TRANSPORT ADMINISTRATION AMENDMENT (RAIL AND FERRY TRANSPORT AUTHORITIES) BILL 2008
Agreement in Principle
Debate resumed from 30 October 2008.
Mr JONATHAN O'DEA
(Davidson) [4.16 p.m.]: The Transport Administration Amendment (Rail and Ferry Transport Authorities) Bill 2008 amends the Transport Administration Act 1988, the Passenger Transport Act 1990 and other Acts with respect to the corporate structure of Rail Corporation New South Wales—RailCorp—and Sydney Ferries, as well as the provision and regulation of rail passenger services and ferry services. The bill reorganises the corporate structure of existing rail and ferry agencies so that they are effectively de-corporatised and become statutory authorities. The corporate names of RailCorp and Sydney Ferries Corporation will be retained, as will a board for each authority with members appointed by the Government. Both boards will report directly to the Minister for Transport.
The Minister stated in his agreement in principle speech on 24 October that the main Government argument is, "We do not have sufficient control over RailCorp or Sydney Ferries to produce results", with the proposed changes to give the Minister direct control over the running of the rail network and ferries. If passed, the proposed legislation will represent a victory for the unions, which prefer dealing directly with Labor Ministers than with corporate-style boards. The real problem with rail and ferries has been union resistance and pressure not to introduce appropriate commercial practices including proper benchmarks.
We need more appropriate and professional governance; however, the role played by the Minister should not be as an operational manager. The Minister should ensure that senior managers do their jobs effectively. The Minister should set policy guidelines, not personally apply the policies on the ground. We should not have day-to-day political interference in vital services such as our trains and ferries. One has only to look at how poorly direct ministerial responsibility works for hospitals, schools, roads and other basic services. The suggestion that the Minister and Cabinet can do a better job directly running the trains and ferries appears to be either arrogant or stupid, or both.
As we have seen before, the New South Wales Labor Government has a conflict of interest because of its close relationship with unions that donate millions of dollars to it each year. This bill further increases the risk of political rather than merit-based decisions. It reminds me of a chairman of selectors of a certain local football club who was out of condition and had never played a serious game of football before. Faced with an appalling series of team performances and a rapidly diminishing group of supporters, he selected himself and a club benefactor to play in the football team, resulting in an even worse outcome. Even if it were appropriate for the Minister for Transport to actively run operational activities, this Labor Government has a lack of members of Parliament with prior management experience in delivering major services in a competitive environment.
Unfortunately the vast majority of members of Parliament on the other side of the House come directly from an Australian Labor Party or union job. The former Chief of Staff of Premier Bob Carr, and now powerful Australian Labor Party connected lobbyist, Bruce Hawker, recently lamented that the percentage of such hacks had increased from 24 per cent in 1971 to 67 per cent in 2005. Little wonder Mr Hawker links the narrowing of the Australian Labor Party talent pool to a lack of trust between citizens and their elected representatives. What some speakers for the Government have ironically said is that transport services have to be brought back within the direct control of the State Minister so that they can be then outsourced to external organisations in competition with the State-owned provider. This seems to be like the old adage "one step back, two steps forward". However, the problem with taking one step backwards to take two steps forward is that the Government has proved that it does not really know how, or does not have the political will, to really move forward.
In April 2008, Boston Consulting Group released a report commissioned by the State Government recommending RailCorp implement tougher industrial reforms. The report was meant to provide direction for RailCorp and urged the retrenchment of more than 1,100 employees. Savings were to be spent on security, including specialised police to patrol trains and stations. The report went further and recommended that all maintenance of carriages be outsourced. This followed the collapse of an agreement between RailCorp and the unions to reform the rail maintenance depots by October last year. The Independent Pricing and Regulatory Tribunal [IPART] independently discovered that $480 million annual expenditure could be carved from the bloated RailCorp bureaucracy by 2012. In its latest report, the Independent Pricing and Regulatory Tribunal calculated the reforms would save New South Wales $1 billion over four years.
A report conducted by the New South Wales Auditor-General in 2007 found that almost all trains experienced more failures than in the previous year and more than 90 per cent of CityRail's electric fleet was more than 10 years old, with 58 per cent more than 20 years old, and 33 per cent at least 30 years old. The report also found that a shortage of engineers threatened to derail major upgrade projects to Sydney's CityRail networks, causing delays and cost blow-outs, as well as risking the $1.8 billion clearways project. More recently, RailCorp has been investigated by the Independent Commission Against Corruption [ICAC]. Its inquiries and reports have exposed a seemingly endless string of rorts. Recently ICAC handed down its fifth and sixth reports from its lengthy inquiry into bribery and fraud within RailCorp. The investigation showed how $19 million worth of corrupt contracts had riddled RailCorp and provided the funds to pay millions more in kickbacks.
