It was all self-congratulation in a government press release last week praising timetable changes that would "increase services and reduce crowding" on Melbourne's trams. Well, that was last week and a week is a long time in politics.

This week the story broke that tram services will be slashed on some of Melbourne's busiest routes. Fewer services and more crowding is the reality from the operator locked in secret negotiations with the government for a new contract to run Melbourne's trams.

The 96 tram: among those suffering service cuts.

In a stroke of legal genius, the current contract of Yarra Trams gives it the exclusive right to negotiate with the government behind closed doors for a seven-year franchise agreement. It certainly makes the bidding process easier when you are not facing competition.

Secret negotiations are just the start of this clandestine operation. Yarra Trams received $2.2 million in "incentive payments" on top of the $2.2 billion the government has paid for the group to operate Melbourne's trams. How those incentive payments are calculated is shrouded in mystery, with three of the five contractually agreed criteria kept secret.