Private companies benefit from patronage gains

The Public Transport Users Association (PTUA) has called for a restructure of the tram and train contracts, as the government prepares for the next phase of privatisation.

PTUA President Daniel Bowen said that moving to a “fee-for-service” model (also known as “gross cost”) would ensure that growing patronage benefited commuters, rather than the private companies’ bottom lines. Under the current arrangements, Connex and Yarra Trams benefit from increased ticket sales, and while they cite overcrowding for increased delays and fines on their performance, they are not compelled to invest back into the system to fix problems.

Metropolitan ticket revenue is mostly distributed straight to the operators, with 40% going to Connex, 40% to Yarra Trams, and 20% to the government to help pay for bus services.

The PTUA compared the operators’ revenue from tickets and performance penalties for 2005 and 2007. During this time fare revenue jumped by 29%, or around $50 million for each operator, while fines for poor performance went up about $5 million each.

“As patronage grows, Connex and Yarra Trams are incurring growing fines because of the increased delays. But the additional fare revenue of around $50 million per year each for Connex and Yarra Trams is outstripping the increasing fines, which are up about $5-6 million per year for each”, said Mr Bowen.

“It’s clear the private operators are profiting from recent increases in public transport usage, even though it is the government that is responsible for paying for things like expansion of the fleet and removal of single track bottlenecks, as well as paying additional money as extra services are provided.

“The current contracts, due to expire soon, are a complicated mess of payments, incentives, fines and subsidies. With patronage continuing to climb as petrol prices spiral out of control, the government should move to a simpler and fairer ‘fee-for-service’ arrangement for the new contracts, to ensure that increased revenue can be put straight back into continued upgrades to rail and tram infrastructure and services, rather than boosting the profits of the private companies”, Mr Bowen concluded.


  • Fare revenue: 2005 $174.3 million; 2007 $225.0 million (up $50.9 million)
  • Performance fines: 2005 $22.6 million; 2007 $28.5 million (up $5.9 million)

Yarra Trams

  • Fare revenue: 2005 $174.4 million; 2007 $225.4 million (up $51.0 million)
  • Performance fines: 2005 $79,000; 2007 $5.3 million (up $5.3 million)

Sources: Track Record issues 21 and 33.

More information about public transport governance arrangements

See also: The Age 2/6/2008 Transport fares outstrip penalties