Chapter 3
Concerns about the development
and proposed benefits
of the Perth Freight Link
3.1
The previous
chapter considered the case made for the Perth Freight Link project by its
proponents, the Commonwealth and Western Australian governments. This chapter
considers the concerns raised to the committee about the development of the
Perth Freight Link proposal and the Commonwealth's commitment of
$1.2 billion funding for its implementation, particularly issues relating
to:
-
the lack of
transparency of the decision to fund the Freight Link, including the ongoing lack
of clarity around how the project was developed and approved for financing by
the Commonwealth and state governments;
-
economic concerns
that the project will be more expensive than current estimates suggest,
including from:
-
the lack of
works to support the movement of freight from the terminus of the Freight Link
through Fremantle itself;
-
potentially increased
capital costs from tunnelling parts of the route; and
-
the business
cost ratio (BCR) outlined in the Business Case Executive Summary relying upon
flawed economic modelling, so positive returns will not be as great as estimated.
-
suggestions
that forecast expenditure on the Freight Link should be diverted to other
projects which may deliver greater long-term returns for Western Australia,
particularly:
-
the
development of a second port at the outer harbour at Kwinana; and/or
-
improving
existing rail links and management of traffic flows to the existing Fremantle
Port.
The decision to fund the
Freight Link
3.2
Some evidence
considered by the committee suggests that the Freight Link project was
developed by the Commonwealth without sufficient consultation with the Western
Australian government and Infrastructure Australia.[1]
3.3
As noted
earlier in this report, the Freight Link project was first announced by the
Commonwealth Government on 19 May 2014 as part of the
2014-15 Budget.[2]
Mr Roland Pittar, General Manager, North West Roads, Department of
Infrastructure and Regional Development (the department), told the committee
that this announcement was:
...the
result of long-term planning for a new freight connection to the Fremantle
port. It incorporated development work already undertaken for the Roe Highway
stage 8 and the High Street upgrade projects.[3]
3.4
However,
Infrastructure Australia noted in its Assessment Brief that the Freight Link
concept was markedly absent from all existing Western Australian government
policy statements on future priorities for the state:
At the
time of assessment (May 2015), the Perth Freight Link project is not directly
mentioned in any of these State plans and policies:
-
State
Planning Strategy 2050 and Metropolitan Region Scheme;
-
Directions
2031 and Beyond;
-
Murdoch
Specialised Activity Centre Structure;
-
Draft
Moving People Network Plan;
-
WA
Regional Freight Transport Network Plan;
-
Draft
Perth Freight Transport Network Plan;
-
Draft
State Port Strategic Plan; and
-
Fremantle
Port Inner Harbour Port Development Plan.[4]
3.5
It appears
some limited consultation with the state government on the Freight Link
proposal was undertaken by the Commonwealth prior to the 2014-15 Budget.
For instance, the then Assistant Minister for Infrastructure and Regional
Development, the Hon Jamie Briggs MP, stated on 19 May 2014 that 'a
comprehensive plan' for the project had been developed by the Commonwealth and state
governments over 'the last two months'.[5]
3.6
However, just
a few weeks after this assertion was made, the Hon Jim Chown,
Parliamentary Secretary for Transport (WA), suggested that the idea for the
Freight Link had actually come directly from the Commonwealth, so the state
government did not have definitive designs for the project:
The
commonwealth has a propensity to make these announcements, as you well know,
but the reality is that the Main Roads department and this government will be
implementing and designing the Roe 8 extension, and at this stage we have not
actually got design plans that are worthy of public scrutiny...[6]
3.7
It also
appears that the Commonwealth did not consult Infrastructure Australia about
the proposal before December 2014, well after funding for the project was committed
in the Budget. Professor Peter Newman, a founding board member of
Infrastructure Australia, stated in his submission:
I was
appointed to the Board of Infrastructure Australia from its origin in 2008 to 2014. I was part of the
process that set up the guidelines for assessing transport projects and helped
to develop the pipeline of projects which became the main task of IA and
enabled the Federal Government to have enough confidence that they were funding
good projects. By the end of my
time on IA we had seen the commitment of funds to all of the top projects on
our pipeline. At no stage did the Perth Freight Link appear anywhere near this
list, it was not anywhere to be seen, even as a conceptual idea.[7]
3.8
Some
witnesses from the local government sector also expressed disappointment about
a perceived lack of consultation by the Commonwealth and state governments on
the Freight Link.[8]
For example, Councillor O'Neill, Mayor of East Fremantle, told the
committee:
Our
concerns when it comes to the decision-making process include that the decision
to commit funds to the PFL project by the state and federal governments appears
to have bypassed the usual processes that the public would reasonably expect
for an infrastructure investment of this magnitude.[9]
Potential for greater
capital costs than estimated
3.9
The committee
received evidence that the capital costs of the Freight Link would be far
greater than estimated, which would make the business-cost ratio (BCR) benefits
much less than the current forecast suggests.
