Review of Bus Services in New South Wales: Final Report - February 2004: Foreword and Recommendations

Foreword

The community and industry response to the Interim Report of the Review of Bus Services in NSW, released in November 2003, has been informative and of great assistance in the preparation of this Final Report. Most contributions were supportive of the changes proposed to the bus service contracting regime and of the proposal for consolidated contract regions.

In many instances, responses to the Interim Report suggested amendments which were both positive and helpful, and consequently these have been acknowledged and adopted.

The principal objective of the Review, to create a bus transport system with common standards of fares and service levels, has been widely accepted as an achievable outcome of the implementation of the recommendations outlined in the Interim Report.

Discussions with the major stakeholders, including bus operators, unions and user groups, produced varied indications of support for the early introduction of the Review recommendations.

It is recognised that those affected often resist change, and in this respect it is necessary to understand the approach adopted by the Bus and Coach Association (BCA) on behalf of its members when discussing the Interim Report recommendations.

The BCA response clearly outlined concerns expressed by member bus operators on the impact of proposed changes to the planning, contracting and funding of bus services. These concerns have been discussed with the BCA in detail, considered by the Review, and addressed as appropriate in this Final Report.

The task of the BCA is to protect its members' interests, and in doing so maintain the status quo as far as possible. However, this is not necessarily in the community interest nor conducive to the development of an effective bus transport system for the metropolitan regions of the State.

The Review welcomes the involvement of private bus operators in the provision of transport services, albeit in a significantly changed contracting, funding and operating environment, which will provide certainty and growth for the future.

Greater Sydney is recognised throughout the world as a city with outstanding features; it therefore follows that the quality of the bus transport system should measure up to community expectations, commensurate with the international status of the city.

At present it is clear that we have two bus systems - government and privately operated - with widely varying levels of service and customer satisfaction and, consequently, falling short of community expectations.

The Review believes that the current inequities must be eliminated, and that this can only occur with structural changes and reforms, such as those recommended in this Final Report.

The most significant reform must involve the manner in which the Government authorises bus operators to provide services in franchise areas. Larger contact regions incorporating strategic corridors will facilitate the planning and establishment of a bus network which integrates with other transport modes, and provides services to desired travel destinations.

To achieve this change, existing contracts covering small fragmented areas may have to be extinguished and replaced with new region wide contracts.

The move to new, larger contract regions and fewer contracts will result in the changed status of a number of current operators. Change can best be achieved by encouraging operators to form regional alliances and suitable arrangements so that there is one lead operator per region. Performance based transitional contracts can then be entered into through an Expression of Interest process.

The new contract holders should then be responsible for co-ordinating the services of other bus operators currently providing services within the region.

On expiry of these initial transitional contracts, a competitive tendering regime should be introduced for all regions, preferably on a sequential basis.

Contract duration may vary depending upon the disposition of assets. Alternative options in this regard are canvassed in this Report.

Further consideration of the issue of asset and infrastructure ownership by the Review confirms the benefits that would flow from the separation of operating responsibility and asset ownership.

Responses from financial institutions, experienced in the establishment and operation of infrastructure trusts, have been both positive and constructive, and indicate that the concept is worthy of further consideration. In the short term, it will be important for contracting arrangements to give Government greater control over assets in the event of a contract breach or termination.

A central element of the future bus transport system for Greater Sydney is the creation of a network of strategic bus corridors, linking residential communities, regional centres, hospitals and education facilities.

The corridors identified by the Review for the Greater Sydney area have been universally accepted as appropriate, and where organisations have proposed amendments, these have been considered and selectively adopted.

The Review believes that the proposed strategic corridors could be proclaimed as transitway routes if necessary, and subject to cost benefit analysis to enable the implementation of bus priority improvement measures. Appropriate provision should also be made for effective enforcement measures to ensure the efficient operation of bus priority.

Given the cost of bus priority development, its extension across the network of bus corridors will require new funding mechanisms, such as developer contributions and expanded parking space levies.

