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Rural and Regional Affairs and Transport Legislation Committee
26/02/2018
Estimates
INFRASTRUCTURE AND REGIONAL DEVELOPMENT PORTFOLIO
Australian Rail Track Corporation Ltd

Australian Rail Track Corporation Ltd

[11:16]

CHAIR: Welcome, Mr Fullerton.

Senator WILLIAMS: Welcome, Mr Fullerton from ARTC. The real problem with Singleton in the Hunter Valley is as simple as this. They've done a trial noise reduction fence to eliminate the noise. People bought their houses and have been there for many, many years, but of course the train line was there first. They were getting two or three trains a day 50 years ago, but now they're getting two or three trains every half an hour type of thing—it's a huge amount of noise. The council says that it's not their responsibility and the ARTC says there has been a sample fence built by the coal mining industry. Who's going to fix this problem?

Mr Fullerton : We're very conscious of the impact of the coal train has on local communities.

Senator WILLIAMS: That's good.

Mr Fullerton : We're very conscious of it, and we do quite a lot of work in terms of dealing with noise impacts on communities. I might add that, as you would understand, all new works require noise attenuation to be installed in terms of planning approval.

Senator WILLIAMS: Did you say, 'All new work'?

Mr Fullerton : All new works.

Senator WILLIAMS: This is the old work.

Mr Fullerton : I am aware of that. I was going to get to that response. We do a lot of noise wall construction on that Maitland to Minimbah project, so we're very conscious of that Singleton issue around Victoria Street and Carrington Street.

Senator WILLIAMS: Yes, Glenridding.

Mr Fullerton : Yes. At the initiative of the industry two years ago we implemented that trial, as you talked about—that under the rail noise project—and installed that noise wall, which was funded by industry. New South Wales does have a rail noise program that applies to their networks based on need. It doesn't cover the ARTC network, so any funding that we have for that type of work needs to be sourced from industry or from our customers, but we are aware of the issues involving, I think, three families in Singleton. We continue to work with them, trying to do what we can to minimise that impact and recognising that there are about a thousand-odd adjacent households along the corridor. We recognise the impact it has on those houses, and we work with industry to try and find solutions.

Senator WILLIAMS: We all recognise that. That's the thing about finding a solution. Coal trains are rumbling through day and night. One reason that was said was when they tried to sell their home over 18 months ago people were not interested when they saw the trains rumbling through. Even when my chief of staff phoned last week they said, 'Hang on a minute. We can't talk,' and he had to put the phone down until the train went past. It nearly goes through the lounge room. It's a huge amount of noise. You recognise the problem, so I've got simple questions: who's going to fix it and when are they going to fix it?

Mr Fullerton : I can't give you an answer on that today. It's a problem that we are aware of: the impact of noise across our corridors. We do what we can.

Senator WILLIAMS: We've been there. We're all aware of the noise and the impact. The thing is, people are being driven crazy because of the trains every few minutes. It's not like the old days when they moved in and there were two or three trains a day. Would you have a good, close look at it and see if you can come back in the May estimates and see if you can give us some positive answers?

Mr Fullerton : I will.

Senator WILLIAMS: On the Inland Rail, as far as resuming land et cetera is concerned, which bodies are responsible for the land acquisition?

Mr Fullerton : Under the current lease arrangements for the existing network, it is a joint responsibility between the states and ARTC. For example, in the Hunter Valley, if we need additional land for network expansion, we pay for that but the land is acquired—

Senator WILLIAMS: I'm looking at the Inland Rail. They are going to have to resume some farmland. Back in the seventies, I think it was, when the Indian-Pacific train line was built from Perth to Sydney, they came straight through our farm in South Australia. They diagonally cut the 1,000 acres in half, basically. They came around a corner, pulled down the fences and dug up the pipelines and there were sheep out of water and sheep boxed everywhere. My father was not impressed. So let's go through it a bit. Who buys land? Who resumes the land?

Mr Fullerton : We buy the land and pay for it—

Senator WILLIAMS: ARTC will pay for the land?

Mr Fullerton : but the acquisition powers rest with the state.

Senator WILLIAMS: Very good. Do you pay market price or above market price? What's the story when you resume the land?

Mr Fullerton : We pay a market price, but we look at what the impact is on property because we recognise that severance is an issue for a lot of landowners in moving machinery and stock from one side of the railway to another. We're very conscious of that, but we'd like to think that in all cases we can negotiate a commercial settlement with those farmers, recognising the impact that the railway will have on their property and, in some cases, the devaluing of that property because of the advent of the railway.

