Why Cancel Inland Rail?

I questioned Australian Rail Track Corporation (ARTC) and Inland Rail officials regarding the cancellation of the Inland Rail project, specifically the lack of consultation and the government’s refusal to consider private sector alternatives.

ARTC officials admitted they were only formally notified of the cancellation right before the federal budget, having previously worked on scope changes rather than plans to shut down the project.

Inland Rail was projected to take 200,000 truck movements off the roads. I asked Minister McCarthy whether the cancellation increased safety risks and who would pay for the higher maintenance costs for local roads, not to mention the massive hit to national productivity, noting that ARTC admitted they never even modelled the productivity loss.

Despite viable private proposals, including a $14.4 billion costed freight route presented by IPG and interest from Everald Crompton’s group to build the line using private capital, Minister McCarthy could only take questions on notice rather than explain why the government cancelled the project instead of putting it out to tender.

The government’s decision to scrap this vital project without proper consultation or modelling is a blow to Australian productivity and safety – and a wasted opportunity for a privately funded nation building infrastructure project.

Transcript

Senator ROBERTS: Thank you for appearing again. When did the ARTC know the Inland Rail project was being cancelled, and were you consulted?  

Mr W Johnson: We knew at the same time as final decisions were made, obviously, within the government. As I just mentioned, the week before budget there were some discussions around what potentially might take place. Then, the day before budget, that was formalised, and we were provided information.  

Senator ROBERTS: So you knew after the decision had been made. You weren’t consulted?  

Mr W Johnson: We’ve been providing input and working with the department now for months in terms of how we actually go about the types of things that need consideration on the program and what type of scope relaxations we could undertake with all the environmental approvals, some of which we couldn’t undertake, to hold the conditions. So this hasn’t been just a point in time. There’s been a lot of evaluation. We were formally advised, as were most people, at the point of the budget conclusions.  

Senator ROBERTS: When did you first start looking at scope changes and modifications?  

Mr W Johnson: I think it’s been an ongoing process. Clearly, through the course of the back end of last year into this year, we’ve been looking at what can happen around that. Inland Rail have been running a number of scenarios with all the types of approval conditions on them about how they might go about that. Months.  

Senator ROBERTS: When was the first time you started discussing options to shut it down?  

Mr W Johnson: That wasn’t discussed. We talked about—  

Senator ROBERTS: You talked about changes to keep it alive.  

Mr W Johnson: That’s right.  

Senator ROBERTS: So you weren’t really consulted, or you didn’t work on the closing.  

Mr W Johnson: I wouldn’t put it quite like that. I think in those scenarios we also were realistic, at a cost benefit, on what type of pressures we might be under, which drove our first pieces of work.  

Senator ROBERTS: Have the ARTC or Inland Rail incurred any sunk costs in the cancellation of Inland Rail? Could you please itemise them.  

Ms McDougall: The consolidation south of Parkes and the preservation of the corridor north of Parkes—if I deal with south of Parkes first, there is no impact to the ongoing construction projects that we are continuing to deliver south of Parkes.  

Senator ROBERTS: They connect with the west and the south?  

Ms McDougall: Yes, when they reach Parkes. The preservation of the rail corridor north of Parkes—we have a project development agreement with the Commonwealth and with ARTC in which it specifies that we can obtain environmental approvals and property acquisition works. That was the ‘least regrets’ work recommended by Dr Schott. We have got significant contracts to support the least regrets preservation of the rail corridor works on foot at the moment. There are no immediate steps to cancel or break those contracts. We are working closely with the Commonwealth and with the relevant state agencies to assess the different ways that we can preserve the corridor, so we will continue working with the Commonwealth to assess the contract status of each of those contracts.  

Senator ROBERTS: So you want to preserve the corridor as an asset?  

Ms McDougall: Yes. 

Senator ROBERTS: Let’s have some answers to specific questions on where the assets will go. You purchased significant amounts of rail track from Whyalla. This is high-quality rail. I’m concerned it may not be reassigned to other rail works. What physical assets does the ARTC have under your control relating to Inland Rail, and how will these assets be sold, stored and reassigned, including, but not limited to, track?  

Mr W Johnson: I’ll go to Fiona in the first instance, and I’ll talk about what the endeavours will be in the future.  

Ms McDougall: We’re still assessing what preservation of the corridor means for the works north of Parkes. I can’t comment on the rail.  

Mr W Johnson: Both the steel sleeper specifications and the turnout specifications are pretty standardised ARTC standards. If there is inventory that’s been purchased ahead for use within further construction, then there might be an opportunity to see what reuse looks like. We’ll work through that in coming months with Inland Rail.  

Senator ROBERTS: So you’re still getting to grips with the assets.  

Mr W Johnson: Yes.  

Senator ROBERTS: Minister, this Inland Rail project would have taken 200,000 truck movements off the roads. Have you just made motorists less safe and increased road maintenance spending for state and local government?  

Senator McCarthy: No, Senator.  

Senator ROBERTS: Who’s going to pay for the extra road maintenance that Inland Rail would have taken off the road?  

Senator McCarthy: We’ve not made it unsafe. That is my response to your question there.  

Senator ROBERTS: What about the extra maintenance?  

Senator McCarthy: I can take that on notice.  

Senator ROBERTS: There are significant costs for the highways in killing Inland Rail.  

Mr W Johnson: Inland Rail was a long-term program. There are also initiatives under way nationally today within the rail freight sector, clearly through the National Transport Commission and the harmonisation agenda, which is all about the alignment, synergies and efficiencies of the railways nationally. There are our own activities that are already underway with the joint program of network investment with our shareholders, which is building the resilience of the existing network. We’ve already got existing improvement programs underway around performance. We have significantly adjusted what we’ve been doing in terms of our linkage to the ports and intermodal precincts nationally to go about rail freight increase—mode share change to rail. That endeavour maintains. And with the most recent announcement from our shareholders, the Australian government, in terms of continuing the investment and additive nature of that that go to the aims to both improve the existing network and maintain that growth trajectory we’re on, we foresee that we’ll be able to actually achieve some of this growth from road to rail still.  

Senator ROBERTS: This is a decision which will reduce productivity through congested freight routes. Have you modelled the hit Australia’s productivity and prosperity just took with this decision to cancel Inland Rail?  

Mr W Johnson: No.  

Senator ROBERTS: Minister, IPG is a significant Australian freight company. It’s provided One Nation with the costing for the construction of Inland Rail from Narromine to the Port of Gladstone, privately, along the forestry route, then from Wandoan to Banana to Gladstone. An intermodal at Dalby will take the Brisbane and Toowoomba air freight. This has been costed at $14.4 billion, using a single track with passing loops. These people know what they’re doing. If this company is interested in building the line in return for operation rights, why didn’t you put the project out to tender instead of cancelling it?  

Senator McCarthy: I’ll take that question on notice.  

Senator ROBERTS: Everald Crompton is also in town representing a group of transport companies wanting to talk about building the line using private money. Minister, will you meet with proponents, or will Ms King meet with proponents of a private build? And, more generally, will you consider private equity building the line?  

Senator McCarthy: I’ll take the question on notice and get back to you.