APT thanks the Tribunal for this opportunity to follow up our earlier submission to the Review, and to comment on the issues identified in the Discussion Paper.
But first, let's go back to the beginning.
CityRail's submission has four main points:
While we are here nitpicking about twenty cents a trip, we are ignoring, as the current metaphor goes, the elephant lurking in the corner. In fact, there are two or three elephants in the room, or at least some rhinos or hippos.
The first elephant or obstacle is the absence of an explicit fares policy. Such a policy would give clear direction to transport authorities, and a clear statement to passengers, about how and why fares are set. Charges for water are set, amongst other things, to encourage reduced water usage. Traffic fines are set, amongst other reasons, to encourage safer driving habits.
A fares policy would give direction in such matters as commercial practices, cost recovery, equality and harmonisation, the ability to pay, ease of use, modal shift, increasing patronage, social obligations, environmental obligations, concessions, etc. Such topics are required to be considered by IPART, but outside of that, there is no defined government policy on fares.
The second beast in the room is the archaic fare system that has remained virtually unchanged since the first trains ran in 1855. On TransPerth's web site the ticketing page begins: "like most of the world's major public transport systems, TransPerth determines fares by dividing its service areas into zones". Guess which major city doesn't.
In fact, guess which is the only Australian capital that still sells train tickets. That's right. Only in Sydney can you still buy "a train ticket". If a person fronts up to the office at Dandenong railway station, or Sunnnybank, or Cottesloe or Goodwood railway stations, and asks for a ticket to town, he won't receive a train ticket. He will get a zone ticket. Only at Milsons Point station would he get a train ticket.
Related to this beast is the urgent need to manage the network as a public transport system, not as a patchwork of public or private buses, trains, ferries, trams, etc, which may or may not recognise each other's existence.. The point was made recently by the Auditor-General that the system doesn't even have a marketing name. Other cities have TransPerth, TransLink, Metlink, MetroTas, AdelaideMetro, etc, but all we have is a number - "131500".
The third beast is the magnitude of the task. An average fare rise of 20 cents a trip for 273 million trips would produce about $54 million additional revenue per year. The Christie report estimates that about $12,000 million is needed over the next ten years to bring everything up to scratch. See details attached. This is a very big gap, and trying to fill it from passengers' pockets is akin to filling the boiler of 3801 with a thimble. Actually, that comparison is a bit cruel. I have given the Tribunal some "back of the envelope" jottings which would bore you if I read them out here.
The Tribunal has nominated the following four topics for discussion today:
APT has neither the expertise nor the desire to intrude upon CityRail's cost management processes. All we can hope is that CityRail has the serenity to accept the things it cannot change, the courage to change those things it can, and the wisdom to know the difference.
However, one item we are puzzled about is the specific costs to improve safety and reliability. How did slower trains and fewer trains cause costs to increase?
IPART, with the agreement of CityRail, has called in a consultant to look at CityRail's accounts. Considering the breadth of the consultant's agenda to investigate and overhaul CityRail's cost accounting methods, one wonders how much reliance can be placed on the current records.
There are two main methods of raising more revenue - higher volumes and higher prices. Most large businesses would opt for higher volumes, yet all we ever hear from CityRail is higher prices. Where are the proposals to increase patronage?
There is much mention of "the level of government funding" as if this is a taxpayer handout to rich city folks. Many government services attract a high level of subsidy, and the government chooses to do this because the alternative is too awful to contemplate. If the government had a fares policy, we would not be here discussing what is an appropriate level of cost recovery.
The Tribunal has noted the discrepancy between CityRail's view and the public's view of service standards.
A failure rate of point zero zero something in CityRail's performance doesn't sound like much, but it usually translates to thousands of angry travellers. If Woolworths offered a 99.99 per cent reliability in the supply of my favourite muesli, and one day it wasn't there, that's no big deal. I buy something else or come back tomorrow. Unfortunately it doesn't work like that with cancelled trains. All the average numbers in the world won't pacify a grumpy passenger. And, of course, CityRail long ago dropped the apology from the end of its "cancelled for today only" announcements.