Senator WILLIAMS: How much notice is given to the affected landholders that their land is being sought?

Mr Fullerton : There is a process that we're going through in relation to greenfields where there will be land acquisition required. We're at the early phase of that at the moment. All we have identified is a two-kilometre-wide study area. Once we go through that environmental assessment process, which will take us probably 18 months, and also some preliminary design which we call reference design, we should be able to narrow that down to a 60-metre-wide corridor and that's where we will build the railway. But, in determining that final alignment, we're very conscious of, where we can, following boundary fences, road networks and so on to try and minimise the impact of that severance that will be caused by that railway construction. There is still some work to do and work to be done with each individual landowner in that two-kilometre study area to determine where we finally build that 60-metre-wide corridor. We take all the factors into consideration, including the feedback from them in relation to flooding and hydrology issues as well as severance issues. We do have some flexibility over the next 18 months to position that railway the best we can to minimise the impact on landowners, recognising that, in many cases, the track itself will cut their properties.

Senator WILLIAMS: There'll just be one track built—correct?

Mr Fullerton : There will be one track, but there'll also be 36 crossing lanes.

Senator WILLIAMS: Is 60 metres plenty of room so that if, in 100 years time, they decide to build a second track alongside so the rail line can run both ways?

Mr Fullerton : The width of a track is about six metres, so 60 metres is ample. It gives us—

Senator WILLIAMS: There'd be plenty of room, you'd think. My final question is: at a guess—I don't expect you to be exact—how many landholdings will be impacted from go to whoa?

Mr Fullerton : It's difficult to say. I can come back to you with precise—

Senator WILLIAMS: I suppose if the final route hasn't been decided—

Mr Fullerton : For example, from the border to Gowrie, I think there are something like 1,200 landowners involved in that two-kilometre-wide corridor—it gets quite dense up towards the upper Darling Downs. But, of course, as we narrow that down to a 60-metre-wide corridor, the number of landholders that are actually affected is a lot lower than that. At the moment, if you look at the 307-kilometre greenfield section from Narromine to Narrabri, there are something like nearly 300 landowners affected in that corridor. But, as I said, there are about 1,000 on that other big greenfield section from the Border to Gowrie in Queensland. They are large numbers. We've spoken to most of them already in both community sessions and one-on-ones, but, as we narrow that two kilometres down to a 60-metre-wide corridor, the numbers affected will be a lot lower.

Senator WILLIAMS: Thank you, and please try and do something for Singleton and all those people who will be buying hearing aids at a young age, I'd imagine.

Mr Fullerton : I will, Senator.

Senator WILLIAMS: Thanks a million.

CHAIR: Mr Fullerton, just on the question of landowners affected, you would accept that different landowners are affected in different ways? Senator Williams has raised an issue around noise, but some other landowners may be affected in terms of their ability to operate their farm or their business enterprise. You do accept that?

Mr Fullerton : That's true. We're very conscious of that. The feedback we've had from landowners is not just around, obviously, the Condamine, which you're familiar with. Their big concern is flood mitigation and the impact of flooding, with a railway being built through that area. Towards Toowoomba they're more concerned about noise in terms of proximity to their properties. Those farmers I've spoken to down towards Inglewood are more concerned about land severance, because, as you know, they move machinery from one side of the railway to the other and they've got stock that moves from one side to the other. So they're probably the three or four issues that most people are concerned about: the severance of the property; the impact on flood waters that may get disturbed by the construction of the railway, bearing in mind that we have very stringent planning requirements to meet in designing the railway; and the noise and the proximity to houses as the railway winds its way through the regional areas.

CHAIR: Since we interacted at the last estimates you've created some consultative committees to deal with the concerns of the operators on the flood plain?

Mr Fullerton : We have. We've got four consultative committees in place. We've got the Lower Darling Downs, the Upper Darling, the Gowrie to Kagaru, and the Kagaru to Acacia Ridge sections. There are four committees. They began to meet last December. There have been a number of meetings. We're just finalising an initial report of all those meetings.

CHAIR: Good work. Thank you for that.

Senator McCARTHY: Hello, Mr Fullerton. How are you doing?

Mr Fullerton : Hi, Senator. How are you?

