Senator CHAPMAN --I notice that in relation to the funding for transport infrastructure there will be a reduction in funding this year of $150m, which in fact is the source of the funds for these other programs that we have been discussing with other departments earlier this morning. That occurs this year. Next year there will be additional funding of $100m, over and above what was foreshadowed in Appropriation Bill (No. 2) in this year's Budget. In 1994-95 there will be further funding of $50m; that was not foreshadowed in the original Budget. Can you tell me where that money is going to come from? The amount of $150m that is being reduced from this allocation this year is being spent on other projects, other things, yet the total amount to be spent on land transport, now over three years rather than over two years, will be the same. So obviously there are some additional allocations to come from somewhere.

Senator McMullan --The Treasurer's statement of 13 November has a chart as an attachment which makes clear there is virtually no increase in expenditure overall. It is mainly a reallocation. For example, $55m which is being brought forward to this financial year with regard to local capital works is just that, a bringing forward; therefore, there is $55m less for local capital works next year, et cetera. So the net spending for 1992-93 is $8m and for 1993-94 it is $31m. That was an expenditure program reallocation statement by the Treasurer on 13 November 1992.

Senator CHAPMAN --You referred to $55m.

Senator McMullan --I just used that as an example.

Senator CHAPMAN --Is that the same in all cases?

Senator McMullan --It cannot be exactly the same because there is a very small increase in net spending.

Senator CHAPMAN --So what you are saying is that the $150m that has been ripped out of land transport this year and is allocated to the other programs next year and in 1994-95 will be taken from those other programs and given to land transport.

Senator McMullan --Broadly, yes. Because there is a slight net increase it is not absolutely right.

Senator CHAPMAN --But within a million or two or three?

Senator McMullan --That is broadly a correct statement of the principle, yes.

Senator SHORT --I have one question of a general allocation nature, but it is in relation to road rather than rail. I notice on page 7 of the notes provided for this Committee, `Roads and road safety funding', that the reallocation for 1992-93 contains an increase of $30m under road safety and research. That relates to black spots, does it not?

Mr Thorpe --That is correct.

Senator SHORT --But for 1993-94, the corresponding reallocation, the $30m reduction, is in roads rather than road safety and research.

Mr Thorpe --That is correct.

Senator SHORT --Does that mean, taking the two years together, you are not pulling forward money on black spots; you are increasing the money on black spots and decreasing accordingly the money on roads?

Mr Thorpe --That is correct. The black spots program is a sunsetted program that expires in 1993-94. The additional allocation in this financial year of $30m will be funded out of the ongoing roads program from 1993-94.

Senator SHORT --So the amount for road construction and maintenance over the two years will be $30m less than had originally been planned.

Mr Thorpe --No. We are spending $30m more this year and paying for it with $30m less next year.

Senator SHORT --But out of a different pocket.

Mr Thorpe --It will be spent this year on black spots, which are small intersection type treatments, and next year it will come out of our general roads program. So there is a different composition of expenditure; that is correct.

Senator SHORT --So the general roads program is going to be reduced over the two years by $30m.

Mr Thorpe --Yes.

Senator SHORT --The black spots program is going to be increased by $30m.

Mr Thorpe --That is correct.

Senator SHORT --In relation to rail, following on from some of Senator Chapman's questions--and I must admit I was not listening quite as closely as I should have been--in the program notes for today, it is claimed on page 6 that the reduction this year of $150m on rail is because of design and logistical delays. If this was the purport of Senator Chapman's question, just pull me up. My question is: specifically, what design and logistical delays?

Mr Thorpe --Is that anticipating your question, Senator Chapman?

Senator CHAPMAN --One of the areas.

Senator SHORT --If you are going to lead into that, that is okay. I notice in today's Financial Review that it was announced--yesterday, was it?--that the NRC plans to take over the commercial operations of the State rail authorities by 30 March next year.

Mr Thorpe --That is correct.

Senator SHORT --Is that report because of the legislative action of Western Australia yesterday?

Mr Thorpe --Yes. The National Rail Corporation could become fully operational once all of the parties who had signed up to the shareholders' agreement had passed legislation ratifying that agreement. Western Australia was the last shareholder to do so. They did that, as you noted, two days ago

Senator SHORT --In One Nation, on page 98, various conditions were laid down--I hope I am not getting into your detail here.

Senator CHAPMAN --You are, but go on.

Senator SHORT --Various conditions were laid down as needing to be met before funds would be released for the rail infrastructure. Those conditions required, amongst other things, firm commitments from the unions to support a greenfields NRC enterprise award incorporating labour arrangements; firm commitments from State governments to accelerate the process of reform in their rail system; and, where additional rail investment is channelled through the States, that the NRC must agree to design and standards to apply before contracts are let, all contracts to be subject to competitive bidding. Then there is something about `on completion of project'. Have those conditions all been met by now?

Mr Thorpe --Yes.

Senator SHORT --Including the commitment from the unions to support a greenfields NRC enterprise award?

Mr Thorpe --The unions and NRC signed a memorandum of understanding, by memory, in July, which the Government considered met that condition.

Senator CHAPMAN --Have they, in fact, achieved an enterprise award?

Mr Thorpe --Not yet. They are still negotiating on that.

Senator CHAPMAN --So, is that one of the reasons that has delayed the expected expenditure of funds that were originally allocated?

Mr Thorpe --No.

Senator SHORT --My interpretation of that section of One Nation is that it says `a firm commitment from the unions to support a greenfields NRC enterprise award, incorporating labour arrangements already set out in the NRC shareholders agreement'. You are saying that there have been negotiations and a general acceptance. Where does it actually stand specifically?

Mr Thorpe --The memorandum of understanding that I referred to earlier embodied firm commitments by the signatories, which were the unions, to progress and to support a greenfields agreement. Since then, there have been continuous negotiations to develop that enterprise agreement. There has been very considerable progress made on that agreement. It is the subject of a private conference at the Industrial Relations Commission later this month, next Tuesday. So that is progressing.

CHAIRMAN --Could I ask: are there any major obstacles at this point?

Mr Thorpe --It is not, as you would appreciate, an easy negotiation. They are working continuously to sort out current areas of disagreement.

Senator CHAPMAN --But if the enterprise agreement itself has not been entered into yet, how could the relevant work have commenced without the enterprise agreement?

Mr Thorpe --The condition that was imposed under One Nation was not that there be an enterprise agreement in place before the One Nation moneys were spent. It is a condition of the shareholders that they will not provide any equity funds to National Rail, until that enterprise agreement is in place, apart from funding to keep the organisation going. That condition has not been met and no equity funds that would allow National Rail to undertake its own investment program have been released. But this is different in that sense. The condition the Government set was a commitment to support a greenfields enterprise award. That commitment was given in the memorandum of understanding.

Senator CHAPMAN --I can understand that then allows the funds to be released, but, unless the actual enterprise agreement has been achieved between the employees and the employer, obviously the work is not going to commence.

Mr Thorpe --The One Nation rail program is not being delivered in that sense by National Rail. National Rail is responsible for determining the scope and the standards and has been involved in coordinating the program. Delivery of that program will be through a variety of means, which includes various rail systems and contractors. It is not National Rail physically putting the works into place with its own work force.

Senator CHAPMAN --You are saying that none of the contribution or the role that NRC has to play in these projects has been at all hindered by the absence of the enterprise agreement.

Mr Thorpe --That is correct.

Senator SHORT --Correct me if I am wrong, but my understanding was--I am talking as a Victorian, I guess because I have been following it a bit more closely down there--that several months ago the Federal Government said that none of the funds that would go Victoria's way would be released until the rail unions in Victoria had undertaken certain commitments to change. I think that related very importantly to manning levels. Am I correct in that?

Mr Thorpe --I think you are referring to a statement that the Treasurer made prior to the development and signing of the memorandum of understanding that I referred to earlier.

Senator SHORT --Yes. I cannot remember the precise timing. It was around about that time. I thought the Treasurer's statement--and I have not got it with me--was very clear that the money would not be forthcoming unless and until there were the necessary guarantees from the rail unions in Victoria to meet various conditions that the Commonwealth was wanting in relation to funding, and that that included importantly the question of manning levels. Am I broadly correct there?

Mr Thorpe --I think you are referring--

CHAIRMAN --Can I first make this point: is it being suggested by you that that must occur within that Victorian rail system?

Senator SHORT --Yes. I thought there were changes required within the Victorian rail system as a condition of the Federal funding.

Mr Thorpe --I understand the point you are making. I think you are referring to the second condition, that there are firm commitments from State governments to accelerate the process of reform in their rail systems.

Senator SHORT --Yes, I think I am.

Mr Thorpe --In that particular case, that was raised at ATAC, the Australian Transport Advisory Council, the Commonwealth-State transport Ministers forum. Undertakings were given in that forum that State systems would continue to pursue reform of their rail systems. Those assurances were accepted by the Government. The Premiers also gave similar undertakings.

CHAIRMAN --Would it be fair to say that, because of the movement towards a national concept, it may well be that the rail unions will look at a national award which would cover all systems, including the National Freight Authority?

Mr Thorpe --That is clearly an option that is available. At the moment the focus is very much on an enterprise agreement with National Rail.

CHAIRMAN --Which could take the place of a national award, really, could it not? Call it what you like--an award or agreement--it would still govern wages and conditions for the people in that area.

Mr Thorpe --Certainly the enterprise agreement that National Rail puts into place will cover interstate rail freight operations, which are a significant element of activity.

CHAIRMAN --Would you be fairly confident, as a result of the undertakings that have been given--even though there might be some hiccups here and there and some differences of opinion about the measurements of what might be agreed--that there will be an agreement at the end of the day?

Mr Thorpe --Yes.

Senator SHORT --What if the negotiations that are now in train--you have hearings next week--break down? Does that mean that the Commonwealth has committed and outlaid funds on its own? As I understand you, there will be no contributions from anyone else until the agreements are actually signed. Is that right?

Mr Thorpe --Yes, that is correct.

Senator SHORT --If the negotiations break down, does that not run the risk of leaving the Commonwealth a bit like a shag on a rock?

Mr Thorpe --That is a very hypothetical question. I would really prefer not to speculate on it.

Senator SHORT --I am not really asking you to comment on whether you think the negotiations will succeed; I am asking a question of fact. If the negotiations break down, where does that leave the Commonwealth? It would appear to me that it leaves the Commonwealth, having committed and appropriated funds, as the only party to have done so.

