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Thursday, 4 October 1984
Page: 1295

(Question No. 1053)

Senator Kilgariff asked the Minister representing the Minister for Transport, upon notice, on 23 August 1984:

(1) Could the Minister for Transport advise whether the Government has yet taken a decision on the future of the Alice Springs-Darwin Railway.

(2) Have significant criticisms been made of the Hill Inquiry's findings by the Northern Territory and South Australian Governments and by union and employer organisations.

(3) Did the Inquiry adopt a methodology for ascribing costs and benefits to the project which is not only heavily biased against the railway, but which is also inconsistent with the approach normally taken to investment analysis of such major projects.

(4) Does the Minister accept the view that the Alice Springs-Darwin railway would be an integral part of the national rail network and that the benefits of the railway could therefore impact on the whole of this national network; if not , why would these benefits not occur.

(5) Is the Minister satisfied that the Inquiry adequately discharged its responsibility to undertake a rigorous assessment of costs and benefits given that its approach to the critical question of freight volume was to present hypothetical scenarios.

(6) Can the Minister advise what steps the Government took to satisfy itself that these scenarios were more soundly based than is evident from the report itself.

Senator Gietzelt —The Minister for Transport has provided the following answer to the honourable senator's question:

(1) Yes. There was no allocation to commence construction of the Alice Springs- Darwin railway in the 1984 Budget. This decision was taken as the Northern Territory (NT) Government declined to participate in the funding of the railway' s construction. In light of the Hill Inquiry's conclusion that the railway ' would constitute a major misallocation of the nation's resources' and the Defence Department assessment that there were no compelling defence reasons to construct the railway, the Federal Government was not prepared to allocate funds to this project. However, $5 million was allocated to accelerate construction of the Stuart Highway to a high, virtually all-weather standard between Alice Springs and Darwin and to improve rail services to Alice Springs.

(2) and (3) Whilst some criticisms from vested interests have been made, the Bureau of Transport Economics (BTE) confirmed that the approach adopted by the Inquiry is reasonable for such a project and that its report reflects considerable effort to reach a fair assessment.

(4) The railway, if built, would form an integral part of the national rail network. The Hill Inquiry concluded that any additional benefits for traffic on the balance of the network would be available even if the railway did not exist. Any additional system-wide benefits that could be attributed to the railway are likely to be small as a large proportion of the freight carried in the corridor south of Alice Springs is already predominantly transported by rail. Rail's share of this freight is unlikely to increase because the railway would encounter more intense road competition as the Stuart Highway is progressively upgraded to national highway standards. The highway in South Australia is scheduled to be completed to a sealed, virtually all-weather standard by late 1986. The BTE considers that the Hill approach of restricting the assessment of benefits to the Alice Springs to Darwin corridor would provide a reasonable approximation of the benefits likely to be realised.

(5) and (6) As pointed out by the Hill Inquiry, projections of freight traffic well into the future are subject to uncertainty, particularly when starting from such a small base. In this case, the uncertainty is increased because of the difficulty in determining which of the number of potential mineral projects will actually be undertaken. Accordingly, the Hill Inquiry decided that two illustrative projections of freight level should be used. Even by adopting an optimistic view of future growth, the Inquiry still found the investment in the railway cannot be justified. Furthermore, the Inquiry found that even using the NT Government's own projections did not change this conclusion. Under these circumstances, the Government saw no need to do other than accept the conclusions of the Hill Inquiry.