The Federal Government has outlined key supply chain investments in this week’s 2021-22 Federal Budget.
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Rail freight operator Pacific National has welcomed the Federal Government’s commitment to fund the Inland Rail project.
“More than thirty years since the ambitious rail link was first suggested, the 1,700km rail line is now well on track to become a reality following the $8.4 billion commitment in last night’s Federal Budget,” the company said in a statement.
“Pacific National believes the Inland Rail project will be transformative for Australia, helping revitalise regional communities and providing a boost in national productivity that will deliver for generations to come.”
Pacific National CEO David Irwin said, “Australia has a growing problem that can’t be ignored – we are trying to move too much freight on our increasingly congested road and rail networks along our Eastern seaboard.
“Inland Rail is a true game changer and we commend the Government for its commitment to such an important nation-building project.
“We look forward to working with the Government and all the communities along the route to see Inland Rail become a reality and ensure it’s a huge success once operational.
“We want a swift and smooth construction program and a clear path to the day the first freight trains can start using the route – and this will ensure potential investors and rail operators can plan for the future with greater certainty,” he added.
Aurizon Managing Director and CEO Andrew Harding has reported that he was pleased to see the Government commit in last night’s 2017–18 Budget to investing in freight rail infrastructure, and he believes Governments, at both the federal and state level, have key roles to play in implementing sound policy and regulatory frameworks to support a competitive rail industry.
“To improve the competitiveness of rail freight, the Inland Rail project and linked supply chains will need more than the correct design and construction, they will require major transport policy reform,” Harding said.
“Rail freight companies need to be able to compete on equal footing with other transport modes and allow rail to do more of the heavy-lifting in Australia’s freight transport task.”
Harding said the previously announced decision taken by the Federal and State Governments to introduce heavy-vehicle pricing and investment reform over five years was welcome, however Aurizon wanted to see a strong focus on the detailed implementation of a new pricing methodology and governance to ensure the outcome of reform would be a consistent pricing framework applied across the haulage of both heavy vehicles and rail freight.
“Currently heavy vehicles are charged indirectly by government through diesel excise and registration to recover an historical average of spending on road infrastructure,” said Hardling. “Whereas rail freight operators are directly charged for access to, and use of, rail infrastructure, with prices that are more cost-reflective and overseen by an independent economic regulator.”
“The design will need to allow longer and heavier trains and double stacking of containers on the network and efficiently integrate existing freight supply chains to enable customers to move their freight to, and from, major export ports,” he added.
“The announcement is a big step in the right direction, and should be used as the basis for a major modal shift from road to rail along the east coast, while delivering substantial economic, community and environmental benefits along the way.
“In our grain haulage business, for example, we estimate a fully loaded train carries up to 1,750 tonnes of grain to export, which is the equivalent to 44 trucks on the road. Adopting rail over road for long-distance haulage of freight offers improved safety outcomes for the community by helping to prevent and reduce road fatalities and road trauma. Rail freight also produces an estimated 10 times less carbon dioxide than road freight per tonne-kilometre travelled.”
The significant infrastructure investments contained in the 2017–18 Federal Budget have the potential to deliver substantial improvements to supply chain efficiency and significantly boost economic growth, according to the Australian Logistics Council (ALC)
“The Government should be commended for making clear commitments to two significant infrastructure projects crucial to the freight and logistics industry,” said Michael Kilgariff, Managing Director, ALC.
“The transformative potential of the Inland Rail project has been talked about for decades, with incremental progress being made over the past several years, including a positive assessment of the business case by Infrastructure Australia. The $8.4 billion commitment announced in the Treasurer’s speech tonight will finally allow its construction. At long last, we can stop merely talking about this project’s potential, and instead begin to witness it.”
Kilgariff added that the establishment of a safe, reliable port-to-port rail link for freight between Melbourne and Brisbane is the only way to simultaneously meet Australia’s burgeoning freight task, alleviate congestion on existing freight networks, create regional jobs and boost growth.
“To fully unleash the benefits of this project, the line must run to the ports of Melbourne and Brisbane, and comprise efficient rail linkages to the ports of Botany, Kembla and Newcastle in NSW,” he added. “We must also support the development of intermodal freight hubs at appropriate intervals along the route.”
Kilgariff also hailed a $5.3 billion commitment to construct the Western Sydney Airport and $75 million to duplicate the Port Botany freight rail line, noting that the projects would bring to fruition “critical” freight infrastructure projects that would further support economic activity and job creation.
“The Budget’s strong focus on infrastructure is timely, coming less than six months after the Federal Government agreed to ALC’s request to develop a National Freight and Supply Chain Strategy,” he added. “We welcome the measures announced tonight as a positive first step in continuing efforts to deliver a safer, more efficient supply chain.