3.10
The Business
Case Executive Summary estimates total expenditure on the Freight Link's
capital costs at $1.5 billion.[10]
Regarding this estimate, Infrastructure Australia commented that one of
the concerns about the project is that 'there are significant risks around estimated
costs'.[11]
3.11
Some other
evidence received by the committee agreed that the costs of the project could
greatly exceed current estimates.[12]
Most significantly, Professor Peter Newman and Dr Cole Hendrigan
suggested in their research for the Town of Fremantle:
The final
costs of the PFL will be much higher than the initial phases as it will
necessitate further investments in bridges, interchanges and improvements in other parts of the logistics
chain, especially in the final route through East Fremantle and North
Fremantle.[13]
3.12
These
concerns clustered around two potential areas where the Freight Link's costs could
increase significantly which will be discussed in turn, namely:
-
bottlenecks
in traffic around Fremantle caused by increased traffic volumes, particularly
given there is no provision to improve the existing bridge across the Swan
River; and
-
substantial
elements of stage 2 (Stock Road) have not been determined, and may include
tunnelled sections, adding substantially to the project's capital costs and
delaying the project's delivery.
3.13
These
concerns seem to have been borne out by the April 2016 announcement of an extra
$260.8 million federal funding for tunnelling parts of stage 2 of the project,
which takes the total cost of the Freight Link to at least $1.9 billion.[14]
The committee notes that this further funding does not address the matter of
current bridges not being able to handle increased traffic to and through Fremantle
that would result from the Freight Link.
Congestion
in Fremantle
3.14
The Freight
Link works are currently planned to end at the Leach Highway/ High Street
Fremantle junction, around 1.5 km from the port itself. The committee heard
there are some serious impediments to traffic movement between this location
and the port that are not addressed in the current Freight Link proposal. Most importantly,
the committee understands that the Stirling Bridge across the Swan River may
not be able to handle increased traffic flows from the Freight Link.
3.15
Infrastructure
Australia told the committee that there was no indication the Freight Link
would cause congestion around the Stirling Bridge:
The
surface solution has traffic modelling which shows the traffic modelling going
from the Perth Freight Link across the Stirling Bridge into the port... The
transport modelling did not show a bottleneck across the existing bridge in the
foreseeable future.[15]
3.16
However, many
witnesses and submissions disagreed with this view. For example, Councillor
O'Neill, Mayor of East Fremantle questioned why solutions to ease traffic over
the Swan River were not included in the project's original design:
What
project starts without addressing the most difficult solution, which is the
last half a [kilometre], from the Town of East Fremantle - the Stirling Bridge,
if you like - into the port? That will be the most expensive cost per metre and
probably the most destructive on our town. It is our concern you cannot start a
project without having it in its entirety and its detail.[16]
3.17
Other
witnesses also noted that the Freight Link proposal does not include measures
to improve traffic flows from the end of the Freight Link (Leach Highway/High
Street Fremantle) through to the Fremantle Port itself. Professor Newman
submitted that this could add at least $500 million to capital costs, bringing
total expenditure to over $2 billion:
The final
stage to get through to North Fremantle has not been announced but is likely to
cost at least $0.5b extra as it will most likely involve doubling Stirling
Bridge and providing large overpasses to miss lights around Tydeman Road. The
total [for the Freight Link] is thus more likely to be around $2b, if not much
more.[17]
Uncertainty
regarding tunnelled sections and the implementation of stage 2
3.18
The committee
heard that there is still great uncertainty over elements of the Freight Link,
which have the potential to increase the project's costs, as well as to substantially
delay its implementation. For example, Dr Brad Pettit, Mayor of Fremantle, told
the committee that he was unsure about how the plans for the Freight Link were
proceeding, at the time of the hearing in early October 2015:
We
certainly expect we may find out further information later this year, but it
would be fair to say that the range of options seems to be increasing rather
than decreasing. The original plan A, which was obviously a fattening and
upgrading to freeway standard of the existing Leach Highway and Stock Road
network was put forward. Since then the second plan was around tunnelling under
the former Fremantle Eastern Bypass route. What was certainly reported on the
front page of the Fremantle Herald last week was new options for
tunnelling that may go more diagonally, running from Stock Road at the
Winterfold Road intersection through to the Fremantle Golf Course. They seem to
be changing, but none of those, other than the first two, have we been informed
of formally.[18]
3.19
Mr Andrew
Mangano, a professional engineer with experience of operating road tunnels, submitted
that, were they used, they would add significant costs, not only to the
construction budget, but also to maintenance expenses in the future:
The
construction and operation of road tunnels is extremely costly and high risk.
