The government’s railway reform: A better transport future for rail commuters and goods transporters

These were the words of Minister of Transport and Communications Ketil Solvik-Olsen when he, together with representatives from the co-operating partners Høyre, Fremskrittspartiet, Venstre and Kristelig Folkeparti, presented the main elements of the plans for a reform of the railway sector.

“The current parliamentary majority has demonstrated the will and intention to invest in the railways. After the change of government in 2013 grants in the railways have increased by about 50 percent, and maintenance in particular has benefited from this. The backlog in maintenance will be reduced in 2015 after many years of neglect. This is already laying the foundations for a more robust infrastructure. At the same time we need to make changes in the way the railways are organised in order to clarify responsibility for tasks and thus ensure improved exploitation of all resources. The current organization is not fully suited to purpose, and the major participants in the railway sector have been asking for a reform, a fact that serves to emphasize the need for systemic change”, says Solvik-Olsen.

The necessity of a railway reform

“Many of the participants in the railway sector have pointed to a number of challenges in the railway sector, amongst these the division of responsibilities in a number of areas. One example of this is that responsibility for railway property is shared between Jernbaneverket and NSBs Rom Eiendom. This creates unclear areas of responsibility in connection with the development of the rail hubs. The reform will provide a better solution for this”, says the Minister

“Many have also pointed to the weak economic incentives in the sector. The current form of organisation does not produce enough customer focus. The railway sector fails to fully exploit the benefits inherent in the competitive factor. Competition contributes to increased efficiency and innovation. There is also potential to improve co-ordination between the railways and other forms of public transport.

Measures for a better railway

The government bases the reform on state ownership of the railway infrastructure, and that the railway sector will be a target for investment and improvement. The necessary resources must be allocated and reorganisation accomplished in order to achieve this goal.

One of the proposed changes to ensure that the railway sector is better equipped to meet the future is to gather more governmental responsibilities in the sector into one state controlled and strong governmental body. The unit will amongst other tasks deal with long-term planning and have the role of co-ordinator in relation to the sector’s participants and other forms of public transport.

The plan is to set up a state controlled unit with the main task of operating, maintaining and building railway infrastructure. In order to ensure predictability for the unit, the unit will enter into long-term licensing agreements with the state. The unit will also be responsible for the management of all railway property in Norway. This will contribute to an improved, more efficient and more effective development of stations and transportation hubs.

Some railway operational and maintenance work is already open to competition, and the experience gleaned from this is positive. The government envisages that more operational and maintenance tasks will be opened for competition over time, and with longer-term agreements in place for the parties. This notwithstanding, a state-owned participant will have overall responsibility safety and for the quality of all maintenance work carried out.

Competition for improved rail services

The driving force behind the reform is the strong political aim to give the railway’s customers with better, improved rail services. Norway already has experience with competition in the public transport sector. The competition to operate Gjøvikbanen has resulted in a satisfying increase in the number of passengers carried, and the customer satisfaction is very high. There is also full competition in goods transport by rail. The government will bring the positive elements of competition into the railway sector to a higher degree with the aim of improving vitality, efficiency and innovation.

Competition in the railway sector will be regulated through licenses, where the state ensures attractive rail travel service on stretches that are not necessarily economically viable. The plan is therefore to permit train companies to compete for traffic on the various stretches by agreement with the government.

Regard for railway sector employees

The current employees in the sector are the single most important resource in ensuring a successful transition in the railway sector. The government will place emphasis on an including and predictable process for the employees. The employees’ organisations have been informed of the main features of the planned changes. Employees’ organisations will be heard when measures are to be given concrete content.

The reform contains no plans to introduce alterations to pension schemes that are established in existing state-owned companies.

The Railways Act includes provisions that make certain provisions regarding transfer of ownership of undertakings of the Working Environment Act apply to competitions for agreements on passenger transport by rail, if after the competition the activity is operated with the same type of transport vehicle as was previously the case.

A White Paper on the reform will be presented to Stortinget in the near future.

For more information please contact Political Advisor Reynir Johannesson (Frp): 465 48 595