How to deal with tramways financial management and debt management
- by admin
When you buy a tram, you also buy an interest in a company.
The idea is that the tram company can borrow money to pay its debts if needed, but you also get to own a stake in the company.
Tramways have been in business for centuries, but the public sector sector is growing at a rate of 5% a year, and that’s only going to get worse in the years ahead.
The financial services industry is already the largest and most complex sector in the country.
Its role is growing so rapidly that in the next 20 years, the sector will account for 25% of the national economy, according to the OECD.
The tram company has been able to get a foothold in the public purse with the help of government support, but now, it needs to secure a little more capital to get on the road.
Tramway financial manager, Mr Brian Taylor, has seen some big banks come knocking, but they’re not willing to lend.
“I’ve been called in to work with banks who are just going to loan money,” he said.
“They have no idea what they’re doing.”
The financial crisis forced a rethink in the way we deal with the financial sector.
In Australia, we’re still very much in a financial crisis.
We don’t have a strong, long-term financial system, and the problem is the lack of confidence in banks.
“The banks are just getting desperate,” he says.
“This is a really important financial system.
We need to get back to the day-to-day, working day-by-day as we are now.”
So if you have a bank that’s not in the business of lending money to people, then they’re going to look at you, they’re probably going to be a little bit wary of you.
“He’s worried about tramways future.”
We’re seeing a lot of consolidation, where a lot more and more companies are getting involved in the financial services sector,” he explains.”
That is something that is not going to help us in the long-run.
“Tramking is a big business, so you need to think about what you’re doing for the long term.”
Tram operator, the National Transport Authority, has a different outlook.
“As we’ve seen in the last couple of years, a lot has happened in the tram sector, and tram operators are increasingly looking for a way to diversify,” it says.
The NTA is working to find new funding sources to fund the growth of its business, and its recently unveiled Capital Plan aims to keep the company in business beyond 2034.
In fact, it’s so ambitious that it includes a $10 billion fund to help the company stay on the right path.
“There are a lot, a great many of the people who have worked in the sector over the last few years have been very, very optimistic,” Mr Taylor said.
He’s been with the company for 20 years.
“But I think there are some people who think we have to take a little further and have to do some things in a more structured way.”
For instance, the NTA’s board has to be convinced that the company can be a part of the next big financial transaction, and not just another bank.
“It’s something that’s been discussed quite a bit in the industry,” Mr Brian says.
The NAA’s plan for the future also includes new financial tools that it says will help it make better use of the tram’s assets.
But it won’t be easy.
Travelling through the capital cities of Australia’s cities, it is clear that there’s a big difference between having a large number of assets to invest in and having a stable and solid infrastructure.
“What’s different in the past has been we’ve had a lot less infrastructure, we’ve lost a lot,” Mr Austin says.
This has led to a lot volatility in the value of tram routes, and Mr Austin’s company is no different.
“In the past we’ve got a huge amount of money invested in the system, but we’ve just not been able for a long time to really keep up with the changes that are happening in the economy,” he explained.
“At the moment there’s not enough infrastructure to allow us to continue to deliver services.”
He says that will be changing as the tramways infrastructure is improved.
“A lot of it’s going to come from the tram companies themselves,” he predicted.
“I’m very hopeful that the financial tools will come into play.”
For now, the tram is safe and sound.
But with the tram industry facing a future of uncertainty and uncertainty of how the financial system works, the next few years will be critical.
When you buy a tram, you also buy an interest in a company.The idea is that the tram company can…