Vic, Next in line
Vic, Next in line
Clay Lucas
The Age MEL April 7, 2009

Photo: Angela Wylie
BY MELBOURNE'S standards, the tram and bus network of the French city of Bordeaux is tiny: 44 trams running on 43 kilometres of track, and 488 buses. But for the company selected by the Bordeaux transport authority to operate this network, the money at stake is big; they will be paid 750 million euros ($A1.4 billion) over four years.
That is why the managers at Veolia - the French infrastructure firm that owns Melbourne's Connex - were so disappointed to lose the Bordeaux tender last week to rival Keolis, a subsidiary of French Government railway manager SNCF. For Veolia, the loss came after decades of running Bordeaux's trams and buses. But, with more than 5000 contracts across 30 countries, the loss is hardly a catastrophic blow to the company's bottom line. Besides, there is always another tender process going on elsewhere.
Like today in Melbourne, when Veolia takes on Keolis once again, along with a third bidder, Hong Kong's MTR. This time, they are bidding for a contract far more lucrative: to run Melbourne's 372-kilometre train system for up to 15 years.
By 2pm today, the three firms will deliver thousands of pages of documents to the Transport Department's offices. In these confidential tender documents will be the details of how each firm proposes to run Melbourne's train system.
The tender bids cannot be separated from the financial and political maelstrom into which they fall. JP Morgan analyst Alistair Reid speculated that Connex's battering in the media over poor performance - which reached a fever pitch during the long, hot months of summer - could see it removed.
"The Government may want to distance itself from the current operator, particularly given the recent bad press focusing on its sub-par performance," Reid wrote in a report on the tendering last month.
He notes that running the city's trains will be worth about $8 billion in the first 10 years to the winning bidder.
Reid believes the world's economic downturn could mean the Brumby Government is more likely to accept the lowest bid, rather than the most innovative or highest-quality submission.
Certainly the state's finances are considerably less robust than a year ago. Last May, Victoria's forecast surplus for this financial year was $828 million. The surplus for the first six months of the year turned out to be $46 million.
Whichever bidder wins the contract, there is general agreement among the men and women who drive the city's trains, those who do the repairs and among rail union chiefs that the new contract is a distraction rather than a cure for Melbourne's overcrowded and often unreliable train system. All of Connex's staff, except the top managers, will remain, and will simply be signed over to the new operator. New trains are unlikely to appear any time soon as a result of the contract, nor will there be any new tracks.
But for long-suffering peak-hour train commuters, any change provides the hope of a better-run system.
Regardless of who wins, the Connex brand will disappear from December 1, when the new contract begins. Under the contract's terms, the winner must come up with a "Melbourne" brand to re-badge the city's trains. That brand will remain under subsequent re-tendering.
The Transport Department has controlled the flow of information about the train bids, keeping bidders silent by making it a condition of the tender that they not talk to the media without first having their communication vetted. And not even Parliament's upper house has been able to force the Government to hand over documents relating to the bids.
Transport Department secretary Jim Betts went on a trip to Europe in early 2008 to meet prospective tenderers. Opposition upper house leader David Davis last year moved a motion demanding that a ministerial briefing paper on Betts' trip, given to Public Transport Minister Lynne Kosky, be given to Parliament. The Government in March refused to release that paper — even after an upper house majority demanded it be handed over. A letter from Attorney-General Rob Hulls said that releasing the briefing paper was not in the public interest.
The expression-of-interest documents themselves, which lay out the criteria by which companies' bids will be evaluated, were to be kept secret — until the Opposition obtained a leaked copy and distributed it to the media. These documents show that the Government's key criteria for the bid include:
A proven safety record.
- The lowest cost.
- Knowledge and understanding of Melbourne.
- A good history of dealing well with passengers.
- A good industrial relations record.
- An ability to improve operational performance.
- Good project management and planning skills.
- An ability to conduct a smooth transition to the new contract.
So who are the companies bidding for the right to run Melbourne's rail system, which nets Connex $600 million a year?
