NSW Premier Barry O'Farrell has ruled out public transport fare increases above inflation without an improvement in services, after the pricing regulator recommended price hikes from January.
The Independent Pricing and Regulatory Tribunal (IPART) has recommended average maximum fare increases of up to 3.6 per cent for CityRail and 4.8 per cent for Sydney Ferries, from January 2013.
But Mr O'Farrell on Wednesday reiterated his government's opposition to fare increases above inflation, which currently stands at two per cent.
"Our policy is clear - no increases beyond CPI for public transport fares until we see services improve, because we think commuters deserve a break," Mr O'Farrell told reporters in Sydney.
"We understand that a lack of investment means that whether you're catching trains ... you're travelling on crowded services.
"We understand that services aren't as on time as people would like them, and we don't think that situation is going to be helped by whacking up fare increases that provide another disincentive to catch public transport, (to) jump in your car and add to Sydney's congestion woes."
IPART chairman Peter Boxall on Wednesday said that without real fare increases now, taxpayers would end up paying an extra $62 million over the next three years.
"We consider that taxpayers should fund a share of the efficient costs that is broadly equal to the value of the external benefits," he said in a statement.
"This value represents the level of taxpayer subsidy that can be justified on economic grounds."
The final determinations set fares for the next three years for CityRail and the next four years for Sydney Ferries.
Under the IPART determinations, CityRail fares would be allowed to increase by a further 3.8 per cent a year from 2014 to 2015, and Sydney Ferries fares by a further five per cent a year from 2014 to 2016.
A Transport for NSW spokeswoman later said fares would rise in January by 2.44 per cent - the inflation measure to the end of June 2012.