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Public servants warned over $2b train privatisation


The Malinauskas Government has warned public servants involved in the privatisation of Adelaide’s passenger rail service that any insertion of  “extraordinary clauses” regarding breaking the contract could be “close to maladministration or misconduct”.

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The new Labor state government went to the March election with a commitment to bring Adelaide’s passenger trains and trams back into public hands, after the former Marshall Government privatised the services in 2020.

Private operator Keolis Downer is in its second year of an eight-year, $2.14 billion contract.

Labor’s first State Budget included $1 million for a “Commission of Inquiry” to provide advice on the most “efficient and cost-effective” means of reversing the privatisation.

The inquiry will also examine the feasibility of bringing the state’s bus service, which has been privatised for more than 20 years, back into public hands.

Transport and Infrastructure Minister Tom Koutsantonis, asked in parliament on Thursday how long the inquiry would take, said it would “depend on the complexity of the contract negotiations with Keolis Downer and the commissioner we appoint”.

“I do not expect it to be a very long process, but one of the key recommendations, which we talked about before the election, was an investigation into any break clauses and whether they were unusual or extraordinary in standard government contracts,” he said.

“And if there are, those public officers involved in that will obviously have to deal with the consequences of that because if any government put in extraordinary clauses that are unusual in standard contracts for break clauses … that would be unusual.”

Koutsantonis suggested the insertion of extraordinary clauses “could be close to maladministration or misconduct”.

“The commission of inquiry will report back to the cabinet and let us know exactly what has occurred, and if there are any examples of that in those contracts, obviously there will have to be further action from there,” he said.

“But we will get to the bottom of it very, very quickly.”

Koutsantonis said the State Government was looking at “a number of people” to lead the inquiry as commissioner.

“The department will be involved ultimately as well,” he said.

“We will be looking at experts, because we haven’t had buses in our government fleet — that is operationally — since the [former Liberal MLC from 1982 to 2003] Diana Laidlaw days, when we had another program of privatisation by members opposite.”

The Liberal Opposition claims it has received information from the Department of Infrastructure and Transport showing the cost of cancelling the Keolis Downer contract before June 2023 could reach $70 million.

Koutsantonis confirmed to parliament that he has received advice about the cost of terminating the Keolis Downer contract but did not give any further details.

InDaily asked the transport minister what figure he was provided in this advice. In a statement, Koutsantonis insisted the State Government did not expect to incur costs for reversing the privatisation.

“Since prior to the last election we made it clear to all potential bidders we would reverse this privatisation and because of that we maintain we don’t expect to incur any costs,” he said.

“Keolis Downer is working with us constructively as we take the next steps.”

Meanwhile, a Bill that would require parliament to approve the privatisation of any state asset is expected to pass the Upper House next week.

Greens MLC Robert Simms, who introduced the Bill last month, said he expects the legislation to pass with support from Labor.

In addition to giving parliament new powers to stop a privatisation, the law change would require a parliamentary committee to review any push to privatise an asset and table a recommendation on the decision in both houses of parliament.

Committee reviews of privatisations were a key recommendation of a select committee report into privatisation tabled last year.

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