The Independent Commission Against Corruption has asked prosecutors to pursue numerous rail employees and private contractors after the biggest investigation in the agency's history. The Independent Commission Against Corruption has canvassed various corruption issues, which must be better addressed than previously. The ongoing corruption in RailCorp again demonstrates the lack of will of this Government to take firm action and address a clear culture of corruption in RailCorp. As an aside I further note that probably the most successful model adopted in recent New South Wales rail history is that involving the Australian Rail Track Corporation [ARTC], whereby the New South Wales Government sensibly handed over management of New South Wales regional rail networks by leasing and contractual arrangements.
The Australian Rail Track Corporation is a successful corporation. It is well governed and managed and has an independent board that is capably led by its chairman, Barry Murphy. It has a single Commonwealth shareholder that essentially leaves the organisation alone. Perhaps most importantly, when the Australian Rail Track Corporation says it will do something, it actually does it. As earlier speakers have stated, the New South Wales Government has released the report of a seven-month inquiry into Sydney Ferries conducted by Bret Walker, SC. The report recommended that the Government take out a service contract with a private operator that would then run and manage the service. The inquiry was called following several fatal accidents early last year and annual losses by Sydney Ferries of approximately $50 million. Mr Walker was scathing about the option of returning the ferries to direct government control as a statutory authority without an independent board. He found:
Its key weakness as a model is that it supplies no more incentive for better governmental value for money than the present model, and may even reduce the present statutory pressure for efficiency.
He said that the statutory authority model provided taxpayers with less assurance of value for money than does the current corporatised model. The Government has complained about the Minister having to issue formal directions to a State-owned corporation that can be cumbersome and time consuming, yet it has itself delayed introducing more meaningful benchmarks, service standards and professionalism. Real action is deferred by a transport Minister and Premier who announce that RailCorp and Sydney Ferries have been put on notice, but who seemingly are afraid of upsetting their union mates.
The New South Wales Opposition Leader, Barry O'Farrell, and shadow Minister for Transport, Gladys Berejiklian, recently released a plan to fix Sydney Ferries while improving existing services. This expands on the Coalition policy outlined in our discussion paper, "Towards One Network". The Government should study this policy properly and adopt it. The Coalition's policy would improve service delivery, maintenance and management—unlike the New South Wales Labor Government's plans, which will force commuters to wait even longer for our ailing public transport system to be fixed. In the insightful words of the Sydney Morning Herald
editorial on 22 October, which were more extensively quoted by the member for Castle Hill, the Government's plans "amount to little more than studied prevarication".
The Coalition's policy aims to improve service delivery and fleet maintenance while Labor's announcements force commuters to wait another year before anything changes. The Government tells us that the Minister needs increased powers required to take decisive actions, while refusing to take action. Just like thousands of people on train platforms across Sydney every work day, we have to stand by, watching and waiting, while the Government fails in its service delivery responsibilities. The apparent confusion in the Government's arguments was further evident when some of its speakers suggested that train services will follow the type of model in place for bus services under which the New South Wales Government has entered contracts with various operators. But at the same time the member for Heathcote pointed out that because rail is inherently monopolistic, it would be very difficult to introduce contestability into rail. Guys, I know you like telling fairy tales, but please get your story right!
Worse still, the Government has axed the Office of the Coordinator General, removing an overarching function for delivering the State's infrastructure plan. This risks further feeding a silo mentality with insular decision making. Abolishing the Office of the Coordinator General will save just $2 million a year, apparently, and now it appears that the final authority for the State's infrastructure program will be consolidated under the Minister for Finance, Minister for Infrastructure, Minister for Regulatory Reform, and Minister for Ports and Waterways, Joe Tripodi. At least today's media reports suggest that the Government is seriously considering the Coalition's idea of a transport coordination authority—an idea that was previously rubbished by the Government.
Recently the New South Wales Auditor-General delivered to RailCorp a blunt message that its trains are old, overcrowded and over budget. Commuters can also expect things to get worse because high petrol prices will force more people onto trains. A primary concern of New South Wales rail commuters is increased crowding, with more than half the passengers being clearly dissatisfied with crowding on most lines. Compounding this dissatisfaction is that all projects to replace or update carriages currently are late or are behind schedule, and almost one in four rail carriages fail every month, according to the independent New South Wales Auditor-General. The Government needs to do better. This bill is not an improvement on the current situation; it needs to be re-examined. We need real reform in the transport area. Unfortunately, the public will have to wait until March 2011 to see it.