In October 2016 Melbourne newspaper The Age revealed that $300 million would soon need to be spent at Southern Cross Station in order to cater for increasing passenger numbers. So why are the works expected to cost so much, and why does a ten year old station already need to be expanded?
Here is the original article from The Age:
Southern Cross would be dramatically overhauled under a $300 million plan to cope with an unprecedented surge in patronage that is threatening the station’s ability to function.
Barely 10 years after the station formerly known as Spencer Street was rebuilt, Fairfax Media can reveal Southern Cross is now struggling to deal with passenger numbers.
Growth has been so acute the station could soon rival Melbourne Airport as one of the state’s busiest transport hubs, with long queues to access overloaded platforms and an overburdened coach terminal.
As a result, the station’s owner, AssetCo, a subsidiary of industry superannuation behemoth IFM, has lodged an unsolicited bid proposal believed to be worth about $300 million that includes a new elevated bridge running down the middle of the station to provide extra access to its 16 platforms.
But the story really starts in February 2000, when the Steve Bracks led Labour Government announced a redevelopment of what was then called Spencer Street Station. It was decided that the project would be completed as part of a Public Private Partnership – with the government to determine the scope of the project, then pay a private company to build and operate the new station for 30 years, after which the asset would revert to the state.
The winning private operator was Civic Nexus – a consortium of ABN Amro Australia, Leighton Contractors, Honeywell and Delaware North Australia. The contract with the government was signed in July 2002 and construction commenced in October 2002, with management of the completed station building being handed over to the private operator in August 2006.
As you can expect for a public private partnership, reams of paperwork were required to set out the contractual obligations of the two parties. In the case of Southern Cross Station, the expected passenger handling capacity was among the requirements.
The Spencer Street Station Redevelopment Project ‘Annexture I: Project Brief‘ dated July 2002 documented the passenger numbers that the government expected the new station to cater for (my bolding).
3.3.2 Capacity of Facility
In 2000, the State appointed a range of consultants, led by Flagstaff Consulting Group, to prepare the Planning Report to identify current and future transport needs at the Station. Surveys were conducted in November 2000 to measure passenger numbers and movements at the Station.
The Planning Report identifies current operational parameters and existing infrastructure, as well as the consultants’ views on trends for future public transport usage, patronage increases on a fifty year horizon, and the need to provide for new transport modes.
The State’s estimate of the capacity requirement of the Facility in 2050 is a peak hour passenger flow of 30,000. The State is seeking a Facility with the capacity to meet this target figure over the Concession Term. The State will assess designs on the ability to meet this figure.
The project brief also documented the expectations around passenger flows.
6.3.1 Rail Platforms
Entrances and exits to platforms, including vertical circulation elements serving platforms shall be evenly distributed along the platform, and be located such that they minimise the walking distance for alighting passengers, and facilitate an even distribution of passengers moving along the platform.
Exit points from platforms shall be located so that passengers shall not be required to walk more than 60m along the platform length to reach these exits. This requirement only applies to the suburban platforms, and those portions of the country platforms located south of the Bourke Street bridge. Notwithstanding this requirement, entries and exits shall also meet the requirements for travel distance in the case of an emergency.
Clearance rates for platforms are, to a large extent, determined by train scheduling, so that unsafe crowding conditions are avoided. The design of rail platform circulation elements allowing entry and egress to and from platforms shall be of sufficient capacity such that all passengers can be cleared from the platform within a reasonable period of time of the train stopping and allowing disembarkation. For island platforms, the design must cater for two trains arriving simultaneously.
As well as specific figures relating to how long passengers could clear the platform:
The calculation shall be based upon a minimum of 300 passengers per train clearing the platform within 90 seconds of the train stopping and allowing disembarkation. Should patronage levels increase such that platform clearance times exceed 90 seconds or should the frequency of trains increase, additional circulation elements shall be provided to rectify this situation.
