CHAPTER 3
OBSERVATIONS ON THE BREW REPORT
Observations on the Brew Report
3.1 Issues which arose in evidence to the Committee included the
process for conducting the review was done without broad consultation; that many groups
were either not approached or excluded from discussions; or, that those that were involved
were given limited time with the review team. In response, Mr Brew advised that he was
satisfied that we had adequate access to those we needed to, and we
got quite a deal of information and viewpoint. [1]
3.2 The Committee notes that Mr Brew's terms of reference were
focussed very much on providing advice on the commercial aspects and future operational
potential of AN.
3.3 In its submission to the Committee, Rail 2000 whilst acknowledging
that the Brew Report provides a framework for the resolution of AN and
NRC's problems, was also critical of the report claiming 'serious flaws'
in the recommendations. [2]
3.4 The submission went further to cast doubt over the actual financial
situation at AN and suggested that the review team had placed higher importance
on what it considered to be 'rubbery figures' [3]
3.5 The Brew Report chose not to comment on the likely impact the proposals
would have on regional communities. In evidence to the Committee, Mr Brew
summarised his report as one which was '...totally focussed on the financial
position of AN' [4] as was required by
the terms of reference.
3.6 It was further explained that the objectives of the Brew Report were
designed to arrest, or stabilise, what was identified by the review team
as a 'deteriorating financial position.' [5]
3.7 In their submission to the Committee, the ACTU Rail Unions considered
the recommendations of the Brew Report as '...shallow, error ridden, lacking
in detail and not addressing the fundamental problems of the Australian
rail transport industry'. [6]
3.8 The Brew Report found that the value of the work on order for AN
had fallen by about 25 per cent each year from 1994/1995, that it was difficult even for
management at AN to establish an accurate statement of its financial position and that
essentially
the root of ANR's problems was that it incurred the debt of upgrading
and modernising the infrastructure and rolling stock on its part of
the interstate rail network but lost the ability to service the debt
and maintain employment. [7]
3.9 In explaining the thrust of his report to the Committee, Mr Brew
advised that '...what the report sought to do was to recommend ways in
which the projected operating losses could be reined in and some improvement
made in the trading position...' [8]
3.10 In a concluding general remark to the Committee, Mr Brew commented
that 'the die has been cast. It is now the task for the AN people to play
the game by the new rules.' [9]
3.11 However, it would appear that Mr Brew formed this view at an earlier
time. For example, the view of the current AN management is that there
are no other options available other than those prescribed in the findings
of the Brew Report, even though the report was formulated on the basis
of purely financial information. [10] To that extent, the outcomes proposed by
the Brew Report appear to confirm information which had been progressively
gathered by the Department of Transport and Regional Development (DTRD)
and presented to the Government. [11] Moreover, this was confirmed by the Chairman
of AN when he indicated to the Committee that 'the Brew Report does agree
with the Commission's point of view'. [12]
Observations on the Brew Findings
3.12 The Committee received a range of views on the Brew Report in a
number of key areas recognised as important to the future of rail. Generally, there was
recognition that the report at least synthesised many of the issues facing both AN and NR.
3.13 In Port Augusta for example, where the railways still form an integral
component of the community, it was noted by the City Council that the
Brew Report came as a sense of relief because ' once the announcement
was made, at least the work force knew at the end of the line at some
time decisions would be made.' [13]
3.14 However, this was not a view held by the union movement in Port
Augusta. It was the unions view that the proposals of the Brew Report
would lead to asset stripping of the AN organisation by private contractors
and that the work would more than likely be transferred interstate. The
unions believe that there still is a continuing role for the Government
in the rail industry and it is this involvement which would continue to
give centres such as Port Augusta a future. [14]
3.15 The ACTU Rail Unions' submission provided an analysis of each of
the recommendations of the Brew Report. In particular, the submission
addressed the Brew Report's findings as they apparently exceeded the terms
of reference. The submission also extended the debate on the Governments
proposed rail reform process by raising issues involving the principles
behind road and rail policy development, overseas experiences, implications
of private versus public ownership of railways as well as focussing on
future options for both AN and NR. [15]
Particular Recommendations in the Brew Report
3.16 The first recommendation called for the establishment of a
national track access and infrastructure body. A consistent theme in submissions is that
the proposed National Track Access Authority (NTAA) is seen as a key component in the
success of much of the reform process, both in terms of track access charges and a known
track access regime. However, the evidence in relation to the establishment of a track
access body recognised the need for sufficient funding and Commonwealth government support
for such an organisation but that the current funding proposal for that organisation was
clearly viewed in evidence as inadequate.
3.17 The proposal to remove the Commonwealth's equity in NR was given
qualified support from NR itself, noting that a number other matters should
be resolved in the first instance. [16]
3.18 It was recognised that as TASRAIL only currently provides a freight
service, the Tasmanian Government supports the proposed sale. [17] However, it was explained that in supporting
this recommendation the government of Tasmania preferred to ensure that
there would be no further closure of services and that the rail system
remain viable and not lead to a transfer and increase in road usage. [18]
3.19 The same perspective was applied to the South Australian
Freight Business, where issues involving pricing and charges on the country lines,
particularly those involving the transportation of grain were given focus in the debate.
3.20 For example, the South Australian Farmers Federation advised the
Committee that the rail system in South Australia delivers 55% of that
states grain to ports and silos and it was argued that no rail operator
could expect to succeed without the commitment of its customers. It was
their view an appropriate price regime is important, as '...it is essential
that the freight rates and operating costs related to the rail network
infrastructure are internationally competitive'. [19]
Footnotes
[1] Evidence, 3 February 1997,
p.406.
[2] Rail 2000, Submission 20, p.7.
[3] Ibid, pp.6-7.
[4] Evidence, 3 February 1997,
p.400.
[5] Evidence, 3 February 1997,
p.403.
[6] ACTU Rail Unions, submission no. 25,
p.2.
[7] Evidence, 3 February 1997,
p.394.
[8] Evidence, 3 February 1997,
p.403.
[9] Evidence, 3 February 1997,
p.417.
[10] Evidence, 28 January 1997,
p.33.
[11] Evidence, 3 February, 1997,
p.328.
[12] Evidence, 28 January 1997,
p.32.
[13] Evidence, 29 January 1997,
p.78.
[14] Evidence, 29 January 1997,
p.134-152.
[15] ACTU Rail Unions, Submission 25
[16] Evidence, 3 February 1997,
p.377.
[17] Tasmanian Government, Submission
45
[18] Evidence, 5 February 1997,
p.430.
[19] Evidence, 28 January 1997,
pp.46-47.