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Wednesday, 16 November 1983
Page: 2755

Mr PETER MORRIS (Minister for Transport)(10.42) —I move:

That the Bill be now read a second time.

The purpose of this Bill and the associated Australian National Railways Commission (Transitional Provisions and Consequential Amendments) Bill is to repeal the Australian National Railways Act 1917 and replace it with legislation appropriate to the Commission's role as a commercially oriented business undertaking operating in the 1980s. The Bill defines precisely the Commission's powers and responsibilities and enhances its opportunity to operate commercially in competitive markets.

Let me make one point perfectly clear at the outset. We believe the Federal Government has a major role to play in improving the efficiency of railways in Australia's national transport system. This role has not always been recognised- the most obvious example being that, as a result of parochial thinking in past years, Australia now has five separate rail systems using three different gauges . Previous Federal governments of various political persuasions have made major efforts to overcome the difficulties of this legacy by attempting to unify and standardise the national rail network. Rail's performance can, and must, be improved. This can be done by the introduction of more flexible and more commercial management and a more consistent national transport policy than in the past. The long term viability of rail systems depends upon not only adequate infrastructure but also effective pricing, marketing, organisation and personnel policies. With this legislation we are providing AN with the powers to operate in this manner.

Railway operations should not concentrate solely on traditional areas of business. We expect railways as dynamic organisations to be looking for new traffic to expand its business. By promoting business growth, railways can increase efficiency and productivity and help generate additional employment opportunities. An improved industrial relations environment, better management and rational investment plans will reduce transit times, improve reliability and increase the opportunity for real growth in rail business. Unfortunately, funding is simply not available to undertake all of the investment needs of railways immediately. All governments currently face extremely difficult budgetary situations. Because of this, further investment in rail programs will need to be guided by a careful and responsible assessment of priorities. A good case in point is the Darwin-Alice Springs railway. No one would deny that if resources were no object it may be desirable to construct the railway. This Government is committed to upgrading transport services to the Northern Territory and the inquiry being conducted by Mr David Hill will determine the facts on whether the rail or road option is the more economically and socially sound.

Notwithstanding the current difficult economic conditions, governments are, as much as possible, pressing ahead with major railway projects. They are showing their confidence in railways' future by committing further funds for new projects which will expand the overall tasks performed by railways. With adequate investment and improved efficiency Australian railways will play an essential role in the development of Australia for the rest of this century and beyond. It is a matter of special concern that the national rail network operates efficiently and meets national needs. In addition to infrastructure, railways must also be properly equipped with manpower and management resources and the practices necessary to perform their role. A healthy working relationship between labour and management is as important for railways as it is in any industry. Co-operation and consultation are the basic working principles of this Government. Upon becoming Minister for Transport I therefore initiated regular meetings with the unions and AN to discuss issues of mutual concern. This process of consultation and co-operation is being expanded both at ministerial level and within AN. In this way, AN's employees have a greater opportunity to contribute to improvements in AN and to have an input into policy .

The ANRC Bill has as one of its objectives the establishment of a unified organisation dedicated to operating a sound and efficient railway system. It is up to AN and its employees to grasp the chance for success and work hard to achieve it. The Government can set the climate, but management and unions together must accept the challenge. In AN, the Australian Government's own railway system, these things are happening. For instance, the Commission is upgrading its marketing effort to ensure that it wins its share of the freight available, and is seeking to improve the information available to management.

Honourable members will recall that it was the previous Labor Government which began the Tarcoola-Alice Springs railway, completed in 1980. The new standard gauge line between Adelaide and Crystal Brook has also commenced operating successfully, notwithstanding the overall adverse economic conditions. In the first 10 months of operation, over 1.1 million tonnes of freight have been carried on the line. Work is proceeding on the Adelaide rail passenger terminal, a new interstate terminal being built at Keswick. It will commence passenger operations early next year.