As a guide, and subject to the design proposal, this may equate to a minimum of four escalators, (one running in a counter direction to the other three) and two sets of 2 metre wide stairs, and one lift.
126.96.36.199 Country and Interstate
The calculation shall be based upon a minimum of 150 passengers per train clearing the platform within 120 seconds of the train stopping and allowing disembarkation. Should patronage levels increase such that platform clearance times exceed 120 seconds or should the frequency of trains increase, additional circulation elements shall be provided to rectify this situation.
As a guide, and subject to the design proposal this may equate to a minimum of two escalators, (one running in a counter direction to the other) and two sets of 2 metre wide stairs, and one lift.
And even ticket barriers.
6.4.1 Ticket Barriers
The design of the Facility shall provide for the installation of ticket barriers leading to the suburban platforms, to separate the “paid” from the “unpaid” areas. The Concessionaire will provide all data and power conduiting to the proposed location/s, base supports and any other requirements for the equipment to enable installation by others. The equipment will be provided, installed and maintained by others.
Provision of areas for ticket barriers shall be sufficient to process a minimum peak hour passenger flow of 7500 passengers at Level of Service C, by providing a minimum number of ticket barriers in a single array at least equal to the existing number of barriers (this is currently 10 barriers, including two wide ticket barriers). The design will allow for future installation of additional ticket barriers (by others) to provide for the target peak hour flow.
Consideration shall be given to the impact that the location and arrangement of banks of ticket barriers may have on the total number of ticket barriers required. Individual entry points shall be provided with a minimum number of three ticket barriers, to allow one with bi-directional flow, and two with opposing direction flows at all times. An area sufficient for a minimum of one wide ticket barrier shall be included at every bank of ticket barriers.
Pretty simple metrics – the station had to handle at least 30,000 passengers per hour, with passengers able to exit the platform within 90 seconds of their train stopping.
So how does the government track that the private operator is meeting the requirements, and what happens if the number of passengers grows beyond what the station was designed to handle?
The ‘Southern Cross Station Transport Interchange Facility – Services and Development Agreement‘ dated August 2006 has the gory details – here is a quick summary:
- every year the private operator must complete a traffic survey to determine how many passengers are using the station,
- if station usage reaches 90% of the 30,000 passenger per hour target capacity, the private operator must inform the government of that fact,
- both parties are to decide whether a ‘verification test’ should be completed to confirm if the target capacity has been reached,
- if the verification test shows that the target capacity has been reached, then the private operator is eligible for an increased annual service payment from the government, a variation to various KPIs they are required to meet, or a government funded modification to the station.
So how do these contracts relate to the current congestion at Southern Cross Station?
Since the new station opened
For a start, rail patronage exploded soon after the new Southern Cross Station was completed – as the Victorian Government’s submission to the 2010 Select Committee on Train Services describes.
Melbourne’s train patronage has grown by more than 70 per cent in the last decade, including more than 50 per cent in the past four years, and is at its highest ever level with the number of trips estimated to have exceeded 220 million in the last 12 months.
In the decade before 2005, public transport patronage was typically growing at a rate of 1 per cent – 3 per cent each year. Since 2005, growth has clearly been of a very different order of magnitude and represents a clear break from these trends.
But the government failed to manage this growth, as the Victorian Auditor General wrote in 2012:
The Department of Transport has not successfully dealt with all of the challenges it has faced over the past decade. It was not prepared for strong patronage growth between 2004 and 2009. Satisfaction for all modes of transport has deteriorated since 2002, with metropolitan trains experiencing the greatest decline.
Meanwhile at Southern Cross Station, the earlier article from The Age has the details.
Under the terms of the contract between the state and IFM, once the station hits a capacity trigger point of about 30,000 passengers per peak period, IFM has the right to renegotiate the deal to factor in extra costs linked to overcrowding.
That could cost the state hundreds of millions of dollars extra over the life of the contract.
