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Thursday, 18 October 1984
Page: 1955


Senator KILGARIFF(1.01) —I wish to take the opportunity in this debate on matters of public interest to refer to a couple of recent reports that have come to light on the proposed rail link between Alice Springs and Darwin. The Senate will recall that in October 1983 the Commonwealth Government initiated an inquiry into transport services to the Northern Territory, in particular the construction of the Alice Springs to Darwin railway and the accelerated upgrading of the Stuart Highway. The Commonwealth Government stated that it was concerned to ensure that transportation requirements in the Northern Territory were met in an economic manner. Flowing from that an inquiry was conducted by Mr David Hill, Chief Executive of the New South Wales State Rail Authority. It is now common knowledge that it was decided by the Federal Government not to go ahead with the construction of the rail link from Alice Springs to Darwin, despite the fact that the people of Australia, particularly in the Northern Territory, thought that there was no issue on the matter as it appeared at one stage that everyone was in agreement that the construction should take place. However, I now wish to go beyond the period of the Hill report and speak briefly on a couple of reports which have come to light since then, which I shall seek to table.

The first is a most interesting preliminary report on the review of the economic viability of the extension of the standard gauge rail service from Alice Springs to Darwin. The report was prepared by Canadian Pacific Consulting Services Ltd. A media report in the Northern Territory News on 18 September this year, under the headline 'Rail report error claim' stated:

The Hill inquiry into the Alice Springs to Darwin railway made a major error in the method it used to arrive at a conclusion the railway was uneconomic.

That is the finding made by Dr John McPherson, an economist with Canadian Pacific Consulting Services Ltd.

The Hill inquiry found the economic costs to the nation in the life of the railway would be hundreds of millions of dollars.

The newspaper report quotes Dr McPherson as saying:

We are saying that in purely economic terms the railway is roughly a break even exercise.

He concluded by saying:

The conclusion that Hill came to was that the railway would impose a cost on the nation of somewhere between $250 million and $400 million.

The article continued:

The methodological mistake Mr Hill made in his inquiry was to look only at the effect of the railway on transport within the narrow confines of the Territory.

The article referred to the error in the Hill report. I take this opportunity to refer to another interesting report which has been published recently, entitled 'Defence Implications of the Alice Springs-Darwin Railway'. That paper was prepared by the Strategic and Defence Studies Centre at the Australian National University in Canberra. The authors are Desmond Ball, J. O. Langtry and J. D. Stevenson. Honourable senators will remember that when this inquiry took place under Mr Hill it was decided by the Federal Government that there would be no submissions on the project from the Department of Defence. That information was received with amazement by most people. Surely one of the main clients for such a line would be the Defence Department in view of the major part that it would play in the defence of Australia. My understanding is that, while the Defence Department was not permitted to make a submission to the inquiry, it prepared a paper for the Federal Government which clearly indicated, although I understand it has not been made public, that there is a real case for the construction of this line. However, that has not reached the light of day. An article regarding this report, entitled 'Darwin Railway Vital to Defence', in the Australian of 17 October, states:

Completion of an Alice Springs-Darwin rail link is vital to the nation's security, and the project should go ahead regardless of cost . . .

The article went on to refer to the reports. The report which I am tabling, entitled 'Defence Implications of the Alice Springs-Darwin Railway', was compiled by the head of the Strategic Defence Studies Centre, Dr Ball, and others, including the Centre's Executive Officer, Colonel Langtry, and a former commander of the First Australian Logistic Support Group in South Vietnam. I seek leave to table the two reports I have just described.

Leave granted.


Senator KILGARIFF —These two reports have been received with interest. They were tabled in the Northern Territory Legislative Assembly yesterday. The Chief Minister of the Northern Territory tabled with these reports his statement in relation to them. To save time, I seek leave to have his statement incorporated in Hansard.

Leave granted.

The statement read as follows-

STATEMENT ON THE ALICE SPRINGS-DARWIN RAILWAY

Mr Speaker, I table three reports relating to the Alice Springs-Darwin railway. The first is a review of the economic viability of the railway prepared by Canadian Pacific Consulting Services, an arm of the Canadian Pacific Railroad Company. The second is a review of the defence implications of the railway prepared by the Strategic and Defence Studies Centre of the Australian National University. The third is an environmental assessment report prepared by the federal Department of Home Affairs and the Environment.

Mr Speaker, I have spoken in this assembly on several occasions about the Alice Springs to Darwin railway and I think it fitting that my last major statement in this place should be on this subject. Of course, this will certainly not be the last statement I will make about the railway, Honourable members and all Territorians can be sure that I will be saying a lot about the railway in other places in the weeks and months to come.

