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Wednesday, 28 June 2000
Page: 18551

Mr McARTHUR (11:11 AM) —In July 1995, the standard gauge was completed and I was honoured to be at the ceremony when the then Prime Minister, the Hon. Paul Keating, opened that standard gauge from Brisbane to Perth. I put on the record that that government achieved that outcome and I commend them for that because the objective of standardising the gauge from Brisbane to Perth had been on the books since 1923. That government invested $440 million to achieve that outcome. We know that parts of the track were not properly done, especially in parts of the electorate of Corangamite, but I do record the outstanding achievement of actually standardising the gauge across Australia. The new concept that was developed during that time was the ARTC with rail access, and I will talk more about that. The regulations that had historically been state based now moved to a more nationally based operation. During that time, of course, there were also safety concerns.

The government's response this morning is to three reports. The first is the Neville report—I personally participated very vigorously in every inspection and in questioning every witness. The second is the Smorgon report which, it is fair to say, took a number of the recommendations from the Neville report. The third is the Productivity Commission report, which again was a fairly independent assessment of the rail industry, but utilised some of the evidence of the Tracking Australia report. Certainly the harmonisation of the state based rail operations was a key feature. The Neville report and the other two reports focused on that possible outcome.

The sale of the rail operations of AN now means that a number of those operations—the Ghan, the IndianPacific and the Melbourne to Adelaide run—are moving towards profitability, having more passengers and becoming much more commercial. The sale of the freight operation in Victoria, V/Line, to Freight Australia has opened up remarkable new opportunities in terms of timber, wheat and other merchandise. Tasrail has been a remarkable success—an operation which was fundamentally broke for 100 years is now operating in profit.

The fundamental thing we should address is that the federal government has allocated $250 million to rail operations upgrade and yet, on a year by year basis in Australia, the federal and state governments allocate $6 billion to road construction. It is very important, in this whole discussion, to recall that. We need an upgrade of the basic rail network structure. Governments, both state and federal, have failed to invest for all kinds of historical reasons. The sale of National Rail—which, in my assessment, has done a remarkable job of connecting capital cities, by means of the standard rail gauge and the National Rail operations—to the private sector will be another step in the right direction. Remembering that National Rail had to overcome the culture of every state government and, given the difficulties, I think its results have been commendable.

I turn now to some brief comment on the specifics of the recommendations. On the national transport policy: this is an argument about rail versus road. There is some reluctance by the road operators to allow the rail industry to get a fair go. The road industry has had a very strong lobby, as members present would be aware, and is very keen to maintain its strategic advantage. The important things in recommendation 3 are a balance between rail and road and the need for a genuine cost-benefit analysis of which goods ought, in the long haul, to be carried by the rail network instead of the road system, rather than decisions being made because of the power of the road lobby.

The next few recommendations concern project development processes. Particular reference is made to Canberra-Sydney and the response suggests that there be no restriction of future operations between Sydney, Canberra and Melbourne. I accept that. I raise the issue of the number of passengers between Canberra and Sydney, however, and I have raised that with the project developers on numerous occasions. I also raise the issue that government has indicated that it hopes there will be no further cost to government, but there are subtle pressures that governments provide support for these very big projects. Again I put on the record my concern about the Alice Springs-Darwin freight line: what are the numbers for the amount of freight that will move both ways between Alice Springs and Darwin? Can that be sustained by the private sector without heavy government involvement? I challenge the proponents of that rail to come up with the figures. I am a supporter of rail and I hope that that project is sustained in the long term and is not just a short-term, big wonder project.

It is suggested that there be neutrality in charges and modes. In simple terms, that means that the tax regime for rail and road are reasonably neutral. Roads would just pay a registration sales tax, some tolls, some local government rates and, of course, fuel excise—which other motorists pay as well and which contributes to the road maintenance. Rail, on the other hand, is now paying for accreditation and track access, which is something that has not been sorted out, and pays considerable fuel excise. As the report suggests, we need to make sure that we have some neutrality between those two operations.

In terms of the comparison between the road and the rail network, the response observes that there is private capital in the road operations, where trucking companies and private cars use what I call the free public road network. There is enormous political pressure for voters to maintain that road network and improve it forever, almost on a yearly basis, for those transport operators. In my view, they exert undue political pressure to upgrade the Australian road system. On the other hand, the rail system does not enjoy that level of political support. In fact, some state governments are subsidising their urban passenger systems by up to $1 billion per state. The investment in track upgrade for the access of rail operators is very much behind the investment in the road network. Again I emphasise that $6 billion a year is invested in the road network, as compared with the small investment in the rail network throughout Australia.

All three reports recommend that privatisation take place, the Smorgon report suggesting that all federal and state rail operations be privatised. I entirely agree with that suggestion. The Productivity Commission's interesting suggestion is that the BOOT type operation—build, own, operate and transfer—be looked at that all freight operations be privatised and that there be a commercial approach to the rail operation. The federal government, I am pleased to see, is wholeheartedly accepting the recommendation on privatisation.

