Tracking Australia


Tracking Australia

An Inquiry into the Role of Rail in the National Transport Network by the House of Representatives Standing Committee on Communications, Transport and Microeconomic Reform, July 1998.

EXECUTIVE SUMMARY

Fundamental Principles

The committee examined a wide range of evidence in the course of its extensive inquiry into the role of rail in the national transport network. In essence, the focus of this report is on national interstate rail services, reflecting the committee's emphasis on national responsibilities.

The committee's findings and recommendations are built on the following fundamental

principles:

  • there is a role for rail in the national transport network,
  • therefore the Commonwealth
  • has a national leadership responsibility in relation to rail transport,
  • should declare a national track for interstate rail services in consultation with the States and Territories,
  • must address the chronic deficiencies in the national track infrastructure, and
  • must, as a matter of urgency, invest in the national track.
  • Based on these fundamental principles, the committee has investigated and discussed in the
  • report a variety of issues raised in the evidence and made additional recommendations on:
  • an integrated national transport strategic plan
  • national infrastructure standards
  • consistency in safety standards and practices
  • a one–off grant to standardise communication equipment and safety operations
  • national training courses at approved educational centres
  • separation and establishment of a national regulatory authority and an investigative incident unit
  • national consistency in accreditation practices, and operating procedures and standards
  • changes to Part IIIA of the Trade Practices Act 1974 to promote greater certainty, transparency and accountability
  • access pricing which is transparent and accountable for the declared national track
  • examination of public liability insurance imposts
  • control and management of the national track
  • a National Land Transport Commission
  • a more consistent, equitable approach to transport taxes and charges
The Role of Rail in the National Transport Network

On the basis of evidence received, and given rail's competitive advantage in the transport of bulk goods and long distance haulage, the committee believes that rail should be made an efficient and integral component of Australia's transport system, with customers accessing the most effective combination of modes to meet specific transport needs. If rail was no longer a transport option then, considerable costs would be imposed on other transport modes and ultimately on the general community.

Commonwealth Role

The Commonwealth has an important leadership role in developing an integrated national transport strategic plan. This plan requires a clear statement of objectives and a focus on outcomes incorporating evaluation and review. Such an approach would be intermodal.

National Track

The Commonwealth in consultation with the States/Territories should declare a national track for interstate rail services on the standard gauge network from Brisbane to Perth, via both Melbourne and Broken Hill. The chronic deficiencies on the national track must be addressed and national standards adopted. If not, Australia's rail industry will deteriorate to a point where it is irretrievable.

National Strategy

While the standard gauge connects State capital cities from Brisbane to Perth, operations are neither seamless nor continuous. There is urgent need for a nationally consistent approach on rail safety standards and practices for the national track. To boost a national approach the Commonwealth should provide a one-off grant to standardise signalling, radio and other telecommunications, and safety operations for the national track.

As part of this development, consideration should be given to better training of rail employees and the award of appropriate qualifications to drivers and other rail workers. Education and training for rail employees requires a national approach, with curricula, courses and qualifications from approved educational centres recognised by all rail systems.

For the national track, the regulatory role and the investigative role should be separate. This can be achieved by establishing a rail safety authority and a rail incident investigative unit, each reporting directly to the relevant Commonwealth Minister.

Regulatory Framework

The Commonwealth should, as a matter of urgency, develop a regulatory framework in consultation with the States/Territories to help the Australian rail industry attain international best practice. As part of the regulatory framework, the committee believes the Commonwealth should encourage rail initiatives and better integration within rail.

Externalities - environment, congestion, accidents, air and noise pollution, gas emissions and greenhouse effects - should be considered in assessing the efficiency of the transport industry.

The committee is aware that the quality of rail service will determine its use. It is mindful of the age of the locomotives and rolling stock, some of which are quite fuel inefficient. If rail is to increase its market share, upgrading the locomotives and rolling stock is as important as upgrading the infrastructure. New technology is one way to improve the rail industry although improvements also may be achieved by new strategies and changes in operations. Efficiency and effectiveness may be further increased by attracting private operators to rail, especially to interstate rail development.

Private Sector Participation

Private sector investment and participation in the rail industry have the potential to benefit the community. However, the committee cautions that private sector participation does not automatically produce greater effectiveness and efficiency nor guarantees competition.

The committee supports the use of competitive tendering for publicly funded rail projects whether for design, construction, upgrading or maintenance. Infrastructure investments should be viewed from a comprehensive intermodal perspective.

