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RURAL AND REGIONAL AFFAIRS AND TRANSPORT REFERENCES COMMITTEE
Australia's future oil supply and alternative transport fuels
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RURAL AND REGIONAL AFFAIRS AND TRANSPORT REFERENCES COMMITTEE
CHAIR (Senator Siewert)
Australia's future oil supply and alternative transport fuels
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RURAL AND REGIONAL AFFAIRS AND TRANSPORT REFERENCES COMMITTEE
(Senate-Friday, 30 June 2006)
CHAIR (Senator Siewert)
GREEN, Mr Gregory Morris
MICHELL, Mr Maxwell John Rodon
HONAN, Mr Andrew Thomas
MILFORD, Mr Bernard John
THAMBIMUTHU, Dr Kelly
REED, Dr Graham Philip
TAIT, Mr Lachlan William
TITCHEN, Mr John Philip
WADIWEL, Mr Dinesh Joseph
LAIRD, Dr Philip Glencoe
BELL, Dr Philip John Livingstone
- CHAIR (Senator Siewert)
Content WindowRURAL AND REGIONAL AFFAIRS AND TRANSPORT REFERENCES COMMITTEE - 30/06/2006 - Australia's future oil supply and alternative transport fuels
CHAIR (Senator Siewert) —Welcome, Mr Green, and welcome everyone to the second Sydney hearing of the Senate Rural and Regional Affairs Committee inquiry into Australia’s future oil supply and alternative transport fuels. The committee is due to report on 19 October. These proceedings are public, although the committee may agree to request to have evidence heard in camera or may determine that certain evidence should be heard in camera. I remind all witnesses giving evidence to the committee that they are protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence given to a committee. Such action may be treated as contempt by the Senate. It is also a contempt of the Senate to give false or misleading evidence to a committee. If a witness objects to answering a question, that witness should state the reason for the objection. The committee will determine whether it will insist on an answer, having regard to the grounds claimed. If the committee decides it wants to insist on an answer, a witness may request that that be given in camera. Mr Green. Do you wish to make an opening statement before we proceed to questions?
Mr Green —I do have an opening statement. As the Fuel Manager at Pacific National my role is the management of procurement and distribution of our fuel on a national basis. Pacific National appreciates the opportunity to provide further detail on our submission. The original author of our submission is not available, as he is no longer with the company. My role was to provide a good deal of the technical detail which underpinned the submission. I am here in that capacity and I will do the very best I can to answer all your questions.
In our submission we have highlighted the current fuel efficiency of rail and have explored a number of options for reducing Australia’s transport fuel demands. We have also included a short discussion on alternative transport fuels. To put our fuel demand in perspective, we purchase one million litres of diesel fuel per day, accounting for some 15 per cent of our operating costs. Our highest operating cost item is track access fees, which account for 25-odd per cent of our operating costs. The condition of the interstate track is one of our concerns that does provide an inhibiting factor for us to forcibly reduce our reliance on diesel fuel. That said, Pacific National does have several initiatives in place and planned for the future to successfully manage our fuel, and they are alluded to in our submission. I look forward to your questions.
Senator NASH —We have been looking at the efficiency of rail as an alternative to the trucking industry. One of the questions that has been raised about rail is obviously the difficulty of point-to-point transport. If we are going to increase our rail usage, obviously long haul is really the place we need to head. In terms of efficiency, how do we go about that end to end where we still need that capacity for the trucking industry to deliver goods?
Mr Green —By ‘end to end’ do you mean the initiating and terminating of the train?
Senator NASH —Yes.
Mr Green —That would still have to be seen as road haul. Smaller trucks are going to deliver goods from the railhead to and from local businesses.
Senator NASH —What do you see as the factors inhibiting the greater use and greater development of rail?
Mr Green —In the development of long-haul rail?
Senator NASH —Yes, particularly in long-haul rail. There are obviously great benefits in the rail network. What are the things inhibiting the development of the greater use of rail?
