The details of the new franchises for Melbourne's public transport, released this week, provide a ringing endorsement of privatisation.
The contracts show that the involvement of the private sector in the provision of public transport services, as a form of public-private partnership, controls costs for taxpayers and provides better services for commuters.
Also, the fact that new operators with ambitious plans are replacing the incumbents strongly validates the decision to award new franchises by a competitive tendering process, rather than by negotiation.
This crucial decision was a close-run thing. There were powerful elements within the Government that advocated negotiation with incumbents, rather than testing the market. Fortunately, the Government chose the more courageous option of going to tender, the first time this had been done since the initial contracts were let in 1999.
Competitive tendering has achieved the impressive double of keeping costs under control for the eight-years of the contracts while delivering several customer service initiatives. Where there is investment, it is in the key maintenance area, which ensures that some practices and attitudes that remain from Public Transport Corporation days are finally eradicated.
The new operators, Metro Trains Melbourne and Keolis Downer EDI (KDR), will bring new perspectives, and strong international expertise, to Melbourne's trains and trams respectively. Given the focus on trains in recent years, MTM probably has the bigger challenge. It is a joint venture between MTR Corporation of Hong Kong, and locals John Holland and UGL Rail (a division of United Group Limited).
The fleet that MTR operates to more than 99 per cent punctuality in Hong Kong contains rolling stock that has a life expectancy of 40 years and that raises the hope that even the older components of Melbourne's fleet can be utilised efficiently. MTM has also committed to ensuring that air-conditioners on Comeng trains will be able to operate in temperatures up to 45 degrees.
Anyone who stands at Flinders Street in the evening peak also knows that there is scope to radically restructure train platform movements, which remain essentially as they were designed by VicRail bureaucrats when the City Loop opened in the early 1980s.
New contracts have also given the Government the chance to amend the performance regime, which often meant that operators could be fined for the consequences of their success in increasing patronage in Melbourne at a rate faster than almost any other city in the world.
Unfortunately, the Government was slow to respond to the patronage boom delivered by the private operators but was often prepared to have the operators carry the can for problems that were beyond their control. For years, the Government had the best of both worlds, taking credit for improvements and blaming operators for problems.
Privately, Premier John Brumby must be happy the privatisation of the public transport system was completed just days before the 1999 election. Given that the Government, when left to its own devices, managed to turn an $80 million regional fast-train project into one costing more than $1 billion, one shudders to think what it might have spent on the metropolitan system.
Without privatisation, it would probably look more like Sydney's system, which has had no patronage boom, costs taxpayers far more to operate and performs worse.
Melbourne entered the 1990s with its streets blockaded with trams as a result of what were regular strikes that had destroyed confidence in public transport. Fares were increasing at a rate way above inflation, the system had inefficient work practices and patronage was about half its present level.
Two decades of reform, privatisation and a patronage boom provide the new operators with the opportunity to finally bring home the bacon for Melbourne's commuters.
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