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Rail privatisation needed to meet budget savings: Transport boss

Local

The Marshall Government would need to find alternative savings measures if the sell-off of the state’s rail services did not proceed, the head of the Transport Department has conceded – despite previous assertions proceeds would be reinvested into improving the network.

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Transport Minister Stephan Knoll announced in July last year that the operation of Adelaide Metro tram and train services would be outsourced to the private sector, “to deliver better and more customer focussed services for South Australians”.

He has maintained that “under this model we will be able to deliver more efficient services, so we can reinvest back into the network to provide better services”.

However, Transport, Infrastructure and Planning Department chief Tony Braxton-Smith has effectively conceded the privatisation is a cost-saving, telling parliament he would need to find alternative efficiencies if it was not going ahead.

Fronting a parliamentary committee by video link last week, Braxton-Smith said: “We would need to put other measures to government and we would need to reassess our budget position if we were not able to proceed.”

However, he added, that was “almost a hypothetical” as “we are proceeding”.

Knoll has re-confirmed his intent to proceed with the sale despite the economic uncertainty wrought by the coronavirus pandemic.

Just last month, an Invitation to Supply was issued to three shortlisted consortia: Adelaide Next, a consortium between Deutsche Bahn and John Holland with Bombardier as a sub-contractor; Keolis Downer, a consortium between Keolis and Downer EDI; and TrainCo, a consortium between Transdev and CAF.

In the parliamentary hearing, Opposition frontbencher Stephen Mullighan asked Braxton-Smith where he was “able to deliver your budget savings if you were not to proceed with the outsourcing of heavy rail operations”.

The agency boss replied: “That’s an interesting question.”

“I would say that we are able to deliver our budget,” he said.

“We can deliver our savings target under a number of different policy settings and this is the policy setting that government has selected.”

Asked to clarify, he went on: “We would need to put other measures to government and we would need to reassess our budget position if we were not able to proceed.”

He said it was “yet to be determined” what proportion of DPTI’s budgeted savings would be delivered by the outsourcing of rail services, “because we don’t have the price back from the bidders”

“When we have a price back from the bidders, we will be able to say what savings have been achieved,” he said.

Mullighan then asked: “If all short-listed consortia come back and do not deliver you any savings, you won’t be accruing any savings from this outsourcing?”

“That’s a possibility,” Braxton-Smith conceded.

“At this stage, our plans are to proceed with the procurement and we are confident that the bidders will deliver savings and that we will be able to present the Government with options as to how to achieve any savings gap if one materialises.

“But at this stage, all the evidence and all the analysis that we have available to us… would suggest that there are efficiencies available to government from the outsourcing of the rail operations.”

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