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Tasmanian train declared excinct -

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ASHLEY HALL: Tasmania's largest rail operator, Pacific National, has announced it's pulling out of
the state.

Two years ago, the Federal and State Government's put together a $118 million rescue package to
help the flagging rail system and keep Pacific National operating in Tasmania.

But Pacific National says the package hasn't been enough to help it make a profit - so it's selling
up.

The Tasmanian Government has been left owning the railway lines with no-one committed to running
the trains.

Felicity Ogilvie reports.

FELICITY OGILVIE: There are no public passenger trains in Tasmania - but a network of freight lines
criss-cross the island.

The Tasmanian Government hasn't run the state's railway since 1975, and the Treasurer, Michael
Aird, doesn't want the railway back.

MICHAEL AIRD: Look, I'd be very reluctant to be drawn down that path, to be quite frank. But if
push comes to shove that we need to be involved, then we will, but it is not something that I would
promote and I certainly would like to see an independent commercial operator.

FELICITY OGILVIE: Pacific National considered pulling out of Tasmanian in 2006 - but stayed because
of a rescue package.

In a three-way deal, the Tasmanian Government committed $40 million to repairing the state's rail
line.

The Federal Government put in $78 million and Pacific National agreed to upgrade its locomotives
and carriages.

A spokeswoman from Pacific National says the company can't keep the Government money from the deal
because it's earmarked for the Tasmanian rail line.

That's been confirmed by the Tasmanian Treasurer, Michael Aird, who's told ABC local radio in
Hobart the money from the rescue package will be spent on the line:

MICHAEL AIRD: We have continued our investment in rail and I think, quite frankly, this is an
opportunity for us to find an operator who will know exactly the level of investment that the
states are making and the Commonwealth Government's making into supporting the rail infrastructure
and get a decent operator here who can run it properly and commercially

FELICITY OGILVIE: Pacific National says it won't leave Tasmania until a new operator can be found.

A Tasmanian transport analyst, John Livermore, says even with the Government's help, a new operator
will still have to spend a sizeable amount of money to get the rail system into working order.

JOHN LIVERMORE: The whole line has had problems with derailments. In fact, even five years ago I
understand from a freight operator, not Pacific National, that there were about a million dollars
worth of claims in relation to derailments from those who had put freight on rail, so I think there
are a number of maintenance issues that need to be addressed.

FELICITY OGILVIE: Operating the rail line is still an attractive investment because of the growth
in Tasmania.

Logs for Australia's biggest pulp mill will be carted by rail as well as road, and the West Coast
is experiencing a mining boom.

The Mayor, Darryl Gerrity, says there is three mines in the area and two more are opening this year
and they all need rail transport.

DARRYL GERRITY: We are due to increase three-fold the amount of minerals being exported from the
West Coast between now and 2010. That is only in two years time, so three-fold we are bringing in,
we'll be exporting about 1.2 million tonnes per annum in two years.

Obviously, that can't go on our roads.

FELICITY OGILVIE: At the moment, one quarter of Tasmania's freight is moved by rail.

ASHLEY HALL: Felicity Ogilvie.