2.1
This chapter considers the underlying economic rationale of the Inland Rail project and the anticipated benefits of its construction for the Australian economy, particularly for those regions hosting the Inland Rail project. Whilst it is apparent that Inland Rail will be advantageous to Australia’s future prosperity, it is hindered by ongoing concerns about the cost of the project. Over the course of this inquiry the cost has ballooned from $4.7 to $14.3 billion, with predictions that it will exceed $20 billion. This increase in cost potentially undermines Inland Rail’s business case and casts doubt over the ARTC and the Australian Government’s capacity to manage the project. This chapter concludes with consideration of the impact of the Australian Government’s decision to establish a strict 24-hour journey time parameter on the project and Inland Rail’s ability to compete with other modes of transport.
Inland Rail’s business case
2.2
The Inland Rail business case was released in September 2015 after an 18-month study by PricewaterhouseCoopers in partnership with ACIL Allen Consulting. The business case outlined the rationale for Inland Rail, an overview of the project, anticipated construction costs, the economic case and the demand for, and delivery of, Inland Rail.
2.3
A key finding of the Inland Rail business case was its capacity to address the effects of Australia’s population growth and subsequent increase in freight movements along the east coast of Australia. The report predicted that interstate freight will increase by 70 per cent by 2030, and would place immense pressure on existing infrastructure between Melbourne and Brisbane, further compounded by population growth and constrained north-south freight infrastructure. In the ARTC’s summary of the business case, it reported that Inland Rail ‘will encourage and facilitate the shift of more freight from road to rail’ and reduce the forecasted economic costs of road congestion. The amount of freight moved by rail is expected to increase by 62 per cent in 2050 with the construction of Inland Rail.
2.4
By 2050, Inland Rail is expected to carry approximately 66 per cent domestic consumer goods, largely between Melbourne and Brisbane, but also between Brisbane, Adelaide and Perth. Twenty-five per cent of its freight is expected to be coal and other minerals for export, and nine per cent consisting of agricultural products for export. Despite the comparatively small share of agricultural goods being transported by Inland Rail for export, the business case stated that ‘because Inland Rail will travel through Australia’s four richest farming regions and mining regions, it can be expected to draw significant volumes of grain, cotton, chilled beef [and] coal’.
2.5
An important component of Inland Rail’s business case is its service offering, particularly the emphasis on the 24-hour transit time to meet its customers’ needs. The business case also emphasised the importance of it being competitive with other freight services (cost) and having 98 per cent reliability.
2.6
Regarding the cost of Inland Rail, the original desktop estimate was $4.7 billion, which was later revised in the business case to be $9.9 ($10.7) billion over 10 years (‘with sufficient contingency to provide a 90 per cent likelihood that this [figure] will not be exceeded’ for the P90 figure of $10.7 billion). The financial analysis of the Inland Rail found the project ‘would not generate enough revenue to provide a return on its full construction cost’ but ‘would be cash flow positive once’ operational. This positive cash flow would ensure the project would ‘receive more than sufficient income from access fees to cover ongoing operations and maintenance costs’. On an economic benefit cost ratio, Inland Rail would have a benefit of 2.62, which according to the business case was ‘strong under a wide range of variations including revenues and costs either higher or lower than estimated or forecast’. Variations listed included demand, access pricing, capex, GDP growth, oil and coal prices.
2.7
Whilst the Australian Government projected Inland Rail to cost approximately $10 billion, it also anticipated that it would increase Australia’s GDP by $16 billion over the 10 year period of its construction and within the first 50 years of its operation. The business case also anticipated the delivery of 16,000 new jobs at the peak of Inland Rail’s construction, and ‘an average of 700 additional jobs per year over the entire period’. This figure was later increased to 21,500 direct and indirect jobs throughout its construction.
Ernst and Young Inland Rail Regional Opportunities report
2.8
In addition to the business case, the Department of Infrastructure, Transport, Regional Development and Communications (Department of Infrastructure) commissioned Ernst and Young (EY) to undertake a study of the short, medium and long-term economic benefits of Inland Rail for the regions along its proposed alignment.
2.9
In total, 39 investment options were identified as part of the study. A summary of these supply chain efficiencies and value chain growth investment opportunities across regions is found in Table 2.1:
Table 2.1: Potential investment opportunities, Inland Rail
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Queensland
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- Grain storage & handling facility in South West Queensland to service export market through Port of Brisbane.
- Expanded logistics & cotton handling hub.
- Regional airport expansion (stage 1) for air freight services.
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- Food processing hub (stage 1) for export market.
- Mining support hub for Surat Basin coal reserves and coal seam gas mining; movement of inbound mining supply logistics (fuels, nitrate, steel) from Port of Brisbane.
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- Abattoir expansion to service growth in domestic & global demand for animal protein.
- Regional airport expansion (stage 2) for air freight services.
- Cotton logistics hub expansion.
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Northern NSW
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- Abattoir expansion to service growth in domestic & global demand for animal protein.
- Intermodal freight hub, Dubbo/Narromine
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- Grain Mill (stage 1) to integrate processed products within food processing hub (pasta, bread).
- Mining support hub for Gunnedah Basin.
- Food processing hub for value-adding for grain-based food production.
|
- Expanded logistics hub (cotton lint & seed) & handling of inbound goods.
- Grain mill (stage 2, see stage 1).
- Consumer goods warehousing for Moree/Narrabri to meet population growth.
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Southern NSW
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- Cotton processing expansion in the Riverina.
- Food processing hub for the Murray & Riverina regions, particularly fruit and vegetable goods.
- Logistics hub at Parkes to intersect with freight travelling between Brisbane, Adelaide and Perth.
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- Rail hub between Inland Rail & short line services in Riverina (such as Wagga Wagga).
- Regional airport expansion (stage 1) for air freight services.
- Flour mill expansion for the movement of processed goods.
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- Manufacturing expansion, such as timber products from the Alpine region.
- Consumer goods warehousing based on population growth in region.
- Almond processing based on growth in industry and anticipated output.
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Victoria
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- Intermodal expansion at Albury/Wodonga freight hubs.
- Timber/paper manufacturing in Benalla, Wangaratta & Alpine region.
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- Food processing hub (stage 1) to capitalise on horticulture production from region.
- Defence manufacturing support hub.
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- Food processing expansion (stage 2, see stage 1)
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Source: Ernst and Young Inland Rail Regional Opportunities report, March 2020, pp. 26–52.
2.10
Overall, the EY study found that Inland Rail could deliver up to $13.3 billion in increased gross regional product for the 103 local government areas along the proposed alignment. The potential economic uplift of Inland Rail across all regions for employment, gross-regional production and output are detailed in Table 2.2:
Table 2.2: Potential economic uplift, Inland Rail
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Employment (full time equivalent)
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2,090–2,510
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2,180–2,770
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2,470–2,950
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Gross-Regional Product
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$1.3 to $1.5 billion
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$1.7 to $2.1 billion
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$2.5 to 2.8 billion
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Output
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$1.8 to $2 billion
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$2.4 to 3 billion
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$3.5 to 4.1 billion
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Source: Ernst and Young Inland Rail Regional Opportunities report, March 2020, p. 56.
