South Australian Government bus strategy wrong: researcher

Source: Flinders Indaily


One of Australia’s most respected public transport academics has backed criticism of the State Government’s decision to competitively tender Adelaide’s public transport bus services. Professor David Hensher, Director of the Institute of Transport and Logistics Studies at the University of Sydney and member of our BRT Centre of Excellence, agreed with advice provided to the South Australian Government to not competitively tender the state’s public transport bus services. This advice was ignored by the Government, which competitively tendered the services in 2010.

Since the new contracts began there has been widespread dissatisfaction with the performance of the bus system, and patronage has declined significantly since 2010. The advice, from former public transport chief Heather Webster and two former consultants to South Australia’s transport department, favoured a process of negotiated contract extensions.

Prof Hensher told Indaily that three rounds of competitive tendering in Adelaide had ironed out the cost inefficiencies and lack of service incentives under the previous public monopoly model. “But all the research on competitive tendering versus negotiated performance-based contracts is showing that one cannot squeeze any more out of the cost efficiency stone after three rounds and the risk of declines in service quality is real if this is pushed,” he said. He said competitive tendering resulted in the loss of a trusting partnership between government and operators. Prof Hensher also agreed with Webster’s criticism of the government’s investment in light and heavy rail, as compared to the bus system. He pointed to a study he had undertaken comparing the operating costs of Sydney railways with buses, both private and public. The study concluded that a train costs about 14 times more to operate per service kilometre than a bus. Statistics also showed that the Sydney buses carried 13 per cent more passenger trips than trains, meaning that trains are close to 16 times more cost-inefficient compared to buses. “This is a staggeringly different sum and raises some serious questions about value for money in investing in rail versus bus,” Prof Hensher said.

Webster questioned the government’s spending on trams and trains, when the bus network shouldered so much of the public transport burden in Adelaide, and at a much lower comparative cost. Figures provided to Indaily by the Department of Planning, Transport and Infrastructure showed that in 2011/12, buses were responsible for 50.99 million boardings, while trams accounted for 2.9 million and trains 9.62 million.

Prof Hensher provided Indaily with data on the performance of Melbourne’s public sector buses, which shows considerable growth based on a negotiated contract process, under which service improvements are agreed between government and industry. By contrast, Adelaide’s form line is going in the opposite direction. Government data shows a steady increase in patronage over the first two complete rounds of competitive tendering, followed by a sharp drop-off in the past two years.

Transport Services Minister Chloë Fox defended the Government’s decision to competitively tender the services. “The state’s primary responsibility is to the taxpayer and I fully understand why the Government chose to test the market for value for money,” Fox said. “The tendering of contracts also provides the opportunity to introduce a range of contractual changes towards the improvement of services, an opportunity that was exercised in the recent tendering in areas including financial incentives/penalties, range of services provided and key performance benchmarks. This is shown tangibly in the much stronger penalty provisions which now apply.”