The proposed restructure to establish larger contract regions - ten in metropolitan Sydney, two for Newcastle and one each for Wollongong, the Central Coast and the Blue Mountains - has been validated by stakeholders with only minor boundary adjustments necessary.

In the Interim Bus Review Report consideration was given to the provision of free CBD buses in Newcastle, Parramatta and Wollongong, based on the successful Perth and Fremantle CAT services. A visit to review these West Australian services by the Lord Mayors of the three cities produced enthusiastic support for the concept, which should now be further progressed.

In December 2003 the Final Report of the Ministerial Inquiry into Sustainable Transport in New South Wales, conducted by Dr Thomas G Parry, was simultaneously released with the NSW Government's response to its recommendations.

As many of the recommendations relating to fares and concessions initially proposed in the Parry Inquiry Interim Report had been considered by the Bus Review in its Interim Report, the clarification of the Government position has greatly assisted in the preparation of this Final Report.

Responses from bus user groups reflected the anxiety of those who benefit from access to the Pensioner Excursion Ticket, and who feared a loss of future eligibility. The reactions from these user groups, primarily Seniors Card holders, and their strong representations to the Government, have resulted in a clear statement of policy which will ensure their continued access to the concession.

The fare increase proposed for the Pensioner Excursion Ticket by the Parry Inquiry, from $1.10 to $2.50, was also supported by the Review, and has been endorsed by the Government. While there were expressions of concern at the amount of the increase, there was also a recognition that the price had not increased since 1989, when the then Government increased the Pensioner Excursion Ticket by 66% to the pre-GST $1.00 fare.

The decision of the Government to adopt the recommendations put to it by the Parry Inquiry and the Bus Review Interim Report, that the Pensioner Excursion Ticket be made available to private bus patrons, has been enthusiastically supported by user groups. The extension of the availability of the Pensioner Excursion Ticket justifies the increase to $2.50, as it still represents a cost saving on current fares for the private bus passenger.

The Government response to the Parry Inquiry Final Report also extended the area of coverage of the proposed $2.50 fare to the outer boundaries of the CityRail network, a material benefit to users.

Country based pensioner concession cardholders have raised the claim that the Pensioner Excursion Ticket should be available where bus services exist in country towns. In the interests of equity the Review believes that this is a reasonable proposition which is widely supported, and recommends it accordingly.

Morning peak travel restrictions on the use of the Pensioner Excursion Ticket were proposed in the Interim and Final Parry Inquiry Reports and supported by this Review in its Interim Report. In the Government response to the Parry Inquiry Final Report, an assessment of the impact of morning peak congestion was proposed prior to further consideration of the limitation.

Both government and private bus operators have raised their concerns about peak capacity constraints and the additional costs incurred to provide for discretionary pensioner excursion travel. It is desirable, therefore, that operators closely monitor the profile of morning peak ticket sales, and advise of trends and implications to enable further Government consideration of the proposed limitation.

To minimise delays to journeys caused by driver sales, pensioner organisations have requested that the Excursion Ticket be made available for sale as a multi-day ticket, able to be purchased at a variety of locations. They suggest that if accompanied by fraud prevention measures, such as the use of photo identification on concession cards, this initiative could have significant value.

Fares paid by bus travellers fall far short of the cost of providing acceptable services and service levels, and Government subsidies, either direct or indirect, are a necessary feature of the provision of an effective bus transport system.

The Review's Terms of Reference required consideration of the establishment of a consistent statewide fare regime, and this has been done.

Both this Review and the Parry Inquiry believe that a standard metropolitan fare scale should be introduced which would apply equally to private and government bus operators.

The outcome of this equalisation process would then reduce the State Transit pricing CSO payments for redistribution across the industry. It is noted that the Government response to the Parry Inquiry concurs with this initiative.

While the Final Report of the Parry Inquiry proposed that the IPART annual fare assessment increase STA fares over time, the Review believes that fare equalisation should be given priority to eliminate the STA pricing CSO and to bring forward the extension of benefits to the wider community.

