Govt-opposition at loggerhead over rail transport reform

The opposition in parliament is at loggerheads with the treasury bench over the reform proposal to open the railway sector to competition breaking the monopoly of VR Group.

As all the five opposition parties submitted interpellation challenging the reform move, the government will face a no-confidence motion on Wednesday in parliament.

On Tuesday, Transport and Communications Minister Anne Berner replied to the opposition’s interpellation on behalf of the government, said a government press release.

The minister said the government’s aim is to safeguard public transport services in entire Finland, to enable the creation of new services in different sectors, and to increase opportunities for people to choose the most suitable option for them.

“The opening of passenger rail transport to competition plays a significant role in achieving these goals in the transport sector. A decision has been made to open rail transport to competition because it has been estimated to lead to better services for train passengers and to benefit the whole society. Considerable savings can also be made in public procurement,” Berner said in her reply.

The reform of passenger rail transport is aimed at increasing and diversifying rail transport services. The aim of opening the rail transport sector to competition is to ensure more efficient service provision than today and to provide services that meet the needs of different customer groups better, she said, adding that an increase in transport services and competition between providers and the different modes of transport will benefit passengers.

The experiences of other countries show opening rail transport to competition benefits passengers, in particular. In countries that have opened their passenger rail transport, the supply and demand for rail transport has increased significantly.

Opening passenger rail transport to competition means that VR will no longer have exclusive rights to operate Finland’s railway network and other operators will also be able to enter the passenger rail transport market.

It is stated in the interpellation that the current rail transport services have not been cost-effective enough and have not met people’s needs in all respects. Passenger rail transport will therefore be opened to competition. Competition is an incentive for companies to improve their operations. When companies compete for passengers, customers will have an opportunity to choose between different options.

The government said it has decided to open the passenger rail transport to competition on the basis of concession contracts based on areas and service entities. This model ensures that there will be competition between the rail operators. The required service level and the incentives for improving the operation will be determined in more details in the contracts. Concession contracts will not guarantee exclusive rights for operators to operate in the areas subject to competitive tendering. Several companies may operate in the same rail section.

The government also plans to create three state-owned companies separate from the VR Group to guarantee access to the market.