Along with many other transport enterprises, AN's financial performance has suffered as a result of the economic downturn and severe drought. Honourable members will recall that on assuming office we were told that an additional $34. 5m was needed in 1982-83 to meet Commission losses, a 50 per cent increase over the original allocation, giving a total contribution for the year 1982-83 of $ 106m. I will describe later the steps we are implementing to avoid a repeat of this experience. In 1983-84 the Government is providing a revenue supplement of $85m or some $21m less than in 1982-83.

I have also asked the Commission to identify those services where it believes government support should be provided to maintain these operations. Over the years it is clear that railways have undertaken tasks that they would not do if they operated solely on commercial criteria. In order that the Commission can operate efficiently in terms of both its commercial and non-commercial activities it is clear that this latter group has to be indentified so that the cost can clearly be seen and taken into account. It is then for others, rather than AN, to determine whether these services should be maintained and, if so, to be prepared to meet the costs associated with the provision of the services. Obviously it is incumbent upon government to fulfil this role.

In this manner AN's performance can be judged against broad commercial criteria and community services can be undertaken without detriment to the Commission's overall financial performance. This approach accords with the recommendations made by the House of Representatives Standing Committee on Expenditure in its 1982 report on the Australian National Railways Commission. It also accords with the Government's social audit policy in transport.

As well as completion of the Adelaide-Crystal Brook project, capital works to be undertaken this year include continuation of the rehabilitation of the Tasmanian rail system, the purchase of 10 new locomotives and construction of AN 's new headquarters building. In total, these projects will cost $40m in 1983-84 . Further support for AN is being provided under the Commonwealth's own share of the community employment program. All of the $1.6m allocated to AN under CEP in 1983-84 will be used to employ 130 extra people for railway and re-sleepering projects in South Australia and Western Australia. What I have described are a number of the major initiatives this Government has already taken to prepare AN for the challenge of the 1980s.

The Bill now before us will provide the framework under which AN can function as a commercially oriented transport authority. The legislation contains many provisions of an earlier Bill introduced into the House with bipartisan support by the former Minister for Transport and Construction. I commend him for this action. Explanatory memoranda have been circulated to assist honourable members in their consideration of the Bill.

The Commission, as established under the Australian National Railways Act 1917, will continue in existence. An important feature of this Bill is that the powers of the Commission have been comprehensively defined. Ministerial intervention in day to day activities is minimised while ministerial oversight is retained in critical areas. This ensures that the Commission is provided with that necessary flexibility to operate commercially but remains properly accountable to the Parliament.

Of the provisions of the legislation changing our predecessor's Bill, the most important relate to the accountability of the Commission for attaining financial targets. We are satisfied these changes are necessary if AN is to be clearly responsible for its financial performance against defined criteria. Certain other clauses have been streamlined in order to simplify the legislation. AN's past financial performance, similar to that of other railway systems, leaves considerable scope for improvement. We believe that improvement will in part be achieved through greater financial accountability. As I said earlier, I have asked AN to identify its community service obligations. Factors such as these being taken into account, AN will be provided with a revenue supplement in the Budget context. It will then be AN's responsibility to ensure that this financial target is at least achieved if not bettered. To do this the Commission will be able to be more flexible and to adapt readily to changing conditions.

This Bill will ensure that the annual revenue supplement decided in the Budget becomes the level of contribution that the Government provides to the Commission for that year. But we will not be unreasonable about this. AN will be required to submit to the Minister a financial target for each year not later than 60 days before the start of that financial year. We will then consult with the Commission to reach a fair and just figure involving responsible use of the taxpayer's money. AN will then be responsible for reviewing at least six monthly progress towards achieving the financial target. If it is not on target, AN must determine what actions it will take to meet the financial objective by the end of the year. Notwithstanding all that this review process involves, should AN's operating results then indicate that the target will not be met, the Commission will be required to inform the Minister of the measures it will take to meet this shortfall. The legislation provides that these measures cannot include further recourse to the Budget.

