A tram in Adelaide, SA

The South Australian Government has signed a deal to transition the state’s trains and trams back to State Government  ownership, whilst avoiding any termination costs.

The government made a major election promise to bring the services back to public hands, following the services being privatised and sold under the former State Government. 

South Australian Premier, Peter Malinauskas, said, “Labor went to last year’s election with a clear policy to end the former Marshall Liberal government’s failed privatisation of train and tram services.

“We are delivering on that election commitment with a deal to return train and tram operations to public ownership.

“This is a rare and historic achievement – returning a privatised service to public hands.

Since we came to office, we’ve been working steadfastly to see a smooth transition of our train and tram operations back where they belong.”

The government announced that all parties have agreed to a deal which will see operational functions for Adelaide’s trains returned to public hands within two years.

The agreement will see train operator Keolis Downer Adelaide and tram operator Torrens Connect (AMO) hand back operational functions by January 2025 and July 2025 respectively, ensuring a safe and efficient transition.

The government said the deal will mean passengers will not notice any impacts to services during the transition period, with Adelaide Metro operations continuing to run as normal.

The former government privatised tram services in 2020 and train services in 2021 under separate contracts, each for an initial eight-year term with an option to extend to ten and twelve years, respectively.

Labor has long pledged it would reverse the privatisation and return train and tram services to public operation, with Keolis Downer and Torrens Connect committing to work collaboratively with the State Government towards a deal to return operations as smoothly as possible for customers and employees.

South Australia Minister for Transport and Infrastructure, Tom Koutsantonis, said, “Liberal Transport spokesman Vincent Tarzia said in December that this contract ‘won’t ever be torn up’, that the Keolis Downer contract ‘can’t be cancelled without a huge cost to taxpayers’ and that Labor has ‘no intention of cancelling the contract’.

“Despite the Liberals imposing potential payout clauses set to make South Australian taxpayers liable for nearly $100 million in termination payments – in addition to the transitional investments required – we’ve negotiated in good faith on a deal that will see rail services brought back into public hands with no break fees and with minimal transition costs that will deliver a smooth transition to return a trained and skilled workforce,” Mr Koutsantonis said.

“Passengers will not be impacted as these changes roll out, but will benefit from an increased security presence as we seek to rectify the savings measures imposed by the former Liberal government in a bid to make this deal stack up.

“Today’s outcome is not a reflection on the companies involved, but of our firm belief that public transport belongs to the public – it should be run for the benefit of all South Australians, rather than for private profit or in a bid to impose budget savings that never materialise.

“Today we have consigned this unnecessary privatisation to history.”

Consistent with the government’s previous commitments, no early break fee will be payable to the operators for transitioning services back to Government.

The government says it will invest around $15 million a year under an alliance model over the next two years, preparing for full operational control of the train fleet, along with around $3 million in transitional arrangements for the tram services.

These will cover legal support, recruitment and training and purchase of intellectual property and physical assets owned by the private operators which will be used by the government in delivering the services from 2025.

There is no requirement under these arrangements to pay termination costs to the operators, who indicated that under an immediate termination scenario they would seek compensation costs totalling more than $94 million.

The train deal will also see customer service and security management functions returned to government control by June 2027, under an agreement that will see additional compliance and security staff integrated into the network, offsetting cuts instituted as part of the former Liberal Government’s original deal.

As previously announced, Keolis Downer Adelaide will continue to provide fleet and infrastructure maintenance services under contract until 2035.

This is consistent with maintenance arrangements nationally, with a range of train maintenance functions previously contracted to external parties prior to the privatisation of services.

A similar arrangement is in place with Torrens Connect, who will continue to provide tram fleet and track maintenance services until 2035.

Under the tram deal, Torrens Connect will return operations, including drivers, operations control, customer service, network and timetable planning to government hands by 31 July 2025.

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