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Melbourne’s transport again, again,…

The Age newspaper has continued its campaign to reform Melbourne’s public transport. It has drawn on an unpublished report (authored by Paul Mees et al.) and called for free public transport in the city and for privately-operated ‘public transport’ to be again publicly-managed. It again editorialises on these issues. Just as it can repeat itself (it has advanced the first of these three propositions at least thrice over recent weeks) so could I. But to conserve pixels I’ll just give a link to my earlier comments.

The issue of bringing tram and train sector operations back into the public fold is not one that I would necessarily disagree with. These services have a substantial natural monopoly element and it is unsurprising that regulated private operation does not provide an ideal service. Many economists look dubiously at the prospect of achieving efficiency gains from such privatisations. But I am very skeptical at the prospect of bringing the bus service back into private hands as The Age suggests is being advocated. Quote:

Bus operators received a subsidy equivalent to $4.09 for each passenger, the report says. In Vancouver, Canada, the subsidy was equivalent to $2.20. “These results confirm the findings for train and tram services: privatisation is not serving the public interest,” the report says.

Bringing the bus service back into public hands would seem foolish. What is needed is more competition and less regulation to deal flexibly with the severe transport issues confronting residents in Melbourme’s perihery. But, ignoring the bus issue, do the problems identified for tram and rail involve contracting, excessively high fares or what? What are the possibilities for strengthening competition in the sector generally? On the basis of the study The Age asserts privatised transport has cost taxpayers $1.2 billion more than it would have if it had remained in public hands and will cost an additional $2.1 billion through to 2010.

How are these figures arrived at and why have costs blown out? Hopefully the Mees et al. study to be released tomorrow will explain. But isn’t it irresponsible journalism to editorialise and assume an advocacy role comment on such an issue before the facts are in and have been subjected to analysis. Moreover why no reference to the draft VCEC report which does involve careful analysis of congestion issues and suggests reforms that would improve the economics of public transport? There is nothing a priori obvious about The Age’s claims – the issues are complex.

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