Putting the public interest back into public transport: a report to the Victorian community

The privatisation of Melbourne’s trams and trains has been an expensive failure. By June 2006, the privatised system will have cost $1.2 billion more in public subsidies than continued operation by the former Public Transport Corporation; by 2010 this difference will blow out to $2.1 billion. This is not counting the above-inflation fare rises at the end of 2003. Services have not improved, despite claims to the contrary; nor are the claims of a capacity crisis on the rail system correct. Private bus services consume large subsidies to provide poor services which carry low patronage levels. Private operators are blaming the system’s problems on insufficient subsidies, and are lobbying for increases. But the reverse is the case: train, tram and bus operators will receive $1.2 billion this year in subsidies and fares – more per head than first-class overseas public operators such as Vancouver’s Translink. Privatisation has not served the public interest. The State government is preparing a ‘transport and livability statement’, which will reiterate proposals for public transport improvements and extensions from previous documents, such as Melbourne 2030 (released in October 2002). Regardless of the merits of these proposals, they cannot be delivered affordably or effectively under the current institutional arrangements. The tram and train franchise agreements were released (quietly) late last year and we have analysed their contents. The franchises will expire on 30 November 2008, unless the state government gives notice that it wants to extend them. Such notice must be given by 30 November 2007 (only 19 months from now), but can be given at any time. If no such notice is given, then Melbourne’s trains and trams will revert to public ownership at 3am on 30 November 2008 without the risk of compensation claims. We recommend that instead of extending or renewing the franchise agreements, the state government replace them with a new public transport agency modelled on the very best in the world, such as those in Vancouver, Zurich or even Perth. We make detailed recommendations about the best way of establishing a dynamic, efficient, accountable public body to spend the annual $1.2 billion budget. The new public transport agency would have a small staff, no more than 30 or so, selected from the best people in the world. It would also have a governing board that meets in public and shares information with the public. The agency would need to be established well before the franchises expire in 2008, so it could ‘hit the ground running’ when it takes over the operation of services. It would then be charged with upgrading, integrating and extending trains, trams and buses to world’s-best standards. We are presenting these proposals to the Victorian community and the state government for consideration between now and 30 November next year (the last day on which the government can give notice that it wants to extend the Yarra Trams and Connex franchises). In the meantime, we call on the government not to extend the franchises, so the community has a chance to have a say about putting the public interest back into public transport.