Graeme Taylor
Action for Public Transport
1 August 2007
Action for Public Transport supports the concept of subsidised public transport. We believe that the benefits of public transport extend to the whole community, economically and environmentally. The burden of paying for public transport should not be borne solely by those who use these services.
The Special Commission of Inquiry into Sydney Ferries has proposed three models for funding ferry services. Our analysis reflects the wide range of issues to be considered when evaluating how to operate a marine public transport service. Our discussion of the first model seeks to clarify the role of government in planning and provision of public transport services. Analysis of the second model focuses on fleet specification and operational practices at Sydney Ferries. The third model provides the opportunity to better understand the market for ferry travel and how operators such as Sydney Ferries can maximise revenue and patronage.
Both the population and residential density of Sydney are growing, and the capacity of our roads and public transport network are stretched. The most economical and environmentally sustainable solution is to expand the capacity of public transport. Government policy also needs to address major issues such as the impact of dwindling world oil supplies on private vehicle usage, the economic cost of sprawling cities, and the need to reduce greenhouse gas emissions to combat global warming.
We believe that the government should be responsible for the planning
and regulation of public transport services. This function requires
focus, and a small, specialist organisation should hold this
responsibility. We believe that day-to-day business should be managed
by operators.
Safe operation of ferries requires specialist marine expertise, and this management skill is best located within Sydney Ferries. We believe that a government department which was required to provide detail support to some or all transport operators would become bureaucratic and unwieldy, resulting in slow decision making. The operators are closest to the markets they serve, and we believe fine tuning of service delivery is best left to them.
While an acceptable model, we believe that there is no significant advantage over the current arrangements (State Owned Corporation) that would justify the cost and disruption of required changes.
This is the current arrangement and we believe this is the optimal model. Sydney Ferries is responsible for its own day-to-day operations, collects its own revenue and provides services under contract to the Ministry of Transport. Action for Public Transport welcomes the improvements made to timetables since corporatisation in July 2004.
We would like to make the point that, from our observation, ferry
passengers like the vessels which comprise the current fleet.
Traditional vessels such as the Freshwater Class and the First Fleet
Catamarans are spacious and comfortable. The high-speed fleet makes
ferry travel time competitive and convenient.
We wish to add background information to the commission's analysis of
Brisbane Ferries. This was always a good service, even before the
private manager became involved. Patronage growth is driven by faster
ferries offering quick journey times, increased capacity from new,
larger vessels and the introduction of integrated ticketing. Brisbane
Ferries is a much simpler operation than Sydney Ferries.
Sydney Ferries vessels are unique to Sydney Ferries and control over the design and construction must rest with Sydney Ferries. A fact not understood outside marine circles is the historical involvement of Sydney Ferries own masters in the development of new vessels. The highly successful Freshwater Class were designed with the assistance of senior masters. However, in the case of the recently purchased HarbourCats and SuperCats, the builder was also the designer. These vessels, particularly the SuperCats are very unsatisfactory in terms of performance.
The cost to Sydney Ferries of over the life of the vessel of lease
cost should also be considered. It may be cheaper to buy new vessels
outright as they are generally designed to have an operational life
of more than thirty years. Disputes may also arise with the leasing
company regarding major maintenance.
Effective maintenance of large vessels requires good communication
between the crew who operate the vessels and those doing the
maintenance. Maintenance of the JetCats is a good case example, where
instances of unreliability correspond to the unavailability of
engineers to supervise maintenance. Sydney Ferries currently has its
own maintenance facility at Balmain which is capable of all
maintenance expect docking the Freshwater Class. We would not like to
see this facility lost because of the need for operational and
maintenance staff to work closely together, and the declining number
of ship repair facilities on Sydney Harbour. Sydney Ferries have
found outsourced work to be expensive and at times unsatisfactory.
The option would involve Sydney Ferries losing control over the style
of vessel. We would expect that the private partner would build
smaller, cheaper vessels than those in the current fleet and the
customer experience would be diminished by this arrangement. Sydney
Ferries are the largest ferry company in Australia and there vessel
style is unique. We also believe this arrangement may complicate
operational procedures which underpin the reliable provision of ferry
services.
While we believe it is critical the owner of the vessel should always
provide the crew, to ensure safe operation of the vessel, privately
funded vessels would most likely be smaller and less comfortable than
the current fleet. Capacity is a critical issue, especially on the
Parramatta River Services.
We believe that this option is impractical. Uncertainty, and the high
cost of new vessels would discourage investment.
We reject removal of the subsidy received by Sydney Ferries implicit in this model. However, we believe an analysis of this scenario provides valuable insight into the market for ferry travel on Sydney Harbour.
The critical reality for ferry operators is that cruise and leisure services are more profitable than commuter services. The opposite is true for Sydney Buses which makes its money on commuter services and loses money at weekends and between peak hours.
Given this reality, any ferry operator wish to increase revenue will focus on the leisure market. We believe that provision of commuter services is essential in a major city such as Sydney, and that subsidisation of fares for commuters is in the public interest.
Regular passengers on Sydney Ferries' services have much experience of traveling on private ferries. It is common practice for Sydney Ferries to hire private ferries when their own vessels break down. These vessels are generally older, smaller and less comfortable than Sydney Ferries own vessels.
If model two was adopted, it would provide entry to this market for a private enterprise assisted by government. We believe that this is really a form of corporate welfare. The reality of the current regulatory situation is that any new entrant can enter the ferry market. Where is the stampede? A review of market conditions on Sydney Harbour may provide the answer. Demand, particularly in the leisure market over the last two years have been poor, with many cruise operators struggling to attract sufficient trade.
In a rare example of a new venture on Sydney Harbour, Palm Beach Ferries recently tried to enter the commuter market on the Parramatta River. They received no subsidy for operation of this service. The $50 charged for ferryten tickets proved too expensive for passengers and the service failed to attract sufficient patronage. Sydney Ferries have subsequently taken over this run, offering cheaper fares, and have attracted very strong levels of patronage.
Matilda Cruises operate a similarly priced service on the Lane Cove River which attracts better patronage probably due the affluence of the catchment area. However, this service does not operate outside peak hours, a factor in car dependence. Matilda's other services on Sydney Harbour which compete directly with Sydney Ferries could be best described as cherry picking.
Action for Public Transport would like to see private operators of
ferry services included in the integrated ticketing project. This
will involve renegotiation of their contracts with the Ministry of
Transport, and a possible an industry assistance package to make the
transition possible. We believe that any sharp increase in the price
of fuel is likely to impact heavily on private operators. The CVA
regularly applies for above CPI increases in fares at IPART fare
reviews.
We believe the role of government is to plan and regulate provision of transport services. This should be a focused role with operators handling day to day matters. To achieve its policy objectives government should subsidise services and provide for integrated ticketing across all modes.
In regard to public-private partnerships, we have presented evidence that they would diminish critical operational capabilities required to deliver safe and reliable public transport services. Sydney Ferries must be run by people with marine expertise who have a thorough knowledge of Sydney Harbour. Stability and consistency in management are important for this organization.
Good urban and transport planning, and operational practice must
provide the context for decisions regarding fleet acquisition. We
would like Sydney Ferries to acquire new vessels that combine the
best aspects of traditional Sydney Ferries with modern technology,
and use them to grow patronage and generate better revenue returns.
Graeme Taylor
Action for Public Transport
1 August 2007