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New modelling on the benefits of franchising, released as part of Infrastructure Australia’s ongoing Reform Series, shows that subjecting government-operated bus and rail services to competitive tender processes could save Australian taxpayers up to $15.5 billion by 2040.

As detailed in the report Improving Public Transport: Customer Focused Franchising, Australia’s population is growing rapidly. By 2040, our population will reach almost 34 million and this is driving a huge increase in demand for public transport services.

From 2011 to 2030, the urban public transport task in Australia is expected to increase by nearly 30 per cent.

Without additional investment and changes to how we plan, operate and fund our public transport infrastructure, commuters will face increasing levels of crowding and delays.

There is a tried and tested way to improve the reliability and the capacity of our public transport system at a state level. This begins with facilitating greater contestability in the delivery of our public transport services through franchising.

State and territory governments who pursue customer focused franchising can reinvest the savings generated through this approach back into the public transport system to deliver new trains and buses, station upgrades or additional capacity on our networks.

Franchised public transport is delivered in a tightly-regulated environment with clear performance targets, and contracts are regularly reviewed to ensure competition delivers the best result for the commuters and taxpayers.

Governments would still own the infrastructure and have responsibility for important decisions such as network planning, investment in new infrastructure, fare prices and timetabling. They would also be able to hold private operators to account with clear performance targets and penalties for poor service.

Domestic and international experience shows that this combination of competition and incentives deliver better outcomes for transport users and ensures that we have infrastructure that is well-maintained, customer-focused and responsive to shifts in demand.

Where public transport has been franchised through a competitive process, such as Sydney’s ferries and Melbourne’s trams, consumers have benefitted from increased investment and higher quality services. All public transport operators in Australia should be routinely and periodically exposed to a competitive process to ensure that users are provided with the best possible service at the most efficient price.

While public transport is the responsibility of state and territory governments, there is an important role for the federal government to play in encouraging these governments to embark upon public transport reform.

The federal government should use incentives to encourage the states and territories to embark on this nationally significant reform.

The incentives could be structured using a range of mechanisms including, the City Deals framework, COAG’s Competition and Reform Agreements or Infrastructure Reform Incentives recommended in the 15-year Australian Infrastructure Plan.

Whichever path the federal government takes, it is critical that our political leaders act now to ensure that our cities benefit from world class transport services for generations to come.

 
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