GENERAL PURPOSE STANDING COMMITTEE No. 4 Monday 10 December 2007 Further examination of proposed expenditure for the portfolio area TRANSPORT The Committee met at 1 .00 p.m. MEMBERS The Hon. J. A. Gardiner (Chair) The Hon. K. F. Griffin The Hon. M. Mason-Cox Ms L. Rhiannon _______________ The Hon. R. A. Smith The Hon. H. S. Tsang The Hon. L. J. Voltz PRESENT Ministry of Transport Mr J. Glasson, Director General RailCorp Mr V. Graham, Chief Executive Officer State Transit Authority Mr P. Rowley, Acting Chief Executive Officer Sydney Ferries Corporation Mr G. Smith, Chief Executive Officer Public Transport Ticketing Corporation Ms E. Zealand, Chief Executive Officer _______________
CORRECTIONS TO TRANSCRIPT OF COMMITTEE PROCEEDINGS Corrections should be marked on a photocopy of the proof and forwarded to: Budget Estimates secretariat Room 812 Parliament House Macquarie Street SYDNEY NSW 2000
CHAIRMAN: At this hearing the Committee will further examine the proposed expenditure for the portfolio area of Transport. Before commencing I will make some comments about procedural matters. In accordance with the Legislative Council's guidelines only Committee members and witnesses may be filmed or recorded. People in the public gallery should not be the primary focus of any filming or photos. In reporting the proceedings of this Committee you must take responsibility for what you publish or what interpretation you place on anything that is said before the Committee. The guidelines for broadcasting proceedings are available at the table by the door. Any messages for Committee members will follow the usual procedures. Witnesses are free to pass notes and refer directly to advisers while at the table. Mobile phones should be turned off. The Committee has agreed that questions will be put in turn by the Opposition, crossbench and then the Government in 20-minute allocations. The Committee has decided to commence with the Public Transport Ticketing Corporation. We are going to take a 10-minute break at 2.30 p.m. I advise that in relation to the return date for questions on notice the Committee resolved previously to request that answers to questions on notice at this hearing be provided within 21 calendar days of the date on which they are sent by the Committee secretariat. Any questions taken on notice today will be sent through the Minister for Transport. In relation to the swearing in of witnesses, all witnesses from departments, statutory bodies or corporations are sworn prior to giving evidence, however, all of the witnesses for today other than Ms Zealand still are on their former oath given at the hearing of this Committee on 15 October. ELIZABETH ANNE ZEALAND, Chief Executive Officer, Public Transport Ticketing Corporation, affirmed and examined: CHAIR: I declare the proposed expenditure for the portfolio area of Transport open for examination. Ms Zealand, if you have a brief opening statement you would like to give, you may proceed to do so? Ms ZEALAND: The Tcard contract, as I am sure the Committee is aware, was signed in February 2003 with an expected completion date of November 2006. There are a number of variations and amendments to the contract throughout the period and I would just like to outline some of those and speak about where we are with the contract today. There were a number of options contained in the contract which government could choose to take up if subsequently required after signing the contract. The first significant option taken up in March 2003 at a value of about $1 million was to allow ERG to reverse engineer and document the existing RailCorp equipment, such as gates, vending machines and ticket office terminals. This was prudent risk management by government. The option enabled ERG to satisfy itself that it had sufficient information to allow it to modify existing RailCorp equipment and to see which of the equipment it could reuse in the project. The take-up of this option had no time impact on the contract. Another significant option worth about $14 million that was exercised was the option to tag on and tag off the bus operation. This was issued in April 2004. This option fitted with the distance- based fare structure we have on our public transport, but it also allows much more effective data for transport planning and data collection. Again there was no time impact associated with this option. The Committee will be aware of the interim school student transport scheme. That involved work worth about $14.8 billion. This variation was issued in December 2003 to improve the collection and management of data for the school student transport scheme. This resulted in a three-month extension to the project agreement being granted in connection with this variation. This moved the expected delivery date to January 2007. The project agreement is structured in phases, stages, milestones and, in some cases, milestone events, and payments to the contractor are linked to the achievement of stages. There have been two amending agreements to the project agreement due to delays. The first was variation agreement one, and that was in May 2005. This gave ERG a 26-week extension to phase one of the project, yet this impacted only the completion date of the full project from January 2007, as I have just mentioned, to February 2007. The second amendment amending agreement two was executed in June 2006. This had an agreed recovery schedule which showed complete delivery of the project by March 2008. The extensions of time have always been negotiated in the interests of the taxpayers in New South Wales and appropriate commercial concessions were achieved for government in these TRANSPORT ESTIMATES [FURTHER EXAMINATION] 1 MONDAY 10 DECEMBER 2007