Senator McCARTHY: It's good to see you. I apologise that I did miss the beginning of your responses, so let me know if I'm covering something that you've already answered. Just in terms of the Inland Rail, according to the budget speech:

… the Government will fund the Melbourne to Brisbane Inland Rail project with $8.4 billion in equity to be provided to the Australian Rail Track Corporation. Construction on this 1,700 kilometre project will begin in 2017-18 … It will benefit not just Melbourne and Brisbane, but all the regions along its route.

And it's expected to be operational in 2024-25. In addition to the $8.4 billion equity injection, the 126 kilometre section between Toowoomba and Kagaru, including large-scale tunnelling, will be delivered through a public-private partnership. Under this delivery arrangement, the private sector will design, build, finance and maintain this section of the rail line over a long-term concession period. Mr Fullerton, I know we've touched on these issues previously, but again, for the sake of clarity, I do want to go over them to confirm a couple of things. Will the ARTC need a letter of comfort, guarantee or any other agreement or arrangement with the Commonwealth regarding the commercials and risks related to the Inland Rail project?

Mr Fullerton : No, Senator, I don't think so. The governance arrangements in relation to this project have now pretty much been finalised. The statement of expectations, the equity financing agreement and the project governance framework have been finalised with the shareholders. Each year ARTC prepares a five-year corporate plan that picks up our business forecasts over that period. Of course, this year it will include within that corporate plan the provisions for the construction of Inland Rail. So the corporate plan forms our understanding with the shareholder on ARTC's operations and activities.

Senator McCARTHY: How are the discussions with the New South Wales and Victorian governments regarding extending the leasing of their track progressing?

Mr Fullerton : I think that, given that the Commonwealth and the three states are in the process of negotiating bilateral agreements, it's probably a topic that's best answered by the department.

Senator McCARTHY: Dr Kennedy?

Dr Kennedy : They're proceeding well. Inland Rail and Rail Policy Division's appearing at 9 pm tonight.

Senator McCARTHY: Sorry, I'm having trouble hearing you.

Dr Kennedy : Inland Rail and Rail Policy Division, the relevant division for this, is appearing at 9 pm. I'm going to do my best for you now, Senator, because they're appearing at nine tonight. I might just ask one of my colleagues, Phil Smith, to come to the table, and the deputy secretary. You want an update on how the intergovernmental agreement discussion—

Senator McCARTHY: Yes.

Dr Kennedy : We'll do that for you now, rather than waiting until 9 pm.

Senator McCARTHY: Okay, thank you.

Mr Yeaman : So, Senator, I think your question related to the progress on the intergovernmental agreement negotiations—is that correct?

Senator McCARTHY: Extending the leasing, yes. How is that progressing?

Mr Yeaman : So we're in constructive and ongoing discussions with the state governments across all three affected states to try to lock in an intergovernmental agreement. We've provided advice to government on that, and those discussions are progressing. We'd hope to have IGAs in place shortly.

Senator McCARTHY: So what does 'shortly' mean?

Mr Yeaman : It's difficult to say, Senator. Obviously it's a negotiation. I think we've made good progress with some of the states and we hope to have something down shortly, but it's a matter for government.

Senator McCARTHY: So you don't have a particular time frame that says it has to be reached by this?

Mr Yeaman : No, it hasn't been stated that there's a particular time frame.

Senator McCARTHY: What impact would increases in rents have on the commercials of the Inland Rail project?

Mr Yeaman : Senator, on a long-term project of this kind there are a number of factors that could change over the course of the project in terms of costs. Those have been factored into the business case that was conducted in 2015. There was contingency provided to manage those impacts in the normal way, so we would expect that to be part of the normal contingency arrangements.

Senator McCARTHY: How much has been spent on Inland Rail to this point?

Mr Fullerton : To date we've spent $160 million of the $285 million of grant funding allocated to ARTC, and we've spent a further $3.8 million of equity funding.

Senator McCARTHY: Sorry a third?

Mr Fullerton : We've spent $3.8 million of equity funding that commenced to flow to us in December 2017.

Senator McCARTHY: December 2017?

Mr Fullerton : Yes.

Senator McCARTHY: Mr Fullerton, when will construction actually begin?

Mr Fullerton : We've got some early works commencing in late March. We've got two possessions in March and April, whereby we'll build four new concrete bridges on Parkes to Narromine and replace the existing timber bridges.

Senator McCARTHY: So that's in March?

