Government fails rail audit

Tasmania's auditor-general exposes sloppy management practices in the State Government's approach to rail network

Government fails rail audit
Government fails rail audit
By Brad Gardner

Tasmania’s rail woes continue to worsen, with a report exposing sloppy management practices in the State Government’s dealings with Pacific National.

As uncertainty swirls around the future of Tasmanian rail, the Government has been beset with allegations it failed to conduct a risk assessment before agreeing to buy back the network.

Auditor-General Mike Blake’s assessment of the Rail Management and Maintenance Deed reveals a lack of oversight on the part of the Government and calls for a major change in its approach to contractual agreements.

The deed, which began in January 2007, required the Tasmanian Government to inject $44 million over 10 years into the ailing infrastructure and take back control of the network.

Although Minister for Infrastructure Graeme Sturges has rejected the report’s findings, Blake says the Government did not examine the cost of derailments, the difficulties of establishing maintenance programs or the consequence of Pacific National ending operations.

"No formal risk assessment exercise was undertaken prior to the commencement of the deed and no risk management was undertaken once the deed was in operation," the report says.

As part of the deed, the Federal Government also committed $78 million for track maintenance, while the agreement formalised Pacific National’s obligations.

"These included $38 million to upgrade its rolling stock over a 10-year period, continuance of its rail operation activities, including intermodal rail service for 10 years, maintenance and train control," the report says.

However, the report goes on to say that no monitoring scheme was put in place to ensure the deed’s reporting and performance requirements were met.

This is despite the auditor-general saying such a scheme "is an essential aspect of effective contract management".

"We found no evidence that a monitoring system had been developed to ensure compliance with all the reporting and performance requirements of the deed," the report says.

Furthermore, Pacific National did not report according to key performance indicators (KPIs) despite it being a requirement as part of the deed.

In releasing the report, Blake recommended the Government in future develop risk management strategies before entering a contract and ensure all contracts are systematically monitored.

Blake also called for a steering committee to be established for contracts with significant risk, materiality and public interest.

Due to the absence of formal monitoring processes, the Rail Management Unit (RMU)—responsible for managing the deed—used an invoice system to verify expenditure.

But while saying the RMU was "assiduous" in its actions, it was unable to account for $500,000.

Blake’s report also criticises the state of the rail network, saying it has failed to reach the levels of safety and productivity outlined in the deed.

According to the report, Tasmania’s rate of derailment is seven times higher than other states, while speed restrictions and a drop in the amount of annual tonnage have hampered the network.

Although rejecting Blake’s assessment, a spokesman for Sturges declined to give reasons why.

"We disagree with his interpretation of the deed," the spokesman says.

The release of the report comes as government staffers meet today with representatives from Pacific National's parent company, Asciano, to try and reach an agreement on securing the future of rail freight in Tasmania.

The rail operator is due to stop carting freight on the Melba line, claiming it cannot renew its contract with the Tasmanian Ports Corporation.

But Sturges says Pacific National was offered a 12-month contract extension.

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