negotiations. I began with the Public Transport Ticketing Corporation in July 2007. The first formal notification of delay to me was in August 2007 and that was of further delays to amending agreement two. On 24 September 2007 the Public Transport Ticketing Corporation issued a default notice to Integrated Ticketing Solutions Limited which required it to complete the missed milestones within 20 business days, and this was 22 October 2007. On 22 October 2007 Integrated Ticketing Solutions Limited had not delivered on the missed milestones and still has not delivered on the missed milestones. On 5 November the Public Transport Ticketing Corporation issued notices of intention to terminate. These notices gave the contractor until 3 December 2007 to meet the contract milestones they had missed or work diligently to pursue a remedy that will come up with a satisfactory remedial program. I can confirm that the Public Transport Ticketing Corporation received a response to the notices from the contractor on 30 November and that this remedial program is being considered appropriately now by the Public Transport Ticketing Corporation. The Committee will appreciate that due to the sensitive commercial context of the Tcard contract at this time, I cannot comment on the contents of the remedial program, the process that the review will be taking, and I will not speculate on the outcome of this review. I may be further constrained in my responses depending on the questions, but I will certainly attempt to answer anything the Committee asks of me. What I will comment on, as it has been mentioned in the public domain, are some factual matters around the most recent schedule ERG has given to us. They have an expected completion date for the project of February 2010 with a bus-rail milestone of August 2008. The Hon. MATTHEW MASON-COX: Thank you for appearing before us today. I had a range of questions. I am a bit concerned that in your opening comments you said you would not be making any comments in relation to the arrangements as they stand. Bear with me in that regard. I am going to ask you questions anyway and we will see where we go with them. First of all, in relation to the board meeting, which I understood took place last Friday, 7 December, in relation to the Tcard project, can you give us an outline of the decisions made in that board meeting? Ms ZEALAND: I cannot comment on the decisions made in the board but, as I stated earlier, I will not speculate on the time a review process will take but I can say no decision has been made around the review of the remedial program submitted by ERG. The Hon. MATTHEW MASON-COX: Were you generally impressed with the approach ERG had taken? Ms ZEALAND: I am not going to comment on the outcome of the review. The Hon. MATTHEW MASON-COX: The public media release issued by ERG notes, as you stated, it should be completed in time for perhaps an early 2010 completion, which is only seven years after the initial contract was signed. I wondered in that regard has the Government had any role to play in relation to delaying this project over time? Do you have any comments in that regard regarding the Government's role? Ms ZEALAND: The Government has always managed the project according to what the contractor has contracted to deliver. The Hon. MATTHEW MASON-COX: Let me look at the variation agreement No. 1 and agreement No. 2. In the first one, can you please explain why there was a need for a variation in May 2005? Ms ZEALAND: I would have to get specific details for you, but it was in relation to delays experienced from the contractor on the project. The Hon. MATTHEW MASON-COX: So the Government had nothing to do with the delay at that time, or there was no need for a delay because of government action or departmental action? Ms ZEALAND: I am not aware of that. I would have to take that on notice to check for you. TRANSPORT ESTIMATES [FURTHER EXAMINATION] 2 MONDAY 10 DECEMBER 2007
CHAIR: Can you take that on notice, then, to get those details? Ms ZEALAND: Certainly. The Hon. MATTHEW MASON-COX: Similarly, in relation to the variation agreement No. 2 in June 2006, are you able to clarify why that variation was required by the Government? Ms ZEALAND: That one I am more familiar with, and again, in response to delays in the contractor delivering on what they have been contracted to produce. The Hon. MATTHEW MASON-COX: Again, can you explain what the delay was? Ms ZEALAND: There were a number of delays on various milestones and milestone events. It is in software delivery on a number of issues. The Hon. MATTHEW MASON-COX: Could you please explain what the milestones are under the contract in layman's terms and precisely where we are up to? I notice no milestone has been achieved up to this time, which is quite extraordinary given the length of time this contract has been on foot. Precisely what are the milestones? Ms ZEALAND: Mr Mason-Cox, no milestone that triggers a payment to the contractor has been met. There are some early design and documentation milestones that have been met. The project is structured as a design phase, a testing and settling phase and then an implementation and installation phase. Until we get to a milestone that has a commuter field trial on both bus and rail, that is where you have a milestone that would trigger a payment. But certainly there are milestones leading up to that or events that have been completed. Early design, as I said, design and documentation. The Hon. MATTHEW MASON-COX: Was that a successful commuter field trial or just going to a field trial? Ms ZEALAND: I would have to take that on notice. The Hon. MATTHEW MASON-COX: I note that ERG in its public statement noted that it received $6 million from the State Government. Can you explain what that was for? Ms ZEALAND: I do not know what ERG had claimed that for. The payments we have made to the contractor have been largely for the interim school student transport scheme. The Hon. MATTHEW MASON-COX: You envisage that was what the $6 million was for? Ms ZEALAND: I cannot comment on what they are specifically making that claim for. The Hon. MATTHEW MASON-COX: Can you take that on notice please? It would be good if we had an answer on that. Looking at the success of ERG in other places—as you are aware it has been successful in introducing a ticketing system in places like Singapore, Rome and San Francisco—why has it not had success here in Sydney? Are any particular issues there different? Ms ZEALAND: Each city has different requirements. All I can say is we have continued to experience delays on the development of the Sydney project. The Hon. MATTHEW MASON-COX: With Sydney, does ERG not provide the current ticketing system for buses? What I am saying is, given that it provides the current system for buses, it understands what that system does and clearly it placed the software and other means in place to use that system. The reverse engineering of that is a simple matter for it. Why can it not simply work through the logistics of a new ticketing system as a result? Ms ZEALAND: I would have the same questions. We are continuing to experience delays. The contract signed was for a smart card integrated system, not an existing bus system. TRANSPORT ESTIMATES [FURTHER EXAMINATION] 3 MONDAY 10 DECEMBER 2007
