This paper reviews some of the methods for financing urban public transport that are used in OECD countries. Stricter management of income and expenditure is needed, to limit the financial requirements of public transport systems. Spending can be controlled by giving more responsibility to individual production units, and by using private companies to provide services defined by a public authority. Transport undertakings need to invest wisely, avoid falling into debt, and seek additional financing, especially through allied property development operations. It may be useful to apply financial techniques related to leasing, which enables part of the tax relief of the lessor to be passed on to the final investment cost. Fares should increase at least as fast as operating costs. The tariff share of total income can be increased, but care should be taken to avoid social exclusion as a result. Diversified fare structures can be helpful. Urban public transport has some public financial support in every OECD country. One question is the level at which such subsidies should be provided; there is increasing belief that they should be applied locally, but this requires sufficient financial independence and resources for local authorities. In several countries, public-private collaboration on transport projects is developing. For the covering abstract, see IRRD 893662.
Abstract