Mr Thorpe --I guess two issues are involved. It is a clear and unequivocal condition of the shareholders agreement that no equity funds to be spent on capital purposes will be provided to National Rail until an enterprise agreement is signed. Were the current negotiations to fail, that condition would apply and no substantial equity funds would be provided to National Rail.

On the One Nation funding, which is separate--a large slab of it is NRC related--there is approval for about $200m worth of projects, which are being put in place at the moment. In many cases, firm commitments are being entered into, so those would proceed. In that case, it would be up to the Government to take a decision to not continue to approve new One Nation projects. Alternatively, it could agree to continue to fund those rail infrastructure projects on the basis that they would constitute a continuing benefit of enhanced rail infrastructure from which the existing systems that are operating at the moment would benefit. So you would get an ongoing national benefit out of that infrastructure expenditure. They are clearly the options. It is a question of government policy as to which way it would go were it put in that position.

Senator SHORT --So if the worst happened and everything broke down, you are saying, in regard to the money that is now being committed and spent by the Commonwealth, that the Commonwealth--being the only party at the moment so spending--would not be frustrated by the absence of support from the States in relation to enterprise agreements and the like that hopefully would have been signed? I am trying to get clear what you are saying.

Mr Thorpe --That is broadly the point that I am making. The whole exercise in spending the One Nation rail money has been to achieve worthwhile long term benefits. A lot of time and care has been taken to identify the best way of spending that money to get the best returns on upgrading the main line rail network. So the expenditure that is being undertaken under the One Nation rail program will have ongoing long term benefits. Clearly, those will be maximised if you have an efficient State rail operator, such as NRC, operating under an enterprise agreement. But they are worthwhile projects in their own right because they are being selected on that basis.

Senator SHORT --But the railways in Australia lose huge amounts of money each year.

Mr Thorpe --That is correct.

Senator SHORT --It would be difficult to argue, would it not, that the lack of physical infrastructure is a significant cause for those losses, that the losses are overwhelmingly the result of massive overmanning and other structural impediments to efficiency improvement? If that is broadly so--and you may comment on it--how does the building of the new shiny rails, if you like, benefit the infrastructure situation in Australia in the absence of change to the industrial relations climate?

CHAIRMAN --In that answer, could you also include the degree to which the staffing, including women, has been reduced over time?

Senator McMullan --I am happy for the officer to provide the details, but I want to deal with the broad questions that Senator Short has raised. Two separate questions are involved. I accept that, if we are to have a national system, those questions become interrelated. The first is that the State rail operations run at a loss. This may be driven by inefficiencies or other problems. The other is that the country's economic efficiency is impaired by some shortcomings in the national rail infrastructure. Irrespective of however many staff you have, if a bridge is too low to take the most efficient unit of transport, that is an infrastructure inefficiency that will constrain a properly staffed body or an improperly staffed body. The two things can be addressed separately.

CHAIRMAN --What about rolling stock?

Senator McMullan --The One Nation expenditure is designed to remove some of those infrastructure impediments to an efficient rail system. It will improve the nation's economic efficiency in its own right. If the National Rail Freight Corporation is developed successfully through cooperation with the States and we get a more overall administratively efficient national rail freight system, that is another significant enhancement. But the first does not fail for want of achieving the second.

The infrastructure improvements will make the rail systems capable of operating more efficiently in their own right, although that is not to underestimate the significance of the administrative reforms that we are also pursuing. So those are the broad policy questions. I will get the officers to supply answers to some of the questions of detail.

Mr Thorpe --You are correct, Senator Short, when you say that Australian railways lose very large sums of money annually. From memory, the Industry Commission puts the figure at about $4 billion a year. However, the bulk of that is in urban passenger services. The National Rail Corporation is focusing on interstate rail freight. There is a loss in the order of $320m annually in that area. One Nation is focusing on enhancing the infrastructure that is used on those long-distance interstate freight services on parts of the track where National Rail will be the predominant user--although not always. Much of the money is being spent out of the metropolitan areas.

It is fair to say that, over the last few decades, not a lot of money has been spent on enhancing rail infrastructure. Most of the resources that have gone into rail have gone into funding operating deficits. Not much has been left over to cope with rail infrastructure. There are clearly areas where run-down rail infrastructure is causing inefficiencies. That is being reflected in the losses in interstate rail freight.

There is a significant issue in the work practices area, there is a significant issue in the management practices area, and there is a significant efficiency issue in the way in which interstate rail freight is managed. The key element of National Rail is that, for the first time, you have a single body that is marketing nationally rather than a whole series of different systems each taking responsibility for a container when it crosses a funny dotted line on a map, creating cracks down which things can fall and have frequently fallen in the past.

The whole issue of efficiency in this area is multifaceted. Infrastructure will not resolve all of the problems, obviously, but it does make a valuable contribution in that area. To pick up the Chairman's point, lots of activity has been undertaken by the States and the Commonwealth in terms of changing work practices and improving efficiency. There has been substantial labour shedding in the industry to reflect those changed work practices. That will continue.

CHAIRMAN --So tonnes per man hour would have gone up significantly?

Mr Thorpe --Yes, significant improvements in productivity have been reflected. We believe, as do the other governments that have signed up for the shareholders agreement on National Rail, that by having a single body responsible for this task there will be an opportunity to tackle the problem comprehensively--work practices, management practices and marketing issues--and to get a better focus on the infrastructure.

Senator SHORT --Following up the Chairman's point about the degree of demanning, could you provide the Committee with some statistics on the extent of reductions in manning levels on the interstate rail freight operations over the last couple of years?

Mr Thorpe --Yes, we can certainly provide that. I also make the comment that of the order of 9,000 people are currently employed on interstate rail freight operations. It is expected that, were that to be operating at the efficiency levels envisaged by the enterprise agreement currently being negotiated by National Rail, you would need something like 4,500 people to do that work.

Senator SHORT --Over what period is it anticipated that the reduction would occur?

Mr Thorpe --Under the shareholders agreement a three-year period is allowed for transfer of functions and assets to National Rail as it takes over the task. Because of delays in the operational establishment of National Rail that resulted from delays in getting legislation passed--the Western Australian difficulty that has been resolved just recently--it is anticipated that National Rail will now move more quickly than the three years originally envisaged in the agreement to take over operations. Quite clearly, signing up the enterprise agreement is the key first step in that process.

Senator SHORT --What is the current expectation of when you would be down to the 4,500 level?

Mr Thorpe --I really cannot give you a comprehensive answer on that. That is really in the hands of National Rail and depends critically on the rate at which it takes over responsibilities.

Senator SCHACHT --As I understand it, National Rail will pick the 4,000 people it wants out of the various existing systems. It is up to the State or Australian National, the Commonwealth body, to hand those people over. It is up to those State bodies and AN to work out the redundancies as they go down from 9,000 to 4,000 employees. National Rail is not paying the redundancies to go from 9,000 down to 4,000, is it?

Mr Thorpe --You just anticipated the point I was about to make. You are quite correct. It is important to recognise that in this process National Rail will only employ the people it needs to undertake its functions. It will recruit just that number. Those who do not gain employment with National Rail, as Senator Schacht quite clearly points out, will remain with the system which currently employs them. It is up to them to resolve the redundancies issue.

Senator SCHACHT --Is National Rail under any obligation to take the approximately 4,000 people it needs in proportion from the various State systems and AN?

Mr Thorpe --No; my understanding is that it is a merit selection.

Senator SHORT --So New South Wales, Victoria or AN cannot say--AN already has 70 per cent of the interstate freight across the east-west line--`You have to take 70 per cent of our staff to keep that running'. National Rail will pick the staff from open selection across Australia and people from any rail system can apply or even people from outside the rail system.

Mr Thorpe --That is my understanding although, quite obviously, for those rail systems which are more heavily involved with interstate rail freight than others, you would expect more of the workers from those systems to end up in National Rail because that is their area of expertise.

Senator SCHACHT --You mentioned the WA agreement that was reached two days ago when legislation was passed in WA.

Mr Thorpe --That is correct.

Senator SCHACHT --A press report yesterday said that there had been some negotiation and some compromise reached about the shareholding structure. I do not know whether that is a correct summation on my part but there was some indication that there had been some adjustment to the arrangements for establishing the National Rail Corporation to get the legislation through the Opposition controlled WA upper House. What are those changes, guarantees or adjustments to the original memorandum of understanding that had to be compromised or changed to get the Bill through the Western Australian Parliament?

Mr Thorpe --The concern of the Western Australian upper House was about the wisdom, in its view, of Western Australia being a shareholder of the National Rail Corporation. The proposition was put--it was backed up by the written agreement of the three other shareholders: the Commonwealth, New South Wales and Victoria--that if, on the passage of the agreement as it currently stands, the Western Australian Government were to ask by 30 June 1993 to amend that agreement to have its status changed from being `a State' to `other State' under the agreement, the shareholders would agree. What that means is this: `State' is defined in the agreement as a shareholder. That is the current status of Western Australia. `Other State', which at the moment covers Queensland, puts obligations on that State to provide access to its rail system to National Rail on a commercial basis. It does not place the obligations on such a State that it does on a shareholder, that it transfer assets, functions, or provide equity funding.

The upshot is that if the Western Australian Government seeks `other State' status by 30 June next year, it will cease to be a shareholder, it will lose its director, the $8m it was proposing to pay in equity funds in several years hence to National Rail will not occur, and it will lose the benefit of the Western Australian compensation clause. That was a clause that was put into the shareholders agreement that would provide some protection to Western Australia should independent assessment show that the State was suffering financial detriment in the first five years of operation of National Rail.

Senator SCHACHT --The way you make it sound, Western Australia would have to be bonkers to seek `other State' status because it would lose all these benefits. Why would it ask for that to be in there if it is going to get such negative outcomes by going to `other State' status?

Senator McMullan --It is really not for us to comment on that.

Mr Thorpe --My only comment is that, on the basis of that undertaking, the agreement was passed.

CHAIRMAN --I think Carmen Lawrence can look after that.

Senator SCHACHT --I will bet that, sooner or later, somebody is going to ask for a bill to be paid.

CHAIRMAN --We will deal with that when it happens. So Queensland has `other State' status?

Mr Thorpe --That is correct.

