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Thursday, 30 September 1971
Page: 1786


Mr COLLARD (Kalgoorlie) - The Bill which we are debating at the moment proposes to amend the Railway Agreement (Western Australia) Act of 1961. As the honourable member for Newcastle (Mr Charles Jones) pointed out, the Act came about by agreement between the Commonwealth and the Western Australian State government of the day. It set out the terms and conditions by which the Commonwealth would provide a certain amount of financial assistance to Western Australia for the construction of a standard gauge line between Kalgoorlie and Kwinana. The purpose of the amendment is to remove the time limit originally imposed in relation to the expenditure incurred by Western Australia on the project and also to relate the provision of 85 per cent of the cost by the Commonwealth to the current estimates. As a result of the proposal to remove the time limit being agreed to the recent expenditure that has been incurred since 14th June 1970 and future expenditure will be accepted by the Commonwealth as a legitimate charge against the standard gauge project.

The rejection of the amendment, however, would mean that any expenditure incurred by Western Australia on the project since 14th June last year and from now on would not be accepted by the Commonwealth, because the Act in its existing form lays down very specific limits in that regard. To allow that situation to continue would be quite unfair and quite unreasonable because, as the. Minister pointed out, it has been necessary for certain design and expansion work on the project to be carried out which could not in many respects have been envisaged in the initial stages. In addition to being unable to complete the project on the date originally planned, there is also the matter of the increased cost beyond the original estimate. So it is only proper that the terms of the agreement in relation to the 85 per cent provision should be extended into the additional charges. Therefore, under all the circumstances, which were in most respects either unforeseen in the first place or unavoidable as time went on, the proposal to extend the date of acceptance of charges and the extension of the 85 per cent proviso is no more than fair and reasonable and deserves the support of this House.

In the long run the money will all be returned to the Commonwealth because of the original agreement that was made between the Commonwealth and the Liberal-Country Party government in Western Australia in 1961 which placed upon the taxpayers of Western Australia the unjustified burden of repaying every cent which the Commonwealth provides. This will come about - the honourable member for Newcastle mentioned this - because of the interest which has to be paid on the loan money. That interest will be at least equal to and most likely substantially in excess of the grant which the Commonwealth made. In effect, the Western Australian taxpayers will eventually repay the total loan plus the grant, plus the State's original commitment and so will finish up paying for the whole project even though the project itself for a standard gauge railway will be of considerable benefit to Australia generally.

That cost upon the Western Australian taxpayer has increased very considerably since the agreement was first drawn up. The original estimate of the cost in 1961 for the entire project, including the line and associated works such as carriage sheds, passenger terminals and rolling stock, was $82,400,000. In February 1965 the estimate was revised to $110m. I note now in the Minister's second reading speech that the current estimate is $125m, or an increase over the 10 years of something like $40,500,000. Even in 1961 the estimate then of $82m-odd was being measured critically against the estimate made in 1945 by Sir Harold Clapp of $16,500,000 for a standard gauge line between Kalgoorlie and Fremantle. In 1961 the estimate was 5 times greater than in 1945 and the current estimate is 7 times the amount in 1945. The amount then, of course, was for a distance of only 419 miles as against the 528 miles for the present project But even so, it will be found that including associated works and rolling stock the cost per mile of construction today is something like $236,700 per mile as against some $39,300 per mile in 1945 - a rather significant difference. No doubt the various associated works suggested in 1945 will be nowhere . near as extensive as they are today and the same thing would apply in relation to the rolling stock. But even so, simply looking at the construction cost of the line itself, it will be found that today's estimate is several times that of 1945.

I have drawn the comparison of costs today with those in 1945 for 2 very good reasons: Firstly, had Labor been reelected in 1949, it would have gone ahead immediately with the standardisation as a Commonwealth responsibility, as a cost not to the State but to the Commonwealth, because of its defence value. It could have been expected to be completed by the latter part of the 1950s, and as a result would have been providing additional revenue both to the Commonwealth and to the States over the past 20 years. The difference between Labor's attitude and that of the present Government was that it took the present Government 13 years eventually to get round to doing the job, and by that time the cost had increased very substantially - I have just referred to the figures - so the Government got around that point by ensuring that the taxpayers of just one State would carry the burden. Actually, of course, it is extremely doubtful whether the project would have been commenced yet if Broken Hill Pty Co. Ltd had not applied some pressure regarding its requirements in relation to the transport of iron ore from Koolyanobbing to the coast, and .this is made evident from what Mr Menzies as Prime Minister said in 1961 when he introduced the Bill to amend the Act which we are now considering. Mr Menzies said:

We-

That is his Government - . . subsequently embarked on a close examination of this railway project in consultation with both the Government of Western Australia and Broken Hill Pty Co. Ltd. We satisfied ourselves that construction of the railway had a vital place in that company's plans for a major expansion of the steel industry.

