Parliamentary Friends of Rail breakfast speech

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Dorcas George
5 years ago
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1 Parliamentary Friends f Rail breakfast speech Thursday 26 March 2015 I am here tday t speak t yu abut the imprtance f the private sectr s invlvement in rail. In Australia, private wnership f rail is seen as a relatively new phenmenn. In fact, it has a lng histry, particularly in Victria. HISTORY In 1854, Australia s first mdern railway frm Flinders Street t Prt Melburne was perated by the Melburne & Hbsns Bay Railway Cmpany Later that decade, mre privately perated railways were built in Melburne, cnnecting Melburne t the new suburbs f Brightn, Essendn and Hawthrn and frm Melburne t the new city f Geelng. Frm the 1880s n, mst f Melburne s tram system was privately built and run. But it wasn t just passenger trains in Victria. A whle array f small-scale railways hauling timber and sugar were privately built and perated acrss Australia, but the great standut private peratrs were the Silvertn Tramway and the Midland Railway, bth prviding a private-sectr transprt slutin t address a plitical prblem. The Silvertn Tramway prvided a plitically cnvenient shrtline railway jining the rich silver, lead and zinc depsits f Brken Hill in NSW and the smelters f Prt Pirie. Fr almst a century, the Silvertn helped slve the prblem f gvernment railways crssing state brders. The Midland Railway in WA was a land grant railway that helped the gvernment f Western Australia mre clsely settle and develp agricultural land in the state s mid-nrth using private, rather than public mney. The irn re railways f the Pilbara als stand as a superb example f the private sectr s invlvement in rail. Over almst half a century and largely ut f the public s cnsciusness, the miners f the Pilbara have assembled a heavy haul railway that is glbally secnd t nne. The largest flw f irn re freight traffic is in the Pilbara where mre than 94% f Australia s irn re is mved. Between the three big miners in the Pilbara, ver 500 millin tnnes f irn re mves frm mine t prt annually. These private peratrs run sme f the lngest, heaviest and mst technically advanced rllingstck in the wrld.

2 MORE RECENT EXAMPLES Let s mve frward t mre recent times, where the private sectr has filled sme imprtant niches acrss the spectrum f the Australasian rail industry. Cast yur mind back t the 1990s when the first wave f micrecnmic refrm was well underway, with a range f paths being fllwed t refrm the chrnically underperfrming rail industry in bth public and private sectrs. The frmatin f the publically-wned Natinal Rail Crpratin in 1992 undubtedly preserved a future fr lng-distance freight n rail by cncentrating n intermdal and bulk cmmdities; SCT, ne f rail s great success stries identified a gap in the market fr wagnlad traffic, building its rail business frm hired lcmtives and hand-me-dwn wagns int a fleet f dedicated lcmtives, rllingstck and lgistics infrastructure. The train nw runs several times a week and is a factr in rail s dminant mde share n the Melburne Perth crridr. The 1990s als saw the start f privatising publically-wned rail peratins, either thrugh lng-term leases r utright sale. In 1997, the Federal Gvernment s privatised the Australian Natinal Railways business and used its interstate track assets t frm the Australian Rail Track Crpratin (ARTC). In Victria, the state gvernment started the experiment f franchising ut urban and reginal rail services, with the first metrplitan franchises cntracted in The state als sld the publically wned rail freight business that year. The sale f abve-rail freight assets in Western Australia and the lng-term lease f belw rail assets tk place in The sale f Natinal Rail and the NSW freight peratr Freightcrp t the Pacific Natinal cnsrtium in The sale f the QR freight business by the Queensland gvernment in 2010 t becme Aurizn. SHARING GLOBAL SKILLS AND KNOWLEDGE The railway has always been an internatinal industry, transferring peple and technlgy arund the wrld. Let us nt frget the cntributin made by the prfessinal skills and knwledge f railway peple and the cmpanies that emply them wh have cme frm arund the wrld t Australia. Let us als remember thse Australian railway peple whse expertise is being shared arund the wrld amng a range f railway peratrs, cntractrs and cnsultancies.

