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Driving the costs out of rail: speech to the AusRAIL 2013 Conference, Sydney



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Warren Truss MP Deputy Prime Minister

Minister for Infrastructure and Regional Development

Speech

AusRAIL 2013 Conference: ‘Driving the costs out of rail’

Bayside Auditorium B Sydney Exhibition and Convention Centre Darling Drive, Darling Harbour

28 November 2013

Thank you Bryan for the warm welcome (Bryan Nye CEO, Australasian Railway Association) and good morning everyone.

I appreciate the opportunity to address your conference today.

It’s particularly pleasing to be back as Minister for Infrastructure and Regional Development.

Can I begin by rejecting the myth that this government is not interested in rail projects.

While the Prime Minister and I have stressed on several occasions that we intend to be an infrastructure government and we certainly intend to build a lot of roads… we are also committed to building the rail infrastructure of the 21st Century.

Greater investment in more efficient and effective rail infrastructure will provide access to new and emerging industries, transport our goods to local and far-off markets more competitively, and link Australians to jobs, services and goods we haven’t yet dreamt of.

That future is achievable with good planning, good coordination and long-term vision.

In rail we can clearly showcase planning, coordination, cooperation and vision.

SUPPORTING THE NATIONAL FREIGHT TASK

As we all know Australia’s 33,000 kilometres of rail are integral to our national transport network, moving passengers and freight.

Our freight transport task has quadrupled over the last four decades, and we expect this trend to continue.

This growth, along with Australia’s growing population and increasing urbanisation, have real implications for our economy, particularly for transport and infrastructure.

The new Coalition Government recognises that the time has come to ensure that our freight infrastructure such as road, rail, intermodal terminals and ports, is geared to meet forecast growth.

And that if we don’t make a significant investment in our rail network, and ensure that more freight is carried by rail, we won’t just have double the number of trucks on the road, but triple or quadruple.

We recognise that industry must have a genuine choice when transporting freight, and while we are working with the states and territories to accelerate the delivery of major roads and highways, this Government will also have a strong focus on rail freight projects.

An efficient rail freight network is the key to effective supply chains, national productivity and competitiveness.

Better utilising our existing infrastructure is an important element of an efficient rail network.

The Australian Rail Track Corporation’s continuing work on developing the Advanced Train Management System, which I was talking about when I was last Transport Minister, is one example of using technology to increase capacity and improve safety.

This use of technology will also be important for new rail infrastructure such as the Melbourne to Brisbane Inland Rail project which will provide a major boost to our logistics capability as a nation.

INLAND RAIL—A BOOST FOR REGIONAL AUSTRALIA

As you may know, the Government has committed $300 million to finalise the plans, engineering design and environmental assessments and to get the Inland Rail project underway.

Inland Rail has long been championed by Coalition Governments. When previously in this portfolio, I commissioned the North-South Rail Corridor Study to identify the best route for the line.

It is now this Government’s priority major rail freight project. It is one of the nation’s most ambitious. For these reasons we have brought forward funding to make the project happen.

It is also a project close to my heart because of my strong personal commitment to regional development.

It will bring new life and growth opportunities to communities and districts along the route through regional Queensland, regional NSW and regional Victoria.

Inland Rail will help to grow the wealth of regional Australia in the eastern states and create flow-on benefits throughout Australia’s economy.

Inland Rail will position our transport network to do the heavy lifting required to meet Australia’s growing freight transport task over the next 50 years.

Greater efficiencies will reduce the Melbourne-to-Brisbane terminal-to-terminal transit time to less than 21 hours - seven hours faster than the current route.

By passing congested Sydney area freight lines, it will transform the movement of freight in Australia’s eastern states and provide regional communities with cost-effective access to metropolitan markets and east coast ports.

And it will open up significant commercial opportunities and new industries for regional centres along the route such as freight hubs, storage and handling.

The Inland Rail from Melbourne to Brisbane will cross the Sydney to Perth continental railway in Parkes, providing an interconnected rail network between all of our mainland capital cities.

Indications are that by 2050 Inland Rail will reduce the truck task for agriculture alone by over 100,000 semi-trailers, helping to make our roads safer and ease congestion.

The line is also projected to generate 10 million tonnes of new coal and mineral freight, opening mining industries in locations like the Surat Basin to develop their full potential.