The railway project remains critical to the future of the Territory.

This Assembly is familiar with the story of the railway so far-a saga of broken promises and unfulfilled commitments. A shameful chronicle of Commonwealth prevarication and lack of vision that stretches back over 70 years.

All Territorians celebrated in September 1980 when, after years of Federal hesitancy and after considerable effort by the Territory Government, the then Prime Minister of Australia, Malcolm Fraser, confirmed that the railway would be completed. Malcolm Fraser subsequently announced the railway as a bicentennial project for completion in 1988.

Territorians were assured that this commitment was bipartisan and we had every reason to believe that the railway was to be a reality.

In March 1983 Mr Hawke made it a solemn promise. The Federal Minister for Transport, Mr Morris, confirmed that promise. Mr Reeves gave his word that a Federal Labor Government would build the railway.

Mr Speaker, we all know what a charade that turned out to be.

In a pathetic effort to defuse and confuse the issue we were told that the railway could not be built because the Federal Budget deficit was too large. If that was so, the proper approach would have been to confirm that the railway would go ahead but perhaps over a longer construction period.

Instead 130,000 Territorians were asked to pay 40% of the cost-approximately $ 220 million-for a project which has wide implications for national development and defence, and which the Commonwealth has a legislative obligation to meet. The cost to the Territory taxpayer and the cost in services and facilities which all Territorians would have had to forego made that deal totally unacceptable.

Perhaps the sorriest chapter of all in the saga was the so-called independent economic inquiry.

This inquiry, conceived and imposed on us by the Federal Government, was nothing more than a pretext against which to finally retract the promise that the railway would be built.

We accepted this inquiry only under great duress. Our views on the terms of reference were ignored. Our views on the structure and membership of the inquiry were ignored and our views on its timing and conduct were ignored. But even given minimal time to prepare our case, we nonetheless produced a comprehensive three volume submission which was then, and remains now, the most comprehensive assessment of the financial and economic viability of the railway that has been produced.

That submission concluded that in economic terms the rail link was viable and its construction would provide economic benefits to the nation. Our submission had the full support of the Northern Territory Labor Party.

So it was with considerable anger, but not much surprise, that we received the news that the inquiry had concluded that the railway would not be economically viable and should not be built.

This so-called independent inquiry was totally cavalier and utterly irresponsible in its treatment of the very careful analysis of freight forecasts put forward by the Northern Territory. It produced its own ''illustrative projections'' of freight without any justification or supporting argument.

The Federal Government could not wait to seize on this report to announce that the railway would not be built. The Federal Minister for Transport had announced that even before I had received a copy of the report.

Mr Speaker, needless to say, the Territory examined the inquiry's report very carefully and produced a detailed critique of it which raised a number of criticisms relating not only to the treatment of freight forecasts, but also a number of serious methodological questions. We endeavoured to resolve all of these issues by approaching the Federal Government to obtain further information as to the approach taken by the inquiry, but these approaches were denied. Many months ago we made a formal request under the freedom of information act for access to the relevant papers and documents. The response-after these months-has been 350 pages of so-called documents which are in fact nothing more than Press clippings and parliamentary questions and answers-information that we and the public were already aware of. Our real request has not been met, and it appears that it will not be met. I can only conclude that the request strikes too close to home. The Commonwealth does have a lot to hide in the conduct of this exercise.

The shallowness of the independent economic inquiry served only to strengthen our conviction that the railway was not only a viable project, but one which was essential for the Territory and for Australia. However, given the total intractability of the Commonwealth we were forced to move forward on our own and it was in these circumstances that we commissioned the two reports which I have tabled this morning.

Canadian Pacific Consulting Services is the consulting arm of the Canadian Pacific Railroad Company. This organisation is an acknowledged railway operator and the consultants have world-wide and impeccable credentials. It runs very successfully a railway system over a country which bears considerable similarities to Australia.

We requested Canadian Pacific to review the conclusions of the Hill report and the Northern Territory submission and to provide us with an independent view as to the financial viability of the railway. In particular we asked Canadian Pacific to test the essential conclusion of the Hill inquiry that the railway would impose a substantial economic cost to the Commonwealth.

The consultant reviewed all of the material and had discussions with relevant people here in the Northern Territory and in South Australia. At the urging of the Territory Government the consultant sought to meet with Mr David Hill who conducted the earlier inquiry to clarify a number of important issues arising out of the report, but Mr Hill refused to meet with him on the grounds that all relevant information was in the report and suggested that the consultant direct all questions to the Federal Minister for Transport instead.

