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By Jonathan J. Ariel - posted Friday, 18 May 2012

No response to my email.

Hmm. Guess the site isn’t up and running yet, hey Minister?

No matter. As I was saying, on behalf of many long suffering train commuters let me echo a very popular sentiment: you’re one gutsy dame.


Ifyou actually succeed in carrying out fundamental, fair and customer-centric reforms to the herpes like sore that the rail system has become, thenyou’ll be doin’ us proud. If you fail, then you can join the list of do-nothing NSW politicians who marked time, promised the world but are best remembered for living very high on the hog. The standard bearer of course was Premier “Dubai Bob” Carr.

Minister, while many whine, most of us pine for a better mass transit system. One where short distance commuters don’t subsidize long-haul passengers. Or at least don’t subsidize to the extent that we currently do. A system that runs to timetables that suit customers, not staff. One where trains are pulled out of service to actuallyeffect repairs to the tracks and are not sitting idly by while Rail Corp argues with contractors about who’s who and what’s what.

While reforms are indeed overdue, such restructures are not synonymous with a privatized transit system. Regardless of what the big end of town may whisper in your ear.

Given the appealing sound bites you’ve offered, many commentators are frustrated with the scant details of what exactly is your government’s end game and what is the scope of the proposed reforms.

No surprise really. It’s not your job to spill the beans before they’ve even been harvested let alone canned, is it? And we shouldn’t expect to see Booz Allen Hamilton’s (the consultants engaged by the Government) report in its entiretyany time soon, should we?

One issue surely canvassed in the hitherto unreleased report (or its forthcoming sequel) must be the proposed governance arrangements of the rail network. Regardless of how the transit functions are carved betweenSydney Trainsand its regional sibling, NSW Trains, a key question remains: will Sydney Trainsand NSW Trainsremain subsidiaries of a State Owned Corporation that succeeds Rail Corporation? Will there be one NSW Trainsor multiple service providers responsible for regional NSW?  If multiple, then will they be kept in state government hands but under a geographic franchise arrangement? Or will they be passed into local government ownership? Will the Feds want a piece of the pie? Will the railways be privatized? And if so, then will it be in full or in part? Will the big end of town cherry pick the routes they want? And how will all the disparate parts integrate?  I can already hear financial carpetbaggers looking at buying say, the well patronized Sydney’s Eastern Suburbs line and then making what they’ll term financial and “human capital” adjustments to the franchise before their initial public offering on the Australian Stock Exchange, hoping to make a killing.


Neither the Minister for Transport nor her boss, NSW Premier Barry O’Farrell has shed a ray of light on this aspect of the proposed reforms. But as luck would have it, the matter of governance was commented upon in a study of mass transit challenges in the United States, by none other than Booz Allen Hamilton themselves, only last year: Regional Organizational Models for Public Transportation.

Starting from a very different situation, where most transit systems are run by local authorities or hybrids of multiple public sector bodies and private subcontractors (as opposed to the NSW situation where rail is owned lock, stock and barrel by the one state government), the consultants examined how to address the never-ending challenges to meet travelers’ demands, service coordination, funding shortfalls and governance arrangements transformation that was employed to respond to the challenges for public transportation were considered.

Five governance models were identified dominating the U.S. transit agencies landscape, listed below as Figure #1 extracted from the report. Under consideration was transit agencies effecting change in their governance from one structure to another.

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About the Author

Jonathan J. Ariel is an economist and financial analyst. He holds a MBA from the Australian Graduate School of Management. He can be contacted at

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