BusNSW has responded to a report released by the McKell Institute titled “Private Gain, Public
Pain: Why the Privatisation of Newcastle’s Bus Network Has Been a Failed Experiment.”
BusNSW Executive Director Matt Threlkeld said the report presents a largely ideological argument
that fails to recognise the historical evidence and policy context that led to the franchising of bus
services in Newcastle and parts of Sydney.
“The report overlooks the well-documented reasons why the NSW Government moved away
from direct government operation of bus services,” Mr Threlkeld said.
“A 2015 NSW Auditor-General’s Report found that the former government operator (State Transit
Authority) was underperforming compared with private operators, including poorer punctuality
and weaker overall performance indicators.”
“The Auditor-General also concluded that the contractual arrangements with the State Transit
Authority did not clearly separate the roles of purchaser and provider and lacked the financial
incentives and risk transfer that exist under privately operated bus contracts.”
Mr Threlkeld said the McKell report acknowledges that franchising has delivered significant cost
savings for taxpayers, though it doesn’t recognise the NSW Government’s Procurement Policy
Framework and the principle of achieving value for money when contracting in the future.
Mr Threlkeld said it was also important to note that the report was produced in partnership with
the Rail, Tram and Bus Union (RTBU), which has a vested interest in the return of government-operated
bus services.
“This raises legitimate questions about the objectivity of the report’s recommendations,” he said.
Franchising model misrepresented
BusNSW also noted that the McKell report overlooks the fundamental structure and benefits of
the franchising model used in NSW.
“Timetables, routes, bus stops, bus frequency, network planning and fares are regulated by
Transport for NSW, while private operators deliver services under contract in accordance with
strict performance requirements.” Mr Threlkeld said.
“The suggestion that private operators control the network and service design is simply
incorrect.”
“Similarly, the insinuation that private operators have ownership of government assets under the
franchising model is misleading”.
“Furthermore, there is no credible evidence to support claims that pay and conditions have
worsened for workers employed by private operators.”
External factors ignored
Mr Threlkeld said the report fails to acknowledge the significant external factors that have
affected public transport services in recent years.
“A 2025 Auditor-General’s report on metropolitan bus contracts recognised that the industry has
faced unprecedented disruption following COVID-19,” he said.
“This includes driver shortages, changing travel patterns as more people work from home, and
increased traffic congestion caused by a shift away from public transport.”
“The Auditor-General’s report also noted that operators often have limited ability to address root
causes of customer complaints such as congestion, patronage fluctuations and government’s
control of timetables.”
BusNSW also noted that the McKell report fails to recognise that fare evasion and anti -social
behaviour directed at bus drivers are community issues, instead attributing responsibility to
private bus operators and franchising.
Recommendation and proposal for government-operator to tender questioned
BusNSW said the McKell report’s recommendation that Transport for NSW assume day-to-day
operational responsibility for the Newcastle bus network is difficult to reconcile.
“Given the well-documented criticism of Transport for NSW’s bus service procurement processes
and contract management in recent Bus Industry Taskforce and Auditor-General reports, it is not
logical for the McKell report to recommend that the same agency assume responsibility for
drivers, rostering and operations.” said Threlkeld.
“Transport for NSW does not possess operational experience or the capability required to directly
operate bus services.”
“The idea that a government operator could be created to compete in a tender process run by
the government itself is a highly unusual policy proposition.”
“The NSW Government previously exited direct bus operations in part because the former
government operator was costing taxpayers around $3 per kilometre more than comparable
private operators.”
Focus should be on partnership and system improvements
Mr Threlkeld said the NSW Bus Industry Taskforce had highlighted the importance of a genuine
partnership model between Transport for NSW and private operators.
“The Taskforce recognised that better outcomes are achieved when government and private
operators work collaboratively to improve bus services,” he said.
BusNSW said the Newcastle community would benefit from the NSW Government focusing on
investment in bus service adjustments and practical improvements to the public transport
system.
“Advancing fleet upgrades, replacing an outdated ticketing system, improving real-time bus
tracking, and delivering better customer information will do far more to enhance the passenger
experience in Newcastle than unnecessary efforts to assess the reinstatement of a high-cost
government operator.”