Before implementing its proposed measures, the Commission will seek in the normal way any Government approvals that might be required. All borrowings, for example, are subject to the Treasurer's approval. The success of our approach depends largely on the ability of the Commission and the Government to consult to determine a realistic annual revenue supplement. We will be working with AN's Commission and staff to ensure that this is achieved. On the basis that a realistic revenue supplement is determined, AN will have the opportunity to enjoy the benefits of any improvements it might achieve above that level during the year. Clearly, the financial target will be the bench-mark against which AN' s performance can be judged.

The division between AN's powers and responsibilities and those of the Minister are clearly distinguished in the Bill. This arrangement emphasises the need for AN to operate as a commercially orientated transport authority. The responsibility for commercial initiatives rests squarely with the Commission. AN 's greater commercial freedom will be evident in relation to day to day matters such as the fixing of fares and freight rates. AN is obliged by the Bill to determine the principles which it proposes to apply in order to fix rates of charges for prescribed services. This concept was included in amendments which I recently introduced to the Australian Shipping Commission Act. It will provide approved parameters within which AN will be able to determine and vary fares and freight rates, thus avoiding excessive Government intervention in routine operating decisions. These principles are to be determined by AN and advised to the Minister, who may accept them or redetermine the principles that are to form the basis of AN's charges.

Again, as indicated earlier, the Bill enables the Minister to direct the Commission to undertake non-commercial activities which may be socially desirable. If the Government requires AN to engage in particular activities for social or other reasons, the Minister will issue a direction to the Commission. AN will be reimbursed for any losses involved in carrying out the Minister's directions. Such directions are required to be tabled in Parliament. Although the Bill removes a number of constraints, reasonable provisions for ministerial oversight will remain. For contracts valued at more than $2m, approval of the Minister will be required. I intend to use the provision to vary this level by regulation to maintain the current level in real terms. Such action would, I expect, be undertaken annually. Ministerial approval must be obtained before AN takes part in the formation of companies or enters into agreements for lease financing.

AN will have the power to construct small extensions to its existing railway network. Previously it was necessary for all railway construction to be approved by an Act of Parliament. Under the proposed provision, legislation will be required only when railways over 25 kilometres long are built. This power would allow AN to further its business interests by construction of sidings or spur lines to clients' premises. This will increase the ability of AN to compete with other transport operators. The Commission's powers relating to the operation, maintenance and construction of railways, including the right to enter and occupy land, have been modernised. This is consistent with the powers provided to other statutory authorities and will help ensure that AN is able to fulfil its proper functions in a timely and efficient manner.

There are some changes to the Commission itself. There will be an option for appointing the Chairman on either a part time or full time basis. The Bill also provides for a Deputy Chairman to be appointed. The statutory retiring age of 65 for part time commissioners will be removed. The rights of employees of the Commission, including those transferred from the former Tasmanian Railways and South Australian Railways, have not been changed. But there have been improvements in the area of personnel practices. Conditions of employment of AN staff will no longer be determined by the Public Service Board. Ministerial approval of salaries of senior positions will not be required. Such matters are more properly a matter for the commercial judgment of AN.

There are several other provisions which I would like to also briefly mention. The accident reporting provisions have been revised to specify the types of accidents that must be reported to the Minister. The Minister's power to initiate independent investigation of accidents has also been strengthened. The current legislation has a number of separate provisions covering different kinds of offences. These have been replaced by the one provision, which identifies the single, serious offence of endangering the safety of railways and provides for a substantial penalty. The Commission also has the power to make by-laws to protect railway users and property. Penalties of up to $500 can be prescribed for offences. Any such by-laws will be subject to parliamentary scrutiny in the same manner as regulations.

This Bill is not a money Bill and therefore has no direct financial impact on the Budget. The legislation is an important step in giving AN the responsibilities and powers to increase the productivity, efficiency and competitiveness of its railway operations. I commend the Bill to the House.

Debate (on motion by Mr Lusher) adjourned.