The cost to construct road tunnels is far higher than roadways. Placarded loads
cannot use tunnels. There will have to be exhaust chimneys, possibly every 0.5
kms along the route. There is a strong likelihood all houses above the tunnel
will need to be demolished due to the limestone
geology in the Fremantle area. Operational costs will be far higher than
roadways, due to lighting, fire controls, ventilation and monthly shutdowns for maintenance.[19]
3.20
As noted in
chapter 2, the Western Australian Premier, Mr Colin Barnett, suggested in early
November 2015 that work developing and implementing stage 2 of the Freight Link
would be delayed for at least a year.[20]
This appears to realise the fears of some submitters to the inquiry, such as Ms
Christine Cooper, Chairperson, Bibra Lake Residents Association:
Our major
fear is that the WA government is very likely to delay or cancel the second
section, which is Roe 9, because of a lack of planning, but proceed with Roe 8,
which will end at Stock Road and then cause major problems for us local
residents. It also means not having a direct connection to the Fremantle port
or the proposed outer harbour—and what a mess that will be.[21]
Lower
business-cost ratio than forecast
3.21
As discussed in
the previous chapter, the Business Case estimated the Freight Link would
deliver a BCR of 2.8. However, the committee received evidence that suggested the
realised BCR could be much lower, not only from larger-than-expected capital costs
but also due to flawed assumptions being used in the Business Case modelling.
3.22
Professor
Newman's submission commented that the return from the estimated BCR of 2.8 is good
compared to many other infrastructure projects. However, he considered that some
of its underlying assumptions were flawed, so actual returns would be much
lower:
...most of
the benefits are based on a 10 minute time savings by trucks, despite there being
no solution to the traffic at North Fremantle yet. A faster route around the
city may be possible but in the end it will not save time if trucks are stuck
in truck jams in East Fremantle and North Fremantle. The benefit cost ratio is
thus illusory and misleading.[22]
3.23
This point
was also raised by Councillor O'Neill, who suggested that additional
expenditure on improving traffic flows between the end of the Freight Link and
the port would reduce the BCR:
If trucks
are banked back at that bridge, there will be no cost benefit. In fact, our
concern is that we will have trucks banked back to a fair distance in our town.
We did find that the cost of the additional infrastructure—that is, working out
how to get the trucks across the bridge—would have a serious impact on the BCR
of 2.8. Unless you have costed everything, how can we rely on the BCR?[23]
3.24
The committee
also heard concerns that the return from the Freight Link's toll system may not
be as great as expected. As discussed in the previous chapter, the Business
Case Executive Summary is clear that the rate for Freight Link user charge has
not been confirmed.[24]
Moreover, the department could not confirm to the committee that the beginning
of the charge would coincide with the opening of the Freight Link:
One would
expect that once the infrastructure is operating....there would be an opportunity
for the charge to be applied. But, as I say, the detail for the implementation
arrangements for the heavy vehicle user charge has not been settled. That is still a decision for
government.[25]
3.25
The committee
also heard that the cost-benefit analysis undertaken for the Business Case did not take into account social
and environmental factors, or the opportunity cost of implementing the Freight
Link over other potential infrastructure projects. As Mr Samuel Wainwright,
Spokesperson, Fremantle Road to Rail Campaign, suggested:
An
investment of over $1.6 billion demands an exhaustive analysis, including all
social and environmental costs. This should then be stacked up against the
alternatives, whether that be investment in public transport, outer harbour,
rail freight or accommodation of all three. This, you would have thought, would
be the very first stepping stone for an investment of this magnitude, but we
have seen nothing like that.[26]
The lack of
consideration of other infrastructure to support freight
3.26
Another theme
of evidence received by the committee was that in developing the Freight Link
proposal, the Commonwealth and state governments had not sufficiently considered
options for infrastructure to support the long-term health of Western
Australian shipping and freight industries, including:
-
the lack of
consideration of the pressures on the existing port;
-
ways freight movement
to the existing port could be improved at minimum cost without the Freight
Link; and
-
the
construction of a second port at Kwinana.
