From The Sunday Age
Privatised trains, trams on the wrong track
By William Birnbauer
April 9, 2006
THE promises ran faster than an out-of-control express train. Premier Jeff Kennett was full of steam in 1999 and the public transport sell-off was the most exciting game in town.
Privatising the system would reduce the subsidy, provide better services and new trains, improve railway stations, and even eliminate the need for a transport minister, Mr Kennett said. It was a "win, win, win" for Victoria.
He predicted the changes would be the envy of the world. They were noticed, but not the way he predicted.
"No other first-world city has followed Melbourne's lead," an expert report obtained by The Sunday Age
says. "We have become the … example of why privatised urban public transport does not work."
Mr Kennett recently expressed dismay at the outcome: "We now pay billions in subsidies to the private operators, which was not the idea of privatisation," he said.
Victoria's four leading transport analysts and critics compiled the report. Dr Paul Mees is a senior lecturer in transport planning at Melbourne University and is a past president of the Public Transport Users Association. Michael Buxton is an associate professor at RMIT University and is seen as the father of Labor's "green wedge" legislation.
John Stone is a public transport politics researcher from Swinburne University. Dr Patrick Moriarty is an engineering lecturer and transport researcher from Monash University.
The report says that if the Connex and Yarra Trams' franchises were extended to 2010, taxpayers would pay $2.1 billion more in subsidies than if public transport were still publicly owned. This compares with projections in 1999 that taxpayers would save $550 million.
The Liberal government in 1999 split Melbourne's trains and trams into five franchises. Three private operators won the bids and signed 12- to 15-year contracts. But in early 2002, the Bracks Government announced a $105 million bail-out for the operators. It was not enough for National Express Group and it pulled out of the system later that year, leaving only Connex and Yarra Trams.
The analysis shows that Government rescue packages in 2002 and 2004 increased subsidies to operators while reducing service obligations.
Passengers were also hit with higher-than-inflation rises in ticket prices in 2003. The report says this will amount to about $100 million of extra revenue by 2010.
"When announcing the refranchising in 2004, the transport minister (Peter Batchelor) claimed that the private operators had improved the service quality and increased patronage faster than under public ownership. Neither of these claims was correct at the time, and since 2004, reliability has deteriorated, particularly on trains," the report says.
Mr Kennett told The Sunday Age
privatisation had turned out "different from what we intended. When the operators got into trouble after Labor's election in 1999, they ran to the Government and got a bigger subsidy. I probably would have said, 'Well if you can't manage it, you lose the franchise and we will look at either retendering it out or we might look at any other option'."
He said private operators had initially made the system more punctual and added rolling stock, much of it locally made. "The question is whether that is a good outcome or not so good outcome. The (Bracks) Government has handled it differently than we would have," Mr Kennett said.
The analysts say private operators bought about $500 million in rolling stock, some of which would have been bought under state ownership.
But they say $2.2 billion is a lot to pay for such an investment and the trains and trams "which were ordered in haste to meet contract deadlines have serious design flaws".
Trams had poor suspensions and fewer seats, and some train carriages had only two doors, slowing boarding and alighting. Others were subject to speed restrictions because of braking problems.
Bus operators received a subsidy equivalent to $4.09 for each passenger, the report says. In Vancouver, Canada, the subsidy was equivalent to $2.20. "These results confirm the findings for train and tram services: privatisation is not serving the public interest," the report says.