Mr Fullerton : In March and April. We've also purchased 15,000 tonnes of rail steel from Liberty OneSteel in Whyalla. That's in the process of being delivered to site between Parkes and Narromine. We are about to award a contract for 190,000 concrete sleepers that we expect to receive in April of this year, as well as ballast and capping material for the formation. And we're going to tender shortly for turnouts that will be installed on the Parkes to Narromine section. We're also currently in the tender evaluation phase for the construction component of Parkes to Narromine, where they will build the new formation and the new track. We've had site visits from the shortlisted proponents. We expect to be able to award that contract in May this year and for construction to start soon thereafter on the track construction. However, the bridge construction will be starting in March and April.

Senator McCARTHY: Okay, so how many jobs does that involve?

Mr Fullerton : Senator, I will need to take that on notice for the construction phase, but it would be hundreds of jobs.

Senator McCARTHY: For the four bridges between Parkes and Narromine, how many jobs? Could you take it on notice?

Mr Fullerton : I'd need to take it on notice. I think it's a $3 million project, so there would be quite a few people employed on that construction.

Senator McCARTHY: Yes, but just for that section, obviously, because that's your first cab off the rank, so to speak, in terms of construction. You said 15,000 tonnes of rail steel that's being delivered?

Mr Fullerton : Yes.

Senator McCARTHY: How many jobs would be involved in that, in the relocation of the steel, and how many jobs are in the 190,000 concrete sleepers?

Mr Fullerton : We can provide that information to you.

Senator McCARTHY: How many Indigenous workers would be within those numbers, and how many Indigenous suppliers would be involved in those numbers? You can take those on notice.

Mr Fullerton : I could do that.

Senator McCARTHY: Great. Thank you. Mr Fullerton, you told a recent joint committee on public accounts and audit that Inland Rail would never make a return on its investment. On what basis is this being funded off budget given that off-budget projects must be able to make a return to the budget?

Mr Fullerton : I think my comments were that, from an ARTC perspective, ARTC is a commercial entity. Could it develop a commercial case to invest the full $10 billion to Inland Rail and get a commercial return that we are required to do? I think it was clear through the market testing process that was undertaken two years ago that there was no market appetite for the private sector to fund the full construction cost of Inland Rail, but certainly the project produces substantial benefits to ARTC once it's completed, because sixty per cent of Inland Rail is part of the existing ARTC network. The completion of Inland Rail will allow significant growth to occur into capital cities between Melbourne to Brisbane, Brisbane to Adelaide and Brisbane to Perth, and the size of those future cash flows well and truly covers the ongoing operating cost of the railway and will fund further growth capex in terms of that corridor. The value of those cash flows is such that ARTC itself could make an investment into the project, and that's something that we are now considering with the shareholders. The scale of that investment would be based on those future cash flows that will flow once the line is open.

Senator McCARTHY: When details of this project were being hammered out, did the ARTC provide that advice and other advice as to whether the project should or should not be off budget?

Mr Fullerton : That was a matter for the government to decide. Since 2014 we've worked very closely with government around the original business case, the market-testing process and, more recently, the development of the equity financing agreement and the statement of expectations.

Senator McCARTHY: Is there a possibility that at some point during the construction of Inland Rail the Commonwealth will have to provide grant funding to make it a reality?

Mr Fullerton : Our understanding is that, through the last two budgets, the Federal Government allocated a bit over $9 billion as equity funding into ARTC. In addition to that, you mentioned the public-private partnership that will obtain money from the private sector for the construction of that section of corridor, plus there's also the capacity of ARTC itself to invest in the project given the cash flows from day one.

Senator McCARTHY: Can you just clarify for me again what the total cost of the program is?

Mr Fullerton : The 2015 estimate was at a P50 level and just under $10 billion. At P90 it was $10.7 billion, but, as was mentioned last year, we are going through a reference design process and environmental approvals now, and we expect to update that budget in about 18 months time, when there are more knowns around the environmental factors and the reference design to underpin the project.

Senator McCARTHY: So in estimates next year we might have a different—

Mr Fullerton : That's right. But that $10 billion, as you'll note from the business case, included well over—I'd need to check the number, but it was certainly nearly thirty per cent as contingency. So there's a recognition that, when that budget was put together, that original concept design was significant given the scale of the project, the time over which it will be built and the complexity of it. There was significant contingency allowed in that budget, but, as I said, we will be updating that budget when we have more information around the reference design and the environmental approvals.

