Infrastructure Australia released a study today claiming that privatising public transport can save billions of dollars:
I had a quick read of the study and I have to say, I found it utterly unconvincing. The executive summary talks up privatisation, but the study text doesn’t really present any compelling arguments for or against it.
It provides a case study of Melbourne’s tram and trains, but the graphs showing patronage and punctuality/performance don’t really show how privatisation/franchising affected this. After privatisation in 1999, patronage was stagnant initially, only shooting up in the latter part of the 2000s when population growth, the economy and CBD growth really kicked in.
Patronage before and after 1999 privatisation. I’d be reluctant to pin this on anything the operators did. Mostly the economy/pop growth.🏙️ pic.twitter.com/MTNNVNbUyG
— Daniel Bowen (@danielbowen) May 25, 2017
A section discussing service reliability (eg cancellations and punctuality) notes that the Auditor General concluded many of the factors there were taxpayer investment in infrastructure and fleet upgrades.
It talks about forecast cost savings from other PT services around the country being privatised/franchised, but doesn’t really talk about the cost savings out of Melbourne’s existing franchises (perhaps because there haven’t been any) – instead only talking about costs since 2004, which is five years after privatisation occurred.
Theoretical cost savings obtained in modelling by PwC. Actual cost savings based on Victorian experience are zero. https://t.co/In2l0dVJIl
— Tony Morton (@tonybmorton) May 26, 2017
The study does compare Sydney vs Melbourne operating costs (Melbourne is lower), claiming the main difference is public vs private operation, but seems to ignore the fact that Sydney trains have two staff aboard each service vs Melbourne’s one — something which changed before privatisation occurred.
Thanks to some well-placed headline figures suggesting that the savings can be spent on [insert local city upgrade here], it’s had plenty of media coverage around the country, including The Age and Brisbane Times.
— Nine News Melbourne (@9NewsMelb) May 26, 2017
Ultimately it’s not about who runs the services, it’s about whether it’s done well. Privatisation doesn’t change that.
New operators might bring in experience and innovation from their other operations, which potentially means improvements.
But the risk is if governments don’t put in adequate checks and balances, operators will simply cut costs and the service will decline, discouraging passengers and ultimately resulting in fewer people using it: higher subsidies per passenger, and traffic, equity of access and livability impacts on our cities.