| Subject: 2002-05-30 One link 65 million |
Author:
Steve Bonkers
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Date Posted: 06:31:38 06/06/02 Thu
ERG LIMITED 2002-05-30 ASX-SIGNAL-GHOMEX Perth ----------------------------------------------------------
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Melbourne's public transport ticketing provider will be required toprovide better service to tram, train and bus users as part of a newagreement with the Government and transport operators.
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Transport Minister Peter Batchelor said that under an agreement withOneLink, the company would receive up to $65 million for a stagedsettlement of outstanding legal claims against the State of Victoria.
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The Government has also changed the OneLink contract to allow for asystem of performance bonuses and penalties, and to ensure OneLinkassumes responsibility for the management of vandalism of machines.
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Mr Batchelor said the Government had rejected OneLink's claims, whichnow total $360 million. The claims resulted from the installation ofthe automated ticketing system under the Kennett Government between
1994 and 1998.
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"Despite significant problems with the system since its introduction,the contract had no effective penalty system in place if OneLinkfailed to perform," Mr Batchelor said.
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"In fact, late changes to the contract by the Kennett Government -between the signing of the contact and final project specifications -actually exposed the State to a massive legal claim."
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This was confirmed by the Auditor-General in his 1998 Special Reportinto Automated Fare Collection which found that the KennettGovernment's decision to fast track implementation of the systemfailed miserably, created a risk of contractual disputation andexposed the State to increased risks.
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"The dispute with OneLink was yet another privatisation time bombthat Victorian taxpayers inherited from the Kennett administration.
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It is yet another mess the Bracks Government has been forced to fixup."
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Mr Batchelor said the bulk of the claims related toalleged increasesin the scope of the ticketing project, between entry into thecontract and finalisation of project specifications in September1995. OneLink claimed that these variations resulted in a number ofchanges including upgraded computer capacity, improved security
protection for cash held in ticket machines and design changes toticket machines and station barriers.
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Mr Batchelor said the Government had not been prepared to settle theclaim without changing the contract to ensure OneLink improved itsperformance and provided a better service to Victoria commuters.
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"A new performance regime will apply to OneLink, with higher
standards to ensure that more ticketing machines on Melbourne'strain, tram and bus network are fully operational at any point intime," Mr Batchelor said.
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Mr Batchelor said OneLink would be able to earn performance paymentsof around $17.5 million over the remaining five years of the revisedcontract including;
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* up to $3 million per year if it achieves new performance measureswhich incorporate the management of vandalism; however, it stands tolose up to $2 million each year in penalties if it fails to reachthese standards;
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* where superior performance results in increased public transportrevenue, OneLink can earn a bonus of around $500,000 per year(assuming real revenue growth of three per tent per annum).
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Mr Batchelor said one of the most significant changes to the contractwould be that OneLink would assume the management of vandalism underthe new arrangements.
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"OneLink's capacity,to claim compensation for vandalism-related costs- as it could under the Kennett Government contract - will besignificantly limited," he said.
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"OneLink's ability to reduce the impact of vandalism on reliabilityof the ticketing system will be essential to its ability to earnbonuses and avoid penalties.
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"For the first time, OneLink will face a real financialincentive toensure that the ticketing system better meets customer expectations,"Mr Batchelor said.
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The Minister said that resolution of these long-outstanding andcomplex contractual issues provided meant all parties - the train,tram and bus operators, OneLink and Government - could now get onwith reforming and improving the ticketing system.
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Settlement of OneLink's claims will be implemented in three stages,with payments tied to performance milestones. Full and finalsettlement will follow successful completion of a trial period.
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"This agreement builds an other initiatives undertaken by the BracksGovernment to improve Melbourne's ticketing system," Mr Batchelorsaid.
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"The investment of $500,000 by the private operators in machineupgrades has almost halved the number of vandalism acts involvingautomated ticketing machines.
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"The Bracks Government is working hard to address the problemscreated by the ineptitude of the Kennett Government, and ensuringthat the mess they created does not result in further disruption toVictoria's public transport system.
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"With hundreds of thousands of Victorians relying on public transportto get to and from work, school and other activities every day, animproved and more reliable ticketing system is vital," he said.
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Mr Batchelor said that the settlement delivered improvements
consistent with recommendations of the Independent Audit of
Melbourne's Automated Ticketing System, prepared by the Miller Groupand released in June 2001.
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Media contact: Matt Phelan 9651 5799 or 0418 374 496 www.vic.gov.au
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