Since 1989, New South Wales has been competitively tendering bus services that replaced rural rail service and late night rail service in Sydney. At the same time, the urban transport operators in Newcastle and Sydney have been required to substantially reduce their costs per mile under threat of competitive tendering. The urban rail system will also be competitively tendered. In preparation for competitive tendering, the government owned bus operator has reduced its costs per mile by 25 percent. The government owned system has also begun selling over-built or redundant capital facilities such as its central maintenance facility.
Policy is separated from operations.
Recently enacted legislation requires conversion of the remainder by 2002. Inflation-adjusted costs per mile of bus service declined 19.2 percent from 1989 to 1995 as a result of competitive tendering. The urban transport authority credits competitive tendering with reversing the downward ridership trend. Between 1992 and 1994, the public operator reduced its cost 12 percent in response to the competitive environment. As competitive tendering continues to be implemented, the public operator is prohibited from incurring unit costs above the average cost per mile of competitively tendered services.