2022 Victorian State Budget shifts to service

Welcome to our look at the 2022/23 Victorian State Budget. 

It's important for at least three reasons.

* It is in deficit and there is desire to reduce it as projected rising interest rates increase debt servicing costs. 2021's budget, described as financially responsible by VCCI, sought to bring it nearer to balance. However an update later in 2021 indicated that its turn around won't be as projected. It will thus be hard to find large funds for new projects, especially those involving recurrent spending or large borrowings with debt servicing costing an increasing proportion of state income. 

* It's a pre-election budget. While most eyes are on federal politics at the moment, the Andrews government will be considering its re-election prospects when planning revenue and spending measures. Focuses include health and cost of living with a $250 household electricity rebate announced. There was a similar pre-election handout in 2018 but then it was only $50. 

* For us in transport it is the first budget to come after Victoria's Bus Plan. As so much of that plan depends on more service kilometres, and the funding for that must come from the budget, the latter's contents test of the government's commitment to bus reform and transport service generally. That requires more of the abovementioned hard to find recurrent spending. A saving grace is that there is a lot of 'low hanging fruit' potential cheap upgrades due to a lack of past reform. Hence you could do a lot with not much, even as you don't do as much new infrastructure for a while.  

The Andrews government transport emphasis has been very much about major infrastructure projects rather than service. Even pre-election sweeteners on the latter have been missing. For instance election years 2002, 2006, 2010 and even 2014 included significant pre-election service upgrades. 

2018 lacked this. However it could point to achievements in infrastructure including numerous level crossing removals, rebuilt stations and rail to Mernda. They're more visible to non-public transport users than a few extra trips in timetables. However with more infrastructure built by 2022 and an emptier kitty service might nevertheless look more attractive as an affordable win that can be geographically targeted.  

Recent budgets

November 2020's state budget probably marked the high point of the feed infrastructure / starve service approach. However the two main bus initiatives that were funded (Mornington Peninsula upgrade and 390 Craigieburn - Mernda bus) are now up, running and successful. 

May 2021's budget nudged the service tap so there's now a small trickle rather than occasional drops. And it changed the language so that bus reform could be openly discussed (with the Bus Plan coming out about six weeks later). Bus reform planning capability was ramped up within the Department of Transport and several worthwhile service initiatives during the year made 2021 quite noteworthy for train, tram and bus services. These happened despite staff cuts in other areas of DoT. 

One pattern for major projects is that planning may be funded in one budget with construction funding allocated in the next. Hence it's worth looking at planning funded last year to see if projects got construction money this year. The Caulfield Station interchange upgrade got planning funding last year. Construction will need to be funded soon if it is to be ready for when Metro Tunnel services commence. Fishermans Bend transport also got planning funding last year. However with the general downturn in the university sector its urgency may be affected by the extent and speed to which Melbourne University pursues its plans in Fishermans Bend. 

Prior announcements 

What did we know about this budget before it was released? Not much. Certainly less than for some previous budgets. Information about the budget is tightly controlled prior to the speech. However governments may release some details a few days prior. This may include 'bad news' revenue measures or highlights they wish to accentuate. 

This year's relative quietness may be because the government's major capital works agenda is already large with previous years' announcements. They may also be intending to keep any new projects up its sleeve for the election campaign later in the year when there's more certainty in Canberra. Speaking of which, the current federal campaign will be diverting some peoples' attention.

Transport infrastructure has had a fair suck of the sauce bottle for a while. With worry about the deficit and interest rates, it's getting harder to shake dollops out. Bold hard to fund projects might have lost a little gloss with cost of living concerns. Plus the pandemic has driven health to push transport infrastructure off centre stage. 

However we did hear about the letting of the construction contract for 100 G-class trams last month. 

April also saw the delivery of the first two of 36 electric buses from Volgren. Electric buses tick boxes including public transport, skills, jobs and emissions reduction. Unlike multi-billion dollar 'all or nothing' infrastructure projects, but like level crossing removals, you can be more incremental in their funding. I think we can reasonably expect to hear more about zero emission buses whether in this budget and/or as an election commitment. 

