The focus of our audit

 

 

 

Each day RailCorp, State Transit and Sydney Ferries transport passengers who have not bought a ticket or paid the correct fare. To limit fare evasion, each agency has revenue protection measures in place designed to educate the travelling public, to be highly visible and to catch and fine passengers evading fares. Around 95 per cent of fines for fare evasion are for infringements on the rail system, compared with five per cent for buses and ferries.

 

 

 

The State Debt Recovery Office (SDRO), a division of the Office of State Revenue (OSR), is responsible for enforcing fines. The Infringement Processing Bureau (IPB) within SDRO processes the fine, and if it is not paid within a specified period it is forwarded to its Fine Enforcement Branch (FEB).

 

 

 

Our 2000 performance audit reviewed the levels of fare evasion and fine default for rail, bus and ferry services. It examined the measures agencies had in place to minimise fare evasion and also examined the efforts of the agencies, the Infringement Processing Bureau (IPB) and the State Debt Recovery Office (SDRO) in minimising the level of fine default.

 

 

 

This follow-up audit examined the progress agencies had made in addressing the recommendations from the 2000 audit. Where particular recommendations had not been accepted by agencies, the audit examined progress that had been made in addressing the issues relating to the recommendation.

 

 

 

Audit opinion

 

 

 

The overall level of fare evasion is now lower, and the revenue forgone much less, than in 2000.  The estimation of fare evasion, detection of fare evasion and management of fare compliance by RailCorp, State Transit and Sydney Ferries has improved, although Sydney Ferries needs to improve further.

 

 

 

However, only one in four fines for fare evasion are paid within 12 months.  This is worse than in 2000.  And the number of frequent fare evaders has almost trebled.

 

 

 

SDRO and the transport agencies need to develop new and improved strategies to reduce the level of fine default and to better manage frequent fare evaders.

 

 

 

 

Our 2000 audit

 

 

Key findings of 2000 audit

In 2000, our opinion was that arrangements for ensuring fare compliance were not adequate and improvement was required. We found that:

§             a significant number of passengers travelled without paying the correct fare, resulting in many millions of dollars in revenue foregone

§             even when caught, the majority did not pay the fine.

 

 

2000 recommendations accepted

In 2000, State Transit (then including Sydney Ferries) and RailCorp (formerly the State Rail Authority) accepted our recommendations to improve:

§             fare evasion estimates

 

§             planning and management of revenue protection, including clarifying accountabilities and introducing performance measures and targets

 

§             information sharing and co‑ordination between transport agencies  and SDRO

 

§             public awareness and understanding of penalties for fare evasion especially in terms of concession travel

 

§             guidance on discretion to those authorised to enforce the law

 

§             strategies to deal with frequent fare evaders.

 

 

 

RailCorp also accepted our recommendations to examine:

 

§             ways to reduce the complexity of concession entitlements

 

§             the reasons for fine default to improve the payment rate.

 

 

 

Appendix 3 provides a summary of the status of recommendations and changes since 2000.

 

 

 

This 2006 audit

 

 

Key findings 2006:

Fare Evasion

RailCorp estimates that fare evasion on metropolitan trains has fallen from 4.1 per cent (one in 24 passengers) in 2000 to 2.3 per cent (one in 43 passengers) in 2005. That is, from 10.8 million to 5.3 million passenger journeys per year.

 

 

 

State Transit estimates that fare evasion on Sydney buses has increased from 0.7 per cent (one in 148 passengers) in 2000 to 1.1 per cent (one in 94 passengers) in 2005. That is, from 1.3 million to 2.0 million passengers journeys per year. However, State Transit believes this increase is because it has improved its detection and measurement of fare evasion.

 

 

 

Fare evasion on Sydney Ferries still cannot be measured reliably.

 

 

 

More than 2,700 people were caught fare evading on the rail system more than ten times in the three years to September 2005, compared with around 1,000 people caught in the three years to September 1999. The total value of these offences was more than $6 million, and few of these people pay their fines. One person was infringed 210 times.

 

 

Key findings 2006:

Fine default

 

Three out of every four fines issued for fare evasion are not paid within 12 months, compared to around 60 per cent reported in 2000.  

 

SDRO continues recovery action on unpaid fines beyond 12 months and recovery rates typically improve.

 

 

 

A fall in fine payments occurred in 2003 at about the same time rail fines were increased.

 

 

 

In the 12 months to September 2005, seven per cent of infringement reminder notices (around 9,700) were returned to SDRO (i.e. marked “return to sender”). SDRO attempts to identify an alternative address on all returned to sender mail and reissue the notice to the corrected address.