Senator McCARTHY: Mr Fullerton, last year the government produced an alignment through the southern part of Queensland, and critics, including the chair of this committee, were critical of this alignment and the amount of consultation leading to it being chosen. Can you outline progress on this issue since our last hearing?

Mr Fullerton : Yes. I think it was on 21 September last year that the minister determined the study alignment for that corridor which went through the Millmerran-Wellcamp area. We also were requested, at the time, to accelerate the technical and approvals work on that corridor, given the concerns by some landowners about the Condamine floodplain. We've now awarded a consultancy to a company that, first of all, will be accelerating the flood design work, and hopefully we'll have a report from that work by the middle of the year.

Senator McCARTHY: Is that consultancy public? Has it been publicly announced?

Mr Fullerton : If it's not, it's very close.

Senator McCARTHY: I'm just wondering whether you could reveal it to us, but clearly you're not sure about that yet.

Mr Fullerton : No. It has certainly been approved by the board, and we're just finalising the contract details, so I'd prefer not to name the company. It was approved by the board in the February meeting.

Senator McCARTHY: Do you want to take the question on notice in case?

Mr Fullerton : I will, yes.

Senator McCARTHY: You might want to be able to provide it later. Specifically, there are claims that the project will cause flooding. What evidence do you have as to whether flooding is a risk?

Mr Fullerton : Railways have to cross floodplains, and this is a significant floodplain. There is a railway across the Condamine floodplain today, but I wouldn't use that as an example because it's an old railway alignment. There are very stringent planning requirements about the construction of any infrastructure. We can't build infrastructure that's going to have a material impact on surrounding infrastructure or land. We're very conscious of that. That's the work that we have initiated now, with the consultants, to look at the Condamine floodplain. Of course, you want a railway to be able to operate under many flood conditions so it remains open. It's at the early phase of the work to look at the engineering solutions that will be required to ensure that both flood waters and flood levels are managed in accordance with environmental and planning standards. We are working very closely with landowners who have spoken to me and made their views public. This as is a significant issue, and we're working closely with them. I touched on it a bit earlier with those consultative committees. They're well represented by some of those landowners to ensure that we take them through this process step by step.

Senator HANSON: You said the Inland Rail is $10 billion in 2015. It is projected it could blow out to $13 billion. Is that correct?

Mr Fullerton : No, I cannot comment on that until we do that budget review update.

Senator HANSON: You've just commented that it's going directly from Melbourne to Sydney to Brisbane. What benefits will this have for inland communities and towns if it's a direct line?

Mr Fullerton : It will have a significant impact. It's a faster route. Seventy-five per cent of the volumes will flow from intercapital. It's the intercapital component of freight that really helps justify the project, but the fact that it's going to run through two of the most productive farming areas of Australia—

Senator HANSON: But it's not stopping?

Mr Fullerton : It's not stopping. Intercapital freight trains don't stop. They don't stop today. The benefits it will provide to the Southern Downs are: high-capacity, high axle load, longer, higher, heavier trains that can run through to the port. That would also be the case in western New South Wales into Port Botany, Port Kembla and the Riverina into the Port of Melbourne. There are large volumes of freight generated by regional Australia that goes to export. To date they've had a pretty lousy network that services those regions into the port. Inland Rail provides the opportunity to provide a world-class rail system that can handle grain, chickpeas and cotton far more efficiently than it has ever done in the past.

Senator HANSON: You did mention the Condamine floodplain—the floodplains all around the area just outside Toowoomba and Millmerran. Of course that was dramatically hit by the 2011 floods for over two years in a row, and that had an impact on that. I have spoken to the locals who are terribly opposed to where the line is going, because of the floods. Have you actually reassessed that and looked at where else to put the line rather than outside Millmerran, which is neither practical nor cost-effective.

Mr Fullerton : Yes, we have, Senator. I have spoken to a lot of the landowners myself, and I'm fully aware of the concerns that they've got. You know what we've committed to, and the question has come up at estimates previously, that we're now accelerating the work with our technical advisers to look at the engineering solutions. We're working very closely with landowners to ensure they get comfort from and are satisfied with the design of the railway to handle floodwaters and flood levels. We then have to seek environmental approvals for that construction.