The main pre-budget transport announcement though was last Sunday. Over $150m in train, tram and bus accessibility upgrades were announced. This is another area where the network has lagged, especially for trams. A ramped-up community campaign called for more accessible transport. The clock is ticking on a 2032 DDA deadline we will struggle to meet. Adding urgency was Victoria's success in winning hosting rights for the 2026 Commonwealth Games. I listed accessibility as a priority to get our  transport network Games-ready for locals and guests. 

Highlights from the abovementioned accessibility package include: 

* $24.6m to permit unassisted boarding of the new trains (HCMTs) on 14 stations on the Cranbourne and Pakenham lines

* $21.9m to upgrade Lalor, Merri, Thornbury, Victoria Park and Warrnambool stations. Improvements to include boarding ramps, tactile ground surface indicators, CCTV and shelters. Development work for  accessibility upgrades at Auburn, Belgrave, East Camberwell, Canterbury, Willison, Hartwell, Moorabbin, Newport and Watsonia stations.

* $68.1 million for six new level access tram stops along La Trobe St. La Trobe St is the last major CBD street with the old stops remaining. There are more than that number of stops currently there so this work means that some will be removed or merged. There will also be improvements to the Park St tram interchange which will improve connectivity to Metro Tunnel trains. 

* $5.5m to develop future corridors of level access tram stops for upgrades. 

* $5m to upgrade up to 80 bus stops across the state. To include seats, shelters and real time bus information. Some buses will get wheelchair restraint systems for evaluation. 

The budget documents: Where everything is

See budget.vic.gov.au

A short cut to the budget papers is here 

On Twitter follow #vicbudget (or #vicbudget2022 )

The budget papers most important for public transport are:

* Paper 2 (Strategy and Outlook)

Page 16 refers to $3.5b for public transport services and infrastructure, including $383 million for additional train services and to operate new infrastructure delivered under Big Build. $250m will build and buy 12 new V/Locity trains for regional Victoria. V/Line will get $248m to improve efficiency and reliability. 

* Paper 3 (Service Delivery) Pages 109 - 122, 331 - 352 and 405. (more from this below)

* Paper 4 (State Capital Program) Pages 10 - 13, 82 - 89 (more from this below)

* Paper 5 (Statement of Finances)

Summaries on some transport aspects of the budget are here: 

Salient points from Paper 3 (Service Delivery)

* 'Switching on the Big Build'. Preparation for Day One operations of Metro Tunnel. This involves nearly 300 new drivers, station staff and others and a spend of nearly $60 million. 

This should permit significant train frequency upgrades. It will also be possible to develop wayfinding and customer information. It is desirable that the thinking for the latter is network rather than project based as we have a case of different types of passenger information across the network depending on the project and funding at the time. 

This is a good initiative but specifics on frequencies and service levels would be welcome. And it's desirable that it be staged with some low cost upgrades (eg removing all >20 min waits from the timetable by adding a few trains here and there) being done sooner. We need to move towards a service culture where frequency is regarded as a good by itself rather than something reluctantly and belatedly done when crowding gets extreme or as part of a capital project.

* Delivering Victoria's Bus Plan. A welcome funding uplift from 2021/22 but not what you'd call large. Dollar amounts over the next four years (from 2022/23) are 11.6, 20.7, 23.2, 24.0 (in millions). 

There will also be $13.5m in each of 2022/23 and 2023/24 for this plan. This will deliver: 

• service changes and operating funding for the Bulleen Park and Ride which will open in 2022 as part of the North East Link Busway

• a first phase roll-out of wheelchair restraint systems on metropolitan buses

• accessibility and amenity upgrades at 80 bus stops

• network changes to deliver Flexiride services in Greensborough and St Helena

• network changes in Heatherton to complement Suburban Rail Loop works

• improvements to bus routes connecting Kilmore residents to the town centre

• improvements and service uplifts to Gisborne town bus services

• service uplifts for bus routes between Torquay and Armstrong Creek to Geelong

• a high frequency weekday shuttle bus between Donnybrook and Craigieburn Stations

• new services for Sunbury and Diggers Rest

• expansion of bus routes in Cranbourne West and Narre Warren

• improvements to bus routes and services between Box Hill, Oakleigh and Southland

• new and uplifted school services across Victoria targeted towards growth areas

• development funding for the Footscray Station Bus Interchange.