Commentary on the economic benefit of Inland Rail
2.11
There were varied views on the economic benefits of Inland Rail. Representatives from the rail and freight sectors spoke highly of the investment, as did various local councils, especially those in proximity to Inland Rail’s intermodal facilities. The committee also heard of the benefit of Inland Rail during its construction phase, with an increased number of jobs for regional areas and increased business opportunities for local businesses.
2.12
The Australasian Railway Association (ARA), SCT Logistics, Pacific National, the Freight on Rail Group and the Australian Logistics Council all emphasised the importance of Inland Rail as a means to improve the competitiveness of rail across the freight transport sector. SCT Logistics contented that Inland Rail would increase competitiveness by a 23 per cent productivity gain due to improved transit times, reliability, the removal of constraints associated with the movement of goods through Sydney, and the increased size and capacity of Inland Rail’s trains.
2.13
For the ARA, Inland Rail improves competitiveness by addressing the progressive decrease in rail’s mode share because ‘it provides the necessary infrastructure to help get more freight on rail’. In addition, Inland Rail supports the diversification of freight operations in Australia. As argued by the ARA, the investment into rail improves investors’ confidence and has broader benefits for the community:
If we see good sustained investment across all the various modes, recognising they are all important for different aspects, that gives investors confidence to invest in freight rail and we can see the benefits that it provides in terms of congestion in cities, environment, removing accidents from roads. Those benefits can be realised as part of the investment cycle.
2.14
However, the ARA emphasised the importance of certainty for the industry, expressing the view that when a government makes and announces a decision, it shouldn’t be overturned. The ARA went on to say that ‘[w]e believe this principle remains as true of other infrastructure projects as it is of Inland Rail’. The ARA argued that the Inland Rail project must ‘proceed without reprosecuting (sic) the decision’ and that its members required certainty:
ARA has members that need certainty regarding the commencement of construction and ongoing operation of Inland Rail. Continued public speculation about the route is destabilising for companies and causing stress and unnecessary hardship for those both on the government's existing route and communities such as Cecil Plains and other communities not on the current alignment.
2.15
Certainty was also emphasised by other rail companies, who have already invested in infrastructure to accommodate Inland Rail. For example, SCT Logistics spoke of an ‘opportunity to invest up to $250 million on the [Inland Rail] route’ in 2021, with $50 million to be invested in Melbourne and Wodonga terminals alone.
Cost savings
2.16
An additional benefit of Inland Rail is the anticipated cost savings available to industry, identified as part of a CSIRO-led study completed in March 2019. The pilot study called Inland Rail Supply Chain Mapping analysed the Parkes to Narromine (P2N) section of Inland Rail, and found ‘a potential average transport cost saving of $76 per tonne for horticulture products and post-processed food road trips shifted to Inland Rail’. Whilst indicating a benefit, the study noted that this modelling did not include local supply chains (goods that originated in or were destined for the region). Rather, the study considered ‘potential to use the majority of Inland Rail to move freight between Victoria and Queensland and beyond’. Preliminary findings from a broader CSIRO-led study found Inland Rail could save up to $170 million in transport costs per year due to the shift from road to rail. Upon the release of the second study, the Australian Government called for industry to start planning for this transition.
2.17
The importance of improved cost savings was emphasised by SCT Logistics. It advised the committee that cost was of primary importance to the freight sector, followed by reliability and transit time.
Local benefits, employment and business opportunities
2.18
As forecast by the EY regional opportunities study, regional and rural communities are expected to benefit from Inland Rail, whether through the creation of intermodal facilities, or employment and business opportunities during and after its construction. Overall, there was a high degree of support for Inland Rail, even amongst some of those communities adversely impacted by its construction.
2.19
One long-term advocate for Inland Rail is the Parkes Shire Council, whose representatives spoke highly of the Inland Rail project, its contribution to the community thus far, and the anticipated benefits for the region once fully operational. The committee was told that the region had experienced a major lift during the construction of the P2N project; however, the Council added that the real advantages won’t be experienced until Inland Rail is fully operational. For this reason, the Parkes Shire Council called for Inland Rail to be delivered as soon as possible and was supportive of the Prime Minister’s call for the project to be accelerated. The Council added that Inland Rail would be the backbone of Australia’s rail network, and noted that:
…it's very important that it be efficient. To drive that modal shift, to get the trucks off the road, we need a railway that's short, fast, flat, and more reliable than trucks. That's critical.
2.20
A key point raised by Parkes Shire Council was the improvement to Australia’s internal competitiveness once Inland Rail is completed. The Council referenced Canada’s rail network that has a faster and more efficient network that carries ‘up to 10,000 tonnes with highly efficient balloon loop loading compared with trains on our network, which run on a fraction of that’. The Council also highlighted that Australia’s reliance upon trucking is unsustainable, if current freight numbers are set to double, and that Inland Rail will drive the much needed modal shift across the freight sector.
2.21
For the local economy, the Parkes Shire Council emphasised the importance of value adding to the region’s $1 billion agricultural industry. Currently, 65 per cent of agricultural products leave the region without any value adding, whereas the special activation precinct created in Parkes to capitalise on Inland Rail will enable value adding and increased productivity. The Council explained the importance of value adding to the region and the current limitations without Inland Rail:
The whole purpose of our activation precinct is so that, instead of selling bulk wheat, we can sell a completed product. We already have as a consequence of the activation precinct an advanced food manufacturer, who has set up there and will be using the logistics that will be there to export their product overseas. This is where we'd like to use the rail product. At the moment, to put a container—a single one—on rail and get it out is a problem and costly. However, with Inland Rail, with potentially daily services, all of a sudden one container or two containers will be possible, so we're strongly pushing a bonding service out here. All of a sudden the huge potential of, for argument's sake, the Lachlan Valley and the Macquarie Valley to move into higher-product agricultural products and get them directly to those export markets will be very important. We have beef, we have lamb and we have major irrigation in both the Macquarie Valley and the Lachlan Valley, all of which could be value added, onto the train, directly to port and then to overseas export markets.
2.22
In addition to transporting goods to the international market, the Council identified benefits including the transportation of goods to the region, such as fuel, fertilisers and agricultural equipment that are typically transported by single-unit trucks. The Parkes National Logistics Hub had also opened up opportunities for the region to host a resources and recycling plant.