Connex's parent company, listed water and transport giant Veolia Environnement, will attempt to stay on in Melbourne after a decade running trains here. It has become a partner with train manufacturer Bombardier, which will fix the city's fleet of 164 trains.
Companies must also become partners with firms that will fix the tracks and signalling and, in an ominous sign for Connex, its partner Thiess left the consortium late last year. It is still unclear which company will fill that void in Connex's bid team. Melbourne's rail maintenance for the past five years has been done by United Group. It too has abandoned Connex, joining the bid of Hong Kong's MTR.
Hong Kong has one of the world's most successful underground systems, operated by MTR, something this team's bid is sure to emphasise. But, as readers and transport experts pointed out last week after The Age reported MTR's 99.9 per cent on-time running performance compared to Connex's recent 88 per cent, it also has some of the world's most modern tracks and trains. Construction of Hong Kong's metro started in 1975, and its trains are among of the newest and simplest to operate.
It is unclear how MTR would perform running a less modern and more complicated above-ground train system such as Melbourne's. In England, MTR operates the London Overground train system, which services London's outlying suburbs and towns. There MTR managed to run only 91 per cent of the trains on time.
While some in the industry are fascinated by the idea of MTR bringing its Hong Kong-style management to Melbourne, there is also concern in Victoria's powerful rail union over MTR's rail maintenance partner, John Holland. Sources in the Rail, Tram and Bus Union have expressed concerns about John Holland's chequered history of relations with some unions.
Finally there is the least-known of the three bid teams, France's Keolis. Part-owned by the French national rail operator SNCF, it operates in eight countries. It is a partner with Australian engineers Downer EDI, which will maintain the trains and the tracks. Keolis is also bidding against Yarra Trams for the less lucrative contract to run Melbourne's trams. Bids for the tram contract — which JP Morgan estimates is worth $2 billion in revenue in the next seven years — closed last month. There was less international interest in the trams than the train contract and, fearful of the embarrassment of having just Yarra Trams tendering, the Brumby Government agreed to pay up to $5 million to losing bidders.
The signing of new contracts to run Melbourne's trains and trams will not stop the long-running debate about whether privatisation has succeeded.
The Institute of Public Affairs' Richard Allsop was an adviser to the Transport Ministry when the Kennett government privatised the trains and trams in 1999.
Allsop said in a 2007 report that privatisation had delivered patronage growth, improved reliability and punctuality, new services, the virtual eradication of strikes, and 65 new trains and 95 new trams.
Vic, Connex parent Veolia puts in rail bid
SMH SYD Breaking News, April 7, 2009 - 4:59PM
The parent company of Melbourne rail operator Connex has lodged a bid to keep the embattled network running from December 2009.
French-based Veolia Transport, along with its partners Bombardier and Singapore-based SMRT, says it has put forward a "compelling" bid to the Victorian government.
Connex has come under heavy criticism over cancellations and overcrowded trains.
In February thousands of commuters were compensated with free public transport after more than 2,000 trains were cancelled during the previous month, largely due to the weather.
A record heatwave brought 1,447 train services to a standstill in just three days.
A total of 2,371, or 4.3 per cent of trains, were cancelled in January and 9.1 per cent did not run on time.
Connex is required to meet performance benchmarks of having 98 per cent of trains running each month and 92 per cent on time.
Last month a train broke down at Richmond station at 9am and was not removed until around 5.30pm that day after commuters were told to catch trams and replacement buses.
And at last year's Spring Carnival at Flemington up to 40,000 punters were left stranded on Oaks day when services from the racecourse ground to a halt when a train became tangled in overhead wires.
This left Metlink, the company which oversees all public transport in Melbourne, giving free travel on Connex trains for anyone with a ticket to the next race day.
Premier John Brumby declined to comment on whether Connex's dismal performance over recent times would have an effect on the bid by its parent company.
"All the bids are in today," Mr Brumby told reporters.
"They'll all be considered by the committee. They'll take into account all of the bid documents, all of the commitments that are made by Connex.
"But the main issue is obviously the performance going forward."