3.27
As Infrastructure
Australia stated in its assessment:
A rapid
BCR was completed for the preferred option only, assessed against the Base
Case. A rapid BCR was not completed for additional options to determine if the
preferred option provided the greatest net benefits.[27]
3.28
Infrastructure
Australia particularly highlighted that the Business Case for the Freight Link omitted
any consideration of a second port to support the current Fremantle Port,
although it considered some other relevant issues were examined:
The
options considered included pricing and efficiency using existing road
infrastructure, investment or subsidisation of rail and a number of road
investment options. The options did not include consideration of the Outer
Harbour at Cockburn Sound South [sic] of Perth.[28]
Pressure
on, and limits to, the existing port's capacity
3.29
The committee
heard that the existing facilities at Fremantle Port are currently close to
reaching capacity and, moreover, that the harbour has insufficient depth to
handle the new generation of larger cargo ships.
3.30
The
department stated in its submission to the inquiry that:
The port
is still operating well within its capacity (estimated at 1.2 to 1.4 million
TEUs per year), so has considerable growth potential.[29]
3.31
However, the Fremantle Ports Annual
Report 2014 found
that optimal capacity would be reached at some point between 2024 and 2029,
depending on trade trends and other factors:
Fremantle
Port’s Inner Harbour container trade is expected to reach optimal capacity
within the next 10 to 15 years, with the timing dependent on trade trends and
other factors. When this occurs, additional facilities will be needed to cater
for further growth.[30]
3.32
A 2003 Main
Roads WA report noted not only the limits to the volume of cargo at the
existing port, but also identified other issues supporting the construction of
a second port, including:
...land availability, constraints
imposed by the road and rail system and the intensification of urban
development around the periphery of the harbour area. Therefore another site is
required to accommodate the long term growth in the container and breakbulk
trade through the metropolitan area.[31]
3.33
Mr Dale Park,
the former President of the WA Farmers Federation appearing in a private
capacity, told the committee that Fremantle port could not handle the new
generation of international cargo ships:
The port
of Fremantle really is too small; we cannot get capes and mini-capes into it,
although they are looking at all sorts of interesting ways to get mini-capes
in, like backing them in and that sort of thing. But if we are going to look at
a 40-, 50- or even 100-year plan, the use-by date of Fremantle port is well and
truly past.[32]
3.34
This
perspective was shared by the Maritime
Union of Australia (MUA),
which told the committee that:
...[Australia
needs] a facility to trade with the world—a conduit to trade with the
world—that will accept the new generation of ships, width-wise and
draught-wise. We will be able to handle container cranes with a smaller
footprint so that we can work bays side by side. Then we will be world
competitive and be able to compare the productivity of Australian waterside
workers with others in the world.[33]
3.35
Kwinana
Industries Council noted that the gentrification of Fremantle town had also
changed community expectations about the port's continued growth:
The
Fremantle inner harbour can grow within its boundaries, but in the long term,
the pressure the gentrification process is placing on the Port continues to
make it more difficult for the freight task to and from the Port. In addition
community expectations around an improvement in air quality and greater product
transfer safety will put further pressure on the strained freight network.[34]
A
second port at Kwinana[35]
3.36
The committee
notes that the proposal to open a second port to support the existing
facilities at Fremantle has had broad bipartisan and community support for many
decades. As Counsellor Carol Adams, Mayor of Kwinana, noted, a second port was
both 'viable and inevitable' in the future. Given this, she questioned the need
to invest so heavily in the Freight Link project:
...as the
inquiry knows, [a second port for Perth] is not a new concept. It has its
genesis back with the Stephenson and Hepburn report in 1955. More recently, the
Fremantle Port Authority was in the advanced stage of design options for a port
in Cockburn Sound, and also a private port was well advanced in design and EPA
approvals with conditions. So I would pose the question: if a new port is both
a viable and inevitable option, why is so much public money proposed to be
spent on [the Freight Link's proposal to build] freight routes to an inner
harbour that has limited capacity to grow?[36]
