Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard   

Previous Fragment    Next Fragment
Thursday, 1 December 1983
Page: 3178

Mr LUSHER(3.26) —The Opposition does not intend to oppose the Australian National Railways Commission Bill 1983 or the Australian National Railways Commission (Transitional Provisions and Consequential Amendments) Bill. In fact, it is the intention of the Opposition to be as supportive as possible of the Australian National Railways Commission. The Commission faces enormous problems. It has faced enormous problems from the outset. The system that was taken over by Australian National was losing, as I recall, $1.7m a week when the Commission started to operate. That has obviously created all sorts of difficulties and problems for management right from the inception of the Commission as the manager of the Australian National network as we know it at the moment. I think it is largely because of the extent of the problems that the Commission faces that the Opposition wishes to be as supportive as possible of Australian National.

The Opposition also recognises that there is no alternative to the Australian National Railways Commission. It is not one of those enterprises of government which can be sold. There is obviously no buyer for a network of that nature. Equally, the network cannot be closed down. Again, we recognise that there is no alternative to the Commission, and that is another reason why one must be positive about the Australian National Railways Commission. One must approach any legislation, any debate, any government decisions, any Opposition policy which relates to it in a positive way.

It is my firm belief that a commission of the nature of the Australian National Railways Commission must have top-flight management. It is one of the difficulties of any government business undertaking, because of the nature of comparisons and the structure that exists within the Public Service, even with those structures which are set up outside the Public Service Board, that conditions, salaries and the like will always be matters of some sensitivity. The reality is, and we all accept it, that the commercial market rates probably cannot be paid to the management that should be paid if it is to attract the sort of people it needs. However, within the constraints that apply, it is the view of the Opposition that the Government should ensure that the best possible management is attracted to the Commission. Secondly, all possible encouragement should be given to that management. For its part, the Government must be prepared to accept the Public Service obligations that it as a government imposes upon the Australian National Railways Commission and not use the Commission as some sort of rag-bag or pork barrelling operation in such a way that the losses and what have you finish up in some unaccountable mishmash that nobody can unravel. I think that is important.

The Commission will never operate as a commercial proposition if the Government does not take a positive attitude to it. If the Government is not prepared to accept the Commission's community service obligations and to fund those obligations, as properly being requirements placed upon the Commission by government as services that would not have been provided if the commercial test had been applied, the morale of the Commission will be extraordinarily low. The management will know that regardless of what efforts it might make, the number of uncommercial ventures it is required to undertake will mean that the Commission will always perform badly in financial terms, if not in other terms. That is an important factor that needs to be understood. I know that the Minister for Transport (Mr Peter Morris) acknowledges it and that there is provision in this legislation for it.

The Commission in my view must also be encouraged to do those things that it can do well, to expand its operations to the maximum in areas where it has the advantage and to operate in such a way that it achieves the best financial results that it can at a minimum cost to the taxpayer. The Bill which the Minister has introduced is very similar in nature to a Bill introduced by the former Minister, the honourable member for Gwydir (Mr Hunt). It does differ in some respects and I will deal with those aspects a little later in the course of my remarks. It is the intention of the Opposition to support the legislation. I say that in the context of the remarks that I have made so far. But there are enormous problems. It is a reality that we have the rail network. There is no alternative other than to continue to operate it and we must therefore attack it in a positive way, be supportive of the Commission and ensure that all things that can be done are done to make sure that it is as commercial an operation as possible.

The next thing that needs to be said is that it has not been an easy time to be operating rail systems. I cite as examples some recent results. In 1981-82 the Victorian rail system lost $233m, which is equivalent to a subsidy of about $11, 100 per employee. The New South Wales rail system lost about $670m in 1981-82, if the total subsidies paid by the Government to the New South Wales rail system are taken as being a measure of its loss. That equates to about 16,200 per employee. In the same year the Australian National Railways Commission lost $73m . I think I am right in saying that that is about $6,000 per employee. The reality, as I say, is that things are not easy for railways. There are common problems facing all of them in terms of the state of the networks-the track and rolling-stock-and obviously things such as drought and general economic climate as well as the nature and extent of competition. Australian National must compete with the road transport industry and the passenger coach industry. It also must compete with airlines at least in regard to passengers, if not freight . It also must compete with the coastal shipping network. Australian National does not find itself in any sort of a privileged or monopoly situation. It operates in a commercial and competitive environment and it must operate as best it can within that environment.

