Protecting the Public Interest in Melbourne's Rail Franchise

This paper explores ways to improve the current public transport contract model, and identify where change is needed to better serve the public good.

Melbourne's rail operator (Metro) has recently been offered a seven year extension to their franchise. This offers a timely opportunity consider how the public's interest is best protected, to examine the existing franchising mechanism,  and to see where it can be improved upon. It is also timely because other Australian states are believed to be considering adopting the Melbourne model, and the re-regulation of deregulated railways remains a live topic around the world.

The paper flags three key issues. First, the future contestability of the franchise, given that the existing operating consortium is not only involved with other capital and major maintenance projects in the region, but may also be acquiring significant skills and knowledge which may not be able to be replicated by other bidders. Second, the question of whether contractual cross subsidisation prevents efficient bid prices at future tender points.  Third, the question of the treatment of legacy assets and the maintenance backlog: is a franchise with seven-year performance criteria encouraged to maintain existing assets to ensure the best outcome for the railways and the public over the long term?


Dr John Stone
Senior Lecturer in Transport Planning
University of Melbourne

David Ashmore
Researcher, Transport Policy & Regulation
University of Melbourne

Yvonne Kirk
Researcher, Transport Planning & Policy
University of Melbourne

Read the full paper

MSSI strives to inform and stimulate public conversation about key sustainability questions facing our society. Each MSSI Issues Paper aims to encapsulate the insights of a thinker or practitioner on a particular issue of importance to society. Although material is often closely informed by peer-reviewed academic research, the papers themselves are presented in a clear, discursive style intended for a broad readership.