3.37
Dr Pettit,
Mayor of Fremantle agreed, commenting that it was odd the proposal for the
second port had not been evaluated as part of the Freight Link Business Case:
...there
has actually been a bipartisan agreement around the need for an outer harbour
in Kwinana for 50 years, as the [Infrastructure Australia] report says. But
very explicitly from both sides of state government over the last 20 years
there have been active steps towards that, with the exception of the last few
years... [given this] it is pretty clear that when you have had a bipartisan
approach to building a port - be it an overflow port at Kwinana or a new port
at Kwinana - that should have been part of the comparison that happened.[37]
3.38
Ms Joanne
Abiss, CEO, City of Kwinana highlighted that the Federal Government had already
seen a second port as essential future infrastructure for Western Australia, as
have other stakeholders:
Regional
Development Australia have recently finalised their Perth and Peel economic
development strategy and infrastructure priority plan. The No. 1
nation-building project for WA is the outer harbour. So you have a federal
government agency saying it. You have [the Property Council] a private-sector
agency saying it... [alongside] local government saying it.[38]
3.39
The MUA also asked why the massive
expenditure on the Perth Freight Link had been committed given the limited
returns it offered:
Why
commit $2 billion of funding to build a road to a port that is nearing
capacity, when those funds could be redirected to a new port with safe and
reliable access and egress for rail and road transport?[39]
The
City of Kwinana's Indian Ocean Gateway proposal
3.40
The committee
held a hearing to consider the City of Kwinana's Indian Ocean Gateway proposal,
which includes the construction of a second port at Kwinana and associated
freight and transport networks. Evidence at this hearing overwhelmingly
confirmed that investment in a second port is necessary to assure the long-term economic
health of Western Australia. According to Counsellor Adams, Mayor of
Kwinana:
The outer
harbour is the future of the port trade in WA. It futureproofs our economy,
provides certainty and places infrastructure in the most logical and effective
location for growth in this region, if not WA, for the next 50 to 100
years.[40]
3.41
The City of
Kwinana highlighted to the committee the many benefits of the proposal for the area and Western
Australia as outlined
in its submission,
including:
- an annual ongoing revenue of $42.4
billion from the port directly;
- a further $28 billion annually of
flow-on revenue from indirect sales and output;
- the creation of 37,383 jobs
directly from the project, which is three-times the current level of direct
employment in the area (13,757 employees); and
- indirect employment in local
areas boosted by a further 49,657 jobs.[41]
3.42
These claims were
supported by detailed planning work undertaken by the City of Kwinana for a second
port, which it estimated could be operational within the next decade, just as
the Fremantle port facility reaches its optimum capacity:
Our
current estimation is that stage 1 [port facilities] could be operational
within seven years, if there was a whole-of-government approach and the funding
was secured. That is inclusive of the environmental approvals... we took a
conservative approach of 10 years at the outside - so, between seven to
10 years.[42]
3.43
The City of
Kwinana representatives also told the committee they had factored in improvements
to freight infrastructure to support this growth. According to Ms Abiss, City
of Kwinana, the first step toward a second harbour would be to improve existing
roads and rail networks to support the significant industries already based at
Kwinana:
The total
cost of all of the road and rail upgrades that are needed comes to $920
million, which is equivalent to the current federal government commitment for
funding the Perth Freight Link...[43]
3.44
These
upgrades would not only support existing industry at Kwinana, but also draw new
businesses and industries to the area. Ms Abiss commented that, in undertaking
this work:
The city
wanted to be able to demonstrate to both tiers of government that an outer
harbour could cope with the capacity of Western Australia's future port trade for
the next 50 years. We were able to task the international designers with
demonstrating that this port could cope with at least three million TEU, as
well as what was anticipated to be all of the general cargo, dry bulk, motor
vehicles and livestock out to 2070.[44]
3.45
The City of
Kwinana representatives also told the committee that they had undertaken
significant consultation with the business sector and the local community in
the development of this proposal.