Senator SHORT --In relation to the earlier question asked about the funding, is any of the $133m for this year at this stage allocated for equity contribution?

Mr Thorpe --No. One Nation is quite separate. There is a separation appropriation in Appropriation Bill (No. 2) for the Commonwealth's equity contribution to National Rail. The $133m you are referring to is One Nation moneys that will be spent on mainland rail upgrading which will be directly beneficial to National Rail simply because it is an operator on mainland track. I should add one further point: one of the conditions of the One Nation package was that, where One Nation money was spent in that way, the other shareholders would provide the Commonwealth ultimately with equity recognition for that expenditure when National Rail is operational. To set the position out quite clearly for you, the $133m is not being provided as an equity contribution at this stage. However, when NRC gets set up, some of that may come back in as equity recognition for the Commonwealth.

Senator SHORT --To refresh my memory, how much is the equity contribution in Appropriation Bill (No. 2)?

Mr Thorpe --Two hundred and ninety six is the Commonwealth's full contribution. I cannot recall immediately offhand what it is for this year. It is considerably less than that; it is about half of that.

Senator CHAPMAN --One Nation referred to free and open competition as being the engine which drives efficiency, and that was to be achieved through micro-economic reform. It also refers to micro-economic reform as being the fundamental determinant of our international competitiveness, essential to minimise the cost impact of our global isolation, the location of our national resources, and of the dispersion of our major cities. The proposals for upgrading our rail system were certainly regarded in One Nation as a very important part of that micro-economic reform. In the annual report of the Department there is reference to the One Nation statement and the $454m investment program which will increase efficiency between rail and sea transport and improve road-rail terminal facilities, and which certainly have acknowledged inefficiencies as far as our economic performance is concerned. The reallocation of funds will, obviously, set back the pace of micro-economic reform. Has any assessment been made as to whether we can, in effect, afford to lose a year of micro-economic reform compared with our competitor nations which are simply pressing on with making their economies more competitive? As a result of losing that year, how many long term real jobs will not be created in exchange for these short term, make work jobs, that are being created because of the reallocation of funds?

Senator McMullan --Firstly, I understand the thrust of your point. It is not correct to say that we have lost a year, because a substantial part--$133m of the $283m--is going ahead, but I accept that there is a setback to the pace at which we would prefer to be undertaking the spending. I am not challenging that part of the point, although I think you are overstating it. But it will make the enhancement of the efficiency of the rail infrastructure a slower process, and that is a negative for national economic efficiency. I do not know that there is any realistic mechanism by which we can measure the net economic loss to Australia from doing that more slowly, recognising that some of the purposes to which the money is being transferred are also socially and economically worthwhile expenditures. But there is a net loss to the rate at which economic efficiency is increased. Any attempt to quantify that in terms of future jobs when the whole process is concluded--if there is ever such a point--I think would be very artificial.

Senator CHAPMAN --Can you identify which specific aspects of the rail projects will not proceed as a result of the reallocation of funds this year that were originally expected to proceed?

Mr Thorpe --The reallocation stems, as the notes say, from design and logistical delays. As I said earlier, it has been the case for some decades that there has been very little money spent on rail track infrastructure. It has taken much longer than we originally anticipated to work up what are sensible and high value projects so that this money can be spent to the best long term advantage. That has required corridor studies to be undertaken and a lot of design work to be done; that is the source of the delays. It is not the case that projects have been cut from the program because of the inability to commence them as early as was originally intended. What is happening, simply, is that they are being deferred, so that what was hoped to be able to be spent and constructed this year will be spent and constructed next year.

Senator CHAPMAN --If that is the basis of the deferral, is it therefore fair to conclude that, when the One Nation statement was announced, appropriate projects had not been thought through properly?

Mr Thorpe --The One Nation rail program was worked up following consultations between the Federal Government, the State governments and the NRC. The size of it was a matter for government policy. The particular areas in which it was focused were decided by Ministers following those discussions. The One Nation rail program was not a list of specific projects. It is quite clear that there were a couple of large projects in it--the Adelaide-Melbourne standardisation, and the Sydney access project--but the bulk of the moneys was in fact allocated to corridors for particular types of upgrading works.

They were either bridge replacements, crossing loops, track upgrades or re-sleepering on corners to reduce maintenance; those sorts of things. Those projects were not specifically identified at the time the decision was taken to allocate the funds; that work had to be done subsequently.

Senator SCHACHT --Is it true to say that it is overwhelmingly the State rail systems of New South Wales and Victoria that were not up to speed with the design of what was needed?

Mr Thorpe --Yes.

Senator SCHACHT --Of that $150m that cannot be spent this year, is the delay in design and logistics in New South Wales and Victoria?

Mr Thorpe --The bulk of it is because the bulk of the program was to be spent in New South Wales and Victoria.

Senator SCHACHT --The National Rail Corporation was relying on State Rail in New South Wales and VicRail in Victoria to provide the design for the rebuilding of the bridges on the Melbourne-Sydney railway line.

Mr Thorpe --That is largely the case. In some cases, National Rail has appointed its own consultants.

Senator SCHACHT --Did National Rail set--

Senator McMullan --I am not sure that Mr Thorpe had actually finished.

Mr Thorpe --No. I was simply going to say that you were correct: the bulk of it was reliant on the existing State rail systems.

Senator SCHACHT --Did National Rail set standards for those two State rail authorities, saying that these are the standards of the new bridges we need in order to make what we think will be a competitive transport corridor; or was it left to each of the two State systems to work out for themselves what should be the national standard for these bridges?

Mr Thorpe --No, National Rail has been asked to approve the scope and standards of One Nation rail projects to ensure that, when it operates on the network, what is built under One Nation conforms to its operational standards and practices. National Rail has established a series of corridor working groups, of which the State systems and AN are a part, to work systematically through that so that when projects are designed they are designed to a consistent standard.

Senator SCHACHT --I ask you to take this question on notice. With regard to the $150m that is being deferred from this financial year from One Nation because of this delay in design and logistics, can we get a breakdown of where it is not being spent and for what reason?

Mr Thorpe --Yes.

Senator SCHACHT --Can you tell the Committee where the $133m is being spent?

Mr Thorpe --Yes.

Senator SCHACHT --Earlier some of my colleagues asked parochial questions about allocations of local government funding.

Senator McMullan --Perish the thought.

Senator SCHACHT --As a South Australian senator, I will take the opportunity to ask a couple of parochial questions. Does that $133m include the rail loop for Port Adelaide?

Mr Thorpe --That will be covered in the material we provide. From memory, I think the $133m includes some funds for design, but the construction of that will commence in 1993-94. I stand to be corrected on that point.

Senator SCHACHT --Was the rail loop in Adelaide being designed by Australian National?

Mr Thorpe --No, the rail loop proposal was originally put to the Federal Government by the South Australian Government. There has been some rethinking of the concept over the last six months; that is part of the design study. The concept has changed a little from what was originally envisaged.

Senator SCHACHT --Will it now be a rail square or something?

Mr Thorpe --I think it will be a series of parallel tracks rather than a loop.

Senator SCHACHT --My other parochial question concerns the standardisation of the Adelaide-Melbourne railway line. How much of the--

Senator McMullan --We should call Senator Short and he can ask a question about the other half--I am being flippant.

Senator SCHACHT --The Victorians can ask about the other half. Is the delay in the design to standardise the line caused by the problem in Victoria whereby they cannot decide whether the standard gauge line will go through Ballarat or Geelong?

Mr Thorpe --There has been a problem with the Adelaide-Melbourne standardisation. You quite rightly point out that no route has been selected in Victoria as yet.

Senator SCHACHT --Who is determining the route? Will it be the National Rail Corporation or VicRail?

Mr Thorpe --It will in fact be neither. It will be the Federal Government, which is providing the funds, in consultation with the Victorian Government, which owns the line. The NRC has made recommendations about the route which will obviously be taken into account.

CHAIRMAN --The route will be used by both National Rail and the Victorian rail system, will it not?

Senator SCHACHT --No. The railway line is being standardised to be an interstate freight line; is that right?

Mr Thorpe --That is correct. Also operating on that line will be the interstate rail passenger services that currently operate into Melbourne, such as the Overlander.

Senator SCHACHT --The National Rail Corporation will get priority on that line. You will not have the Castlemaine tea and milk train stopping the interstate freight train, will you?

Mr Thorpe --Apart from the Overlander and some intrastate passenger services, interstate rail freight will be the main user of that line.

Senator SCHACHT --Therefore, why is it not up to the National Rail Corporation to decide what is the best and most economical route?

Mr Thorpe --The National Rail Corporation is not funding the Adelaide-Melbourne standardisation out of its own resources; the Federal Government is funding it out of One Nation.

Senator SCHACHT --Which comes out of the $296m.

Mr Thorpe --No, it is coming out of the One Nation rail allocation, which is $454m.

Senator SCHACHT --That was going to be used overwhelmingly by the National Rail Corporation for interstate freight. Does the Federal Government, ultimately, get any recognition in equity terms from the National Rail Corporation for the money for the standardisation of the Adelaide-Melbourne railway line?

Mr Thorpe --Yes. Under the shareholders' agreement, if the National Rail Corporation nominates the Adelaide-Melbourne line as an asset it wishes to acquire--and it will be the predominant user of that line so it has a right to do so--the current owners of that line are under an obligation to transfer it to National Rail. They can transfer it either by transfer of outright ownership, long term lease--in which case there will be an equity recognition accorded to the owner of that line--or a right of access. That will not qualify for equity recognition. We are in the process--

Senator SCHACHT --But the Commonwealth Government would control the right of access.

CHAIRMAN --It would have the authority.

Mr Thorpe --The Federal Government controls the line from Belair to the Victorian border, so it has full discretion over that line. We are negotiating an agreement with the Victorians separately so that were they to transfer the Victorian side of the standard line to the National Rail Corporation, the Commonwealth would get part of the equity that it will qualify for through that transfer, in recognition of the value the Commonwealth has added to that line through One Nation rail funds. That is a little convoluted, but I hope the point is clear.

Senator SCHACHT --This whole structure is very convoluted for lay politicians like me to get our wits around. That may reflect on our ability rather than anything else, but I defy anybody simply to get hold of this whole structure. Going back to the actual design of the line, has Australian National, which controls Belair to the Victorian border, completed all its design and logistics so that at least that section is ready to go?

