My Manifesto: The Incoherent Ramblings of a Madman

In reply to “The following entry has been rated "f" for excessive use of……..”

You gave the following comment:

If you are going to have a rant then at least check your supporting facts, especially those that appear in the first few sentences of your argument:

1. Sydney Water IS State owned and operated.
Sydney Water is "a statutory State owned corporation, wholly owned by the people of New South Wales" (Sydney Water Corporations website).
It is true Sydney Water was changed from a State Department/Board to a Corporation in order to get it ready for eventual privitisation, however that has been put on the back burner as Sydney faces the current water crisis.

2. State Rail no longer exists: "RailCorp merges the State Rail Authority of NSW (StateRail) and the metropolitan functions of the Rail Infrastructure Corporation (RIC)". RailCorp IS a state-owned corporation.
(RailCorp website)

3. CityRail IS State owned and operated.
CityRail and CountryLink are two independent services operating under Rail Corporation New South Wales (RailCorp). RailCorp is the government agency responsible for all passenger rail services in NSW.(CityRail website).

My Reply:

Firstly, we need to begin with a definition so we can ascertain some key points: asset; an asset in business terms is something that makes money, that is, the opposite to a liability. Now, at first glance this seems as though it is simple to define. If we take a house for instance most people will tell you that a house is an asset, this is not always the case. If the house is fully owned and is increasing in value at a higher rate than the CPI increase plus the house rates and upkeep etc then it is an asset, conversely, if the house is not fully owned and increasing in value at a higher rare than the CPI increase plus the house rates etc then it is a liability. Now, if the house is par-owned and is being rented out at a rate that covers the cost of the repayment plus the increase in rates (we will presume that the house is either gaining value at the CPI rate or slightly higher than the CPI) then the house is an asset. If the house is fully owned and is increasing in value at the CPI then it is a liability because it is losing you money for upkeep and rent and the like.

Now, in the case of the abovementioned entry we will go into some history of the state rail system to see what they did own and run and what they don’t own and run now. The state government owned the entire rail infrastructure, freight (until 2002: cityrail website – just below your reference infact), passenger services, and maintenance services.

Freight Corp, the rail-freight organisation, had an increase in output of 244% per employee from 1991 to 1998. The total loss in state government employees in the same time frame is 49% of the workforce (state treasury). Effectively the state lost half its workforce during that time frame and productivity increased for this business entity. Profit and privatisation were on the cards. As you are probably well aware, although obviously not willing to admit, the state does not own the freight services anymore (city rail website).

Now for our next definition we will define commonsense: we will use a definition found at www.dictionary.com for the purposes here and define it simply as sound judgement. When privatisation begins with public owned companies/services/corporations the components of them that go first are those that are most profitable and viable as a standalone business venture – this being commonsense. It is commonsense to create a business venture out of something that makes money rather than something that doesn’t make money. Traditionally the state rail system has made its money from freight. Consequently freight was the first major component of the rail system to be privatised.

In addition to the privatisation of the freight system, the freight being the biggest money earner and the greatest burden on the rail infrastructure, the maintenance arm was separated as a government business unit known as the Rail Services Authority in 1997 (state government treasury website).

Before the state government split everything up State Rail was a government entity that lost around about $64 million per year, consequently, one of the first things the state government did when they came to power was to split State Rail into four separate entities: State Rail who would run passenger services; Freight Rail would do freight; Rail Services Authority would manage the maintenance; and Rail Access Corporation would manage the infrastructure.

In its first year the Rail Services Authority formed alliances with Brown and Root Ltd and Thiess Contractors Pty Ltd. Essentially this means that they were outsourcing the work from the beginning. Before forming the Rail Services Authority the state were outsourcing all of the work to maintenance companies such as Transfield, ABB, and other companies of this nature. These private firms were doing almost all of the maintenance on the rail system. The government realised that it was costing them a lot of money to outsource everything and then began to form their own maintenance service as a business unit to compete with these other companies for the works for the state rail system and other government services who would require maintenance services. ABB a large international were getting state government rail contracts for maintenance services from 1995 onwards (ABB website). This gave them two to three years experience in getting state government rail maintenance contracts. Transfield maintenance again have been getting contracts of this nature for as long, if not longer than ABB. These other firms not only have had more experience in beating the state government at its own game, but also had acquired all of the experienced workers from the state government in this field.

As previously mentioned, the maintenance arm of the state rail system even when it won the maintenance contracts still had to outsource to other companies because they lacked the manpower, skills, and expertise to carry out any of the works on their own. If the state government had kept the maintenance arm of the state rail system in its completeness from the beginning and not let it slide losing all of its main personnel to the private sector then the state government would not have to rely on the private sector to carry out the maintenance works – in addition to this – these other companies who were almost entirely founded for the purposes of maintenance to take advantage of public-private partnership type deals would not exist at all. Back to some commonsense – if these are companies are getting rich by doing all of the maintenance work for the state rail network – why did the state government make their own maintenance arm impotent? The maintenance arm of the government would have been an ideal business venture and would have been a huge asset had it been properly managed and implemented. Another asset the government has effectively lost.

The Rail Access Corporation was an entity who made money essentially by charging the operators access to use its tracks. In its 1997 report the chairman of the Rail Access Corporation said: “RAC was set two broad tasks: to own, operate, maintain and enhance the essential rail infrastructure in NSW; and to promote access to existing and prospective operators. Success ... will be measured by reducing the costs of owning and operating the network and building the volume of business using that network." So essentially the job of the RAC was to increase use of their system while reducing maintenance costs to make a profit as they were a business venture and they had to make money.

