The cost of community transport

Community Transport (CT) provides essential mobility for vulnerable populations but remains financially fragile due to misaligned funding. In Australia, prevailing flat-rate subsidies fail to cover true “care-embedded” service costs, which vary significantly by geography, client complexity, and trip distance. Addressing the challenge of designing cost-reflective paratransit subsidies, we utilize a unique mixed-methods dataset—combining financial audits from 31 CT operators with operational telemetry for 175,000 trips—to estimate a transparent, benchmarked cost function. Our analysis reveals a severe structural deficit: the volume-weighted mean cost per trip (AUD 67.50) nearly doubles the current subsidy. Furthermore, we unmask a “rural cost paradox” where lower rural labour costs obscure significant capital burdens. To resolve this, we derive a National Variable Pricing Formula structured as a two-part tariff, featuring a fixed base flag-fall and a distance-based variable rate, supplemented by verifiable premiums for high-needs clients and remote capital. Simulations demonstrate this schedule increases the sector-wide cost recovery ratio from 52% to full sustainability, enabling most operators (25 of 31) to achieve 80% target solvency without incentivizing cost inflation. This study provides the first empirical cost analysis of CT, offering a transferable blueprint for transitioning to sustainable, activity-based transport subsidies.