The Hon. MATTHEW MASON-COX: That is true, but I am trying to understand, when we sign a contract in 2003 and here we are in 2007 when it should have already been completed. We understand there have been delays but that pushes it out to early this year at the latest and now we are talking about 2010. I understand you are relatively new to this position but I am trying to work out why is it so difficult in Sydney? Why is this ticketing system such a cot case where it has been put in place elsewhere successfully? Ms ZEALAND: Again, I am asking the same questions of the contractor. The Hon. MATTHEW MASON-COX: And you are saying the Government or the Public Transport Ticketing Corporation has no involvement in any way, shape or form in causing any delay under that contract? Ms ZEALAND: Delay claims are dealt with contractually as a matter of the contract. But in terms of the contract that ERG signed up to deliver we are consistently having software and quality issues with the delivery of the project agreement. The Hon. MATTHEW MASON-COX: That is ERG's fault? There have been no delays caused by the Government's and administration of the contract? Ms ZEALAND: Given the current contractual and commercially sensitive context of the contract to date, I will not be commenting on that. The Hon. MATTHEW MASON-COX: Do you not think you owe the people of New South Wales a better explanation of why this is such a fiasco? Ms ZEALAND: As I say, I think in the current contractual situation it is more prudent of me not to comment on that. The Hon. MATTHEW MASON-COX: Is that what the Minister asked you to say today? Ms ZEALAND: I am not going to comment. The Hon. MATTHEW MASON-COX: It is just that we put some questions on notice to you. At the last hearing we put 13 questions directly on Tcard asking pretty simple questions about when the project was due, the costs of the project, why there were delays. We received some responses to those questions from you. If I can just read one of them and perhaps you can understand a bit better why we are a bit concerned and frustrated. On 15 October we asked, "When will all commuters have access to the Tcard in your estimate?" That is what we asked the Minister, and the response we received was, "The Government remains committed to delivering an integrated ticketing system for the commuters of Sydney." Ahoy there! I mean, I know this is the Minister responding, but I think it goes right to the core of public accountability. We just want an answer to a simple question. When do you would think the ticketing system will actually be up and running in Sydney? Ms ZEALAND: The current schedule that is in front of us from the contractor has a completion date for the full roll-out of the project of February 2010, but as you can appreciate we are currently in a sensitive commercial and contractual time regarding the project agreement. All I can say is that that is the current schedule that has been presented to us by the contractor. The Hon. MATTHEW MASON-COX: Do you have any confidence in the schedule from the contractor, and given its past performance? Ms ZEALAND: We are reviewing appropriately the remedial program that was given to us on 30 November by ERG. As we are still in the midst of that process, I would not like to comment any further on that. The Hon. MATTHEW MASON-COX: But given its past performance, do you think it is credible? Ms ZEALAND: Again, I would not like to comment. TRANSPORT ESTIMATES [FURTHER EXAMINATION] 4 MONDAY 10 DECEMBER 2007
The Hon. MATTHEW MASON-COX: I certainly would have a few question marks over that being delivered, with the greatest respect, but the people of Sydney are the ones who are suffering, are they not? Have you or the Minister, or any of the Minister's staff to your best knowledge, met with any other organisations who may be able to provide a ticketing arrangement for Sydney, apart from the current contractor? Ms ZEALAND: I can only comment on who I have managed. In the five months since I have been with the project, I have spoken to the industry to get a better understanding and education of the smart card industry. I have spoken with Optus about things they are doing with mobile phones. I have spoken with Talis, and had very industry-education meetings. All of the meetings that I have had with any industry partners or industry providers other than ERG have been on the absolute understanding that we are in a contract and it is purely to get me up to speed with what is going on in the smart card arena. I have spoken with—I am not sure of her title—a senior person in Golden Gate Transit in San Francisco earlier my role, really to see the ferry solution. I have met with Mass Transit Railway [MTR] from Hong Kong, and my main interest in that was more around the product and the business rules and the challenges for commuter behaviour that they have overcome, the roll-out strategy, the marketing for the product. Again, it was actually looking at the product as a whole—it certainly was not around any kind of contractual meetings—but really to see how did other jurisdictions make a success of migrating the travelling public to a smart card environment. The Hon. MATTHEW MASON-COX: The Mass Transit Railway in Hong Kong is acknowledged as the world leader, is it not [MTR]? Ms ZEALAND: I cannot say where it has been acknowledged as a world leader, but certainly it seems to be working well. The Hon. MATTHEW MASON-COX: I have travelled on it a number of times, and it is a fantastic system. Sydney's transport would be transformed with a system like that, I would think. I am just wondering and getting back to whether there are any particular reasons why Sydney is a difficult system to integrate. Ms ZEALAND: It is very large and complex but, again, I guess that is why we are with a global provider of smart card systems. It is a large network. It is over three modes of transport, yes. The Hon. MATTHEW MASON-COX: In terms of the contract with ERG, if a decision was made to terminate the contract—I understand that you are not in a position to comment at this stage—what part of the intellectual property and technology developed under the contract would be able to be used by the Government or a new contractor? Ms ZEALAND: I would need to take that on notice to get an accurate answer to that. The Hon. MATTHEW MASON-COX: If you could just clarify who owns the intellectual property under the Tcard contract in the context of that answer, that would be most appreciated. Have you actually provided any advice to the Minister recently in regard to the Tcard contract? Ms ZEALAND: I am sorry, I do not understand what you mean. The Hon. MATTHEW MASON-COX: In relation to the remedial plan put to you by ERG, or any other matters that you have recently advised the Minister on, in that regard. Ms ZEALAND: The Public Transport Ticketing Corporation [PTTC] is currently going through—we are still in the Met, and still going through that review process. The thing I would say is that the time is going to be—it is going to take the time that it requires to do, so I cannot put a date on— The Hon. MATTHEW MASON-COX: Naturally it will take the time it requires to do so, but how long do you think that would be? TRANSPORT ESTIMATES [FURTHER EXAMINATION] 5 MONDAY 10 DECEMBER 2007
Ms ZEALAND: I cannot predict how long it is going to take, but I do not see a decision being made before Christmas. The Hon. MATTHEW MASON-COX: I see. Ms ZEALAND: It is quite a lengthy response. The Hon. MATTHEW MASON-COX: Who in the Public Transport Ticketing Corporation do you have reviewing that? Ms ZEALAND: I really would not like to comment on the review team or the review process, but it would be the subject experts in technology in the program. The Hon. MATTHEW MASON-COX: Are they all in-house, or do you have contractors that you use for that purposes well? Ms ZEALAND: I have a mixture. The Hon. MATTHEW MASON-COX: So you would hope to receive something early in the New Year in relation to a recommendation to put forward to the Minister? Ms ZEALAND: I would hope so, but I cannot guarantee that. The Hon. MATTHEW MASON-COX: I hate to be suggesting that in any way the Public Transport Ticketing Corporation delayed this contract. That is probably the last thing we would need, is it not? I note that the Public Transport Ticketing Corporation hired a human resource manager in October this year, which was a new position. Can you please explain why that occurred when the actual contract with ERG was in doubt at that stage? Ms ZEALAND: I am sorry? The Hon. MATTHEW MASON-COX: I understand that in October this year a new human resources manager was hired by the Public Transport Ticketing Corporation. I just wondered why that was done when indeed at that stage you would have known that the ERG contract was in doubt? Ms ZEALAND: I have to take that on notice. We replaced a vacancy but the contract is still on foot. We are still employing around 69 people that need to be paid and managed, so I have to take that on notice for the specifics of that. But I know we filled a vacancy from someone who had left. The Hon. MATTHEW MASON-COX: Okay. In relation to the comments from ERG, they note the 2010 planned release for integrated ticketing for buses and trains, but there is no mention of ferries. I just wondered whether they are on the same time line as the buses and trains, or whether there are any difficulties on that front? Ms ZEALAND: Ferries? Certainly on the timeline, the first milestone payment trigger is a bus-rail trial. The Hon. MATTHEW MASON-COX: Do you envisage the ferries being delivered on time along with bus and rail? Ms ZEALAND: Again, that would depend on the schedule that we have been presented with. The Hon. MATTHEW MASON-COX: Do you envisage having a trial with ferries as well at some time in the future? Ms ZEALAND: There will be a trial prior to a roll-out for ferries, certainly. The Hon. MATTHEW MASON-COX: Any idea when that might be? TRANSPORT ESTIMATES [FURTHER EXAMINATION] 6 MONDAY 10 DECEMBER 2007
Ms ZEALAND: No. The Hon. MATTHEW MASON-COX: In relation to employees, how many of your past or present employees have been hired from interstate or overseas? Ms ZEALAND: I will have to take that question on notice. The Hon. MATTHEW MASON-COX: How many of them are still employed by you and what was the tenure of those who are no longer employed by you? Perhaps you might take that question on notice as well. Ms ZEALAND: Certainly. Ms LEE RHIANNON: I want to take you back to when the contract was first drawn up because I have read a couple of times that the brief did not include fare structure so the original framework to take the project forward did not have that to build on and that built in uncertainty and a problem for then delivering the project. Can you comment on that, particularly with reference to the information that was built into the contract initially with regard to the fare structure? Ms ZEALAND: My understanding is that the contract specifies that all existing products are replicated in the project agreement. So the fare structure that was existing at the time, the contract replicates those various fare products and structures. Ms LEE RHIANNON: Is that as far as the advice went—that it just should be replicated? Ms ZEALAND: Certainly to provide migration as well. You need to be able to purchase the products that are in the marketplace through magnetic