Many opportunities exist for the private sector to be operators, initiators, joint partners, managers, contractors or owners. The Commonwealth role is to ensure the regulatory framework and the national strategy support the best outcomes.

The committee supports greater transparency in agreements for private sector participation in rail projects. This would identify the risks carried by government and non-government players and the resources provided by government, leading to improve accountability. The outcome should be a better transport network across the nation.

Given the emphasis on integration and intermodal efficiencies, the committee believes that it is important to focus on the overall transport strategy when considering individual transport projects. Individual projects whether publicly or privately funded should not proceed without adequate consideration of the effects on other transport modes.

Whether rail services are provided by the private sector or the public sector is not the priority consideration. The important issue is that rail infrastructure is upgraded and the whole rail industry is able to develop its potential, since many have spoken of rail as the transport mode for the 21st century.

Access and Utilisation

Improved access to and utilisation of rail infrastructure are essential if rail is to continue to play an important part in the national transport system.

Competition initiatives, including the establishment of the national access regime under Part IIIA of the Trade Practices Act 1974 (TPA), have provided the impetus for more open, consistent approaches to rail infrastructure access. However, reform of the rail industry remains slow. To date, application of Part IIIA processes to rail have not directly lead to increased third party access to rail infrastructure.

In the absence of a specific reform program for rail, the Commonwealth will need to address the deficiencies of the existing Part IIIA access provisions to ensure that they can be effectively applied to rail. In particular, this means ensuring greater certainty, transparency and accountability in the Part IIIA declaration decision making process. A useful starting point would be to ensure that States have adequate incentive to publish and substantiate decisions—to either declare or not declare infrastructure facilities within the period prescribed by the TPA.

The Commonwealth should also encourage States to develop and certify 'effective' rail access regimes, under Part IIIA of the TPA and, consistent with commitments made under the Competition Principles Agreement, at the earliest possible date. The recent application for certification of the NSW Rail Access Regime, and subsequent application by Queensland for certification of a rail access regime for certain services provided by Queensland Rail are encouraging signs that the States are committed to establishing a more open, competitive rail environment.

However, improving access to rail infrastructure requires more than legislated rights to negotiate terms and conditions of access. Other impediments to effective rail access— including the price of access, the level and cost of regulatory requirements such as public liability insurance, costs associated with multiple safeworking and operational accreditation systems, and the availability and allocation of pathways—also need to be addressed by the Commonwealth and States. To some extent, this is already occurring. The Commonwealth and States, through the Australian Transport Council, have begun to focus on the need for more consistency in rail accreditation processes (both safeworking and operational), and regulatory requirements imposed on rail operators. Further efforts to address regulatory requirements, such as public liability insurance, are essential.

Access to rail infrastructure also may be affected by the structure and function of existing rail enterprises, particularly those rail enterprises involved in above and below rail operations. In terms of promoting competition in the rail industry, experience to date does not lend overwhelming support to the concepts of either structural separation or vertical integration of rail enterprises. Ultimately, the structure of rail enterprises, and hence the structure of the industry, will need to balance the interest of promoting increased competition with that of ensuring continued rail viability—a balance which should be struck to secure net benefit for the Australian community.

For the Commonwealth, a first priority is to address the difficulties, highlighted in the evidence, of obtaining access to the interstate network. The declaration of a national track, to be controlled and managed by a single entity, the Australian Rail Track Corporation (ARTC), should provide for a more uniform and seamless approach to interstate rail services, including access to rail infrastructure. To ensure that access to the national track is open, non-discriminatory and equitable (particularly with regard to infrastructure charges applied to other forms of transport), the ARTC will need to adopt a pricing regime that is transparent, posted and based on costs that are allocated according to use.

Efforts to improve access to rail infrastructure, in terms of pricing, accreditation and standards required, should facilitate increased utilisation, particularly at the interstate level. However, increased utilisation will also depend on improvements to the condition and standard of the existing rail infrastructure, and improvements to intermodal logistics, train control and communication systems. Importantly, increased rail utilisation will depend on the extent to which governments address the current imbalance in the treatment of road and rail transport, in terms of funding, regulatory requirements, and taxes and charges.

Investment and Ownership

There are strong reasons for increasing investment in public use rail infrastructure. In addition to the obvious benefits of maintaining a diversified national transport system, there are the benefits of more effective and efficient use of the nation's rail assets, generating economic benefits for rail users and the wider community.

Less positively, there are the potential costs of losing those assets. Without urgent and substantial investment in this infrastructure, major sections of the national rail network are likely to become irretrievable within ten years. In this context, the rationale for increased investment in rail infrastructure has to be about averting the potentially enormous costs of diminished or defunct rail services between major cities on the eastern seaboard, including increased road construction and maintenance, and the negative externalities associated with large and growing volumes of road traffic.

