey, or whatever it is) - that's a clear change in policy.

Now, there are always going to be winners and losers - people who alternate days and locations, or don't work a full week may lose out on the weekly reward and end up paying more than before, but could also win on reduced single fares and the ability to use off-peak fares. Swings and roundabouts will always apply in this situation, but the penalty to those who use more than one type of transport is extreme and an unfair penalty on those who really have no choice.

Ultimately, those close to the city can catch buses, if not trains, the whole way, those in major suburbs along the train lines can use them - those a long way from the city more than often need to get a bus to a train interchange. In a city where a 25km trip from Parramatta to the CBD takes well over an hour on a bus or 25 mins on a train, we simply can't use buses the whole way.

This is why they built the T-ways into Blacktown, Parra and Liverpool - to get us to the trains! But now those people who rely on this particular form of transport provided a few years ago by the state government are now going to be slugged with increased fares.

And that's my problem, I don't mind a bit of swings and roundabouts, that always happens but they have effectively removed discounts worth hundreds of dollars for a significant minority of travellers - had they just removed quarterly train tickets or MyMultis there would be protests, yet that is effectively what they've done but they get away with it because we finally have a smartcard system.

Some would say Sydney Trains are revenue raising, I would argue it's simple laziness - unlike other cities, they couldn't be arsed to factor in multi-modal costs, and simply charge people the same old train/bus/ferry fares - while removing the over-riding MyMulti platform, which was created for the very reason that the Opal system now reintroduces.

Personally, I think people facing a 25-50% fare hike should be complaining, yes some (most, even) people will save a bit of money, but for a lot of people this is a huge cost increase.

That said,  I am of course happy we finally have a real system and there are pros and cons:

Good points:

Buses are cheaper in general
Those on singles/weeklies make a small saving
No major prepayment needed
You don't need to buy tickets
Off-peak fares available
Unlimited travel

Bad points:

Savings are minor and replace much larger ones
Penalty for switching modes (this is fair why, Gladys?)
No savings for those who don't work 5 days (sick day, anyone?)

The silver lining

The 8 trips thing can be easily manipulated - on Monday/Tuesday just hop on a city circle ride, or get a bus for one stop during your lunch (technically speaking you could spend Monday making a trip once an hour 8 times and only pay $15 for a week)

The bad news is, that for those who used to be on Quarterlies you'll barely break even on your old fare - a lot more effort for the same price (but the old monthly travellers do pretty well, based on my experience)

09 June 2014

What is Q and A meant to be

biased presumably...

The ABC need to decide whether their flagship political chat show is a proper people's forum like the BBC's Question Time or a talking heads show, two weeks ago it was given over to authors from the Writers Festival, and tonight it was handed over to a group of 'wise elders' comprising:

Jane Goodall – Primatologist
Betty Churcher – Art educator
Peter Coleman – Conservative intellectual
Rosalie Kunoth-Monks – Central Australian Indigenous leader
Stuart Rees – Founder of the Sydney Peace Foundation

There hasn't even been a rationale presented for this anti-politician format - as much as I'm interested in Jane Goodall's experiences there is little to no public value in hearing the political views of selected individuals without any politicians to anchor the debate.

I can understand the concept, politician-free episodes can be much better for debate, and nobody misses the politicians spouting the same lines and avoiding every question, but the purpose of the show is for our representatives to answer questions. Very occasionally Question Time would run one of these formats, and they can work very well, particularly if they have a non-political topic like science or religion, but in general if there's current politics discussed the politicians need to be there.

My issue with the ABC is that, in their frequent 'non-politician' Q and As the topics are the standard political questions, but with a bunch of pointless people with their own pointless views answering the questions. I don't even want to start on the views of these people and the typical accusations of bias. I would find a 'balanced' panel completely redundant in these cases, they aren't there as specialists in the field and so the exercise is, in my view, boring, wasteful and indulgent, that's before we even point out the obvious accusations of bias.

Tonight, and last time (and many times before) there were political questions, such as attacking the government over their environmental record (one example from tonight) - inviting such questions to a panel of hand-picked commentators with no links to Parliament is clearly open to bias. Effectively the ABC grant a free-kick to whichever side they wish, typically regarded as 'the left', but by excluding the main parties and simply picking sympathetic commentators they avoid any objective measure of bias. This is why such shows, funded by the taxpayer as a form of political public service, should be stopped.

It's plausible that the ABC think that these shows offer a break from 'Punch and Judy' politics of Australia, and create a more civil dinner table type of experience, but somehow I doubt anyone genuinely believes that, and if they do, they're mistaken. Selecting 'wise elders' based on the views of some ABC staff is unlikely to create a more popular edition and only serves to provide ammunition to their critics, and crucially, it turns the show into a talking heads show, which is a deviation from the aim of providing public political discourse. If the ABC wish to make a dinner table show, stacked with their own choice of public figures, then they should make one and stop allowing a political debate show to be taken over by random groups of 'commentators'.

As an aside, yes some commentators might be of 'the right', and I do like some of the views presented, but the point is that it's a political discussion without any elected politicians, allowing the show to be hijacked by whatever views the ABC wish to present, these could be right, left or Martian for all I care, it ain't their job to pick who answers the questions, it's a medium for the government and opposition. It's a taxpayer funded political debate show, it needs to get politicians engaging with the people, not writers and activists.