So it was quite clear that BHP made the decision or at least made the request and the Government quickly jumped to attention. That was the only reason which caused the Government to see that the standard gauge line was necessary. The second reason for drawing attention to the difference between costs in 1945 and costs in 1971 is to show how delays, and quite often unnecessary delays, can mean a very much greater eventual cost which in turn places a heavier than necessary burden on those who foot the bill - the taxpayers - for railway construction. In addition the delays, particularly long delays, mean that revenue from the project concerned is unavailable to the interested authority.

I would like to point out that right at this moment delays are being allowed to occur and are in fact being enforced with regard to certain other necessary railway projects in Western Australia which actually should be proceeding right now. I refer to the fact that at the present time the Government of Western Australia is seeking financial assistance from the Commonwealth to construct a standard gauge line between Kalgoorlie and Esperance via Kambalda. I want to draw the attention of the House to the similarity of that project to the standard gauge line with which the Bill now before the House is concerned. The standard gauge line between Kalgoorlie and Kwinana proceeds via Koolyanobbing for the purpose of providing for BHP a more convenient and less costly transport of iron ore to the coast. The line from Kalgoorlie to Esperance would go via Kambalda for the purpose of more convenient and less costly transport of nickel concentrates of Western Mining Corporation to the port of Esperance.

One difference between the 2 projects is that the extra miles of construction were many more with regard to the line via Koolyanobbing than would be the case with the Kalgoolie-Esperance line. As a matter of fact the extra distance to include Kambalda would be minimal so far as that line is concerned. The KalgoorlieEsperance standard gauge line is a project which should receive immediate Commonwealth financial backing, not just because of its local importance but because of its value to Australia generally. Let me point out to the House that extensions such as this were envisaged in the schedule to the 1961 agreement which is now before the House and which I now quote:

And whereas in order to assist in the defence and the development cf the Commonwealth of Australia to facilitate interstate trade and commerce and to secure maximum efficiency and economy in railway operations, it is desirable that there should be a standard gauge railway between Kalgoorlie and Perth and other places in the State of Western Australia.

It cannot be denied that a standard gauge line between Kalgoorlie and Esperance which links with such a line to Perth and the eastern States would be in keeping with that particular part of the 1961 agreement in all respects. Defence and development, interstate trade, maximum efficiency and economy would all be met. I would like also to point out that the late Sir Harold Clapp, as Director-General of Land Transport, when he made his report in 1945 on the standardisation of the Kalgoorlie-Perth line referred to the advantages which could and would be gained from linking that proposed line with ports. As everyone knows, Esperance is a port, and a very good one, with facilities capable of handling all the goods, substantial as they would be, which would be transported on the standard gauge line. Sir Harold Clapp also said:

The construction of this independent line in Western Australia is the simplest way to provide the inter-capital gauge link, pending the conversion at a later date of the entire West Australian system.

So in both cases, the 1945 report and the 1961 agreement, the linking of the KalgoorlieFremantle line with other State lines on a standard gauge basis was contemplated as a gradual overall standard system. It may be interesting to note that Sir Harold Clapp estimated that to convert the entire system in Western Australia on 1945 values would cost in today's money a little more than $95m. If we look at the recent estimate for the line between Kalgoorlie and Kwinana we can put the cost today of converting the entire system at about $875m, using Sir Harold Clapp'. figures as a comparison. What this does, of course, is highlight the fact that the longer the delay in constructing such lines the greater will be the cost eventually, but more particularly it makes it very evident that where, by constructing standard gauge lines there will be considerable advantage immediately and in the future, those lines which it is physically and financially possible to construct should be proceeded with immediately. Because of the ever increasing costs, and as the construction of the Kalgoorlie-Esperance line is in fact in keeping with the intention of the 1961 standard gauge agreement, it is difficult to understand the Federal Government's reluctance and, apparently at this date anyway, its refusal to agree to extend to the State Government of Western Australia the financial assistance it is seeking.