Evidence to the inquiry overwhelmingly showed that existing arrangements for investment in public use rail infrastructure are inadequate. Where the Commonwealth and State Governments have committed funds for rail infrastructure in the past, this investment has been largely start stop, ad hoc and poorly coordinated with investment in other forms of transport. The Commonwealth decision in 1997–98 to commit $250 million over four years for investment in the interstate rail network, along with the establishment of the Australian Rail Track Corporation to control and manage the network, is undoubtedly a positive start.

However, there is no question that governments could and should be doing more, in terms of effective investment in and utilisation of Australia's public use rail infrastructure. For the Commonwealth, this means in the first instance the development of a national, strategic approach to transport planning which clearly defines and supports a role for rail in the national transport system, and in the second instance, the recognition of and commitment to fulfilling its responsibilities in that regard.

A National Land Transport Commission should be established. This body would assist in the implementation of the national strategic transport plan and, in particular, provide advice to the Commonwealth on investment in land transport projects.

On the basis of a national, integrated transport plan and a structure to ensure effective funding on an integrated basis, the Commonwealth then has to develop a strategy to address the nation's considerable rail infrastructure needs. Recognising that constraints exist on the level of public sector funding available for investment in rail infrastructure, the Commonwealth needs to adopt a tiered approach, which would:

first, as a matter of urgency, identify and fund infrastructure investment to remedy the critical deficiencies in the declared national track,

second, develop a longer term program for investment in rail infrastructure which delivers national benefits, but which may not be limited to the national track.

Such a tiered approach would be based on a structure which distinguishes between the declared national track and tracks of national importance (TONIs). Responsibility for investment in the national track would rest primarily with the Commonwealth, but could also include private sector participation. TONIs would be the responsibility of the States, with scope for strategic investment by the Commonwealth (in partnership with the States) once the urgent investment needs of the national track has been met.

To make a tiered approach work, the Commonwealth needs to substantially increase the amount of funding allocated for investment in, and the longer term maintenance of, public use rail infrastructure. It will also need to develop strategies to encourage greater involvement by the States and the private sector in rail infrastructure investment. However, greater involvement by the States and private sector will only occur on the basis of a stronger financial commitment by the Commonwealth to investment in public use rail infrastructure.

To harness the potential benefits of increased private sector involvement in the rail industry, particularly through ownership and investment, the Commonwealth and States will need to address not only incentives for, but impediments to, private sector participation. Most importantly, this means addressing the disparities in the treatment of rail and road transport in terms of infrastructure investment, taxes and charges, and regulatory requirements. Rail viability is directly affected by continued upgrading and improvement to road infrastructure which provide for continuing gains in road transit times, fuel efficiency and user convenience. It is also potentially affected by differences in the infrastructure costs borne by rail operators and long distance road vehicles, rail's chief competition. One obvious solution, identified in this report, is for the Commonwealth to develop a national transport perspective, which leads to a more consistent, equitable approach to transport taxes and charges.

International Best Practice

Rail is reviving in various countries throughout the world. There have been renewed interests and investment in rail both in Australia and in other countries. Many of these international investors are interested in Australia's rail operations and appear keen to bid for new projects as well as for the rail operations being privatised.

On the eve of the 21st century, the committee is conscious that concerns about the environment and other externalities mean that rail in Australia is being seriously considered as a viable transport option. Australia's rail therefore has 'to lift its game' and perform at international best practice levels. Governments must consider transport on a national intermodal basis.

While the committee acknowledges that the Bureau of Industry Economics' three broad categories of indicators are still relevant and the committee supports their continued use as performance measures, it believes the actual benchmark measures themselves may now require revision. Changes in the Australian rail industries over recent years mean that the international models cited may no longer be appropriate.

Although some witnesses claimed international models are totally inappropriate, the committee does not agree. The committee believes, for instance, that the intermodal system in Switzerland and other parts of Europe should be examined by State passenger rail entities so that they may incorporate appropriate practices. Similarly, the committee is aware that some of the highest standards for rail have been set by the Pilbara rail operations. Australia's rail system would benefit from comparison with other rail operations.

However, nominating specific models for national benchmarking is a complex task. The transport committee in the next parliament should review progress in rail performance by government and industry since the Bureau of Industry Economics' reports of 1992–95.

