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Privatising VicRoads – positive or problematic?

Recently VicRoads was handed over from government control to a private consortium of owners. Many in the industry are praising the move and keenly await changes. But is it all a positive venture for transport operators?

In a sign of the transport industry becoming increasingly modern, VicRoads was recently sold to a private enterprise. The privatisation of the previously government-owned and controlled enterprise signals a great shift in the way Victorian transport companies can navigate licensing.

Like many in the sector, Victorian Transport Association (VTA) CEO Peter Anderson has been left frustrated on occasions by VicRoads. He can’t wait for it to become privately owned so it can take advantage of modern technology.

“I think it’s a great move,” Anderson told ATN. “One of the issues we’ve had with VicRoads is the ability to keep up with the technology required, so we’re hoping that, with a new provider, we’ll see it brought up to speed with other states.

“We’ve been calling for this for quite some time. We’re hoping it’ll result in the system being updated, so we can get online and get into the 21st century.”

While the Victorian government will retain the ownership of VicRoads, the new privatisation deal means a consortium will handle the licensing and registration operations for the next 40 years. In a $7.9 billion deal, the group will take on face-to-face work, call centres and administrative systems.

Anderson says he likes to think his association had an impact in lobbying for VicRoads to be updated. It took until a couple of years ago for decision makers to listen to the VTA, with the state government now undergoing a phased process to create new independent trade bodies and provide a fresh face at the helm of VicRoads.

The VTA CEO says the shift in power may relieve the current frustrating administration processes that many operators face.

“It’s been archaic compared to how we do business nowadays,” Anderson says. “We can only applaud the government for its leadership and for taking this big step.

“Hopefully it can produce a more efficient process for us all so companies can keep up with commitments to registration in a more professional way.”

Reducing admin

Previously, fleet owners had to undergo constant registration visits and often suffered unroadworthy vehicle fines when VicRoads’ administrative side couldn’t follow the online movements of other state bodies.

Freestone’s Transport founder Paul Freestone is one of the many Victorian operators who encountered these difficulties. He says he often had to line up monthly in VicRoads’ queues just to de-register and then re-register trucks that had been sitting idle to avoid paying hefty administrative fees.

“When we have a truck down, we take the plates off, but then you have to go through the booking and roadworthy phase, which can take over a month to eventually get the truck re-registered,” Freestone told ATN. “If you receive an unroadworthy sticker while in another state then you have to follow it up with VicRoads to make sure they know you’ve fixed the defect.

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“We’ve had to go to places like Seymour, Bendigo and Geelong just to find a VicRoads where we can register our trucks and get a booking.”

Freestone is similarly pleased with the decision to privatise VicRoads. With registration bills piling up to more than $30,000 to $40,000 per week for his trucks, the operator simply wants to see a more seamless process available for transport industry members. He says the updated system must be user friendly and online to avoid the painstaking waits in queues to simply register vehicles.

For operators who don’t mind paying a little bit more money for technology that’ll eventually save costs, Freestone says this privatisation move is the way forward. Although he is weary of privatising bodies, Freestone is confident this move is beneficial for the industry.

“I want a system where we can do everything online,” Freestone says. “I want to be able to register, de-register, check licences, clear defects and see if we’re cleared in all states. I want to be able to physically see it and not have to go in and stand in lines.

“With everything else online now, why can’t we also make all of these processes online too?” 

Money motives

The announcement of VicRoads’ new owners appears to be a positive move for many in Victoria’s transport sector. While the private ownership occurs, Victorian treasurer Tim Pallas says the state government will continue controlling data, privacy provisions and essential fee prices.

Any money raised from the private venture will go to the Victorian Future Fund to address the state’s pandemic debt, with the consortium of private owners consisting of Aware Super, Australian Retirement Trust and Macquarie Asset Management.

Other bodies like the Australian Livestock and Rural Transporters Association (ALRTA) agree with Anderson and Freestone that the move will benefit operators. But ALRTA executive director Mathew Munro has also raised concerns over the profiteering motives behind the private consortium now assuming ownership of VicRoads.

Although the state government says the money from this venture will be used to fix Victoria’s roads and contribute to the Future Fund, Munro says he’s unsure about how the consortium will treat its new ownership.

“This move has come as a surprise to us,” Munro says. “The profit motivation of investors is our fundamental concern because if it leads to an increase in charges above what has been agreed to in the past then there’ll be no consultation.

“We haven’t been consulted, so there’s no assurances for us if the privatisation of VicRoads won’t lead to increased charges.”

If VicRoads rates do go up under the new owners, Munro says the charges will vary from other states, which could potentially push fleet owners into operating in other states or territories. In other cases, this increase may be passed onto consumers, meaning inflation will continue to grow.

Munro wants the administrative arrangements to be made fair under the new ownership. He points to privatisation in the electricity and gas markets as examples of when private ownership isn’t always as good as it initially appears.

The ALRTA executive director says his association will take their concerns up with the government and find out more about the arrangement.

“We will definitely be asking the government to talk to us and explain the changes, why they’ve been made and what impacts will happen,” Munro says. “We want to know what will happen with costs and the nature of the delivery of VicRoads’s service going forward.”

Yet, Anderson doesn’t believe this profit motive from the new owners is such a negative factor.

The VTA CEO says any private ventures hold an element of profiteering behind them, but that many private owners often revitalise enterprises.

“In our view, $7.9 billion will go a long way towards fixing the state’s roads, so we hope it goes into that,” Anderson says. “The reality is it doesn’t matter who takes over, if you privatise it then there will be people wanting to make money out of it.

“I’m more positive about it all. I see more positives than negatives out of privatising it. At the end of the day, I just want VicRoads focusing on road quality and improving its management of vehicles.”

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