2.23
Strategically and historically, Parkes has played a vital role in connecting freight between the east and west coasts. These freight movements are not only agricultural goods, with significant volumes of consumer goods being consolidated in Parkes and transported to Western Australia. Parkes Shire Council informed the committee of the nature of this freight network and the role of Inland Rail in the future:
SCT Logistics moves I think it's up to 27 trucks a day that come up to Parkes and then they consolidate freight here. Everything from alcohol to white goods, all sorts of domestic products, they're moving those through Parkes and consolidating here to make sure that they get to Western Australia. So we are seeing a lot of not just agricultural products. We see mining products moving through Parkes. Someone like Linfox, for example, has contracts with Amazon. They have contracts to move to Western Australia as well. We are seeing not just traditional freight moving through Parkes, and that's because of the ability to consolidate.
We think that with Inland Rail we'll see more of that. Someone like Pacific National set up here because they can consolidate 12 trains down to eight trains to move to Western Australia. Rather than consolidating down to eight, they have actually moved up to 12 because of the increase of domestic freight moving through here.
2.24
In a statement made by the ARTC, the committee heard of the regional benefit provided by the construction of the P2N project:
…it has very significant impacts that have been warmly welcomed in the communities. By way of example of some of the figures, more than 760 local people worked on the project in the Parkes area, almost 200 of those were Indigenous. There was $110 million spent with 99 local businesses in the Parkes area; $14 million was spent with nine Indigenous businesses, four of which were local. That was at a time, as we're all well aware, when New South Wales was still suffering from drought and from the COVID-19 impacts, so it has had a great impact.
2.25
The ARTC anticipates that 21,500 jobs will be created at the peak of Inland Rail’s construction, with an average of 700 additional jobs per year over the entire period. In addition to these employment opportunities, the ARTC has funded local community groups, scholarships and Indigenous-led programs, as well as awarded local businesses with contracts to support Inland Rail’s construction, such as:
$20 million contract awarded to Liberty OneSteel Whyalla Steelworks to supply steel for the Parkes to Narromine (P2N) project;
$20 million contract awarded to Rocla in the Southern Highlands to provide 200,000 concrete sleepers for the P2N project; and a
$80 million turnout contract awarded to Castlemaine-based company, Vossloh AG.
2.26
An additional measure to strengthen and explore potential opportunities to connect local communities to Inland Rail was the $44 million Inland Rail Interface Improvement Program. The Australian Government established this program to support local organisations, governments and communities with their development of business cases for projects and investment opportunities connected to Inland Rail. The Australian Government announced that the program would ‘not provide or guarantee funding for projects’, but ‘enables local ideas to be developed for further consideration’.
2.27
The committee also heard that Inland Rail would contribute to Australia’s national security by providing suitable rail access to Australia’s defence suppliers based in regional areas.
Key concerns
2.28
Although there was significant support for the Inland Rail project, especially from the freight and logistic sectors, the committee heard strong concerns about a number of key elements of the Inland Rail project. These concerns included the overall cost of the Inland Rail project and whether the economic assumptions made within the 2015 business case remain valid. A further key concern raised throughout the inquiry was the impact of the 24-hour travel time between Melbourne and Brisbane and how this parameter potentially hindered efforts to explore more suitable alignments. Finally, some stakeholders spoke of concerns about the competitiveness of Inland Rail against other modes of transport, largely shipping and trucking sectors.
Cost of Inland Rail
2.29
Over recent years, the Australian Government has made a number of investment decisions in relation to Inland Rail. In 2011–12, the Australian Government announced the approval of an initial $300 million in grant funding for Inland Rail’s pre-construction activities that would span the 2014–15 to 2018–19 period. Following the 2013 election, the incoming Government confirmed its commitment to this funding.
2.30
In the 2016–17 Budget, the Australian Government announced that Inland Rail would be delivered through the ARTC in partnership with the private sector. At this time, the Department of Finance undertook a market testing process that informed the government’s consideration of the delivery and financing model for Inland Rail. The budget also allocated an additional $593.7 million to the ARTC to progress land acquisition, continue the pre-construction phase and undertake due diligence activities.
2.31
The government’s most substantive contribution to the Inland Rail project was made in the 2017–18 Budget, with the allocation of an $8.4 billion equity investment in ARTC. It was also announced that additional funding would be sought through Private-Public Partnerships (PPP) for three of projects based in Queensland. At the time, the total expenditure of Inland Rail was projected to be $9.3 billion.
2.32
A further $44 million was committed in 2019–20 for the development of a strategic business case to identify and prioritise upgrades to regional rail networks that connect economic centres with the ARTC's network, particularly with Inland Rail. Under the budget measure, the government also allocated funding for an Inland Rail Intermodal Terminal Business Cases for intermodal terminals in Brisbane and Melbourne (under the Major Project Business Case Fund announced in the 2018–19 Budget). Then in the 2020–21 Budget, the government announced it would make additional equity investment in the ARTC, primarily to deliver the Inland Rail project; however, the measure was not published due to commercial sensitivities.
2.33
The increased cost of Inland Rail was reportedly anticipated in the business case. The ARTC advised the committee that the Australian Government’s overall financial commitment to Inland Rail would be continually refined as the project progressed, and as a more detailed understanding of its requirements were developed through engineering, property and stakeholder requirements.
2.34
The Inland Rail Implementation Group (IRIG) report of 2015 made a number of key findings regarding the cost of Inland Rail. It found ‘Inland Rail will require significant, if not total, funding from the Australian Government’ because of the ‘limited opportunities for upfront private sector financing of Inland Rail (without significant risk transfer to the Australia Government)’. Further, the IRIG report concluded that financing by the private sector ‘would in all probability cost Government more than funding the project from its balance sheet due to the undertakings that would be required by the Government to private sector investors, and would unlikely bring any meaningful reduction on the Australian Government’s balance sheet’.
2.35
It should be noted that three of Inland Rail’s projects, notably the most expensive, are to be funded in partnership with private investors as part of a PPP. For this reason, the true cost of the Inland Rail project is not publicly available due to commercial sensitivities. Mr John Abbott, from Inter-Port Global Holdings, was critical of the Australian Government’s decision to implement a PPP for the Toowoomba Range projects because:
…the ARTC model, as I understand it, is that those PPP consortia don't take any risk on freight volume. They'll build it, ARTC will pay the capital cost over 30 or 50 years or whatever the time frame is of the contract, they will pay the risk premium that contractors put into those sorts of projects and they'll pay the profit for the PPP partner. That'll be built in as a liability for ARTC for 30 or 50 years or whatever.
Enhanced Inland Rail funding announcement
2.36
On 16 December 2020, the Australian Government announced that it would provide an additional $5.5 billion in equity to the ARTC for the Inland Rail project, bringing to total anticipated cost to $14.3 billion. The government stated that this financial enhancement would ‘deliver a safer and more efficient Inland Rail whilst also backing thousands of extra jobs and billions in additional economic activity through major enhancements to the planning, design and delivery’ of the project.
2.37
Reference was made to amendments to its design, such as an extra 4,500 culverts, nine extra viaducts, 6.8 kilometres of bridges, ten extra grade separations, approximately 450 kilometres of additional fencing and the removal of 139 level crossings. The government noted that these enhancements were a product of the ARTC’s ongoing design, community engagement and detailed analysis of the project. In addition, the government anticipated up to 21,500 jobs being created at the peak of Inland Rail’s construction and an economic boost of $2 billion.