There were four alternative alignments that have been considered. They were considered during that six-month period from November 16 to March of last year and were independently assessed by a team of engineers from AECOM and Aurecon. They looked at those four alignments and came up with their recommendation around the Millmerran alignment. The closest one to that was the Kulara alignment that also had to cross the Condamine Plains as well but higher up. Considerable work's been done to look at those four alignments. Sure, the alignment selected has caused some concerns for those Millmerran farmers, but we're now working with them to get them comfortable with the design of the railway through that area and to accommodate to their satisfaction the floodwaters.

Senator HANSON: Isn't there going to be even greater impact on farming families in the Millmerran area from the route that you've selected?

Mr Fullerton : There's already a train line that's no longer operational from Millmerran to Toowoomba.

Senator HANSON: Yes, I know, but the track that you propose now—

Mr Fullerton : We do have to build the railway line through the Condamine at some point, and the important thing is that we build that line to very stringent planning conditions to ensure that it can handle the floodwaters and can't increase flood levels as a result of the line. It's a well-known flooding area—we appreciate that.

Senator HANSON: My concern is for the farming families that have been established there for many years and the impact a train line going through their properties is going to have. It's been brought to my attention that putting the track about five or six kilometres to the west would not have as much of an impact and would only go through one landowner holding rather than numerous landowners. Has it been considered to put the track up through Goondiwindi to Miles and, instead of using the Brisbane port, to actually have the line go from Miles to the Gladstone port?

Mr Fullerton : No, it hasn't, Senator.

Senator HANSON: Would it be viable to consider that? The line is to go to Acacia Ridge, is that right? And from Acacia Ridge to the port is by how? How are you going to get your product off the train to the port?

Mr Fullerton : The millions of tonnes of freight that move from Melbourne to Brisbane today go through Acacia Ridge. That freight is manufactured in Australia and consumed in Australia. It doesn't go to the port. It's intercapital freight that's generated in Melbourne and in Victoria, and it's—

Senator HANSON: So that line is not going to be used for anything that's going to end up at the Brisbane port for shipping overseas?

Mr Fullerton : Senator, that's the current market; that's the interstate market that we estimate to be around about five million tonnes. Rail's got about 25 per cent of it today, and it's domestic freight that doesn't go to or from a port. There is another market: if you take the Riverina, for example, and western New South Wales, there are significant volumes of agricultural product that go from those regions on rail to the nearest port. So, from the Riverina for example, significant tonnes will flow south through the Port of Melbourne. Some of it goes to the port of Botany and, in western New South Wales, you've got significant volumes of grain and other agricultural products that go into Port Kembla and Port Botany. We're confident, with the advent of Inland Rail through the Toowoomba region, given the characteristics of the railway, that significant volumes of agricultural product for the first time can go by rail into the Port of Brisbane. There is an existing line there today—a narrow gauge and a standard gauge line. The standard gauge line was built in 1997. We expect that to be able to be utilised to some extent for some time to handle those volumes. We agree that, at some point in the future, you will need to build a new dedicated freight line from Acacia Ridge to the port, but that's not required yet. The first stage is to build stage 1, which is Melbourne to Acacia Ridge, for the intercapital freight.

Senator HANSON: So your company is looking at investing $10 billion. So the money is going to be federal government funding? Is that correct, or is it private investment?

Mr Fullerton : No. We generate $300 million revenue already on our interstate, intercapital network from general freight. Of that, 25 per cent of that freight to date is from Melbourne to Brisbane. We enjoy about an 80 per cent market share Sydney, Melbourne to Perth, because of long double-stacked trains of the type we want to run between Melbourne to Brisbane, and we expect that market share in the business case to grow by 62 per cent, which is a substantial lift in tonnes, which we will be able to charge access fees for. The profits we make from that additional freight can support the investment we'll make in Inland Rail during the construction phase.

Senator HANSON: Yes, but you didn't answer my question. Where is all the money coming from to build this-is it federal government funding?

Mr Fullerton : Yes. As the government announced in May 2016 and May 2017, a bit over $9 billion—

Senator HANSON: Federal government funding—

Mr Fullerton : has been committed by the federal government.

Senator HANSON: And has it been viewed a white elephant? I know of other—

CHAIR: Without limiting you, Senator, these matters were comprehensively examined here a bit earlier in estimates. My policy is: if you have a particular detailed interest, you probably should go to the Hansard and see, but continue on.