Mr Green —One of the prime items, as I have mentioned, is the condition of the track. There are 80- to 90-odd speed restrictions in place on the major corridors—the north-south and the east-west corridors—as I have alluded to in our submission. The cost in fuel alone of actually slowing a train down that is 4,000 tonnes with 8,000 to 12,000 horsepower at the front is of the order of several hundred litres each time. Across the total journey, it can be 1,000 to 1,500 litres per locomotive and those trains would typically have two or three locos onboard. So, if there was a good quality track north-south and east-west—I am talking Melbourne-Brisbane and Sydney-Perth—the savings nominated in various reports by independent bodies is 1,000 to 1,500 litres per loco on those journeys. For us that would equate to a one per cent saving on our total fuel burn for each of those corridors if they could be rectified. That is a multibillion dollar task that we see as not having had the attention it deserves over the years.
Senator NASH —Attention from where? Whose responsibility is it in your view to have that track at the level you would like to see it?
Mr Green —It would be a personal view.
Senator NASH —That is all right.
Mr Green —We do not own the track. It comes back to the track owners and how they see themselves performing that task.
Senator NASH —Thank you.
Senator O’BRIEN —I see in your submission you talk about the need for some research on the use of biodiesel in the locomotives that your organisation uses. Given that biodiesel is used extensively in other engines, what is the difference? Why is there a need for research here for the engines that are being used in the locomotives in your business?
Mr Green —I do not see, for instance, that the biodiesel is used extensively in any other engines. It is being used in niche areas. There are some issues still to be resolved, including the availability on national basis. There is some concern and further research needs to be done on each engine type as to potential marginal power losses, which would inhibit us on the track in that we are required to have a particular power to weight ratio when we go on certain sections of track to cover the ruling grades. From that point of view, if we were to reduce power, we would either have to put an extra loco on the front—and that would be a $4 million to $5 million investment—or we would have to reduce other revenue and the carrying capacity, hence lowering efficiency. Additionally, there are issues of inconsistent quality from the various sources of biodiesel around at the moment available on a national basis. We are a national carrier. We are operating from Townsville through to Perth. So we need to be consistent with the fuel being supplied to our machinery.
Senator O’BRIEN —One of the big issues with rail is the disadvantage that the intermodal connection has against the trucking industry’s ability to pick up a load at point A, take it on the same vehicle to point B and unload without any handling in between. What work is Pacific National doing to improve efficiencies to be more competitive with the trucking industry in that regard, or is that just a bridge too far?
Mr Green —I do not have a lot of information on that area other than that at our major terminals for long-haul work, the possible small disadvantage at the originating port and the destination would certainly be overcome by the long-haul efficiencies. Certainly for short-haul work, that particular movement would become a larger component of the total work. We certainly do have links now through to ports. We do take a lot of our container load directly to the port, unload there and pick up the same way, and that is in virtually all states.
Senator O’BRIEN —Where it is going to a port, clearly everyone has to connect with a new mode. The example I was looking at to see what had been done was where it was going from Australian premises to Australian premises. I was talking to some trucking insurance people recently. I was wondering, apart from those speed and safety restriction factors on the north-south track, why a roll-on, roll-off type rail service from Melbourne to Brisbane would not work more effectively—you could load a truck on at one end and drive it off at the other to avoid the problems of double-handling. It was suggested to me that it would be a safer and cheaper option. Would that be right?
Mr Green —We do have some of that happening at the moment with our trailer rail operation, where a specifically designed semitrailer becomes part of our train consists, and that is picked up at the other end. We do have an element of that within our business—a specific division which deals with trailer rail. I think that at this stage that is predominantly on the east-west corridor and less so on the north-south corridor.
Senator O’BRIEN —So there is potential for it to improve on the north-south corridor when the rail is improved?
Mr Green —Yes, that would have to be a consideration. The percentage of business on the north-south corridor on interstate rail is much lower than it is on the east-west corridor. I am not familiar at the moment, without referring to notes—
Senator HEFFERNAN —Are the bridges high enough for that?
Senator O’BRIEN —I am not talking about in Sydney; Sydney is a problem.
Senator HEFFERNAN —I am not talking about Sydney either; I am talking about Junee.
Senator O’BRIEN —You are talking about double stacking.
Mr Green —For double stacking, if we are looking at the trailer rail option—
Senator HEFFERNAN —Not double stacking, just sitting the trailer on the—
Mr Green —What I am talking about is the actual trailer becoming the wagon itself. The truck’s trailer does not go up on top of the wagon; it is the wagon. It is delivered locally. It is effectively a rail wagon with road wheels. That is the simplest way to look at it. There are elements to that already in place, as I say, with our trailer rail operation, where the actual wheel set of the truck trailer is cranked up, lifted above the track and then hooked into the consist. That element has already been operating for some 10 or 15 years, I would think. The concept was first trialled 15 years ago.
