Since Kennett's cuts in the 1990s, the Victorian government has been throwing money to the private sector to act as a middleman in rail. The Labor Party has an opportunity to stop this. Why don't they?

A case against privatisation: Rail in the 1990s

The Socialist Bulletin Staff - 11/2/2026

Photo: By Marcus Wong (Wongm) - Own work, CC BY-SA 3.0

WHILE it is unlikely that anyone reading a Socialist website is in any way for privatisation, it is regardless important to know about and study local examples against privatisation.

In the second half of the 20th Century, rail in the state of Victoria was on the decline, faced with growing competition from the road and from the air, and with immensely reduced funding - carriages, by 1980, were routinely running into their 80s, far beyond the design life of rail rolling stock, which usually sits around 40 years.

This crisis continued to deepen, until in 1983 the new Labor government moved to reform the then century-old system governing the Victorian Railways. Previously led by its Commissioners, the VR would become corporatised, and its units would also be split into metropolitan and regional units - the Metropolitan Transit Authority, trading as The MET, and the State Transit Authority, trading as V/Line.

These units would survive until 1989, when further restructuring - to become a theme for the next decade - occurred. The STA and MTA were merged, becoming the Public Transport Corporation, but its split identities were kept due to public knowledge of the brands.

The death blow to railways, however, came in 1992, with the defeat of the Kirner Labor government, and the victory of Jeff Kennett and his Liberals. Kennett was a slasher and a burner. He resented any kind of government spending, labelling it wasteful. His government swiftly moved to carve up the railway network, one of the most unionised workplaces in the state.

Throughout 1992 and 1993, Kennett's government closed vast swathes of lines. Mildura. Leongatha. Bairnsdale. Cobram. Dimboola. Ararat. All of these towns lost their rail connection, with these services replaced by private road coaches, which were still subsidised hugely by the Kennett government.

One line, however, became the guinea pig for Kennett's plans for rail privatisation: Warrnambool. Instead of being replaced by road coaches, that line was handed over to West Coast Railway, the first private company to operate any railways in the state since 1878. West Coast Railway took out leases, and eventually bought, several older first-generation diesel locomotives and carriages built in the 1930s and 1950s, which the government was at the time working to replace. Fares on the Warrnambool line drastically increased, making travel from the regional town to Melbourne incredibly difficult for workers.

Following the example of Warrnambool, the Kennett government followed up in 1995, with the splitting of V/Line into Freight and Passenger divisions, ready for eventual privatisation. Suburban bus services, too, were sold off, with the National Bus Company founded to take over government routes in suburban Melbourne in 1993.

A prominent strike of tram employees during the Grand Prix in 1997 enraged Kennett, and he had his government pass legislation to split up the Public Transport Corporation's metropolitan operations - the very thing the tram employees were striking over - into four, Met Train 1 and 2 (later Hillside Trains and Bayside Trains) and Met Tram 1 and 2 (later Swanston Trams and Yarra Trams). Workers were split among the new businesses, which, despite remaining government-owned in 1997, began to operate more as private companies than public.

In 1999, the government finally began a great sell-off of rail operations. V/Line Passenger was sold to British company National Express, alongside Bayside Trains and Swanston Trams. V/Line Freight was sold to a joint venture that became Freight Victoria (later Freight Australia). Hillside Trains was handed over to French company Connex. Yarra Trams was sold to a consortium known as TransdevTSL.

Despite this privatisation, the impact of public transport on the state budget was not lessened, as was advertised - in fact subsidies for public transport went up during the 'first era' of privatisation - from 1999-2004. This increase in subsidies, however, did not go towards improving the network, as we would have seen under the century prior of government operation. When the four metropolitan operators - now Connex Melbourne, M>Train, M>Tram and Yarra Trams - were required to order new trains and trams as part of their contractual obligations, the operators all bought extremely cheap, off-the-shelf solutions from multinational companies. Cuts were made to staffing also following the privatisations.

In 2002, however, National Express, owner of V/Line Passenger, M>Train and M>Tram, announced that they would pull out of Victoria, as subsidies were not large enough. This is despite subsidies being far greater than just 5 years prior under government operation.

The now Labor government, as always, took a very 'moderate' perspective on what to do with these three franchises. They were all initially given to KPMG to administrate them on behalf of the government, but in 2003 V/Line Passenger was formally renationalised, and in 2004, the government handed M>Train and M>Tram over to Connex Melbourne and Yarra Trams, allowing private ownership to remain on the suburban network.

Since 2004, a list of private companies have taken over from Connex and TransdevTSL, with each doing less than the last.

In early 2026, the two metropolitan operators - Metro Trains Melbourne and Yarra Trams (operated by Yarra Journey Makers) - do less than ever before. No longer do they order new rolling stock. No longer do they have any input into ticketing. No longer do they employ staff. No longer do they even own the names they operate under. Yet, the subsidies keep on going up. The Metro Trains contract is up this year, and the Rail, Tram and Bus Union has called on the Labor government to participate in the bidding process. Forever the mediocre party, however, the Labor Party does not seem to be moving on this.

Since 1993, not a single benefit has come by privatisation. The Victorian Labor Party has the opportunity to make their government more popular - as in South Australia - and lower expenses and provide a better experience for passengers and workers alike. Why don't they take it?

The Socialist Bulletin acknowledges that we write on stolen, unceded Indigenous land. We pay our respects to First Nations elders, past, present, and emerging.