Funding impasse setback for rail

Vital upgrades to Western Australia’s grain rail freight network face further delays after the federal government rejected a state request for help in funding the $400 million required to keep parts of the network functioning.

Up to one third of the narrow gauge network, or between 750 and 1,000 kilometres of track, could face closure after being identified by WestNet Rail, which leases the rail lines, as economically unviable.

The federal and state governments, as well as the rail and grain industries, have spent the past three years in discussions over who should pay for the upgrades.

A $400 million rail network rescue package, devised by a consortium of rail and grain organisations in conjunction with the state government, divided the contribution from the federal government, the state government and industry equally into three.

But the rejection of funding from the federal government, which according to Planning and Infrastructure Minister Alannah MacTiernan does not view Australia’s grain export industry as a federal responsibility, casts doubts over the future of some of the grain industry’s most vital infrastructure.

The state government has reportedly indicated it would pull out of the funding arrangement if the federal government did not come to the table.

Ms MacTiernan told WA Business News the current funding package was not viable without the assistance of the federal government.

“It’s back to the drawing board,” she said.

Ms MacTiernan said that the result of the upcoming federal election could change the situation, with the federal opposition signalling it would consider the funding package in such a way that would “not just provide a free gift to a privatised entity”.

CBH Group manager supply chain strategy, Rob Voysey, said the consortium was still considering the latest development and was due to meet later this week to assess its options.

“Without federal government funding, the entire funding package falls over,” he said.

Mr Voysey said that this was not the first knock back from the federal government for funding.

“We are very disappointed with the government’s response. This puts in jeopardy a significant length of narrow gauge track,” he said.

Grain industry representatives say rail line closures would have a damaging effect on Australia’s $5.5 billion grain export industry, with WA responsible for more than half of the nation’s grain exports.

About 60 per cent of the state’s grain is transported to port via rail, with close to 90 per cent of grain produced in WA exported.

WestNet Rail chief executive John Cleland believes the federal government’s decision will delay the upgrades, but is confident an outcome will still be reached in the next three to six months.

He said WestNet, which charges rail operators an access fee to use the tracks, were not contemplating surrendering any lines back to the government in the near future.

“There has to be a logical outcome, at the end of the day,” Mr Cleland said.

He said the social and political implications of increasing grain transport on regional and metropolitan roads, and the cost of maintaining roads because of increased heavy traffic, would ultimately be greater than if the federal government committed to the funding package.

The state government has floated the idea of introducing an infrastructure levy for growers who use the rail lines, an idea farmer groups have opposed.

Mr Vosey said CBH was uncomfortable imposing a levy on farmers, saying he would need to see a better definition of the model to be convinced.

Increased competition from road transport, and the allocation imbalance between the amount of track devoted to grain traffic compared with other freight, such as minerals, has led to the under utilisation of some tracks servicing the grain industry.