Senator O’BRIEN —That does not have a huge penetration in the market, does it?
Mr Green —No, there is not a huge penetration because they are specific trailers for that operation. They are not economic for general freight work. They are specific for the rail operation. It suits a customer base where they have sufficient business with the rail and it has constant use back and forth. So that could be further developed, yes.
Senator O’BRIEN —What is the state of play with the federal government and the Tasmanian government Pacific National negotiation about the Tasmanian track?
Mr Green —I am not up to speed with that. My portfolio is primarily fuel. If you wish, I could come back with a written response to that. We are actually working with them at the moment, so that has kicked off, but I am not aware of the specific details.
Senator O’BRIEN —It has not been finalised, obviously.
Mr Green —Of that I am uncertain. Again, my role is specifically on the fuel side. I can say that there is additional confidence with our Tasmanian operation, and that is already showing in increasing business and activity down there. I see that with our fuel buying.
Senator O’BRIEN —In regard to your submission on competitive neutral pricing between road and rail, does that put Pacific National at loggerheads with the rest of the transport business in Toll?
Mr Green —Not to my knowledge.
Senator O’BRIEN —The road freight section of the Toll company has no problem with the submission?
Mr Green —None that I am aware of.
Senator O’BRIEN —Could you check that and advise us whether the other part of the Toll transport business questions this submission, because it is in conflict with the trucking association’s view of the outcome of the rejection of the third charges determination.
Mr Green —Could you repeat that.
Senator O’BRIEN —We will send you the Hansard, which will contain the details of the question. If this part of the Toll business is saying that, effectively, it is a $100 million subsidy, I want to be sure that the road freight part of your business agrees with that.
Mr Green —Right.
Senator HEFFERNAN —In terms of competitive neutrality—and you say that you are the fuel man—what percentage of your outgoings is for fuel? Did you say it was 10 per cent?
Mr Green —Something like 15 per cent. It varies with the mode of business.
Senator HEFFERNAN —Is that percentage moveable, other than by efficiencies in the rail line? How much of your outgoings is what you pay for the use of the track?
Mr Green —Something like 25 per cent and maybe slightly higher.
Senator HEFFERNAN —If there is an improvement to the track, who determines that there should be a cost recovery for the use of the track?
Mr Green —That would be a discussion between the track owners and our corporate people.
Senator HEFFERNAN —The other side of your argument could be, ‘If these blokes want the track improved, we will do it but we will charge more,’ and that may destroy your argument.
Mr Green —Destroy would be unfortunate; complement would be better.
Senator HEFFERNAN —But it could offset any other improvements you get with speed et cetera. This is a nasty business obviously and everyone wants to get a quid. As Senator O’Brien has said, they are not going to give ground to the trucking industry. You would wonder how commercial the rent is that you pay for the use of the track compared to what ought to be spent on the track in respect of its capital value. It could well be that if you put all that into it, you might have to have a massive subsidy to make it a proposition. Are there tracks in Australia that are satisfactory, in your view?
Mr Green —There are sections of track that are satisfactory.
Senator HEFFERNAN —Where are they, generally?
Mr Green —I am not aware of the specifics.
Senator O’BRIEN —The east-west track is a whole lot better than the north-south track. ‘Nothing is perfect’ is probably a fair response to that sort of question. I understand that the volume of land based freight that travels east-west is approaching 80 per cent, whereas, north-south, it is below 20 per cent.
Mr Green —It is somewhat like 20 plus or minus a small amount. On one of your other points on commercial viability, we have to look at the total commercial viability of improvements to the track. Another factor for all interstate carriers is the time factor and being able to get goods to the market on time. That is also a huge benefit.
Senator HEFFERNAN —I understand all those arguments, but the argument that Senator O’Brien was putting is that once upon a time all the wool used to go on rail but it was not worth mucking around with—by the time you got the truck to the Junee rail siding, unloaded it, eventually got it down and had the same thing happening at the other end, you might as well have just trucked it. Would the east-west line have been a federal line?
