MELISSA CLARKE, AM HOST: The ambitious plan to have a major freight rail corridor stretching from Melbourne to Brisbane is all but dead, with the Federal Government walking away from the Inland Rail project, with costs now forecast to exceed $45 billion and timing blowing out to 2037, the Government has pulled the pin. In next week's budget, some of the money will be redirected to track upgrades, but plans north of Parkes are on ice indefinitely. The Minister for Infrastructure, Transport, Regional Development and Local Government joined me earlier. Catherine King, thank you very much for speaking to AM this morning.

MINISTER FOR INFRASTRUCTURE, TRANSPORT, REGIONAL DEVELOPMENT AND LOCAL GOVERNMENT CATHERINE KING: Good to be with you.

CLARKE: Can you tell me why the government is walking away from the vision of Inland Rail?

KING: Well, as you'd be aware, when we came to Government, we inherited a project that had been started without having any of the planning work done, any idea about where it was going to start and finish, and it was frankly underfunded. The first thing the board, of the then ARTC network who was building Inland Rail at the time, said when they came to see me, is this going to need a lot more money, and when I asked how much, they couldn't tell me, which is a pretty dire position for an Infrastructure Minister to be in with an infrastructure project. So we did the hard work. We got Kerry Schott to come in and, again, do a really big piece of work as to how we could actually deliver this freight project. What she said to us is that she couldn't be confident, but she felt it would cost possibly another $31 billion, but we needed to do the work to find out how much that actually was going to be. We've now done that work. We've had independent actuarialists come in and have a look at it. They've told us to finish it, it will cost an additional $45 billion. What freight operators are telling us is that where we want to put investment at the moment is actually in the existing freight network, to get Inland Rail to Parkes, which is what we've been doing. So basically this project, from the start, from when we came into office, we've been having to manage, frankly, what has been a bit of a mess, and we're now making the decision to prioritise getting it to Parkes, preserving the corridor beyond that, and the intermodal terminals beyond that, and really delivering better resilience...

CLARKE: We'll come to that in the moment. I'll come to that in a moment. But as you say, there was a reassessment when the Albanese Government was elected, and in 2023 you did have an overhaul gollowing that review by Kerry Schott, you changed the governance and how it would be delivered. So why couldn't you proceed from that point forward, or make the decision then not to go ahead What's gone wrong over the subsequent two years?

KING: Well, two things we said is we'd always said we'd prioritise building it to Parkes, so we've really got on with that, and then do no regrets work beyond that. Start getting the planning work, starting to get all of the work underway, to get an idea about how much it was actually going to cost, so we could make a decision about what to do next. Now that work's been done and we're making that decision that will preserve the corridor. We'll get that gazetted. We'll continue to do the planning work. We'll continue to preserve the intermodal hubs around Parkes, Gowrie and Ebenezer, and work our way through the land of that. But really, in terms of commitments of additional money for construction, we're prioritising going to Parkes, but also reinvesting some of that money in the existing, 150 year old rail network, which has been failing and is pretty important to get  more freight moving across the country.

CLARKE: So that will be all south of Parkes. Does this mean Queenslanders just have to accept that there will be more and more freight on the roads in the future? Is that what they're being left with?

KING: No, not at all. Obviously, there is already an existing north-south freight network, which is owned by the Government, the Australian Rail Track Corporation owns that asset. It's been failing. It's 150 years old. It's had no to minimal investment for a long time. Now we've seen Broken Hill was out more recently, and that cost us...

CLARKE: But even with the redirection that you are talking about now, that will go to areas south of Parkes. So we're not going to see the vision that had been put in place, that would go through regional Queensland and through to Brisbane. So the future, we're talking over the next couple of decades, there's not going to be greater capacity for freight to get off the roads is there?

KING: There will be improved capacity in the existing network. What we have also announced is a $55 million program to actually look at, and try and incentivise, getting more freight onto that existing network. But I want the existing network to work. It has been down a number of days, whether it's been from floods, whether it's been from signaling failures, and a range of things in terms of that network. So reprioritising some of the money that would have gone north from Parkes into the existing network, including through Queensland, we think is a smart decision to do to get more freight onto rail, to improve the resilience of the existing network. And that's really what the government has made the decision to do.

CLARKE: Catherine King, thank you very much for speaking with am this morning.

KING: Really good to be with you.