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Report on Operations Part 3 Key Challenges Competition Policy In 1996/97, the Government introduced changes to the Passenger Transport Act to introduce competitive service contracts after the Year 2000. State Transit will need to meet specified benchmarks, covering service levels, costs, fares and ticketing and service quality, to retain its current 24 service contracts and possibly expand into other areas, currently held by private operators. Cost Review To ensure State Transit's costs are competitive with the private sector, the Independent Pricing and Regulatory Tribunal (IPART) and the Department of Transport are jointly reviewing the costs of bus operations and recommending a program to reduce costs which are higher than efficient levels. Associated with reducing costs of operation, and moving to a level playing field with the private sector is the funding of infrastructure, such as, busways and wharves. No private sector operators recognise an obligation to maintain such facilities. Price Controls State Transit's fares are regulated by Government, on the advice of the Independent Pricing and Regulatory Tribunal (IPART). Under 1996/97 determinations, State Transit's bus fares continued to be held below commercial private sector levels, and the difference was made up by a targeted pricing CSO payment. It might be noted that, if State Transit's fares were set at private sector levels, the pricing CSO could be eliminated and this would represent a saving to Government of around $25 million per annum. Slim Margins State Transit is forecasting a profit of $1.5 million in 1997/98. Any increases in costs over the year will be seen directly on the bottom line. State Transit's fares are regulated by IPART and it has a very limited capability to increase revenue to make up for increases in the cost base such as wages, fuel, insurance, infrastructure maintenance and accessibility. The Short Term Cost of Growth State Transit's business has been growing significantly over the last four years. Growth does produce short term cost pressures. To stimulate growth, expenditure must be increased, through purchasing more buses, increasing frequencies of services, trialing new services, improving the comfort of the fleet etc. In the longer term this will pay off, however, over the next few years we can expect only slim margins as any returns are re-invested in the business to increase patronage. Cost of Disability Responsibilities State Transit is improving the accessibility of its services in line with the draft National Accessible Transport Standards. Complying with these standards includes, purchasing low-floor buses, installing ramps, making timetables easier to read, ensuring wharves are accessible and offering assistance for the visually and hearing impaired. This does pose a significant cost for the organisation with around $2-3 million spent in 1996/97 to implement the standards. This cost will continue to increase as new buses are purchased and more facilities are made accessible. Olympic Games State Transit will play a major role in the transportation of athletes, officials, media and spectators for the Olympic Games in 2000. During the year State Transit has worked with the Olympic Roads and Transport Authority (ORTA) to define the task for the both the 1998 Easter Show and the Olympic Games. State Transit will continue to work with ORTA to develop plans for the delivery of transport services and integrated ticketing arrangements for the Olympic games and major events leading up to the Games.
Bus Priority For State Transit to continue to grow its services, the reliability and speed of bus transport needs to be improved. This implies bus priority measures, with those already implemented generating increased patronage and more services. The CBD Bus Priority Scheme, due to be implemented in 1997, is a further step in gaining acceptance for bus priority and improving the attractiveness of bus transport. State Transit will continue to work with the Bus Priority Steering Committee to promote the benefits of bus priority to ensure the Government's objective of growing the use of public transport is achieved. In 1998, State Transit will work specifically on expanding bus priority measures, promoting better delineation of bus lanes and encouraging better regulation and enforcement. Public Transport Authority State Transit was a major contributor to the work of the newly formed Public Transport Authority. State Transit took responsibility for developing improved public transport information and options for integrated ticketing arrangements which are now progressing very strongly. Click here to view our On-Line documentation of this project or here to access the PTA web site. (Next Page) (Table of Contents) (Report on Operations Menu) |