The Canadian Pacific report is available for honourable members to study. I will not therefore deal with its findings in great detail.

But I do want to emphasise the conclusion:

'The railway is essentially an economic break-even proposition, likely to neither impose a major economic cost on the Commonwealth, nor provide a significant return'.

Mr Speaker, that conclusion is a total repudiation of the Hill inquiry's findings.

The report contains an assessment of railway costs and the impact on costs and revenues on various potential freight volumes.

It looks at the financial implications of a railway in terms of cost savings in areas such as road costs and road maintenance, and in a very important contribution it examines the appropriate methodology in assessing the costs and benefits of a project of this kind.

In that regard, honourable members may recall that in March of this year I said this about the Hill report:

'A major criticism of the report which should be made is of its methodological defects. As an exercise in the appraisal of the costs and benefits of the rail link, it fails to adopt universally-accepted procedures. As a result, its conclusions are wrong. The Alice to Darwin railway is not a freestanding proposal under which trains will simply run backwards and forwards between Alice Springs and Darwin, bringing benefit to no one other than those in that corridor . The line would be an integral part of the national rail system. Indeed, it is the major missing link in such a national system. It follows from this that the completion of the link would generate additional rail traffic on other sections of the national rail system outside of the Northern Territory. Indeed, the report acknowledges that rail has advantages in the area of long-haul transport. The cost benefits of this additional traffic throughout the national rail system must be attributed to the Alice Springs to Darwin railway for the simple reason that, without that rail link, they will not occur. That concept is quite fundamental in any project assessment of this type yet the inquiry chose to ignore it. More than that, it specifically rejected it'.

Canadian Pacific has supported that view about methodology and has even pointed out that the Northern Territory submission erred in not extending this principle far enough in some important areas.

Mr Speaker, during the conduct of this most recent assessment, Canadian Pacific has suggested that a further review of the engineering and design standards to apply to the railway could be warranted and that significant savings in capital costs might be possible by applying different standards. This is an area in which Canadian Pacific, as railway builders and operators, have considerable experience. We are therefore proceeding to a second phase study and we have asked Canadian Pacific to undertake this task.

Mr Speaker, establishing the financial and economic viability of the railway is extremely important, but there are other issues as well. There is the future of northern development, there is the consolidation of the investment which Australia is making in the future of the Northern Territory, there are the more than 2,000 jobs which are at stake. Also at stake are important questions of national defence.

The issue of defence was unilaterally excluded from the terms of reference of the independent economic inquiry by the Federal Government. That was just one of the many decisions taken by the Commonwealth which the Territory opposed strenuously.

The Commonwealth sought a defence assessment from the defence establishment and an expurgated copy of that was eventually-after considerable prodding-made available to me and to the Premier of South Australia. I read that assessment with interest. It seemed to me to be a fairly unequivocal statement of support for the railway and it emphasised the extreme significance of the railway in contingent circumstances.

The Prime Minister and the Minister for Defence blithely concluded that these major defence issues in no way detracted from the so-called economic findings of the Hill inquiry and that was the end of the matter.

So once again, it fell to us to try to produce in a positive and constructive way some further insights into the defence issues.

To do this we engaged the strategic and defence studies centre at the Australian National University. The team was lead by the head of the Centre, Dr. Ball, supported by two former senior military officers, one of whom had been Chief of Army Logistics.

Mr Speaker, this study once again shows the totally cavalier approach by the Federal Government to important national issues.

The report concludes that ''in most defence contingencies, even at medium levels of threat, the availability of a rail link through Alice Springs to Darwin would be essential to the deployment and support of a defence force''.

The report provides a very detailed assessment of strategic considerations, including likely threats, warning times, and priorities. It calculated the quantities of fuel and other supplies, personnel and equipment to be moved at various levels of threats, concluded and concerned that road infrastructure lacks the required capacity. It also makes the very important point that infrastructure development and the defence of Australia must be indivisible when it comes to national planning.

The study observes that a reliance on road transport to maintain any defence capability in the north and north-west of Australia is totally unacceptable. The report states that 'the strain on the road transport capability is likely to prove intolerable and the necessary support to the deployment of an operational force could not be guaranteed. The availability of a rail link between Alice Springs and Darwin is essential to the timely deployment and subsequent guaranteed logistic support of a force'.

One of the key warnings in the report is that against waiting until there is some indication of an impending threat to Australia before developing infrastructure such as the railway. The report notes that the very existence of the railway would be an important deterrent. It also notes the considerable time which would be required to build the railway and the possibility of a major threat developing well within this time scale.

