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Operators grasp state funds

01 Apr 2002

EXTRA funding to keep Melbourne's local rail and tram services going was announced by the Victorian government on February 26. The transport ministry said the 'interim agreement' would bring 'greater certainty and stability', with Transport Minister Peter Batchelor justifying the funds 'because of the financial problems facing the operators who were contracted to run the railway as part of the flawed privatisation process conducted by the Kennett government' in 1999.

National Express, Yarra Trams and Connex will receive A$41·6m in settlement of contractual claims and disputes arising from the privatisation. A further A$27m is to form a one-off payment while the companies develop strategies for business expansion to replace 'patronage growth incentives created by the Kennett administration [that] have proved unworkable'. In return, the operators are to top up their performance bond lodged with the state from A$105m to A$210m. The operators will also receive A$3m a year until the contracts finish in 2011-14.

Problems cited by National Express include the MetCard ticketing system that was ordered in 1994 but which was not fully commissioned five years later. Fare evasion is still a major headache which the companies estimate is costing them A$50m a year. Opposition politicians attacked the state government with accusations that Batchelor had been 'sucked in' to give taxpayers' money to private companies.