As emphasised previously, APT believes that setting train fares (as opposed to setting public transport fares) is an exercise in navel-gazing, refusing to look around and see the rest of the world pass us by.
APT accepts that a cataclysmic change is not going to befall the fares system overnight. However, perhaps IPART could be both audacious and adventurous and start the reform in a small way now.
Rail fares are charged in 24 small bands - ten bands from 0 to 65 kms, another ten from 65 to 195 kms and another four up to 305 kms. (Note that these are distances and not concentric circles. Five kilometres from Central costs the same as five kilometres from Scone.)
IPART could consider some heavy-handed slashing of the number of bands as a step on the way to a true zone fare system.
The Discussion Paper then poses three questions:
The Tribunal has partly answered its own question from an analysis of the problems in the public submissions. The main gripes, apart from those in the table above, are:
IPART should therefore declare itself unable to adequately assess CityRail's proposal. If, in the absence of the desired information, IPART still wishes to allow an increase, they could save a great deal of time and money, and get roughly the same result, by picking a number from one of the pieces of paper in my hat.
But back to the elephants. If CityRail's cost accounting is in such a parlous state that consultants need to be called in, then how can that accounting be used to justify a fare rise. We must wait until the consultants' findings are known before we dare use the figures to justify anything.
Any decision to change CityRail fares should be deferred until the results of the 2008 review of CityRail's regulatory framework are known.
Fares should have little or nothing to do with costs. The sooner that the Tribunal, CityRail and Treasury understand this, the quicker we can start the fares reformation.
CHRISTIE REPORT - EST. TEN YEAR COSTS (TABLE 7.1)
| Item | Est $m |
|---|---|
| Capital projects - patronage growth (Sect 4.4) | 2,585 |
| Corridor protection (planning, land acquisitions, etc) (Sect 5) | 200 |
| Capacity-enhancing station upgrades (Sect 4.4/4.6) | 150 |
| Fire and life safety works on underground lines (Sect 4.7) | 180 |
| Easy Access station upgrades (Sect 4.6) | *145 |
| Bus/rail interchanges and car parks (Sect 4.6) | 400 |
| Other upgrades to stations | *260 |
| Power supply capacity upgrades(Sect 4.8) | *30 |
| Signalling and train control modernisation projects (Sect 4.9) | 230 |
| New rolling stock (for replacement and growth). $595m in first five years + $1,180 in next five years (Sect 6.1/6.2) | 1,775 |
| Stabling yards & maintenance facilities (Sect 6.3) | *100 |
| Rail infrastructure - major periodic maint (Fig 4.22) | 2,550 |
| Rail infrastructure - routine maintenance (Fig 4.22) | 1,400 |
| Stations major periodic maintenance | 100 |
| Rolling stock major periodic maintenance | *600 |
| Rolling stock routine maintenance | *400 |
| TOTAL ($11.1 billion) | 11,105 |
| * Estimates for first five years only. Continued for five more years could be another $1,535m. |
CITYRAIL'S INCOME AND EXPENDITURE
Some "back of the envelope" figures.
2006/07
| INCOME | $million | EXPENDITURE | $million | |
|---|---|---|---|---|
| Fares $1.97 x 273 m | 538 | Operating $8.44 x 273 m | 2,304 | |
| Subsidies and Other | 2,546 | Capital | 780 | |
| Total | 3,084 | Total | 3,084 |
A fare increase of, say, an average of 20 cents per trip will raise $54 m, which will not go far towards total costs of $3,000 m.
The Christie Report recommends expenditure of $11,000 million (mostly on capital items) over ten years, or about $1,100 million per year. This might include some expenditure that CityRail has classified as Operating Expenses above.
However, there is still a large gap of three or four hundred million dollars a year between CityRail's expenditure at the current rate and that recommended by the Christie Report.
And there would be a similar but expanding gap every year for ten years unless the government had a radical change of thought on funding.
Allan Miles Action for Public Transport 30/08/07