Article: CityCat sale to go through this morning

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CityCat sale to go through this morning

CityCat sale to go through this morning

Tony Moore
August 17, 2009 - 5:23AM

Brisbane City Council will this morning reject offers from three banks and sell its CityCat ferries to the State Government, saving council between up to $19 million a year in running costs.

Council's civic cabinet will hear a recommendation to talk directly with the Queensland Treasury Corporation, who has offered to buy and lease back the fleet of 14 CityCats.

If approved, all buses, ferries and trains will be state-owned.

QTC is the main state government-backed finance organisation for councils and government departments.

It is the only source of borrowings for Brisbane City Council.

Lord Mayor Campbell Newman announced plans in April to sell the fleet of 14 CityCats and then lease them back, prompting criticism from Labor's council leader Cr Shayne Sutton.

Cr Sutton criticised Cr Newman for selling the CityCats as "an opportunistic grab for cash", saying they "should never be sold to plug holes in the budget."

However it was later revealed that Labor had planned to sell off the CityCats in 2002, an issue not publicised until then-Lord Mayor Tim Quinn announced a "$94 million" sell-off in November 2003.

This morning Civic Cabinet will vote on the QTC's offer of a lease arrangement for all CityCat ferries, including the newer ferries built since January 2008.

An "operating lease" gives Brisbane City Council the ability to choice to buy the fleet back at a reduced rate after paying a lease for a number of years.

It is understood QTC has offered cheaper lease agreements than the three banks and was the only agency able to offer Brisbane City Council an "operating" lease.

Council's website shows the NAB, Westpac and the Commonwealth Bank all offered leases, said to be between five and 10 years.

It cost about $26.5 million to run Brisbane's CityCat fleet in 2009-10, with Brisbane City Council funding about 75 per cent of that annual cost.

Translink funds the remaining 25 per cent, mostly from CityCat fares.

"It frees up around $20 million a year for council," an industry source said yesterday.

"It is something that has been in the background for years.

"Council has been keen to offload it and the State Government has always been interested in buying it."

A private company, TransdevTSL, has the contract to manage Brisbane's CityCat fleet, although new tenders to run the ferry fleet have been called and will close on October 21.

Six new CityCats are planned to be added by 2012. The sale does not include new ferry terminals.

Meanwhile, in Sydney, the New South Wales Government is part way through an investigation of whether their Sydney Ferry services should be run by the New South Wales Government or by a private operator.

Both Transdev, and Veolia Transport who build some Brisbane City Council buses, are the shortlisted tenders for the Sydney bids to see if they can match the service provided by Sydney Ferries.

The Sydney tenders close this week and their decision will be made by the end of 2009.