Deal imminent to bring Adelaide trains and tram operations back into public hands

A deal is imminent to return Adelaide train and tram operations to public ownership – without exposing taxpayers to almost $100m in fees. Have your say.

A deal is imminent to return Adelaide train and tram operations to public ownership without a termination fee of up to $94m.

Transport Minister Tom Koutsantonis will on Saturday declare his confidence that taxpayers will not be liable for early contract termination payments to private sector operator Keolis Downer.

Laying the political foundation for an announcement he has declared “imminent”, Mr Koutsantonis also will release Infrastructure and Transport Department advice that the contract inked by the previous Liberal government would cost taxpayers about $122m in aggregate over the 12-year term.

A deal is imminent to return Adelaide train and tram operations to public ownership. Picture: Tom Huntley

Keolis Downer started operating and maintaining Adelaide Metro rail services on January 31, 2021, under a 12-year, $2.14 billion privatisation deal.

This was forecast to save taxpayers an average of almost $10m annually, or $118m over 12 years, according to figures supplied to The Advertiser in October, 2020.

But Mr Koutsantonis on Saturday will release departmental advice showing about 300 government staff did not transition to the private train and tram operators – 134 now remain unassigned – adding a recurrent annual cost of about $20m.

Mr Koutsantonis will argue this cost of unassigned staff, along with extra support and operational cost, has more than offset any intended budget savings in the contract’s first two years and would continue to wipe out savings – potentially over the deal’s entire term.

“The entire premise of this sell-off was always about budget savings – we can now reveal that under the deal put in place by the former Liberal government there were none. The whole rationale for privatising our state’s rail services was flawed,” Mr Koutsantonis said.

“Instead of the Liberals’ much-hyped $118 million budget boost over 12 years, the state is facing a budget shortfall of around $122 million under this ill-conceived privatisation.”

Mr Koutsantonis will release departmental advice showing the contracts contained a termination clause linked to the value of the private operators’ profits under the remaining terms of the deals.

His departmental advice says these fees could have seen taxpayers liable for a much as $94m in termination and disengagement fees.

“I’m grateful for the collaborative approach the private sector operators have taken to negotiations with the state Labor Government, and we remain confident that taxpayers will not be liable for any early termination costs associated with breaking these contracts, as we seek to make good on our mandate to bring rail services back into public hands – where they belong,” Mr Koustantonis said.

Ahead of last March’s election, Labor vowed to tear up the contracts and return operations to public hands – a deal Mr Koutsantonis on March 22 said was “imminent”.