Re: [Vic] Age: Train fare pledge dumped

[amorton@mudguard.ee.mu.oz.au (Anthony Morton)]

Maurie Daly <mauried@tpg.com.au> wrote:

>Vline passenger when it was Govt operated was generating in fare
>revenue of 6.5 c/per net pass km ,and had operating costs of 33.7
>c/per net pass km, ie costs 5 times the revenue.
>(Source BTCE Analysis of the Rail Deficit Table 40).

That 33.7c figure doesn't really mean much.  It includes notional interest
calculated by the Commonwealth Grants Commission on all Federal rail grants
dating back 100 years.  For its own peculiar reasons the Grants Commission
treats public transport as a 'trading enterprise' to be charged interest on
grant monies, while roads (for example) are a 'social service' attracting
zero interest.

I don't know how this phantom debt is handled post-privatisation, and I'm
not sure if anyone outside the government does.  I suspect that the notional
interest payments are absorbed by the government as the owner of the
infrastructure.  Thus the subsidy to the private operators covers real
operating expenses only, a much lower figure.

In any case, there are plenty of regional public transport systems around the
world with reasonable fares and good cost recovery.  These systems don't
have a 'natural advantage' over Victoria's, but they do make an effort to
encourage large numbers of paying passengers.  If Vline's cost recovery is
poor it's because the standard of service is so poor that few people use it,
and those that do mostly travel on concession fares.

>Whilst Govt rail operators can operate continuously and make
>losses,the private sector cant.
>It has to at least break even.

I think you'll find that National Express does make a profit once you factor
in the government subsidy and performance bonuses.  It's just that the
profits aren't as high as they'd like.

>And theres no point in blaming the Private operator.
>The problem is privatization of the service.

I entirely agree.  As Paul Mees always says, you can't blame private companies
for being rational profit maximisers.  The shareholders of National Express
expect them to be making money, not providing good public tranport for the
sake of good public transport.  This of course puts them at odds with the
people of Victoria.

The government's duty however is to the people of Victoria, not the
shareholders of National Express.  You can draw your own conclusions.

>If the Govt is unhappy about the fares rising,it is fully free to
>subsidise the fares to keep them constant.
>Cant somehow see this happening though.

If the government were now to increase their subsidy so as to maintain fares
at their old level, it would amount to a successful blackmail attempt by the
private operator on the State of Victoria.  Private operators aren't entitled
to receive a higher subsidy just because they want it.

On the other hand, the government could threaten to reduce their subsidy on
the grounds that they can now expect to collect more fare revenue.

Regards,
Tony Morton

Public Transport Users Association             http://www.ptua.org.au/