Keynote Address: AusRAIL 2014 Making Innovation Work



11 November 2014

Perth Convention and Exhibition Centre

Thank you for the warm welcome Bryan (Nye, CEO, Australasian Railway Association) and good morning everyone.

AusRAIL 2013 in Sydney was my first major speaking engagement following my appointment as Deputy Prime Minister and Minister for Infrastructure and Regional Development.

It is a pleasure to join you again for this year's conference.

As you all know, in Australia and across the globe, rail continues to be a vital link in the transport chain that connects commerce and communities, supporting local, regional and national economic growth.

Rail freight supports our agricultural businesses and export industries, and it is key to our national competitiveness.

2015 is likely to be a big year for rail.

It is appropriate—given your conference theme: Making Innovation Work—that we come together in Perth.

As Bryan noted in the conference programme, Western Australia is very innovative in rail. This state is internationally renowned for having the world's best heavy rail freight network—derived through cutting-edge train operation technologies.

West Australians and, indeed, all Australians, can be proud of the achievements of companies like Rio Tinto, BHP Billiton and of course Fortescue Metals.

These are companies which pride themselves on technologies that drive productivity and efficiency in the mining sector.

Our mining companies operate the heaviest haul rail networks on the planet, and we are seeing world-first advances in the length and weight of driverless, automated trains towing their loads across the Pilbara.

Indeed, Australia-wide, the rail freight sector now moves more freight further than any other transport mode in Australia and now handles a 40 per cent larger share of the freight task than the trucking sector.

In fact, the story being told in the ARA's and the Bureau of Infrastructure, Transport and Regional Economics latest report card on the Australian rail sector, Trainline 2—which I have the pleasure of releasing today—is a story about the increasingly vital role rail is playing in delivering freight.

In tonne-kilometre terms, rail now accounts for almost half of all domestic freight activity, up from around 36 per cent at the turn of the century.

The rail industry moved over 1 billion tonnes of freight in 2012–13.

It would be easy to say that such growth is just a result of the mining boom.

But I am pleased to say the Bureau's data indicates intermodal freight is recovering from the global financial crisis and in 2012–13 intermodal trains moved 28 million tonnes of freight, an increase of 67 per cent since 2009–10.

The story for urban passenger rail is also good.

For the five major capital cities, urban rail passenger-kilometres increased by one-third between 2004 and 2013, helping lift the share of metropolitan public transport nationally from 9 to 10.5 percent.

I am advised by the Bureau that both Transperth and Victoria's regional operator, V/Line, are reaping the rewards of the significant investments they have made in their networks, with both operators having more than doubled their patronage in the last decade.

In Perth, with the opening of the Mandurah rail line, urban rail passenger kilometres in 2013 are 2.5 times what they were in 2004, helping take the share of public transport from 5.2 per cent to 7.7 percent in 2013.

I congratulate the ARA and the Bureau for their collaborative efforts in putting together this report providing valuable information for government and industry on the usage and performance of Australia's freight, urban and non-urban passenger railways.

I would also like to thank participating ARA members. Indeed, without the provision of data by industry, Trainline 2 could not be published. I encourage ARA members to continue to provide their support for this important research.

The report is now available on the Bureau's website.

Our Government's drive is to ensure we have the transport infrastructure in place that will allow our nation to prosper well into the future.

Rail has played, and will continue to play, a key role in building this nation.

The Coalition has long been committed to supporting a more integrated and productive Australian rail industry through policy reform.

It was under the Howard Government that the Australian Rail Track Corporation was created after the Commonwealth and State Governments agreed in 1997 to the formation of a ‘one-stop shop’ for all operators seeking access to the National interstate rail network.

It enabled, for the first time, a single body to drive co-ordinated, planned and targeted investment in modernising the interstate rail freight network.

This Government sees freight rail's importance growing rather than declining in moving Australia's freight task.

We want to see more freight carried by rail by ensuring that rail is as competitive as it can be and achieves its full potential.

This means governments and industry need to work together to address some of the constraints preventing freight rail exploiting its many advantages.

Intermodal connectivity is a big part of this. Any improvements that make it easier, cheaper or faster for freight to get from market or port to a rail hub will only enhance the case for using rail.

This isn't about advantaging rail over road freight. It's about ensuring the economy gets the benefit of rail's natural advantages in carrying freight.

An important part of that equation is the removal of red tape and unnecessary costs to industry.

We are determined to get rid of conflicting and contradictory regulations by streamlining environmental approvals.

