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