THE $437 million railcar contract for the planned Mandurah railway highlights the wide gap between rhetoric and reality that sometimes muddies the local content debate.
The nature of this contract always meant that most of the work would be performed interstate, where large-scale facilities for the manufacture of railcars already exist.
However, this did not stop the Gallop Government from making extravagant claims about the amount of local content and the employment benefits.
“The Gallop Government’s commitment to maximising the amount of work completed in Western Australia has resulted in $172 million worth of work for WA from the railcar contract,” the Government said last May.
The premier also said the contract would generate “an estimated 1,000 direct and indirect jobs over 15 years”.
Both of these claims bear close scrutiny.
In reality, most of the local work relates to a 15-year maintenance contract ($114 million) and the associated construction of a maintenance depot north of Joondalup ($34 million). In other words, it is work that must be performed in WA.
The Government can claim some credit for $24 million of construction and fit-out work due to be performed in WA.
A spokesman for WA Government Railways said the $24 million of local construction work was negotiated with the winning EDI Rail – Bombardier Transportation consortium.
The EDI consortium plans to build and assemble the 31 railcar sets at its Queensland manufacturing facilities, using overseas imports worth about $100 million.
The local content includes a $6 million contract for on-train communications equipment, awarded to West Perth-based MRX Technologies, and a $4 million contract for vehicle coupler systems, awarded to Osborne Park-based Scharfenberg.
Other local contracts are due to be awarded for the railcar bogies and the passenger seats.
The spokesman said the amount of local content negotiated with EDI was similar to the amount proposed by the competing Alstom – Goninan consortium.
However, the composition of their local content was different.
The Alstom consortium had planned to build the shells in NSW but the assembly and fit-out would have occurred at Goninan’s facilities in Perth.
The claimed employment benefits of the winning contract were derived from economic modelling, not actual employment plans. It was based on the $58 million of expected manufacturing work in WA and an “employment multiplier” calculated by an economic consulting firm.
Put the two together and result is that the local work “is expected to create over 250 direct jobs and 750 indirect jobs”, according to the Government.
How does this compare to the stated employment plans?“EDI Rail has estimated it will employ approximately 40 personnel in maintaining the railcars,” its press statement said.