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RAIL CORPORATIONS BILL
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31 October 1996
Second Reading
BROWN
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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.