Home' Future Building Australian Infrastructure Review : July 2011 Contents Although Sydney’s passenger rail network has
enjoyed significant improvements in its reliability
in recent years, rail services in New South Wales
continue to perform poorly in terms of both financial
and customer service performance. Beyond the
economic measures, customer complaints rose by
23.9 per cent in 2009/10, and cost recovery has
decreased markedly since 2007.
It is not that various public sector approaches
have not been tried. Over the past 13 years, the New
South Wales rail system has undergone significant
disaggregation and re-aggregation. Currently,
RailCorp owns the state’s rail infrastructure and is
the sole provider of passenger rail services. It mirrors
the former State Rail Authority (SRA) prior to 1996.
Between 1996 and 2004, the natural monopoly
infrastructure components of the rail system were
separated from the contestable, service delivery
functions. However, interface and reliability problems
have seen a regression in the structure – a case of
‘back to the future’.
The case for reform is compelling. Patronage
demand increased by 5.2 per cent in 2007-08 and is
currently growing at about 2.9 per cent – well above
the historic annual average increase of 1.9 per cent.
Annual growth in passenger demand adds pressure to
RailCorp’s infrastructure and services and increasingly
risks pushing passenger loading on trains above the
acceptable level of 135 per cent.
But patronage growth poses another challenge to
taxpayers. More people and greater demands require
additional services, in turn increasing operating
costs. Government affordable transport policies cap
the allowable fare increases to movements in the
Consumer Price Index.
This has given rise to a situation where the loss
incurred by RailCorp on passenger journeys was 14
per cent higher in 2009 than 2005. Over this time,
government has had to increase its recurrent and
capital funding for RailCorp to support train operations
and the renewal, maintenance and upgrade of
In the context of a stretched government balance
sheet, insufficient flexibility within the constraints of
the AAA credit rating and a huge demand for new
capital investment – including in extensions to the rail
network – the paper argues that it is time to give real
consideration to modernising passenger rail services.
So could franchising work in New South Wales?
The paper argues that ‘given the benefits, when
weighed against the costs, franchising the New South
Wales passenger rail system to the private sector is a
proposition worthy of further consideration’. It goes
on to suggest a realistic method of consideration in
the form of a series of key recommendations to the
New South Wales Government that would test its
costs and benefits in practice.
Getting New South Wales rail back on track
Over the past 13 years,
the New South Wales rail
system has undergone
significant disaggregation and
Volume 2 Number 1
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