Grain Industry Advisory Council 8 August 2008 Rail

Grain Industry Advisory Council 8 August 2008 Rail Industry Issues PART ONE

Victorian Rail Industry Structure • Victorian rail network owned by Victorian Government through Vic. Track Interstate rail network (825 km) leased to the Australian Rail Track Corporation, a Federal Government corporation that owns or manages most of the national interstate rail network Urban rail network (400 km) leased to Connex Intrastate, non-urban rail network (3, 670 km; 2, 300 km freight only) leased to Freight Australia in 1999; Freight Australia (including track lease) sold to Pacific National in September 2004 Government bought back lease of intrastate, nonurban rail network for $133. 8 million in May 2007. Regional intrastate rail network now leased to and managed by V/Line under Regional Infrastructure

Victorian rail freight operators • Pacific National (PN) – interstate and regional freight trains Queensland Rail National (QRN), SCT – interstate freight trains El Zorro - Warrnambool container train, AWB grain trains, shunting and maintenance trains Southern Shorthaul Rail – shunting and maintenance trains

Victorian rail freight • The regional Victorian rail freight task is over five million tonnes per annum comprising: export grain (2 million tonnes average nondrought year) 1. • 2. domestic grain (0. 3 million tonnes) 2. export containers (1. 8 million tonnes) 3. industrial freight – crushed rock and cement (0. 9 million tonnes) 4. paper products (0. 4 million tonnes) 5. logs (0. 2 million tonnes)

Grain • In non-drought years, the most significant component of the Victorian intrastate rail freight task is grain (in tonnes) Large components of the rail network are retained purely to service the grain industry Changes occurring in the grain industry have a major influence over the rail freight network

Victorian rail freight • Average freight task on Victorian regional network has fallen by estimated 20% since late 1990 s (before privatisation) despite strong State economic growth Attributable to increased road competition (particularly B – doubles and now pressure for B-triples), continued Government $ on road network and seasonal conditions Degradation of freight network also a factor – affects operating efficiency and causes loss of customer confidence Only traffics to increase are export containers, logs and quarry products Major declines in grain, cement and paper - petroleum, gypsum, sand, fertiliser no longer on rail

May 2007 Lease buyback • Buy-back enables State to better manage investment in network including upgrades and rectifying maintenance backlog Track lease post-1999 privatisation – no specific maintenance obligations for freight-only rail network 1999 -2006 – almost zero major maintenance or investment on freight-only lines – only essential ‘fix when fail’ repairs (State provided $25 m to Pacific National in 2006 -07 for maintenance of freight-only rail network) Today – some lines inoperable (5% of network), others nearing same, most under speed restriction mainly due to very poor timber sleeper condition

Rail Freight Network Review • RFNR recommended investment in the network • based on the following categories: 1. Platinum (the base passenger, ARTC and Aus. Link network assumed to be retained and maintained) 2. Gold (core grain network) 3. Silver (secondary grain network) 4. Bronze (marginal grain network) Grain network recommendations developed in consultation with grain industry. • The recommended total investment package requires capital of $83. 5 million and three years ongoing maintenance cost of • $57. 2 million for a total of $140. 7 million.

RFNR recommended network