Off the rails: How Australia is at odds with global infrastructure plans

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Australia's rail freight network lags behind the rest of the world

Ambitious projects and global plans are under way, but rail freight deserves a higher priority by the Abbott Government and the states now, writes Max Berry.

Australia has a unique opportunity to use its (just-vacated) G20 chairmanship to lead the world in infrastructure investment and planning, according to Treasurer Joe Hockey, who, speaking before the G20 Leaders Summit in Brisbane, foreshadowed a

“... multi-year set of actions to increase the quality and quantity of infrastructure across the G20 and beyond."

The G20 Leaders Communique endorsed the Global Infrastructure Initiative and its corresponding Hub, designed to share expertise on planning, financing and securitising infrastructure projects.

Facilitating infrastructure around the world is undoubtedly a worthy aim, but perhaps the grand ambition of global leadership on major projects would have more credibility if the immediate past chair of the group first addressed some glaring infrastructure shortcomings in its own backyard.

The Federal Government’s own recently-released Agricultural Competitiveness Green Paper pointedly sets out some failings in the national transport network.

Producers and transporters who wrote submissions complained about bottlenecks in the 'first and last mile' of supply chains, such as rail sidings and ports, maintenance backlogs, and inefficiencies resulting from incompatible state rail networks

'... where freight may operate on narrow [1067 mm], broad [1435 mm], or standard [1600 mm] gauges and under different track operators and access regimes.'

Losses sustained by farmers as a result of transport inefficiencies are sometimes considerable: a submission from CSIRO found losses between harvesting and retail shelves for perishable products like tomatoes and mangoes can run to 40 per cent or more. The cost of transporting produce from farm to destination in Australia averaged 21 per cent of the products’ farm gate value, according to a 2011 study cited in the paper — well above international best practice.

The problems faced by primary producers in getting produce to markets are best examined by looking at the state probably worst affected by the colonial era mix-up over track widths caused, in Victoria’s case, when NSW made a late change to standard gauge – which, as the name suggests, has become the national default specification – after the colonies north and south of the Murray had initially committed to broad gauge. Queensland has retained its narrow gauge network, with only the interstate line to Sydney in standard gauge, while South Australia has the dubious distinction of having operating railways in all three gauges.

Former Deputy Prime Minister Tim Fischer reckons Australia has built railways in a world-record 22 track widths, including “mistake narrow gauge” — when an engineer’s clerical error resulted in some 90 kilometres of track in the Illawarra region being built to the wrong specification.

But the break-of-gauge problem is more than a colonial-era bungle studied in Australian history courses; it’s an ongoing brake on productivity.

Combined with neglect of maintenance, Victoria’s isolated broad gauge rail freight network is causing derailments, limiting train sizes and speeds, preventing competition between rail operators, discouraging investment in efficient rolling stock, allowing unfair terms for customers, and forcing freight that could be moved by rail on to roads, according to speakers at a Melbourne rail conference in October.

Neil Johns, who runs GrainCorp’s storage and logistics division, told the 2014 Rail Freight Futures Conference that train operators wouldn’t invest in new, larger wagons in broad gauge because they wanted to send rolling stock interstate, mostly to NSW, where railways are standard gauge, when it wasn’t needed for Victorian harvests. Mr Johns said grain storage, loading and port facilities were utilised to only 35 per cent of capacity, and poorly maintained tracks were unable to bear the weight of modern trains. Handling costs could be cut by $10 per tonne, and farmer’s incomes accordingly increased, if the inefficiencies were ironed out, Mr Johns said.

Neil Johns added:

“The bottleneck is the rail issue. Loading grain trains in Victoria is a nightmare.”

Graincorp is borrowing to invest $200 million in modernised loading and storage facilities at a reduced network of silos and the company wants the Victorian Government to make a complementary investment in extended and upgraded rail sidings to help load grain trains faster.

And while a different track width protects most of the Victorian network from new competitors, dominant operator Pacific National (part of Asciano) enforces inflexible “take-or-pay” contracts requiring customers to pay for train services (typically three per week) whether or not they are needed.

