SHOCKWAVES from the bitter war between Toll and Patrick brought Tasmania's surviving 726 km 1067mm gauge network to the brink of permanent closure last month.

Through a media statement, Pacific National Tasmania warned the state government in Hobart and the federal government in Canberra that without an injection of public funds to upgrade and maintain the track it would cease operations.

Major rail users such as the Norske Skog Boyer paper mill at New Norfolk warned Tasmania's infrastructure minister Bryan Green that to keep their plant viable they would have to use B-Triple road trains, which are barred from the island's roads and also from Victoria and most of NSW because of their 60m length. 'Where is the economics in that?' asked Tasmanian Chamber of Commerce Chief Executive Damon Thomas. 'Why spend hundreds of millions of dollars building new highways to cope with huge trucks because A$78m couldn't be found to fix the existing rail network?'

At the eleventh hour, the federal government did offer A$78m for a 10-year upgrade on December 12, provided Tasmania contributed A$4m annually for maintenance, probably undertaken by Australian Rail Track Corp. As part of the deal, PNT would have to invest A$38m in new locos and wagons.

The federal proposal also required PNT to hand back the network to the state, having acquired it under a long lease less than two years ago. But the state government reacted angrily, accusing Canberra of simply diverting funds already promised for roads rather than putting in new money.

Victoria faces a similar crisis, having sold the non-metropolitan network to Freight Australia for A$163m in 1999, which then sold it on to Pacific National for A$285m in 2004. Philip Lovel of the Victorian Transport Freight & Logistics Council said on December 1 that maintenance and upgrading costs were 'overwhelming the rail network', and when PN publishes its freight tariff 'it will be so unaffordable we will be in a terrible situation.'