Sunday, December 15, 2019

NEXIT: 17 years since the National Express walkout

Tomorrow is an important anniversary. 17 years ago National Express announced it was quitting. It couldn't make half our trains and half our trams pay under franchise contracts it signed just three years prior.

In retrospect it was a big ask. It seems foolish that anyone could commit to the conditions agreed. But such was the prevailing atmosphere of market-grabbing delusion that rail bosses like Peter Strachan could agree to conditions like 84% patronage increase and profitable operations by 2014 with a straight face. In his own words "Group experience elsewhere has proved that they are more than achievable".

But what seemed a pushover in 2000 became a struggle in 2001. Metcard ticketing wasn't reliable and Melburnians were apparently dodging fares more than had been factored in. You can hear these concerns in the management Q & A tape below (it's long - listen later).

National Express (along with other transport franchisees who were also struggling) demanded more money from the government. They got a bit but not enough. You can hear in this May 2002 management talkback the increasing concern about financial sustainability. Especially in the answer given to a question about National Express becoming an Australian company in which staff could buy shares. The answer was along the lines that you wouldn't want to since they were losing money.

Despite the worries over finances the franchise operators were doing one important thing right - service delivery. The service wasn't trouble free but the delays and strikes common during the 1970s, 1980s and early 1990s were much rarer with fastest improvement during the last few years of government operation in the late '90s. Sentimental 'bring back tram conductor' types who hanker for the past tended to forget how bad the service they pine for really was, especially during the Cain/Kirner era. While an unpopular view, the early franchise years were somewhat of a golden era for metropolitan train travel, at least for commuters (evening service levels were then, and remain in 2019, depressed after the large frequency cuts of 1978).

The walkout

Seventeen years ago tomorrow, National Express dramatically gave notice that they were quitting their Melbourne train and tram franchises. More here: and .

The following week government-appointed receivers (KPMG) took over the running of services.  New managers were appointed in early 2003 .

The good performance mentioned before didn't last. On-time running fell off a cliff from late 2003 (never to fully recover). Passengers around this time found more trains were getting cancelled due to 'insufficient drivers'. It was found later that National Express were skimping on driver training. Passengers who travelled widely also noticed that trains were kept cleaner on the Connex half of the network.

In M>Train's favour, their passengers had better Sunday evening services with a service upgrade soon after National Express took over. Whereas those on the Connex lines endured 40 minute frequencies and early finishes until their lines got upgraded later. Before then those who wanted to watch night sports to the end couldn't take trains home.  

As the last people standing, Connex and Yarra, got more money and the rights to run the train and tram services abandoned by National Express in renegotiated more sustainable but dearer contracts.

Greens and old lefties wanted the government to 'take back the network' rather than refranchise with private operators. Transport activists wanted at least a public planning body to specify, contract for and coordinate services across all modes. However the financially conservative and pro-business Bracks Labor government continued private franchise operation.  After all it gave someone else to blame when things went wrong.

Key to success, especially under a Labor government, was what the RTBU thought. They went along with rail franchising provided their conditions were protected. Minister Batchelor guaranteed this.

National Express was a product of entrepreneurial British rail culture whose managers were informed by Thatcherite union-busting industrial politics. Connex and Yarra were from France where trade unions are considered an enduring part of working life rather than bodies to be weakened then overcome. This outlook might have helped railway workers support a transition to Connex. Had Connex bailed out first and National Express taken over then acceptance might have been less. For more see this John Stone paper on the industrial culture of public transport in Melbourne.

Meanwhile V/Line reverted to government management. . Although rural voters were more inclined to be Liberal or National voters than city folk, it was those parties that championed privatisation despite it being unpopular in the bush. Regional Victoria, particularly V/Line served cities such as Geelong, Bendigo and Ballarat, swung strongly towards Labor in 1999.

