A comparative assessment of the productivity of Australia's public rail systems 1971/72–1991/92

Abstract

There is a growing interest in the establishment of suitable measures of the overall performance of government business enterprises, particularly railways, which are a major recipient of government subsidy. They must improve their performance and become more cost efficient. Any policy designed to reduce costs must consider the implications of resultant actions on the overall productivity of a business. We propose the use of the total factor productivity index as an appropriate reference benchmark, to enable each railway to evaluate the productivity implications of any change to the operating and managerial environment. Using the Institute of Transport Studies' rail database, total factor productivity indices are derived annually from 1971/72 to 1991/92 for the 5 major public rail systems in Australia and sources of variation are identified.

The paper recognizes the need to identify sources of variation in productivity which translate into operational guidelines for management in assisting them to improve performance over time. A contribution is the recognition of the importance of including both demand side (final output) and supply, side measures of output (intermediate output). Final output may be more important for monitoring the performance of an enterprise from a cost-effectiveness perspective, but a supply side measure is often more useful to operators because it is the dimension of output over which they have more control.