Honourable members will be aware that the Commission was set up in July 1975 to take over the minor Commonwealth rail network that existed at the time and also to take over the recently acquired Tasmanian system and South Australian rural system, of which the then Government, under the prime ministership of Mr Whitlam , negotiated the purchase from the respective State governments. But it was not until 1978 when the transfer agreements were finalised that Australian National took effective operational control of those networks. Since that time its performance has been disappointing. Regardless of how supportive one might wish to be, one must take account of the fact that even though the systems that were taken over were loss-making systems, the result really has not improved a great deal over that period. In 1977-78 the Commission lost $88m and received a government subsidy towards that loss of $64m; in 1978-79 it lost $72m and the subsidy was again $64m; in 1979-80 there was a $65m loss with a subsidy of $58m; in 1980-81 the loss was $63m and the subsidy was $56m; and in 1981-82 the loss was $73m and the subsidy was $68m. So over that period of five years the Commission has achieved operating losses of $361m and has received from taxpayers through the Government $310m in subsidies. The Minister has indicated that the subsidy element this year will be about $105m and for the previous year it was $106m. Since its inception the Australian National Railways Commission has been paid a subsidy approaching $500m from taxpayers funds.

The legislation that we are considering today requires the Commission to conduct its operations in a manner which accords with sound commercial practice. That provision, which is proper, is made in clause 18 of the Bill. There were similar provisions in the legislation which is being repealed. But we need to acknowledge that the Government has a role to play in relation to the operation of the Commission. There are essentially three revenue sources for the Commission from the Government. Those are: Capital works and services payments that are made available; the operating loss subsidy to which I have just referred; and also the money which is made available in the form of reimbursement of concessions. In addition to those sources of funds from the Government, the Commission has the option-if in fact it is an option; I would like to think it is probably more of a requirement-to make claims upon the Government for the payment of those losses incurred at the direction of the Government. Such provision was made in section 44 of the Act and is contained in clauses 19 and 20 of the Bill.

The other matter that is of some relevance in this regard is that the Commissioner also has the authority to borrow at semi-government rates and with a government guarantee. I think that there is still reasonably extensive Government involvement in the money that flows to the Commission and the role that it has to play even though the Commission is expected to operate in accordance with some commercial practice. I believe that in all these areas of financial involvement the Government must show sensitivity. It should act in such a way as to assist the commercial objective of the Commission and not act in a way which will constrain the Commission or cause adverse effects on its ability to achieve profits and, generally speaking, to operate in a commercial fashion. I believe the role of government ought to be to set objectives, to ensure that the best available management is employed by the Commission and perhaps to play the role of a banker to the Commission. Otherwise it should keep its involvement to a minimum.

The Parliament, for its part, needs to satisfy itself that the interests of the taxpayer are being protected. As I have indicated, over the last seven years the taxpayer has contributed something approaching $500m. That is no mean contribution. It may well be that in another environment one might wish to consider whether there are other ways in which the services of the Commission can be provided at less cost. However, accepting things as they are for the moment, the taxpayer is making a reasonable contribution to the provision of those services and does have some interest in ensuring that things are being run in the most effective fashion. The other point one should note in relation to this matter is that the situation is unlikely to change, at least in the medium term. That may be fair enough. Maybe things are beyond the control of the Commission and losses will continue to be recorded for some time to come. Regardless of that, this just emphasises the point tht the taxpayer does have an interest in the Commission. Bearing that in mind, the Commission needs to be accountable to the Parliament for its commercial operations.

The Government ought to be accountable to the Parliament for the community service obligation element because essentially that arises from government decisions. If the Government takes the view that Australian National Railways ought to operate a particular service, or ought to operate a particular branch line, or ought to operate somewhere where the Commission does not believe it ought to operate because of the commercial test, the Government needs to be accountable to the Parliament for that element of the Commission's funding. The Commission ought not be accountable in the same way. But certainly, in relation to those elements of the Commission's operations which are commercial, it needs to be accountable to the Parliament. I think that is one important reason why the community service obligations need to be separated from the commercial operations of the Commission.

I do not think it is news to anybody who takes an interest in these matters that I have been critical of Australian National's management. I think it is reasonable to say that over a period the management has left a lot to be desired . That is not to say that I am in any way censuring the management or taking any drastic approach of that nature. But things have not been good and I do not entirely attribute that to the present management structure because obviously a lot of the problems were inherited. The system was losing money at a very heavy rate when the present management took it over. It would be unfair to lay the blame on the present management for the results that we have seen over the years and for the claims that have had to be made upon the taxpayers to keep the system running. It needs to be said that up to about half of the losses recorded by Australian National are due to the community service obligations; the other half are largely management-related losses. As I say, those management related losses refer to past management as well as present management. When I say 'past' I include the period before the transfer agreements were entered into with the Tasmanian and South Australian governments. There is no doubt that a lot of bad business decisions or bad management decisions have been taken since then in relation to a number of factors and these have been responsible, at least in part, for some of the losses that have been made.

I have made the point, and I repeat it, that it is essential that the Commission isolate and itemise those losses which are due to the community service obligations and make a claim upon the Government for those funds. The management has not separated the community service obligations and made those claims. I believe it should have. The sooner it gets around to getting its systems into order so that that can be done the better.

