Review of Bus Services in New South Wales: Interim Report - November 2003: Foreword and Recommendations

Foreword

The creation of a bus transport system which provides common standards of fares, and service levels tailored to the needs of each community, is an essential outcome of this Review.

To achieve the optimal result, the Review has developed a number of creative strategies, set out in this Interim Report for consideration by Government.

The problems canvassed and the solutions proposed are a response to the current inequities existing in a system divided - between long established and newly developed regions of Greater Sydney, between different bus operations, Government and private, and between communities with a variety of travel requirements.

Previous attempts to deal with these inequities have been frustrated by an inability to reconcile the differing objectives and imperatives of private and Government bus operations.

The Review invited the travelling public to "have a say" and bus travellers who submitted their views expressed a desire for the availability of frequent, reliable and reasonably priced services.

The extension of these concepts across the landscape requires a new approach to contracting for bus services by Government, and a reallocation of subsidy payments currently made to operators.

The changes proposed to the operating and contracting regime may not be capable of immediate implementation in all regions. However, acceptance of the need to make change, and planning for a phased introduction, will result in the benefits of the new approach being realised over time.

The Review has examined bus travel requirements in both urban and rural communities, and accepts that the problems and solutions differ in each locale.

Consequently, we propose local solutions be developed to meet the special needs of people living outside urban areas.

When travel patterns across the Sydney metropolitan area are examined, it is clear that the majority of journeys are within or between adjoining regions.

The existing bus route structure radiates from the Sydney CBD. It services peak time commuters, but it fails to provide travel solutions for many potential public transport users who are consequently forced to drive their cars.

In the outer suburbs, due to contract area restrictions and the primary role of private bus operators as providers of a feeder service to the rail network, the limitation on cross regional travel is even more apparent.

Where a cross regional service has been introduced the patronage generated has justified its development. This is evidenced by the State Transit service from Bondi Junction to Burwood, and the Perth Circle Route operated as part of the Transperth bus network.

As required by its terms of reference, the Review has developed a plan for strategic corridors across Sydney and also for Newcastle, the Central Coast and Wollongong.

These strategic corridors provide a framework from which to connect and integrate local bus routes serving old and new communities, regional centres, hospitals and education facilities.

To limit the ever increasing use of cars, and the consequent pollution and traffic congestion, it is essential that more bus travel options be presented to travellers.

The Review believes the proposed strategic routes will contribute to this objective.

The experience of Government bus regulators in other Australian States and Territories in introducing change, and improving service to the travelling public, has been examined by the Review.

In particular, there is a need to ensure service standards are set and maintained by Government, through an easily understood and applied contract regime.

The existing contracting arrangements are based on an evolutionary process stretching back to the inception of public passenger bus transportation in New South Wales.

The current legislative limitations, imposing exclusive contracts renewed in perpetuity, are outdated and must be restructured.

New contracting arrangements are proposed for the Greater Sydney region, which incorporates Newcastle, the Central Coast and Wollongong, to facilitate development of a fully integrated and equitable bus system.

Subsequent to a transitional period, contracts should be based on periodic competitive tendering, to ensure operators provide an efficient service at a measured cost to Government.

In considering the best vehicle for regulating the new contracting regime, the Review believes a Passenger Services Division of the Ministry of Transport would be well placed to provide the necessary contract administration skills.

With the addition to the Division of a bus service planning function, an asset administration group, as well as financial control and funding mechanisms, a structure would be in place to appropriately respond to community requirements.

The Review also sees merit in further consideration of alternative asset management structures, such as an asset and infrastructure trust, that would separate service operation from asset ownership.

The Review, by its terms of reference, is required to take into account the findings of the Ministerial Inquiry into Sustainable Transport in NSW undertaken by Dr Tom Parry.

The Interim Report of that Inquiry was released in August and provides a number of suggested solutions to questions of fare parity, equity for concession pass travellers, and solutions to morning peak travel congestion for full fare paying passengers.

A number of significant options were put forward by the Inquiry to mitigate the burgeoning cost to Government of the School Student Transport Scheme.

In particular, the Inquiry proposed a change to the Scheme to ensure payment for travel is based on actual travel only, and a means tested copayment be introduced, as a control measure on passes issued.

After careful consideration the Review endorses many of the Inquiry's options and proposes that in some respects they be extended.

As previously indicated, the public transport requirements of rural and regional communities differ significantly from those of the urban traveller.