To that end, the Office of the National Rail Safety Regulator commenced operations in January this year when four of the eight states and territories enacted their Rail Safety National Law legislation and became part of the single national rail safety regulatory framework headquartered in Adelaide.

As a result, operating across those four states and territories is now more efficient, with less regulatory cost.

The Regulator is working with industry to develop a safety risk model and national industry standards which will continue to reduce the costs of regulation.

And this morning I would like to welcome a new CEO on board—Susan McCarrey.

Susan currently serves with the West Australian Department of Transport and her experience in the rail industry, together with her expertise in government policy and regulatory reform will stand the ONRSR in good stead.

I would also like to thank Rob Andrews who has headed up the Regulator since it started operations in 2013. Rob had a challenging and difficult job and he has made an outstanding contribution. Thank you Rob.

The Government's faith in rail as a critical element of our transport infrastructure has been demonstrated in the recent Budget, where we committed over $3.6 billion to rail investment.

The states are also continuing to invest in urban rail and since the federal election, have confirmed some $27 billion in urban public transport projects.

In the coming months we can also expect:

  • Completion of the Gosford Passing Loops and North Strathfield Rail Underpass, the latter will go a long way to increasing the corridor's freight carrying capacity by 50 per cent, with an additional 15 freight trains a day by 2016;
  • the Victorian Government will identify a preferred option for the Western Interstate Freight Terminal, which will be vital to improving the efficiency of existing interstate services and maximising the benefits of Inland Rail; and
  • in Adelaide, work will commence on the Torrens Junction upgrade to separate interstate freight from the metropolitan rail network on the Melbourne-Adelaide line.

I would like to take a moment now to acknowledge that this year marks a ten-year milestone for ARTC.

It was in September 2004 that ARTC took up the NSW State Lease.

Through the interstate and Hunter Valley network, ARTC currently operates and manages over 8,500km of track.

Within five years of taking over the east-west corridor, ARTC's targeted investment programme to improve transit times and increase reliability facilitated year-on-year record rail freight movements between the Eastern States and Western Australia .

The Southern Sydney Freight Line is now operational and Sydney's Metropolitan Freight Network has been integrated into ARTC's network in line with the lease agreement.

Rail freight customers now enjoy greater rail freight access to Port Botany and for rail freight transiting southern Sydney, dedicated 24/7 access.

A massive investment into the Hunter coal chain has also seen billions of dollars in rail infrastructure delivered to support coal growth tonnages that now amount to more than 150 million tonnes a year.

Looking to the future, ARTC is now considering whether there is a commercial case to expand its operations in Queensland.

If commercially viable, a greater role for ARTC in Queensland could assist a more seamless integration of the national network and help with ending the remaining break-of gauge issues across our nation.

This proposed expansion compliments the Government's determination and commitment to further develop the interstate network through the construction of the Melbourne to Brisbane Inland Railway—a missing link in the east coast rail freight chain.

ARTC is also leading the deployment of the innovative Advanced Train Management System, or ATMS, from Port Augusta to Whyalla in South Australia.

Supported by a $50 million cash injection from the Government, once operational, this system can be extended to other parts of the ARTC network.

This will bring interstate rail into the modern era by replacing physical train control and signalling systems with an advanced digital system using global positioning, 3G broadband communications and satellite technology.

ATMS not only improves safety, but also boosts productivity by allowing more efficient use of existing infrastructure.

ARTC provides national leadership in working with users to prioritise new investments, and ensuring that these new investments are adequately maintained to meet industry's long-term needs.

It is a model that is working well for the nation, and I acknowledge that other track managers around the country are also working hard to ensure their networks meet the needs of their customers.

Having first class below rail managers is essential to create confidence in the future of rail, and by doing so, provide the environment for above rail operators to invest in new, more efficient rolling stock and innovative services.

I note that in his address to the Australian Logistics Forum earlier this year that the ARTC CEO, John Fullerton, observed that in his 30 years of experience, the last 10 years has seen enormous change in terms of the modernisation of the freight rail industry.

ARTC is continuing this work. With a vision to make rail the mode of choice in the national logistics chain, ARTC has been working hard to engage more with its customers and the companies who use rail in Australia, to capture a greater share of the freight market.

We must keep the momentum going and I can assure you that I am committed to supporting the continuing growth of an efficient and dynamic rail freight industry in this country.

The role of government in supporting an innovative, high performance rail industry goes beyond just finding the dollars.

Governments must take the lead in planning for the type of transformational projects where the benefits flow on for generations.

