Fares please! An economic history of the Melbourne & Metropolitan Tramways Board

Descent into the red

The new Chairman of the M&MTB was F. R. Kirby [27], who was to have the shortest tenure of any in this role. He had the unenviable task of taking over from Risson, in whose shadow he had stood for many years and who was still very much a key player in his subsequent role as the Executive Director of the Metropolitan Transport Committee.

Furthermore, the dependence of the M&MTB from 1970-71 on State Government subsidies to enable day-to-day operation placed the Board under a greater degree of political control than it faced under Kirby’s predecessors. Therefore both tactical and strategic decisions began to come under the authority of the Minister for Transport rather than the Chairman of the M&MTB, and it began to take on the character of a social service rather than a business.

M&MTB W2 class numbers 632, 537, 354 and 428 in storage at Thornbury Depot, 1979. Official M&MTB photograph M&MTB W2 class numbers 632, 537, 354 and 428 in storage at Thornbury Depot, 1979. These surplus cars were placed into store due to their replacement by Z class tramcars and overall reduction in service frequencies.
Official M&MTB photograph.

As one example, the issue of fare increases – long a point of contention between the M&MTB and the State Government – became almost wholly an electoral issue rather than a reflection of costs, given that the Board was kept operational by subsidies. And the Government committed to paying ever-larger subsidies over the next twelve years, as it wished to remain electorally popular by not increasing fares – besides, it was easier to mask the true costs through subsidies rather than fare rises.

Risson had kept extremely tight control over expenditure during his term, but once he was gone it appears that the discipline he embraced in this area was discarded – there were few areas remaining that could be cut further – given the widening gap between receipts and expenses. Admittedly, Kirby faced a range of new challenges, such as the hyper-inflation induced by the OPEC oil shocks of the 1970s, and the corresponding explosive growth in wages. The nature of industrial law had not substantially changed since the struggles of the 1950s, so his options with regard to reducing costs or improving productivity were very limited.

Total receipts and expenses, 1919-20 to 1981-82. Source M&MTB Total receipts and expenses, 1919-20 to 1981-82.
Source M&MTB.

The M&MTB during its final period can be viewed as a perfect case study of the corrupting effects of subsidies. At a simplistic level, the primary product of the Board was vehicle kilometres measured in kilometres per employee, and its revenue was determined on passengers per kilometre. Basically there was no improvement in the Board’s productivity to offset the decline in passengers per vehicle kilometre, nor was there any incentive to do so as the State Government could be relied upon to make up the operational shortfall. Under these conditions, the Board began to be operated more for the benefit of its employees rather than its customers and shareholders [28] – a situation very similar to that of the Australian sugar industry at the start of the twenty-first century.

These troubles aside, the retirement of Sir Henry Bolte as Premier in 1972 removed a key tram opponent from the power equation. His successor, Sir Rupert Hamer did not have an anti-tram bias, and was willing to pump substantial investment into the M&MTB, particularly to ensure re-election.

Brand new PCC 1041 at Preston Workshops in 1973. Official M&MTB photograph Brand new PCC 1041 at Preston Workshops in 1973 prior to its official launch.
Official M&MTB photograph.

This change of environment saw the construction of PCC 1041 in 1973, the first new tramcar built for Melbourne since 1956. This car was used to test many of the design features for the subsequent Z class trams, which commenced delivery two years later. Unfortunately PCC 1041 would have a short service life, and was to be the last tram built by Preston Workshops, external contractors building all subsequent trams.

In 1975, 30 Leyland National [29] buses entered service, the first new buses since the acquisition of the AEC Mark VI buses in the mid-1960s. These were the first buses ever bought off-the-shelf by the M&MTB, all others being designed specifically for Board use. Both the new buses and trams displayed a new high-visibility orange colour scheme to mark the beginning of a new era of investment in public transport.

Dudley Snell [30] was the final Chairman of the M&MTB, succeeding to the role in 1976. He was to preside over the first increases in the tramway network since 1956, namely:

  • East Burwood extension to Middleborough Road – 23 July 1978
  • East Preston extension to Boldrewood Parade – 19 May 1983.

In 1976 Snell closed the single-track non-passenger Holden Street line that was only used for car transfers between the East Coburg and West Preston line – although this was unplanned, as the Fitzroy Council dug up the infrequently-used line without seeking authorisation from the M&MTB.

He was also to oversee the order of 115 trams of the Z3 class (the follow-on from the initial Z class orders), as well as the introduction of the Volvo B59 and MAN buses. A change in funding strategy was undertaken with these buses, being leased rather than purchased outright. This strategy for financing public transport equipment would be extended with disastrous consequences to the finances of the State Government under the Cain State Government, but this was not to have an effect until after the end of the M&MTB.

Snell did oversee ticketing innovations, with the introduction of the ‘Day Tripper’ which allowed unlimited daily travel on M&MTB trams and buses, to be followed by the ‘Travelcard’ which introduced the same concept to multi-modal public transport across the M&MTB, the Victorian Railways and private bus services based on ticketing by zone. These initiatives did see a reversal of the decline in public transport usage as it became more cost-effective for passengers to undertake journeys that involved one or more changes of vehicle.

However, increases in passenger usage did not have a significant impact on the Board’s financial position, which saw an operating deficit in 1981-82 of $6,265,147 – despite a State Government subsidy of $49,850,000.


[27] Francis Richard Kirby BEE, FIEAust, AMInstT, MCIT was M&MTB Distribution Engineer from 1953 and in 1960 became Chief Engineer of the M&MTB, achieving the position of Deputy Chairman in 1965, and Chairman from 1970.

[28] The nadir of this trend was to be seen in the ‘scratch ticket’ dispute of January 1990 when the tramway system was under the management of the Public Transport Corporation. This dispute was ultimately over one-man crewing of trams. The basic equation of employee productivity would not change until after the privatisation of the system under the Kennett Government, removal of conductors and introduction of the ‘Met-ticket’ automated ticketing system – a solution not without its own problems, particularly with regard to fare avoidance.

[29] Leyland had acquired AEC some years earlier under the general rationalisation of the British motor industry.

[30] F.D. (Dudley) Snell DipEE, MIEAust, MCIT was Chief Engineer of the M&MTB prior to his appointment as Deputy Chairman in 1970, before becoming the fifth and final Chairman in 1976.