Supportive but mostly ex-National Party independents held other rural seats. They were critical to Labor governing in its first term. Also Labor had major plans for regional rail. So one can see why they kept V/Line in state hands given the backlash against privately-run hospitals in regional Victoria. A recent write-up on the Bracks government rail record is here

National Express operated under the M>Train, M>Tram and National Bus brands. Initially their trains were known as Bayside Trains and trams as Swanston Trams. These were the two names given when the networks were split (under government ownership) before being franchised to private operators. The "Yarra Trams" brand is the sole survivor from this era.  

National Bus was unaffected by the walk-out as it was contracted separately. However in 2004 National Express sold their bus concerns in Brisbane and Melbourne with ours being snapped up by Ventura Bus Lines. Our National routes were on a different type of contract to other Melbourne bus routes. They were later bundled with routes run by Melbourne Bus Link and refranchised. As a result operation transferred to Transdev Melbourne (not unrelated to Connex which ran Melbourne's trains until 2009).

The people legacy

National Express was a British firm. Britain had gone through rail franchising so it was logical that some with experience of it would be brought here. Some remained even after National Express quit.

Indeed the sun has not set on UK rail managers in Victoria, even though subsequent operator Connex was French and current operator Metro is from Hong Kong. Mother Country Overseers remain prominent, occupying the apex of a four-level colonial-style hierarchy in our railways. 

Below them are the driver ranks, dominated by (mostly) Australian-born males (although this percentage is declining). This skilled artisan class is represented by the powerful Locomotive Division of the RTBU. This truculent organisation is wary of if not opposed to reforms foisted on drivers by their shiny-bum Pommy blow-in bosses and bean-counter functionaries. While formally a Division of the RTBU, the drivers appear to run their day to day affairs separately, with their own office, website and newsletter (Loco Lines).  Read some Loco Lines columns for otherwise unavailable public expressions of the old rail union culture. It's a proud, well-paid blue-collar culture, not unlike police or the military, that would be particularly attractive to those who did not attend university.   

Next are 'worker bee' customer service roles at the barriers, on the platforms and behind the ticket counters. These (increasingly rare and thus prized) stable working class roles are popular among migrants (especially from India where the railways are prominent). They lack the prestige of the driver ranks but pay and job security beats most warehousing, retail and hospitality jobs due to higher unionisation.  This group is represented by the Rail Operations Division of the RTBU (as opposed to the 'elite' Locomotive Division).

Worker bee' numbers were pared back under Kennett era reforms. Elsewhere in the public sector similar roles were either made redundant by technology or contracted out. Outsourcing has made the public sector a closed shop to anyone without a degree and, at least on class and education bases, less representative of the population it serves. The railways however remain an area where the on-the-job trained 'skilled technician' remains prominent, as opposed to other areas (especially public sector) that require general degrees even for junior roles.

If  you want a flavour of how things used to be here as regards to railway staffing, visit Brisbane, ride trains and see their stations. QR's Brisbane operations probably has the highest staff to service kilometre ratio in the country due to their high staffing but generally infrequent service.

At the bottom is the precarious 'Coolie-class'. They work on and around trains but aren't Metro employees and have no access to internal opportunities. They are low (and apparently sometimes under) paid contract workers from labour hire firms who do things like security, cleaning trains and direct passengers during works.

These people form a new insecurely employed "night army" proletariat of casual workers created by three decades of contracting out. Their labour hire bosses are basically Fagins that the Overseer class signs outsourcing contracts with before retiring to the pub to gloat over how much they've saved by downgrading 'Worker Bees' to 'Coolie' roles. Unions understandably resist this while the Andrews government is tightening regulation of the labour hire industry.

Where do women fit in? Rail, particularly the driving ranks, has traditionally been male-dominated. Managers want more women drivers to address shortages, drive cultural change (including openness to reform and better customer service) and strengthen inclusiveness.

Unions, like society generally, have had mixed attitudes to women's rights and roles. Communists and fellow travellers were early supporters of equal pay for women. The CFMMEU's John Setka has been criticised for what he's said on issues important to women. And his behaviour towards a woman brought him to the attention of the justice system earlier this year.