Mr Thorpe --National Rail has been working closely with Australia National to agree on the scope and the standards to apply. There is no problem about standards. As you would be aware, under a program that predates One Nation, the Federal Government was providing separate funding to put in concrete dual gauge sleepers from Ki Ki to the border. Unlike a number of other rail systems, because Australian National has been undertaking track-up grading works over a long period of time, it has a good handle on what is required to do the rest of the job.

Senator SCHACHT --So the delay in design and logistics is not on the Australian National side, basically, from Belair down to the South Australian border?

Mr Thorpe --No. We have got to the stage where we would hope that the first contract for sleepers for the South Australian side of the track will be able to be put in place shortly.

Senator SCHACHT --Has a deadline been set to complete the negotiations with the Victorian Government on the route from the Victorian border back to Melbourne, whether it is via Ballarat or Geelong, and the design of conversion and so on?

Mr Thorpe --There is no deadline as such, but both the Commonwealth and the Victorian governments are at the moment negotiating on the matter with a view to sorting it out as quickly as possible.

Senator SCHACHT --I think $150m was set aside in the One Nation statement for the conversion of the Adelaide-Melbourne line.

Mr Thorpe --The amount originally allocated was $115m.

Senator SCHACHT --In looking at this design and so on, has there been any revision of that figure to meet the standards that people now think are required to have an efficient railway line?

Mr Thorpe --Yes. It is a question of which route you select. National Rail is recommending that the line go via Geelong and Cressy.

Senator SCHACHT --Ararat through to Geelong and miss Ballarat?

Mr Thorpe --That is right, not go through Ballarat. To maximise the benefit of that route, it is proposing that there be a separate line from Geelong to Melbourne so that you can physically separate passengers from freight. The cost of that and associated signalling suggests that going that route with standardisation would cost in the order of $150m.

Senator SCHACHT --That is overwhelmingly the Geelong-Melbourne leg where, in some cases, you have to acquire land, plus signalling, but as a separate dedicated track.

Mr Thorpe --It is signalling and the actual construction of new track as opposed to what will happen to the rest of the route, which is resleepering and moving the rail in.

Senator SCHACHT --In the consideration of the Melbourne-Sydney line, which is overwhelmingly to put in new bridges--

Mr Thorpe --Yes, on both sides of the border there is a lot of bridgework.

Senator SCHACHT --But I understand that there is not much design on the realignment of the track to get rid of the bends in the track on some of the more notorious sections in New South Wales. Up around Yass and Goulburn the track zigzags because of the hilly nature of the terrain which, people say, is the main reason the train takes so long to get from Sydney to Melbourne.

Mr Thorpe --That is correct, $454m does not go very far when one is talking about major track realignments in very mountainous country.

Senator SCHACHT --What advantage will we get in reducing the time between Sydney and Melbourne by putting in new bridges--I presume so that trains can go over them at a faster rate--when the real problem of increasing speed is to get rid of the bends? We are to spend many millions of dollars, but how much will we reduce the time to make it more competitive, supposedly, with trucks going down what will soon be a four-lane Hume Highway from Sydney to Melbourne?

Mr Thorpe --I would question your assumption that the main problem on the Melbourne-Sydney line is in fact the tight bends. That is obviously a difficulty, but there are a number of reasons for the time that is taken. It does include tight bends and speed restrictions on bridges.

The bridge replacement and refurbishment works are being focused on those bridges that will produce the highest immediate return. Obviously, we are not replicating problems by just simply naively replacing the bridge in exactly the same form at the moment if there is a difficulty with it. There will be some track and grade easing in New South Wales, which will improve transit times.

The other major difficulty is access into Sydney because of the passenger services. A curfew applies in Sydney. If your freight train arrives half an hour late, just as the peak morning passenger services are starting, it will cool its heels for several hours on the outskirts of Sydney. Part of the program is focused on improving Sydney access.

There is also a series of other things that will improve reliability and the speed of the service between Sydney and Melbourne. It will be better signalling and better train management, which is a function of National Rail's management capabilities. You will get better utilisation out of the track.

It is true that there are still parts of that track that are not as straight and quick as everyone would like, but there are not unlimited resources. As a consequence of the One Nation rail expenditure on that route, it is expected that the transit time from Sydney to Melbourne will become a reliable 12 hours which, if the rail terminal operation is up to scratch, will significantly improve the transit time competitiveness of rail with interstate trucking on the Hume Highway.

Senator SCHACHT --I raise the question of bends because two years ago a number of us were members of the Senate Standing Committee on Transport, Communications and Infrastructure which was dealing with an inquiry into the VFT, the very fast train concept. A lot of people gave that Committee evidence that there should not be an expenditure of $8 billion on the very fast train, but an expenditure of a few hundred million dollars to straighten out the track--the real problem was the bends, not the gradients, bridges and so on--and that seemed a very compelling piece of evidence. Ultimately, people say, `If you really want to be competitive at some stage, if the system starts working, we will have to straighten out those bends'. I only hope we do not go and spend $50m building a lot of new bridges and then find that when we straighten the track those bridges are no longer on the track.

Mr Thorpe --That is precisely why considerable time and care is being taken to select where the investment is going, to minimise the risk of precisely that happening. So that is something that NRC is very careful about in this exercise.

CHAIRMAN --Can you not eliminate it, not minimise it? Surely, you would know those areas which would be subject to straightening.

Mr Thorpe --Yes, that is certainly true. There are lots of views on how you best get the rail system operating there. One of the key things that will make interstate rail freight work is achieving reliability. It is quite clear that, if freight is delivered reliably, people value that more highly than price or speed.

In the Sydney-Melbourne market, rail will not be able to compete with the genuine, high value, overnight express freight market. There is, however, a very substantial freight market that is not really that but which people are paying premiums for to be delivered in that way because of the current rail system's lack of reliability. If we can get that fixed and get transit times down to 12 hours, we will open up very significant market opportunities for interstate rail freight.

Senator SCHACHT --Could you provide us with the figures on the volumes of the very rapid high value freight transport, which is overnight trucking, compared with this more reliable but less time sensitive business, which you think is the National Rail Corporation's scope?

Mr Thorpe --I do not think I can actually give you hard figures on that because I do not think that they exist in that tight form. I was expressing a view about the nature of the market that rail can sensibly go for. But we will see what we can do for you.

Senator TIERNEY --My question arises out of Senator Schacht's question. He asked you about a comparison regarding the Very Fast Train. I recall a figure similar to what he was mentioning, that for under half a billion dollars you could straighten out the tracks. Before he got on to that specific point, you said that $450m would not go very far in doing that sort of an exercise. Could you clarify that? Has there been any precise costing on straightening out the track from Sydney to Melbourne? Are we looking at a bit under half a billion dollars?

Mr Thorpe --The short answer to that is no. I am not aware of any such calculations that have been done by the rail systems that are authoritative because they have not been in the business of doing that sort of very substantial track upgrading. They have simply not had those sorts of capital budgets. The point I was making about half a billion dollars not going very far was that the One Nation rail infrastructure program was a national rail infrastructure program. It was not focused simply on the Sydney to Melbourne line. When you start spreading it around, when you start undertaking very major projects like the standardisation of Adelaide to Melbourne, half a billion dollars does not allow you to devote massive resources to a couple of hundred of kilometres of track in southern New South Wales.

CHAIRMAN --What is your response to that sort of a costing?

Mr Thorpe --I have seen a range of costings that range from numbers like that to numbers like $2 billion. Quite frankly, I do not think that any authoritative engineering works have been done. Certainly you would have to be very cautious. That country is pretty rough, as you know.

Senator SCHACHT --Australian National has the Australian rights to the development of a process from America called `Roadrailer' which means that you just take the trailer. The trailer can be made into a freight train without the rubber road wheels having to be removed. It is jacked up, a bogie is put underneath it and so on.

Mr Thorpe --That is correct.

Senator SCHACHT --A whole train can be assembled and disassembled in half an hour by two or three employees with the appropriate equipment. People say that if you have got the speed down to, say, eight to 10 hours between Sydney and Melbourne, a roadrailer concept would really make a very big difference in the trucking between Sydney and Melbourne. You could pick up that high value added from a warehouse in Sydney, go straight to the railway yard, where the trailer becomes part of an assembled train, which then at high speed gets to Melbourne cheaper and certainly time-sensitive. It can be disassembled and then be delivered to the warehouse in Melbourne. If we are going to be really serious about getting back the value of the investment, are we being penny-wise and pound-foolish by only going half the way of developing that rail corridor, when such developments as Roadrailer could easily revolutionise even the high value added overnight road freight business?

CHAIRMAN --This is very interesting, but we are getting away from relevance. After this answer I would like us to get back on the track.

Mr Thorpe --I certainly understand the point you are making. I guess my response would be that One Nation does not purport to resolve all of Australia's rail infrastructure problems. It is not a substitute for National Rail's ongoing capital program. Now that we have an operational NRC, or one that will be operational in January, very shortly, it is a matter for it to work out what is commercially the most sensible way to go. I agree that concepts like Roadrailer are certainly worth very serious consideration. But the backlog in works in rail infrastructure is such that you are not going to be able to solve it in the next couple of years.

Senator CHAPMAN --Does the reallocation of funding have any impact on Australian National's operations at Port Augusta either in terms of its general operations or in the workshops at Port Augusta? Are there any employment consequences?

Mr Thorpe --No.

Senator SCHACHT --So the money allocated for the workshops at Port Augusta under One Nation is now being spent because they can spend it.

Mr Thorpe --Yes. It is in the process of being spent.

Senator SCHACHT --Is the $12m allocated in the Budget for the upgrading of the Indian Pacific now being spent?

Mr Thorpe --One of the conditions attached to that money was that the Western Australian rail system agree to single corridor management of that. That has not yet been finalised. Hence the money has not yet been spent.

Senator TIERNEY --Just to show that I am not totally parochial, I am going to ask a Queensland question. But I will admit that it has some links to Sydney. The One Nation package included $30m for rail improvement in Queensland. This was to be spent in south east Queensland on the Sydney-Brisbane link and on the standard gauge connection to Brisbane Port. Have I got that right?

Mr Thorpe --You are talking about Fishermans Island?

Senator SCHACHT --Fishermans Island and the Queensland border upgrading.

Mr Thorpe --The $30m included in the One Nation rail program is a contribution towards the dual gauging of Fishermans Island.