 

 

Key findings 2006:

Management of fare compliance

Compared to 2000, transport agencies now:

§             have improved revenue protection policy and strategic planning, including performance measures

 

§             make greater use of data and intelligence on fare evasion to deploy resources and determine appropriate compliance strategies

 

§             have better information on fare evasion

 

§             have clearly documented policies on exercising discretion

 

§             have better signs showing the consequences of fare evasion

 

§             use a range of innovative strategies to improve fare compliance.

 

 

 

The complexity of concessions has not been addressed by the Ministry of Transport and transport agencies. The transport agencies have also been understandably reluctant to make substantial investments in better compliance technologies given their expectation that the introduction of a single payment card for travel on all trains, buses and ferries (Tcard) will provide such technology. Tcard implementation has, however, been delayed by four years due to an extended legal challenge and contract variations.

 

 

Suggestions for Improvement

Our practice is to not make new recommendations in follow-up audit reports but we do make suggestions designed to improve progress.

 

 

 

Transport agencies and SDRO should:

§             routinely compile and share data on fine default and payment trends as a requirement of their service level agreements. 

§             continue to improve their ability to validate and verify offender name and address details

§             develop alternative ways of dealing with repeat offenders and the non payment of fines by frequent fare evaders

§             review data on infringements not paid to identify causes and use this information to inform revenue protection strategies, or identify additional training for revenue protection staff

§             undertake a review to determine whether additional training and powers provided to RailCorp transit officers has resulted in improved completeness and accuracy of offender details or whether further work is required

§             routinely report on the progress of performance audit recommendations to their Audit Committees (or equivalent) and in their annual reports.

 

 

 

In addition SDRO should:

§             consider developing alternative approaches to serving notices where the offender has multiple instances of mail marked “return to sender”

§             improve procedures for checking the identity and address of fines marked return to sender or where there is insufficient passenger details

§             monitor trends in fines marked returned to sender and consider the need for legislative changes if identity checks fail to reduce the rate

§             provide feedback to transport operators to help improve the accuracy and completeness of passenger details.

 

Response from RailCorp

 

I refer to your letter dated 7 April 2006 regarding the report on the ‘Fare Evasion on Public Transport’ follow-up performance audit.

 

RailCorp accepts the improvement suggestions contained in the audit report which relate to this organisation, and has prepared a table summarising the current status of suggested improvements (refer enclosure).

 

I was pleased to observe that the report highlights RailCorp’s Fare Compliance Strategy as an example of good practice. RailCorp is committed to maximising fare compliance on the CityRail network and will continue to develop, implement and improve initiatives such as the Fare Compliance Strategy, with this objective in mind.

 

RailCorp will also continue to work with the State Debt Recovery Office (SDRO) to increase the effectiveness and efficiency of the penalty notice enforcement process. In this regard, I can advise that RailCorp has agreed with SDRO to progress further information sharing strategies with a view to improving the rate of penalty notice payment.

 

In conclusion, on behalf of RailCorp, I extend my appreciation for the work undertaken by members of your office in undertaking this follow-up performance audit.

 

(signed)

 

Vince Graham

Chief Executive Officer

 

Dated: 13 April 2006

 

 

RailCorp Response to ‘Fare Evasion on Public Transport’ Follow-up Performance Audit Improvement Suggestions

Improvement Suggestion

RailCorp Response

Transport Agencies and SDRO should routinely compile and share data on fine default and payment trends as a requirement of their service level agreements.

Accepted – RailCorp has previously received and commenced analysing data from the State Debt Recovery Office (SDRO) concerning the status of RailCorp penalty notices.

RailCorp and SDRO have agreed to progress further information sharing strategies as a basis for improving the rate of penalty notice payment.

Transport Agencies and SDRO should continue to improve the ability to validate and verify offender name and address details.

Accepted – RailCorp is continuing to pursue improvement of its capability to confirm offender name and address with a particular focus on improving the capacity of RailCorp’s Security Control Centre to support officers in the field. In pursuing improvements in this area, RailCorp will continue to take into account information and advice provided by SDRO.

Transport Agencies and SDRO should develop alternative ways of dealing with repeat offenders and the non-payment of fines by frequent fare evaders.

Accepted – RailCorp will liaise with SDRO and other relevant stakeholders concerning the improvement suggestion that alternative ways of dealing with repeat offenders and the non-payment of fines by frequent fare evaders should be developed.

Transport Agencies and SDRO should review data on infringements not paid to identify causes and use this information to inform revenue protection strategies, or identify additional training for revenue protection staff.

Accepted – RailCorp and SDRO have agreed to progress further information sharing strategies. RailCorp will consider this information from the perspective of identifying opportunities to improve revenue protection strategies or Transit Officer training.

Transport Agencies and SDRO should undertake a review to determine whether additional training and powers provided to RailCorp Transit Officers has resulted in improved completeness and accuracy of offender details or whether further work is required.