“It’s also pleasing that Infrastructure Australia has been provided with an additional $11.9 million to deliver its core functions of assessing projects and producing an infrastructure pipeline.”
He noted that the proposed new Infrastructure and Project Financing Agency within the Department of Prime Minister and Cabinet would need sufficient technical expertise to aid the national leadership in making sound infrastructure funding decisions.
“This includes a willingness to make Commonwealth funding for projects conditional on the implementation of appropriate strategies to protect freight corridors, and minimise urban encroachment on freight infrastructure,” Kilgariff concluded.
The Australasian Railway Association (ARA) has spoken in support of the $20 billion investment in rail announced by the Federal Government’s in the 2017–2018 Budget.
“The Government’s renewed commitment to rail, including through its $10 billion National Rail Program for urban and regional passenger rail, underscores its importance to Australia and is welcomed by the rail industry,” said Danny Broad, CEO, ARA.
“ARA congratulates the Government’s strong funding commitment to rail in the 2017-2018 budget to boost economic activity and improve the liveability of our cities.”
In particular, Broad applauded the Government’s commitment to Inland Rail through its $8.4 billion equity injection to the Australian Rail Track Corporation.
“The Government’s $8.4 billion commitment to Inland Rail is critical to supporting the delivery of this iconic national freight project,” he said.
“Linking Victoria and regional NSW with Queensland will help get freight off the road and onto rail, address rising congestion in Sydney and will deliver thousands of jobs, many in regional Australia.
“This project will deliver a strong economic contribution to the nation and will enhance productivity and increase consumer freight options.”
Broad noted that the Government’s intention for a public private partnership to progress the Toowoomba to Kagaru tunnel section would the most challenging aspect of the project.
“Whist this capital injection to the ARTC is welcomed, the fact remains that significant work needs to occur to ensure the Inland Rail project comes to fruition,” said Broad. “This includes maximising the economic benefits of this project by delivering efficient linkages that directly connect the railway line to the Port of Melbourne and Port Brisbane.”
Michael Kilgariff, Managing Director of the Australian Logistics Council (ALC) has spoken out ahead of the release of the 2017/18 Federal Budget, noting that Budget support is the “best chance” the Inland Rail project has of moving into the construction phase.
“It is already clear that infrastructure development will be a central theme in this year’s document,” Kilgariff said.
“This project is a long-held priority for ALC, as it is for many in the freight and logistics industry. That’s why it was a core focus of ALC’s pre-Budget submission.”
Danny Broad, CEO, Australasian Railway Association (ARA), also stressed the need for Inland Rail investment. “The ARA outlined in its pre-budget submission that a significant financial commitment is needed in order to boost rail efficiency and urban liveability,” Broad said.
“The ARA has indicated that a firm commitment by the Commonwealth to vital infrastructure, such as Inland Rail and rail to ports is necessary.
“Inland Rail will increase Australia’s GDP by $16 billion. It is profitable from day one – for every $1 the Commonwealth invests there is a return of $2.60 to our economy. Inland Rail will inject 16,000 jobs at its peak, retaining 700 jobs every year over the life of the project. Inland Rail will reduce congestion on our roads with fewer heavy vehicle movements and improve our nation’s environmental sustainability.”
“An ongoing commitment to increasing urban and regional rail projects is also necessary. The ARA looks to the Commonwealth Government to work with State and Territory Governments as partners in investing into rail. Ongoing financial support needs to be provided to enhance our liveability in our cities and growth corridors.
“We urge the Commonwealth Government to also take action on road pricing. The Commonwealth needs to act on mass-distance-location charging mechanisms for heavy vehicles along major interstate routes which compete with rail. The playing field on this issue has been unequal for far too long. Options for independent price regulation of heavy vehicle charges need to be commenced, including trial elements of heavy vehicle road reform.
The Inland Rail project is expected to receive an allocation of $1 billion in the Federal Budget.
Kilgariff also said that funding to equip authorities such as Infrastructure Australia (IA) with the resources necessary to undertake their core functions will help the development of the National Freight and Supply Chain Strategy.
“IA is particularly important in this regard, as its professional and apolitical approach helps to ensure that infrastructure development remains subject to rigorous, evidence-based assessments, and that projects ultimately deliver the best economic and social outcomes for the community,” he said.
“As in previous years, ALC will be closely monitoring what emerges on Budget Night, and will provide commentary regarding its impact on the freight and logistics industry.”
The 2017/18 Federal Budget will be announced on the evening on Tuesday 9 May, 2017.