stripe technology currently. Certainly it was envisaged that you could still buy those fare product offerings on a smartcard as well. Ms LEE RHIANNON: So in terms of replicating the current system—which is what I understood you to mean—there was no attempt to simplify it, considering its complexity. It was just saying that the current fare structure needed to be replicated in an integrated ticketing system. Is that the basis on which the project started? Ms ZEALAND: I cannot comment on fare policy. Ms LEE RHIANNON: But if I understood you correctly, my first question was about fare structure and you said that the requirement was for there to be a replication of what already existed. So you have commented on that aspect. My question is simply building on the first question. Ms ZEALAND: Any decision on simplification I cannot comment on. My contract is to enable the fare products that the consumer can purchase now to be able to be purchased on the smartcard. Ms LEE RHIANNON: Can you not comment because you do not know or because— Ms ZEALAND: It is not my area of responsibility. Ms LEE RHIANNON: Can you explain that, because it seems as though integral to taking forward the whole integrated ticketing project is that we must have clear guidelines with regard to fare structure? So I do not understand how you cannot comment on that and say that it is not your responsibility. Ms ZEALAND: We have clear guidelines on the fare structure for me, and those guidelines for me are that the smartcard will have the products that consumers can purchase now. In terms of questions around a different fare structure, that is not my responsibility; that is the Ministry of Transport. TRANSPORT ESTIMATES [FURTHER EXAMINATION] 7 MONDAY 10 DECEMBER 2007
Ms LEE RHIANNON: But all I am after are the details that were provided to the company to carry forward the project. In my opening question I said that I had read on a couple of occasions that there was no fare structure provided, and it has been suggested that this has been the basis of the subsequent problems that the project has run into. That is what I was seeking comment on. Ms ZEALAND: I am not aware of that. I will have to take that part of the question on notice. Ms LEE RHIANNON: The Hon. Matthew Mason-Cox has already explored this issue but I would also be interested to know about it, considering there has been much speculation that the project would fall over and Mr Watkins, the Minister, came close to suggesting that at a press conference—I think many people interpreted his comments in that way. Can you outline the contingency plans, or whatever plans you have, if you have to start the project again? Ms ZEALAND: As I stated earlier, I would not like to speculate on the outcome of the review that we are going through at the moment. Ms LEE RHIANNON: So the review is of what you will do if the project falls over. Is that what the review is? Ms ZEALAND: No. It is the review of the remedial programs submitted by ITSL. Ms LEE RHIANNON: Are you saying that there are no discussions occurring about what will happen if the current project fails? Ms ZEALAND: Certainly I would be negligent in my duties if I do not consider scenarios. But my focus is on appropriately reviewing the response given to us with the contract we are currently engaged with. Ms LEE RHIANNON: Could you outline those scenarios that you are considering? Ms ZEALAND: No. I will not be commenting on that. Ms LEE RHIANNON: Why is that? Ms ZEALAND: As I said, my focus is on the appropriate review of the response I have from ITSL, and I would not like to speculate on the outcome of that review. Ms LEE RHIANNON: But I was talking about what will happen if the project fails. You have said that you were looking at scenarios. Do you have people working on scenarios that could be implemented if the current project falls over? Do you have people working on it for you? Ms ZEALAND: Currently, I will need to take that on notice. The Hon. LYNDA VOLTZ: Can you tell me what is the status of the bus commuter field trial? Ms ZEALAND: Certainly. We decided to expand the bus commuter field trial to commuters, and we contacted them in October 2007. We had 1,000 volunteers that we recruited in the previous year when we did not go ahead with the trial. We decided that we could go ahead with the trial in early November this year and so we issued Tcards to the first 106 volunteers from the public. The feedback has been very detailed from our volunteers. They are currently using inner west buses from the Kingsgrove depot. I can get you the numbers. The Hon. LYNDA VOLTZ: The 423. Ms ZEALAND: Yes, it is the 423, the 426 and the 428. We have had about 1,450 trips with the 106 participants, and we have had 251 calls to our call centre. We have also had a lot of detailed feedback. We have actually uncovered some problems since going to trial and we have decided at this stage not to expand beyond our first 106 triallists. The problems that our triallists are encountering are with the on-board fare payment devices. That is one of the problems they have encountered. I do not TRANSPORT ESTIMATES [FURTHER EXAMINATION] 8 MONDAY 10 DECEMBER 2007
know whether you know how the Tcard system works on the buses. There is a driver console at the front of the bus and a reader at the front of the bus that the volunteers tag on. Then there is a reader at the rear doors of the bus, where the volunteers tag off at the end of their journey. They can also tag off at the front readers. What has been happening is that we have had feedback from our public triallists that, while they have been able to tag on, they have not been able to tag off. When someone gets on the bus if the fare is, for instance, $2.50, you tag on and the bus will assume that you are going the $2.50 fare unless you tell it otherwise by tagging off at a bus stop earlier than that. With the problems on the on-fare payment devices, our customers who have not been able to tag off have been charged an incorrect fare. So obviously we are not going to expand that to any other members of the public. The contractor is working