Concern about the operation of the School Student Transport Scheme (SSTS) arose during the conduct of this Review, due to the central funding role played by the scheme in bus industry financing. The Bus Review Interim Report and the Parry Inquiry Final Report recommended that bus operators be paid on actual school travel undertaken. The Government response concurred with this.

The consequential funding gap will leave many operators unable to maintain scheduled route services due to inadequate fare box revenue. Therefore, supplementary subsidies, based on efficient costs, may be required.

This requires the introduction of the new planning, contracting and funding arrangements proposed by this Review. To facilitate this, the Ministry of Transport will locate all relevant functions in an Operations stream separate from the Policy function. Further consideration can be given to the need for a separate Passenger Transport Authority, once this operations area is functioning and its performance able to be evaluated.

In considering the provision of bus services in rural and regional locations, the Review's Interim Report recommended that a new administrative structure be developed which would better co-ordinate access to transport resources and funding. Strong support for this concept was identified in subsequent discussions with various transport user interest groups and in consideration of submissions.

The appointment of regionally based Transport Working Groups, convened by Transport Co-ordination and Development Officers employed by the Ministry of Transport, has been recognised as an initiative which will identify local transport needs and provide tailored solutions.

Appropriately funded community transport organisations can assist in the provision of solutions for many of the needs of transport disadvantaged groups through liaison with the proposed Transport Co-ordination and Development Officers and Working Groups.

In the course of the Review a number of associated issues arose which are worth reporting on, one being the viability of the bus manufacturing industry located in this and other Australian states.

Consideration of submissions and manufacturing site visits highlighted the need to ensure that facilities and skills are maintained to supply suitable new and refurbished buses to operators. A number of manufacturers have exited the industry and those remaining will only survive in an environment which provides certainty for the future of bus operators.

Issues which concerned the Transport Workers' Union were the need to ensure that all new drivers received workplace induction and safety training, and that regular refresher courses are provided. The Union also raised the question of award compliance and the need to observe the requirements of the Occupational Health and Safety Act, suggesting that contracts incorporate adherence to these instruments as a proviso. These seem to be reasonable requirements that can readily be incorporated into service contracts.

The Final Report also addresses two other issues raised by the Transport Workers' Union - the need for driver amenities at interchanges and stations, and the need for some flexibility in respect of the hours during which school students can use their SSTS passes.

This Review of Bus Services in New South Wales has provided a unique opportunity for a wide variety of bus industry participants, interest groups and transport users to present their opinions on ways to improve the system.

Thanks must be extended to the more than 1,800 organisations and individuals for their contributions to the process of review, and for devoting the time to present many excellent submissions and ideas.

I must also commend the highly talented team of policy development officers of the Ministry of Transport, Joanna Quilty, George Pund, Bill Grant, Catherine Reilly, Matthew James, Matt Hunter, Stephen Timbrell, John Morandini, Marion Browne and Rosemary Evans, who totally devoted themselves to the to the task of the Review over an extended period, and thank them for their efforts.

During the course of the Review, a Review Advisory Group comprising representatives of The Cabinet Office; Treasury; the Department of Infrastructure, Planning and Natural Resources (DIPNR); Transitways; the Roads and Traffic Authority (RTA); Railcorp; and the Ministry of Transport (Contracts); as well as Joe Tripodi, Parliamentary Secretary to the Minister for Transport Services, met to consider and advise on issues associated with the Review. Their assistance was invaluable and much appreciated.

The consultants to the Review - SAHA International, LEK Consulting, Parsons Brinkerhoff, Sinclair Knight Merz, Booz Allen Hamilton, INDEC Consulting and Allens Arthur Robinson - have also provided critical inputs to the analysis and recommendations contained in the Interim and Final Reports. For that we all express our appreciation.

I thank the Director-General of the Ministry of Transport, John Lee, for his generous support of the Review and his continued interest in its progress.

In conclusion, on behalf of the Review team and myself, I must thank the Hon Michael Costa for entrusting us with the responsibility of undertaking this important examination of the bus industry and the service it provides to the community.