The state government soon realised that the system was not sustainable. With one entity looking after the tracks and the other entity using them there were different agendas at play. It was in the interest of the Rail Services Authority to spend as little money and effort on maintenance as possible to make as much profit as possible and increase the possibilities of more work. At the same time, it was in the interests of the Rail Access Corporation to spend as little money on maintenance as possible to make the most amount of money as possible. These two organisations were on different sides of the spectrum. One trying to make as much money from fixing things up as little as possible for the maximum costs to the client – the other trying to make as much money as possible by fixing up things as cheaply as possible. This was and is not sustainable. The network was failing.

In the 1999-2000 tax year the RAC paid a dividend of $75 million to the government. It borrowed $80 million.

The Rail Services Authority was merged with the Rail Access Corporation in 2001 to form the Rail Infrastructure Corporation who would run and maintain the tracks. The trouble is, that by this stage, the tracks had been so poorly managed with two different government business units with different agendas and competing means of making money that there was very little profit to be had. It made profit on the hunter line only it its first year of operation.

The key money earner of any rail system has and will always be freight. Freight is an asset. Passenger services are more often than not a liability. Freight has been privatised since 2002. Passenger services are owned as a government business unit. Maintenance services are almost entirely outsourced and managed by a government business unit had maintenance services been properly managed to begin with then they would be an asset and they would be the ones making the profits of companies such as Transfield who predicted a profit of $80 million over four years managing the rail infrastructure (Transfield report).
In 2004 Rail Corp merges from the ashes of the shambles that is the par-private run, par-government run, par-private operated, par-government operated state rail system.

What does Rail Corp do? It pretty much does everything that the original State Rail did. Fuck me dead people! We have come full circle! The problems? The problems are that the organisation is missing the key money earner of the freight division. The organisation is missing the full force of the maintenance division hampering their efforts at maintaining their infrastructure without outsourcing almost entirely and losing the opportunity to carry out outsourced work themselves for other organisations to bring private money back into government hands. AND with only half its original workforce it is made up of those dodgy management types who do not know shit from clay (see next paragraphs) and are encouraging public-private partnership or PPP as they like to call it in management circles. So after around about 10 years we have: dismantled State Rail into separate companies who competed against each other with differing agendas; encouraged the experienced qualified workforce to join the private sector; paid the private sector to do all of the work; realised that with the different organisations and the private sector are competing against each other with differing agendas that is affecting the network and decided to combine the different organisations together again for the sake of completeness to relive the glory days; only managed to combine half of what the organisation used to be when combining it all back together; because only half the organisation has been put back in it is relying almost entirely on the private sector again to do everything which was the problem in the fucking beginning – but on paper we are making money in the short-term due to staff layoffs and the PPP contract setups offsetting the initial costs – in the long run we lose the money that we used to gain from our assets.

Government agencies as business units work as a business unit, now this may sound obvious, as it is obvious to the point I am repeating myself in the same sentence. For example, the construction arm of a local council. They must compete for work with other contractors. The profit they make goes into their unit. The loss they make affects their unit. They pay a dividend of the profit to the council in a shareholder type of arrangement. Their funding comes from competing with private firms for the work, mainly council work of course. The main problem with government agencies as business units is that because governments have been outsourcing things for so long they have lost all of their competent staff to private industry and they have been getting leaner and leaner workforces as they outsource more and more of their work. (1991-1998 governments lost 49% of their workforce – see above) Most government business units are effectively managers of outsourced contractors who do the work - more often than not the government business unit outsources the management of the contractor to a consultant - so the government business unit is managing the manager of a contractor who is managing the work.

The majority of people who work in government business units are managers or from a managerial background. This leads to some obvious problems. The first being that they generally do not have a proper understanding of the matters at hand and take the word for the contractor as law, the second being that because they do not understand the matters at hand they cannot effectively manage the financial or quality aspects of the work. If we take the example of the RTA. The RTA offered an amount of $50,000 for the maintenance painting of the bridge contract I am working on. The local council decided that they would look further into the costs of such a job before accepting the $50,000 offer. The local council not fully comprehending what the works involved came back with what they thought was a conservative figure of $350,000 for the works. The council negotiated and the $350,000 was agreed upon after much deliberation. The job went to tender. The RTA maintenance arm themselves put in a bid of around 6 times the negotiated amount that the RTA offered. The RTA had no idea of the costs of the type of work at hand.

With the RTA management arm not communicating with the RTA maintenance arm none of the knowledge is shared. Each arm of the RTA works as a separate entity; that is, a separate business unit. To further exasperate the problem, there are other arms of the RTA who again do not communicate with each other. RTA has a research and technical section who do not communicate with the management side who do not communicate with the maintenance side who do not communicate with the government. Each of the business units within the RTA are competing against each other with their own agendas and means of making money – they are doing the same thing that the rail organisations do.

Sydney Water is in the same boat. They are a government agency being run as a business venture. Sydney Water has to make money. Sydney Water has sacked a lot of staff in the tried and true State Rail way, consequently, Sydney Water outsources the maintenance and management of their system to companies such as ABB (ABB website). ABB is a Swiss company. At one stage ABB managed and maintained 26 Sydney Water sites. Thiess Services has undertaken the design, construction, management, and maintenance of Sydney Water sites (Thiess website). Thiess Services has founded their company entirely on their ability to design, construct, manage and maintain government “owned” facilities. Other companies have also done the same.

A monkey can read a website that says something is government owned or run, I, on the other hand, expected more critical thinking from you. The State Rail you and I refer to are not the same entity. The State Rail I refer to is no longer whole. The Sydney Water you refer to has not been elaborated on enough on your behalf to show whether or not you fully understand its circumstances.

I’m tired. I was going to give a proper essay reply but figured there was no point anyways because you probably will never read it, or if you do, will respond with an essay reply, which in-turn will require me to respond with another essay in reply. So the abovementioned will do for now.