The ACTU's Sally McManus wanted him to stand down from his union role. Meanwhile the RTBU's Luba Grigorovitch has backed Mr Setka though it is obviously a sensitive issue with lots of internecine politics. Apparently both the CFMMEU and RTBU are in the same "Industrial Left" union faction allied to right-wing "Centre Unity" power broker Adem Somyurek MP after splitting from the "Socialist Left" grouping. The change brings the train, tram and ex-government bus-dominated RTBU factionally closer to the TWU - a union strong in the truck and private bus industries. 

The network identity legacy

Public transport branding, signage and marketing was a boom industry in early 2000s Melbourne. Operator brands had lifespans only slightly longer than fruit flies. Each change required new station signage, new train livery, new uniforms, new printed material, new advertising and new websites.

Part of this was because The Met had a bad name, largely arising from the industrial disputation of the early 1990s. It initially seemed that Bayside and Hillside (for trains) and Swanston and Yarra (for trams) would last a while. However they weren't counting on National Express changing it all before chucking it in. Consequently Swanston Trams became M>Tram and Bayside Trains became M>Train. The new brands looked nice but were highly self-indulgent given National Express were losing money and weren't doing important stuff like driver training.

All this rebranding confused the public. Maps in trains and trams showed only half the network and franchisees were advertising their own tickets that undermined the network offerings. The separate operator/single mode marketing proved a failure. When franchisees realised this they set up the Melbourne Passenger Growth Initiative Pty Ltd - a precursor to Metlink - to coordinate marketing.

The new M> brands didn't last when the trains went to Connex and the trams to Yarra. Shortly after Metlink started to bring some branding unity to the network. Recent experience, with the change to PTV followed by changes from PTV, showed that bureaucrats and governments can be as silly as private operators when it comes to unnecessary network rebrandings. However state ownership of Metro for trains and Yarra for trams mean that if operators change the names won't need to.

The 24 hour clock legacy

Some unexpected things survive from the National Express era. National Express briefly ran V/Line. They changed timetables from a 12 hour clock to a 24 hour clock. Even though PTV, Metro Trains and the bus operators all use 12 hour time, V/Line's 24 hour format remains, despite the regional transport operator being in government hands for 17 years now.  

The network management legacy

National Expresses' walkout taught those paying attention a few things. Both governments and private operators could be greedy. Both can count their chickens early. Governments might think they can get a service on the cheap. Private operators might think they can win business by bidding low and screwing the government later when they are locked in and charge steep mark-ups on 'extras' the client later requests. Franchise tendering processes can be brought into disrepute if quality suppliers are of the view that governments always go for lowball bids so it's not worth participating.

Replace 'ego' with 'profit' to get the private operators' thinking of the time

Savings can prove illusory, especially, as in the railways case, most were already made under government management. That leaves few extra 'efficiency gains' for private operators to exploit. Governments may wish to transfer risk to the private supplier but they end up paying eventually - either in a price premium on the contract or, as here, the operator walking out and the government having to renegotiate with other suppliers (who will want higher payments).

In the case of Melbourne's rail franchising, the first round skimped on the funding enough for National Express to walk out, the second (with Connex) skimped on it enough for maintenance and service to be insufficient while the current round (with Metro) is skimping on necessary service increases.

The 1999 patronage projections, along with the diminished funding, seemed particularly fanciful since higher patronage can't reliably happen without improved service. Although it actually did a bit later under Connex, where a surge in passengers was met by an unresponsive government slow to improve service. The result was mounting crowding and falling reliability that claimed not just Connex but the government itself. However the rail contracts themselves are stable and we haven't seen a repeat of National Express's walkout.

As a hypothetical it's worth considering what could have happened if National Express remained for a few more years. They'd have kept losing money, and no one (except for some wild projections in Melbourne 2030) was projecting the patronage surge from about 2004. NX might however have been tempted to cut more corners with potentially bad consequences for things like safety.

