Metro Trains and Yarra Trams will continue to operate Melbourne's public transport after the Andrews Government awarded the pair new contracts worth $7 billion.

What's changing? Trains required to run on time 92pc of time, up from 88pc

Trains required to run on time 92pc of time, up from 88pc Train station skipping to be banned

Train station skipping to be banned Trams required to run on time 82pc of time, up from 77pc

Trams required to run on time 82pc of time, up from 77pc Trams banned from changing services to meet punctuality targets

Trams banned from changing services to meet punctuality targets Increased fines for failing to meet standards

Increased fines for failing to meet standards Increased performance bonus of $1.25m per month for Metro

The widely expected seven-year deal to grant the contracts comes despite recent chaos on the train network and a push for public transport to be returned to public hands.

Under the new deal, Metro Trains, partly owned by Hong Kong's MTR Corporation, will be banned from the controversial practice of station skipping, a policy used to meet punctuality standards by not stopping when delayed.

The Government is also imposing tougher performance targets and penalties.

Trains will now need to be on time 92 per cent of the time per month, up from 88 per cent.

Trams will need be on time 82 per cent of the time, up from 77 per cent.

Metro will face fines of up to $700,000 if half the network shuts down, on top of performance penalties.

Daily inspections of stations, trains and major tram stops will be introduced, and restrictions on advertising — including a ban on wrap-around tram ads — will be put in place.

The French-owned Yarra Trams will also be banned from changing its services to meet punctuality standards.

Metro Trains will receive more lucrative bonuses for meeting performance targets under the new contract. ( ABC News: Danielle Bonica )

There will also be a major investment boost to maintenance and recruitment, including a push to create 700 new jobs.

The Government said 150 new train drivers, 270 support staff for passengers and 90 maintenance workers would be recruited, with a push for people from disadvantaged backgrounds to be employed.

Victorian Public Transport Minister Jacinta Allan said the deal was created with passengers in mind.

"We are cracking down on those things that really frustrate passengers, whether it the bypassing of the City Loop, station skipping, short running," she said.

"[These are] much tougher penalties than what exists currently and we have to remember too that these tougher penalties are being judged against tougher performance requirements, so we have lifted the bar on both counts."

'Devil in the detail'

Failure to meet maintenance of the network could incur $10 million in fines.

Earlier this month, the Victorian Government revealed Metro Trains had been fined the maximum penalty of $1.2 million over a computer glitch that forced a temporary shutdown of the network in July.

Frustrated commuters tried to get onto packed trams after Melbourne's train lines went down. ( ABC News: Chris Le Page )

Under the previous contract, the operators had an exclusive right to negotiate with the Victorian Government for a new deal before other businesses could bid.

Shadow treasurer Michael O'Brien said commuters would end up paying for the 30 per cent pay rise for the operators, adding that the Government should have run an open tender process.

"It's very hard to understand why there wasn't an open tender," he said.

"If Daniel Andrews thought that there could have been a better deal, or in fact if Daniel Andrews had thought can the state run it better, then everyone should have been put to the test."

The Greens' Samantha Dunn also said the deal should have been open for competitive tender.

"This will deliver seven more years of late, unreliable and overcrowded trains and trams," Ms Dunn said.

"The fact this deal was cooked up in private, without any competitive processes, is a sad indictment on this Labor Government."

The exclusivity agreement is not in the new contract.



The contract's seven years include a major period of disruption on the network, with the construction of the Metro tunnel, signal upgrades and Mernda rail extension all planned.

Metro will receive a more lucrative performance bonus of $1.25 million per month.

The Rail, Tram and Bus Union (RBTU) has been leading a campaign for more than a year for trains and trams to return to public hands, arguing profits are going overseas rather than being reinvested in network service improvements.

RTBU secretary Luba Grigorovitch said the contract must be released so the public could scrutinise it.

"The devil is always in the detail," Ms Grigorovitch said.

She said a boost to maintenance must be met with adequate staffing levels.

"Without testing the market, without looking at other options and without sufficient transparency, there remains room for improvement and many questions to be answered."