Barrie Unsworth
Chair
Review of Bus Services in New South Wales

Final Report Recommendations

Metropolitan Network and Service Planning

The Government should progressively implement, for Sydney, Wollongong, Newcastle and the Central Coast, a network of viable strategic corridors to provide fast, frequent, direct and convenient links to regional centres. The identification of suitable corridors should be finalised on the basis of patronage modelling results and stakeholder inputs.
The network of strategic corridors should be underpinned by 10 contract regions in the Sydney metropolitan area, 2 for Newcastle and one each for Wollongong, the Central Coast and the Blue Mountains.
Within each region, provision of bus services along the strategic corridors should be integrated with local bus services.
A partnership approach to integrated service planning between the lead operator for each region and the Ministry of Transport should be adopted, with the Ministry of Transport having a system-wide oversight role.
New 'service planning guidelines' to replace the existing Minimum Service Level (MSL) Policy, should be developed by a central working group including representatives from the bus industry, community transport providers and the Ministry of Transport. The guidelines should identify:
- roles and responsibilities in the planning process;
- desirable service frequencies along strategic corridors and for local services;
- opportunities to integrate bus services with rail and ferry services where appropriate;
- opportunities for operators to target resources at viable, demand responsive services, with flexible solutions to best serve the needs of the transport disadvantaged;
- the need for local government to implement local planning policies to encourage public transport provision;
- factors/criteria to be taken into account when recommending that service frequencies or routes be varied; and
- factors/criteria to be taken into account for determining when patronage levels or community needs are such that local services would be better provided under the auspices of community transport or a community transport/private operator partnership arrangement.
Regional service planning forums, comprised of representatives from the lead operator, local government, the Roads and Traffic Authority (RTA), community transport local working groups and the Ministry of Transport, should be convened annually or as needed to assist with the service planning and review process. The role of the forum should be to advise the lead operator and the Ministry of Transport on service planning issues, frequency requirements and proposed changes that will have a material impact on passengers and the region.
The Ministry of Transport should consider employing regional transport co-ordinators in metropolitan areas to promote co-operative service provision between all transport providers - bus, rail, community transport and taxis - needed to encourage flexible transport solutions and ensure that services for the transport disadvantaged are optimised.
In leading the development of the Sydney Metropolitan Strategy, the Department of Infrastructure, Planning and Natural Resources (DIPNR) should ensure that:
- the role of bus services and bus priority measures in effectively meeting the long term transport needs of metropolitan Sydney is recognised and promoted;
- planning for the provision of bus services is factored into the development of greenfield sites and high level integrated transport planning at the regional and sub-regional level;
- the strategic corridors and contract regions proposed in this Final Report are used as the starting point for meeting medium and longer term transport needs; and
- the strategy encompasses policies which support the development of viable public transport solutions such as supporting employment and population growth in regional centres, encouraging development along strategic corridors and restricting parking.
The service planning roles of DIPNR and the Ministry of Transport should be clearly defined to reflect:
- DIPNR's focus on strategic level integrated transport planning at the regional and sub-regional level as key components of the Sydney Metropolitan Strategy and other regional planning activities; and
- The Ministry of Transport's focus on translating these strategic level transport outcomes into shorter term service planning requirements reflected in proposed bus service contracts.
The RTA, in consultation with the Ministry of Transport and DIPNR, should progress the initial assessment of the proposed strategic corridors undertaken as part of this Review to:
- prioritise the strategic corridors according to need for and impact of proposed bus priority measures;
- determine, case by case, the level of infrastructure required and associated costs;
- develop an expanded bus priority program (including additional revenue sources) to be rolled out over the length of the first contract period; and
- implement electronic enforcement measures in parallel with bus priority measures.
To ensure that bus drivers have adequate access to amenities at stations and interchanges:
- DIPNR should finalise the draft Interchange Design Guidelines and ensure that they effectively address the issue of driver amenities, in consultation with the Transport Workers' Union, the Rail, Bus and Tram Union, the Bus and Coach Association, State Transit, Railcorp and the Ministry of Transport;
- consideration should be given to the Transport Infrastructure and Development Corporation taking a lead role in working with other relevant Government agencies to resolve the issues of ownership, funding and maintenance of amenities at new interchanges and stations; and
- Railcorp should continue to ensure adequate access for bus drivers to existing facilities at stations and interchanges.
The Lord Mayors of Parramatta, Newcastle and Wollongong should set up a working party to further investigate the feasibility of establishing free bus services in their respective cities' CBDs. The working party should consist of the Lord Mayors, and relevant business and community leaders.