Senator TIERNEY --What is the estimate on how many jobs that project was going to create?

Mr Thorpe --We use as a rule of thumb in this industry, this sort of heavy construction industry, 25 jobs direct and indirect being supported by every $1m worth of expenditure. So that is 750 jobs direct and indirect.

Senator TIERNEY --Direct and indirect in the construction industry?

Mr Thorpe --What I mean by direct and indirect is as follows. Direct employment is the actual physical conversion of the line. Indirect is creating industries that are supplying the materials: steel, concrete, gravel, transport services--all of those sorts of things.

Senator TIERNEY --What is the breakdown between direct and indirect? Is that a one for one thing?

Mr Thorpe --It is roughly 50:50, one for one. I should make it clear in this context, because of the discussion earlier this morning, that when we talk about a job in this context we talk about employment for a year.

Senator TIERNEY --In terms of these Appropriations, does that have any effect on this $30m?

Mr Thorpe --No.

Senator TIERNEY --What is the estimate now on how long it will take for this project to go ahead, for any of that $30m to be spent?

Mr Thorpe --We expect the bulk of that $30m to be spent in the first half of next calendar year, the first half of 1993. At the moment there is an environment impact study being finalised on that project. Once that has occurred, and once the all-clear has been given from the environmental side to the project, construction will commence immediately. It is a project that costs considerably more than $30m; it is about $120m. The Commonwealth, through One Nation, is only providing $30m.

CHAIRMAN --There are some community objections to the route, are there not?

Mr Thorpe --There is a local concern about noise associated with this line, and that is obviously a clear focus of the environmental impact statement.

Senator TIERNEY --Is there any danger of the environmental impact statement being held up as it was for several years with Sydney Airport because of noise? I assume that trains are not as quite as noisy as jumbo jets.

Mr Thorpe --I would not like to speculate on that, other than to simply make the observation that there is a narrow gauge line there at the moment which is very heavily used.

CHAIRMAN --It is passengers mostly.

Mr Thorpe --In fact, it is both passengers and bulk.

Senator TIERNEY --The spending of this money is to start at the beginning of next year. Is that what you said?

Mr Thorpe --The Commonwealth contribution is expected to start to flow once the environmental issue is finalised properly early in 1993, yes.

Senator TIERNEY --We are right at the end of 1992. Do you think this environmental matter will be fixed in two or three months?

Mr Thorpe --The environmental impact study is in the process of being finalised and is to be presented shortly.

Senator TIERNEY --Why would it not have a budgetary impact on this figure, if we are looking at expenditure in 1992-93? Surely, some of the $30m would have to be spent in the current financial year, would it not?

Mr Thorpe --Yes. I thought your question--and perhaps I misunderstood what you said--was whether this would be affected by the $150m deferred, and the answer to that is no.

Senator TIERNEY --I was speaking more about the $30m.

Mr Thorpe --No. The $133m which is identified in the notes as being spent in 1992-93 under this program would include not the full $30m, but a substantial amount of the $30m for that Fishermans Island line.

Senator TIERNEY --That is in 1992-93?

Mr Thorpe --That is right.

Senator SHORT --I would like to come back to a couple of the areas we were talking about earlier. I do not think we dealt with this matter, although I was out of the room for a little while. If the question has already been asked, please let me know. What impact will the delay in the expenditure on the rail projects and the deferment of the $150m have on the employment generation that was anticipated for these projects?

Mr Thorpe --In terms of One Nation rail, it is anticipated that the current expenditure level for 1992-93 will produce about half the employment that was previously expected to be created from this program in 1992-93.

Senator SHORT --How much was that?

Mr Thorpe --Around 7,000 direct and indirect.

Senator SHORT --Seven thousand direct and indirect in 1992-93?

Mr Thorpe --Yes.

Senator SHORT --You are now saying that will be--

Mr Thorpe --More like about 3,800. Just to recap, we had anticipated that One Nation rail would generate about 7,000 direct and indirect jobs in 1992-93. The expenditure now provided for the program in 1992-93 is likely to support more like 3,800 jobs. I should make the point, of course, that the $150m that will not be spent on this rail will be spent on other projects and items under One Nation. That will, in fact, increase the employment supporting effect. Obviously, these numbers relate only to the rail component.

Senator SHORT --I understand that. The August Budget and Appropriation Bills No. 1 and No. 2 contained no intimation of the delays and problems that have now necessitated the reallocation of expenditure. What actually happened between August and 13 November to necessitate these changes?

Mr Thorpe --Once One Nation was announced in February, National Rail set up corridor working groups, as I said earlier, to progress projects for selection, approval and expenditure under this program. In early July, $180m worth of projects, or something of that order, were in fact approved by the Minister for Land Transport. It was expected at that time that expenditure would follow. It has become apparent over the subsequent few months that that timetable simply was not to be met.

Senator SHORT --What happened between July and the ensuing months to make it clear that that could not happen?

Mr Thorpe --There were two things. The projects that had been approved were taking longer to design up than had been anticipated. Secondly, a major part of the total program is the Adelaide-Melbourne standardisation. The decision on the Victorian route has simply not been able to be taken, first, because the Victorian State election earlier this year meant that the then government was not prepared to make a final decision. Secondly, of course, the new government has had to settle in before focusing on this particular issue, which it is now doing. A combination of both of those things has meant a slippage in the program that was not evident midway through this calendar year.

Senator SHORT --When do you expect a decision on the Melbourne-Adelaide project?

Mr Thorpe --Very shortly. I cannot be more specific than that. It is a matter for negotiation between the Federal Government and the State Government.

Senator SHORT --By `very shortly', without pinning it down to a date, is that days, weeks or months?

Mr Thorpe --I would hope that it is days away. But that is just a speculation.

Senator SHORT --The alternatives, as I understand it, are said to be Melbourne, Geelong-Cressy or straight through the Ballarat route.

Mr Thorpe --That is right.

Senator SHORT --Are those two mutually exclusive? Why is it not possible, if you did want to go through Geelong, to also involve Ballarat in the upgrade? What would be the cost implications?

Mr Thorpe --That is not a viable option. There are in fact three routes. There are the two that you have identified. There is a third that involves going from Geelong through, I think, Meredith to Ballarat and going across.

Senator SHORT --There is a line there now?

Mr Thorpe --There is a line there now. No-one who has looked at that proposition who has provided any advice that I have seen finds that a satisfactory solution. The reason for that is this: the Cressy route is being supported by National Rail as being superior to the Ballarat route for basically three reasons. Firstly, although it is longer--something like 60 kilometres longer--the gradients are much more gentle and it turns out that transit times and fuel consumption are broadly comparable with going through Ballarat, and wear and tear on locomotives and the power required by locomotives to maintain speeds is lower through Cressy. So in that narrow operational sense it has some attractions.

Secondly, going through Geelong and Cressy gives you the option of separating passengers from freight with a separate line to Geelong. That is not a ready solution if going through Ballarat. There is in fact heavy passenger traffic between Melbourne and Ballarat. It is not an easy or a cheap matter to be able to put a dedicated line through what I understand to be a narrow alignment and hilly countryside. The third reason that National Rail favours the Geelong-Cressy route is that it does nothing to impede double stacking of containers.

To go through Ballarat you have to go through the Ballarat station which is, as you know, a heritage station with a veranda that stretches across the line which simply does not have the clearance for double stacking. To double stack through Ballarat would be very expensive because the only real solution would appear to be to lower the line which would be visually ugly and very expensive. Those are basically the three factors that were taken into account by National Rail in assessing the two routes and why it has come down in favour of Geelong-Cressy.

Senator SHORT --Am I correct in saying that there was a Booz-Allen report that in fact recommended the Ballarat route?

Mr Thorpe --A Booz-Allen report was prepared for the national rail freight initiative task force which was the precursor to the National Rail Corporation which did recommend Ballarat. That was the basis for the original One Nation assessment. Subsequent much more detailed work that has been undertaken by National Rail has simply not been able to verify the numbers that appear in that Booz-Allen report.

Senator SHORT --That is a public document, is it?

Mr Thorpe --I am not sure whether it is. It was commissioned by what is now the National Rail Corporation.

Senator SHORT --Can you take that question on notice? If possible, please let the Committee have a copy of that Booz-Allen report.

Luncheon adjournment

CHAIRMAN --We are still on the Department of Transport and Communications.

Senator SHORT --I think we had finished pretty much with Adelaide-Melbourne, unless there is anything you want to add that had occurred to you over lunch.

Mr Thorpe --No.

Senator SHORT --Just to get it clear, precisely which rail projects now have been approved to go ahead in this financial year and in 1993-94 and 1994-95?

Mr Thorpe --Senator Schacht earlier asked for a schedule that set that out. I think I would prefer to leave it to that. That way I will be able to give you a comprehensive answer.

Senator SHORT --Did Senator Schacht ask for the expected expenditure on each of those projects to be included in that answer? If he did not, can you add that in?

Mr Thorpe --To the extent that we can, we will. The difficulty we will have is that not all of the projects had got to a stage of final specification at this time. So, in telling you where expenditure will not occur, we may in a number of cases simply have to identify corridors and types of projects because it has not got that far in the development stage. But we will certainly try to give you as much of that information as we can.

Senator SHORT --Again you might need to take this question on notice and include its answer in the same response. Which organisations--for example, the NRC or the State rail authorities--will oversee this expenditure in each case? I presume that it will vary from project to project, will it?

Mr Thorpe --National Rail has overall oversight responsibility. In some cases National Rail itself will be the project manager; in other cases, that will be a State rail authority or AN; and in other cases there may well be someone who is contracted in to do that. But we will make sure that the material that comes back identifies that to the extent that we are able to at this stage.

Senator SHORT --But the ultimate responsibility can vary from one project to another, can it not?

Mr Thorpe --That is correct, yes.

Senator SHORT --Again in that information that you are to provide, could you include the breakdown of expenditure on each of the projects between, firstly, One Nation funding, secondly, funding of the State rail authorities and, thirdly, the equity funding for the NRC? Is that a meaningful question?

Mr Thorpe --This is all One Nation funding which, as I explained earlier, will be taken into account when equity is finally calculated in National Rail. We will explain those equity arrangements and give the breakdown of expenditure in as much of the detail that you have asked for as possible.

Senator SHORT --This is not my field of expertise, as you are aware, but I find--not just in my own head but in a lot of other people's heads--a lot of confusion in trying to understand how this all fits together.