2.38
The ARTC did not provide the committee with the budget figures for each Inland Rail project due to ongoing procurement negotiations, but offered to provide regular updates once the details and approvals of each project were progressively completed over the next 18-months. It did, however, point out that the completed Parkers to Narromine section of Inland Rail was completed under budget (from approximately $536 million to $480 million), whilst the Narrabri to North Star project’s estimated budget had slightly increased from $867 million to $878 million.
Inland Rail’s business case and cost of the project
2.39
The Australian Government’s additional $5.5 billion investment in 2020 fed into the scepticism shared by various stakeholders about the overall cost of the Inland Rail project, and the opaque nature of the actual cost of Inland Rail.
2.40
Questions regarding the cost of the project were raised throughout the inquiry. During the August 2020 hearing the committee sought clarification from the ARTC about the cost, which at that point had increased to $12.115 billion, including risk and contingency funding (if needed). When asked whether the existing funds were sufficient for the project, the ARTC responded that it was working with the Department of Infrastructure to make a cabinet submission regarding costs and the timeline of the project’s delivery. The ARTC added that although the Inland Rail project had been budgeted for, further understanding of its cost would be gained as each project progressed beyond its reference design phase. The ARTC clarified that any adjustments to the cost of the Inland Rail project could be achieved through a determination by the Australian Government to amend the project’s scope, which was a discussion the ARTC was having with government at the time:
There are two sides to any budget. One is the cost side of the budget; the other is the scope side of the budget. There is always possibility to change scope to reduce cost. I don't know what the government's preference would be. That's in some of the discussions we're having presently and that's why it's not finalised at this time.
2.41
The committee also asked whether there had been a review of the 2015 business case to determine whether the assumptions made remained valid. The Department of Infrastructure made reference to the EY report, and added that the assumptions ‘absolutely’ remained fit-for-purpose; however, it was yet to determine the impact COVID-19 would have on the planned 35-year payback period.
2.42
Doubts about the anticipated cost of Inland Rail were shared during the January 2021 hearing. Mr John Abbott, from the Central Queensland Regional Organisation of Councils (CQROC) was critical of the cost of Inland Rail, predicting that the actual cost would exceed $20 billion. Mr Abbott pointed out that it was no surprise that the project would run over budget, given the firm commitment made by the government. He argued the budget overrun was grounds for the removal of the Inland Rail’s CEO and project manager:
With any project that has a 40 per cent cost overrun, $4 billion, I would have expected to see the CEO and the project manager fired, because that is just unacceptable, particularly when, if you read the press, it's because they forgot to include some things. It should not come as a surprise, after the project is so firmly committed, that that cost overrun comes. I have had a look at some of the figures—I've just used the standard dollars-per-kilometre type figures—and I find some of them quite unrealistic. One example I give, for example, is the $2.9 million that's often quoted for the Acacia Ridge to port of Brisbane leg, where I think, if my memory serves me correctly, it's about $75 million per kilometre. If you think of a project of similar size that's happening here in Queensland, the Cross River Rail, another 10-kilometre route, that is $600 million per kilometre. That might give you an idea why I call that component Dreamtime stuff.
2.43
Mr Abbott subsequently called for the project to be paused and for a review to determine the final cost overrun, arguing in favour of the alignment travelling to Gladstone as a means to meet the project’s budget.
2.44
National Trunk Rail warned that it was likely additional funding announcements would be made because ‘[t]here is a huge amount still unaccounted for—a huge amount’. When asked whether the cost of Inland Rail would cost $20 billion, the National Trunk Rail expressed the view that figure ‘might be on the low side’.
2.45
Mr Everald Compton asserted that the ARTC management of Inland Rail should cease, with a new parliamentary appointed body to be authorised to review and amend the current alignment. His rationale for this view was due to the excessive cost of Inland Rail and the ARTC’s decision to underutilise existing rail corridors, with a preference for the Gladstone corridor.
2.46
The Community Consultation Committee (CCC) for the Narromine to Narrabri (N2N) project expressed concern about the underestimated cost of Inland Rail. In correspondence to the Department of Infrastructure, the CCC outlined its evaluation of the anticipated cost of the N2N project (based on the 2015 business case and the Inland Rail Alignment Study) compared to the details found in the ARTC’s draft EIS documentation from 2020. CCC member Mr Andrew Knop specified the key differences, such as:
only 3.7km of bridging being included in the business case versus the draft EIS reporting 15.1km (with community expectation of bridging to increase to 20km);
estimated culverts equating to 560m, with the draft EIS reporting 11,260m; and
a total of 1.8km of road re-alignments in the business case, versus 36.85km in the draft EIS.
2.47
For the entire Inland Rail project between Melbourne and Brisbane, the CCC reported that the extent of bridging works was estimated to be 9,601m, whereas the ARTC’s 2020 documents list the current bridging required to total 35,442m, with an additional 100 structures yet to be included. The CCC also pointed out that the original distance for tunnelling was 6.6km but the 2020 figure had increased to 8.6km, with obvious budgetary implications.
2.48
Along with cost, concerns were also voiced about possible delays and amendments to the Inland Rail network. Industry representatives cautioned any delays to the project. The ARA warned that:
Logistics companies and major freight owners need to make commitments looking forward over five to ten-year horizons. Any changes to existing plans, routes or the service offering to the Inland Rail project will impact these decisions.
2.49
The Australian Logistics Council warned that any delays to the project would ‘erode investor confidence, and will place the economic benefits of the project in jeopardy at a time when the Australian economy can ill-afford such outcomes’. The ARTC maintained that the current forecast to commence end-to-end operations of Inland Rail is 2027.
Coal and its impact on the 2015 business case
2.50
As previously noted, domestic inter-capital goods will make up the majority of the freight transported by Inland Rail (66 per cent) by 2049–50, whilst coal and other minerals is projected to account for 25 per cent of the Inland Rail’s freight movements. According to the ARTC, the transportation of coal does not require double-stacking, and ‘will be able to utilise the existing rail connections for direct train access from regional areas to the ports’ and would not need to be double handed at inland intermodal terminals.
2.51
One of the key critiques directed at the Inland Rail has been whether the project remains viable if demand for coal declines or whether restrictions are imposed on the movement of coal along the Inland Rail alignment. The ARTC acknowledged that although the economic benefit of Inland Rail would be impacted, overall the impact would be minimal. Reference was made to the original business case modelling, as well as Infrastructure Australia’s evaluation of Inland Rail’s business case. While Infrastructure Australia identified a decline in coal transportation as a potential risk, a sensitivity test suggested that a ‘scenario in which no coal is transported 30 years after project completion’ would have ‘minimal impact on the stated [benefit-cost ratio (BCR)]’. Further clarification was provided by the ARTC. It stated that the current BCR of 2.62 was based on the transportation of 19.5 million tonnes of coal per annum, whereas a reduction in coal volumes to four million tonnes per annum reduced the BCR to 2.50 at a four per cent discount rate. The ARTC added that a sensitivity test for a ‘coal volume to zero was not directly assessed in the business case, but the ARTC assesses that it would have the effect of reducing the BCR to approximately 2.4’.
