Ideas@TheCentre
Ferry woes show no signs of abating
In 2009–10, the state-owned Sydney Ferries carried just 1.7% more passengers than in 2004–05, beset as it is by high labour and maintenance costs, poor service reliability, and growing customer complaints. To top it off, over 50% of its revenue is financed by taxpayers.
By contrast, the Tourism and Transport Forum (TTF) reported that from 2004–05 to 2008–09, the privately run Brisbane Ferries enjoyed yearly growth rates as high as 33%. It outperforms Sydney Ferries in efficiency, service reliability, and customer satisfaction.
That’s why many Sydneysiders were relieved at the Coalition government’s announcement to franchise the troubled ferry system. Unfortunately, it is only replacing a government monopoly with a private monopoly, and neither is good.
According to the proposal, the private sector would operate and maintain the vessels, while the government would control the fare prices, route structure, vessels, wharves and shipyards. If the new company wants to add or cut routes, change ticketing systems, or change vessels, it must first seek government approval.
To be fair, franchising will bring improvements. Experience in Brisbane shows Sydney can expect lower labour and maintenance costs, better on-time running, and increased patronage. But the Sydney franchise will still be subsidised. Taxpayers will have to pay for any upgrades in the ticketing systems or investment into new vessels, shipyards and wharves. In addition, there will be little incentive to be creative, to try out new technologies or new services. After all, there is no other company threatening to compete with them.
Competition is a constant struggle for efficiency and providing the best service at the lowest price. The harder the fight, the better the outcome. In 2007, the Walker Inquiry concluded that the Manly fast ferry was making such huge losses and recommended dismantling it. In 2009, the Manly ferry service was replaced by two private operators, who turned it into a profitable, competitive sector operating without the need for subsidy. There is even an on-board bar and wifi access for passengers.
There is a lot to gain when government steps away and deregulates. What the unions and the media have labelled ‘privatisation’ is actually far from it. The belaboured Sydney ferries, a vital mode of transport of commuters and part of Sydney’s tourism appeal, needs a comprehensive work over, not another monopoly.
Alexander Philipatos is a Policy Analyst at The Centre for Independent Studies.
