Firm political commitment seen as crucial to lure freight from road
The federal government has released an Inland Rail business case and an implementation report for a project destined to have a crucial impact on eastern Australian long-haul trucking.
Federal infrastructure minister Warren Truss indicates the return on investment will be about 2.62 if the project is realised by 2025 at the projected cost of around $10 billion.
Despite that, the business case admits the project “would not generate sufficient access revenues to cover the full costs”, though it would be would be “cash flow positive from commencement of operations with access revenues sufficient to cover ongoing operations and maintenance costs plus a margin”.
An extension to the Port of Brisbane was deemed “marginal”.
The business case also says private-sector investment in the whole concept hinged on early and full government commitment to the project.
This would “create an environment where the private sector can invest with sufficient certainty that the anticipated service outcomes will be realised in the committed timeframes.
“Without such a commitment, the risk is that companies will not be incentivised to invest in rail supply chains and Australia’s east coast may be locked into road-based logistics options which undermine future efforts to attract freight to rail.”
Truss makes plain the two reports are an important milestone on a longer journey.
“The Delivery Plan indicates Inland Rail will generate economic benefits of around $22.5 billion,” Truss says.
“Importantly, the Implementation Group has identified that an early commitment to Inland Rail will give certainty for businesses and will allow the private sector to invest in complementary projects leveraging Inland Rail’s enhanced logistics benefits.
“The Implementation Group’s analysis indicates that there is some scope for private sector funding, however, the release of this Report will now allow potential investors to consider the merits of the proposal.
“If viable alternatives emerge that are substantiated by evidence, these would be considered on their merits and referred to Infrastructure Australia as appropriate.
“As with any project of this magnitude, it is important that Australian Government fully considers the project and how best to implement and fund it.
“As part of our consideration, I am referring the business case to Infrastructure Australia.”
The Inland Rail Implementation Group’s delivery plan outlines a 10-year construction timeframe to complete the 1,700km project – including some 600km of new track.
Meanwhile, the 375-page PricewaterhouseCoopers Australia (PwC) report, ordered by Australian Rail Track Corporation (ARTC), argues the business case on capacity, productivity, social and environment, accessibility and resilience grounds.
It says relying on existing infrastructure between Melbourne and Brisbane will mean:
- insufficient capacity to meet future freight demand
- freight productivity is increasingly be constrained
- continued reliance on road for freight transport that will result in increasing safety, environmental and community impacts with associated costs
- access to supply chain networks for regional producers and industries is hindered and the productivity and economic growth potential of regional communities inhibited
- supply chains are exposed to disruptions and suboptimal reliability.
The business case projects 2 million tonnes of agricultural freight attracted from road, with a total of 8.9 million tonnes of agricultural freight “more efficiently diverted to Inland Rail”, plus a $10 per tonne reduction in rail costs for intercapital freight between Melbourne and Brisbane.
“This Report and Business Case provides the information needed to consider how best to build the Inland Rail network to meet the freight challenge of the coming decades – expected to treble along the eastern seaboard to 2030,” Truss says.
“Inland Rail will complement existing road and rail networks and will dramatically boost productivity. Initially, it will provide for 1,800 metre long trains carrying containers stacked two high and, in the longer term, much heavier 3,600 metre long trains.
“The new freight line will reduce transit time between Melbourne and Brisbane by more than 10 hours – reducing the journey to less than a day. It will remove 200,000 trucks, or 5.4 billion net tonne kilometres of freight, from roads each year.
“For the first time, south east Queensland will connect by rail to Melbourne, Adelaide and Perth, avoiding the need for freight to transit through the congested Sydney network.
“Inland Rail will reduce the distance between Melbourne and Brisbane by 200 km and carve 500 km from the Brisbane to Perth trip.”
The business case can be found here and the delivery plan here.