3.46
Regarding
private sector stakeholders, the committee heard that local and multinational
businesses with local operations were all concerned at the current economic
outlook, especially given the state government's lack of engagement with the
second harbour proposal.[45]
For example, Mr Des Gillen,
Managing Director,
BP Refinery (Kwinana), commented that the private sector required
certainty in future government infrastructure investment:
...we all
work in internationally challenging industries, and the Australian economy,
particularly the cost base that we have, is already challenging. So the
uncertainty that comes with whether ports will be developed or not is just an
additional challenge that we have to deal with, particularly in terms of future
investments and where we want to put our piece. The biggest piece in the short
term is that there are decisions around rail and road infrastructure that are
pretty critical to all of our businesses in terms of how we move things around
that are essentially stalled until we work out where the port is going to
be—and that has been the case for almost 10 years now.[46]
3.47
Mr Albert
Romano, Manager LPG/LNG Production and Engineering, Wesfarmers Kleenheat Gas,
drew out the potential benefits for the private sector that would come from the
Indian Ocean Gateway proposal going ahead:
For us,
it is all about future proofing what is good business for the community as well
as for industry. To have sustainable industry, you need a sustainable community
and vice versa... By bringing port infrastructure to this [Kwinana] area, you
help to further future proof the benefits that exist already for industry in
this location but also help to future proof the other consideration which is
less encroachment into sensitive land use areas that currently exist [including
residential and environmental concerns].[47]
3.48
Representatives
from the Kwinana Industries Council (KIC) also told the committee that the plan
had widespread support from businesses based in Kwinana, as well as the Western
Australian business sector more broadly:
The
primary thrust for KIC [and its members] supporting the Indian Ocean Gateway,
and all that it would bring, is around the principle of business efficiency. It
is critically important for the long-term health of industry that port
operations - be they the existing or the possible future ones - are an
efficient and effective operation. Any additional cost associated with an
inefficient port operation comes down to industry. Those who are exporting are
operating in internationally competitive marketplaces and every dollar counts,
especially in these current times. Efficiency is the key driver, because of the
cost associated with import export.[48]
3.49
The committee
also spoke with representatives of the Western Australian agricultural sector,
who confirmed that the future efficiency and productivity of the sector was
dependent on the construction of a larger second port servicing Western
Australia.[49]
3.50
Regarding
consultation with the local community, Councillor Adams, Mayor of Kwinana, told
the committee that the proposal was popular given:
... the whole
employment or lack of employment in the area. It is not just in Kwinana; this
is about the whole region. We have the areas of Rockingham, Mandurah and
Armadale, which have pockets of very high unemployment as well. So, as far as
community support goes, I think they are supportive that the City of Kwinana
has taken the leadership role and tried to address a problem, which is not
going away and which is indeed increasing, if you were going to take the
planning documents of 750,000 people coming to a region of already high
unemployment.[50]
3.51
Ms Abiss,
City of Kwinana, said that data collected on the city's website pointed to
widespread community support, with well over 75 per cent of the submissions
received on the council's Indian Ocean Gateway website favouring the proposal.[51]
3.52
Regarding
environmental approvals, the committee heard that preliminary scoping work
suggested the project's environmental impacts could be managed effectively:
Principally,
the environmental impacts will come in the construction phase, through the
dredging and the actual reclamation. It is the release of the turbidity there
that needs to be managed carefully so that it does not impact on what they
called the benthic environment and particularly the seagrass beds... [T]he intake
for the desalination plant is also very important; it needs to be managed. But
there is the opportunity for filters to be retrofitted to that...On the land
side, the principal environmental impacts are around Mount Brown and the
ecological communities that exist there, as well as managing any potential
contamination that exists from historic uses. But it is not anticipated, as
mentioned in the report, that that will be an issue, given that most of the
construction is to the west of that existing area.[52]
3.53
Most of the
evidence received by the committee suggested there were very few drawbacks to
the development of a second port at Kwinana. However, it is apparent that some
work is needed on how freight could transfer between the ports of Kwinana and
Fremantle, and consideration of whether both ports could be maintain viability
over the long term. As the Kwinana Industries Council commented:
In time,
if we have two operating container terminals, the ships will only stop in one
port; they will not stop in two. That, by definition, means there will be a lot
of traffic, preferably rail, as opposed to road between the two ports. That
means at every level crossing the bells will be ringing on the hour, pretty
much seven days a week, all night, because it will be a busy railway line... and
the trains blaring their horns, and I reckon that that will result quite
quickly in curfews being talked about because there will be a lot of very angry
people. That is a problem that I foresee and am putting on the table, and have
been putting on the table.[53]
3.54
At the
hearing, the committee asked Mr David Rice and Mr Ian Ker, of the Sustainable
Transport Coalition, to comment on the respective merits of the Perth Freight
Link and the Indian Ocean Gateway proposals. Despite noting some issues that
needed further consideration in the City of Kwinana's proposition, they found:
At best,
the PFL buys a little time, deferring the need for major investment in Outer
Harbour container facilities and access, while attempting to manage the congestion,
social and environmental effects of a sole focus on the Inner Harbour.