This greater capacity will flow-on to other regional industries, helping them to tap into global supply chains and captialise on the opportunities presented by new and emerging national and international markets, particularly in Asia.

It will also free up additional rail capacity in Sydney, benefiting the entire urban passenger and freight rail network.

Inland Rail will support the forecast freight growth by allowing interstate trains travelling between Melbourne and Brisbane to avoid the Sydney metropolitan network and the NSW north coast line.

This will improve reliability, which is an important aspect for productivity.

This long list of benefits is not something this Government is just paying lip-service to… we are committed to making Inland rail a reality.

And there are a number of key parties to the project, construction giants and just plain visionaries who share our enthusiasm for the line. To ensure that construction of Inland Rail starts as soon as possible, I am forming a high-level Implementation Group, to be Chaired by the former Deputy Prime Minister John Anderson, to drive then project forward and to achieve our goal to begin construction in our first term.

As Australia’s longest serving transport Minister, John has the experience and the networks to help bring this significant project to fruition. He was instrumental in negotiating the lease of the NSW interstate rail network to the Australian Rail Track Corporation, establishing our first truly national rail network. I am now asking him to tackle a second major rail initiative.

The Implementation Group will report to me. Importantly, its role will be to help drive the project, determine construction priorities and ensure appropriate engagement with the community and stakeholders, including many of you in this room.

I have written to the Premiers of Queensland, NSW and Victoria to ask for their cooperation in building Inland Rail and to extend to them the invitation to nominate a senior representative to participate in this group. I expect the CEO of the ARTC, John Fullerton, and the Secretary of my Department, Mike Mrdak, to also participate.

Consistent with our commitment, the Australian Rail Track Corporation will be tasked, under the guidance of the Implementation Group, to work together with interested parties to construct Inland Rail through a staged, ten year approach. I expect that construction will provide the opportunity for many firms to participate in building key components.

The Government is firmly committed to delivering Inland Rail and we are investigating opportunities for bring forward its completion.

SEPARATING FREIGHT AND PASSENGER TRAFFIC

Earlier I referred to our growing freight task. Added to this is the significant growth in passenger demand that will continue to squeeze our vital freight traffic in metropolitan areas, which are, after all, also the origin and destination of much of the nation’s freight.

What this means is that connecting our international gateways, freight hubs and trade corridors to our regions, factories, farms and mines - and to our cities and ports - will become ever more critical.

Greater efficiency is needed to make us more price competitive, improve access to international markets and strengthen our ability to trade with a world crying out for more of what Australia has to offer.

It also requires freeing-up capacity on Australia’s metropolitan rail networks through the separation of freight and passenger traffic.

To this end, work is continuing on the Northern Sydney Freight Corridor upgrades with the construction of:

 a rail underpass at North Strathfield;  a third track from Epping to Thornleigh;  two new passing loops at Gosford; and  a holding track at Hexham.

For rail operations this means that the Australian Government’s $840 million investment in this corridor will drive a 50 per cent increase in its freight carrying capacity.

With an additional 15 freight trains-a-day by 2016, the reliability of rail freight services travelling through Sydney will greatly improve with flow-on benefits for passenger services using these lines.

The project is funded in partnership with the NSW Government, which is contributing $213 million.

Building on that work, our Government has made a commitment to investigate the rail infrastructure required for a new 24/7 dedicated freight connection from the Acacia Ridge Intermodal Terminal to the Port of Brisbane.

A dedicated freight connection to the Port of Brisbane will address the port’s long-term access requirements.

It will also improve connections between this important international gateway with the regions and mines in South East Queensland and Northern NSW.

DECONGESTING SYDNEY

One of our great transport challenges is boosting productivity, improving transport links and reducing road congestion in Australia’s biggest city.

The annual cost of congestion in Sydney is estimated at $5.1 billion. This is already a serious economic drain, but it is projected to rise to $8.8 billion by 2020.

The Government has three major infrastructure projects working simultaneously to create long-term benefits that will be felt far wider than Sydney - and these projects have largely enjoyed bipartisan support at federal and state level for a decade or more.

They will improve Australia's productivity and economic performance, and promote industry development and investment.

When complete, these projects will provide benefits across the supply chain, through more efficient connections to the interstate rail network and major ports.

