The Bus In­dus­try Con­fed­er­a­tion has ques­tioned In­fra­struc­ture Aus­tralia’s con­tention that ‘fran­chis­ing’ govern­ment-owned rail and bus net­works in Aus­tralia’s largest cities to pri­vate op­er­a­tors is the only op­tion to boost ef­fi­ciency

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The Bus In­dus­try Con­fed­er­a­tion (BIC) has ques­tioned In­fra­struc­ture Aus­tralia’s (IA) con­tention that ‘ fran­chis­ing’ govern­ment-owned rail and bus net­works in Aus­tralia’s largest cities to pri­vate op­er­a­tors is the only op­tion to boost ‘ef­fi­ciency’.

In a re­port re­leased in late May, ti­tled Im­prov­ing Pub­lic Trans­port – Cus­tomer Fo­cused Fran­chis­ing, IA ar­gues that “the na­tional govern­ment has a di­rect in­ter­est in more ef­fi­cient trans­port ser­vice de­liv­ery and this di­rect in­ter­est rep­re­sents a strong case for the fed­eral govern­ment to in­cen­tivise the states and ter­ri­to­ries to em­bark upon re­form un­der the ‘cus­tomer-fo­cused trans­port model’”.

Un­der this rec­om­mended model, gov­ern­ments would sell op­er­a­tional re­spon­si­bil­i­ties for the de­liv­ery of the ser­vices – not in­fra­struc­ture and other as­sets – through “time-limited ex­clu­sive fran­chises”.

The re­port refers to pri­vate bus op­er­a­tions and specif­i­cally non-fran­chised Mel­bourne bus op­er­a­tors, and the 2017 Vic­to­rian Govern­ment’s an­nounce­ment that it would phase out ex­clu­sive bus con­tracts over the next decade.

BIC ex­ec­u­tive di­rec­tor Michael Apps says that while he “couldn’t agree more” about the need for more ef­fi­cient trans­port ser­vice de­liv­ery, a be­lief that fran­chis­ing is the only way to de­liver more ef­fi­cient ser­vices is a “very heroic as­sump­tion”.

He adds: “The au­thors of the re­port let them­selves down by con­ve­niently ig­nor­ing the large body of ev­i­dence that does not sup­port their case,” in­clud­ing the fail­ure of a sim­i­lar pol­icy in Vic­to­ria sev­eral years ago.

“Per­haps IA should have con­sid­ered bench­mark­ing rel­a­tive PT net­work ef­fi­ciency and the agen­cies that run them to see where ef­fi­cien­cies might be gar­nered,” Apps sug­gests.

Ad­di­tion­ally, Apps ar­gues IA’s ref­er­ence to fran­chis­ing pri­vate – as well as govern­ment – bus op­er­a­tions raises some “in­ter­est­ing ques­tions” about own­er­ship of de­pots, ve­hi­cles and other as­sets that are in pri­vate hands.

“The re­port in­fers the same ben­e­fits (sav­ings for the tax­payer, higher-qual­ity ser­vices at better value for cus­tomers) will ap­ply in fran­chis­ing govern­ment-owned PT op­er­a­tions and pri­vate op­er­a­tions. I am not so sure about that; it is a com­pletely dif­fer­ent ex­er­cise,” he says.

“The re­port does not men­tion re­gional PT op­er­a­tions specif­i­cally but it does build on IA’s core rec­om­men­da­tion from the Aus­tralian In­fra­struc­ture Plan that all pub­lic trans­port should be sub­ject to a de­fault ex­po­sure to con­testable sup­ply through fran­chis­ing.”

While IA makes it sounds sim­ple, Apps dis­agrees. BIC’s view on pro­cure­ment of bus ser­vices is that state and ter­ri­tory gov­ern­ments should de­ter­mine how they

de­cide to pro­cure bus ser­vices, whether it is a com­pet­i­tive ten­der or ne­go­ti­ated con­tract; and that new ad­di­tions to the pub­lic trans­port net­work or op­er­a­tions pre­vi­ously not ten­dered can be sub­ject to a one-off ten­der or ne­go­ti­ated to set a cost base.

Apps points out that sav­ings gen­er­ated by ten­der­ing – or fran­chis­ing – pub­lic mo­nop­o­lies are not re­peated in sub­se­quent ten­ders, a po­si­tion “sup­ported by much re­search that has been ig­nored by IA”.

“There is also good ev­i­dence that sav­ings are re­duced if the pub­lic mo­nop­oly has gone through a cor­po­rati­sa­tion process.”

What’s more, a “one-size-fits-all” pro­cure­ment ap­proach for all states and ter­ri­to­ries and PT op­er­a­tions is not re­al­is­tic, Apps says, es­pe­cially in re­la­tion to city and re­gional ser­vices, school bus ser­vices and govern­ment and pri­vately owned op­er­a­tions.

“If key per­for­mance in­di­ca­tors are met in de­liv­er­ing pub­lic trans­port ser­vices, con­tracts/fran­chises should be rene­go­ti­ated as a first op­tion, or man­dated,” he says.

Apps con­cludes the worst out­come would be “blind ac­cep­tance” of the IA re­port by state and ter­ri­tory gov­ern­ments.

“In my view, the con­cept be­ing floated by IA that state and ter­ri­tory gov­ern­ments fran­chise pub­lic trans­port op­er­a­tions on a reg­u­lar ba­sis to re­ceive fund­ing is flawed.

“If pe­ri­odic ten­der­ing is the re­quire­ment and, there­fore, the mo­ti­va­tion for states and ter­ri­tory gov­ern­ments to get fed­eral govern­ment money, de­spite the per­for­mance of the op­er­a­tion, are we re­ally go­ing to get im­proved ser­vices lev­els for cus­tomers and value for money for tax­pay­ers?

“This ap­proach has the scope to de­liver ex­actly the op­po­site to what it plans to achieve. Put sim­ply, this is a pos­si­ble dis­as­ter in the mak­ing driven more by ide­ol­ogy than good pub­lic trans­port in­vest­ment, plan­ning and ser­vice de­liv­ery.”

“This is a pos­si­ble dis­as­ter in the mak­ing driven more by ide­ol­ogy than good pub­lic trans­port in­vest­ment”

Left: BIC ex­ec­u­tive di­rec­tor Michael Apps has raised a few concerns about In­fra­struc­ture Aus­tralia’s lat­est re­port

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