RECOMMENDATIONS

Chapter 2 Effective and Efficient Use of Rail

Recommendation 1

The committee recommends that the Commonwealth assume the leadership role and consult widely in developing an integrated national transport strategic plan to be published by 1 July 1999. (paragraph 2.46)

Recommendation 2

The committee recommends that the Commonwealth, in consultation with States and Territories, enhance the role of rail in the national transport network by:

declaring a national track for interstate rail services on the standard gauge network from Brisbane to Perth

addressing chronic deficiencies in the interstate national track

adopting agreed national standards for the condition of the national track.

(paragraph 2.67)

Recommendation 3

The committee recommends that the Commonwealth takes a strategic approach to provide consistency in rail safety standards and practices for the national track. (paragraph 2.88)

Recommendation 4

The committee recommends that the Commonwealth provides a specific one-off grant to standardise signalling, radio and telecommunications, and safety operations for the national track. (paragraph 2.89)

Recommendation 5

The committee recommends that the Commonwealth in conjunction with the States/Territories and appropriate parties, develop and accredit national qualifications based on consistent curricula and accredited training courses available to all rail employees from approved educational centres. (paragraph 2.90)

Recommendation 6

The committee recommends that the Commonwealth establish for the national track:

a rail safety authority

a rail incident investigation unit to report directly to the appropriate Commonwealth Minister. (paragraph 2.96)

Recommendation 7

The committee recommends that the Commonwealth, in consultation with the States/Territories and appropriate parties, immediately develop a national regulatory framework that promotes operational consistency in:

accreditation practices

operating procedures and standards across the national track system and associated jurisdictions to ensure effectiveness and efficiency. (paragraph 2.116)

Chapter 4 Improved Access and Utilisation

Recommendation 8

The committee recommends that the Commonwealth amend Part IIIA of the Trade Practices Act 1974 to provide that, where the designated Minister does not publish a decision on a declaration recommendation referred to him or her by the National Competition Council within sixty days of receiving the recommendation:

the designated Minister should be taken to have declared the service (rather than the deemed decision to be in the negative), and

the expiry date of the declaration will be that as recommended by the National Competition Council. (paragraph 4.65)

Recommendation 9

The committee recommends that the Australian Transport Council review public liability insurance to ensure more appropriate coverage which reflects the level of risk and responsibility of the owners and operators of public rail infrastructure. (paragraph 4.147)

Recommendation 10

The committee recommends that the Commonwealth ensures the Australian Rail Track Corporation adopts an access regime providing for transparent and accountable pricing. Such a regime should include:

access pricing based on a two part tariff, comprising a flagfall and a variable component which allocates costs on a user pays basis; and

posted access pricing by track segment. (paragraph 4.188)

Recommendation 11

The committee recommends that the Commonwealth ensures that the Australian Rail Track Corporation secures control and management of the national track, including those sections of the interstate network currently controlled by State authorities. (paragraph 4.189)

Chapter 5 Effective Investment and Ownership Arrangements

Recommendation 12

The committee recommends that the Commonwealth develops a more consistent, equitable approach to transport infrastructure charges to ensure competitive neutrality between modes. (paragraph 5.81)

Recommendation 13

The committee recommends that the Commonwealth establish a National Land Transport Commission to provide:

advice to the Government on a national transport plan; and

recommendations to the Government on the allocation of funds for rail and road projects on the strict basis of highest benefit cost ratios, which address all relevant externalities, such as accidents, congestion, pollution, greenhouse gas emissions and noise.

Further, the Commonwealth give higher priority to land transport infrastructure investment within total budget outlays than is currently the case. (paragraph 5.132)

Recommendation 14

The committee recommends that the Commonwealth:

undertake responsibility for investment in the declared national track;

allocate, in addition to the $250 million committed to the Australian Rail Track Corporation in 1997–98, a further $750 million over three years for investment in the national track to be expended according to priorities developed by the Commonwealth and States/Territories; and

allocate, on an agreed basis, an additional $2 billion over ten years from 2001 for investment in rail infrastructure of national strategic importance, to be directed primarily to the national track, and with provision for designated tracks of national importance (TONIs). (paragraph 5.167)

Recommendation 15

The committee recommends that the Commonwealth, in consultation with the States/Territories and relevant parties, develop a rolling maintenance program, to be funded by the Commonwealth, for the declared national track to agreed national standards. (paragraph 5.168)

Chapter 6 International Best Practice

Recommendation 16

The committee recommends that the transport committee in the next parliament should review:

responses by government and industry to the recommendations in this report

progress in rail performance by government and industry since the Bureau of Industry Economics' reports of 1992–95. (paragraph 6.45)