Mr Thorpe --As Senator Schacht said earlier, it is not straightforward. I agree with that. We will try to set it out for you so that it is clearer.

Senator SHORT --Having mentioned Senator Schacht, I revert to the questions he and Senator Tierney were asking about straightening the bends--I take that to mean straightening the track--on the Melbourne to Sydney line. Has any estimate been done on how much time would be saved between Melbourne and Sydney?

Mr Thorpe --I am not aware of a comprehensive study that has been done. There have been studies that have looked at aspects of that track. We will see what we can turn up from the material we have to hand. I repeat the point I made before: transit times obviously are an important and competitive factor that is taken into account by users of interstate rail freight. Reliability is critical. The trucking industry boasts a reliability rate of something like 99 per cent. Rail will not be able to compete effectively unless it can start to match those sorts of reliability levels. That certainly is a marketing target of National Rail.

It is also a question of targeting the particular niches in the freight market. Reliability is critical in that. If people can be assured of getting their products at a specified time, they will arrange their production schedules based on it. Therefore, for example, it is not necessary to have an eight-hour transit time; people may be happy with a 16-hour transit time, provided that it is reliable and predictable. It has been built into the production regime because, as you know, people are moving to lean production techniques and the tolerances are very fine.

Senator SHORT --Today we have been talking essentially about freight, but I would have thought that interstate passenger rail was also a very important consideration. To what extent is that encompassed in the thinking of One Nation?

Mr Thorpe --One Nation is focusing on mainline upgrading, predominantly with the National Rail Corporation in mind. To the extent that you have a well maintained line that will allow heavy freight trains to run at reasonable speeds, you will get automatic spin-offs for passenger services. Because of the weight and the sorts of bogies they have, they will run at much faster speeds than a freight train could on the same quality of track. One Nation is focusing on improving the rail freight system, but interstate rail passenger services get direct and immediate spin-off benefits from that.

Senator SHORT --Do you have any figures at the moment as to the extent of what I understand is the blow-out in the cost estimates of the Campbelltown-Enfield project?

Mr Thorpe --At the time One Nation was pulled together, $71m was provided for the Glenlea-Enfield line, which was to be a dedicated freight line. That was based on advice provided by the State Rail Authority in New South Wales. The more detailed evaluation that has been undertaken of that line has put the estimate of the cost of that line somewhere between $180m and $250m. That is a fully dedicated freight line through that area. That clearly could not be funded under One Nation, given the size of it. Therefore, National Rail is looking at an alternative: not a fully dedicated line but a solution that looks at removing the worst of the bottlenecks by long passing loops and that sort of thing--if you like, the first stages of a fully dedicated line. The objective is to achieve better and more predictable access into the Sydney market and to do it in the most cost-effective way, given the resources that are available through this package.

Senator SHORT --What is the explanation for that quite enormous difference between $71m on the one hand and $180m to $250m on the other?

Mr Thorpe --It gets back to a problem that has bedevilled a number of considerations in this area. No-one had on the shelf a set of plans for a dedicated line. They had some preliminary works which produced a number for cost which is just simply unable to be substantiated when you do the more detailed engineering numbers. It proved to be hopelessly inadequate. Basically, the work had not really been done. We took judgments on the basis of the best available advice and that advice has subsequently proved not to be very good.

Senator SHORT --I assume that when you were putting One Nation together you would have had access to and would have examined the material on which the $71m was based.

Mr Thorpe --We relied on information provided to us by the responsible authority, in this case SRA and the New South Wales Department of Transport.

Senator SHORT --So you did not examine the data at all?

Mr Thorpe --No. I should also make the point that when the Prime Minister asked the Premier, Mr Greiner, whether the $71m was adequate he received an assurance from him that it was more than adequate.

Senator SHORT --In terms of the examination you made at the Commonwealth level, does the same apply to the other projects that are included in the One Nation figures?

Mr Thorpe --As I said earlier, the majority of the program in fact was never specified down to individual project level. Rather, there were allocations for upgrading works of a particular type in a corridor, and particular projects such as particular bridges to be replaced or particular bits of re-railing to be done were to be identified subsequently and funded from within the allocations made available.

Senator SHORT --How did you determine the allocations to be made available if you did not have the details of the component parts?

Mr Thorpe --The Government, as part of its general deliberations on the form and size of One Nation, first took some judgments as to how much it was prepared to allocate to rail and, secondly, in breaking that down between corridors, made judgments as to amounts that would be sufficient to achieve improvements of the kind that it felt could sensibly be funded under One Nation. It was a series of judgments of that kind.

Senator SHORT --If I understand you correctly, you are saying that the Government said, `We will spend $X billion or whatever it is on rail in One Nation and then we will find out how we might allocate that'.

Mr Thorpe --It was an iterative process, as these things always are, because One Nation rail was not looked at in isolation from the broader One Nation package.

Senator SHORT --I understand that, but how would you determine a figure to be spent on rail in One Nation if you did not have costings for the various components that were going to make up the total figure? I suppose the second question that follows from that is: how was that total figure determined in the first place?

Mr Thorpe --I will take the second question first. It was an iterative process between what sorts of broad projects the Government wished to put into the program and the aggregate that it decided was to be made available to rail. The Government took decisions on a couple of large projects; one was the Adelaide-Melbourne standardisation and the other was the Glenlea-Enfield line. It then took the advice it had received from State rail systems, State governments and the NRC as to what types of expenditure would be most cost-effective within the two-year time horizon that it was focusing on for One Nation, and the advice it received from rail systems as to what could be spent within that period of time on those sorts of works, and generated the program from that.

Senator SHORT --Were there any Commonwealth Government IDCs or task forces to look at these components? For example, in determining how much money was going to be spent on rail, was that a figure that was determined after consideration by an IDC or a task force?

Mr Thorpe --A range of options was put up to Ministers on the One Nation rail and a range of other possible One Nation projects. From those options, the Government made its decisions.

Senator SHORT --Were the departments of Treasury or Finance involved in any of these exercises?

Mr Thorpe --The departments of Treasury and Finance provided advice to the Government on the broad structure of One Nation, as you would expect with an expenditure program of that type.

Senator SHORT --Yes, on the broad structure. But what about in terms of, say, the rail expenditure.

Mr Thorpe --I have no doubt, as you would be aware, Senator, that officers from Treasury and Finance were able to brief their Ministers on what they thought was the best way of spending money in this area. That is typically what Treasury and Finance officers do when building up Budget arrangements. We obviously had discussions with them in that sort of a process.

Senator SHORT --I must say from listening to you that I think you are very articulate in your explanation. But it seems to me to be an extraordinarily hairy way of deciding, first of all, how much money--and we are talking about hundreds of millions of dollars--to spend in terms of fixing the total and then determining the components. I find it extraordinary that the process would not, in fact, be the other way round; that you would have some idea of what you wanted to spend it on and how much it would cost and that you would build up from that to see how much it would cost and whether you could afford it in total. The process seems to have gone quite the other way, or am I missing something?

Senator McMullan --You have to appreciate the manner in which advice is given to Ministers and Cabinet and the processes of Cabinet in determining that advice. It is not something that we are going to go into in detail here.

Senator SHORT --Nor am I.

Senator McMullan --I understand that. I am simply saying that it means there is a bit of a gap in the information because there is only this much that can be provided and then you get to the processes of decision making by Ministers and the Cabinet. I think you can be assured that it was a very thoroughly considered process.

You will remember, just from public knowledge, the very wide range of consultation with business, State governments and other interest groups to get all those inputs. We had, for example, then Premier Greiner making the inputs on New South Wales rail options. It seems to me that, if you want to get information on the best way to conduct rail projects in New South Wales, you talk to the rail authorities, to the Transport Department and to the New South Wales Premier and Treasurer. That seems to me where you get authoritative information. Then you get the best independent advice that you can from your own advisers.

We cannot give more detailed information on the decision making processes because that is part of the Cabinet process into which we do not inquire. The uncertainty arises simply because we cut off providing information at a certain point and we cannot supplement it. It may appear a little--what was the word you used?--hairy; I am not quite sure what that means, but I think I get the general impression. But I think it is only that we cannot provide all the information.

Senator SHORT --I do not want to pursue the Cabinet decision making processes. But picking up what you have just said, what was the extent of the consultations? How wide did the consultative process with the outside world--other governments and so on--go so far as the rail aspects of One Nation were concerned? You said there were very, very wide consultations.

Senator McMullan --If you want any supplementation with regard to rail, it will be provided. The broad consultation is on the public record. There was no secret about the people to whom the relevant Ministers in that group, led by the Prime Minister, spoke. They had a series of consultations with business groups generally, State governments and other authorities. That is the general parameter. You have to appreciate that the rail expenditure did not come out of thin air. There had been a lot of discussions about rail options and the rail freight corporation concept for some time before One Nation.

This was not the first time the Commonwealth had been involved in discussions with the States about railways; it simply introduced an extra element to do with direct Commonwealth funding of the infrastructure. So it was building on a basis of a lot of consultation at institutional and departmental level. There was a political component added to that in terms of the Prime Minister talking to Premiers, et cetera, as a result of the explicitly One Nation consultative process.

Mr Thorpe --The only comment I would add is that in the consultations that occurred with prominent members of the business community there was also an effort made to get a feel from the users of rail as to what types of improvements were required in order to produce the sorts of benefits those users were looking for from a revitalised rail sector.

Senator SHORT --I will return briefly to the Campbelltown-Enfield project. When do you expect decisions to be taken on that project?

Mr Thorpe --I would expect decisions to be taken early in the new year. At the moment, some design work is under way to firm up the best options for expenditure on that route. But I would expect that the firm proposals will be able to be put to the Minister for Land Transport for approval early in 1993.

Senator SHORT --As I understand what you said earlier, at the moment you are looking at less than a dedicated freight line.

Mr Thorpe --That is right.

Senator SHORT --Is one of the possibilities that may come out of that--given that the whole project was originally based on a dedicated freight line and given the apparently horrendous endless expense of that compared with your expectations--the possibility that the project may not go ahead at all?

Mr Thorpe --That is one of the logical possibilities. That is obviously a matter for the Government to make judgments about. I really could not speculate on that.

Senator SHORT --But, as you say, it is an obvious option.

Mr Thorpe --It is a logical possibility, yes.

