John Brumby's aim to be a more decisive premier than his predecessor seems to have brought a quick end to the months of speculation about what will happen to the existing public transport franchises when they expire in November next year.
In deciding on continued private operation and competitive tendering in 2009 (after a short extension to existing contracts), the State Government has followed the path I recommended earlier this year.
One option that the Government rejected was re-nationalisation. The push for this largely came from a recidivist, anti-market core of public transport activists and academics. Those supporting this line generally seemed to be motivated by a general antipathy to private enterprise that made them unwilling to acknowledge that the introduction of private operators has actually improved Melbourne's public transport.
One of their more exaggerated claims was that privatisation had doubled costs to taxpayers. While it is true that the franchised arrangements had failed to deliver the big savings envisaged by the Kennett government in 1999, the Auditor-General found in 2005 that the costs were comparable to pre-privatisation levels, and provide "value for money" to the taxpayer.
The Department of Infrastructure also recently engaged Deloitte to review value for money assessments the department had made. The review confirmed that private operators have delivered increased services for the same cost to taxpayers.
It has been commuters, rather than taxpayers, who have been the winners from privatisation. In particular, they no longer have to endure the strikes that were a feature of the system in public hands.
On almost every performance indicator, incumbent tram operator Yarra Trams has provided a superior service to that provided by the Public Transport Corporation in the 1990s. For much of its franchise period, train operator Connex has also offered improved services.
However, as every rail commuter knows, Connex has had its share of problems. Many of the factors that have affected its service, such as the redevelopment of the Spencer Street -- now Southern Cross -- station, and the problems with the brakes on the inherited Siemens trains, have been largely outside its control.
At the moment, Connex's biggest problem is overcrowding. But this is indicative of success rather than failure. The growth in patronage in Melbourne is the highest in the country, so our private operators must be doing something right that their government-operated counterparts interstate are not.
The other pressure that the Government sensibly ignored was a push to simply give the two incumbent operators lengthy extensions, bypassing competitive tendering. The argument was being made in public transport circles that tendering processes are time consuming and costly, and that a better outcome could be achieved behind closed doors. Yet the benefit of privatisation to taxpayers and customers comes largely from the competitive process of tendering.
Of course, the benefits from competitive tendering will only accrue if the Government ensures that a strong field of tenderers make it to the starting line. Prospective tenderers will want to be convinced that it is a genuinely fair and open competition.
Getting a significant number of bidders is just one of the challenges the Government will face. A major challenge will be to ensure that the new ticketing system is implemented in a timely and non-disruptive manner. It will also need to develop an operational performance regime that will last through the next contract period, as well as delivering the infrastructure that will be needed if private operators continue to increase patronage.
Another advantage of fresh tendering is that the Labor Government will finally have to cease its double act of claiming credit for the benefits from the introduction of private operators, while blaming any problems on the Kennett government's "flawed" model.
Tuesday's announcement shows that the Government knows that the positives of public transport privatisation have clearly outweighed the negatives.
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