Trams have always been crowded with intra-CBD traffic, even in the fare paying (and no City Loop) days. You need to establish what percentage of users are actually freeloaders, which is a bit difficult given such journeys are not logged. As has been mentioned many times elsewhere, most people travelling in the Free Tram Zone will have already paid for it with a public transport journey from outside the FTZ. (Short journeys have been made less attractive by the increased spacing between tram stops.)
The whole issue of inner Melbourne interchanging now and in the future needs to be looked at. Some of the crowding on trams has been caused by running trains direct to or from Flinders Street. For example, to get to Melbourne Uni from the Sandringham line you have to travel all the way through the CBD from Flinders Street whereas as those from the east and south-east interchange at Melbourne Central. (Interchanging at Melbourne Central is another story, since developers lengthened the journey some 2 - 3 mins by forcing people to walk past their shops.) Some passengers from the west would find it easier to catch a tram up Bourke or Collins Street from Southern Cross rather than change to a crowded City Loop service at North Melbourne.
Metro Tunnel 1 will increase demand on trams in Collins Street as passengers from Town Hall head east or west, whereas previously they had direct access to Parliament, Flagstaff or Southern Cross. A similar situation will occur with La Trobe Street trams at State Library. If Metro Tunnel 2 runs via Parkville, Flagstaff and Southern Cross, a lot of commuters will be dumped in the north-west of the CBD with trams being a major option for completing their journey.
There are other non-tram interchange issues. If the Frankston and Craigieburn lines are through-routed via the City Loop then the only point for a direct interchange with some (most) regional services (eg Geelong and Ballarat) and the proposed Melbourne Airport line will be at North Melbourne. Getting to Southern Cross will require 2 interchanges. Future interchanging at Clifton Hill, Caulfield and Footscray is predicated on an equal number of people transferring from one full train as do from the other, which may not be the case. The Suburban Rail Loop may also affect some of the above. Perhaps interchanging should be discussed in a separate Melbourne Suburban thread.
People that appear to have had their laziness encouraged by jumping on a tram for a short journey (assumed to be on a fine day, not pouring rain or 35o
C+), rather than walk, and added to the sardine-tin feel that plagues trams throughout the CBD, to paraphrase a Melbourne newspaper, are really just participating in the Melbourne public transport experience, which will increasingly involve interchanging.