These projects are:

 Moorebank Intermodal Terminal Project - first initiated by the Howard/Anderson Government in 2004  Port Botany Rail Line Upgrades, both the early planning and scoping stages were funded under the AusLink program, and  Northern Sydney Freight Corridor Upgrade, which I have already mentioned.

In south-west Sydney a precinct approach is being taken at Moorebank, with 220 hectares of land being made available for an intermodal hub for the private sector to deliver an integrated

import-export port shuttle, interstate freight rail terminal, and associated warehousing and distribution centres.

The site is highly suitable for an efficient intermodal terminal because of its ready access to existing rail and road infrastructure, proximity to major freight markets, and sufficient distance from Port Botany to make rail a commercially viable alternative to road.

The continuing $172 million upgrade at Port Botany will improve rail freight capacity to meet a growing demand for container transport by rail. While the Government is yet to settle its investment program, we recognise that ongoing improvements to rail infrastructure at Port Botany will be necessary to support the freight task.

These investments, together with the rail port shuttle to Moorebank, will help alleviate congestion at the busy Port Botany/Sydney airport precinct.

HIGH SPEED RAIL

For many years there has been interest in the construction of a high speed rail network in Australia - nowhere more so than at a convention like this one.

Australia is a large country which, therefore, lends itself to the development of high speed trains. But our population is small, which challenges the economics of high speed passenger rail.

As you will be aware, the findings of a study into high speed rail for the east coast of Australia were released earlier this year.

It confirmed that high speed rail would be an extremely expensive and long-term construction project—costing at least $114 billion (in 2012 dollars) and taking over three decades to build. Passenger fares could not be expected to cover much of the capital cost.

It is easy to dismiss high speed rail as an unaffordable fantasy for Australia. But the study also revealed that, by 2065, travel on the east coast will more than double to 355 million trips per year.

Sydney-Melbourne is already in the top three airline routes in the world and Sydney-Brisbane and Brisbane-Melbourne are also in the top 20. Can we imagine our skies and airports double the number of flights there are now? Or our roads with double the traffic?

The Government is considering what role high speed rail could play as part of Australia’s long term transport planning, which we will do as part of a broader approach that looks at the preferred options across all transport modes and in consultation with eastern state governments.

I plan, as the next stage, to consult with the states and the ACT to ascertain their support for the proposal and their willingness to begin the next step - reserving the corridor for a future high speed rail line.

This is not just innocent drawing lines on a map. It will be a major multi-billion dollar commitment. You cannot designate a corridor through our cities, suburbs, towns and rural landscapes without being willing to purchase the affected lands and that will be expensive and without an immediate return.

We will also, therefore, be open to innovative funding and construction proposals that may help a deeply indebted country to deliver such a large project.

STREAMLINING REGULATION

I want to affirm this Government’s commitment to reducing red tape and unnecessary costs to industry - and that includes rail.

We are determined to get rid of conflicting and contradictory regulations and by streamlining environmental approvals through a ‘one stop shop’.

These initiatives, which we have commenced implementing, are directly relevant to the conference theme of ‘driving the costs out of rail’.

Rail has played, and will continue to play, a key role in building this nation.

That role will be hindered without a single regulator to develop a safety risk model and national industry standards, and to reduce the costs of regulation.

The Office of the National Rail Safety Regulator commenced operations in January this year when four of the eight states and territories enacted their Rail Safety National Law legislation and became part of the single national rail safety regulatory framework headquartered in Adelaide.

As a result, operating across those four states and territories is now more efficient, with less regulatory cost.

I commend the national regulator, Rob Andrews and his staff, on ensuring that the transition to the national arrangements was as seamless as possible.

But since then progress has been distressingly slow.

The reform is not fully implemented until all jurisdictions have enacted their legislation, and until all interstate rail operators will only have to be accredited once - no matter where they operate.

The nation urgently needs full implementation of the reform. No jurisdiction argues against the reform - they just are very slow to act or want to keep a few special rules of their own.

A single regulatory framework for the entire length of the line is the only way to maximise the benefits of such an important asset and, indeed, all our rail infrastructure.

GETTING IT RIGHT

Our infrastructure plan is ambitious and a clear indication that Australia is, once again, open for business.

