Northwest Rail Link to be privatised?

Posted: December 15, 2011 in Transport
Tags: , , ,

An internal memo by Railcorp CEO Rob Mason and obtained by transport lobby group Hills Transport Working Group (part of the Western Sydney Public Transport Users umbrella group) states that:

“a private sector entity will design, construct, commission, operate and maintain the North West rail link including rail and tunnel systems, track, structures and stations for a period of 20 to 30 years” under an “access model”

In light of this, Barry O’Farrell has again denied that the cost of travelling on the Northwest Rail Link (NWRL) will be higher than on the rest of the Cityrail network, like with the two airport stations which currently charge an access fee of $11.80 on a single ticket. (Twitter feed image below is from the NSW politics blog A State of Mind. Click on the image for a link to the site.)

Mason has also been clarifying his statement, and last night told the Daily Telegraph (emphasis mine):

“The message to RailCorp staff this week may have created an incorrect impression that all operations and maintenance of North West Rail Link would be the responsibility of a private sector entity”

His statement suggests that the line will not be entirely run by the private sector, but will still be partly run by a private company. The Herald’s report suggests that the model will be one in which the government pays the operator, rather than for commuters to pay an additional charge.

There are two potential models for a government paid access fee. The first is to pay a fixed fee for access, which is similar how buses operate, where the government pays the operator for the distance traveled (regardless of the number of passengers) and the government collects all the fares. The other is to pay a fee for each passenger who uses the stations, which is the system currently used at Mascot and Green Square stations on the airport line, where the government pays the operator directly for the access fee that was previously paid for by passengers.

Whether or not this is a good idea depends entirely on whether you think privatisation is a good policy option or not. Detractors will argue that it is cheaper for the government to build and operate transport infrastructure, and that by getting the private sector to build and/or operate it inflates prices due to higher borrowing costs and by requiring the company to make profits. Supporters will argue that a private company has more incentives to be efficient, which will result in lower costs in the long run, and that it removes risk from public hands.


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