Mr Green —To my knowledge, that goes back before my time.
Senator HEFFERNAN —The difficulty with the north-south line is that the state governments have managed to flick the real cost, because they handed the lines over in pretty poor nick and they were never, ever going to be fixed. The whole thing was a con job in the early days. The state of the main southern track got to the point in Junee, where there used to be a couple of hundred drivers, at which the local drivers would not let their families travel on the trains because the track was so crummy.
Mr Green —I am familiar with some of the Junee drivers.
Senator HEFFERNAN —This might not be as simple as it is made out to be, and the committee needs to be aware of the fact that if the real cost of sorting all this out is put into the equation it might be a completely different sum.
Senator MILNE —I would like to follow up on the discussion in relation to the $100 million a year subsidy to B-double operators, which you contend has occurred with the failure to increase the truck prices. You go on to say:
... there is ... no compelling commercial justification to upgrade PN’s fleet of older grain haulage locomotives, despite the obvious fuel efficiency benefits of such a move.
If there were really obvious fuel efficiency benefits and the cost of fuel is 15 per cent of your operating costs, why is there no compelling argument to upgrade?
Mr Green —That particular grain section of our locomotive fleet is an isolated area. It is a very seasonal operation. The style of locos there tend to be smaller and older, and for a combination of reasons—a return on investment, the state of the track in the areas the locos are running in; the track may be a lighter weight and unable to take the heavier load—it is primarily a seasonal operation. Those locos are not in full-time service, so the return on investment is much lower. The total litres through those small locos, which is of the order of 900 horsepower compared with our main line locos of some 4,000 horsepower, is not justified based on the smaller fuel throughput through that equipment.
Senator HEFFERNAN —Surely the below line management of the branch lines is a con job? Allegedly, they are going to be upgraded before they are handed over. But they are not going to be upgraded; they are falling apart. That is the reason it does not work. You cannot run a decent train down one of those lines, because the line will fall apart. To fix all this, in capital terms, is what I am trying to get at; it is a massive task.
Mr Green —There are many elements of that grain operation where the larger locos just cannot access the track and the smaller locos—again, used on a seasonal basis—are used to haul the grain task, if you like, to the larger centres. They are then consolidated into a larger train which goes to the ports at Melbourne and Port Kembla.
Senator MILNE —You talk about the significant savings that could be achieved by expanding the use of hybrid technologies. We had quite a lot of evidence about natural gas as a heavy transport fuel. Is natural gas suitable for locomotives? If so, have you looked into that?
Mr Green —We have not fully assessed that operation at the moment. There would be some issues to overcome with natural gas—the pure weight, the size, the configuration of the storage vessel would have to be assessed. We are yet to see significant savings. I do not believe we have mentioned significant savings in our submission but we are certainly assessing all options available for the future.
Senator MILNE —So you are looking at compressed natural gas, liquid natural gas?
Mr Green —I do not think we have officially addressed that issue, but that is a part of our internal discussions, yes.
Senator MILNE —What do you need to roll out the hybrid technology more extensively than you currently are doing?
Mr Green —We have no hybrid technology currently in place. Again, that is a matter for review by our company. We recognise that those items do exist. Typically they are suitable for the lighter type of work, which would be more a shunt engine type arrangement whereas on the main line track we require 4,000 horsepower. We do not see in the conceivable future that a hybrid unit would be able to manage consistently 4,000 horsepower outputs. Certainly, for our shunting operations, we currently use small logos. The speed and the magnitude of the task are much smaller within our shunting yards.
Senator MILNE —So, from what you have said so far, the biggest impediment to greater fuel efficiency for your operations is the state of the track?
Mr Green —That would be the single largest, yes.
Senator JOYCE —I noticed in your submission at point 4.0 you say:
There are a number of bio-diesel plants planned for development in Australia over the next three years.
In light of the passage of the legislation last week, which basically took away the advantage of biodiesel, is that still the case? Have you done any research on that? Can you advise where these biodiesel plants are going to go?
Mr Green —We would not be in the business of putting the biodiesel plants in position. I am not familiar with something that has happened as recently as last week on those issues. So far as locations of biodiesel plants, logically, they would be in higher volume usage locations. But that is for someone else to determine for their business case.