2.52
The transportation of coal through Brisbane is restricted, but the ARTC reassured the committee that coal would continue to be transported along the West Moreton line until such a time that a different determination is made in the future. As of January 2021, the Australian and Queensland governments were in negotiations about coal movements along the K2ARB project. Despite this current restriction, the ARTC modelling for the Calvert to Kagaru project shows 16 of the 42 train movements for each 24-hour period to be a coal train service by 2026.
2.53
An additional concern was the capacity of the Port of Brisbane to receive and store coal, which is limited to 12 million tonnes, with further restrictions on rail pathways along the Brisbane rail network. This concern was largely shared by advocates for Inland Rail connecting to the Port of Gladstone, such as the CQROC, which proffered a number of benefits for transporting coal, via Inland Rail to Gladstone (instead of Brisbane). It argued there is an economic case for this expansion, particularly for the coal market. The CQROC added that a Gladstone link would support and grow the coal sector by facilitating new mines and the expansion of existing mines.
2.54
According to the CQRC, additional benefits of a Gladstone alignment would include reducing the number of coal trains using the Brisbane rail network, a cost saving on building Inland Rail from Toowoomba to Brisbane and that the Port of Gladstone is already capable of increasing its intake of coal. These arguments are further explored in Chapter 3.
Committee comment and recommendation
2.55
The committee is generally supportive of the Inland Rail project. Its construction has the potential to provide significant benefit to rural, regional and urban communities — enabling a more efficient movement of freight across Australia and further diversification of the nation’s freight infrastructure. Importantly, Inland Rail will ensure Australia is capable of meeting the anticipated growth of the freight sector, alleviate pressure on road infrastructure and improve road safety.
2.56
The various business cases, reports and reviews, support the belief that there will be significant economic benefits for local communities, both during Inland Rail’s construction and once operational. These benefits are augmented by the substantial investments already made by the freight and logistics sectors into the project and the contracts awarded to local businesses to support the construction of Inland Rail. In addition, Inland Rail will create thousands of jobs throughout its construction, with further job creation upon its completion.
2.57
Despite the committee’s support for Inland Rail, it holds real concern that the economic benefit may not be fully realised by many of the communities along the proposed alignment and recognises more needs to be done to garner broader support for the project. While Inland Rail looks likely to generate substantial economic benefit for some communities, such as Albury/Wodonga, Parkes and Toowoomba, other regions may have minimal economic opportunities beyond the construction phase. The committee is encouraged by the Australian Government’s investment into an interface improvement program to improve connections and supply chain efficiencies, but remains unclear as to whether this investment has led to any meaningful improvements to the Inland Rail project, or whether there has been any serious consideration of proposals made as part of the program. The committee is concerned the program is tokenistic, and fails to achieve any meaningful improvement for local communities.
Budget
2.58
It is apparent to the committee that the original costings and allocated budget for Inland Rail was inadequate from the outset, and it is a failure on behalf of the Australian Government and the ARTC to appropriately prepare, plan and implement Inland Rail. Whilst the prospect of an increase in the cost of Inland Rail has consistently been maintained, the allocation of an additional $5.5 billion with minimal information to justify this expenditure is of concern to the committee. The ARTC has not provided the committee, nor the public, with a clear understanding of the likely cost of Inland Rail, largely because of the commercial sensitivities related to the delivery of three Inland Rail projects subject to a PPP and procurement negotiations.
2.59
The original estimated cost of Inland Rail was $4.7 billion, which later became $9.9 billion. The Australian Government has now committed over $14.3 billion to the Inland Rail project, which is governed by an out-of-date business case and undermined by predictions that the project will exceed $20 billion. The committee’s concern about the cost of Inland Rail, driven by warnings that further cost blowouts may occur as the Inland Rail project progresses, warrants a dedicated oversight mechanism to be established throughout the project’s construction.
2.60
Whilst certain parliamentary processes, such as Senate Estimates, provide an important oversight and accountability measure, the committee is of the view that the project requires ongoing, dedicated committee oversight to ensure the Australian Government and the ARTC are held accountable to Australia’s taxpayers. Ongoing committee oversight of this project will also provide an avenue outside of the ARTC for communities and landholders adversely impacted by Inland Rail to disclose their grievances and concerns about the project. Oversight by the parliamentary committee will facilitate greater transparency and create a pathway for the committee to speak to the public’s concerns and experiences. For these reason, the committee recommends that the Senate Rural and Regional Affairs and Transport Legislation Committee self refers an inquiry for oversight of the Inland Rail project to ensure the Australian Government and the ARTC are held accountable for their management of this multi-billion dollar project.
2.61
The committee recommends the Senate Rural and Regional Affairs and Transport Legislation Committee self refers an ongoing inquiry for oversight of the Inland Rail project.
2.62
An additional concern shared by the committee is whether Inland Rail’s 2015 business case remains valid in light of the substantial increase in capital required for the project’s completion. It is the committee’s view that this substantive increase in the cost of Inland Rail warrants a review and update of the 2015 business case.
2.63
The rationale for a business case review and update is further justified in the succeeding chapter, which shows the end-of-service parameters in Queensland are yet to be determined, and the appropriate alignments for some projects are yet to be finalised. The business case review should assess all proposed routes from Toowoomba to Brisbane and Gladstone. The committee is also of the view that the business case review should include a sensitivity analysis should there be any changes to coastal shipping arrangements (see paragraph 2.31 for further information).
2.64
This review and update must be conducted in accordance with Infrastructure Australia’s guidelines. The final product must then be reviewed by Infrastructure Australia and its findings published. The business case update and Infrastructure Australia’s review must be provided to the Rural and Regional Affairs and Transport Legislation Committee as part of its ongoing oversight of the Inland Rail project. Should there be any confidential information redacted from the business case update, a redacted version should be provided to the committee for publication, along with detailed reasoning for such redactions for the committee to consider.
2.65
In light of the shifting variables experienced by the Inland Rail project to date, the committee sees significant benefits in providing stakeholders and the Australian public an updated business case that provides the necessary rationalisation for current expenditure and overall benefit.
2.66
The committee recommends the Australian Government commissions an independent review and update of Inland Rail’s 2015 business case that:
is an accurate reflection of current and anticipated Inland Rail expenditure and end-of-service offerings;
includes an assessment of all the proposed routes from Toowoomba to the ports of Brisbane and Gladstone, along with alternative routes subject to ongoing public scrutiny (particularly the Narromine to Narrabri and Border to Gowrie projects);
includes a sensitivity analysis on the impact of any proposed changes to Australia’s coastal shipping arrangements;
is developed in accordance with Infrastructure Australia’s guidelines and for Infrastructure Australia to review the updated business case; and
is made publicly available, and provided to the Rural and Regional Affairs and Transport Legislation Committee.
