>After listening to Craig crap on about how WCR is not subsidised, here it
>is in black & white from the auditors generals report
>
>The following is taken directly from the AG's report...
And so is this which you didn't mention.....
----
3.3.147 As the level of these maintenance related reimbursements by
the operator were higher than the amount originally determined in the
tendering process and advised to tender participants, the Department
has been reimbursing the operator approximately $1 million a year to
offset the additional costs. The tender process only envisaged an
amount of $512 000 for infrastructure maintenance costs which were to
be borne by the operator running the service. However, due to a change
in the methodology in allocating maintenance costs between passenger
and freight services by the Corporation, the amount was found to have
been underestimated.
3.3.148 The operator is charged for use of the Corporation's ticketing
system. As this cost was not originally included in the tender
documentation provided to the operator, the Department agreed that an
annual amount of $52 000 be reimbursed to the operator to cover costs
charged by the Corporation for the use of the system.
----
3.3.165 The analysis shows a 3 per cent improvement in patronage for
the period 1993-94 to 1995-96. This compares with an increase in
V/Line Passenger patronage of 2.2 per cent in relation to the
Melbourne to Bairnsdale service, a comparable service to the
Warrnambool line.
3.3.166 Notwithstanding the small increase in patronage levels
outlined above, the revenue from the service has remained relatively
stable. The Department has advised audit that the reason for the
relatively stable income level is the wide use of concessional travel
on the line.
-----
RESPONSE provided by Secretary, Department of Infrastructure
Reimbursement of infrastructure costs
Similar adjustments to infrastructure maintenance subsidies were
applied on the same basis to all rail passenger service operators in
Victoria including V/Line Passenger, Australian National, State Rail
Authority of NSW and Hoys. The total cost of subsidies for
infrastructure maintenance did not change - while costs allocated to
rail passenger businesses increased, costs allocated to the PTC
freight business (V/Line Freight) decreased by the same amount.
Reimbursement of ticketing system costs
The Report again does not make the point that West Coast Railways was
treated in exactly the same way as other rail passenger operators.
Relief for fuel cost increases
The 33 per cent fuel increase imposed by the Commonwealth Government
from 1 July 1995 applied to locomotive fuel used by all Victorian
operators.
The Report fails to indicate that the Victorian Government funded the
PTC and both contracted rail operators for this cost which could not
be anticipated.
Delay in formalising the Agreement
There was no risk of disadvantage to the Corporation or the State and
no disadvantage occurred.
Payments to operator for providing the service
The savings to be achieved from the arrangement were calculated at $3
million a year in 1993. The contract was let on that basis and there
has been no variation made to the contract which would change that
outcome.
The Department constantly monitors performance and payments made to
and by West Coast Railways under the Service Agreement. All
indications are that the contract is performing as originally
estimated.
Experience gained through constant monitoring and scrutiny of this
contract and others entered into with private public transport
operators at about the same time will be invaluable in determining
further privatisation proposals. To suggest that such experiences may
not be factored into future privatisation proposals is simply not
sustainable.
----
>So WCR has in fact been subsidised 3.5M since it's inception, plus what it
>receives from passenger fares.
The AGs report makes it quite clear (3.3.147/8) that the "subsidies"
are nothing more than simple re-imbursments for unanticipated monies
that WCR has had to pay to the Government for no other reason than
Government provided information in the tender on which they based
their bid was wrong.
That seem quite fair to me.
>No wonder it's doing so well
It seems to be doing well in spite of some fairly significant
obstacles that were not apparent at the time it entered into the
agreement.
Clearly both WCR and Government are trying to make the service work.
Cheers,
Bill
Bill Bolton billbolton@onaustralia.com.au
Sydney, Australia