The station is already believed to be handling around 25 million passenger visits a year, and is approaching 30 million.
So far everything fits the existing contractual arrangements, but there is a new addition that complicates matters – the Victorian Government’s ‘Unsolicited Proposals Guidelines’ released in February 2014. Back to The Age:
Fairfax Media has learned that IFM wants to extend the lease, in return for the meeting the costs to dramatically boost the capacity of the station, including the elevated walkway spanning the length of the station, boosting the size of platforms and overhauling the coach terminal.
In a statement released after questions from Fairfax Media, IFM confirmed it had submitted an unsolicited, “market-led” proposal to the Victorian government to “help meet future passenger and visitor demand”.
So it looks like the private operator doesn’t just want more money out of the government – they are giving the government the option to ‘fix’ the station congestion problem for free, in return for being allowed to suck on the taxpayer teat for longer through an extended lease.
The full story
So what can go wrong – a government using a 2000 planning study to design a railway station expected to last until the year 2050, only for a wave of unprecedented passenger growth to hit two years later, causing a new rail patronage record to be set in Melbourne and leaving the government completely unprepared to respond.
Meanwhile the contractual straightjacket that governs the station prevents any future government from managing this continued growth, while a private company holds all the cards and is going to use them to extract the maximum profit out of the Victorian taxpayer – all of thanks to a political class too afraid to borrow money to build essential infrastructure, thanks to their obsession with delivering budget surpluses and an irrational fear of debt.
Will we see the same problems in future?
The upcoming Melbourne Metro Rail is another Public Private Partnership with the potential to screw over the Victorian taxpayer. From their page on project delivery.
A multi-billion dollar availability based Public Private Partnership (PPP) will include design and construction of the twin nine-kilometre tunnels and five underground stations, private finance and the provision of maintenance and other services during the operating term.
A partnership with the private sector will help to drive innovation, best practice and value for money on the project. In an ‘availability PPP’ the State Government provides regular payments to the private party for making the asset ‘available’ for use. For this package, that will mean making the tunnel and stations available for public transport operations and Victorians to use.
For a start, the costs of funding a project this way are excessive. From The Age:
Infrastructure expert Chris Hale said availability payments were extremely expensive for governments in the long-term.
“Availability payments are the most expensive model of funding model there is, it’s not possible to find any other model that is going to cost the taxpayer more than an availability-based model in the long run,” Dr Hale said.
But these complicated contractual arrangements also open the door for the same risks we are seeing at Southern Cross Station – future patronage growth may trigger similar clauses in the Melbourne Metro contract, again putting the government on the hook for increased payments to the private operator.
Elsewhere in Melbourne
When the government has more control over rail infrastructure dealing with growth is much easier – an particularly interesting example is the second entrance to Prahan station, which was only built because a candidate promised it during the 2014 state election campaign.
Earlier I summarised how the ‘Southern Cross Station Transport Interchange Facility – Services and Development Agreement‘ (dated August 2006) deals with the station reaching target capacity – here is the exact details.
27. Target Capacity
27.1 Annual Monitoring and Reporting
At least once each Financial Year during the Contract Term, the Concessionaire must:
(a) carry out a survey which reports the Hourly Passenger Flow in peak periods for a minimum of four time intervals, which intervals:
(i) are nominated by the Concessionaire;
(ii) are each of one hour’s duration;
(iii) are all during any continuous 30 day period; and
(iv) do not coincide (in whole or in part) with any Special Events which directly affect Southern Cross Station,
(the Passenger and User Survey); and
(b) provide to the SCSA a written report of the details and results of each Passenger and User Survey within 10 Business Days after carrying out such survey.