Senator HANSON: Other private rail lines are actually very limited now. There may be only one or two, because they've got out of the business of transporting on their rail lines because of the cost factor. They're finding that shipping from one port to another is a lot cheaper. So do you think it's going to be a white elephant for the taxpayers of Australia to build this rail line?

Mr Fullerton : Not at all, Senator. In fact, I think, if Inland Rail isn't built, governments will have to think about having to spend twice as much money on a road network because, at the end of the day, the freight has to move. There are certain characteristics of the supply chain that will require that freight to move on land, not by ship, because freight needs to get there by a certain time. Coastal shipping does carry some but just cannot provide the frequency or transit time to get it all. Inland Rail is a 50- to 100-year project. The existing Brisbane to Melbourne line is old alignment. It's not even continuous. One hundred kilometres of that Melbourne to Brisbane line today share the Sydney metropolitan network between Sydney and Newcastle. So, if Inland Rail isn't built in the fastest-growing economic region of Australia to serve Australia for the next 50 to 100 years, a lot of that freight still has to move. It can't move on an existing coastal route, because it hasn't got the service characteristics and is longer in terms of transit times. So, yes, I'm a great believer in the project. I think we see what happens between Sydney, Melbourne and Perth. A world-class railway captures 80 per cent market share, otherwise all that freight would be on road.

Senator HANSON: One last question: what is going to be the average speed of the train?

Mr Fullerton : The transit time at the moment is 33 hours on the coastal route. With Inland Rail, because it's 200 kilometres shorter, the transit time will be 24 hours or less.

Senator HANSON: And the average speed of the train?

Mr Fullerton : I need to do the calculation. If it's 1,700 kilometres long and the transit time is 24 hours, it's a simple calculation to work out the average speed.

Senator HANSON: It's 70 to 80 kilometres an hour.

Mr Fullerton : That's right. The transit time is road equivalent.

Senator HANSON: Thank you.

Senator RICE: Hello, Mr Fullerton. Not surprisingly North East rail in Victoria is what I've got a particular interest in. I'm interested in knowing how things are progressing with the $100 million upgrade of the North East rail line.

Mr Fullerton : Things are progressing well. Up until Christmas time, I think we've been working with the Victorian agencies around the scope of work for the $100 million. In December, we signed off on that scope of works at a steering committee that I'm a member of as an acceptable scope to deal with the objective—and I think I might have shared that at the last estimates—to make the track more reliable and resilient and improve the ride comfort for passenger services. That was the objective of that piece of work. Since then, we've developed the project proposal report that has been signed off by departments. That's now been shared with Victoria. That work is now being peer reviewed by Monash University, and we're ready to start. It's now subject to just a final agreement between the Commonwealth government and Victoria for us to begin a community consultation process.

Senator RICE: Is it planned for the scope of works to be up for community consultation?

Mr Fullerton : Yes.

Senator RICE: Even before you actually sign off on it?

Mr Fullerton : I think the plan is for us to have a peer review, which has been done, and then share the scope of works and the peer review with the public.

Senator RICE: When is that planned to occur?

Mr Fullerton : We had planned to start in March, but we—

Senator RICE: To actually start—

Mr Fullerton : Consultation work—

Senator RICE: Consultation in March, right.

Mr Fullerton : but we're just waiting for the final sign-off between the Commonwealth and Victoria.

Senator RICE: What's the time line? How long is that going to be out for consultation?

Mr Fullerton : I'd like to do that as quickly as we can, so we can start. I'd expect that consultation to take at least a month.

Senator RICE: Who's going to undertake the consultation?

Mr Fullerton : We will be working with a number of the—well, we will be involved.

Senator RICE: Will ARTC be leading the consultation process?

Mr Fullerton : What we've agreed with Victoria is that, given that V/Line own the customer base or the passengers, we'll be doing this with V/Line and ourselves to front up to those community consultation forums.

Senator RICE: What's the consultation process proposed to consist of?

Mr Fullerton : We're meeting with the Border Action Rail Group, and there are other—we're still looking at who best can represent the communities, and we're still probably open minded about that. We've been working with a number of people along the corridor. We've had a lot of consultation already with a number of those organisations that I've just mentioned, but we will design that consultation so that it satisfies everyone's interests.

Senator RICE: So it's not designed yet?

Mr Fullerton : We're still putting it together, but we haven't really yet agreed that consultation process with Victoria on when and who's going to be involved from ARTC and the Victorian agencies.