But, it’s more than just hanging a ‘under new management’ sign on the door.

We want to ensure good business practices underpin the project selection processes and the best financing and funding solutions are delivering priority projects.

The Government, and for that matter the public, expect due diligence.

There is an expectation that all levels of government understand the issues that affect the national transport network and the inter-linkages between projects.

One of our first steps in this direction is to reform Infrastructure Australia.

A series of reforms will improve planning, ensure better coordination of long term projects and give greater certainty to investors and the construction sector.

Last week I introduced into Parliament legislation to overhaul Infrastructure Australia.

Infrastructure Australia will have a Chief Executive Officer responsible to a board, just like any other government or corporate entity.

In collaboration with the states and territories, the Government will task Infrastructure Australia with undertaking a full evidence-based audit of our infrastructure asset base.

Contrary to commentary in some media outlets, the new legislation does not give the Minister ‘unprecedented powers’ to direct Infrastructure Australia on what inquiries it can or cannot undertake. The referral parts of the legislation are unchanged. Infrastructure Australia has, if anything, greater capacity in making its own agenda and choose its work program.

Infrastructure Australia will be asked to develop a 15-year pipeline of major infrastructure projects, revised every five years, and based on national, state and local infrastructure priorities.

This pipeline will be developed using detailed evidence and analysis gained through an independent approach, rather than based solely on submissions from states and territories.

It will also articulate a timeframe for projects to be brought to market.

This approach will bring a national perspective to the selection of projects over the short, medium and long term that is aligned with the needs of the states and territories.

To complement these reforms, the Government has asked the Productivity Commission to undertake a broad ranging inquiry into ways to encourage private financing and funding for major infrastructure projects, as well as issues relating to high cost and long lead times.

The Productivity Commission will identify how to address barriers and to reduce infrastructure construction costs, again, an issue directly relevant to the theme of this conference.

Our reforms and initiatives firmly reflect the Government’s present and future infrastructure focus on delivering critical infrastructure, ensuring value-for-money and increasing innovation to deliver the infrastructure our society expects, our industries need and our people deserve.

REPORT LAUNCH

Finally, today I have focused on how we as a Government are preparing for future challenges in the rail industry.

On Tuesday my colleague Bob Baldwin, Parliamentary Secretary for Industry, was to speak at this conference and launch a report of great significance to the rail industry.

Unfortunately he was unable to attend, which affords me the pleasure of launching it.

Titled “Opportunities for Greater Passenger Rolling Stock Procurement Efficiency”, the report looks at procurement and the benefits of a smoother and more coordinated approach to rail rolling stock.

The report has been driven by the Australasian Railway Society, and draws on international research and consultations with transport operators and manufacturers.

It:

 sets out the limitations of existing passenger rolling stock procurement methods;  outlines strategies to address these limitations;  measures the economic impact of improving procurement; and  presents a range of actions that could be taken to realise savings and to support key

regional economies.

It also highlights that over the next 30 years state governments are predicted to spend approximately $30 billion on procuring rolling stock.

It notes that actions to help achieve greater planning efficiencies and coordination around these purchases will enable savings of up to $6 billion on upcoming rail projects.

The report confirms that not only will smoothing rail rolling stock procurement result in significant savings to state rail authorities, it will enable Australian businesses to make more informed investment decisions regarding facilities and training.

Being able to better plan for procurement will allow suppliers to better plan production schedules and increase their productivity.

And better planning has the potential to reduce costs for suppliers and customers and encourage investment.

I commend the rail industry for investing in this work. As a Government we are encouraged by the high level of leadership being shown in the rail sector.

I encourage you to read it and discover what a better coordinated procurement system could mean for your sector.

I also encourage you to spread the report’s messages and its findings to help achieve the changes we know are needed.

I thank you, again, for the opportunity to address your conference today.

This is the last day of what has no doubt been a stimulating and highly-productive event.

I look forward to working with you to deliver well-developed, efficient and cost-effective infrastructure that sees our nation achieve its full economic and productivity potential.

Thank you.

[ENDS]

Brett Heffernan Senior Media Advisor Office of the Hon Warren Truss MP Deputy Prime Minister Minister for Infrastructure and Regional Development P: 02 6277 7680 | M: 0467 650 020