I think that over the period the management has preferred to keep the figures muddled because this has obscured the extent of the losses that probably are properly attributed to management itself. I have expressed the view on earlier occasions that the management, even though it probably could not, down to the last dollar, accurately split overheads and attribute costs to different operations, should have made claims through the Department of Transport on the Department of the Treasury and let the Treasury or the Department challenge it and query the figures. I am sure that as a result of that process payments, not necessarily of the original amount claimed, would have been made to Australian National in respect of those community service obligations. I think that by that means the morale of the whole Commission would have been much improved. Instead of having to acknowledge losses of the order of $60m, $70m or even $100m year by year, a lot of that money would have been made available in the form of payments by the Government for the services that it requires the Commission to undertake. The losses that would have been attributable to the other operations of Australian National would have been significantly less and in my view that would have been a far better situation for everybody concerned.

The other matter which I have been critical of is the corporate planning performance. At least four corporate plans have been prepared and probably a couple that I am not aware of have come through in recent times. All of those corporate plans show a deficit for 1983 of between $50m and $60m. In fact the 1983 deficit was closer to $100m. For 1984 the corporate plan shows that the losses should be reduced to something in the order of $35m and $55m, depending on which of the corporate plans one looks at. The anticipated loss for 1984 will be in the order of $85m so it is apparent that the performance of the corporate plan has been way off. I know that claims will be made, because of the drought, the economic recession and a number of other factors, all of which are quite proper, that performance has not been as good as had been anticipated. However, it also has to be acknowledged that that in itself is an admission that the corporate planning has been bad. Anybody who is concerned with corporate planning acknowledges that one must make provisions for the unexpected. We cannot produce corporate plans, forward Budgets and other things on the basis that everything will be ideal every year. We must take account of the fact that all the different factors that make up the corporate plan can vary, and vary dramatically. Anybody who is involved with commercial market corporations will acknowledge that.

The difficulty and the difference between those sorts of corporations and the Commission is this: The Commission was required by the Minister back in 1978 to produce a plan that would demonstrate how the Commission would break even by 1988. Accordingly, that is what the Commission did. The four figures that have been produced show one common thing; that is, that the Commission will break even in 1988. I think that is probably one of the difficulties there is when there are political involvements in a structure which is supposed to operate commercially. This plan does not take into account the unexpected. It does not take into account the sorts of contingencies that can arise. As a result of that it has been way off target. Maybe it cannot afford to take those things into account. If it did it probably could not show a break-even figure by 1988. As I have said, perhaps this is one of the problems that relates to the political directive of having to break even in 1988. I think it needs to be said that, even in relation to its commercial operations, and accepting that the Minister for Transport will be prepared to arrange for the payment of community service obligation moneys, the Commission would probably have trouble breaking even on its commercial operations by 1988.

I want to touch on the question of public funds and the need for accountability . I acknowledge that there is an enormous problem in this area. It is very difficult to have a situation on the one hand where an organisation is expected to be a commercial operation but, on the other, it must have a government and a parliamentary aspect to it. The parliamentary scrutiny of an organisation such as this is important; I say that in a positive way. It ought not be the intention of the Parliament and it is certainly not the intention of the Opposition to arrange the parliamentary scrutiny that we would have in mind in such a way as to deny the freedom from management. But it is essential that accountability should be there. For that reason we will be moving an amendment in the Committee stage of the legislation to ensure that there is some accountability beyond the tabling of an annual report. I accept the criticisms of the Minister in relation to the amendment that I moved in relation to the Australian Shipping Commission. We would be seeking to have the Commission or the Minister put before the Parliament a corporate plan that has been sanitised, to the extent that there was nothing commercially sensitive in it, and made available for scrutiny. This I believe is essential.

I also have some queries about the targeting of the loss subsidy and the way in which the Commission is expected to meet any shortfall between what the loss might actually turn out to be and what the agreement before the beginning of the financial year had been with the Government. I think it is an area which may provide some difficulties as we get further down the track-if honourable members would excuse the pun. One of the things I have been pleased about is that the common carrier provisions have been taken out of this legislation. I think the common carrier provisions provided all sorts of problems for Australian National . They might have been appropriate provisions at the time when competition and alternative forms of transport were not as available as they are now. But I think today it is not sensible to have a situation where Australian National is a common carrier.

The honourable member for Bass (Mr Newman) has raised with me and also with the Minister the question of statistical information which is not available, particularly in relation to a splitting out from the operations of the Commission's statistics that relates specifically to the Tasmanian operations, to accidents and the safety record of the Commission. The Minister might like to turn his attention to those matters because it seems to be a reasonable request to make. It is the sort of thing that could be easily accommodated within the annual reporting structure of Australian National, if he so required it to be.

As I have indicated, the legislation has the support of the Opposition. We will be moving the amendment, as I indicated, in relation to the corporate plan and accountability to the Parliament. I am pleased to see that the Government is taking a positive attitude to the Commission as a whole. As I indicated at the beginning of my speech, it is a reality. It is something to which, in any practicable sense, we do not have any alternative. I think it ought to be the role of government to support it to the full to ensure that it operates in such a way that it does not become any more of a drain on taxpayers than it needs to be. For all those reasons the Opposition will not oppose the legislation.