February 2nd 2008

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Articles from this issue:

COVER STORY: TRANSPORT: End of the line for rail freight?

FINANCE: Sub-prime mortgage crisis paralyses credit system

EDITORIAL: East Timor's new beginning

CANBERRA OBSERVED: Economic storm facing new government

NATIONAL AFFAIRS: A stern test for multiculturalism

CULTURE AND CIVILISATION: Family values overlooked in the market-place

STRAWS IN THE WIND: Reading the signs for the New Year (Through a hedge backwards...) / Hijacking foreign aid / Sub-prime lending crisis / Was Hitler's defeat inevitable?

AFGHANISTAN: Confronting terrorists and the drug trade

WOMEN UNDER ISLAM: Silence of the "sisterhood"

EDUCATION: The threat to our literary heritage

OPINION: Who is the real Kevin Rudd?

Global warming? Stop and think! (letter)

Flaws in our voting system (letter)

Who is running the country? (letter)

Barack Obama on foreign despots (letter)

Alternative to capitalism and communism? (letter)

AS THE WORLD TURNS: Juvenile crime in Britain / Feminist magazine's anti-Israel bias

GOD AND CAESAR: Selected Essays on Religion, Politics, and Society by Cardinal George Pell

BOOKS: CULTURAL AMNESIA: Notes in the Margin of My Time, by Clive James

THE TORCH AND THE SWORD: A History of the Army Cadet Movement in Australia, by Craig A. Stockings

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COVER STORY: TRANSPORT: End of the line for rail freight?

by Antony O'Brien

News Weekly, February 2, 2008

Victoria's run-down regional rail infrastructure risks collapsing within five years, former Deputy Prime Minister Tim Fischer has warned.

An inquiry, recently completed by Mr Fischer into the shortcomings of Victoria's railways, attracted submissions from all around Australia, and has raised serious questions about the impact on railway services of deregulation and National Competition Policy. Antony O'Brien reports.

The long-awaited Victorian Rail Freight Network Review, conducted by former Deputy Prime Minister, Tim Fischer, is completed.

The good news is that the report gives a big tick to a potential future for rail freight operations in Victoria. The bad news is that:

• the rail system has "systemic inefficiencies";

• the rail system has decayed almost to a point of no return, requiring urgent reform and "rehabilitation", with freight speeds unacceptably slow;

• the system is anti-competitive, requiring "urgent and long-term reduction in access charges"; and

• user access to the rail network is restrictive.

The report, Switchpoint - The Template for Rail Freight to Revive and Thrive, catalogues a staggering series of systemic failures, including trains, in temperatures above 36 degrees, being unable to operate on some lines and, elsewhere, having to reduce their speeds to 20 km per hour (a good bullock-team makes 6 km per hour).

Corporate vandalism

Then, in what Fischer has termed "corporate rail vandalism", a promising new tourist branch-line from the river-port border-town of Echuca to the town's wharf was not only decommissioned, but partially dismantled to prevent trains from using the line.

Unacknowledged in the report is that privatisation and National Competition Policy's deregulation programs, rather than easing access to, and improving the efficiencies of, the Victorian railway freight network, instead re-created a monopoly, increased charges and precipitated a near collapse of the whole freight system.

During the greedy days of deregulation, the National Competition Council, between 1997 and 2006, gave Victoria about $1.3 billion for complying with deregulation of rail, gas, electricity supply, ports, liquor-licensing and shop trading-hours.

The council's monies "for access to rail infrastructure" constituted part of the Commonwealth Government's hand-outs of millions of dollars during this decade.

Some years before, on July 19, 1990, the then Labor Prime Minister, Bob Hawke, in a speech, "Towards a closer partnership", foreshadowed the direction of the future National Competition Policy reforms, through which he envisaged streamlining Australia's rail systems.

However, this happened only in some states and some areas. Central to Professor Fred Hilmer's National Competition Policy guidelines for Australia's economy was the concept that third parties should have access to "certain essential facilities of national significance which exhibit natural monopoly characteristics such as ... rail networks ... so as to encourage competition in the provision of allied services such as ... rail transport service supply".

To receive the National Competition Council's dollars for rail compliance, the states dismantled their monopolistic control of railway networks, allowing new or existing companies access to tracks, facilities and infrastructure.

Proponents of deregulation were convinced that this would open up competition for railway services in freight, passengers and tourism. All rail participants would faithfully abide by the "Competitive Conduct Rules". The public would enjoy better services, lower costs, speedier freight services, new entrants, and perhaps new rail offerings. Well, that was the theory. West Coast Rail (Victoria), until its demise in 2004, was able effectively to compete with road and air transport between Melbourne and Warrnambool.

In a surprise for advocates of National Competition Policy, Fischer's report has said that, in 2007, the Victorian rail network charges for user access "are not competitive ... are discouraging grain investment and having an adverse effect on rail operator viability..." (p.6), and that reduced barriers to rail entrants were needed (p.10).