Metropolitan Contracting

There should be one contract per contract region for the Sydney, Newcastle, Wollongong, Central Coast and Blue Mountains metropolitan areas.
There should be a transition period to enable existing operators to organise themselves on a region by region basis to achieve the above. Following this, contracts in metropolitan NSW should be let through competitive tendering (or similar process) to ensure a strong customer focus and best value for the taxpayer. Assessment criteria should not be based on cost alone and should include performance factors such as:
- service planning skills;
- on-time running/reliability;
- environmental history;
- customer relations activities; and
- workplace relations, OH&S experience and proposed approach.
The terms of the new contracts should reflect an appropriate allocation of risk between operators and Government, dependent on which party is best placed to manage the risk, in respect of factors such as patronage, service planning, fares, fares collection and data collection/reporting.
There should be greater flexibility in determining the length of the contract period, but with 5 year contracts, and the opportunity to extend for 2 to 5 years (subject to satisfactory performance), the norm.
Other terms of the contract should include or reflect:
- the prerequisites before a principal operator (and associated operators) can enter into a contract;
- the boundaries and strategic corridors that make up the contract region;
- services to be provided locally and along the strategic corridors, including integration requirements with other modes;
- service quality, performance, bus fleet and other standards to be met, such as punctuality and reliability, timetable information (including requirements in relation to community consultation/notification in respect of service changes), signage, customer relations/complaint handling, fleet specifications, and environmental performance (including implementation of the RTA's Clean Fleet maintenance guidelines);
- requirements in relation to the development of Accessible Transport Action Plans and Customer Relations Plans;
- recording and reporting requirements including provision of boarding and revenue data, financial records, and the need to report regularly to the community on punctuality/reliability, customer service and complaint handling;
- service planning to be undertaken by operators in consultation with regional service planning forums and approved by the Ministry of Transport, in keeping with relevant guidelines;
- requirements in relation to provision of SSTS, other concessional travel, fares and ticketing, including participation in smartcard ticketing and installation in buses of related equipment;
- the need for co-operative arrangements as required with neighbouring and other operators, including for the provision of community transport;
- participation on local transport working groups as required;
- contract payment details including those for SSTS, concessions and any CSO funding;
- requirements in relation to staff training/qualifications and work safety;
- provisions for dispute resolution;
- termination events;
- procedures in relation to contract breaches, including a graduated penalty regime and the exercise of step-in rights where required; and
- procedures in relation to the re-tendering of contracts.

Metropolitan Funding

The Ministry of Transport should implement a funding model for bus service provision in metropolitan NSW that appropriately addresses risk allocation issues, provides incentives for service improvement/ patronage growth, and promotes accountability and transparency.
Elements of the metropolitan funding model should include:
- operator to largely retain fare revenue;
- capacity for revenue sharing where applicable to off-set risks outside the operator's control, particularly in the initial transition period;
- reimbursement of SSTS and concession travel based on actuals or at an agreed rate/fixed sum, based on travel data generated from the ticketing system;
- incentive payments for service quality and penalties for failure to meet standards; and
- an appropriate CSO payment, on a case by case basis as required.
Where possible, State Transit should be required to make targeted efficiency savings to reduce the level of CSO payment. Identified savings should be used to fund service improvements across the metropolitan network over time.

