Transport Minister Andrew Constance said a new body, Transport for Newcastle, would provide the city’s public transport under private ownership.

As rail-watchers were reeling at Mr Constance’s shock announcement from Queens Wharf,  contractors were 2km away at Wickham, starting to rip up the old heavy rail lines.

Reaction to the shock announcement divided along predictable lines.

The business community has welcomed the announcement, which coincided with confirmation that one of the firms in the running, Keolis Downer, has had a presence in Newcastle ‘‘every week . . . since the conversation began about light rail’’.

Labor, the Greens, the Rail, Tram and Bus Union and Save Our Rail have all come out strongly against the announcement, saying Newcastle’s buses and ferries should remain in public hands.

Labor said there was no reason a Newcastle light rail should not be government-run.

Mr Constance called his announcement ‘‘building tomorrow’s Newcastle: a new approach to transport’’.

Outlining the broad thrust, Mr Constance said the government was looking for a private-sector global leader to ‘‘plan and run Newcastle light rail, buses, ferries and interchanges’’.

He said the process was under way, and due to finish next year.

Heavy rail on the Sydney or Maitland lines was not included in the plan.

Mr Constance said the community had been clear on its ‘‘desire for more locally based decisions about transport in Newcastle’’.

The new operator would be based in Newcastle and work ‘‘hand-in-hand with the community to design and run the network’’.

Questioned later as to whether this meant the new operator might not want to use light rail, a Transport for NSW spokesperson said the government would build the light rail as promised but the private company would run it.

‘‘Today’s announcement means that rather than having multiple operators running ad hoc services with mismatched timetables, services would be streamlined to a sole provider . . . focused on customer service,’’ Mr Constance said.

Citing a 14per cent patronage fall in four years on the ferries, and declining numbers on the buses, Mr Constance said something had to change.

‘‘Customers tell us service levels are not up to scratch,’’ Mr Constance said.

‘‘This would be public transport run in Newcastle, for Novocastrians, not run from Sydney.’’

Keolis Downer chief executive Benedicte Colin said her company was Australia’s biggest private ‘‘multi-modal public transport firm’’, with light rail and buses in various states.

Downer operates a rail yard at Cardiff and Ms Colin said the company had people in Newcastle  ‘‘every week . . . since the conversation began about light rail’’.

Ms Colin said the government’s light rail project made it an ideal time to restructure Newcastle public transport.

She said a single operator would ensure smoother running.

‘‘If the bus is late, the light rail will wait for it,’’ Ms Colin said.

‘‘The system is flexible enough to allow for delays.

She said Keolis had successfully restructured public transport in various French cities including Dijon, Angers, Orleans and Tours, which saw patronage rise by 40per cent once light rail was introduced.

‘‘This new approach will allow those artificial barriers to be broken down to allow modes to run as one,’’ Ms Colin said.

‘‘It really is about making public transport the first choice for people rather than something for when they can’t use the car.’’

Opposing the announcement, Newcastle MP Tim Crakanthorp and Charlestown MP Jodie Harrison blasted the government’s ‘‘under-handed’’ tactics.

Ms Harrison, Labor’s Hunter spokesperson, said there had been no warning privatisation was on the table.

She said Labor opposed handing the financially ‘‘marginal’’ but vital services over to the private sector. 

Mr Crakanthorp said the privatisation plan was a ‘‘huge shock’’.

‘‘There is no good reason why the government cannot provide these services,’’ Mr Crakanthorp said.

‘‘You don’t just throw up your hands and say ‘we can’t do it’, we will we give it to the private sector.’’

‘‘We believe in a government-funded Hunter transport authority to manage transport in Newcastle and the Hunter.’’

Greens MP and transport spokeswoman Dr Mehreen Faruqi slammed the fact Hunter residents had been given no warning.

“There is absolutely no reason why Newcastle can’t have its own public transit authority and a world-class public and active transport system,’’ Dr Faruqi said.

“By under-investing in buses and cutting the Newcastle rail line, the Baird government have themselves created the problem they now say they are trying to fix.’’

Rail, Tram and Bus Union divisional secretary Chris Preston said the government’s statement announcing the changes ‘‘dishonestly’’ left out any mention of its true nature as a major privatisation.

Mr Preston said that in calling for the light rail operator to also run the buses and Stockton ferry, the government was deliberately cutting Newcastle Buses out of the equation.

 “Why the state government would say that it won’t let State Transit tender for the system beggars belief," Mr Preston said.

“If this is truly about providing the people of Newcastle with the best possible transport system, then surely the most qualified entities should be able to tender.”

Mr Preston said he and other union officials were coming to Newcastle from Sydney on Friday to talk with drivers.

The union was also meeting with Transport for NSW to obtain details on redundancy provisions and other aspects of the privatisation that directly affected bus drivers.

Mr Preston said Newcastle Buses had more than 300 employees and 180 buses, and the union believed the government would use Newcastle as a test run for privatising Sydney Buses, with 3300 union members and 2400 buses across four regions.

 Save Our Rail president Joan Dawson said the Sydney airport train link offered commuters a taste of public transport in private hands.

‘‘People need to be aware that this type of privatised transport is more expensive,’’ Ms Dawson said.

‘‘The cost on that is much greater.’’

‘‘The light rail in Christchurch, it costs you $20 to get your foot into it. If anyone thinks they’re going to get something better, tell them to go to Christchurch.’’