Friday, November 14, 2008

Coughing up for others' inefficiencies

When Infrastructure Australia is sorting through funding requests from the states there is a strong argument that it should reject any for transport in NSW.

In particular, it should bin NSW Premier Nathan Rees's demand for federal funding of a $4 billion metro from the Sydney CBD to the inner west.  The latest NSW metro is a truncated version of one announced under Morris Iemma's premiership, when it was proposed to extend all the way to Sydney's outer northwestern suburbs at a cost of $12billion.  The Iemma proposal was, in turn, replacing a plan for a conventional rail link to the northwest at a fraction of the cost of a metro.  One of the oddest arguments Iemma made in support of the metro was that it would provide the catalyst for improved work practices across Sydney's CityRail system.  There is no doubt that CityRail needs a drastic overhaul, but spending $12 billion, or even the reduced amount of $4 billion, and waiting years to build a metro, seems both unnecessarily costly and slow.

A recent benchmarking study found that retaining train guards and staff at low patronage stations means that the NSW Government is paying $130 million more than it should to operate its metropolitan rail system.  It is also clear that savings of a similar amount could be made by adopting more efficient maintenance practices for both rail infrastructure and rolling stock.  Yet, despite the obvious need, Rees seems to have ruled out substantive rail reform, no doubt cowered by the power of Unions NSW.  By contrast, in the 1990s in Victoria, the Kennett government removed all train guards, reduced the number of station staff, and reformed maintenance practices under a package of reforms that rail unions ended up accepting without strike action.

Rail is not the only aspect of transport in NSW that needs reform.  In 2007, the Walker report recommended that the best way to stop Sydney Ferries haemorrhaging $50 million a year was to privatise it.  Remarkably, Rees has now announced that the ferries are to be returned to direct government control.  Report author Bret Walker has commented that Rees's decision "may even reduce the present statutory pressure for efficiency".

Sydney is also the only of the five main state capitals where a state government operates a bus fleet.  It is little surprise that the franchised operations in Adelaide and Perth and the private operators in Melbourne are more efficient than the Sydney operation, but so too are the council-operated Brisbane buses.

Unsurprisingly, the culture that tolerates operational inefficiencies also has an appalling record on delivering public transport infrastructure projects.  Sydney's new Epping-to-Chatswood rail line is years late, has seen a massive cost blowout, was designed with a tunnel that is too steep for the modern Tangara trains and, according to recent reports will impose deafening noise levels on commuters.

Given the demonstrable inefficiencies of Sydney's trains, ferries and buses, the demand for federal funding raises an important question.  Why should taxpayers from the rest of the nation have to subsidise the transport system in NSW, when it is clearly the country's least efficient?  Further, it is now being run by a state Government that has given up making any attempts to reform it.

It is clear that IA needs to ensure that it does not subsidise transport infrastructure that could be funded by a state or territory if that jurisdiction's own transport system were operationally efficient.  In doing this, IA could provide infrastructure funding under a model similar to the one that, in the '90s, saw the federal government provide incentive payments to the states for undertaking competition reforms.

With such obvious avenues for transport savings in NSW, it would be hard to justify giving federal funding.  Until now, it has been the long-suffering Sydney commuters and taxpayers of NSW who have paid the price for the power of Unions NSW to stop transport reform in the state.  Unless IA rejects Rees's demands, in future it could be the whole of Australia paying for NSW's refusal to reform.


No comments: