Transport affordability continues to decline across Australia in 2021

Tram Melbourne city

Tom Hounslow

Posted February 28, 2022

The Australian Automobile Association have released their latest Transport Affordability Index, and the findings for 2021 aren’t good for commuters. 

The rising cost of transport continues to hit Victorians’ household budgets, with new figures showing transport costs rose by more than $60 per week for Melburnians and more than $75 per week for some regional areas in 2021.

Victorians are currently paying $77 more per week on transport than the national average, new figures released by the Australian Automobile Association (AAA) show. But the increased costs aren't being borne by everyone as a number of Victorians are not commuting full time.

The AAA’s quarterly Transport Affordability Index factors in a range of transportation costs, including average fuel prices, car loan payments, insurance costs and roadway tolls costs.

Melburnians now spend an average $457.12 per week on transport – up $64.35 from a year prior. Meanwhile, transport costs grew in Geelong to $357.28 per week – an increase of $72.66 from 2020.

Historically, the AAA Affordability Index shows a gradual and steady rise or decline for both public and private transport affordability – normally in step with fluctuating fuel prices. However, 2021 saw a dramatic decline in transport affordability with costs increasing by almost 17 per cent.

“Rising fuel prices continue to be a significant contributor to cost of living pressures across both regional and metropolitan Australia,” AAA Managing Director Michael Bradley says.  

“With a federal election and two state elections this year, this index is a timely reminder that policies that further increase transport costs need to be avoided.”

Increasing transport costs, declining affordability

While Sydney and Melbourne have ranked as Australia’s most expensive cities for motorists, the steep rise in transport costs has been witnessed across the country – both in metro and regional areas. 

By the end of 2021, Melbourne was the second-most-expensive capital city for annual transport costs – estimated at an average of $23,770, which is $4,005 more than the national average. Melbourne also ranked third-highest for transport costs as a proportion of household income.  

RACV’s General Manager Mobility, Elizabeth Kim, says that while there are high transport costs in both metropolitan and regional areas, there are some simple things Victorians can do to assess their transport costs and how they might be able to save.  

“As people start to travel more, with health restrictions lifted and as workplaces fully re-open, their actual transport costs may increase, so we encourage Victorians to consider alternative forms of mobility such as public transport and bike riding. Information on how to access all forms of transport, including fuel prices, can be found in RACV’s arevo app, available for download in the Google Play or App Store.”

Though Sydney holds the unwanted title as the most expensive city for transport, our neighbours to the north only rank fifth in terms of proportion to household income. Tasmanians in Launceston and Hobart are feeling the pinch the hardest, with the highest transport costs in relation to household income.


Motorbike in traffic

Melbourne drivers paid an average of $82.14 per week in fuel costs in Q4 of 2021.

Why is tranport affordability dropping?

During 2020, as lockdowns were in full effect across Victoria, most people were confined to their homes without a need for a car or petrol. Because of a sudden lack of demand for fuel, transport affordability jumped as fuel prices fell to an average of $60.65 per week.

This temporary and uncommon period of improving affordability was overturned in 2021 as people got back on the roads. However, due to the temporary oversupply of fuel and the eventual downfall of supply chains, availability dropped, and sent fuel prices rising again. There is a multitude of other reasons that impact fuel price including geopolitical tensions, oil prices, and fuel excise taxes.

All these issues have ultimately resulted in a petrol price surge, and why Victorians are now paying over $2 per litre in some areas. 

“Melbourne has the second highest transport costs in the country, averaging an overall cost of $457.12 per week for transport. Geelong has Australia’s second highest costs for fuel expenditure averaging $99.94 per week. Melbourne fuel costs are $82.14 per week,” Ms Kim said.

Motorists are advised to shop around for the best deal wherever they are by using the Fuel Tracker on the RACV website, or in the arevo journey planning app.

The Australian Automobile Association is Australia’s peak motoring body, representing Australia’s state-based motoring clubs, including RACV.