Hansard debates

                             RAIL CORPORATIONS BILL
                                 Second reading

  Mr BROWN (Minister for Transport) -- I move:
  That this bill be now read a second time.
During the  government's  first term,  the  policies  and programs  I  initiated
resulted  in efficiency savings  which improved the quality  of public transport
services,  increased  patronage,  and  generated  operating cost savings of $250
million per annum. In its second  term, the government will move to continue the
drive  for  efficiency improvements via the corporatisation  of  individual  PTC
businesses, involving:

        a corporate structure similar to the private sector, with a commercially
        focused board;
        clear, non-conflicting commercial objectives;
        the transport minister  contracting  with both public and private sector
        transport providers to  ensure the needs  of  the travelling public  are
        met;
        managerial responsibility and autonomy;
        independent performance monitoring;
        removal of artificial competitive advantages and disadvantages resulting
        from government ownership;

        independent regulation where necessary; and
        explicit funding for community service obligations.
The Rail Corporations Bill 1996 continues  the process of industry reform in the
provision of public transport. Consistent with the government's policy announced
before   the  last  election,  the   Public  Transport  Corporation   is  to  be
disaggregated   into    smaller,   autonomous,    customer-focused   businesses.
Implementation  of  this policy will bring these public  transport  corporations
into  the government's general  model for reform of state-owned enterprises. The
Treasurer, in consultation with the transport minister, will  be responsible for
the corporatisation and structural reform of the enterprises.

The Minister for Transport  will continue to have responsibility for the  reform
of public transport  services and will contract  with both government-owned  and
private sector service providers. The oversight of the implementation of service
and  operating improvements by  the  Minister for Transport  will be facilitated
through his contracts  with service operators. The contracts will be designed to
ensure  that  the minister  has  the  powers  necessary  to  ensure delivery  of
high-quality   and   reliable  services  to  consumers.  This  model  has   been
successfully applied in relation to the contracting of metropolitan bus services
under the Transport Act 1983.
As  the  next  step  in  this  process,  the bill will establish V/Line  Freight
Corporation and  Victorian  Rail  Track  Corporation as separate and independent
businesses. V/Line Freight will operate rail  freight  services,  competing  for
customers with other suppliers of rail freight services and also road transport.

Victorian  Rail  Track  will  manage  the  non-suburban  rail  infrastructure in
Victoria, including access and  signalling issues. The objective for both is  to
carry  out  their functions efficiently  and in a  commercial  manner. They will
commence operations during 1997.
V/Line Freight has made great efficiency gains  in  the past four years, showing
faster   improvement  than   freight  railways  in   other  states.   Previously
dissatisfied  customers  now appreciate the  service, although there  is still a
considerable  way to go. The  government shares management's view that a smaller
and more commercial  organisation, independent of passenger operations,  focused
on freight customers and free  in its choice of maintenance and other suppliers,
will be able to deliver better services at lower cost.
The Rail Track  Corporation  will  manage  infrastructure  outside  the suburban
network.

As  a  number  of  private  and public railway operators are already using  this
infrastructure, control over  it should be independent  of any one operator. The
new corporation will take over train control from V/Line Freight, will negotiate
access arrangements  and  prices, and will  arrange  maintenance of  its  assets
through  competitive tendering. Safety accreditation  will  be  handled  by  the
Department of Infrastructure.
Consistent with their commercial  focus, the new entities will be state business
corporations,  with their own boards of directors, each with  a  strong  mix  of
skills and  experience. They will  be  established with  opening  balance sheets
reflecting an assessment  of their value. As corporatised businesses, they  will
be  subject  to normal commercial  pressures through the application  of the tax
equivalent regime and will be able to contract out such tasks as maintenance.

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Negotiations  covering  future  superannuation and other conditions will be held
with staff prior to them transferring to the new corporations. Maintenance staff
will have employment opportunities in private firms which bid for rail work. The
government   appreciates   the   importance   to   employees   of   satisfactory
superannuation  and other arrangements,  and several months will be available in
which to negotiate enterprise agreements.
Railways in  Victoria face intense  competition from road  freight operators, so
the  government  does  not  anticipate  a   need  to  regulate   V/Line  Freight
Corporation. Likewise it does not anticipate a need for a defined  access regime
for  the  Rail Track Corporation -- its customers face open competition and  the
corporation's incentive will  be  to  treat  them  fairly  and work with them to
develop new business. However, the bill provides for reference  to the Office of
the Regulator-General if  it is found that competitive pressure on  any services
is insufficient.

The  government is confident  that  these reforms, by  harnessing private sector
skills and  replacing traditional  controls  with commercial  disciplines,  will
enable  management  and  staff  to  improve  rail  services  in  Victoria  while
continuing to reduce the financial burden on taxpayers.
I commend the bill to the house.
Debate adjourned on motion of Mr BATCHELOR (Thomastown).
Debate adjourned until Thursday, 14 November.