Senator JOYCE —It is in your business case here; that is why I asked the question. Pacific National is proposing a research project to determine the suitability of using biodiesel. What is the time frame and how do you envisage doing that?
Mr Green —We envisage utilising a 3,000 horsepower test engine which is in Melbourne at one of the cooperative centres. We have put a business case for that to determine the cost structure and the actual parameters for that testing. That is for within the next 12 to 18 months.
Senator JOYCE —So you have the cash flow already and the costing for it is already in your budgets. It is a definite for the next 12 to 18 months.
Mr Green —I am not privy to whether it is definite. I would have to come back to you on that.
Senator JOYCE —Obviously you have a major cost advantage, as you say, over road transport. That is something I want to follow up on. You must have done a sensitivity analysis of basically where the price of oil has to go before road transport is unviable. You have such an immense cost advantage over road transport. At what price will a barrel of oil be whereby road transport basically becomes unviable?
Mr Green —I do not have information on that. I guess it would depend on the various pricing regimes of the day, excise et cetera, so it would be a very difficult one to predict.
Senator JOYCE —Do you do a sensitivity matrix or anything like that to make a comparison between the price of a barrel of oil and your advantage in structure, your advantage in cost? I want rail to work more. The way the market is going at the moment will make you become more viable, won’t it? The higher the price of oil, the more viable you should become every day.
Mr Green —The logic would hold, yes.
Senator JOYCE —What is inhibiting that? I still see 1,600 trucks a day going up and down the Newell Highway and tearing through Moree right next to a railway line. What is going on there?
Mr Green —I cannot say what is in the heads of our customer base, but discussion points within our company certainly are around the degree of confidence that customers have about moving their freight on road and their confidence about on-time delivery.
Senator JOYCE —Can you explain on-time delivery?
Mr Green —It is mentioned in our submission. Over the last several years, 1½ to three hours have been added to our transit times on north-south and east-west due to track conditions. That affects our crewing operation and the maximum number of hours that our drivers are allowed to be in the cab. All of those factors come into it and increase our costs and delay our arrival times. One of the key elements of on-time arrival is arriving on the correct day, at the correct time, so that the freight can be distributed immediately from the train to the customer.
Senator JOYCE —It is not an issue with Pacific National, but certainly with Queensland Rail the correct time and, at times, the correct place become big issues. Do you have any problems doing short hauls? Everyone is talking about long hauls. I have just returned from Windorah, where $50 million worth of cattle a year head off towards Dinmore, but they want to get most of them to the Roma saleyards. People have no problems taking them from Quilpie. But, to keep the railway line viable, we have to get the trucks off the road and use the railway line; otherwise, the railway line will be closed down. The issue is that they have no problems taking them to Dinmore, but they have a big problem getting to Roma, which is halfway along the track. Do you have any such problems in your organisation, or can you throw some light on issues with short haul, that on-time arrival and actually getting things off the train to where they are supposed to be? Is that a logistical nightmare for rail? Is there any reason why it is more complicated with rail than with anything else?
Mr Green —You would have to talk with Queensland Rail. Our business is primarily interstate type work; we go across state borders.
Senator JOYCE —I will turn the question around.
Senator HEFFERNAN —I will answer it for you. The difficulty before the saleyards is the curfew. If you muck around yarding cattle and trucking them to a train, your cattle are too light by the time you get them to the saleyards, you have lost more than 10 per cent of your weight in curfew. It is all right after you have sold them, because you are being paid on the weight at the weighbridge, they go off to the abattoirs and it is the dead weight. The problem is the live weight at the saleyards, old mate.
Senator JOYCE —Thank you for that, Senator Heffernan. Mr Green, you said you do primarily interstate work, but would an intrastate haul under a certain distance make your work unviable? Do you say in your analysis, ‘We’re only interested in hauls that go so many kilometres or longer?’
Mr Green —I am not privy to that information; I do not work within that part of our company. If you wish to put that as a question, I can put it to the appropriate people and have a response prepared.
Senator JOYCE —You buy a million litres of diesel a day.
Mr Green —Yes.
Senator JOYCE —Do you buy it at the terminal gate price?
Mr Green —We have a commercial contract in place with our major supplier which is not reflective of terminal gate price.
Senator JOYCE —I imagine it would not be. No doubt you would secure your position on that with Singapore based swaps and options? I would, if I were dealing with a million litres a day.