Mr Speaker, I commend this report to the careful study of honourable members.

What emerges from these recent reports is a much clearer picture about the railway than we have ever had before. The railway is economically viable, it is essential to national defence and it is totally justified by the wider social audit and community issues.

The project must proceed and we must continue to confront the Federal Government with the facts.

The evidence is clear and the interests of the Northern Territory require the strongest possible bipartisan support for the project.

I have said before that I will not rest on this issue until the railway is built. I renew that pledge and I hope that every honourable member will join me in it.


Senator KILGARIFF —It is a most interesting statement of the way in which the Northern Territory sees the proposal for the construction of the rail link from Alice Springs to Darwin. I believe that many honourable senators and other people who have been following this saga regarding the project will read it with interest. Many things have happened since then. I recall that in discussions with Dr Don Williams, the General Manager of ANR, he told me:

The Tarcoola-Alice Springs line is covering operating costs.

That is the line to Alice Springs that comes off the Transcontinental at Tarcoola. Honourable senators will recall that this standard gauge line, which has now reached Alice Springs, was completed some three years ago. This, of course, is an answer to those who say that the line is not viable. Dr Williams went on to say:

With regard to the proposed project, Alice Springs-Darwin, ANR believes the link would be capable of covering costs as has been shown on the Tarcoola-Alice Springs section.

One sees from the reports that I have tabled the confirmation of this statement; that is, that the line from Alice Springs to Darwin can more than break even. It is unfortunate that since the completion and the publication of the Hill report all work on this very important project has ceased. On 4 September I took the time to inquire of the constructors of the line, the Australian National Railways Commission, as to the situation in September. The telex I received in reply stated:

Confirm that planning work has ceased, and no further funding has been provided .

I investigated this matter to indicate clearly to people the fact that the planning had reached such an advanced stage that it would be a pity to cease work for the sake of something like $2m, with which the program could have been completed. The telex indicates the work done as at September. It reads:

Work completed to following stage:

1. 'Route identification'-i.e. precise alignment selection on paper, completed throughout. Through distance from Alice Springs railway station to Darwin Port is approximately 1430 kilometres.

2. Pegging of line on the ground was not completed. Line actually pegged for total 1060 kilometres, leaving four sections not pegged totalling 370 km:

. . .

3. Site investigations and engineering design plans completed to preliminary stage Alice Springs to Tennant Creek and much of Adelaide River to Livingstone Road section. To lesser stage of completion in the other sections which have been pegged.

4. Final environment impact statement completed.

I believe that the case for the further construction of the line from Alice Springs to Darwin has not been shelved. I believe that there is a necessity for the line and that ultimately common sense will prevail and in consideration of the extra information and reports that are still coming forward, eventually the Federal Government will acknowledge its responsibility and see that the line is constructed.

This morning I gave notice of a motion that I shall move on the next day of sitting. Of course, the opportunity will not come forward in this sitting of Parliament to debate it as the Senate will be rising next week and there is much more business to be dealt with. We will not have the opportunity of debating these reports. I hope that the debate on my motion will take place after the election. My notice of motion states:

That the Senate-

(a) calls on the Government to commission a second inquiry into the viability of the Alice Springs to Darwin rail link project, taking into consideration the recommendations of a report prepared by the Strategic and Defence Studies Centre at the Australian National University, and a further report prepared by the Montreal-based Canadian Pacific Consulting Services, both of which were tabled in the Northern Territory Legislative Assembly on Tuesday, 16 October 1984, and

(b) in the light of the defence and development requirements of the north, calls on the Government to carry out this further inquiry without delay.

I recommend the papers that have been tabled in this debate. They are extremely important to the future of this project and, indeed, to the development and the defence of the north. Finally, I refer to an article in Network, the Railways of Australia quarterly, Volume 19, No. 4, for December, January and February 1983. It is by Mr Morrie Gigney, the Australian National Assistant General Manager, Operations and Marketing. The article is entitled 'The Alice Darwin connection'. I seek leave to table this article for the information of honourable senators and other people.

Leave granted.


Senator KILGARIFF —There is little more to say at this moment. I look forward to the Senate, in the new Parliament, once again picking up the debate on this very important project, the construction of the rail line from Alice Springs to Darwin. I believe that the inquiry that was carried out by Mr Hill has been in very many ways unsatisfactory. It has failed to take into consideration defence and the defence requirements of the north and various logistics and other important information. All in all, the Hill report was a failure and needs a review. I look forward to the Senate picking this matter up in 1985.