Victorian regional rail in state of collapse

By Mark Carter

It is not that the signs haven’t been there for some time. In fact, exactly a year ago The Age newspaper carried a long article predicting that Pacific National’s intended pull out from most of its regional Victorian rail business was likely to substantially increase the number of truck journeys on Victoria’ roads - reportedly by up to 100,000.
But if we are to believe Public Transport Minister Lynne Kosky there is nothing to worry about. Inspecting progress on ARTC’s North East corridor gauge standardisation works, Kosky said, “The Brumby Government is taking action to improve our regional rail freight network, increasing efficiency and securing a key link in Australia's logistics system.
"Communities along the corridor from Melbourne to Albury-Wodonga will benefit from a high quality rail service which will boost key regional centres and encourage regional growth and development."
This sounds wonderful, and Kosky appears to be backed by the VFLC which seems to hold a similar rose-tinted view, announcing that it is preparing an advocacy paper highlighting recent and future improvements in the Victorian rail freight industry.
The VFLC says Victorian and Federal Government infrastructure commitments worth $1.2bn since May 2007 have been accompanied by private sector investment in rail equipment and facilities specifically to provide a choice to use rail as a transport option.
“A renaissance is taking place in this mode, slowly but surely, to deliver responsive, efficient service and customer choice,” chief executive Rose Elphick said.
Unfortunately much of the comment is related to improvements to rail access around the Port of Melbourne, and the significant upgrades underway on the ARTC interstate network.
Regional passenger services will definitely benefit from projects such as the Seymour to Albury gauge standardisation, but the majority of freight benefits relate to the interstate sector rather than intrastate.
Ironically infrastructure changes resulting from the Wodonga Bypass construction may see some regional freight actually transfer to road due to changed supply chain conditions.
What both Kosky and the VLFC seem oblivious to is that the regional rail freight market in Victoria has reached a point of almost total collapse. This has been highlighted by the loss to road, in the last couple of weeks, of Pacific National’s Bairnsdale to Geelong log traffic and cement between Waurn Ponds and Lyndhurst in recent days.
In fact there has been a steady decline in the number of freight flows carried by rail in Victoria since privatisation in 1999, to the point that the handful of traffics remaining can almost be counted on one hand.
In the last five years there has been no significant intrastate business attracted to rail other than the recent mineral sands traffic from Portland mineral sands carried by independent rail operator El Zorro.
This decline has occurred despite the Victorian Government purchasing back its regional tracks from Pacific National in 2007 for $133 million and making some reasonable investment in the network since then. It has also offered subsidies to customers for the movement of grain and containers in rural Victoria.
All this has not been enough, and major operator Pacific National has continued to reduce services and hit customers with significant rate hikes, rumoured to be in the order of 50 to 60 per cent.
Industry sources have suggested that other remaining traffics such as paper traffic from Maryvale and the container services to Warrnambool, Mildura and Tocumwal - already running at reduced levels - are also vulnerable.
Obviously alternative rail operators need to be found to pick up some of the business Pacific National does not want, but the biggest problem any potential new operator faces using open access to the network is the lack of suitable rolling stock.
Rightly or wrongly, Pacific National has a monopoly on most of the standard and broad gauge rolling stock assets suitable for use in Victoria - most of which were purchased at less than market value through the various privatisation sales and subsequent purchases.
Any aspiring entrant to the market cannot easily access rolling stock made redundant by Pacific National’s withdrawal from the market, and there seems to be some bizarre expectation that unlike Pacific National (and other operators) a new operator should purchase new rolling stock at full market prices for what are marginal traffics.
Economic rationalists may be jump for joy at such a scenario, but if that is the dogma we are to follow, it just will not work and we might as well shut up shop and transfer any remaining freight to road now.
While the current mess is not necessarily its doing, the Victorian Government has hidden behind a flow of meaningless motherhood statements rather than tackle the problem head on in coming up with solutions to this crisis.
Perhaps one option is for it to look at investing in some rolling stock to lease to other rail operators; after all there doesn’t seem to be much point in investing in a rail network if you don’t have anything to run on it?

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