IN A STATEMENT on May 18, Australia’s Deputy Prime Minister and Minister for Transport & Regional Services John Anderson said the federal government would ’pursue a nationally uniform framework for railway track access arrangements and regulatory and safety regimes for rail transport.’

He proposes to establish this year a national rail access regime, supervised by an Australian Rail Operations Unit to be created within his department. The Australian Transport Safety Bureau is to be charged with investigating accidents - but only on the interstate standard-gauge network linking the five mainland state capitals.

Anderson was responding to a series of reports published in recent weeks that chart the often painful process of railway reform in one of the few countries in the world that never achieved a truly national rail network. The Neville Committee produced Tracking Australia; then there was the Smorgon report Revitalising Rail sponsored by the private sector; and finally on April 13 the Productivity Commission issued Progress of Rail Reform.

Of these, the last has probably had the most influence on federal policy. The PC wants to see the state railways (especially in Queensland) broken down into separate networks carrying urban passengers, bulk freight (meaning coal), and general freight. Long distance passenger train operators would negotiate access rights. Vertical integration would apply in the first two cases, but not to interstate or intrastate freight.

For example, Queensland is urged to separate and then franchise its two major coal-hauling railways based on the Goonyella and Blackwater regions, as well as the Brisbane suburban network. The remaining freight operations should then be privatised.

New South Wales should follow suit with Hunter Valley coal, says the PC. Over in Western Australia, a single manager for all the interstate routes ’implies that the proposed sale of Westrail exclude the track between Perth and Kalgoorlie.’

The problem is that when it comes to Australia’s railways, Canberra proposes and the state governments dispose. Granted, open access has been federally mandated, but the ability of some states to obstruct reform has been well demonstrated in the past.

Anderson described state co-operation as ’crucial to the rail reform process. Some of them are well down the path of privatising rail operations and achieving improved productivity. Most have separated track management from rail operations. But there is still a long way to go. If the rate of reform does not pick up, there is a danger that rail will drop so far behind the road freight industry that it will never be able to attract the necessary level of investment funds.’

This is the nub of the problem. One reason why Australia still lags the US in rail productivity is that much of the interstate network east of Adelaide is bedevilled with a legacy of short passing loops, light axleloads (by US standards), and curves or grades that limit both speed and tonnage.

The Commonwealth has been extremely reluctant in the past to fund rail infrastructure improvements. Between 1975 and 1998, national highways got A$34·5bn from the federal treasury and rail A$1·8bn. Yet rail has 40% of the rail + road intercapital market. But instead of setting up strong vertically integrated operators that could afford to invest in upgrades, as the major US railways have since 1980, the proposed regime would see federal and state government agencies retaining ownership and control of track.

Open access means that the handful of new operators that have emerged - such as Patrick, Toll Rail and Specialized Container Transport - would simply not be in a position to fund infrastructure upgrades - any more than individual road hauliers can fund highway improvements. Yet Anderson said the federal government was ’not prepared to consider additional funds for the sector until it is clear that the states are delivering reforms allowing the benefits of existing infrastructure investment to be harvested.’

So far as rail operations are concerned, the Commonwealth will now push ahead with the sale of its share of National Rail Corp. Australian Rail Track Corp, which has managed the interstate track since 1997 (but only in South Australia and Victoria) is being told to assess ’upgrading options that might increase rail’s efficiency, and the business case for investment in ARTC and non-ARTC owned segments of the interstate track.’

The basic idea is ’to provide confidence that the basic rail infrastructure will be developed to a reasonable standard over time in order to encourage the private sector to commit to serious investment.’ If the proposed open access regime is not working by mid-2001, further options including legislation will be considered. In 2002, the commercial viability of rail operations will be assessed to see whether ARTC can raise its prices so as to fund track improvements out of higher access charges.