It must be realised that a standard gauge line between Kalgoorlie and Esperance would be the means whereby much larger loads of nickel concentrates than at present could be transported from Kambalda immediately upon completion of the project. In addition concentrates from other nickel mines, such as International Nickel, Anaconda and so on would also be transported in large quantities when those mines reached production stage. The line would also serve the salt company at Widgiemooltha which transports the salt to Esperance for export - another very significant industry.

In addition to its benefit in the mining field the line would be of considerable assistance to the farming industry in the area beyond Norseman in relation to the freighting of stock to or from the eastern States or Perth markets. At the present time stock and other freight either has to be transhipped at Kalgoorlie or, if going to Perth, has to be sent by road. Nickel concentrates from Kambalda or the refined article from the refineries some 9 to 10 miles south of Kalgoorlie could be transported direct to either Fremantle or Esperance as desired instead of, as would happen under today's system, requiring the process of road haulage into Kalgoorlie. It must a'so be remembered that the 1961 standard gauge agreement, which the Bill we are now discussing proposes to amend, would have been the means of providing some of the rolling stock such as passenger coaches and ordinary goods cars and trucks which could be used on the Esperance line. So in that respect those cars and other vehicles would be serving a dual purpose.

The fact is that a standard gauge line between Kalgoorlie and Esperance would be of general benefit not only to the Western Mining Company and the State of Western Australia but also to the rest of Australia. It must be built eventually and it would be false economy to delay its construction any more. Actually the Western Australian Government is seeking only partial financial assistance towards the construction of the line and in this respect, to my mind anyway, it is being more tha: reasonable. When we remember that the standardisation between Kalgoorlie and Fremantle is, as is pointed out in the Schedule to the Agreement, desirable from both the defence aspect and the genera! development and economy of Australia we cannot cease to be amazed that a major part of the cost was not provided from the defence vote and at least the bulk of the remainder by the Department of National Development and the Treasury without any or very little charge to Western Australia. Therefore, as Western Australian taxpayers were committed by the Liberal-Country Party Government of that State in 1961 to paying in fact the whole of the cost of the Fremantle-Kalgoorlie project it would be no more than reasonable for the Commonwealth to pay the total cost of the KalgoorlieEsperance link.

I would also like to point out that in just a few years time, perhaps only 5 or 6, a standard gauge line may well be required starting at Kalgoorlie and extending into the nickel areas in the north and north-east so that concentrates, etc., from those areas can also be transported direct to either Esperance or Fremantle as required. Surely the extension of the system as I have indicated will increase the value of the existing standard gauge both from Kalgoorlie to Fremantle and also from Kalgoorlie to the Eastern States. I appreciate that we cannot pick the finance required off trees but it must be realised that it will need to be provided only over a spread of years, and here again is a further good reason why the Esperance line should be proceeded with immediately.

Unfortunately it is apparently the policy of the Federal and State Liberal and Country Party Governments that mining companies should build their own lines to transport their products to the ports or elsewhere. This in turn means, of course, that the lines belong to the companies for ever more and the State Government or the Commonwealth Government, as the case may be, receives no revenue whatsoever from their use. This is the situation with regard to the railways serving the iron ore projects in the north of Western Australia. The lines were built by the companies concerned and the engines and rail cars belong to the company. Even if the mines continue for another 100 years Western Australia will receive not one cent in freight charges.

This to me is a false method of economy: Save a few million dollars in the first instance and lose several million dollars over a period. It is quite obvious when we look at the pay load which the locomotives haul on those iron ore lines that the whole rail project will pay for itself in a reasonably short space of time. I understand that the Western Mining Company has offered to finance the building of the standard gauge line between Kalgoorlie and Esperance to which I just referred, but it wants the money paid back at about 7 per cent interest and they also want freight concessions on the ore and concentrates they send over the line. This would also, in my opinion, be a 'false economy proposition as far as the Western Australian Government is concerned, but unfortunately it is not in a position to find the necessary finance itself and must rely on the Commonwealth to come to its assistance. I conclude by pointing out that the proposal by Western Australia is actually a cheap method for the Commonwealth and should be grasped very quickly unless, of course, the Commonwealth intends, as if. should, to foot the whole bill itself.

Sitting suspended from 6 to 8 p.m.







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