Sunday, November 23, 2014

ACT Light Rail support Capital Metro PPP contract transparency

On Sunday 23 November ABC Canberra ran a short story on the 7PM television news covering the use of PPP's between governments and the private sector to fund infrastructure projects.   

ACT Light Rail agree that the contracts reached between successful bidders for the Capital Metro project and the ACT Government should be made public. Transparency is good for governments and leads to good outcomes. 

We disagree with the contentions that some of the experts made. The Australia Institute said that bus services may be reduced to force people onto light rail. They said that the number of buses might be reduced. The government policy since 2012 has been to integrate light rail and buses, with increased bus services feeding commuters to light rail. All Capital Metro literature is consistent on this.

Other aspects of the story referred to closing roads. This is unlikely and does not make a lot of sense in the Northbourne Flemington context. It is not something ACT Light Rail  have heard of in any discussion held with engineers associated with Capital Metro or SMEC. It is in the  interests of toll road operators to close public roads. It is not in the interest of a public transport operator to close roads. 

The story did point out the benefits of PPP's in deferring upfront costs for governments, and letting private companies bear risk. Where the story fell down is in not making it clear that all the PPP failures featured, were road projects relying on tolls. 

The current proposal from Capital Metro is that the fare revenue (electronic card only through the MyWay card) goes to government and that the ACT Government will pay the operator a yearly fee. The private operator does not bear the risk of falling patronage and farebox revenue. Of note is that one prospective PPP bidder has already indicated that it would like to receive a bonus for higher patronage.

Contemporary light rail introduction has seen increases in public transport patronage that exceeded project estimates. Gold Coast Light Rail has been a tremendous success.

It is good that the ABC has decided to cover the PPP issue as Capital Metro light rail is a significant ACT infrastructure program, and affects the city and its future. Perhaps the journalist preparing the story should have read the business case and other Capital Metro literature first. Some of the misconceptions it raises, will now linger in peoples minds.

For more frequent updates on Capital Metro and light rail related news, please visit our Facebook page 'Light Rail for Canberra'.  

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