Article: Smart card delays fill ticket giant's coffers

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Smart card delays fill ticket giant's coffers

Smart card delays fill ticket giant's coffers

Clay Lucas
April 25, 2008
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AT LEAST one group is celebrating the delayed introduction of Melbourne's new myki smartcard ? and it isn't the State Government.

Ticketing giant ERG has run Metcard since 1994, but its contract with the State Government expired in March last year.

Since then, the short-term arrangement reached with the State Government appears to suit ERG.

New financial statements show that, in the six months to January, profits for the division in ERG that runs Metcard increased by 18.5%, up to $14.5 million.

"The profit improvement was primarily attributable to improved operating conditions experienced in relation to the extension of ERG's service contracts in Melbourne for up to five years pending introduction of a new ticketing system (myki)," ERG said in a statement to the Australian Securities Exchange.

"Due to delays in the development of the myki system," it said, "the company expects the service contract and improved conditions to continue until at least 2010."

Public Transport Minister Lynne Kosky said last month that myki would not be fully operational until 2010. It was scheduled to begin in March 2007.

Opposition transport spokesman Terry Mulder said ERG's statement showed taxpayers were paying for "myki madness".

"This is scandalous," he said. "John Brumby and Lynne Kosky had two options here: refuse to pay and shut down the current Metcard ticketing system until Labor sorts out the myki mess, or pay up and shut up. They chose the latter."

Stephen Moynihan, a spokesman for Ms Kosky, said the Government would continue to pay for the existing Metcard system until myki was ready.

Premier John Brumby said yesterday, for the second time this month, that his Government would need to "look very closely" at myki if it failed upcoming tests.

If those tests were not passed, he said, "We'll have to obviously look closely at this project".

Under the contract between the Government and the Kamco consortium creating it, myki will cost $494 million to build and $55 million a year to run for 10 years.

Secret briefings to Ms Kosky, obtained by The Age in February, showed that Melbourne's ageing Metcard system was close to collapse, with difficulties getting replacement parts for machines operating years beyond their use-by date. ERG, a listed company, has been in a trading halt since January, when it was sacked by the New South Wales Government for failing to deliver Sydney's new public transport smartcard, known as Tcard.

The Iemma Government has abandoned Tcard and is suing ERG for $88.6 million.

Despite the improvement in the division of ERG that runs Metcard, the company posted a $104.7 million loss in the six months to January