Senator RICE: But you're planning on starting it in March, which is in a week's time.

Mr Fullerton : That was the plan when we discussed this last year. That's now challenging, but, once we get the go-ahead and agreement is reached between the state and the Commonwealth government, we'll get underway.

Senator RICE: In terms of the exact scope of the consultation process and what it's going to consist of, when do you expect to have that finalised?

Mr Fullerton : I think it's a matter of weeks to get that completed. We're keen to get going. In fact, we've got a shutdown on 17 and 19 March. ARTC has taken the decision to commence a small amount of work because it's opportune.

Senator RICE: It doesn't sound like you'll actually have completed the consultation process by then.

Mr Fullerton : No, but there are some works there in the deck bridges which we've been progressively doing over the years which we could probably do, so we plan to do that. But the consultation process is absolutely critically important to us. It gives a chance for the communities to have a look at what is being proposed. There are a whole range of different work activities, and we will get their feedback.

Senator RICE: The Victorian government, I understand, have raised concerns that the $100 million isn't going to be sufficient to bring the track up to class 2 standard, which is required to accommodate their VLocity trains. What does class 2 standard actually mean?

Mr Fullerton : That's a standard that V/Line have recognised in terms of some of their regional passenger lines, like the Bendigo and Ballarat lines—those higher speed regional passenger lines.

Senator RICE: Is it a Victorian standard or is it a nationally recognised standard?

Mr Fullerton : For example, ARTC has its own national standard for track, the freight standard.

Senator RICE: And how does their class 2 standard then—

Mr Fullerton : It's a higher standard.

Senator RICE: A higher standard than your class 2 standard.

Mr Fullerton : That's right.

Senator RICE: So the North East track doesn't meet the class 2 standard now.

Mr Fullerton : No, it doesn't.

Senator RICE: And after the $100 million works, will it meet the V/Line class 2 standard?

Mr Fullerton : No, it won't.

Senator RICE: Will that mean that velocity trains won't be able to use the track?

Mr Fullerton : That's a matter for Victoria. But I don't think that would prevent velocity trains running today. The XPT runs on that track today at 130 kays an hour.

Senator RICE: But Victoria say that it needs to be a class 2 standard to run velocity trains.

Mr Fullerton : We don't share that view, but that's a matter for Victoria.

Senator RICE: How much more work would be required to bring it up to class 2 standard?

Mr Fullerton : We've always been very clear that the $100 million was a sizeable contribution to achieve those objectives I mentioned a bit earlier about improving the reliability, resilience and ride comfort. But there's further work to be done to raise it to class 2.

Senator RICE: When you were looking at the scope of works, did you look at what would be required to bring it up to class 2 standard?

Mr Fullerton : Yes, we did.

Senator RICE: Is that public information, as to what the scope of works would then need to include?

Mr Fullerton : No, it's not public information.

Senator RICE: But the scope of works that's been done for the $100 million won't bring it to class 2.

Mr Fullerton : No. We've always been clear about that.

Senator RICE: Did you form an estimate of how much extra money would be required to bring it to class 2 standard?

Mr Fullerton : Yes, we did.

Senator RICE: Can you tell us how much extra money would be required to bring it to class 2 standard?

Mr Fullerton : I'd prefer not—

Senator RICE: Can you tell us what it costs—you prefer not to. Are you claiming public interest immunity?

Mr Fullerton : We haven't had any discussion with Victoria but it's a sizeable amount above the $100 million. I'd need to take that on notice to get you the precise numbers.

Senator RICE: But substantially more than the $100 million to bring it to class 2.

Mr Fullerton : There are two elements of a class 2 standard. It really is all about getting a lot more ballast depth. I think, also, with a class 2 track, there is the ongoing maintenance requirement to maintain a class 2 standard, which is also a factor. In terms of the extra dollars, it's something that I'd need to take on notice.

Senator RICE: The Victorian government has been reported as saying an extra $135 million is needed. Do you agree with that figure?

Mr Fullerton : I think it's in that order, but I'd like to go away and just check.

CHAIR: Colleagues? No more questions? As there are none, we thank you, Mr Fullerton. That's a gentler visit this time than last time, I suspect.

Senator Scullion: An easy ride.

Ms Rule : It has been, yes. It's a sign of things to come!

CHAIR: An easy ride, there you go—more ballast under us this time round. Thank you. We appreciate your effort, and safe travels back to wherever your intended destination is.