MacTiernan condemns Court for $116m loss

Planning and Infrastructure Minister Alannah MacTiernan has condemned the Court Government for its privatisation of WA's freight network, saying it had resulted in a $116 milllion loss.

The full text of an announcement from the Minister's office is pasted below

Western Australians are faced with a massive bill as a result of the previous Government's bungled privatisation of the State's rail freight network.

Planning and Infrastructure Minister Alannah MacTiernan said that because the sale was so badly structured, about a third of the network was now facing closure unless the Government and WA farmers paid hundreds of millions of dollars for infrastructure.

"It is a simple but horrifying story - not only did they sell off the network at rock bottom prices, they did so through a contract which despite their public promises, offered no protection for smaller grain lines after 2007," Ms MacTiernan said.

"In June 2000 they sold the network for $585million leaving the State with a $331million unserviced annual debt, and a loss the Auditor General confirmed was $116million.

"In contrast, before privatisation the freight revenue covered operating costs and debt servicing as well as producing a modest profit.

"Also, because of the network approach, costs were spread across the system - ensuring the viability of smaller lines.

"At the time of the sale, the previous Government said the purchasers would spend $400milllion on capital improvements and that the network would be expanded.

"Less than half of that amount appears to have been spent and the expansion did not happen, but now the original purchasers have sold the network and made profits totalling hundreds of millions of dollars.

"But the original contract allows the owners to close uneconomic rail lines from 2008, unless operations are subsidised, and so far about 1000km, or a third of the network, has been put in this category.

"The bill could run into hundreds of millions of dollars for infrastructure upgrades and lead to substantial increases in rail costs for farmers."

The Minister said that she - and many farmers - had warned the previous government that privatisation would lead to cherry picking - and that was exactly what had happened.

Ms MacTiernan said the State Government would work with the Federal Government, rail and grain companies, and farmers' organisations to find a fair solution.

"The alternative would be to have hundreds of very large trucks on country roads shifting the costs to local governments, the State Government and ultimately taxpayers," she said.