Vic Government 'overspent' on freight rail buy-back

Victorian Government overspent buying back rail lines and hasn't delivered needed upgrades, report says

The Victorian Opposition has accused the State Government of recklessly overspending to buy back the freight rail network, where volumes have fallen by 12 percent since the network returned to public hands.

The claim comes after Victorian Auditor-General Des Pearson released a report into the sale yesterday, criticising a deal it says has not delivered what it promised.

In the report Pearson says the then government of which current Premier John Brumby was the Treasurer signed a buy back lease which was "ineffective" in maintaining the network and "mitigated" the State's financial ability to "carry out major investments in upgrading the network".

Pearson says the full cost of the buy back was likely to surpass $200 million, far greater than the initial $133.8 million agreed upon.

The Opposition says the overspending on the network means less has been spent on rail freight transport.

"Since the rail lines buyback took effect in May 2007, the proportion of container freight on trains has slumped to less than 12 percent, compared with Minister for Public Transport Lynne Kosky’s unachievable goal of 30 percent by 2010," Shadow Minister for Transport Terry Mulder says.

"Labor has failed to ensure that more freight is transported by rail. Freight wagons are sitting unused in Melbourne because the current dominant broad gauge rail operator refuses to sell them to other potential investors."

The Government has defended the purchase, saying it has been good for Victorian industry.

"The Brumby Government is taking action to support the grain industry and taking back control of the track has allowed the Victorian and Federal Governments to investment more than $900 million into network upgrades which could not have been achieved under the original contracts," Kosky says.

"The massive investment we are making to the rail freight network is boosting jobs in small regional centres and supporting farmers and the agricultural sector during the worst drought in Victoria's history."

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