Mr Green —We certainly have an escalation process which is based on a Singapore marker.
Senator JOYCE —You might not want to answer this question, and I can understand completely if you do not. What sort of discount on the terminal gate price do you generally get? Do you ever look at the terminal gate price and find that you have a 10 or 15 per cent advantage?
Mr Green —I do not track the terminal gate price. I have no need to track it.
Senator JOYCE —There have been some statements that the terminal gate price is the be-all and end-all. But is not even that; it is a line in the sand, and if you buy it at that price you will go broke.
Mr Green —It is a good reference point.
Senator JOYCE —To do this more efficiently, we obviously want to encourage freight to move off the road and onto rail. The biggest petrol stations in Australia are at Goondiwindi, because of the huge transport of heavy goods going backwards and forwards through that area. In Pacific National’s business plan, can you envisage any reason why we cannot get a proper linkage between New South Wales and Queensland in that corridor, which goes through all the inland coal and wheat towns? We have a mystery tour around Moree. It stops there and then starts again around Goondiwindi. What is going on there?
Mr Green —I am not familiar with that part of the track. Queensland operates on narrow gauge and New South Wales operates on standard gauge. That would have to be a factor. I am not familiar with the fuel depot at Goondiwindi that you mentioned. I have not been to that fuel depot.
Senator JOYCE —It is the BP at Goondiwindi.
Mr Green —What do you mean by ‘large’?
Senator JOYCE —I obviously know there are different gauges, because I live there. But there is differentiation in gauges and differentiation in coordination between the states, and a line on a map means that your business basically becomes unviable. If it was viable in that area, we would be able to move a tremendous amount of this haulage off the roads—there are 1,600 trucks a day going through there—and onto rail. That would make you money and save the states—for whatever purpose they are still around for—some money on roads. It would save the federal government some money on roads, too.
Mr Green —There may well be some justification to your argument. It is a commercial difficulty for us to set up and compete in the Queensland market. We have an operation that runs from Brisbane to Townsville and on to Cairns. That operation was put together upon securing a large section of business that justified the setting up of a new operation that involved 13 locos and associated wagons. It is difficult to compete with incremental volumes in other sections of the Queensland network because we would have to gear up with additional loco sets and wagon sets. We would need a significant amount of business to justify the initial set-up costs for that equipment. To be cost-competitive in this area we would have to pick up incremental business, and we do not have the equipment for that.
Senator HEFFERNAN —Who owns the line you run on?
Mr Green —Queensland Rail—the Queensland government.
Senator JOYCE —The research we have seen says there is no technical differentiation between biodiesel and mineral diesel—that one is indiscernible from the other. So, since your major routes could be inland, if you were buying biodiesel would it be feasible to have major biodiesel purchasing facilities in regional Australia?
Mr Green —That would be a necessity.
Senator JOYCE —A necessity?
Mr Green —There would have to be a distribution arrangement whereby the biodiesel could be moved out to the various locations where we run. I would dispute the comment that is put forward by others in the industry that biodiesel is not discernibly different from the current diesel. To my knowledge, there is no Australian standard for that.
Senator JOYCE —This is a very important thing to put on the record. There is no standard, but let us say there was; let us say that we developed one and concentrated on that. There is potential in regional Australia to pick up—using B49—490,000 litres of biodiesel a day. I imagine it would be a major boon to regional areas if we could deliver that to them.
Mr Green —I have no comment on that. We would have to look at the commercial viability and how it was set up.
Senator HEFFERNAN —Of course it would depend on farmers being able to produce the goods, with fertiliser going up 10 or 15 per cent a year because of the world chemical cartel and everything else. It is all based on farmers being able to produce it at a cost. Getting back to your viability—and obviously long-haul heavy haulage makes a lot of sense for Australia for transport, and for bulk goods especially—how much of your viability depends on what you pay for the rent of the line?
Mr Green —As I say, it is 25 per cent of our costs.
Senator HEFFERNAN —But how much has it gone up in the last five years?
Mr Green —That I am not familiar with.
Senator HEFFERNAN —Could you get for the committee the pattern of cost increase for the line, because it may well not reflect the real costs of maintaining the line. Could you also compare for us the rental of the various state government-owned lines versus the national Australian road track charges, or whatever they are called, so that we can get some comparison on who is doing who in the zoo in terms of charges.
