Current governance arrangements based on the franchising model are not delivering public transport services that serve the public interest. What patronage growth has occurred has been the natural result of population growth, or (since 2005) a fortuitious accident triggered by high petrol prices. Passengers are not being supplied with the fast, frequent, clean, reliable, safe and cheap public transport needed to provide a decent alternative to car travel. The failure of public transport to grow patronage consistently and to be managed in a cost-effective manner also fuels the view, promoted by the road lobby and influential within the Brumby Government, that public transport is inherently expensive and unattractive to ordinary people and that the only ‘realistic’ solution to our transport problems is more and bigger roads.
Fortunately, we have the opportunity to change to a different model of governance with a minimum of pain. The franchise contracts signed in 2004 expire in November 2009 (after a one-year extension granted by the government in 2007), and if not renewed, bring about a ‘sunset’ provision where the trains and trams revert to public ownership automatically. There is no compensation payable to the private operators, other than a token payment to cover the older rolling stock. Of course, it is alternatively open to the government to negotiate entirely new contracts with the private operators. In any case, a decision on the future of the contracts must be made by 30 November 2008, as the contracts stipulate a twelve-month notice period.
A New Public Planning Authority
It is long-standing PTUA policy (dating from before the 1999 privatisation) that Melbourne should move to the Transport Community model of governance that is used in most other cities with successful public transport systems. The timeframe for the expiry of the franchise contracts provides for an orderly and relatively painless transition from one model to the other, with or without the involvement of private operators. The important thing is that new institutional frameworks be put in place early, and adequately resourced, to be ready to take control when the final handover occurs.
Our recommended model for Melbourne involves a public planning authority (PPA), established as an independent statutory corporation with similar status to Vicroads. At least initially, it should be responsible exclusively for public transport to provide a proper focus, and should be a small, lean agency modelled on the ZVV and staffed by experts in the field. (Much of the current success of Perth in expanding public transport services and growing patronage relative to Melbourne is attributable to the fact that in the 1980s Perth’s transport agencies recruited international expertise while Melbourne’s did not.)
To ensure Melbourne’s PPA works in the public interest it needs to be accountable in ways that our current institutions are not. It should have an independent board that meets in public, publishes its documents, and to which councils, community groups and citizens can make formal representations. Independence from the Department of Infrastructure is essential to achieve the necessary culture change: we do not recommend maintaining the PPA as a division within the Department, as unlike Perth’s Public Transport Authority, the Department does not currently have a culture conducive to the expansion of public transport services in the public interest. Independence gives the PPA the freedom necessary to recruit the necessary expertise and means it is not required to compete continually for internal resources against other Departmental divisions.
Vuchic (2005) gives the following as “the necessary or desirable qualifications and capabilities” of PPA board members:
- Strong civic interest (the position usually brings only nominal remuneration), regional orientation (rather than representing interests of a local area only);
- Technical knowledge, or at least good understanding, of transit system operations, such as technical issues, economic aspects, management, and personnel characteristics;
- Use of and interest in transit system, positive attitude, activism and initiative;
- Absence of potential conflicts of interest or strong involvement in a political party.
(Vuchic 2005, p.300)
As noted by Vuchic, some governments require that candidates actually use public transport extensively, or have used it extensively in the past. There is an obvious contrast with current Victorian public sector practice of providing taxpayer-funded cars to senior figures, typically on novated leases that oblige the person in question to drive a large number of kilometres each year. (To his credit, the Director of Public Transport himself declined the offer of a government car.)
Public Transport Operations
Actual services should be provided by other organisations: either renationalised public agencies, the current operators re-engaged as subcontractors on a fee-for-service basis, or new private subcontractors. Wherever private operators are sought, services should be competitively tendered and ‘gross cost’ contracts employed, following the model in Zurich and other cities with private-sector involvement. The PPA should undertake common branding, which should be of the ‘all over’ style found in Perth, Toronto, Vancouver, Zurich and London.