27.2 Usage Close to Target Capacity
If, at any time during the Contract Term, the Concessionaire is of the reasonable opinion that the Hourly Passenger Flow in peak periods would, if subject to a Verification Test, be no less than 90% of the Target Capacity, then:
(a) the Concessionaire must notify the SCSA in writing of that opinion (including the reasons and evidence justifying such opinion); and
(b) within 10 Business Days after the SCSA receives such notice, the Concessionaire and the SCSA must consult with respect to:
(i) if and when the parties reasonably consider that Hourly Passenger Flow in peak periods will or is likely to exceed the Target Capacity;
(ii) the SCSA’s preliminary view on the timing and manner (if any) in which it intends to address the matter in paragraph (i); and
(iii) each party’s view on the most appropriate methodology for conducting a Verification Test.
27.3 Verification Testing
(a) Subject to Clause 27.2 being complied with, if the Concessionaire is of the reasonable opinion that the Hourly Passenger Flow in peak periods has reached, or is about to reach in the immediate future, the Target Capacity, the Concessionaire may request in writing to the SCSA that a Verification Test be conducted by the SCSA, which request must:
(i) nominate a minimum of four, and a maximum of eight, time intervals, which intervals:
(A) are each of one hour’s duration;
(B) are all during any continuous 30 day period; and
(C) do not coincide (in whole or in part) with any Special Events which directly affect Southern Cross Station; and
(ii) have the first nominated interval being no less than one month after the Concessionaire’s request, (the Concessionaire’s Request).
(b) Following receipt of a Concessionaire’s Request, the SCSA must arrange for, and record, a test to verify the Hourly Passenger Flow in peak periods (Verification Test), to be conducted:
(i) in accordance with the applicable Concessionaire’s Request; and
(ii) using methods and measures determined by the SCSA, in its discretion, having regard to the Concessionaire’s views as provided in accordance with Clause 27.2(b)(iii).
(c) The Usage determined in respect of a Verification Test will be the mean of the four highest levels of Hourly Passenger Flow in peak periods recorded by that Verification Test, as notified to the Concessionaire by the SCSA within 10 Business Days after the Verification Test is conducted.
(d) The Concessionaire must pay for, and indemnify the SCSA against, the cost and expense incurred by the SCSA in conducting a Verification Test.
27.4 Usage Exceeding Target Capacity
If the SCSA’s notification under Clause 27.3(c) specifies a level of Usage that exceeds the Target Capacity then:
(a) within 10 Business Days after the Concessionaire receives such notice, the Concessionaire and the SCSA must consult with respect to the SCSA’s views:
(i) on compensating the Concessionaire by an agreed adjustment to the Core Services Payment over the balance of the Contract Term or an agreed one off payment to the Concessionaire (or failing agreement, in either case, as reasonably determined by the SCSA); or
(ii) on implementing a Service Standard Modification;
(iii) on implementing a Modification; or
(iv) on implementing any combination of (i), (ii) and (iii), if and to the extent required to overcome, or mitigate, the direct effects of Hourly Passenger Flow in peak periods (other than during, in whole or in part, Special
Events which directly affect Southern Cross Station) exceeding the Target Capacity over the balance of the Contract Term;
(b) following the consultation required pursuant to Clause 27.4(a), the SCSA must submit to the Concessionaire its proposal in accordance with this Agreement in respect of the matters described in Clause 27.4(a)(i), Clause 27.4(a)(ii), Clause 27.4(a)(iii) or Clause 27.4(a)(iv), as applicable; and
(c) to the extent that the Concessionaire is unable to provide the Services to the Services Standards as a direct result of Hourly Passenger Flow in peak periods (other than during, in whole or in part, Special Events which directly affect Southern Cross Station) at the Interchange Facility exceeding the Target Capacity, the Concessionaire’s performance of the Services to the Services Standards will, to that extent, be suspended from the date of the notification under Clause 27.3(c) until the earlier of:
(i) the Concessionaire’s performance of the applicable Services to the Services Standards ceasing to be so affected; or
(ii) the implementation of the SCSA’s proposal under Clause 27.4(b).
Clear as mud?