Report

Franchising of Sydney ferries network services

4 Feb 2016
Description

The decision to franchise ferry services on the Sydney Ferries Network is justified, according to this report.

Executive summary
Scheduled ferry services on the Sydney Ferries Network are provided under the Ferry System Contract managed by Transport for NSW (TfNSW). Harbour City Ferries (HCF), a partnership between Transdev and Broadspectrum, has been operating ferry services under this contract since 28 July 2012.

The contract is a seven-year franchise arrangement. Sydney Ferries, a statutory authority, provided these scheduled services immediately prior to the franchise under a seven-year service contract. This was terminated after 27 months to allow the franchise to proceed.

Franchising of scheduled ferry services on the Sydney Ferry Network was a policy of the government elected in March 2011.

Under the franchise arrangement, TfNSW retains:

  • fare revenue
  • control over the fare structure, routes and timetables
  • ownership of the original Sydney Ferries fleet of vessels and the shipyard maintenance and berthing facility while leasing them to the franchisee to maintain and operate.

This audit assessed whether:

  • the decision to franchise ferry services on the Sydney Ferries Network was justified
  • TfNSW’s management of the franchise has been effective.

Conclusion:
The decision to franchise ferry services on the Sydney Ferries Network was justified, and TfNSW’s management of the franchise has been largely effective.

Franchising has resulted in cost savings, good service performance, and effective risk transfer from government to the private sector operator.

The expected benefits of franchising have been realised. The HCF contract price is around 12 per cent per annum less than the terminated Sydney Ferries contract price. The performance of HCF against key performance indicators has been generally good and comparable to that of Sydney Ferries over the 27 months of its contract which preceded franchising.

TfNSW, with the support of Treasury, undertook sufficiently robust analysis to conclude that franchising would lead to material cost savings, service improvements and effective risk transfer to the private sector. TfNSW’s process to select the private sector operator was also sufficiently robust. There were some minor shortcomings in the analysis and processes used, but these were not sufficiently material to affect the decisions made.
 

Publication Details
Published year only: 
2016
143
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