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House of Assembly - Fifty-Fourth Parliament, Second Session (54-2)
2020-06-30 Daily Xml
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Public Transport Contracts

Ms BEDFORD (Florey) (15:18): My question is to the Minister for Transport. Has the minister granted service contracts to Torrens Transit for over 83 per cent of metropolitan bus contracts and 67 per cent of the metropolitan public transport network if you include the mooted rail privatisation, and does this constitute a monopoly in contravention of the Passenger Transport Act? With your leave, sir, and that of the house, I will explain.

Leave granted.

Ms BEDFORD: The Adelaide metropolitan region is divided into six contract areas of varying sizes. Torrens Transit has been awarded four of the larger service contracts representing a market share of 83 per cent by bus and tram commuter trips or 67 per cent if you include rail commuter trips. Section 39(3)(a)(i) of the Passenger Transport Act provides, and I quote:

…service contracts should not be awarded so as to allow a single operator to obtain a monopoly, or a market share that is close to a monopoly, in the provision of regular passenger services within Metropolitan Adelaide;

Based on the Herfindahl-Hirschman Index, which the department has indicated to the Economic and Finance Committee would be used to satisfy compliance with the act, it appears the government contracts awarded to Torrens Transit create a highly concentrated market, seemingly in contravention of the act.

The Hon. S.K. KNOLL (Schubert—Minister for Transport, Infrastructure and Local Government, Minister for Planning) (15:20): I do thank the member for Florey for her question and she is right: it is something that is in the Passenger Transport Act and something that was very front and centre as part of the procurement process in relation to how the bus contracts were awarded.

She is right in saying that four of the six areas have been awarded to Transit Systems, I think we call them now, after they restructured with SeaLink—I think that is the best way to call it—and obviously the Hills' contract being awarded to SouthLink and then the Outer South to a new operator into South Australia, Busways.

To answer the member's question, there was advice, and it was something that we explored through the procurement process to ensure that we did comply with that obligation, and certainly the advice has been that we have complied with that obligation. But to unpack that for the member, as to the reason why that would be the case, we have six area contracts that are awarded and, within that contract area, the operator is given a monopoly to operate—i.e., another bus operator can't come in and provide services in that area. So, functionally, in each of those areas the procurement provides that one operator will operate within that contract area.

The two things I would say that are important is that, first off, in order for the public to be able to get the best deal possible, the procurement itself is the best way to be able to ensure that a competitive process is undertaken and we use that competitive procurement process to drive the hardest bargain on behalf of South Australian taxpayers. That was very much the case in relation to this, where we had multiple operators bidding for the various contracts across the network.

The second reason that it's important is that what we don't want to see—and my layperson's understanding would be the intent of the legislation in the first place is that you don't want a situation where there is only one operator who operates who, if something were to happen to that company, would potentially see a disruption to services in South Australia.

We had that situation in 2015 under the former government where Light-City Buses essentially went broke and we needed to have the opportunity to assign that contract to a different operator, and Keolis Downer—or whatever it was called at that time; I think it was called ATE or whatever name they go by—was awarded that contract.

What we do have in South Australia is two other operators, so instead of having two operators we are now back to three operators in South Australia who would have the infrastructure necessary if something were to happen, for us to have an alternative supply arrangement that we could put in place and at reasonably quick notice. That would be my understanding of why you would want to have that clause there in the first place. So you use the procurement to drive the hardest and best deal for the South Australian taxpayer, and then you ensure that there is more than one operator so that you've got alternatives if something happens to the majority supplier.

But can I also say that buses were outsourced in the nineties. I think it is pretty clear and apparent that they continued to be outsourced under the former government, something that we have talked about a lot. But one of the companies that was started was a company called Torrens Transit—

The Hon. A. Piccolo interjecting:

The SPEAKER: Member for Light!

The Hon. S.K. KNOLL: —and Torrens Transit (Transit Systems, as they are now called) has gone on to be a billion dollar company that has been built here in South Australia. Off the back of that outsourcing, not only have they been able to win contracts interstate in Sydney but they have also been able to win contracts in Singapore and in London and have been a fantastic South Australian success story. So I am actually quite excited that they are a beneficiary of South Australian government contracts because they have used those contracts to go on and build a global business based here out of Adelaide—

Members interjecting:

The SPEAKER: Order!

The Hon. S.K. KNOLL: —and they are a fantastic organisation and one that I am proud to award contracts to.

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