Senator SHORT --What funding will go to Australian National in 1992-93 and 1993-94?

Mr Thorpe --Under the NRC-related part of the One Nation program, Australian National will be responsible for two broad projects. The first is $2m worth of upgrading works on the line between Adelaide and Fremantle. That work is already commenced and will be completed, if my memory serves me correctly, in the first half of next year.

Australian National will also be involved with work on the Adelaide-Melbourne standardisation. The amount of funds to be allocated for that has not yet been finally determined. The last 20 kilometres of the route are, in fact, owned by the STA, the South Australian rail authority, and negotiations--I should say discussions--are currently under way between it, AN and NR to determine the best way of standardising that last 20 kilometres, because STA uses that for suburban passenger services. So you have got this issue of how you best manage a bit of track that has both passenger and freight trains on it. Once that has been sorted out, we will be in a position to make some judgment about how much would be necessary to complete the standardisation on the South Australian side of the border. The Minister for Land Transport has approved an initial tranche of $30m for that work and it is hoped that the first contracts flowing from that will be signed very early in the new year.

Senator SHORT --So that would be for expenditure in 1992-93 or 1993-94, or both?

Mr Thorpe --Both. The bulk of expenditure is, in fact, the purchase of concrete sleepers, so they will get produced progressively as they are required. There is not much point in stockpiling the things. There is a trade-off between the cost of getting them produced in six months, if you need them over nine or 12 months, and having them staged sensibly, so that sort of process is being worked out at the moment.

Senator SHORT --I have just one last question related to that. I think that the question still follows, given what you have said. Out of the funding to Australian National, what proportion is One Nation expenditure?

Mr Thorpe --What I have been referring to is all One Nation funding.

Senator SHORT --I am sorry. So, having got that, how much over and above--

Mr Thorpe --I am sorry. I should perhaps correct that, as my colleague has quite properly reminded me. What I have been focusing on to date has been the component of the One Nation rail program that is related to the National Rail Corporation. In addition to that, Australian National has received funding for two further projects which are entirely related to Australian National activities. The first involves $7 1/2m to replace a railway workshop in Launceston, Tasmania. Work has commenced on that and is expected to be completed, if my memory serves me correctly, early in the financial year 1993-94. It has also received an amount of $3.5m for upgrading works at Port Augusta and is currently finalising the designs for that so that work can commence on that in 1993.

Senator TIERNEY --Is the One Nation money for Australian National included in the total spending of the national rail network that is announced in One Nation?

Mr Thorpe --There are two components to it. The first component is $454m, which is the money to be provided for NRC related activities. There was a second component of, from memory, something like $24m, which was non-NRC related. Some of the amount I identified earlier goes to AN; $13m also goes to Western Australia for the Bunbury-Kwinana upgrading works.

Senator TIERNEY --How has the funding been affected by these Bills that we are examining at the moment?

Mr Thorpe --The Bills that you are looking at relate only to the national rail component of One Nation.

Senator TIERNEY --What funding out of One Nation has gone to State rail authorities for main line upgrading?

Mr Thorpe --I cannot give you the precise number off the top of my head. Perhaps I could take that question on notice. If I could clarify the question, are you talking about how much has gone from expenditure made to date?

Senator TIERNEY --Out of the One Nation proposals that came out in May.

Mr Thorpe --Are you talking about the whole $454m?

Senator TIERNEY --Yes.

Mr Thorpe --I cannot give you an answer to that because all the projects have not been specified, hence no decision has been taken as to who will be the authority responsible for doing the work. It is only once you have made that decision that you are able to tell whether a State rail authority, National Rail or a consultant is appointed as a project manager. This point was raised in a question by Senator Short earlier when you were out of the room.

Senator TIERNEY --I am curious as to why we have what seems to be a lack of planning by the rail authorities. Suddenly this money was discovered for One Nation--and it was for rail projects initially--yet plans do not seem to have been put in place for the spending of any of it. I thought that some projects would have been in mind.

My brother was a draughtsman in the main roads area. He used to design bridges for Main Roads. People used to say, `We probably will not get the funding for this for 20 years, but we will have the design ready'. I would have thought there would be a similar situation in the rail industry. I was surprised that railways do not have a lot of pet projects that they have been trying to get funded for years. We seem to be in the position where

the plans were not developed. I can understand why they did not exist for major things, but I would have thought that some of the money could have been spent on railway upgrading to make them more efficient.

Senator McMullan --The officer obviously might want to add some detail, but we essentially considered that area when answering previous questions by Senator Short. It is true that we have been--I do not want to put this too harshly--a bit disappointed with the quality of advice available from the respective State authorities about what projects might be undertaken and the costing of them. There might be all sorts of explanations for that--it is not for me to say that they are inadequate or whatever--including the history of a lack of funding of these bodies, which has probably not encouraged them to spend--

Senator TIERNEY --They were so disappointed in the past that they did not think there was much point in doing the plans.

Senator McMullan --We are straying a long way now because we are talking about State funding of State rail authorities. But that may well be the history; I do not know. I am not reflecting on the individuals--they may have perfectly good explanations--but it has made the Commonwealth's planning more difficult, because that is the input on which we were basing at least the original decisions.

Mr Thorpe --I certainly endorse the comments of Senator McMullan. I add that there is a difference between the road and rail industries in this important regard. Something like $5 billion a year is spent on road construction in this country at all levels of government. There is in place a planning effort which does precisely what you said--design plans for projects that may not be able to be funded for some time. The work is done, put on the shelf and pulled off when the time comes. In rail, that simply has not been the case.

Senator TIERNEY --It has been one of my areas of interest for a long time. One Nation was so specific on projects. It did not say, `We are going to spend so many million in New South Wales'. It actually identified what projects were going to go ahead, such as the upgrading of the Melbourne to Adelaide line. I would have thought that before it was put out the question would have been asked of the authorities, `By the way, do you have any plans to do this?'. That would have only required a phone call.

Mr Thorpe --The One Nation rail program was not as detailed as you have just suggested. In fact, it was described this way as to the $454m: $30m on the Fishermans Island upgrade, which was a part contribution to a specific project, and $82m on the Sydney-Brisbane corridor. The only projects identified on that were the types of work that would be done, such as passing loops, bridge replacements and rail upgrading. Other specific projects included the Sydney freight access line, which is the Glenlea-Enfield line we have already discussed. Also, there were two projects specified for the Dynon freight terminal: $20m for a general upgrade of the terminal facility and $5m for an access road between that and East Swanson Dock. That access road is in the process of being constructed. Another discrete project was the Melbourne-Adelaide standardisation. The outer harbour rail loop, which Senator Schacht referred to earlier, was a discrete project. The Fremantle-Islington rail upgrading, which was basically to improve bridge clearances on that line, was again a series of projects that had to be identified. That was the basis on which the One Nation rail program was announced.

Senator TIERNEY --If we could return to one project that you referred to this morning, the dedication of that Sydney freight line, I was surprised to hear--I had not realised it was the case--that freight trains can be held up for hours at peak periods because suburban trains are taking up all the tracks. I did not realise it was that jammed and that there were those sorts of delays. But would State Rail in New South Wales not have had plans for some time to do this sort of thing, provided that the money was there?

Mr Thorpe --It is really a question of priorities. When you have passenger and freight trains on the one line, the difficulty you have is that passenger trains are very time sensitive, for the most obvious of reasons--customers are very vocal about trains not being on time. A passenger train travels at speeds up to twice that of a freight train. If you have a long, slow and cumbersome freight train on the track being used by passengers, you really do have problems. In the past, City Rail has solved the problem very simply not through an infrastructure fix, which is the permanent solution, but by giving priority to passenger services.

Senator TIERNEY --I identify with it well because I have travelled across America on Amtrak. Those tracks, of course, are owned by the freight companies. We kept being shunted into sidings while the freight train went past. The train was going from Los Angeles across to New Orleans, which is half way across America. The head of the rail used to say, `It is very disheartening when people come up and say "Which day is the train is arriving?"' rather than "What hour?"'. Of course, the problems in the American west are far worse than we have here.

Mr Thorpe --In this country it has tended to be the reverse. It is the freight trains on the long distance runs that have tended to be put into the passing loops while the passenger trains go through.

Senator TIERNEY --Returning to specific questions, is the funding for the upgrading of the Indian Pacific being affected in any way by these Bills?

Mr Thorpe --No, that is quite a separate appropriation.

Senator TIERNEY --I think you gave us the answer this morning on the funding for the Brisbane port development, and you gave an optimistic assessment. That is all I have on rail.

CHAIRMAN --We will now turn to the roads.

Senator CHAPMAN --How many projects are involved in the additional funding of $30m for the Federal black spot road safety program?

Mr Wheatley --The Minister has actually nominated allocations for each State. Since the announcement was made we have gone out to individual States and Territories asking them to put in a program of works. We do not exactly know the number of projects yet.

Mrs Key --I would expect that between 500 and 750 projects could be undertaken with that additional funding.

Senator CHAPMAN --Would these be projects that have previously been identified by the States as needing to be undertaken but for which they have not previously had funds available, or would they be seeking out new black spots on which the money can be spent?

Mr Wheatley --No, quite the opposite. One of the reasons the Government was keen to provide the extra funds is that we knew there was a backlog of black spots projects in the States. We were able to assure the Government before it made the decision that those projects had been identified if funds were made available. In the discussions with the two principal States, it is quite clear that they do have projects, as has been said, on the shelf.

Senator CHAPMAN --You indicated that you were not at this stage able to provide the details of those projects because States had not yet identified them to you.

Mr Wheatley --We have had preliminary discussions with them, but the formal programs have not been submitted to the Minister yet. We are expecting those in the next week or so.

Senator CHAPMAN --Would it be possible to get a breakdown of those projects?

Mr Wheatley --Yes, when they arrive.

Senator CHAPMAN --And identified by Federal electorate?

Mr Wheatley --We could ask the Minister, but that is his decision.

Senator CHAPMAN --I have a few press clippings here taken out of some of the local metropolitan papers in South Australia announcing some projects. It seems to me without exception that those with that degree of publicity all just happen to be located in marginal Federal seats.

Senator McMullan --I assume that the officer did not publicise them, so I do not think the officer can answer the question. If I understand him correctly--this is not a question I have discussed with the Minister or the officers--as the lists come in and get approved, we will make them available publicly. It is for others to make what they wish of the publicity surrounding it.

