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Wednesday, 18 October 2017
Page: 7939


Senator KIM CARR (Victoria) (17:57): On behalf of Senator Sterle, I would like to present the report of the Rural and Regional Affairs and Transport References Committee on the state of Australia's rail industry together with the Hansard record of proceedings and the documents presented to the committee.

Ordered that the report be printed.

Senator KIM CARR: I move:

That the Senate take note of the report.

On behalf of the committee, may I just thank the committee members and Senator Sterle, who, of course, chaired the committee. I think it's demonstrated that this is a committee that works particularly well on behalf of this parliament. This report into the Australian rail industry showed that this is an area in which we're able to gather evidence and reach a unanimous decision in support of recommendations, which are before the chamber at the moment.

I'd like to thank the witnesses for their testimony and the committee secretariat for their hard work in producing this report. Can I in particular take this opportunity to mention the former Senator Back, who participated in this inquiry, and of course Senator O'Sullivan, who stepped into his place in terms of working through the issues, which has led to us being able to bring forward a unanimous report. I would also like to acknowledge Mr Glenn Thompson from the Australian Manufacturing Workers' Union for his fierce public advocacy of the industry and the need to take action on this issue.

The committee, as I said, has produced a unanimous set of recommendations, and, as I said, it's a great opportunity here in the Senate to provide advice to the parliament. I hope the major parties in this parliament are able to take up that advice and provide direction for future government programs. I trust that this will be a matter that will be discussed at the forthcoming election that happens whenever that occurs, and I am hopeful that we are able to take advantage of what's been a 17-month inquiry where we have seen very substantive numbers of submissions and very detailed public hearings.

We heard from over 30 witnesses from industry, from government and from unions. We heard from workers on the shop floor in the railway workshops across the country. Overwhelmingly, all the witnesses—no matter what different companies they represented or what aspect of the industry they represented—testified that action needed to be taken to preserve the strategic capabilities of Australian rail manufacturing.

We know that railways have been very much at the heart of our national politics for a very long time. We understand, for instance, that in colonial times the difference in the rail gauges was one of the reasons that the six colonies decided to federate as the Commonwealth of Australia. What's disappointing is that, some 116 years later, we still haven't resolved some of those big differences between the states, especially around issues of procurement.

The plight of rail manufacturing is akin, in my judgement, to the plight of shipbuilding in this country. It is absolutely essential that we build a sovereign, national capability in rail manufacturing, as we have sought to do in naval shipbuilding. Australia has 150 years of experience in design, manufacturing and maintenance of railways and rolling stock. But the railway manufacturing industry is now facing a valley of death similar to that which has loomed at various points in shipbuilding. The industry employs 5,000 workers, with some 7,000 workers tied up in the supply chain. There are 3,000 jobs that have regrettably been lost in the past decade. Job losses have been particularly severe in regional Australia, in places like Newcastle, Rockhampton, Mackay, Townsville, Maryborough in Queensland, Ballarat and Bendigo. In fact, we have also seen Maryborough in Victoria suffer as a result of the deterioration in the industry. It's essentially because there have been insubstantial numbers of contracts. Investment by the Commonwealth and states in passenger and rail projects is expected to exceed $100 billion in the next two decades. So there is absolutely no reason for this, given the scale of investment that we can anticipate will occur in this country, with regard to projects that are being undertaken both by the Commonwealth and by the states across the Commonwealth of Australia. That's actually greater than the national spend on the Naval Shipbuilding Plan, which is $90 billion over 30 years.

I notice that Senator Sterle is now in the chair. Of course, this is exactly the evidence presented to the inquiry.

The difference, of course, is that in rail manufacturing there has been a lock in on this boom-bust cycle because the procurement decisions made by state and territory governments over many years have not recognised the need to actually build a national market and a national approach to the development of our industrial capabilities. We have, in fact, a situation where the purchasing decisions are taken by state governments on the basis of a very fragmented approach—fragmented in terms of the training opportunities, fragmented with regard to the research and development that's occurring within the industry and, of course, very fragmented in terms of the purchasing. The purchasing power that comes from these various government contracts has been lost. That's not even to begin to consider what's happening in the freight area, where our major resource projects are relying very heavily upon the importation of very, very significant numbers of rail cars from imported sources. We have state governments that all too often look towards the purchase of rolling stock from overseas. They don't consider the issue of the whole-of-life costs of contract; they rather look at the very limited, narrow view. Of course, that undermines our capacity to develop a sovereign capability.

Industries like rail manufacturing just don't emerge in a vacuum. It takes a commitment from governments at all levels. It takes a commitment to plan, to ensure that we keep jobs and skills and capabilities here in this country, and that we develop the necessary supply chains, efficiencies and the skills of our people so we can actually enjoy the benefit of what is, largely, government procurement. Similar lessons apply to private procurement, especially in regard to the resources sector.

The Australian government must develop—this is the recommendation of this report, which was unanimously agreed to—a national rail manufacturing industry plan to maximise the benefit of the $100 billion investment that's expected to be seen in this country over the next two decades. The plan should include a mechanism to remove those peaks and troughs in demand to create certainty for manufacturers and to encourage the investment by companies in Australia to secure the future for employment in the industry and to secure the capacity in the industry so we can be competitive and produce the rolling stock that we actually need.

We've seen in recent times that much has been made in regard to the use of steel in railways. We've seen in cases in recent times where state governments have actually imported the very steel that's used for railways. It's simply a situation that is unnecessary and ought not continue. States and territory governments need to endorse the plan, and under the proposals advanced in this report there is an opportunity here to agree on methods of supporting and resourcing such a national approach. A national rail procurement strategy should be able to complement such a plan, and such a strategy would need to be coordinated through the procurement contracts of the states and territories consistent with our international trade obligations. It would allow for the development of the necessary capabilities, particularly for our small- and medium-sized enterprises, and it would mean that we could maximise local content in the manufacture of passenger, freight and light rail rolling stock. That includes, in my judgement, trams as well. That's consistent with the very position that's outlined in the Commonwealth Procurement Rules and to ensure that we have the whole-of-life costs and quality examined, and also questions on innovation and environmental sustainability. Such an approach would require contractors to implement proper training programs for apprentices and engineering cadets. Such a method would also see us develop the necessary management of supply chains. I seek leave to continue my remarks. (Time expired)

Leave granted.