The latter actually came to pass in Melbourne but on buses rather than trains or trams. Transdev signed what some say was a cheap franchise in 2013. They didn't clean or maintain buses. PTV were lax in monitoring their contract. In 2017 the transport safety regulator stepped in, declaring much of their fleet unroadworthy. We'll know next year what will happen after the existing franchise expires (January 2021).

What about National Express generally? As well as exiting Australia, this once-aggressive transport giant has retreated internationally. Except for some German rail operations it has returned to its roots of being a bus and coach company though today also with significant USA interests.  


While transport is a specialised and technical industry, it would seem that at least the franchising part of it is driven by primal emotions like fear and greed. For example 'fear of missing out' (forcing a private operator to put in a lowball bid) and 'greed' (a government purchaser accepting same).

Then, having been awarded a contract, franchisees can behave like the cool kids when the teacher leaves the class. For them it's more profitable (or fun!) to see what they can get away with than to focus on boring assigned tasks (like keeping trains clean).

Unless contract management is consistently tight one can start with good intentions but let things go in the middle of their franchise period. The performance, presentation, and, as it turned out, safety of Transdev Melbourne bus services is the most notorious recent example.

Then in the year or two before retendering (as they hear the returning teacher's footsteps) one panics and rushes to make things good to demonstrate improvement (on the recent past) and get a chance of winning the next franchising round (Yes, I think Transdev has got a bit better lately).

By then you will have experience and could offer over-trusting clients some 'value-adding' high-margin but cheap to provide extras. That could help you claw back what you sacrificed in bidding low early on to win the business. The main difference, which makes acting up more rewarding, is that teachers don't normally tell their class how long they'll be away for whereas in business franchise periods are known beforehand.

Some of the people involved might have elaborate degrees and MBAs, but the track record shows  that regardless of any higher order skills they may possess, they are just as prone to foibles like fear, greed, hype, ego and poor judgement as anyone else. These can over-ride a careful examination of the facts or lead one to discount historical lessons. After all, isn't it true that "this time it's different"?

PS: I bet you're itching to know what happened to Peter Strachan who made that couldn't-be-more -wrong prediction in 2000? After Melbourne he spent time with Arriva Trains in Wales. Then Britain's Network Rail before another Aussie sojourn to head up Queensland's Translink in 2009. Three years later he was a mandarin (Director General Major Projects and London) back in Britain. The West Coast Rail contracting blunder ended that. Australia took pity with a job on Sydney's North West Rail. Finally back to Scotland to run Caledonian Sleeper Franchise.

It seems that at these esteemed ranks, if you misjudge your only penalty is a game of climate ping-pong. Which Australian state will have him next? I'm guessing South Australia given (i) they're privatising rail, (ii) they're inexperienced and (iii) they want to do things on the cheap. And they say Adelaide follows Melbourne by 20 years!

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Coolie Class said...

In relation to railway staffing, the Adelaide and Perth systems are another two worthy examples to observe.

Adelaide's train system resembles the Kennett-era cuts of the 1990s taken two notches further. Most people who travel between two suburban stations would not regularly see any staff other than train drivers, occasionally they might see a ticket inspector.

Perth's system is staffed how a system planned in the 1990s would be. There are basically two types of staff who the public see on a regular basis - train drivers, and transit guards, who to a Melburnian are a hybrid AO/PSO/customer service role. You definitely won't find staff employed only to sell tickets or blow whistles.

And of course in Brisbane as you mentioned, the number of visible staff employed is ballooning due to the New Generation Rollingstock issues, because of the need to staff every platform for all NGR services to maintain DDA compliance. Lots of staff, few services and relatively few passengers is the general off-peak impression of the QR network to an outsider.

Calvin Tsang said...

Perfectly summarised state of affairs. my fav reading was the union component.