Senator CHAPMAN --In light of the Federal Minister for Land Transport blaming poor driving skills rather than poor roads for a dramatic increase in the road toll last Easter, why has there not been at least some allocation to improve national driving skills rather than all the money simply going into roads?

Mr Wheatley --From a national perspective, what the Government has tried to do over the last three years is to have a fairly broad based strategy towards road safety. Part of that strategy is to improve specific spots on the infrastructure. We do have a program of about $6m a year which attacks research and public education. In general terms, that program is fairly broad.

In particular, we are aware of the need to improve driving skills. We have under way at present a couple of major projects which relate to young drivers, one being undertaken by Monash University, and a public education program is being developed as well. Recently Mrs Key was involved with a program with motorcyclists aimed at improving their riding skills. So we are not unaware of the problem. One of the problems with driving skills is that the evidence from overseas--and particularly from America--is not absolutely unequivocal, so that we are having Monash look at some of those issues again.

Senator CHAPMAN --There was reference--it may have been in the annual report--to the black spot sites being selected on the basis of cost benefit analysis. Can you tell me something of the way in which that cost benefit is calculated?

Mr Wheatley --Yes. Basically, there are two requirements. First, for a project to be approved, there has to be a history of fatal or serious accidents at a particular point. Secondly, a project has to have a BCR of at least two to one. To try to improve the administration program, before we started we had the Australian Road Research Board in Melbourne undertake some research for us, and it came up with a list of types of works. It categorised them into two groups, rural and urban, and then into high, medium and low benefits which would give us a benefit of more than two to one. At the same time we asked each State and Territory to provide us with details of how they would calculate their BCRs. Each State and Territory, at the beginning of the program, set down the basis on which they would calculate their BCRs. It is a normal sort of economic approach to the benefit cost ratio analysis.

Senator CHAPMAN --Do you believe that such a cost benefit analysis has any real meaning, given that one of the major areas where a need for micro-economic reform has been identified to achieve efficiencies is in the building and construction of roads?

Mr Wheatley --That is one aspect, but the Bureau of Transport and Communications Economics recently produced a report which indicated that, based on 1989 figures, the cost of road trauma in Australia is $6 billion a year. So there are significant cost benefits and significant economic benefits to be achieved for the economy if we are able to reduce road trauma. In 1988 the road toll was 2,900. This year it looks like coming in at 1,950. That is a saving of almost $2 billion a year, so the gains are significant.

Senator CHAPMAN --Has the Federal Government put any requirements on the States in terms of improving the efficiency of their road construction and maintenance to ensure that the maximum benefit for cost is extracted from the black spots program, or have you simply left it up to the States to use the money in the way they think is efficient?

Senator McMullan --Not in regard to the black spots program.

Senator CHAPMAN --But you are doing it in relation to some other program?

Senator McMullan --I do not want to open up a whole new area not covered by Estimates. But, in general, there are some things in that direction but they do not relate to this program.

Senator CHAPMAN --Why not in relation to the black spots program?

Senator McMullan --It is a very small part of the construction project. As you would understand, the big road dollars are in the other areas.

Mr Wheatley --When States make decisions on what road infrastructure they should invest in, there is no doubt that the road safety implications are included in their economic assessments.

CHAIRMAN --But some new road construction and alterations would automatically take care of black spots, would they not--even if they were not intended specifically for that?

Mr Wheatley --Yes. When you build the Hume Highway, you get rid of a lot of the black spots on that road.

Senator CHAPMAN --Do you have any figures or has any analysis been done on the employment that will be generated through the additional allocation of the $30m for these projects?

Mr Wheatley --Yes. Similar to what Mr Thorpe was saying this morning, we work on an estimate of about 25 positions per $1m. With the black spots program, it could be slightly higher because the projects are smaller and they are probably more labour intensive; it could be up to 30 positions per $1m. That is the basis that we have used.

Senator CHAPMAN --So you believe those jobs will be additional jobs created rather than the State road authorities simply using their existing employment to do those jobs?

Mr Wheatley --At the beginning of this year when the first One Nation funds came in we made a deliberate decision to put a timeframe on the jobs; we wanted the first $25m worth finished by the end of June this year. We have asked for this year's allocations to be finished as close to the end of the calendar year as possible, but we recognise that some of the projects will go into next year. One of the reasons for that was to ensure that we would get as much work contracted out. We thought that, by doing that, instead of the work going into the road authorities, they would contract some of it out.

Senator CHAPMAN --Do you know how long the new jobs created are expected to last?

Mr Wheatley --I think that, with this extra $30m, that will take them through until the end of this financial year. One of the things that we have asked of the States is to ensure that the work that is undertaken with this additional $30m can be finalised by 30 June this year. That would see most of it done by then.

Senator CHAPMAN --Those jobs would then disappear?

Mr Wheatley --It depends what governments decide on the continuation of this program.

Senator CHAPMAN --Do the States have to use all of the $30m on the projects or are they allowed to use some of it for the administrative costs within their own departments in order to get those projects under way? How is the money broken up in that sense?

Mr Wheatley --These are smallish projects so there would be some small administrative costs allocated. But I think that would be relatively small for this type of work. I do not have the figure off the top of my head and it probably would vary slightly from State to State.

Senator CHAPMAN --You are confident that the States will not use the money simply to prop up their own departments to any great degree?

Mr Wheatley --No. We have an in-built mechanism to make sure they do not. The projects are publicly announced; the councils and the communities are aware that those projects are going to be undertaken in their locality. If they are not done, we certainly hear about it.

Senator CHAPMAN --I understand that, but is it possible for the State departments to build into the cost of each of those projects administrative costs which can be used by the department?

Mr Wheatley --As I said before, I believe that is relatively small.

Senator TIERNEY --In light of the fact that the whole aim of what is being done here is to create jobs, why did the Minister for Land Transport actually suspend road payments to the States in October?

Senator McMullan --It is not actually part of this black spots project; nor these Bills.

Senator TIERNEY --I realise that.

Senator McMullan --Mr Chairman, I do not know whether you want to open up that area. It is an important issue, but it is not an issue related to these Bills.

Senator TIERNEY --We are spending money on roads here; that is, for fixing things up.

Senator McMullan --That is a pretty long bow.

CHAIRMAN --That opportunity was given during the normal Estimates.

Senator McMullan --It is a matter that can be asked at Question Time.

Senator TIERNEY --I was just curious.

Senator McMullan --I think it is of significance; I just do not think it is in this Bill. Well, I know it is not, and I think it is too far removed to drag it in.

Senator TIERNEY --If you are restricting me in that way--

Senator McMullan --It is called the Standing Orders.

Senator TIERNEY --I realise that. Of course, you are allowed a little latitude, at your discretion.

CHAIRMAN --We have allowed a fair bit of latitude today on some issues.

Senator TIERNEY --Could we have a list of the projects that One Nation is funding for roads?

Senator McMullan --Black spots?

Senator TIERNEY --Yes.

Senator McMullan --Senator Chapman has asked for the future ones but, if you want the ones that have already been done--

Mr Wheatley --You are asking for the ones that have been approved?

Senator TIERNEY --Yes.

CHAIRMAN --I think you have been asked that question, have you not?

Senator McMullan --There are those that have already been approved under those first proposed, and Senator Chapman asked for the next lot.

Senator TIERNEY --Could we have that other list as well?

Mr Wheatley --Yes.

Senator TIERNEY --Thank you very much. Has a decision been made on the full route of the Sturt and the Newell highways to be added to the highway system under One Nation?

Senator McMullan --Once again, it is a long way outside this project. If you want, I can try outside this to get you some information on that and I will write you a letter, but it is not under this.

Senator TIERNEY --Let us focus on a few black spots. The Great Western Highway is a State funded road. Having driven along that highway 20 years ago and having driven along it a few weeks ago, I cannot see a great deal of difference. I should have thought there are a lot of black spots along that highway. What sorts of funding proposals do you have to eliminate some of those black spots?

Senator McMullan --It has had some black spots money, and I will get that detail.

Mr Wheatley --Yes, we can get that for you, Senator. The way the system works is that the transport Minister or the roads Minister in the State or Territory would submit the program to the Minister and we basically check the projects. So, in a sense, they are closer to the priorities than we are, but projects have been undertaken on that road.

Senator TIERNEY --Can I finally focus on a very large black spot in my own area, in which I have had some interest in recent times, and that is the end of the F3 freeway in Newcastle where, according to the Road Traffic Authority in New South Wales, the projected increase in volume when that road finishes, going on to Leneghan's Drive, will be 11,000 vehicles a day; yet a dual carriageway should be built when the volume reaches 8,000 vehicles a day. What comments do you have on that very large black spot, which will create horrific traffic conditions when the F3 is finished to Leneghan's Drive at the end of next year? What are the plans to eliminate that very large black spot?

Mr Wheatley --I only look after the little black spots.

Senator TIERNEY --I am sorry?

Senator McMullan --To take him literally, he said, `I only look after the little black spots'. As you can tell from the fact that there are 750 projects for this amount of money, we are talking about small intersection realignments, et cetera. That other, as I understand it, is an ongoing issue about roads funding more generally; it does not come up under these Bills. As I understand it, you and the Minister have been having some debate about that and it is fine for you to do so, but this is not the place.

Senator TIERNEY --I can find you about 20 black spots, actually, along that whole eight kilometres.

Senator McMullan --Then you should tell the New South Wales Government to look at its list.

Senator TIERNEY --That Government seems to be restricted in planning. It would dearly love to build a dual carriageway--that is what it should do--to solve the problem. Unfortunately, you will come across this whole series of black spots.

Mr Wheatley --One other issue I should have mentioned was that the legislation specifically excludes funding of these types of black spots on the national highway. As I understand it, Leneghan's Drive is not part of the national highway.

Senator TIERNEY --Could I clarify that last point? Did you say that Leneghan's Drive is not part of the national highway?

Mr Thorpe --My apologies. It is a temporary link. It is just a question of what the ultimate strategy is for resolving the route through there. It is a temporary link at the moment.

Senator TIERNEY --Do you have an estimate as to how long it will be a temporary link?

Mr Thorpe --I understand that my Minister will be making an announcement on this matter before too much longer and that may well provide an answer to your question.

Senator TIERNEY --The residents of Leneghan's Drive are looking forward to hearing it. I have no further questions.

[2.36 p.m.]