Due to social disadvantage and isolation, many needs cannot be satisfied by traditional transport means, and much more emphasis must be placed on individual solutions.

These can best be achieved by pooling and utilising all resources currently available and allocating them for community use through the employment of regional transport development officers by the Ministry of Transport. These officers will work with local transport committees to determine the mix of services required for each area.

The purpose of the Interim Report is to recommend a blueprint for future reform, which will secure permanent improvement to the bus transport system.

The Interim Report will also provide a platform from which the recommendations can be tested in further consultation with stakeholders.

Subsequently, the Interim Report recommendations will be further developed with legislative, commercial, funding and contracting solutions for incorporation in the Final Report.

Barrie Unsworth
Chair
Review of Bus Services in NSW

Interim Report Recommendations

The Review proposes and seeks comment on the following preferred options in relation to key issues raised in the Report:

Metropolitan Network and Service Planning

1. Develop a network of Strategic Corridors for Sydney, Wollongong, Newcastle and the Central Coast providing fast, frequent, direct and convenient links to regional centres.
2. To support this network of Strategic Corridors, establish 10 contract regions for the Sydney metropolitan area, 2 for Newcastle and one each for Wollongong and the Central Coast.
3. Integrate planning of strategic and local bus services, with the Government leading network design in partnership with operators.
4. Target bus priority on all Strategic Corridors under an expanded Bus Priority Program, supported by effective regulation and enforcement.
5. Replace the Minimum Service Level policy with more flexible service and frequency guidelines that respond to identified travel demand and support the Strategic Corridors.
6. Develop innovative solutions to ensure access to local transport services, such as better integration of community transport services with the bus network and demand responsive services.
7. Provide greater integration of metropolitan planning with transport planning policies to support regional centres, encourage development along Strategic Corridors and restrict parking.
8. Encourage local councils to implement local planning policies under which developers contribute to public transport costs, developments better accommodate public transport services, and councils and transport planners co-ordinate to anticipate service requirements.
9. Investigate and undertake a cost benefit analysis of the provision of free CBD bus services - jointly funded by councils and Government - in Parramatta, Newcastle and Wollongong.

Metropolitan Contracting

10. Phase-in the introduction of competitive tendering as current contracts expire. In transitioning to this arrangement, stringent cost and performance benchmarking and monitoring should apply.
11. Establish new contracting arrangements with terms and conditions that include or reflect:
    • a duration of 5 years;
    • new planning and funding arrangements (such as mechanisms to determine service frequencies, negotiate service changes and promote partnership planning);
    • a comprehensive set of measurable service standards and specifications (such as punctuality and reliability requirements, complaint handling processes, community consultation/notification mechanisms);
    • driver training and work safety priorities (such as induction, customer relations, safety and personal security aspects);
    • reporting requirements and patronage and service data to be provided;
    • uniform fares, ticketing, concession and SSTS arrangements;
    • Smartcard arrangements, including the installation of new technology hardware on buses; and
    • a series of graduated remedies, such as a penalty regime, to deal with contract breaches, and termination and step-in rights (as necessary) as a last resort.

Metropolitan Funding

12. Modify the current "net cost" funding model, where operators retain the fare revenue, to incorporate:
    • payment of school student transport on actual travel only using Smartcard technology;
    • reimbursement of concession travel at an agreed rate or fixed sum;
    • and
    • payment of transparent service subsidies for agreed outcomes at efficient costs, in those areas where it is determined (either on the basis of efficient costs benchmarking or competitive tendering) that fare and other revenue will not be sufficient to enable service requirements to be met.
13. Over time, align subsidy payments to State Transit and private operators as fare levels are equalised, to be part of an industry-wide subsidy payment as outlined in recommendation 12.

