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 oneoff 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 decisionsto 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 pathwaysalso 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
viabilitya 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 199798 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 199295.
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 199798, 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 199295. (paragraph 6.45)