The
Kwinana [Indian Ocean Gateway] proposal, on the other hand, provides an
opportunity to address the more fundamental and longer-term issue of handling
continuing increases in container traffic to and from Western Australia -
beyond the capacity of the existing Inner Harbour.[54]
Privatisation
of Fremantle Port
3.55
There have
been reports that the Western Australian Government is preparing to privatise
the existing Port at Fremantle. However, there is little information in the
public domain about the government's intentions.[55]
3.56
According to
the MUA, the state government has not revealed its intentions concerning the
divestment of Fremantle Port:
Information
is sparse - even the case studies. I believe that there is a study underway now
that is to be finalised at Christmas by the port authority and the state
government. Again, that is only rumour; it is not confirmed. If you ask
questions you find closed doors.[56]
3.57
Fremantle
Port's Annual Report 2015
hinted that plans for the state government's divestment of Fremantle Ports
could be imminent:
Over the
coming months, Fremantle Ports will continue to be closely involved with the
Department of Treasury and its advisers as the State Government pursues its
announced divestment of Fremantle Port. At the time of preparation of this
Annual Report our role has been to assist with information and advice for the
due diligence phase.[57]
3.58
The Kwinana
Industries Council submitted that there was a clear willingness in the private
sector to consider funding and developing facilities in Kwinana, should it be a
condition of sale:
The private investment sector has
made it clear it wants to fund and build a port in Kwinana, in association with
a bid to purchase Fremantle Ports, if indeed it is to be sold.[58]
3.59
However, the
MUA cautioned that the potential for new owners to have rights to both
Fremantle and a second port could potentially lead to price gouging and
significantly higher costs for end users.[59]
3.60
The City of
Kwinana commented that the lack of transparency over the divestment of
Fremantle Port, including what infrastructure would be built to support its
ongoing viability, could adversely affect potential investors and the price
achieved by the state government:
The engagements
that we have had with either investment funds or their advisers have been to
the effect that they are really looking for that certainty. They really want to
know when and what is proposed, because then they can factor that into their
bid price. It is an essential element of information that they need.[60]
Options to improve existing freight links to Fremantle
port
3.61
Some evidence
suggested there were far more effective and cheaper ways of improving freight
heading to Fremantle port than the proposed Freight Link, particularly
improving existing rail capacity and managing traffic flows more effectively.
