Home' Future Building Australian Infrastructure Review : July 2011 Contents 70 futurebuilding
Volume 2 Number 1
Asserting that the overarching goal of reform to rail services should be the pursuit of greater customer
satisfaction at greater value to taxpayers, the key recommendations of the paper are:
1. Undertake a Special Commission of Inquiry on improving rail service quality and efficiency, including
a detailed investigation of the potential to franchise part or all of the New South Wales passenger rail
system to the private sector.
The guiding objective of the Inquiry should be to identify options to achieve increased rail customer
satisfaction, at less cost to government. The Commission of Inquiry should be led by a suitably qualified
individual or team of experts and be able to draw on sufficient resources to fully examine the
necessary issues. Consultation with and submissions from government agencies, industry, business,
unions, the community and regulators should be sought to ensure as broad a range of views as possible are
2. Resolve the features required to support an effective franchising model that represents value for money
for the community. These features should inform the terms of reference of the Special Commission of
Inquiry and concern the appropriate roles of government and the franchisee.
Based on our examination of other franchising schemes in Australia and internationally, these features
• Government should retain public ownership of all rail assets and provide infrastructure and rolling
stock for purposes of franchising.
• Fares should continue to be regulated by the government.
• Government should assume the responsibility for preparing standard operating timetables.
• Government should assume the responsibility for network planning. Network planning should be
informed by an operating plan, demand analysis, customer requirements, economic analysis,
engineering analysis and risk assessment.
• Government should bundle below rail maintenance with passenger services and allow franchise
operators to bid for funding for project upgrades. This would create incentives for operators to plan
for long-term maintenance and invest in the network. The timing of this may be most appropriate
after an examination of the potential of the Clearways program in promoting future competition.
This examination should consider whether opportunities have been created for open access or
tendered concessions on any or all of the sectors in the rail system.
• The relationship between the government and franchisee should be governed by a contract of around
eight to 10 years with a further option to renew the contract.
• Franchise contracts should be clear and simple, with measurable objectives that provide for
continuous improvement in the delivery of services. To ensure this, contracts should:
Explicitly identify any government funded Community Service Obligations that the franchisee is
expected to deliver.
Include relevant, measurable and achievable performance indicators that:
› are linked to customer requirements;
› can be benchmarked;
› can be independently verified;
› support trend analysis; and
› form the basis of payments or penalties to the franchisee.
3. Consider whether the New South Wales Government, as the infrastructure owner, should assume risk in
the rail network and simplify the network to improve operating efficiency.
While franchising offers opportunities to attract private sector innovation, investment and efficiency
into the rail network, government should at an early stage determine its own investment levels.
Government or private investment would need to be linked to network planning to have the optimal
impact on operating efficiency.
Getting New South Wales rail back on track
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