This is a mix of middle and outer suburban services. Greensborough and St Helena have some poorly used local routes so attention in this area is welcome. However the proposed FlexiRide needs to be done in conjunction with regular route reform if it is not to be horrendously inefficient. Reference to 'network changes' is encouraging as FlexiRides in Rowville and Lilydale have mostly ignored such reform and sometimes overlapped existing routes.  

Armstrong Creek, Cranbourne West, Diggers Rest and Donnybrook are significant growth areas that need new service coverage. Torquay has even been mooted as a potential rail extension.

Box Hill, Oakleigh and Southland is a major north-south corridor that in parts parallel the Suburban Rail Loop and intersects with many train lines and shopping centres. There is a scope for network simplification and service boosts particularly on weekends in this area. A bolder reform could lead towards an SRL SmartBus concept involving reformed parts of existing routes. Without specific corridors or routes listed it's not yet clear what's in mind here as several routes could be in play. Part of the Route 903 orbital runs from Box Hill to Oakleigh as does all of Route 733. 767 runs from Box Hill to Southland via Deakin Uni but not Oakleigh. Also the current network has some inefficiencies between Box Hill and Deakin University with an inefficient and complex 201 / 768 overlap. The university has also advocated rerouting 903 via Deakin as well. The Box Hill - Clayton portion of Route 733 more than justifies an upgrade but the Clayton - Oakleigh portion (which largely overlaps another major route) does not. And at the Southland end reform could either involve a potentially controversial rerouting of 903 via Southland or bus reform in the Bentleigh East area involving routes 627, 701, 767 and 822 to provide a direct East Boundary Rd connection and preferably also more direct connectivity to Sandringham from Southland. 

Narre Warren is an established areas that has a very convoluted bus network that's crying out for more direct routes. It is essential that reform here is comprehensive and does not involve merely adding a new route over an existing unreformed network. 

* Substantial funding for the delivery of the Tram Plan, totalling $81.1m. This will be done in the lead-up to the Metro Tunnel opening (noting there's some significant network interdependencies). It will include the already announced six accessible stops on La Trobe St and one at Park St. Also work near Melbourne University terminus and planning for future accessible stop corridors. 

* Caulfield Station interchange. Planning funding for this has continued from last year's budget. This will become a major station feeding into the Metro Tunnel. More passengers will use it as an interchange point as the Dandenong and Frankston lines will go different ways into the CBD. $2 million is allocated here. 

* Northern corridor transport and land use plan. A fast growing area where development has spread further than trains and buses. There have been some service upgrades but more is needed for coverage. Funding is provided to develop a plan. There is also, in a separate measure, funding for a weekday bus between Craigieburn and Donnybrook. This is something that Ros Spence MP has advocated for.

* V/Line improvements including capacity improvements for Melton and Ballarat ($23.8m) and regional rail upgrades including for 'sustainability' and rolling stock. 12 new V/Locity trains will be used on the Shepparton and Warrnambool lines. 

* Active transport measures include bicycle parking at train stations, upgrades for various cycling trails and some pedestrian infrastructure. 

* Train station accessibility and amenity upgrades as outlined before

Outputs, costs and performance measures can be found from page 335. 2022/3 patronage targets are unchanged on what was projected for last year. Our metropolitan bus network is expected to have just under 1 passenger boarding per service kilometre. Metropolitan bus service kilometres are projected to increase by 400 000 per year due to timetabled service increases. This is a rise of about 0.3% on the previous year. No increases in scheduled kilometres are projected for metropolitan trains or trams. 

Other performance measures for transport are on page 405.

