The state’s largest grains handler has hit out at the state government’s decision to proceed with major changes to Western Australia’s grain freight network, despite appeals from farm groups and rural councils concerned over increased trucking activity and higher costs.
The $350 million program, jointly funded by government and industry, includes upgrades to the state’s most competitive grain rail lines and, controversially, the closure of several ‘tier 3’ lines.
It also includes a $118 million investment in Wheatbelt roads to ensure they can handle the extra trucking activity, but critics say this will not be enough.
The Wheatbelt Railway Retention Alliance, which comprises 18 shire councils and members of the WA Farmers Federation, estimates there will be 57,000 additional truck movements on the road network.
Chairman Bill Cowan said this could have “disastrous consequences for safety, efficiency and the environment”.
CBH Group chief executive Andrew Crane said the closure of the tier 3 lines was a lost opportunity to keep more grain on rail and make the state’s wheat market more competitive.
He said information provided in the government’s strategic grain network review illustrated that the lines were economically viable without the need for additional funding.
“It is important going forward that we learn from this process,” Dr Crane said.
“We must ensure that the grains industry, the government and the rail track manager, Brookfield-owned WestNet Rail, work together to make sure that the grain rail network does not deteriorate to such a poor level again that would necessitate closure of further sections.”
However, Transport Minister Troy Buswell said he was unconvinced by the case CBH put forward.
“There are a number of significant issues with the CBH case for government to change its investment strategy, including but not limited to an inconclusive cost benefit analysis and the fact that several infrastructure costs were not taken into account,” he said.
“There is not a compelling case for the retention of the tier 3 lines and therefore the government is not prepared to change an investment of more than $100 million from roads to re-sleepering of the tier 3 lines.”
Mr Buswell said the government now expected CBH to proceed in accordance with the original strategy.
“I encourage CBH to proceed with its investment in rapid loading facilities at Brookton and Kellerberrin,” he said.
Dr Crane said he expected state government funding in the form of the existing transition assistance package would be required indefinitely at Brookton to ensure maximum volumes of grain remain on rail.
Additional infrastructure would also be needed at CBH’s Kellerberrin and Brookton receival sites, Dr Crane said.
“Despite CBH’s strong commitment to rail, as evidenced by our recent $175 million investment in new locomotives and wagons, there remains the distinct possibility that some growers and marketers operating in the tier 3 region will choose to bypass Brookton and deliver by truck to port at Kwinana,” he said.
“Unless freight rates under the road-rail supply chain envisaged in the Brookton strategy are more competitive than going by road all the way to port, growers and marketers will go direct.”
Having lost the argument over tier 3 rail lines, CBH Group also faces the prospect of dismantling its Grain Express service.
This follows a recent decision by the Australian Competition and Consumer Commission (ACCC) to revoke CBH’s “exclusive dealing notification” for Grain Express, which effectively requires growers using CBH’s storage facilities to also use its transport services.
The farmer coop decided last week to lodge an appeal with the Australian Competition Tribunal.
“As we have said repeatedly, our determination to try to retain Grain Express for growers is not because we are trying to protect an inefficient system or to avoid competition,” CBH chairman Neil Wandel said in a statement.
“It is because we genuinely believe the current bundled system delivers more efficiency and benefits to growers and the industry than having multiple marketers coordinating grain transport from our upcountry receival sites to port.”
Mr Wandel said Grain Express enabled the farmer cooperative to “negotiate hard” with road and rail transport providers.
He indicated that costs would be higher if the appeal did not succeed.
“The uncertainty created by potential leakage to competitor transport systems and increased operating costs associated with gearing up for multiple user access to our sites will lessen overall efficiencies and value delivery to growers,” Mr Wandel said.
The free-market oriented Pastoralists and Graziers Association, which has backed extra spending on roads over rail, criticised the appeal and accused CBH of being misleading.
PGA Western Graingrowers chairman John Snooke said the ACCC found that Grain Express “significantly lessened competition, provided limited benefits to growers, and only protected the interests of CBH”.
