Source : the age
Private company Metro Trains is receiving hundreds of millions of taxpayer dollars to offset lower passenger revenue, allowing the company to record bumper profits despite reduced patronage post-pandemic.
Work-from-home habits have left an enduring dent in Melbourne’s public transport usage and associated fare revenue, with train passenger numbers in the first three months of 2025 still 22 per cent below 2019 levels.
Taxpayers have shielded Metro Trains from the impact of COVID-19. Credit: Luis Ascui
Tram passenger numbers were down 20 per cent compared to 2019, while Melbourne’s bus network patronage was down 6 per cent. Metro Trains reported 17.9 million passengers in March this year – 4.2 million fewer than in March 2019, representing a loss of about 137,000 passengers every day.
But Metro – majority owned by Hong Kong’s MTR Corporation – has largely escaped the financial impact of the passenger downturn due to contract provisions, which have set it up for “strong profit results” until the contract ends in November 2027.
The 2025/26 state budget, released last month, shows the Allan government will spend $489 million over the next four years to address “COVID-19 impacts” on Metro train services, including offsetting “lower revenue associated with changed travel patterns to maintain service delivery”.
The COVID-related top-up will cost $176.1 million in the coming financial year, $182.1 million in 2026-27, $103.1 million in 2027-28 and $28.3 million in 2028-29.
The $489 million package was announced as part of a budget straining under Victoria’s record-high debt, forecast to hit $155.5 billion by the end of this month and $194 billion by mid-2029.
The expense comes on top of previous “reset payments” made to Metro and other transport operators since January 2022.
The state spent $389.9 million in 2023 and $238.3 million in 2024 offsetting lower fare revenue across Metro, Yarra Trams, and the regional V/Line network.
Passenger-fare revenue is pooled from across the public transport network and distributed by the Transport Department to private transport operators, along with fixed payments set out in their contracts.
But funding for “COVID-19 impacts” over the next four years is limited to Metro Trains, after the Melbourne tram contract was rewritten and handed over to a new operator in late 2024.
Metro’s contract with the state government, first signed in 2009, was due to expire last year but was extended until November 2027 for an undisclosed sum to avoid changing operators ahead of the new Metro Tunnel opening.
Financial statements lodged with the corporate regulator by Metro Trains Australia, the holding company of Metro Trains Melbourne, show it began to receive “significant revenues” from the Victorian government in January 2022 through the “revenue reset” mechanism in its contract.
The “revenue reset adjustments” mean Public Transport Victoria tops up payments to Metro if fare revenue falls below a “floor amount” agreed when the contract was signed.
Those payments meant that Metro Trains Melbourne’s profitability “returned [to] levels even higher than that of pre-COVID-19” in 2022, despite passenger numbers being down about 60 per cent that year.
Metro reported that due in “large part” to the reset payments, “the COVID impact on fare revenue was more than offset” and profits increased in 2023.
“With the contractual mechanisms mentioned earlier, Metro Trains Melbourne Pty Ltd is forecasting further strong profit results for the remainder of the franchise term,” its accounts say.
Metro Trains Australia’s profit after tax dipped from $55.34 million in 2019 to $27.91 million and $28.6 million in the first two years of the pandemic, before rebounding to $57.41 million in 2022, $118.8 million in 2023 and $137.5 million in 2024.
Payments from the Department of Transport and Planning to Metro increased from $1 billion in 2019 to $1.41 billion last calendar year.
Monash University research published last week shows that Victoria provided the public transport network with an extra $1.6 billion between 2020 and 2025 to cover reduced passenger fare revenue and pay for additional cleaning, representing a 9 per cent increase in total public funding.
Monash’s chair of public transport, Graham Currie, said Victoria’s payments to prop up public transport operators since the pandemic were less than in other jurisdictions around the world, because fare revenue only ever covered 10 to 20 per cent of operating costs here.
Currie said the privately owned Metro should wear the financial pain if patronage fell, but it was not reasonable for it to be on the hook for a downturn of the size COVID-19 inflicted.
“It’s OK to bear some risks – particular things associated with their own service quality and things they are responsible for. But I don’t think you can really argue that a railway is responsible for a pandemic,” he said.
Currie said it was “quite possible that a franchisee could walk away” rather than run at a loss, which is what happened when UK outfit National Express abandoned its share of the Melbourne rail network in 2002, just three years after it was privatised.
A spokesperson for Public Transport Minister Gabrielle Williams said the additional funding in the budget would support the continued delivery of public transport across the state.
Opposition public transport spokesman Matthew Guy said $489 million could have paid for 11 new trains on the network, or two level-crossing removals.“Instead the government is paying Metro Trains profit at a time Victorians need more trains, more often,” he said.
“For a government that’s broke, their priorities are all wrong. You don’t pay a private company its own profit. You put that money back into the system.”
A Metro Trains spokesperson said the company had been heavily affected by the loss of farebox revenue, and the reset payments enabled it to continue operating a full network even when only a small number of people were travelling. The payments also meant laying off employees could be avoided, they said.
Metro Trains and Yarra Trams also received performance payments for hitting punctuality and reliability targets during COVID-19, despite a massive drop in passenger in numbers and quieter roads ensuring operations ran more smoothly.
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