to fix this, but we are not satisfied that our customers are guaranteed of having that fare correctly charged, so we are not expanding at the moment. We have also had a couple of issues with our third-party agents. These are the newsagents that are part of our top-up distribution method. You would go to a newsagent and give your Tcard in and load $20 on it for your travel. There have been some issues with our trial participants either being able to have someone adequately trained to do that or there have been some technical issues. Again we are working with the contractor to fix those things, and the travelling public have been really diligent in their feedback to us. They have told us the time and the number of the bus. It has really enabled us to give our contractor very detailed information on where we are finding issues. As soon as these are resolved, we will look to expand the trial further to learn more. The Hon. LYNDA VOLTZ: Other than those glitches, how are they finding them? Are they liking them under the trial? Ms ZEALAND: There are a variety of responses. But certainly they have all used their cards. Of the 106 participants I think there are only 12 cards that have not been used. So there is certainly an enthusiasm for using the technology. We will be giving them a comprehensive survey to find their likes of the system and any behavioural issues they are finding at the completion. Ms LEE RHIANNON: Could I ask a question on that, Madam Chair? CHAIR: Yes, you may. Ms LEE RHIANNON: With regard to the ticketing off, there have been reports that that was causing considerable delays. I understand that in many of the overseas integrated ticketing systems there is not a ticketing off. Could you comment on that? Ms ZEALAND: The tag-off is because we need to calculate the distance travelled. Other jurisdictions have tag-off. The San Francisco project is a tag-on, tag-off project. I think the London buses is just tag-on, because they have a flat fare no matter where you go. If you do have a flat fare, no matter where you go you can have a tag-on only. If you have a distance-based fare structure, you need tag-on and tag-off. What do you mean by "delays"? Ms LEE RHIANNON: People were queueing for so long to tag off that it was holding up the bus. Ms ZEALAND: I know that time and motion studies have been done early in the life of this project, to measure the disembarking time. Certainly until people are used to it—some feedback is that they are waiting to see if it works. I think it comes with trust. I know that San Francisco did have some issues to start with, but as more and more people are using the system that seems to change. Ms LEE RHIANNON: When you say "change", do you mean there are no delays; the bus is not held up? Ms ZEALAND: People get more comfortable with that process. Ms LEE RHIANNON: Are you saying that you get to a point where there are no delays, or do you just accept that there are delays? TRANSPORT ESTIMATES [FURTHER EXAMINATION] 9 MONDAY 10 DECEMBER 2007
Ms ZEALAND: We have not had a large enough trial to be able to measure the impact of disembarking the bus using a Smart Card, so I cannot answer that at the moment. Certainly when you are coming on a bus it is significantly faster to get on a bus because you are either not paying cash at a console or you are not standing there dipping your card. So I do see evidence of that. I would need to monitor that more closely— Ms LEE RHIANNON: Is that something you are planning to build into a trial: possibly delays in the bus considering a tag-off problem? Ms ZEALAND: We are asking trialists for feedback on all behavioural issues and experience of the Tcard. The Hon. MATTHEW MASON-COX: I wish to clarify a few matters I asked about previously. Can you confirm when each of the transport agencies—buses, rail and ferries—actually signed up to the Tcard project? Ms ZEALAND: What do you mean? The Hon. MATTHEW MASON-COX: I understand that there was a process whereby there was some resistance on behalf of some of those agencies to sign up to be part of the Tcard project. Is that true? Ms ZEALAND: I am not aware of that, but I can take that on notice. The Hon. MATTHEW MASON-COX: Are you saying that they all signed up at the same time, or are you not sure? Ms ZEALAND: I do not know what happened at the commencement of the Tcard project. The Hon. MATTHEW MASON-COX: Could you also clarify the milestones under the current Tcard contract? You mentioned that the first one was the public trial for bus and rail. Ms ZEALAND: That triggers a payment? The Hon. MATTHEW MASON-COX: Yes. Could you clarify what the subsequent milestones are? Ms ZEALAND: They are quite involved. I can take that on notice, to get you the full details of that. The Hon. MATTHEW MASON-COX: Can you give me an understanding of what they are, rather than a detailed explanation? Ms ZEALAND: I would prefer to be accurate and to take that on notice and give you the full definitions of the various milestone events and stages. The Hon. MATTHEW MASON-COX: Do you think it is important that those milestones be in the public arena so that people understand what they are? Ms ZEALAND: As I say, I will take it on notice and give you an answer on that. CHAIR: And you will spell out what the milestones and milestone events are? Ms ZEALAND: As I say, I will take the question on notice and— CHAIR: I will ask you again. The last time you took questions on notice we got non- answers; that is why we are here today. Will you give us specific information in answer to the question, which has now been asked of you three times? TRANSPORT ESTIMATES [FURTHER EXAMINATION] 10 MONDAY 10 DECEMBER 2007