Ken Wakefield, managing director of Merbein-based Wakefield Transport Group, said take-or-pay contracts were largely responsible for his company entering into voluntary administration in the mid-2000s, when drought meant there was little cargo to carry (it has since emerged to become a major Sunraysia logistics company).

Flexible train scheduling is one of the benefits Wakefield expects when the Mildura line is standardised and new rail operators are enticed into Victoria (although winners will depend on which of four route options is chosen). Another gain will be greater load bearing (to 21 tonnes per axle, or an extra 300-400 tonnes per train) which can’t come soon enough for Wakefield, whose business sustained a derailment caused by track damage from the 2011 floods that left stranded a customer’s 9000-tonne citrus crop near Ouyen in August 2013.

Poor rail services such as this are a big factor behind a trend to farmers storing their grain on-farm, instead of in railway silos, which inevitably results in them sending their produce to markets by truck to avoid double-handling.

While producers struggle with poor rail services – or avoid them by trucking their produce – the big national rail project, the Melbourne-Brisbane Inland Railway, is almost “shovel-ready”, with plans to start construction of the 1,730-kilometre line on a join-the-dots route of existing lines through central NSW in 2015. Designed to deliver staged benefits before the line is finally complete, Inland Rail (as it is known) will help to decentralise population and get more freight off trucks, particularly given that trains travelling at up to 115 km/h will be able to double-stack containers over the whole route from Melbourne’s Dynon terminal to the Port of Brisbane.

But the juxtaposition of rundown and disconnected state rail networks with this ambitious project, to which the Federal Government is initially committing just $300 million of an estimated $4.7 billion (in 2010 dollars) project cost, is like a script from the ABC’s “nation building” satire Utopia. Just think how many stages will be announced over the 10-year construction phase and 1730km route.

A change of government always produces a change of priorities and while both sides of politics endorsed Inland Rail at the AusRail conference in November, Shadow Transport Minister Anthony Albanese is also enthusiastic about a high-speed rail (300 km/h plus) on the coastal route from Brisbane to Melbourne via Sydney, with a spur to Canberra.

Even if high-speed rail is set aside, there are concerns that Inland Rail may struggle to win the necessary investment from state governments and the private sector — or that it may starve other infrastructure projects of funds if it does. While Victorian Premier Denis Napthine's Government signed off on the standardisation and upgrade of the line connecting Mildura to the ports of Portland, Geelong and Melbourne, there is only an in-principle commitment to standardising the rest of the Victorian network. Unfortunately, the final route option for the Murray Basin Rail Project; connecting Mildura to the ports of Portland, Geelong and Melbourne; was not determined before the state election which saw the Napthine Government thrown out.

And the new Victorian Labor Government will be focused too closely on its mainly urban voters – for whom it has overturned the original bipartisan commitment to East West Link – to prioritise off-the-radar regional infrastructure.

Addressing the Rail Freight Futures Conference before the election, Natalie Hutchins, then Victoria’s Shadow Ports and Freight Minister, contained expectations for regional rail investment, saying Labor’s priorities were to restore pre-Coalition funding levels for TAFE, health and education. Ms Hutchins did promise a new Infrastructure Victoria agency (more shades of Utopia?) to conduct long-term planning of projects, and a dedicated transport fund from the long-term lease of the Port of Melbourne. She added that the Coalition’s decision to site a new container port at Hastings “doesn’t stack up” (it is likely to be dumped in favour of a site on the western side of Port Phillip Bay after a study), and standardisation will be pursued only for “key lines”. And it’s not an encouraging early sign for the freight sector that Ms Hutchins’ cohesive shadow responsibilities were not translated to government. Responsibility for ports rests with the new Minister for Roads and Road Safety, Luke Donnelan, while the new ministerial line-up doesn’t appear to make good on Ms Hutchins’ promise of a dedicated freight ministry — the words “freight” or “logistics” appear in no minister’s title. 

