Partner sought to develop Gold Coast rapid transit

By Jennifer Perry

The government has devised a risk and reward sharing structure which it hopes will entice the private sector to back the project.
Even though the light rail project has already received nearly $1 billion in public funding – $365 million from the Federal Government via Infrastructure Australia (IA), $464 from the state government and $120 million from the Gold Coast City Council – project director Tim Poole told Rail Express that the project team has had to consider the global financial crisis and its impact on the market.
“For some time, through its proactive market engagement, government has been aware there was reluctance from industry to take the full risk for farebox revenue on public transport projects,” Poole said.
“Therefore government will be proposing an arrangement where it takes most of the farebox revenue risk, but has an appropriate risk and reward sharing with the operator that is eventually chosen.”
Poole said that the current challenging environment has also required the three levels of government to work “extremely hard” over the past three months to structure an affordable whole of life funding and delivery model.
With expressions of interest reportedly dealing with stage one of the project – a 13 kilometre light system between Griffin University and Broadbeach – Poole said that it is “very important” that the delivery of stage one meets the expectations of all three levels of government as well as industry.
Final agreement is “expected shortly” and will allow “expressions of interest for the operator franchisee PPP” to be sought from the market, he said.
Infrastructure Partnerships Australia (IPA) executive director Brendan Lyon said the financial structure of the project – balancing incentives to promote patronage growth, while not fully-shifting patronage risk to the private sector – is an appropriate and widely used model for public transport PPPs.
“The availability model is currently being examined to deliver other public transport projects, including Australia’s largest, the Sydney Metro, and has been used effectively throughout the world,” he said.
“The use of a PPP with appropriate incentives to drive passenger growth will ensure a vibrant and competitive field of bidders, driving down costs to government and taxpayers alike.
“The private sector has been critical to delivering a customer service focus to public transport – introducing new levels [of] service and on-time running to other public transport in Queensland.”