Accepted – RailCorp has commenced an internal quality review process of completed penalty notices to assist in determining whether further work is required to ensure completeness and accuracy of offender details.

RailCorp will also continue to take into account information and advice provided by SDRO concerning this issue.

Transport Agencies and SDRO should routinely report on the progress of performance audit recommendations to the Audit Committees (or equivalent) and in their annual reports.

Accepted – RailCorp will report on the progress of performance audit recommendations to its Board Audit Committee and include this information in RailCorp’s annual report.

 

Response from State Transit Authority

 

Thank you for the opportunity to comment on the Follow-up of the 2000 Performance Audit on Fare Evasion on Public Transport. 

 

State Transit is pleased that the Audit Office has acknowledged the considerable improvements made in the management and operation of our revenue protection function since the initial audit in 2000. 

 

As indicated by State Transit in its response to the 2000 audit, the nature of “fare evasion” in State Transit is principally one of overriding, that is failing to pay the correct fare, rather than a failure to purchase a ticket.

 

State Transit does not consider that there has been any increase in the level of fare evasion on its services, rather that the improved planning and management of revenue protection has resulted in higher levels of detection of passengers who are attempting to evade paying the correct fare. 

 

State Transit in its 2004 organisational restructure, decentralised management of the revenue protection function to one its four key operations General Managers.  Significant investment has been made by State Transit in better planning for the deployment of State Transit’s revenue protection staff resources, in better training of its Revenue Protection Officers and in the setting of key performance indicators to ensure the effective performance of this function.  This has resulted in large productivity improvements in State Transit’s Revenue Protection Unit.

 

State Transit accepts the suggestions for improvement put forward in the report and will work with the other transport agencies and the SDRO to carry out the suggestions.

 

(signed)

 

John Lee

Chief Executive

 

Dated: 13 April 2006

 

Response from Sydney Ferries Corporation

I refer to your letter dated 4 April 2006 concerning the follow-up Performance Audit of the Fare Evasion Performance Audit undertaken in 2000, and thank you for the opportunity to comment on the associated Audit report.

Having read the report, I concur with the general findings of the Audit that, whilst Sydney Ferries has made significant improvements to the management of fare compliance, there are still some areas requiring further improvement. In addition, I make the following specific comments.

Sydney Ferries’ fare revenue protection system is predominantly ‘open’ in nature, with electronic barriers controlling and recording access and exit at only Circular Quay and Manly wharf, two of the 39 service destinations. The prohibitive costs associated with closure of the system through the installation and manning of electronic barriers across the network presents a major barrier to the Corporation’s ability to both minimise and measure fare evasion levels.

The impending introduction of the Tcard integrated ticketing system is expected to have a significant impact on the effectiveness of revenue protection for Sydney Ferries, to the extent that onboard tag on/tag off devices will provide a measure of closure to those services without electronic barrier controls at wharves.

Notwithstanding the limitations of the current fare revenue system, Sydney Ferries will continue to develop and refine its revenue protection activities, with particular emphasis on the following:

§         the development of reliable estimates of fare evasion and detection levels to facilitate the intelligence-based deployment of revenue protection resources;

§         the benchmarking and refinement of Key Performance Indicators and management reporting processes to establish clearer lines of accountability for, and better assess the efficacy of, revenue protection activities;

§         the revision of revenue protection policies, procedures and work instructions to ensure the clear articulation and assignment of specific revenue protection responsibilities and duties to operational staff and line management; and

§         strengthening the Service Level Agreement with State Transit, to ensure further improvements to the level and quality of data gathering and analysis, including information from the State Debt Recovery Office with respect to fine payment default rates and frequent fare evaders.

 

(signed)

 

Chris Oxenbould AO

Acting Chief Executive

 

Dated: 13 April 2006

 

Response from Treasury

 

I refer to your letter dated 4 April 2006 concerning the follow-up performance audit on public transport fare evasion. I thank you for the opportunity to respond and comment on this report.

 

I agree with the suggestions for improvement for the State Debt Recovery Office (SDRO) and make the following comments.

 

The SDRO has agreed with RailCorp on a number of strategies to further improve information exchange, which will assist with the improvement of payment rates of fare evasion fines. The SDRO will approach the other transport agencies to adopt similar strategies for improvement.

 

The SDRO will continue to look for ways to reduce the level of non-service of penalty notices including possible legislative amendments, investigate other avenues to serve notices and access to other government agency data bases in order to validate and verify name and address information.

 

Representatives from the SDRO will continue to meet with transport agencies to discuss ways to improve payment rates, address issues of repeat fare evaders, investigate alternative methods to address fare evasion and review the quality and effectiveness of information exchanged.

 

(signed)

 

John Pierce

Secretary

 

Dated: 12 April 2006