Mr Green —Okay.
Senator STERLE —In your submission you say that operators of B-doubles get government assistance. Before we go any further, I want to be on the record as saying that I believe there is plenty of room in Australia for both modes of heavy haulage and freight removal—
Senator HEFFERNAN —Hear, hear!
Senator STERLE —Senator Heffernan knows where I am going here. Clearly I am pro road transport but I also believe that there is a place for rail. Rail is very good at what it does, in terms of bulk commodities and minerals and that sort of stuff. But you will never be competitive with road transport in service—and I know that will get a few of our rail people offside—because people want their freight, door-to-door, yesterday. We cannot escape that. Could you tell me about your statement about the incentives provided by government to B-double operators: what incentives?
Mr Green —That relates, as I understand it, to an assessment that suggested that road carriers should bear a higher rate than they do currently of the cost of maintaining the roads and there was a particular item that was not adopted which equated to $100 million. On the other side of that argument we see that $100 million cost recovery has been forgone on the road transport side, whereas there has not been a similar benefit put to rail. Every time we go on the track we pay for every tonne, for every kilometre that we are on that track.
Senator STERLE —I would dispute those figures—and I have argued against those figures for years and years. I have not seen the latest set of figures, I must admit—
Senator JOYCE —You’ve only been here for a year.
Senator STERLE —Just for the record, Senator Joyce, I have been arguing for road transport and taxation for many, many years, going back to the late seventies when I first started truck driving.
Senator JOYCE —I will take your word for that.
Senator STERLE —But the last figures I argued against were that the Australian transport industry was taxed at 37c a litre, through GST and the road taxes at the time and all sorts of stuff, but that only about 11c was going back into the roads. So I refute the claim—one that I hear all the time—that the trucking industry does not pay its way. I believe the trucking industry damn well does pay its way.
Mr Green —To bring you up to date on that latest item, the excise on diesel is now 38.143c per litre. The trucking industry gets a rebate of some 18-odd cents a litre on that.
Senator STERLE —Which is being phased out.
Mr Green —That I have not seen as yet.
Senator STERLE —What I mean is that that is the bill in front of us in Canberra.
Mr Green —Okay. As for the 38.143c a litre, the rail industry’s commentary on that is that, where we use one litre of diesel to move a particular amount of goods, road uses three litres, therefore road is receiving three times 18c per litre for the movement of those goods and rail is receiving one times 18c per litre.
Senator STERLE —They would argue that they are paying three times as much at the bowser too. But I just wanted to clarify that, because I am not convinced that the trucking industry does not pay its way. I am not convinced that the government is handing out, hand over fist, assistance to the road industry. Bear in mind that there is a place for both modes of transport—make no mistake about that.
Mr Green —Agreed.
Senator STERLE —And your company is a major employer within the road transport industry in Australia too.
Mr Green —Agreed.
CHAIR —In your submission, you refer to the AusLink delivery of the $1.8 billion and you make a comment about the slowness of its delivery. Would you elaborate a little bit on that? What are your concerns about that?
Mr Green —That was not part of my submission or the supporting information in this document here. As I understand it, it is to do with the upgrade of the tracks. That has been deferred quite a few times. There is some action being taken in the Casino area at the moment which is due for completion later this year. That will certainly be a boon to all operators on that track. But to answer your question concisely, the deferral of various projects has included bridge works. There are bridges in northern New South Wales for which we have to slow down to 25 kilometres an hour because of the state of those bridges: they just cannot take the forces involved with a higher speed train. As I said earlier, that is a significant cost in fuel, time and maintenance of the equipment for braking. We have 50 to 80 wagons which all have to have their brakes applied—and there is a quite severe cost. I am sure that some of the speakers later in the day will be able to comment on that. They have been involved in studies of that over many years.
CHAIR —Have you been in negotiations with various authorities—and I appreciate that you probably have to deal with a number of them, interstate ones et cetera—as to where you consider the real black spots are?
Mr Green —That is a continuing—ongoing—negotiation.
CHAIR —Thank you very much, Mr Green, for your evidence. If you would forward the various bits of information that you said during your evidence you would forward to us, that would be much appreciated.
Mr Green —Okay. Thank you, Chair.