While the PTUA does not have a firm view for or against the involvement of private operators, we note that public operation of fixed-rail (train and tram) services makes it easier for the operator to directly own their rolling stock, thereby simplifying the contractual arrangements. With private fixed-rail operators it is more advisable for the operator to lease rather than own the rolling stock, as the latter is usually not interoperable with other public transport systems and is therefore best regarded as a ‘civic asset’ to be retained in public ownership in the host jurisdiction. The typical duration of contracts is also much shorter than the lifespan of rolling stock, so that the PPA risks being left with substandard assets at the end of a contract if procurement decisions are left to a private operator. The UK experience with private rail operators has not been encouraging, and Vuchic also notes that private operation of rail services has proved less successful internationally than with bus services:
The distinctly lower success of tendering rail than bus services appears to be caused by the inherent differences between the two modes. Important factors are the differences in the physical system characteristics (special ROW and more elaborate system technology), cost structure (different investment / operating cost ratios), management and operating methods (much more centralized for rail), as well as fundamentally different public images of the two modes. (Vuchic 2005, p.462)
Whatever entities are ultimately used to operate train, tram and bus services, it is important that the PPA use its coordinating function to urge innovation in operating practices. At the same time, this innovation must be directed toward the public interest, rather than simply reflecting an operator’s internal agenda, as has occurred under the franchising model to date. It may be kept in mind that in France, both Connex and Yarra Trams’ parent company Transdev operate under contract to city-based public agencies that are evolving from a quasi-nationalised model to a Transport Community model (Vuchic 2005, pp.460–1).
Operator practice must be reformed to encourage a pro-passenger culture extending to all staff levels, to avoid incidents like this one (sadly typical of current attitudes):
—Do you know where Zone 2 starts?
—It’s not a V/Line thing.
—But do you know?
—Could you tell me?
—Where Zone 1 finishes!
(Exchange between V/Line staffer and passenger, reported in The Age, 15 April 2007)
Management attitudes and personnel training must create employees who are strongly motivated and feel responsibility for providing high-quality services. This commitment must be present throughout the organization, but particularly with all persons affecting service or being in direct contact with the public, from general manager to station personnel and vehicle operators. (Vuchic 2005, p.316)
Transfer of Organisational Functions
The Office of the Director of Public Transport would retain some responsibilities under the new arrangements, and would continue to exercise its current role during the transition. Ultimately, the role of other bodies like Metlink and the Transport Ticketing Authority would be assumed by the PPA also, as well as a formal complaints avenue to remove the need for passengers to approach individual operators and to complement the role of the Public Transport Ombudsman.
The Victorian Road-Based Public Transport Advisory Committee also can and should be broadened in representation, and transferred from Vicroads’ auspices to those of the PPA. As Vuchic writes:
Planning and introduction of [public transport priority] measures requires coordination of many agencies and authorities. In many cities, this function is performed efficiently by a body usually known as a transit first committee, which consists of representatives of the transit agency, city’s traffic engineering or streets department, police, parking authority, and other relevant organizations. The committee has the goal of analyzing present transit services, defining problems, and developing and implementing measures that will result in improvements of transit services. (Vuchic 2005, p.317)
In summary, the following are the minimum actions necessary to move from the franchising model to a Transport Community model and establish a success-oriented culture in Melbourne’s public transport:
- Establish a new statutory corporation reporting to the Transport Minister but independent of the Departmental structure, in the same sense as Vicroads. Recruit personnel internationally to board and management positions to import the necessary expertise and cultural outlook.
- Exercise the option not to renew the existing franchise contracts with Connex and Yarra Trams. Once the new agency is established, transfer to it the re-tendering powers under the franchise contracts, giving it jurisdiction over the future arrangements with public transport operators.
- Give the new agency a mandate to plan in the public interest, to seek public input at all stages of the decision making process, and to apply world’s best practice to increasing mode share. In practice this means that the new contracts would be of a ‘gross cost’ fee-for-service nature, published in full, based on a transparent formula for operating costs, include a straightforward process for monitoring service quality, and if private operators are used, would be competitively tendered.
- Progressively transfer to the new agency the (metropolitan) functions, budget, and personnel where appropriate, of Metlink and the Office of the Director of Public Transport.
Within this framework there remains considerable flexibility for the exercise of governmental discretion: to retain private operators or resume public ownership; to involve the new agency in scrutiny of land-use planning decisions; to determine the composition and the balance between officials and expert appointees on the agency’s board; to determine the new agency’s budget; and so on. The PTUA in its other policy documents has stated views on many of these matters, but from the perspective of governance and ensuring the right managerial culture the above actions are a necessary minimum.
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