Victoria’s Myki Overhaul: Questions Linger Over Value for Money as Project Faces Delays and Cost Blowouts
Victoria’s ambitious overhaul of its public transport ticketing system, aimed at introducing modern tap-and-go payment options, is facing significant scrutiny from the state’s financial watchdog. The Victorian Auditor-General’s Office (VAGO) has raised serious doubts about whether the substantial investment is delivering value for money, citing government failures that have led to budget blowouts and extended deadlines for the project.
In 2023, the Victorian government committed to a massive $1.7 billion deal with US technology firm Conduent. The objective was to modernise the myki ticketing system, a crucial step towards aligning Victoria with global standards by enabling convenient tap-and-go payments, a feature now commonplace in public transport networks worldwide.
However, the VAGO’s report, tabled in parliament, found that the Department of Transport has struggled to demonstrate the project’s value. Auditor-General Andrew Greaves stated unequivocally, “Overall, value for money for this investment is unclear.”
Project Shortcomings and Unrealistic Projections
A key concern highlighted by the auditor-general is the absence of a robust benefit management plan within the transport department. Furthermore, the department relied on anecdotal evidence from New South Wales to project the impact of tap-and-go payments. These projections suggested a significant reduction in fare evasion by 35 per cent and a 50 per cent decrease in concession fraud. The auditor-general noted that these estimations lacked a solid, evidence-based foundation.
While the project is reportedly on track to meet a “reset” deadline of 2028, the VAGO report pointed to numerous future risks that the department has yet to adequately address. The introduction of tap-and-go payments allows commuters to use their credit cards or mobile devices for fare payments, eliminating the need for physical tickets.
A trial of this new technology commenced this week on four public transport lines. Currently, this trial is limited to full fare payments only. A significant component of the Conduent contract involves extending tap-and-go functionality to concession fares. Concession card holders represent a substantial portion of the passenger base, accounting for one-third of all travellers. Implementing this feature is a complex undertaking, and it is not scheduled for public rollout until 2027.
The progress of the project has also been hampered by pauses, necessitated by the consideration of new government policies, such as the introduction of free travel for teenagers.
Budget Overruns and Schedule Slippages
Mr. Greaves’ report revealed that the total projected cost for the project over its 15-year lifespan is expected to reach $2.8 billion. The project has already experienced a budget overrun of $136 million, and its delivery deadline has been pushed back by 18 months. These setbacks are attributed to disputes between Conduent and the Department of Transport, issues that the VAGO suggests could have been avoided.
The auditor-general’s report indicated that the transport department was aware of potential risks concerning intellectual property rights from the previous myki provider. Additionally, Conduent’s initial delivery schedule was deemed “overly optimistic and did not contain enough detail,” a sentiment that proved accurate as the schedule was ultimately declared “unrealistic.”
The VAGO also issued a warning regarding the state government’s preparedness for future challenges. Specifically, the report highlighted a lack of planning for the rollout of concession fares and ticketless travel into regional and rural areas of Victoria, a phase slated for completion by 2028.
Concerns Over Procurement and Probity
The selection of Conduent in 2023 was not without its critics, with concerns previously raised about the company’s international track record. While the VAGO found the tender process itself to be effective, a critical flaw was identified: the department failed to appoint a probity auditor. Instead, a probity advisor was appointed.
The report detailed how this probity advisor participated in all key meetings and managed potential conflicts of interest and other probity-related matters throughout the procurement process. However, the VAGO concluded that due to the advisor’s involvement in providing advice on various aspects of the procurement, they lacked the necessary independence to perform the role of a probity auditor.
Government Response and Opposition Scrutiny
In response to the findings, a spokesperson for the state government acknowledged the complexity of delivering a new ticketing system. They drew parallels with international experiences, noting that “major upgrades to ticketing systems usually take around four years — as was the experience in Sydney.” The spokesperson maintained that the government is committed to delivering necessary projects and making public transport more accessible.
However, Shadow Transport Minister Matthew Guy expressed strong concerns about the government’s expenditure. He stated, “Victorians have every right to be concerned about the government’s spending. There’s lack of probity on building sites, there’s lack of probity on the way the government operates and now again on the ticketing system upgrades. This is another billion dollars that the government has spent but we’re not sure what the outcome is or will be, it’s not on time, and it’s not on budget.”
