Victorian Auditor-General’s report
29 February 2012

Public Transport Performance 
Audit summary
Background
An effective public transport system is critical for the state’s economic prosperity and liveability. Melbourne could not function effectively as a city without the current public transport system. In 2009, on a typical weekday in Melbourne, public transport accounted for:
·	8.4 per cent of the 12.6 million journeys made
·	15 per cent of the 113 million kilometres people travelled.
Public transport has grown rapidly between 2005–06 and 2010–11. The Department of Transport (the department) expects further strong patronage growth over the next decade driven by a growing population, rising traffic congestion, high fuel prices and lifestyle changes.
The major challenges facing government and the department are how to cost‑effectively manage the expected growth in patronage while, at the same time, improving performance.
The Transport Integration Act 2010 (the Act) allocates responsibility for public transport to the Director of Public Transport, within the Department of Transport. The audit examined the effectiveness of the state’s public transport services by assessing whether agencies had:
·	delivered effective public transport services
·	adequately prepared to improve and then sustain performance in the future.
We assessed effective delivery by determining how well agencies had met the Act’s public transport objectives of:
·	meeting public transport users’ needs by providing convenient, reliable, secure, comfortable and understandable services 
·	delivering a coordinated system where train, tram, bus and coach services worked as a single, joined-up system
·	contributing to a more sustainable state by growing public transport’s share of journeys and improving environmental performance
·	improving access to public transport for people with a disability by removing the barriers that prevent them from using public transport.
The audit included the Department of Transport and V/Line and examined the performance of public bus, tram and train services across Victoria.
Conclusions
The department was not prepared to effectively manage the rapid growth in public transport patronage that happened between 2004 and 2009. It did not have the capability to foresee this growth or fully understand the root causes of poor performance. It was therefore unable to effectively deal with the performance pressures.
Satisfaction for all public transport modes deteriorated over the past decade, and performance has mostly fallen short of government targets in the past five years. The decline was greatest for metropolitan trains. The response to this decline was partial and uncoordinated, with an incremental approach to changing timetables where complete revamps were necessary if the drivers of poor performance were to be addressed.
Over this time the department managed public transport as a collection of separate modes of travel rather than as an integrated system.
From 2008 the department started to turn this situation around by developing an in‑house capability to understand demand and the causes of poor performance, and by restructuring the metropolitan train and tram contracts. 
The department now has a good, evidence-based understanding of performance issues and has developed an effective planning framework for forecasting and managing current and future performance. The benefits of this approach can be seen in the focus on coordination and the application of a rolling program of timetable updates dealing methodically with the conflicts that undermine performance.
This is a good basis for action but there is more to do. We identified:
·	outstanding weaknesses in how the department measures and reports on performance
·	objectives in the Act that are not being appropriately measured or managed
·	partial application of the department’s improved planning approach and the need to advance all plans to the same level of preparedness 
·	a need to better incorporate performance outcomes into planning.
While the department has improved its performance, the future challenges are significant. We estimate that capital expenditure on public transport will have to triple over the next decade to cope with the expected growth. The department needs to benchmark the costs of operating public transport and devise a long-term plan to improve efficiency.
Recommendations
Number	Recommendation	Page	
	The Department of Transport should:		
1.	finalise its draft process for setting its State Budget targets, and apply it to contract thresholds and other targets	22	
2.	progress plans to monitor performance against accessibility, sustainability and coordination objectives, and develop rigorous plans to better manage these in the future	22	
3.	address residual gaps in its measurement framework	22	
4.	develop its plans for buses, trams and regional trains to the same level of detail it has applied for metropolitan trains	31	
5.	develop the capability to forecast the performance implications if plan components are delayed or omitted	31	
6.	benchmark public transport operating costs and devise a long-term plan to improve efficiency.	31	
Submissions and comments received
In addition to progressive engagement during the course of the audit, in accordance with section 16(3) of the Audit Act 1994 a copy of this report was provided to the Department of Transport and V/Line with a request for submissions or comments.
Agency views have been considered in reaching our audit conclusions and are represented to the extent relevant and warranted in preparing this report. Their full section 16(3) submissions and comments however, are included in Appendix A.