If the ABC wish to keep these formats, I suggest they alter the name and clearly announce 'non-political chat show night' each time they do this.

23 February 2014

How not to live off 80k

I don't really understand people who are hopeless with money, but then I don't understand a lot of people (like Greens voters)

Jenni Ryall is a News writer on a 12 week course to stop being a financial disaster - stop getting taxis everywhere, kick the $10 a day coffee habit etc etc - this week's lesson is (extremely crude) budgeting, or at least a cash flow statement

Everyone needs a budget, doesn't have to be written down, but it helps - my concern with Jenni's article is that she thinks 'Jim's' fictional budget below is a way of 'dominating life'How your graph should look: Jim’s yearly expenses.
So, on a post-tax income of 60k (which is roughly an above average salary of 80k) 'Jim' has 1k in assets at the end of the year - quite possibly to be used for the 'yay-no-debt' party

Now, if you were doing this off a 40k salary, which is just above min wage, then that would be a reasonable result, particularly if you were working towards a pay rise, but 80k is a decent salary to most Australians, it's more than about 80% of all ozzies earn and therefore may represent the peak earning capacity of a lot of people (source) - Jim is buggered if he loses his job (is he a journalist too??), probably needs debt to go on a holiday and is likely facing work til he's 70 (or 80 at the current rate of change) and will be reliant on his minimum super contributions and will probably rely on the pension (but then again...YOLO!)

Not fun in my view, it always amazes me the amount of 30-somethings that simply piss money up the wall, mostly in the form of rent - why is Jim spending over 25k of a single income on rent? Jim likes 3 bedrooms to himself? My whole house would get less than that on the rental market

Maybe he's a sole breadwinner of a family of 4, maybe, but still, 25k is about the yearly cost of interest on a $500k mortgage at current rates - even with the current market, get your own unit with a 3 or 400k mortgage and you're not only saving on your expenses, you're building an asset with excellent growth prospects - why are you surrending more than you need to someone else's income stream?

Secondly, this guy spends over $7000 on a car loan, which could have a 3 or 5 year term and you would hope, therefore, was a new car, and yet he spends $1000 on maintenance per year

Want to know how much I spent on maintaining my 13 year old car last year? - $1300, that was for a major scheduled work, obviously as the car gets older I am exposed to greater likely costs, but such costs are weighed against the utility of the vehicle and the savings I get from not needing to buy a car (which is basically a huge expense, not a store of wealth)

Now while petrol is obviously varied on circumstances, for some reason this guy pays over $2500 on insurance and CTP, more than 50% what I paid last year, so it must be a nice car, that apparently is out of warranty and breaks down a fair bit (Alfa??), he's spending about 15% of his income just on owning the car, the petrol on top of that takes it to over 20%

Combine with the rent, the two basic items of his shelter and car cost him 62% of his income - this is a moderately high income earner and we haven't even got to food yet...

'Transport' bizarrely is again nearly $2k, this is possibly related to Jenni's taxis, or could be the train/bus/tram, but again, the obvious question is raised that why would you spend so much on a car when other forms of transport cost you so much?

So we're now left with about 35% of Jim's income to pay for stuff that isn't related to going from A to B or keeping a roof over his head - food is pretty reasonable, in fact most of his other costs are pretty good - even the clothing budget, probably because he's giving over half of his income to his landlord and the bank

The major exception is entertainment costs - Jenni apparently spends 25% of her income on this, Jim spends $125 every week and this is only 10% so god knows what she is doing

To be honest this is a reasonable figure to work with, budgeting shouldn't be about cutting back on the enjoyable parts of life - maybe try limiting yourself to $100 a week, but really, the rent and car costs should be the red flags

Likewise, the $7 a day coffee habit and $100 in bank fees are simply waste, drop them

If Jim was to spend $7000 on a used car this year (not great, but remember he has no money, so deal with it) next year he would instantly have $7000 to invest, along with savings from using the cheap work coffee and kicking pointless fees he'd be close to 10k a year surplus with minimal fuss - he could then save for a deposit, invest in property, cut his rent expenses substantially and start increasing equity

Alternatively, do what my single mates do and share a rental - only a sole-income family man would need to pay that much himself, instant 15k saving right there - he could even buy the unit, let it out to another 2 people and let them pay his mortgage...

The truth is, you really only need about 30k or 40k to 'live' - I think that's where the poverty line was drawn in Australia last time I checked, but a lot of 'wealthy' people spend so much on flash cars, eating out and general crap that the lowly shop floor workers are actually worth more - I happened to see my boss' savings target recently, and I'm worth many times more (he's older, we're both DINKs) - simply because the gap between my income and expenses is so much bigger than his, despite him earning maybe 30% more than me

As for this daft series, the fact that the whole purpose is to get you to spend $36 on a 12-week frugality course should ring alarm bells, creating wealth really is quite easy:

If you really are hopeless - put your payslip into 3 (or more accounts), set your budget and your savings goals, then put the money for your bills and essentials in one, 'fun' money in the other, and a set amount in the other as savings - treat that last amount as if you don't even have it, live off the reduced income and it does the work for you