Hockridge backs charging reforms to lift intermodal projects


Aurizon seeks long-term thinking on freight to deflect impact of congestion and inform investment decisions

Hockridge backs charging reforms to lift intermodal projects
Aurizon wants to develop more intermodal projects.

 

Aurizon CEO Lance Hockridge has reiterated his concerns about the state and national policy settings and the balance between road and rail freight.

At a time when the trucking industry points to weaknesses in the road charging regime, Hockridge calls for greater transparency on costs for infrastructure use.

In comments reported from the company’s annual general meeting, the man who oversees the nation’s preponderant rail concern, contrasts the fixed track charge with a variable fuel excise that is affected by engine efficiency gains.

He raises the prospect of developing more intermodal operations but has linked that to policy changes along the lines of mass distance location charging.

The comments are an echo of those made mid-year related to Infrastructure Australia’s Australian Infrastructure Audit report.

"The rail freight industry has worked to reduce transit times and improve reliability. But where rail freight operators pay a direct user charge to access infrastructure, truck operators primarily pay for road use through fuel excise," Hockridge writes.

"The combination of low increases in excise and improved fuel technology means heavy vehicle operators are paying less in real terms for the access they are getting to improved infrastructure that delivers them a commercial benefit.

"It is the opposite of the way it works in other sectors including rail.

"Although it is not the only reason for a major imbalance, this difference in pricing is an important factor.

"As a result, we are not realising the productivity and social benefits that freight rail could deliver were it to be given a genuine opportunity to play to its main strengths, including long-haul interstate freight and port-shuttle services where rail offers substantial productivity and social benefits.

"I’m not diminishing the role of the heavy vehicle sector, but this imbalance inevitably means more traffic congestion and accidents, a bigger carbon footprint and more intensive use of fuel."

He contrasts the Australian experience with that of the North American rail freight sector.

There, three decades of reform, deregulation and private investment are estimated to have seen freight rates in real terms fall 30-40 per cent; modal share has climbed to 35 per cent, and almost US$500 billion (A$704 billion) re-invested by the private sector.

"The North Americans are considered the world’s most efficient and competitive railroads, to the benefit of industry, consumers and the economy," Hockridge says.

"While not pretending we have the scale of North American economies, there’s opportunities for reform and investment in the Australian freight sector."

He urges government to:

  • Incentivise more private sector investment in freight infrastructure in commercially-oriented projects that share risk between government and the private sector.  An example is the Moorebank Intermodal Terminal, where the Commonwealth is working with partners Qube and Aurizon to create a nationally-significant and largely privately-funded freight asset that will be open access and multi-user
  • Be targeted, strategic and ‘play the long-game’ in freight infrastructure investment to deliver productivity and economic benefit. This includes existing "brownfield" infrastructure that merits investment to lift efficiency, remove bottlenecks or build capacity.
  • Implement road pricing for heavy vehicles where direct user charges genuinely reflect the cost of infrastructure, its maintenance and expansion, and ultimately, drive the best investment decisions. Distance-based charging for heavy vehicles has been used in New Zealand since the 1987.
  • Plan and secure suitable freight corridors, as part of urban planning, and ensure provision of efficient road, rail and port interfaces. The Federal Government’s seed funding and securing of corridors for the Inland Rail project illustrates the point
  • Further develop the rail modal share targets that some state governments have identified, and back these up with substantial policy changes that will enable them to be met. For example, New South Wales has set a target to double the proportion of freight carried on rail on key freight corridors by 2020. Such an approach is consistent with policy initiatives in the Europe and the US.

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