Vic, Opposition says rail tender will do nothing to fix Melbourne's trains
Article from:
Matthew Schulz
MEL, April 07, 2009 05:18pm
HANDING Melbourne's troubled train network to a new operator will do nothing to get commuters to work on time, the Opposition says.

Bloody Cheek. This farce started when this opposition was in power and totally destroyed the VR

Tender bids to take over the Connex-run train system from December closed this afternoon, with the final bid to retain the service lodged today by Connex parent Veolia Transport.

Bid spokesman Jonathan Metcalfe said the combined bid by French company Veolia (owner of Connex), Melbourne partner Bombadier and Singapore’s SMRT presented a “compelling case”.

It says the bidders have focused on “how the customer experience could be improved”.

But Opposition transport spokesman Terry Mulder said “changing horses” in a multi-million dollar exercise – including changing the name of the system no matter who wins â€“ would do nothing to solve the fundamental problems plaguing the network.

“All the staff will remain in place, other than perhaps key senior managers," he said.

“It’ll be a change in the brand, a change in the name on the side of the train. But the new operator whoever they are, will get landed with whatever Connex have to deal with on a daily basis. It’s just a window-dressing exercise."

He said the Government would be tempted to ditch Connex to shift the blame for the train system’s abysmal recent record.

But he said Victorian public servants had told him Connex was best placed to understand the flaws in the transport system.

“To try to break in a new operator could set it back even further than it is today,” Mr Mulder warned.

“A new operator will take quite a deal of time to become familiar with the system.”

“The greatest danger to the Connex bid is the Government wanting to start with a clean slate and appear to be apportioning blame to the operator for what’s gone wrong.”

“But if Connex gets the boot, and the new operator turns up on day one, what changes? I can’t see anything there that improves the service.”

He said the underlying problem causing delays was chronic underinvestment in the train system including rails, sleepers, points and rail crossings over the past nine years of a Labor Government.

“I have believed all along that the Government should get the rail network to a first-class standard before putting it out to tender," Mr Mulder said.

Previously, the government had promised more train services on weekends to improve Melbourne's train system as part of the tender.

Security would be increased at night, trains kept tidier and flying squads of staff sent to stations during disruptions.

The new train contract, which begins in December, could scrap the Sunday timetable in favour of a combined weekend schedule.

The State Government has told the bidders that commuters want:

BETTER service information, particularly during disruptions.

MORE staff to improve safety and customer service.

INCREASED cleaning.

IMPROVED connections with buses, trams and country trains.

Other bidders include Hong Kong’s MTR, where 99.5 per cent of trains ran on time in the final three months of last year.

In a statement on its website, it has promised “innovative solutions which expand capacity, improve reliability and enhance the customer travelling experience''.

Keolis, from France, is a smaller operator half owned by the French company SNCF.

Certainly the state's finances are considerably less robust than a year ago. Last May, Victoria's forecast surplus for this financial year was $828 million. The surplus for the first six months of the year turned out to be $46 million.
How can Victoria run at a surplus, with absolutely bugger-all natural resources? :confused
Does this mean they were planning on a large surplus by simply skimping on their responsibilities (eg Health, Police, Transport, etc.? :grr
GST revenue from the feds contribute to their treasury. A state with few resources also does not need to operate at a loss. Manufacturing (ie value adding the stuff the QLD all but gives away) to name but one.
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That's right, I almost forgot that there's (still) a vehicle manufacturing industry down that way, to name another one.
Such a small state with so many folk stuck inside, means much smaller road/rail and other infrastructure costs as well.
Wrong. As far as infrastructure goes, the Vics run seven regional country lines extending to Bairnsdale, Shepparton, Albury (when not converting to Standard guage, which is something QLD is not doing), Echuca, Swan Hill, Ararat, and Warrnambool. Some of these country trains enjoy 1 hour frequencies while the outer reaches of the network can have up to 3 trains a day. Sure, none of the lines match the run to Rocky, but consider the costs of operating all those new Velo sets as well as the loco hauled stuff, there is plenty of spending happening public transport - which benefits the actual public rather than the companies moving rocks and dirt.

Now, how many kms of tram network is Brisbane running?
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Victoria outputs about 25% of Gross domestic product, also the Port of Melbourne is one of the busiest ports in the world with on average 22 movements per day. But still it does make you wonder how the hell they make so much money.

Simple answer is Stamp Duty and fines. We have the highest stamp duty costs in the country, and they factor in speed and red light cameras as a revenue stream for the State. Add to that Crown casino, and the millions they take from the pokies, and you can see how they make money. It is all a false economy.

Oh, there is also the fruit and wine industry, which is a few billion dollars, and most wool exports go through Melbourne too.

Also from the equalisation of fuel taxes, Victoria puts in about 27% of the purse, but only gets 22% back. NSW puts in about 30% and gets 30% back, while Queensland puts in about 20% but gets about 25% back.
"How long will the next train be? Six cars would be my guess."
Good to see, on all counts!! Wink

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