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Minister supports moving freight by rail; ACCC gives conditional approval for Toll Holdings to takeover Patrick.

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Friday 17 March 2006

Minister supports moving freight by rail; ACCC gives conditional approval for Toll Holdings to takeover Patrick


MARK COLVIN: The Australian stock mark et doesn't usually regard rail freight as a sexy industry, but the latest developments in the battle between transport giants Toll and Patrick have changed that. 


The Competition and Consumer Commission has given approval for Toll to take over Patrick. But one of the conditions is that if Toll succeeds, it must sell its half share in the jointly owned rail company, Pacific National. 


Analysts say that that stake would be more than a billion dollars. 


The Federal Transport Minister, Warren Truss, says it's in the public interest for freight to get off the roads and onto rail. 


But he's told PM he's worried that after the corporate carve-ups, Pacific National could either be destroyed, or become a monopoly. 


Stephen Skinner reports. 


(sound of train) 


STEPHEN SKINNER: A freight train thunders past a tiny platform on the windy old train line between Newcastle and the Queensland border. 


(sound of train screaming past) 


The Federal Government is spending more than a hundred million dollars on the line to improve the chronically slow speeds and allow bigger trains. It's part of well over a billion dollars the Government is spending on rail lines between Melbourne, Sydney and Brisbane over the next few years. 


Transport Minister, Warren Truss. 


WARREN TRUSS: With the transport task expected to double over the next 20 years, particularly on the Brisbane-Sydney, Sydney-Melbourne route, it's absolutely essential that rail plays a bigger role. 


STEPHEN SKINNER: And why is that? We can't put it all on trucks you don't think? 


WARREN TRUSS: Well even if we were to massively increase the quality of our road network it simply couldn't cope with double the number of trucks on the road. 


STEPHEN SKINNER: Warren Truss points out the current rail spending is much more than in the past. 


Indeed Dr Philip Laird from the University of Wollongong estimates that in the past 30 years, successive Federal Governments have spent $55 billion on roads, but just $2 billion on rail. 


So it's no wonder trucks dominate on the east coast, carrying more than 80 per cent of freight. 


The biggest trucking company, Toll, also owns half of Pacific National. Patrick owns the other half. Pacific National is the dominant rail carrier, with about 80 per cent of the rail market between Brisbane, Sydney and Melbourne. 


Warren Truss hopes the takeover battle between Toll and Patrick leaves Pacific National strong, but not too strong. 


WARREN TRUSS: It is important that companies have the strength to be able to provide effective services reliably. That means that whatever comes through from the current Toll Patrick debate does leave us with an effective rail operator, that's very important. It would be a disaster for Australia if the Toll Patrick operation, Pacific National, was to be destroyed as a result of the current battles that are going on for the control of the various companies. 


So we need them to be strong. But we also need to ensure that they don't have an effective monopoly, that there are other people who can provide services on the route and do so from a position of strength. 


STEPHEN SKINNER: To that end Mr Truss welcomes the recent move into New South Wales, Victoria, WA and South Australia, of Queensland Rail, or QR. 


WARREN TRUSS: I think the arrival of QR, with its substantial resources, will break down the risks of Pacific National becoming a dominant monopoly. 


STEPHEN SKINNER: Queensland Rail is very keen to expand in the southern states, but it's limited by small terminals for loading and unloading. 


QR Chief Executive, Bob Scheuber, says his company will share its big Brisbane terminal with Pacific National. He hopes Pacific National will do likewise and share its big terminals in Sydney and Melbourne. 


Mr Scheuber is upbeat about his biggest competition - trucks. 


BOB SCHEUBER: When you talk between road and rail, there is a significant number of issues that need to happen in terms of the underlying access charges and taxes that apply to both road and rail, issues such as environmental policy, things like safety policy, length of hours and those sorts of things also need to be considered.  


So there's a lot of issues there, but we're starting to see those issues starting to be addressed. Now I think it'll be a long term, but the reality is we know rail is extremely efficient in long distance heavy haul and where we have similar infrastructure to road we can be competitive. 


MARK COLVIN: Queensland Rail Chief Executive, Bob Scheuber, with Stephen Skinner.