Rural and Regional NSW

The Ministry of Transport should commence recruitment of regionally based Transport Development and Co-ordination Officers to facilitate the development of innovative transport solutions and the best use of available resources in country areas. Specifically, their role should encompass:
- mapping existing services and needs;
- establishing regional co-ordination committees of relevant stakeholders to further advise on need, and assist with integrated service provision and planning;
- monitoring the effectiveness of services;
- working with stakeholders to identify and trial service improvement projects, funded by seeding grants; and
- working with the Operations stream of the Ministry of Transport to extract greater value from, and insert more flexibility in, bus contracts.
- The Ministry of Transport should also consider establishing the position of Aboriginal Transport Development Officer to develop transport solutions appropriate to the needs of Aboriginal communities.
As recommended in a previous review, community transport services should be recognised as playing a crucial role in the transport task, with safety and accreditation requirements applying where appropriate. Barriers to the provision of flexible solutions involving the most appropriate vehicle type should be removed.
The Ministry of Transport should develop a new 'modular' service contract for country NSW that is capable of being adapted to the different service needs of different communities and addresses:
- services to be provided, including integration requirements with other modes;
- requirements in respect of availability for other charter and community work;
- uniform standards for service quality, performance and bus fleet specifications;
- reporting requirements to enable better performance monitoring and to inform ongoing service planning;
- procedures for dealing with disputes and contract breaches;
- flexibility in the contract term, from 5 to 10 years;
- contract payment details that take into account income from charter and other work;
- service planning and review processes, including participation in local transport co-ordination committees; and
- contract renewal opportunities and performance assessment processes.
The Ministry of Transport should develop a new financial model for rural and regional bus services that, subject to IPART endorsement, replaces the existing 'non-commercial' funding model. The model should:
- update the inputs in the current funding model to reflect efficient benchmark costs;
- link return to operational effort;
- eliminate any biases in favour of multiple contracts holders/larger operations;
- recognise income derived from other sources (such as commercial charter work) and its contribution to capital costs while still providing incentives to take on this work; and
- establish a per kilometre charge at which the vehicle is to be made available for charter and other work for specified groups.
To provide services that better meet local needs and represent value for money, consideration needs to be given to:
- replacing regular route services in country towns with demand responsive, flexible services, recognising that commuter needs should not drive service planning in these areas. As a starting point, the proposal for a demand responsive service for the Dubbo township should be trialed as soon as possible and opportunities for similar trials identified; and
- the potential for:
- establishing single operator networks for the provision of school services in a given area (replacing the existing single noncommercial contracts) to maximise the efficient use of vehicles and achieve economies of scale,
- funding new services (including regular services to isolated communities) from any savings that may be realised,
- rescheduling CountryLink coach services so that they better meet the needs of the broader community by providing a useful daily link between isolated communities and their regional centres; and
- rolling out a transport information and referral service (based on the system developed by the Macquarie Area Health Service).
The Ministry of Transport should negotiate with operators to move them onto new contractual and funding arrangements.
The Ministry of Transport should continue to work with NSW Health, the Department of Ageing, Disability and Home Care, DIPNR and other government stakeholders to develop integrated regional transport plans and budgets as a mechanism for facilitating a whole-of-government approach to planning, procuring and funding country transport solutions. Agencies should commit to ensuring that new services are procured through the integrated planning approach to maximise value for money and optimise service outcomes for the community.

Statewide Issues

Fares, Ticketing and Concessions

To ensure an equitable system, a consistent bus fare scale should be progressively implemented across all metropolitan bus services and operators should be required by contract to offer the same core fares, concessions, and ticketing arrangements.
Government should request that IPART seek to align State Transit's fares to the Transitway fare scale (equivalent to the private operator fare scale) as a matter of priority.
As commercial contracts in regional areas expire, a single fare scale, consistent with the country fare scale, should be applied so that over time all regional operator fares are aligned to the one scale.
Private operators should be obliged to offer a TravelTen (or equivalent) product, discounted at around 15% relative to single fares. Over time, the discount on State Transit's TravelTen (or equivalent) should be brought to a similar level.
Once the smartcard system is implemented, only single fares and a more limited number of products (such as TravelTens and the Pensioner Excursion Ticket) should be allowed to be loaded onto the smartcard, to promote ease of use.
The proposal, recommended in the Parry Inquiry Final Report and supported by Government, to increase the Pensioner Excursion Ticket to $2.50 and expand it to areas within the Greater Metropolitan Region serviced by private operators, should be implemented as part of new contractual arrangements.
Once the Pensioner Excursion Ticket is available across the metropolitan area, operators should be required to monitor and report to the Ministry of Transport on the extent and impact of Pensioner Excursion Ticket holders travelling during the morning peak.
Prior to the implementation of the smartcard system, consideration should be given to allowing the purchase of a multi-trip Pensioner Excursion Ticket, as a means of reducing on-board ticket purchases and resultant delays, particularly during peak times. Photo identification should be required for purchase and use of the ticket, to protect against fraud.
The Pensioner Excursion Ticket should also be available for use on bus services in large country towns where community transport cannot provide an equivalent service.