Ms ZEALAND: I think the actual contract will be—we are currently working towards corporate papers as well. Yes, certainly we can spell out the milestone events and stages. The Hon. MATTHEW MASON-COX: The Committee has been generally concerned about a lack of information being provided to us, as Madam Chair has pointed out. Indeed, there is a public interest need that appropriate information be provided promptly. I think you would be very much aware of that. We are still concerned that this whole project, whilst stumbling along from one disaster to another, remains, if you like, shielded from the public eye—again, in this case by a process of considering the remedial plans that ERG has in relation to the contract—and you will not comment on them, you will not elucidate what those remedial plans might be, and you will not give us any indication about what those plans may achieve and what the Government's position may or may not be on them, and what your recommendations in relation to that might be. Clearly, the Committee is concerned that you are using this to push into the future any sort of public consideration of the issue. I simply wanted to get your thoughts on that. Ms ZEALAND: That is certainly not my intention. I— The Hon. MATTHEW MASON-COX: Good, because I wanted to ask you a few more questions about that— Ms ZEALAND: If I may finish. Given the context of the commercial position that we are in now, it is important for me not to compromise Government's position. The Hon. MATTHEW MASON-COX: Naturally. We could provide that information confidentially, or with privilege attached to it. Would you be willing to do that? Ms ZEALAND: I am sorry, what information are you talking about? The Hon. MATTHEW MASON-COX: You could provide information in relation to the information supplied by ERG and the remediation plan they have under the contract. Would you be willing to provide that confidentially to the Committee in a closed hearing, or indeed under direct documentation which could be withheld in the Clerk's office to prevent any commercial in confidence being breached? Ms ZEALAND: As I say, we are in a very sensitive commercial position with the contract. We are working to review the remedial program appropriately. I do not think it is appropriate, and ERG has submitted that to us on a commercial-in-confidence basis. The Hon. MATTHEW MASON-COX: And it then detailed quite significant parts of it in its press release? Ms ZEALAND: That is for them. The Hon. MATTHEW MASON-COX: That is for them. I am asking you as a public official, and in relation to the specific request from the Committee with investigative powers, to provide that information under those conditions. Are you willing to do that? Ms ZEALAND: May I take that on notice? The Hon. MATTHEW MASON-COX: Could we have an answer within 24-hours or 48- hours, not 35 days? CHAIR: Is that a "'yes"? Ms ZEALAND: Yes. The Hon. MATTHEW MASON-COX: Forty-eight hours would be fine. Forgive me if I appear a little frustrated but the contract was signed in 2003, as you know, and the Committee has been asking questions about it in the current estimates period, and for a number of years before, and it has rarely got a straight answer. As I read out a question earlier— TRANSPORT ESTIMATES [FURTHER EXAMINATION] 11 MONDAY 10 DECEMBER 2007
The Hon. Lynda Voltz: Point of order: the Hon. Matthew Mason-Cox should ask questions, not make statements towards a person. Ms Zealand has answered the question that she will get back to the Committee. It is nice that the Hon. Matthew Mason-Cox wants to make these statements, but she has given her answer. I think we should keep to questions. CHAIR: There is no point of order. The Hon. Matthew Mason-Cox can ask his questions in the way that he wants to, as long as it is a question. The Hon. MATTHEW MASON-COX: I was bringing that question to a close. [Interruption] The Hon. MATTHEW MASON-COX: I notice in its media statement issued on 2 December 2007, ERG states: "If the Government was to go to another contractor now it would take years to go through the learning phase and requirement capture just to get to trial stage and full implementation would probably be a decade away." Is the reality that the Government is locked into doing a deal with ERG no matter what the consequence for the public? Ms ZEALAND: As I said, I am not going to speculate on the outcome of the review of the remedial plan. The Hon. MATTHEW MASON-COX: Would that be a reasonable conclusion to come to given that it has been going on since 2003? Based on its projections it will be seven years until it delivers what it said would take four, and if we go with somebody else it will take another ten years. Are we really in a dance with the devil on this particular issue? Ms ZEALAND: As I said, my focus is on reviewing the plan that we have in front of the PTTC. The Hon. MATTHEW MASON-COX: Do you have a commercial background? Ms ZEALAND: In what sense? The Hon. MATTHEW MASON-COX: What is your previous experience in matters of this kind in relation to commercial negotiations? Ms ZEALAND: My experience is contractually in the Department of Commerce. Prior to joining government I was in the private industry. The Hon. MATTHEW MASON-COX: What were you dealing with in private industry, if you do not mind me asking? Ms ZEALAND: My area was marketing. The Hon. MATTHEW MASON-COX: Have you ever encountered such a complex set of arrangements? Ms ZEALAND: We certainly have very complex contract arrangements in the Department of Commerce. The Hon. MATTHEW MASON-COX: Did you ever have such a serious delay in relation to a complex set of arrangements? Ms ZEALAND: I personally have not experienced probably a contract in delay of this nature. The Hon. MATTHEW MASON-COX: Is it a personal embarrassment to you to have to continue to deal with this contract year in, year out? TRANSPORT ESTIMATES [FURTHER EXAMINATION] 12 MONDAY 10 DECEMBER 2007