Inland Rail’s parameters and competitiveness with other modes of transport
2.67
Two additional concerns raised during this inquiry was the impact of the requirement that Inland Rail’s journey time does not exceed 24 hours and the competitiveness of Inland Rail (and the rail sector more broadly) with other modes of freight transport.
Route selection and the 24-hour journey time
2.68
One of the primary concerns with the ARTC’s route selection process has been the emphasis for an end-to-end journey time of 24-hours. This parameter, established under the 2015 business case and supported by industry, was regularly referenced by the ARTC as the key factor when considering Inland Rail’s alignment. Whilst the ARTC, industry and the freight sector all emphasised the importance of the 24-hour turnaround, other stakeholders argued that the benchmark was arbitrary, and that the government needed to amend this requirement to allow for more suitable alignments to be considered and utilised.
2.69
The committee received evidence from various industry, freight and logistics representatives, who emphasised the importance of an efficient Inland Rail service. The ARA made it clear that a 24-hour journey time was a matter of competitiveness, particularly for Inland Rail’s ability to compete with the trucking sector. This point was also made by SCT Logistics, which argued that ‘[f]or the project to be effective, utilisation is key’ and that the ‘[p]arameters around rail freight must ensure that it’s operating on as even a playing field as possible between rail, road and sea’.
2.70
The Freight on Rail Group submitted that the 24-hour turnaround was a key priority for the freight rail sector, and ‘[w]ithout this certainty [it would] undermine market confidence’ because:
The rail freight sector needs a fast, straight route to meet industry needs and adequately compete between Melbourne and Brisbane with trucks – the 24-hour transit time can reduce inventory and goods in storage, enabling fresher, more cost-effective delivery of goods.
2.71
Pacific National contented that Inland Rail would ‘help re-balance Australia’s freight future, shifting volume onto rail; not to mention catering for future growth. To help compete with trucks, Australia needs rail freight transit across the country in less than 24 hours’. Similarly, STC Logistics made clear that Inland Rail would make rail more competitive with the trucking sector:
…transit time is important in a couple of areas. With a lot of the space that we operate in, we're trying to compete with the road industry's transit times, so shaving off 10 hours helps us a lot. We do stop the train in Wodonga and pick up freight there. We are able to do that in regional centres but we tend to do it very quickly. They don't stop for long. There's probably about one hour to do that. With the transit time, it's not just to help get the freight there quicker; we're very capital-intensive with our trains, so all of a sudden, if we're turning a train 10 hours quicker and then 10 hours back at the other end, ultimately we can do more with fewer train sets, and there's another sort of cost-effectiveness there. You lose a lot of time having to go through Sydney as well, and into that network. That's a real reliability risk for us—that we get parked if we're late. If we can avoid that in the metro area, that helps us with our consistency and reliability.
2.72
The Australian Logistics Council reflected on the benefits of Inland Rail. It stated that it would lead to cheaper consumer prices, especially for a company like the Woolworths Group:
Woolworths Group, which has one of Australia’s largest supply chains, noted the project’s potential to allow the company to continue to move more of its freight via improving sustainability, congestion and safety outcomes. Woolworths also highlighted Inland Rail’s potential to further support and build up regional suppliers. An efficient supply chain utilising Inland Rail, providing transit times of less than 24 hours end-to-end, will allow providers of fresh produce to increasingly supply product to city consumers, thus further building their customer base.
2.73
The Queensland Trucking Association (QTA), when asked about the importance of a 24-hour turnaround, agreed that the freight sector is time sensitive. This sensitivity meant industry will utilise a service that best suits these demands; however, the QTA also pointed out the importance of the interface between the rail and trucking sectors because ‘you still need a truck to get it to the rail and you need a truck to get it from the rail, so one way or another the road freight element fits into the supply chain’. The QTA added that Inland Rail provides the opportunity for the road and rail interface to be done better.
2.74
For the NSW Farmers Association (NSW Farmers) and the Country Women’s Association (CWA) of NSW, it was the parameters of the Inland Rail project, established by the Australian Government at the outset that was one of the underlying issues for the entire Inland Rail project. This point was emphasised by their legal counsel, Mr Peter Holt, who argued that without the Australian Government amending these key parameters (cost, travel and construction times), then the ARTC would be unable to address any of the concerns of landholders and communities in a meaningful way:
…it seems that, given a project of this size, there are a number of project fundamentals that are missing. For me we're talking about a project that we now know has only a marginal benefit. It seems to me, from talking to landholders and from talking to people who used to work for ARTC, that there are a number of key parameters this project is being designed to, and I think those key parameters were set at the outset. They were: keep the cost below $10 billion, keep the travel time to less than 24 hours and keep construction time below five years. I think the next thing that should be said is that it was: make sure that we're always building some part of the project, somewhere along the alignment, over those five years.
The problem I have with those parameters is that they're arbitrary, and what I have been told by those who used to work for ARTC is that, unless the government is prepared to give ARTC permission to change those parameters, they will continue to press ahead based on the project in its current formulation. What that means for the landholders on the ground is that the ARTC doesn't have the time, the money or the capacity to respond in a meaningful way to those issues that are raised and to change the project design to give effect to the changes that are required. We run the risk of a project where the wider, intangible benefits don't arise but the real, concrete impacts—afflux, inundation, noise, vibration, delays on level crossings—are borne by landowners, now and into the future.
2.75
Community representatives and landholders expressed dismay at the rigidity of the ARTC’s commitment to the 24-hour requirement. For many, preferential alignment options existed or were not adequately investigated because the ARTC was not able to consider routes that increased travel time. Further, these local communities felt their concerns and the harms inflicted upon communities by the Inland Rail project were secondary to the interests of industry groups.
2.76
The ARTC made clear that lower transit time was a critical component for Inland Rail’s route selection, directly relating to the useability and competitiveness of Inland Rail against other modes of transport. In its Inland Rail Route History 2006–2020 report, the ARTC specified that its market consultation with industry:
…during the development of the Inland Rail Service Offering highlighted the need to offer a range of transit times to meet market needs, with a Melbourne to Brisbane transit time of under 24 hours for the Inland Rail reference train necessary to compete with road in the time sensitive express market for intercapital city freight.
2.77
The committee questioned the ARTC on numerous occasions about its commitment to the 24 -hour journey time and its influence of the development of the route’s alignment. In January 2020, the ARTC explained:
The 24 hours is the criterion that was made very clear to us by the freight companies as far back as 2010, when that initial alignment study was done. In that document, they talk about a transit—in that case door by door, for which I think they quoted a figure of 25.5 hours. But, if you take terminal to terminal, it's really less than 24. That was ratified again in 2015, when we set up a reference group of all the major customers that would use Inland Rail, and they reaffirmed the criticality of 1.8-kilometre trains, double stacked, travelling from Melbourne to Brisbane in less than 24 hours.
