Regional communities are putting pressure on the WA government and Brookfield Rail to re-open the third tier of the freight network.
Regional communities are putting pressure on the WA government and Brookfield Rail to re-open the third tier of the freight network.
Grain grower cooperative CBH Group and Brookfield Rail remain in arbitration over access to tier 3 rail lines, with a short-term agreement for access to other parts of the network set to expire next April, after the 2014-15 harvest.
The negotiations are taking place against a backdrop of strong pressure from regional communities to re-open the tier 3 network.
As per the recommendations of a 2009 strategic grain network review, which found the lines were uneconomical, Western Australia’s tier 3 lines closed on June 30 this year. The resultant increase in demand for road transport, particularly through areas within close proximity to the lines, is causing consternation among a range of community and lobby groups.
In particular, farmers and regional lobby groups point to the potential impact on road safety, local government maintenance budgets and transport costs for growers.
This view was supported by a report tabled in parliament last month by the economics and industry standing committee, which found that local governments did not have the capacity to meet the expected increased road maintenance costs.
Committee chair Ian Blayney said the committee believed it was likely the long-term cost of road maintenance would exceed the cost of updating the rail lines.
The report called on the government to recover the tier 3 rail lines in the absence of an access agreement being successfully negotiated.
“I think the worst outcome is for the lines not to be used, nobody wins out of that,” Mr Blayney said.
The report also highlighted the varying costs between different transport modes.
Costs from Bruce Rock to Kwinana averaged around $22 per tonne via rail, but were expected to reach $27/t on road.
Similarly, CBH figures from Kulin found the use of road over rail had increased freight fees from $24.05/t to $27.91/t.
The committee also released the contractual arrangements of the lease that had been negotiated by Brookfield Rail and the state government, despite claims the arrangement was commercial in confidence.
After a variation to the lease in 2010, on the back of the network review, the state government agreed to fund $165 million for maintenance of the tier 1 and 2 lines.
In exchange, the state government would earn 15 per cent of the profits from the operations of those lines until 2025.
CBH claimed that the Public Transport Authority was simultaneously regulating and earning a return from the Brookfield asset, presenting a conflict of interest.
By contrast, the tier 3 lines were not included in the renewed contract, as the state government chose to allocate more than $100 million to road upgrades in place of rail maintenance.
In total, Brookfield Rail operates around 5,500 kilometres of rail track in the southern half of WA, with more than 40 per cent of the network, just less than 2,400km, used only for grain freight transportation, according to the company.
The 509km of tier 3 rail lines represent around 10 per cent of the network.
Annual haulage on the aggregate network is more than 70 million tonnes, up from 30mt when Brookfield won the lease to operate the network.
Wheat made up about 10mt of that total in the most recent financial year, a record harvest, but Brookfield said that, in an average year, grain represented 9 per cent of total freight movements.
Grain transported on tier 3 lines of 752,611t was up from a total of 172,901t in 2012.
In an average year, grain freight moved on the tier 3 portion of the network made up around 1 per cent of total freight tonnage moved, Brookfield said.