Access to the ARTC is another important aspect in terms of policy. The ARTC should be a one-stop shop so that those operators who wish to go on the national track are able to deal with an authority that will give them access at a price and under conditions that are fair to all operators. The ARTC should control and maintain the operation in a fair manner and the interface between urban systems and country tracks should be one of equity and fairness. We see a problem in the Sydney operations where the one freight line is overcome by the priority given to urban city rail traffic. The integrity of the national track is important to the federal government. I particularly note the Kalgoorlie to Perth section which could be sold with the sale of the Western Australian Transrail.

The important arguments that we face in the parliament in terms of the ARTC and the access regime relate to the commercial rate of access by private rail operators and to the methodology. Should they be paying a market rate or should they be seeing what the market will bear? Should it contain an upgrade? What is the relativity with respect to those road operators who enjoy national highways like the Hume Highway which have basically been paid for by taxpayers and private motorists?

Let us move on to investment, about which the Neville report made very strong comments. As I have alluded to before, the Neville report commended the $250 million to be invested in the ARTC. It was suggested that another $750 million be allocated and that over 10 years a mere $2 billion be invested in the rail system. I emphasise `a mere $2 billion' because of the relativity between the road and rail systems. We need to make that sort of investment to ensure that the rail network, both state and national, maintains a position in the transport task.

The Smorgon report suggested a figure of $250 million, and another $470 million on improving the national track. The Productivity Commission emphasised the importance of the freight route through Sydney to ensure that the national track was effective between Brisbane, Sydney, Melbourne and Adelaide, and that there was not a bottleneck. We see that there is support across the board for this investment, which would ensure the operation of the rail system. Certainly, some investments have been very cost effective. I note that the Ararat/Pura Pura line was upgraded in recent times. There was good cooperation between the Victorian state government and the federal government in upgrading that piece of track, which was done poorly under the One Nation program.

With respect to operational uniformity, harmonising the operations is fairly straightforward. But when you look at the rail systems, you note the difference between Queensland, which runs a good rail system; New South Wales, which is fair; Victoria, which is different; and South Australia, which has a different operation. It is a remarkable situation in this modern day and age. Rail safety always gets a very big run. People are overly concerned, in my view, regarding safety of rail operations compared to road safety. I think there is a lack of consideration in both modes of transport. I accept the view that we need to ensure that rail is safe. I think we have one of the safest systems in the world, but we should not overdo it in terms of maintaining manpower and other issues.

I will conclude by referring to the overview comments by the Productivity Commission. I think they summarise the position very clearly as to what is happening in rail in Australia. Some very exciting things are happening. I quote:

Reforms in the 1990s have transformed the structure and operations of Australia's railways.

My personal experience supports that. The overview states that there is now greater competition between railways and more private sector participation. That was never the case before 1990. It is also stated that productivity has increased remarkably in a number of those. The overview continues:

Most government-owned railways are still not viable:

—they face increasing competition from other transport modes;

particularly road—

—suffer from inadequate investment—

which I have referred to—

and require significant government subsidies.

That is especially the case with urban transit systems. The overview goes on:

Greater commercial focus is

— contracting out, franchising or privatising existing government-owned railways.

Again, I commend those policy changes that have taken place, particularly in Victoria:

— the entry of new owners and further investment—

Again, we have seen in Tasmania the remarkable change that has brought about. It continues:

—rigorous application of contracts between governments and railways to meet non-commercial objectives.

That is the CSO—again, an important policy judgment to be made with a reality and a commercial consideration. The overview says that there are different mixes of structural, access and ownership arrangements. That is something that has been a quite exciting change in the attitude of governments and railway operators that was just not possible in the last 100 years. The overview goes on:

The Commonwealth has an important role in:

— developing a national transport framework;

—facilitating ongoing harmonisation of the regulatory arrangements—

so that the state regimes are as one, as has happened in the road transport system—

— establishing a single manager for the interstate network—

ARTC is hopefully doing that. It continues:

— ensuring a more commercial approach to road provision.

That is, they do not always get the money when they provide a political lobby. The overview says the Commonwealth also has a role in financing freight bypass lines to Sydney. I support that as very important, although it would appear not as significant to the layman. Finally, it says:

The suggested reforms have greatest relevance to Queensland, NSW and WA.

Further reform is essential for the survival of most Australian railways.

I commend those points. My close association with the railway network gives me great encouragement that railways do have a future in Australia, especially for the long haul west-east, from Perth to Melbourne. The east coast is a bit more difficult because of the terrain. With support from government on both sides, I am confident that over the next 10 years we will have a rail network that will work. This vast country will have a mode of transport that will be second to none and in 2020 railways will be efficient. (Time expired)