Ms ZEALAND: It is not a personal embarrassment to me, no. The Hon. MATTHEW MASON-COX: Do you think it is embarrassing— The Hon. Henry Tsang: Point of order: I think the Hon. Matthew Mason-Cox is trying to embarrass the chief executive officer. I ask the Hon. Matthew Mason-Cox to ask his question but not with an intent to insult the chief executive officer. The Hon. MATTHEW MASON-COX: To the point of order: It was never my intention to insult or embarrass the chief executive officer. I am asking a question about how does she feel in relation to such a debacle of a contract? The Hon. Lynda Voltz: You distinctly asked her if she was embarrassed by it. It is not your intention to embarrass? The Hon. MATTHEW MASON-COX: No, I am asking whether she is embarrassed by it. I am not trying to embarrass her. There is a very distinct difference between the two issues. The Hon. Henry Tsang: You are deliberately trying to embarrass her, because she was not embarrassed. The Hon. MATTHEW MASON-COX: Madam Chair, it is a ridiculous assertion. The Hon. Henry Tsang: You are deliberately trying to embarrass her. I ask for questions relating to the contract but not her personal history of employment. Let us focus on the inquiry. CHAIR: I think the Hon. Matthew Mason-Cox had moved on from that anyway. The Hon. MATTHEW MASON-COX: I have. The Hon. MATTHEW MASON-COX: In relation to the limitation of liability under the contract, I understand that there is a clause for liquidated damages with a cap of $10 million. I am informed that as at 30 June 2006 a total of $3.5 million of liquidated damages had been paid pursuant to that clause? Would you confirm that? Do you have that information or can you supply it on notice? More generally, in his report of 2006 the Auditor General said that he was not aware of any further remedy for delay beyond the cap of $10 million in the contract. Would you clarify if there is any further remedy under the contract or other action the Government might take to seek compensation for the extensive delay that has been caused under this contract? Ms ZEALAND: On your first question, liquidated damages recognised at 30 June 2007 totalled $8.9 million, and the $10 million cap was reached in August 2007. The subsequent parts of your question—it is a cap so there is no further liquidated damages against the contract. Any further compensation would be a separate legal matter. The Hon. MATTHEW MASON-COX: Do you know whether it was considered increasing or deleting the cap to make it open ended under either of the variation agreements in May 2005 or June 2006, given you would have been cognisant at that time there were significant delays in the implementation of this contract? Ms ZEALAND: I am not aware of any consideration of a change to the liquidated damages. I can take that on notice, but I am not aware of that at this time. The Hon. MATTHEW MASON-COX: Do you think that would be a commercially prudent thing to do at that time? Ms ZEALAND: As I say, I am not aware what considerations were made? The Hon. MATTHEW MASON-COX: Do you think that would be a commercial decision to take? TRANSPORT ESTIMATES [FURTHER EXAMINATION] 13 MONDAY 10 DECEMBER 2007
Ms ZEALAND: There would be a number of commercial remedies, I would imagine, in considering the amending agreements. The Hon. MATTHEW MASON-COX: In relation to each of those variation agreements— May 2005 and June 2006—you said in your opening statement words to the effect that commercial arrangements were entered into which protected the Government, which looked after the Government's position in relation to contracts, in regard to allowing those variations and extension of time that is inherent in those variations. Would you provide the Committee with details of what protections were put in place for the Government in that regard? Ms ZEALAND: I take that on notice. Ms LEE RHIANNON: You spoke earlier about your role in marketing, have you ever considered marketing public transport in terms of the environmental benefits of using public transport and possibly using green power to give public transport a marketing edge to promote the environmental benefits of having fewer emissions by using such power? Ms ZEALAND: I have not personally contemplated that. T-Card does have one of its values as being green, as being an alternate to the creation of paper tickets, and obviously encouraging the use of public transport by making it easier and more convenient but I have not put any attention to that, no. Ms ZEALAND: "To date", being 31 October, are the figures I can tell you. The Government has spent approximately $65 million in capital costs and approximately $15 million for the interim school student transport scheme. The Hon. MATTHEW MASON-COX: Do you have a total estimate for the final delivery of the Tcard project, should indeed that come to fruition subject to all the changes? Ms ZEALAND: Currently the final estimate is the original projected budget. The Hon. MATTHEW MASON-COX: You don 't really believe that figure, do you? Ms ZEALAND: Well the payment to the contractor is—I will have to get the exact number—$106.7 million, so that is a fixed amount. The Hon. MATTHEW MASON-COX: Does the remediation plan that the contractor put to you change any of those assumptions in the contract? Ms ZEALAND: We are still reviewing the remedial program. The Hon. MATTHEW MASON-COX: Finally, in answer to a question that was taken on notice at the last hearing, where it was asked why were widespread trials of the Tcard project announced before the State election when the Minister must have known the project was not meeting the milestones already announced, the answer to that question was: The Public Transport Ticketing Corporation in August 2006 advised the Minister that Tcard trials involving commuters on selected bus services were to take place in October 2006— Which, of course, was prior to the election. However, problems with the Tcard system were subsequently discovered. Can you please elucidate what problems were subsequently discovered and what action has been taken in the interim to rectify those problems? Ms ZEALAND: I can't comment on the specific problems that were discovered in October 2006 but I know the technical problems that we have been working on to actually to get out to trial even this year. So there were problems with the onboard system working on the buses. I would have to get you the specific technical issues but it basically was not—as I outlined with the tag-on, tag-off we have issues now with the fare calculation. Certainly what we have now is a lot more developed than in TRANSPORT ESTIMATES [FURTHER EXAMINATION] 14 MONDAY 10 DECEMBER 2007
ERG Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
(20min delay)