Yet standardisation and upgrading of Victoria’s compact regional rail network would open the possibility of privatising regional passenger carrier V/Line, with the further bounty of funds under the Federal Government’s asset recycling program. No-one now questions the operation of private rail freight operators and, with appropriate service guarantees, most Victorians now accept a private operator running Melbourne’s metropolitan trains. But modernisation and conversion to a single network of all “above rail” infrastructure, including signalling, are prerequisites for the best possible sale of the regional passenger carrier.

Nationally, other rail projects too, deserve closer scrutiny as infrastructure priorities.

Once the Mildura line is standardised, a relatively short (220 kilometre) stretch of new line (from Yelta, near Mildura, to Menindee) would connect the Victorian network to the Sydney-Perth line with freight benefits, such as double-stacking containers and relieving congestion on the Adelaide-Melbourne line, on both an east-west axis, and north-south to Darwin. A feasibility study for the Transcontinental Link describes the national rail network as like a 'skeleton without a spine'. This short railway would be the couple of vertebrae needed to complete that spine. Bulk commodities from the south-west NSW and north-west Victoria catchment area of this project include mineral sands and magnetite, ideally suited to rail transport.

Rail freight has a quiet voice compared to road transport, but at least one organisation, the Rail Freight Alliance, a lobby group formed by 24 rural municipalities, has the mission of making better use of trains to move freight for a host of reasons, starting with the financial drain on councils forced to repair at their expense local roads damaged by trucks because this cost is not borne by road transporters. Then there is the growing concern in local communities about road safety, residential amenity, and the greater fuel consumption and carbon emissions of moving freight by trucks when trains can do the job. A single freight train travelling from Melbourne to Sydney can replace 150 semi-trailers, saving 45,000 litres of fuel on each trip, according to the Australasian Railway Association

Rail freight conditions present a marked contrast between the north-west and south-east corners of the Australian continent.

The iron ore trains in the Pilbara region are the longest and heaviest in the world. Next year, Rio Tinto’s iron ore trains will be automated (driverless). Iron ore and coal are the rail industry’s – and Australia’s – two largest bulk commodities and the resources boom has accounted for rail’s share of freight movements rising from 36 per cent in 2000 to nearly 50 per cent by 2014, according to the Trainline2 report, compiled by the Australasian Railways Association and the Bureau of Infrastructure, Transport and Regional Economics. But the same report estimates that rail moves only 30 per cent of freight between Melbourne and Brisbane. It’s not hard to guess a major reason when the intra-state networks in Queensland, NSW and Victoria have different gauges.

Clearly, the scope and national significance of better integrating rail networks and upgrading rundown lines, deserves federal funding and direction, but freight doesn’t vote and there is much less political appeal in work that upgrades existing infrastructure than in brand new projects. If it has proved difficult to make the business and political case for standardising Victoria’s compact rail network — think of the hurdles to clear before Queensland’s 7,700-kilometre network is even considered for conversion from narrow gauge. But failure to do so restricts competition and prevents the most efficient, least cost services. And that’s without considering the simple engineering benefits of a wider track capable of bearing longer and heavier trains, saving fuel and carbon emissions in the process.

It’s worth reflecting on the greater priority given overseas to overcoming mixed rail gauges under more adverse conditions.

In the mid-19th century, when just five mainland colonial governments were building and operating our railways, hundreds of companies were running trains across 35-odd American states. In Europe, railways seamlessly cross the borders of countries that have fought bitter and protracted wars. The inevitably mixed gauges in both continents were largely integrated by the early 20th century. Standardisation was spurred in the United States by the perceived need to quickly move troops to quell a possible future rebellion after the Civil War; and in Europe, by a determined international effort started in the late 19th century — about a century before the European Union.

Perhaps the best hope for all who understand the implications of Australia’s long-standing bias towards road freight is that as the Federal Government works to implement the Global Infrastructure Initiative announced on the G20 world stage, its attention will be drawn to supply chain priorities on the home front. But with a prime minister who has declared a preference for funding roads rather than railways – and who is happy to be televised in front of a model LinFox semi-trailer on his office bookshelf – don’t hold your breath awaiting a major policy shift.

Max Berry is a freelance journalist specialising in logistics.

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