2.78
The ARTC explained that this parameter was established under the direction of the Australian Government, ‘to deliver an alignment that is fast and flat and gets there in under 24 hours’. This 24-hour commitment meant that amendments to alignments, such as the Narrabri to Narromine project, were not possible because it would take the journey time outside of this parameter. Changes to Inland Rail’s parameters may also result in a requirement for an agreement between the Australian and state governments, ‘depending on the nature and location of any scope change’. The ARTC added that the service offering parameters are ‘central to ensuring Inland Rail delivers the competitive and complementary service required to facilitate the desired freight modal shift from road to rail’, and any departure from those parameters would require a new business case and the renegotiation of bilateral agreements between the Australian Government and state governments. The ARTC clarified that ‘none of the parameters inhibit ARTC in its allocated task, ARTC has not asked for any to be changed’.
Committee comment
2.79
The Australian Government’s decision to establish a strict parameter of a 24-hour end-to-end journey time for Inland Rail has had a significant adverse impact on the communities along the proposed alignment. Whilst it is apparent that a 24-hour preference was made by business stakeholders (including the rail, freight and logistics companies) as a means to make Inland Rail competitive, it has significantly restricted the ARTC’s ability to consider alternative alignments. This impact is clearly demonstrated in the remaining chapters of this report, which reveals the interests of rural, regional and urban communities throughout Victoria, NSW and Queensland are being sidelined by an arbitrary time threshold established by the Australian Government.
2.80
The committee is not convinced that business stakeholders would deem Inland Rail unusable had the journey time for Inland Rail been extended by 30 or 60 minutes; however, for some communities, an additional 15 minutes could have resulted in a more meaningful interaction with the ARTC and the potential for an alignment that meets both business and community expectations. Had the Australian Government established a more flexible time parameter at the initial stages of this project, then many of the issues faced by the ARTC today could have been avoided.
Competitiveness with other modes of transport and supply chain integration
2.81
Concerns were also raised about the competitiveness of Inland Rail with other freight sectors, especially shipping. This concern was primarily driven by concerns about foreign-flagged ships not being subject to domestic costs (such as minimum award wages) and therefore having an unfair advantage over the domestic freight industry. This concern specifically related to the movement of goods from the east to west coasts of Australia; however, industry representatives and unions asserted that this unfair competitive advantage would both directly and indirectly impact on the north-south corridor and Inland Rail. SCT Logistics detailed the challenge it faced when competing against shipping and its potential impact on Inland Rail:
We are losing market share against shipping on our key legs, which are the forward legs, particularly all of the eastern states to Perth. We have gotten into bit of a pickle this year because when we shrink capacity then all of a sudden we rely on modes to pull their weight. What happened this year was, because rates increased so much for shipping companies bringing in the imports, they grabbed hold of their containers and didn't allow them to be used for coastal freight so that was where the issue was. The issue for us, once we start losing profitable areas of our business, is it starts to impact on our ability to invest in other areas like the north-south corridor, for example. It is a one network for us; one thing can impact another.
…
We do monitor with interest the government's activities around coastal shipping reform given that…numbers would suggest that on the east-west leg of domestic freight, between 2008 and 2015, sea freight increased its market share around 10 per cent, which was basically replacing rail freight; road freight stayed around the same. So we were able to identify a key issue for us in making sure there is that competitive comparison between the modes of transport to make Inland Rail as viable and profitable as it can be.
2.82
The committee questioned the Department of Infrastructure about its consultations with the shipping sector regarding coastal trading reform. In response, the Department advised that the Deputy Prime Minister in late 2019 had agreed to consultation with the maritime industry on coastal trading reform. A discussion paper was released in September 2020 and distributed to a wide range of stakeholders, with consultations occurring with specific rail freight operators and future consultations planned with the broader rail freight industry. As of April 2021, the Department was considering feedback it had received and consultations were ongoing. No decisions on reform have been made.
2.83
An additional matter was raised by Mr Max Hooper from the Southern Brisbane Suburban Forum, who spoke of a need for broader regulatory and pricing reform to ‘encourage an increase in the share of intermodal freight carried nationally by rail’. He added that without reform then the anticipated shift in intermodal freight to rail would not materialise:
…there is heavy scepticism that the projected increases in intermodal freight carried by rail will actually materialise given the comparative cost disadvantages of taking this by rail. Building a new rail alignment will not address these factors, and, if they go unresolved, they risk relegating this important national infrastructure project to an expensive white elephant.
2.84
Specifically, Mr Hooper expressed concern about the imbalance between subsidies available to road transport (such as fuel subsidies) and the rail sector’s ‘per tonne, per kilometre user access charge’. He argued that this imbalance was the primary reason for rail’s low intermodal share, and made reference to there being optimistic assumptions and scepticism about Inland Rail’s ability to facilitate a shift to rail. Mr Hooper advocated for the underlying disincentives impacting on the rail freight network to be addressed.
2.85
The opportunity that Inland Rail presents for regulatory reform was also raised by Grain Trade Australia. It pointed out that the sector’s use of rail has diminished over time because of a ‘more fragmented supply chain where we have multiple traders within the supply chain’. The committee was advised by Grain Trade Australia that a fragmented supply chain and the removal of regulations had supported ‘opportunities for more participants within the supply chain’. Its spokesperson, Mr Tim Ross, added that the lack of long term planning had adversely impacted on the use of rail to transport grain to ports:
As a result, road is picking up a lot more of the freight through to the port. A lot of the reason for that is that when you have multiple traders or exporters you have multiple customers that the rail has to interface with and, as a result, you don't have long-term planning windows, which rail likes. We're seeing a bit of a shift from rail to road, which is unfortunate. We believe rail still plays a very important part and probably should be carrying more grain to the ports than it currently is.
2.86
Grain Trade Australia called for a ‘cross-government, industry and ARTC discussion at a strategic level as to how best leverage Inland Rail for the grain supply chain’. The committee was advised that Grain Trade Australia was unsuccessful in its attempt to access funding for the Inland Rail interface program.
2.87
In March 2021, the Australian Rail Association (ARA) published a BIS Oxford Economics report into the Australian Rail Supply Chain. This report identified that ‘[r]egulatory funding and pricing models which disproportionately favour investment in road freight haulage at the expense of rail fright’ as a key vulnerability. The report recommended that consistent policies be developed for regulation, funding and procurement in order for rail to operate ‘on a level playing field with other modes of transport in Australia’. In additional information provided to the committee, the ARA highlighted its long held view ‘that all transport modes have an important role to play within the supply chain’ and that it did ‘not wish to perpetuate a road versus rail debate’; rather, ‘[a]ll modes need to work together to deliver an integrated freight market’. The ARA outlined how the rail and road transport sector can work together:
Rail’s strength is that it can move large quantities of freight over long distances, whereas road is typically more nimble and often has an important role in the first and last mile.