Rural and Regional NSW

14. Introduce Integrated Regional Transport Planning as a vehicle for a whole-of-government approach to planning, contracting and funding transport services in rural and regional areas.
15. Establish Transport Working Groups in identified transport regions -aligned with the planning areas used by NSW Government human service agencies - to involve stakeholders in identifying and developing strategies to meet the region's transport needs. These groups would bring together state and local government agencies, service providers, community organisations and representatives of service users.
16. Employ, in the Passenger Services Division of the Ministry of Transport, regionally based Transport Development Officers with responsibility for co-ordinating, in consultation with the Transport Working Groups:
    • the development plans that identify needs and the package of services required;
    • the procurement of services; and
    • the ongoing contract management and performance monitoring.
17. Implement a new regulatory model, with a focus on service delivery outcomes rather than different service types, and a more uniform approach to accreditation across service providers to promote innovative service solutions.
18. Implement flexible arrangements for procuring the identified "package" of services required for a particular area. Local service providers should be encouraged to work co-operatively and submit collaborative proposals for meeting identified service needs. Competitive tendering could be an option where collaborative efforts are not possible, and/or there is a likelihood of reasonable competition.
19. Assess service provision proposals on the basis of:
    • maximising available resources and minimising duplication of effort;
    • effectively meeting identified community need;
    • the ability to provide services at efficient cost; and
    • ensuring fair and equitable opportunities for all accredited service providers.
20. Implement a more flexible contracting regime, based on services to be provided rather than a specific region or route and incorporating the following:
    • a 5-year term;
    • planning and funding arrangements;
    • arrangements in relation to SSTS, fares, ticketing and concessions
    • measurable service standards and specifications for the mix of required services;
    • appropriate reporting requirements to enable better monitoring of performance and assist with service planning; and
    • mechanisms for dealing with dispute resolution, complaints, breaches of the contract, and reassignment of the contract in certain circumstances.

Contracts with service providers that involve use of Government funded vehicles would also include availability requirements and charge out rates to specified community groups (based on benchmarked efficient marginal operating costs).

21. Obtain cross agency support for establishing Integrated Regional Transport Budgets through pooling existing funds from SSTS payments, concession reimbursements, community transport funding, and other NSW Government agencies' rural transport programs.
22. As part of the new contractual arrangements, implement a funding model that:
    • as appropriate, encourages service providers to collect and retain fare revenue;
    • enables specific services to be purchased on a per kilometre basis;
    • reimburses any SSTS or concession travel provided on the basis of actual travel and/or at an agreed (efficient cost) rate;
    • enables the provision of targeted subsidies (from the Integrated Regional Transport Budget) where the above funding streams will not be sufficient to enable the provision of services identified through the planning process; and
    • enables any savings from the pool of funding to be directed towards increased service provision and/or the purchase of additional services.
23. Recognising the success of the Western NSW Transport Trials, develop a proposal for an Integrated Regional Transport Planning model (as outlined above) for NSW, incorporating Transport Working Groups, Transport Development Officers, new contractual arrangements and an Integrated Regional Transport Budget.

Statewide Fares, Ticketing and Concessions

24. Adopt a consistent fare scale, as determined by IPART, across all metropolitan bus services.
25. Apply a single fare scale to regional NSW. This may be higher than the metropolitan fare scale if there is evidence to support higher costs relative to passenger numbers for regional areas. Transition arrangements to balance impacts on passengers and operator revenue will need to apply.
26. Under new contractual arrangements, require operators to offer a frequency of use discount, possibly in the form of a Travelten or equivalent "travel bonus" scheme.
27. Apply a consistent suite of targeted concessions, based on those available on State Transit buses, across NSW, with the bus Pensioner Excursion Ticket expanded to the greater metropolitan area.
28. Implement the proposal from the Parry Inquiry Interim Report to increase the Pensioner Excursion Ticket to $2.50 and to target its availability to Pensioners and War Widow/ers. The ticket should not be available before 9:00am weekdays, when half-fare concessions should apply.
29. Introduce the proposed Smartcard system with a very simple set of fares and a limited number of products only.
30. Oblige operators under their contracts to be involved in the Smartcard ticketing system to ensure its full benefits are realised.

SSTS Administration

31. Implement the Parry Inquiry Interim Report's option of introducing a $30 annual co-payment for SSTS, with "safety net" exemptions for those families who cannot afford to pay.
32. Give further consideration to the Public Accounts Committee's Inquiry into the SSTS proposal to give schools direct control of transport budgets and responsibility for purchasing services.
33. Develop a Memorandum of Understanding between education bodies and the Ministry of Transport to progress key SSTS administrative tasks that are essential to the effective running of the Scheme.

Statewide Governance Arrangements

34. In the long term, establish a NSW Passenger Transport Authority with responsibilities for planning (in co-operation with providers), contracting, funding and monitoring passenger services, including buses, and for regional co-ordination in relation to community transport.
35. In the interim, establish a Passenger Services Division within the Ministry of Transport to undertake the above functions.
36. Further consider alternative asset management arrangements that would separate asset ownership from service operations.