Key industry players have joined with Planning and Infrastructure Minister Alannah MacTiernan in urging the federal government to foot half of the $800 million bill to fund the upgrade of Western Australia’s road and rail network.
Key industry players have joined with Planning and Infrastructure Minister Alannah MacTiernan in urging the federal government to foot half of the $800 million bill to fund the upgrade of Western Australia’s road and rail network, or face the closure of one-third of the state’s rail network this year.
Representatives from the rail and grains industries have made their case to both state and federal governments for urgent funding on upgrades to the regional rail network, highlighting the damaging effect rail line closures would have on the nation’s $5.5 billion grain export industry.
WA is responsible for more than half the nation’s grain exports, with 60 per cent of the state’s grain transported to port via rail.
Ms MacTiernan blames privatisation of the WA rail network in 2000 by the Court government for its decline.
The current leasee of rail lines, WestNet Rail, which leases about 5,000 kilometres of track from the state government and charges rail operators an access fee to use the tracks, has identified about 1,000 kilometres of economically unviable track it is considering handing back to the government.
WestNet Rail commercial manager Paul Larsen said the conditions of the lease did not include spending money on lines that couldn’t pay their own way.
He said the company, along with rail and grain companies and farmer organisations, had been in discussions with the government and the Department of Planning and Infrastructure for three years on the issue.
Mr Larsen said increased competition with road freight had reduced revenues significantly during the past decade, making it difficult to invest in capital expenditure to sustain uneconomical lines.
The disproportionate amount of track devoted to grain traffic compared with other freight, such as minerals, has led to the under-utilisation of some tracks servicing the grain industry.
But who should pay for the upgrades remains in doubt.
Ms MacTiernan said the $800 million package was divided equally between road and rail infrastructure investment. She believed the federal government should contribute half of the total cost.
Mr Larsen said state and federal governments, as well as the grains industry, should foot the bill.
“We believe it is infrastructure of national significance, therefore the federal government has a role to play, as well as the state government,” he told WA Business News.
“The minister is also keen to see farmers contribute. She has suggested an infrastructure levy of $1-$2 per tonne to help fund infrastructure upgrades.
“Someone’s got to pay for it, either using other taxpayers’ funds or contributions from the users themselves.”
Western Australian Farmers Federa-tion transport executive officer Ross Hardwick believes growers pay enough in taxes, levies and fees already and are yet to see a return on their investment in the form of infrastructure upgrades.
“Grain producers are already paying an exorbitant amount [of freight] on a cents-per-kilometre basis,” he said.
“They [the government] have been collecting taxes to fund all this; it’s time to deliver.”
Mr Harwick said without adequate funding for rail, the potential closure of some lines would lead to more heavy trucks on regional roads, which could be detrimental to the state of the roads and endanger passenger cars using the highways.
“If the government did nothing, you will see an increase in truck movements on the road,” he said.
“And given the state of a lot of the roads, there’ll be an rise in maintenance costs and a decrease in the road safety mix between passenger vehicles and freight movements.”
CBH Group manager supply chain strategy, Rob Voysey, said rail was preferred to road transport in regional areas due to its ability to deliver capacity and safety.
He said CBH had been involved in government and industry discussions over infrastructure issues, and supported Ms MacTiernan in her demands of more funding for the long-term sustainability of the rail network.
“The government’s objective and the industry’s objective is to keep all line sections open. They understand the implications of putting more trucks on the roads,” Mr Voysey said.
Australian Railroad Group, which was jointly owned by Wesfarmers and US-based Genesee & Wyoming, bought the rail network from the government for $585 million in 2000.
In February 2006, ARG was then on-sold to Queensland Rail and Babcock and Brown for $1.6 billion.
Following the transaction, QR took ownership of the above-rail assets, and B&B took over the below-rail business, which included the track and associated infrastructure.
B&B also recently announced its intention to acquire the remaining 49 per cent interest in WestNet Rail, upping its original 51 per cent interest acquired in June 2006.