3.62
Mr Healy,
Fremantle Road to Rail, emphasised that the Freight Link would provide
infrastructure that was not based in sound transport planning or management
principles:
[Improving freight to and from the
port] is going to require actual transport management, and that is the problem
with this Perth Freight Link. The government has confused transport
infrastructure with transport planning. What we really need to do with
Fremantle port is plan what we are going to be doing with the freight and then
decide what infrastructure we need.[61]
3.63
The MUA told
the committee that certain measures
to support the operations of the current port could be implemented at very little
cost, while facilities at Kwinana are being developed:
There are
measures that can be implemented in the port of Fremantle at far less cost than
the freight link to ensure safe and effective transport of containers whilst
the outer harbour is being built.[62]
3.64
Infrastructure
Australia noted the Business Case's modelling was inherently biased against low
cost alternatives to the Freight Link:
Infrastructure
Australia notes that the options identification and assessment for this project
could have been improved by undertaking quantitative modelling of traffic and
economic impacts for multiple short listed options. The multi-criteria
assessment used has significant weaknesses. In particular, criteria weights
used allocate 80% of the weight to benefits and only 20% to costs. This is
likely to bias assessment against low cost options and in favour of higher cost
options.[63]
Better
rail freight networks
3.65
A number of witnesses
and submitters highlighted the need for better management of, and
infrastructure for, rail freight servicing Fremantle Port. For example, Dr
Pettitt, Mayor of Fremantle, stated that:
The other
key impact that we have is trains running at unsociable hours, shall we say,
because currently the constraints around the Fremantle traffic bridge mean that
they cannot run during the day [as they have to share the bridge with passenger
trains]. So we need some better management of that to get more of the freight
train task happening during daylight hours. That is something that we feel very
strongly.[64]
3.66
Mr Barry
Healy, Fremantle Road to Rail Campaign told the committee that investment in
improved rail networks to Fremantle Port would not only be the best way of
improving freight to and from the current port, but were also essential for
servicing a second port at Kwinana:
...the
railway line would be the first place to look to improve the distribution and
delivery of containers to and from Fremantle port. And if you also look at that
map from the City of Cockburn, you will see the railway line goes down to
Kwinana and so if there is an outer harbour built, we contend that we should be
looking at the railway line as the primary way of dealing with the freight
burden for the new port.[65]
3.67
This
perspective also reflects the aspirational targets set by government, which
were noted by the Fremantle Ports Annual Report 2015:
Although
Fremantle Ports has been able to work with industry to gradually build the rail
share, the volume of container freight on rail is subject to market
fluctuations. Since 2002, rail’s share of the container trade has grown from
about two per cent to the current level of 13 per cent but has been slightly
higher in some years. The aspirational target is 30 per cent of total container
trade.[66]
3.68
The position
paper undertaken for the City of Fremantle by Professor Peter Newman
and Dr Cole Hendrigan noted that all current rail links to Fremantle
Ports are now privately owned, and that larger freight volumes to Fremantle
would necessitate:
...significant investments in
double-stack train cars, electrification of the trains and raising the
catenary, a second bridge to support
more trains and a great deal of tolerance of the visitors and residents in the
West End of Fremantle.[67]
3.69
Several other
witnesses highlighted the need for an upgraded or dedicated rail bridge across
the Swan River.[68]
This was costed at $150 million in the Fremantle integrated transport
bridge draft submission to Infrastructure Australia for federal funding in
August 2012.[69]
Road
transport management solutions
3.70
A number of
witnesses and submissions highlighted the need for better road transport management
and planning for trucks servicing Fremantle Port, rather than investment in the
Freight Link. For example, the position paper for the City of Fremantle undertaken
by Professor Newman and Dr Hendrigan suggested that:
There is
a strong case to be made for managing the flow of containerised trucks with
either pulses and/or extending the port operation hours. This would involve
staggering the trucks so they can both travel in 'green waves' of signal lights
all tuning for them in unison or, at least, travel in offpeak hours. This is
likely already in effect to some degree in peak hour traffic, however it is
noticed that almost all trucking is done between 5am and 7pm, Monday to Friday, 250 days a week... Were this
managed differently the trucks could be running before and after the peak hours
with large convoys in the evening.[70]
3.71
The MUA
agreed that there were simple changes to traffic management that could deliver
dividends for the freight industry at very little cost:
There are
some simple measures that could take place. That revolves around road transport
and working outside of what is deemed to be the nine to five hours. That does
happen now on a limited basis. Both of the two major stevedores do what is termed
a bulk run, where they will run a dedicated freight trucking line to a holding
yard of anywhere between 100 containers to 150 containers. But there is a
lot of scope to switch to the back hours of 6 pm to 6 am to alleviate the
trucks on the road.[71]
3.72
The position
paper for the City of Fremantle argued these changes would save a great deal of
expenditure, although they conceded that this option would have some effects on
noise levels near truck routes:
Of
course, this would mean operating the port and receiving destinations differently than current: this is
the rise of Perth as a 24 hour city, as most global cities are. The proposal to
build a $1.6 [to] 2 billion dollar highway seems a very expensive option
in light of simply changing operating hours. It would, of course, mean increased noise
impacts in those areas near the truck routes.[72]
3.73
The following
chapter outlines the concerns that were raised to the committee by local
governments, community groups and individuals who would be affected by the Freight
Link.
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