2.88
The ARA subsequently called for ‘competitive neutrality’ based upon ‘comparable access charges’, ‘comparable approach to regulation and consideration of productivity’ and ‘comparable long-term, stable and predictable infrastructure investment’.
2.89
The ARA’s position was reinforced by Linfox Australia’s commentary that ‘rail is well positioned to share the load with road transport and operate cooperatively’ in order to address the challenge of Australia’s growing shortage of professional truck drivers. Linfox Australia spoke of its moves to ‘embrace the efficiency of rail in Australia’ and built a ‘broad multimodal network’. A similar point was made by the Victorian Transport Association (VTA), with its representative speaking of the interdependence between rail and road, and agreed Inland Rail may reduce the need for long haul trucking, but emphasised that it would not replace short haul trucking. However, the VTA was critical of the lack of clarity of how Inland Rail will work with the trucking sector, arguing that communication around the project appeared to support trucks being replaced by rail. It called for more clarity and engagement with the trucking sector to ensure Inland Rail is appropriately integrated into the nation’s freight transport sector.
2.90
The importance of an integrated supply chain was also raised by the Port of Melbourne, which expounded that an integrated supply chain ‘is about focussing not just on building the infrastructure; it’s about how the infrastructure is going to be used and integrated into the broader freight supply chain’. The Port of Melbourne subsequently recommended:
…taking a system view of how the functionality of Inland Rail and the connected infrastructure components will work to deliver benefits to the freight and supply chain. It is looking at what the opportunities are to take costs out of the supply chain and take efficiencies. It's how it's going to be used. We see that there are opportunities in empty container management and in regulatory requirements about systems planning and also about biosecurity. That can be looked at to re-engineer the processes around the use of the infrastructure. And we think that, if that's done, we can get better outcomes that make rail more attractive from both cost and efficiency perspectives.
2.91
In order to achieve a systems view of Inland Rail’s functionality within the broader freight systems, the Port of Melbourne highlighted the importance of the National Freight and Supply Chain Strategy as a means to address the ‘lack of alignment between [g]overnments and the lack of coordinated action across all levels of [g]overnment’. Vitally, the Port called for Inland Rail to support the ‘National Freight and Supply Chain Strategy and National Action Plan through lowering the unit cost of an integrated supply chain’ and ‘[a]lign productivity and efficiency on other supply chains ([for example] road and coastal [shipping]) to underpin economic growth and targeted infrastructure investments’.
2.92
The importance of the relationship between Inland Rail and the National Freight and Supply Chain Strategy was also emphasised by the Australian Logistics Council (ALC). It called for states and territories to ‘adopt planning instruments that will support the efficient operation of this infrastructure’ including ‘the development of infrastructure that will facilitate access to the Inland Rail by all major east coast ports, including the port of Botany’. The ALC explained the role of national urban freight planning principles to facilitate this connectivity:
…the ALC has long advocated for the development and adoption of national urban freight planning principles to ensure integrated planning across the jurisdictions that enable the continuous movement of freight. These principles form part of this strategy. The ALC urges the jurisdictions to adopt these principles so as to facilitate the continuous movement of freight down the Australian freight chain.
2.93
As of May 2021, the Department of Infrastructure was seeking public feedback on the draft Urban Freight Planning Principles. In its submission, the ALC recommended that the principles ‘contain specific reference to freight infrastructure, including intermodal terminals’ and that ‘[p]lanning approvals for new intermodals should require proponents to demonstrate how their terminals will link freight rail infrastructure, including Inland Rail’. In addition, the ALC called for state governments to ‘explicitly identify how new freight infrastructure delivered in their implementation plans for the National Freight and Supply Chain Strategy will connect with Inland Rail, and provide deadlines for the completion of such infrastructure’.
2.94
Innovative approaches such as the Transport Network Strategic Investment Tool (TraNSIT) have been developed as part of the National Freight and Supply Chain Strategy to support governments and industry with decisions on road and rail investments. The pilot TraNSIT mapping program for Inland Rail’s Parkes to Narromine project has been successfully utilised, with work continuing on the pilot in 2020 and 2021.
Committee comment and recommendations
2.95
Whilst Inland Rail adds diversity and strengthens Australia’s freight and logistics sector, merely building a rail line without addressing other competitive imbalances within the sector could ultimately undermine its success. The committee is particularly concerned by reports that the Department of Infrastructure has been in consultation with the maritime sector regarding measures to provide the foreign-owned shipping sector with a competitive advantage over rail. The committee is concerned that the opening up of coastal shipping to foreign flagged vessels will further undermine Australian-flagged vessels operating along Australia’s coastal shipping routes and have broader adverse impacts on the entire freight supply chain, including the competitiveness and use of Inland Rail.
2.96
The Australian Government must ensure that foreign-flagged ships are not provided with a competitive advantage over other modes of transport or cause any disruption to the freight supply chain.
2.97
The committee recommends the Australian Government ceases any efforts to restructure coastal trading that may provide foreign-flagged ships with a competitive advantage over other modes of transport or disrupts Australia’s freight supply chain.
2.98
Equity between modes of transport is equally important between the rail and trucking sectors. This inquiry has highlighted ways in which Inland Rail promotes a dynamic and interconnected freight transport system, where the rail and road freight sectors support the efficient and integrated transportation of goods across the Australia. In order to capitalise on the transformational effect of Inland Rail on the logistics and freight transport sector, it is vital that Australian and state governments work alongside industry to integrate the Inland Rail project into the principles of the National Freight and Supply Chain Strategy, including the development and adoption of national urban freight planning principles across all jurisdictions. To support this work, the committee encourages the ongoing and expanded use of TraNSIT to inform future road and rail investment decisions linked to Inland Rail.
2.99
To support this opportunity, the committee calls upon Infrastructure and Transport Ministers as part of the National Freight and Supply Chain Strategy, to establish an Inland Rail working group, in partnership with industry representatives, to review and determine what regulatory reforms engendered by Inland Rail can be made to support the synergy between rail and road transport. This objective is not to provide an advantageous position to one form of transport, rather to ensure all sectors are supported by a fair and efficient freight industry.
2.100
The committee recommends the Australian and state governments, in partnership with industry, integrate the Inland Rail project and associated intermodal terminals into the principles of the National Freight and Supply Chain Strategy, including:
the development and adoption the national urban freight planning principles; and
the ongoing and expanded use of the Transport Network Strategic Investment Tool across the Inland Rail project to inform intermodal investment decisions.
2.101
The committee recommends that the Australian Government supports efforts to ensure intermodal freight planning applications demonstrate how intermodal terminals are linked to freight rail infrastructure, including Inland Rail.
2.102
The committee recommends Infrastructure and Transport Ministers, as part of the National Freight and Supply Chain Strategy, establish an Inland Rail working group to review and determine possible regulatory reforms to improve competitiveness, innovation, efficiency and use of Inland Rail.