Salient points from Paper 4 (State Capital Program)

Page 10 lists new capital projects for transport. These include:

* $250 million to purchase 12 new V/Locity regional trains for planned service improvements on the Shepparton and Warrnambool lines

* $205m for what is termed V/Line organisational improvement projects to support reliability, efficiency and maintenance. 

* $173m for metropolitan train radio communications

* $96m to improve the tram network and services. Mentioned above.

Pages 11-12 pages give short summaries of the progress of major projects including SRL and level crossing removals. Pages 16-17 are about private-public partnership projects including the HCMTs and Metro Tunnel. The latter will commence service in 2025. Public Transport Ticketing Renewal (p21) is listed as a new High Value High Risk project. 

New transport projects (see p82) include Delivering Victoria's Bus Plan. This has a total capital expenditure of just under $29m. $15m is listed here for active transport. $2.3m is for 'switching on the Big Build'. Other entries here are for roads and ports. 

If you're curious, the capital for 85 level crossing removals comes at a touch under $9 billion (p83). Some bus improvement and reform comes under existing projects. $13.7m is listed here with the vast bulk of this to be in 2022/23. Completion is expected by the last quarter of that financial year. There's $5.3m for a similarly named entry on p84 with a note regarding infrastructure components for Route 202 (the Victoria Park - Melbourne University shuttle). Costs of the massive North-East Link are listed as 'tbc' on page 85. Page 87 has about $40m for walking and cycling upgrades. 

Some projects are scheduled to be 'completed after publication date but before 30 June 2022' (p88). This includes an entry of $9.711 m for 'more train tram and bus services'. It's row gives a 'financial completion date' of quarter 4 2022-23. 

Salient points from Paper 5 (Statement of Finances)

This paper gives an overview where you can see how transport compares with other portfolios. For example transport assets are the single biggest item of what the state government owns, accounting for over $100 billion and rising fast (p36). Page 127 projects more farebox revenue as commuters return. Assets are considered to have risen due to the completion of major road and rail projects. 

Page 192 brings to our attention that the 'public transport partnership agreements' (ie the franchise contracts for Metro Trains and Yarra Trams) expire on 30 November 2024. Thus whoever wins this year's state election will be able to choose whether to keep or change the existing operators. But before that there will need to be an update of partnership agreements and a refranchising process that reflects changes eg the transition to Metro Tunnel operating and ticketing system updates. 

A few statistics

Budget documents include other numbers such as actual and projected public transport patronage. In recent times these have changed only marginally. Predictions are also conservative, rising by about the same as population. Hence they have often been of little interest. 

Last year's budget drafters had the unenviable task of predicting this year's patronage. They got it wrong. They assumed a faster recovery than happened. 

As I said last year, "This seems ambitious given that international students are major users of public transport and their numbers are down. Also some workplaces may switch to remote working for at least some of their staff for some of the time.". 

Buses are nearer their pre-pandemic usage than trains and trams as (in Melbourne) their patronage mix includes fewer peak period CBD workers and more school and shopping trips. It's the first group of passengers who have changed their travel habits most due to continued working from home. If this is continued this might actually represent an opportunity on some train lines to rethink peak service levels with a view to introducing a flatter, more frequent and generally more useful frequent all day timetable. 

Conclusion

In this budget there's been a switch in emphasis from once all-dominant transport infrastructure to health. This (and age care) has got increased public interest and attention following the pandemic.

Within transport there is an emphasis from building to operating as projects like Metro Tunnel get close enough to fruition that we need to think how they might operate. There have also been accessibility upgrades budgeted and more money for much needed bus network reform and coverage extensions. 

This shift to service is both welcome and overdue. For it is only with good service that we can get the most benefit from the infrastructure we build. 

Exactly what will we get? There's not a lot of detail is in the budget documents. This makes it hard to evaluate some of the proposals, especially for bus. For example do the upgrades involve adding a few trips here and there or does it involve substantial reform with frequent routes? Then there's timing. It would be desirable that rail service upgrades happen in stages, preferably with some starting before the Metro Tunnel opens. Let's hope that further information emerges before too long. 

Comments are welcome and can be left below.