The Melbourne to Brisbane Inland Railway is a game-changer.

When I was last Transport Minister in the Howard Government, I completed the North-South Corridor Study to identify the best route for the line.

The project languished under the previous government—but we have revived it with gusto.

I have fast-tracked the formation of an Inland Rail Implementation Group led by former Deputy Prime Minister John Anderson. The aim is to get construction underway in our first term.

This year's budget confirmed our $300 million commitment for pre-construction work.

The Implementation Group will provide me with recommendations including how to maximise private sector interest in the project and the optimal mix of public and private sector funding.

A financial advisor has been appointed to provide expert advice and carry out preliminary market engagement.

The Implementation Group is also considering how the budgeted $300 million can be used to target early works that provide an immediate benefit to the existing rail network and generate an early economic return.

While the work of the Implementation Group is being guided by the ARTC's 2010 alignment study, the advice from the Implementation Group will go much further.

It will consider the feasibility of a 24/7 dedicated link to the port of Brisbane, and future proofing the line to allow heavier, longer and higher trains to ensure the future needs of industry are met.

This will allow double stacking of containers, which has for many years been the practice between Parkes and Perth, and in the longer term consideration is being given to trains of up to 3,600 metres—providing industry with the opportunity to massively increasing productivity.

Once Moorebank Intermodal Terminal and the Western Interstate Freight Terminal are in place, the improvements that Inland Rail will bring through removing barriers to double stacking, will also remove many of the barriers that currently prevent double stacking between Sydney and Melbourne.

Importantly, my Department has also sought independent advice to validate the key assumptions underlying the business case being developed by ARTC, including confirmation that ARTC's engineering design standards are appropriate for ensuring Inland Rail will meet the long-term service features required by users.

I look forward to receiving the Implementation Group's advice and the detailed business case for Inland Rail. This will allow our Government to make the important decisions that will make Inland Rail are reality.

But the national conversation around rail is not confined to freight.

High speed passenger rail connecting Melbourne to Brisbane along our east coast is still a hot topic of discussion and was the focus of an ARA forum at Parliament House on the 27th of October.

To recap… Internationally, high speed rail is talked about as a positive for national economies.

High speed rail on the east coast of Australia is certainly worth a look. It has potential for positive change across the regions, for regional centres and between capital cities.

Boarding a train in Brisbane and being in the heart of Sydney in around two-and-a-half to three hours has some appeal.

For high speed rail to be realised on Australia's east coast a lot needs to go right.

Governments must weigh up public benefit against public resources.

Today, the price tag on high speed rail network is $114 billion—and that's in 2012 terms.

To put that in perspective, its double the size of the government's entire $50 billion-plus infrastructure package, which is already a record investment.

We know from the feasibly study undertaken by our predecessors that a return on that investment is not likely—ever.

And, even if the private sector participates it is unlikely to be realised without significant reliance on the public purse.

And while there is no shortage of companies wanting to build it, there is a dearth of people wanting to put their hand in their pockets.

As a responsible Government we must weigh that against other spending priorities—whether it is welfare, health, education and training, or defence and national security.

I know ARA launched a report at the forum citing a price tag of $63 billion which it says is a reflection of current international construction costs.

But Australia's construction costs are much higher than costs in the range of countries studied. Our environmental processes have traditionally taken years and most materials will be imported to the site.

I am very aware that the topography for some of the projects cited differs from Australia's east coast, that some don't have to enter and exit a city the size of Sydney, and many are in countries with key differences—labour costs are just one example.

We will, of course, be interested in innovative solutions and options that lessen the cost burden this project would place on taxpayers.

We would also need to consider many issues that may arise—including foreign ownership of the network, the potential use of foreign labour, the risk and cost of any necessary Government guarantees, and the role of states and local government in planning and rezoning decisions associated with developments around stations.

In the meantime we are continuing to work with the governments of New South Wales, Victoria, Queensland and the ACT on the best approaches to protecting the identified corridor.

We have to live in the reality that we have inherited. We must think carefully about how taxpayer money is being invested in all the various needs of this country.

Rail has strong future in this country. Simply put, it has to.

To growth the economy, achieve productivity growth and move the sheer volume of products and resources, rail is vital in that equation.

I hope that subsequent generations will look back at our decisions and acknowledge that through collaboration between industry and governments, we laid the groundwork for an effective, efficient and viable rail network, enabling a genuine choice of mode.

Thank you again for the opportunity to speak with you today and I wish you well with your conference.