One-stop shop

Fischer's recommendation (no. 23) suggests "a one-stop shop" for railway-users wanting to access the network. The one-stop shop concept dates back to 2000, when the deputy executive director of the National Competition Council, Debra Cope, said at the Victorian Infrastructure Conference, "Access to the Rail Infrastructure" (September 14, 2000) that "a one-stop shop" had been agreed to by state ministers.

What then has been the benefit of the National Competition Council's "fistful of dollars" payments to the states, if so-called rail "reform" now denies access onto the system, has created a duopoly or near monopoly for one or two powerful companies, and has failed to deliver better freight services?

How is it possible that the state of Victoria pocketed dollars for compliance with NCP rail policy, then sold off the network to Rail America for $163 million in 1999, pocketing those monies, then re-purchased the rail network during 2007 for $133.8 million, made a profit on the deal, then charges poor old Farmer Brown additional freight imposts for using the railway that his grandfather paid for 100 years ago?

How in this muddied process did the Victorian rail monopoly deregulate and unravel while red-tape increased and the system metamorphosed into another near-monopoly? As all this transpired, successive Victorian governments pocketed millions of National Competition Policy dollars for supposedly streamlining and reducing red-tape rail compliances; in short, the government enjoyed a long and free lunch. Now it is payback time.

The Fischer report identified potential conflicts of interest and chaos with trains seeking access to tracks and rights of way into Melbourne, and the inability to have two trains operating on tracks that once permitted numerous north-bound and south-bound trains to pass.

The report showed that, with the removal of the second track between Kyneton to Bendigo, freight trains cannot operate over that 70km section in daylight hours. With passing loops removed from tracks between Seymour and Shepparton, that 83km section now restricts train movements, adds to costs and compounds inefficiencies.


The accumulation of such short-sighted decisions has almost crippled Victoria's once efficient system, while destroying the network's ability to handle both freight and passenger traffic.

More than a hundred organisations and individuals submitted material to the rail review. Queensland Rail (QR National) predicted a rapid increase in rail freight demands and saw Victorian rail offering "critical links" to the rest of Australia's rail network. QR, in part, urged upgrades between Melbourne, Geelong and Adelaide, to allow double-stacking containers for faster uninterrupted freight movements and the re-opening of the Portland to Mount Gambier line.

SteamRail, a rail tourist operator, argued that de-commissioning passing loops was a deliberate ploy to destroy competition from other rail operators. SteamRail provided fascinating insight into a decayed monopolistic rail network. It showed how other operators were able to delay, alter and impede at the last minute its planned tourist train operations, and even to dictate its terms of access. SteamRail, of course, had no recourse to fair hearings and no compensation for its losses. (Australia's consumer watchdog, the ACCC, should note this submission).

The Victorian rail system requires serious attention and proper funding to ensure its infrastructure, tracks and facilities are adequate. The government must pursue a proactive role to ensure that new entrants and operators have fair access to, and can afford to use, the rail network. For example, between 1983 and 2003, a privately-operated annual Kindergarten Train from Melbourne to Bacchus Marsh provided thousands of children steam-train outings. But these abruptly ceased once charges leapt to $11,000 per train, making the non-profit service unfeasible.

Fischer has proposed awarding a series of ratings (platinum, gold, silver and bronze) to various rail corridors throughout Victoria, according to the degree to which they are restored and improved. This is a sound action plan. Successive Victorian governments have failed in their duty of care to uphold and service this once great public asset.

The Brumby Labor Government faces several challenges:

• to restore the Victorian rail network to a competitive operating entity capable of moving anticipated growing volumes of freight, including grain, fruits, minerals, timber and briquettes for export;

• to allow a variety of service-providers fair access to the rails so that they can operate freight and passenger services without hindrance; and

• to dismantle the prohibitive cost structures and bureaucratic interference stifling rail freight, passenger trains and tourist operators.

Victoria's regional rail infrastructure, established and paid for by our grandparents and great-grandparents, dating back to 1854, is on the verge of disintegration. Tim Fischer has predicted that if nothing is done it is bound to collapse in three to five years.

In its heyday, the Victorian railways were world class in their capacity to transport goods and passengers. In the past 50 years, however, Victoria's railways have withered away as freight movements of livestock ceased, small goods and parcel services vanished, and branch-lines fell into disrepair, after which a scorched-earth policy has seen all remaining infrastructures dismantled. Meanwhile, government policies have given lip-service to maintaining the rail network.

Today, in terms of freight-handling, Victoria's rail network is a third-world branch-line and, when and if the day's temperature is not too hot, snail-trains meander along broken tracks between Perdition and Nowhere.

Here is the challenge for the Brumby Government - to abandon paying mere lip-service to better railways, and instead to roll up its sleeves and throw the switchpoint from Perdition to Phoenix.

All aboard?

- Antony O'Brien is an historian, freelance writer and author of Shenanigans on the Ovens Goldfields: the 1859 election (Artillery Publishing, 2005).

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