SSTS

In-principle agreement should be sought from education bodies to participate in the smartcard trial for SSTS during the second half of 2004, and in the broader implementation of the system in 2005. The trial should include:
- consultation with school staff, unions and parents;
- consideration of ways to minimise the administrative load for schools; and
- the identification of any transition costs.
Following the trial, a Memorandum of Understanding should be entered into between the Ministry of Transport and relevant education bodies. This should outline respective roles and responsibilities in relation to the administration of SSTS under the smartcard system to ensure its effective roll-out and implementation.
Once fully implemented, the potential for the smartcard system to make SSTS more responsive to the changing educational and social needs of students and families should be explored.
The Ministry of Transport and the BCA should jointly identify and implement strategies to ensure that operators and drivers are aware of the recently developed SSTS Guidelines on Hours of Travel, which enable some flexibility in determining when during the day an SSTS bus pass may be used.

Governance Arrangements

The Ministry of Transport should proceed with the establishment of an Operations stream that will consolidate service planning, contracting and funding responsibilities for passenger services under a single management arrangement. To ensure these arrangements commence with the introduction of the new contracting regime, an assessment of the capability, resources and operational requirements needed should be undertaken as a priority.
As part of the above, discussions should commence to enable the transfer of State Transit's planning capability to the Ministry of Transport, concurrent with the signing of new contracts with State Transit.
The effectiveness of the Operations stream should be monitored over the contract period prior to any further consideration being given to the establishment of a Passenger Transport Authority.
In the longer term, serious consideration should be given to the establishment of an appropriate entity to enable the separation of asset control from the operation of services, to realise a range of benefits as outlined in this Report. As a more immediate measure, contracts need to provide for step-in rights and call options to enable Government control over assets where necessary to ensure continuity of services.

Implementation/Transition

Metropolitan Areas

To enable the implementation of new arrangements, the Passenger Transport Act 1990 and other relevant legislation should be amended to allow for:
- removal of automatic renewal rights;
- extinguishment of existing contracts where necessary;
- performance standards and penalties;
- payment of SSTS on actuals;
- the creation of defined contract regions and the identification of strategic corridors;
- a partnership approach to service planning and the replacement of MSLs with service planning guidelines;
- IPART determination of State Transit and private operator fares;
- recognition of the role of community transport in the provision of local services and/or services to meet the needs of particular groups; and
- flexibility in relation to contract periods, including temporary contracts and termination provisions.
To provide certainty, the introduction of new contracting arrangements should be progressed expeditiously, with the aim of being in place across the Sydney metropolitan area by 2005. The first 2 years should be viewed as a transition period, to enable the collection of relevant information and data, and the review and refinement of arrangements as necessary.
A whole-of-government taskforce, comprising the Ministry of Transport, Treasury, The Cabinet Office and other relevant agencies should be established to oversee and monitor implementation of new contracting arrangements for metropolitan areas. Updates on progress with implementation should be published quarterly on the Ministry of Transport's website.

Rural and; Regional NSW

For rural and regional NSW, the Passenger Transport Act 1990 should be amended to provide for:
- a more flexible contracting regime;
- a more flexible accreditation regime;
- recognition of community transport providers; and
- transitional provisions which recognise a gradual roll-out of new service delivery, funding and contracting arrangements.