3 The private sectr makes ther imprtant cntributins t the Australian rail industry, particularly thrugh the infusin f verseas capital and expertise. The expertise cmes acrss a range f fields frm a variety f surces, including: The United States, thrugh freight rail peratrs like Genesee and Wyming, r lcmtive and rllingstck hire cmpanies like CFCLA; Eurpean-based transprt peratrs like French cmpanies Kelis and Transdev wh find Australian light rail systems a natural fit with their existing businesses; Asian rail peratrs like MTR wh run Melburne s suburban train system and will als perate Sydney s nrthwest rail link frm 2019, and; The brad range f glbal rllingstck manufacturers, such as Dwner, CAF and UGL, wh are finding a place fr their prducts in the Australian railway marketplace. Nt t mentin the range f cnsultancies and cntractrs, such as Laing O Rurke and McCnnell Dwell, that prvide specialised skills t the Australian rail industry. PPPs I d als like t briefly lk at the imprtant rle the private sectr can play and has played in funding the rail infrastructure we need in Australia and what pprtunities lie ahead. PPPs: Public-Private Partnerships, Private Financing Initiatives, P3s call them whatever yu like, but they have funded a great deal f transprt and scial infrastructure ver the past few decades. Cnventinal wisdm suggests that rail is nt nrmally cnsidered a class f infrastructure suitable fr PPPs in Australia. Indeed Australian rail has had a limited, but chequered histry with PPPs, with three imprtant prjects in the 2000s dminating discussin n the subject, namely: the Airprt Railways in Sydney and Brisbane and the Alice Springs Darwin Railway. After sme ups and dwns and financial prblems, these three rail PPPs have fund their feet and the industry and the brader Australian ecnmy wuld be the prer withut them. The mst recent and prbably mst exciting PPP n the rail hrizn at the mment is the Cranburne-Pakenham Rail Crridr prject that aims t prvide fr Melburne s busiest rail lines, as well as new r upgraded: tracks, rllingstck electrical pwer supply

4 grade separatins train maintenance and stabling WHAT WE WANT FROM GOVERNMENT In Australia, many gvernments tend t frget that PPPs are a means t an end: that is t fund the infrastructure that prvides real efficiency gains t the ecnmy. Sadly, all t many Treasuries still view PPPs prjects as a way t either: mve infrastructure spending ff-budget r develp bankable prjects (but nt necessarily the best prjects) t tap private capital markets. T pursue a PPP mdel f infrastructure delivery fr these reasns is prbably the least effective way t use them. At a time when interest rates are at histric lws, particularly fr public sectr brrwing, Gvernments shuld be cncentrating n: Imprving the bureaucracy s prject selectin and evaluatin skills in rder t Mre effectively use PPPs t build the infrastructure that maximises prductivity and benefits the natinal ecnmy. The ARA believes that there are a number f ptential rail infrastructure PPPs that meet the gal f maximising prductivity t benefit the Australian ecnmy. These include: Building a 21 st Century Inland Railway between Melburne and Brisbane; Prviding dedicated rail freight access t Australia s majr cntainer prts; Fast, efficient rail links within CBDs and with cnnectins t internatinal airprts. PRIVATE SECTOR CO-FUNDING Hwever, PPPs are nt the full extent f private sectr invlvement in rail. The ARA als believes there is a rle fr increased c-funding by private sectr beneficiaries f rail infrastructure upgrades t match public sectr investment in rail. We believe there are a range f pprtunities in bth passenger and freight rail infrastructure where private sectr cfunding can deliver the kind f rail system Australia needs t meet the challenges f the 21 st Century. These culd include: Prviding better rail access t high prductivity agricultural areas in inland Australia and maximising imprvements t the grain supply chain by:

5 Public sectr upgrades t track that raises train speeds and axle lads are matched by Upgrades t receival and lading sites by grain handlers alng with new, high capacity rlling stck. Using rail infrastructure and services as equity in TOD jint ventures with the prperty develpment industry wuld allw rail peratrs t capture the benefits f develpment and land value uplift thrugh rents and ther revenue. Last but nt least, the private sectr can wrk with the public sectr t leverage their technical knwledge and skills t prvide innvative slutins fr rail infrastructure cnstructin and mre efficiently use public mney t deliver prjects ahead f schedule and under budget. CONCLUSION Australia has a lng and prven histry f public and private partnerships that nt nly wrk and wrk well, but have created the fundatins that ur current natinal rail infrastructure has built n and will cntinue t build n int the future. It is imprtant that we cntinue t lk fr pprtunities t partner where pssible in rder t ensure a strng and prsperus future fr rail in in this cuntry. Thank yu fr yur attentin this mrning, I ll take questins if yu have them.

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