Freight Rail, Legal & Compliance, Operations & Maintenance, Passenger Rail, Rollingstock & Manufacturing, Safety, Social Governance

Anger over rail safety accreditation fees

Rail safety accreditation fees

Rail safety accreditation fees are set to skyrocket for small rail freight operators due to changes proposed by the Office of the National Rail Safety Regulator (ONRSR) to come into effect on July 1.

The agency, set up 10 years ago to reduce the cost of compliance, has traditionally charged accreditation fees based on train kilometres travelled by rail operators and track kilometres under management by access providers (such as ARTC).

The planned new charging regime will be a tiered system, where those accredited organisations in each tier pay for a percentage of the operating costs of ONRSR.

With the NSW and Victorian governments withdrawing funding of ONRSR, after taking into account other government funding to regulate the tourism and heritage sector, it is understood that the agency still needed to increase fees by 30 per cent on the 2020/2021 charges to make up for the shortfall.

Shadow transport minister, Senator Bridget McKenzie, said the model was set to hit small rail freight operators with increased costs by up to 700 per cent.

“And naturally, the only way for businesses to survive will be to pass those costs on to consumers,” she said.

“The Federal Government must step in and fix the cost recovery model which will unfairly punish small rail businesses.

“Australian consumers will be the ones left out of pocket as our private rail freight operators are forced to pass on those costs.”

Visiting Ettamogah Rail Hub near Albury, McKenzie said under the proposed new tier system, the cost increase for small freight operators like this transport facility was cruel.

“Small, family run businesses are the backbone of Australia, and the Government should be supporting them, not trying to send them broke,” she said.

“Ultimately, this cost shifting exercise from state governments onto the private sector will create an uncompetitive market for smaller rail freight operators and impact the viability of our regional freight rail networks.”

McKenzie said the proposed rise in rail safety accreditation fees had been exacerbated by the regulator taking expensive legal action against government rail operators.

“These legal compliance costs should be passed onto the public sector operators, not small and family-owned private sector businesses,” she said.

Ettamogah Rail Hub chairman Colin Rees said the move resembled an “open cheque book for ONRSR”.

“There’s now a positive incentive for them to gold plate their services, as customers are obliged to pay,” he said.

“Our annual fees will rise from $16,000 to somewhere between $100,000 and $140,000,” he said.

Other rail operators understood to be facing massive fee increases include Bowmans Rail, SCT Logistics, Southern Shorthaul Rail (SSR), QUBE and Watco.

SSR rail director Jason Ferguson said costs for the company would increase from $119,000 of accreditation fees in 2020/2021 (the base year ONRSR based costs on) to $700,000 per year.

“The existing model for charging accreditation fees – based on train kilometres travelled by rail operators and track kilometres under management by access providers – is fair,” he said.

“We are proposing that the existing charging regime remains but with a 30 per cent increase across the board to make up for the government funding shortfall, and that the proposed tier system is abolished.”

Ferguson said that the original rise in fees had been cited at about $400,000 per year, and now the figure was $700,000.

“Over the last two years the accreditation fees have gone up 20.3 per cent without any consultation. The whole show is absolutely out of control,” he said.

“ONRSR has spent a significant amount of our money developing this new tier-based approach that will deliver perverse outcomes.

“Under the guise of a reduction in government contribution for rail regulation, ONRSR has spent a sizeable amount of money developing a different philosophy with how they charge access fees.

“One large government passenger rail operator will go from paying around $4.3 million per year in accreditation fees back to $2.2m per year.

“The regulator’s risk tools and tier classifications are heavily flawed and it has come up with a ridiculous regime. It’s over a half a million dollar increase for us each year.

“From late 2024 we will move 100 per cent of the grain in NSW and Victoria that goes to make bread – this will impact on the cost of living and further push up prices”.

Ferguson said that the ONRSR was currently “spending a fortune” prosecuting three government statutory bodies and the ex-employee of a fourth government statutory body.

“Yet it says that rail freight is higher risk and should pay more,” he said.

“Ironically, under the model, it is rail freight that is contributing heavily to paying for the cost of these prosecutions of government statutory bodies.

“Under the old regime where the regulator was partially funded by government, this system at least provided some accountability over costs.

“Under the new regime this accountability is removed, and we are concerned about the risk of future increases without care as it is apparent that they feel industry will just foot the bill”.

An ONRSR spokesman said that the new cost recovery model was the result of many years of consultation and input from industry and government.

“It was always intended, with the creation of a national rail safety regulator, that safety accreditation fees would be paid by industry to alleviate continuing cross-subsidisation from government,” he said.

“Industry has been a part of the development of the new model since 2018.

While it is inappropriate for ONRSR to comment on individual operators’ fees, it is correct that the new cost recovery model results in fee changes for operators, with some increasing while others decrease.

“The new fee methodology will implement government policy to minimise cross subsidisation among operators. At the same time, it will eliminate taxpayer exposure via the removal of state government subsidies that are in place in several states.

“In addition to addressing the subsidisation issues, the new model also correlates fees based on an operator’s risk profile and the regulatory effort required from ONRSR to oversee the operator.

“The previous (and still current) model of fee calculation has many unintended consequences, including a disparity in rates in different states and significant cross-subsidisation across different operators.

“With the implementation of the new model, ONRSR reduces its overall funding from safety accreditation fees by $1.2m to reflect efficiencies that flow from the risk-based approach.”

The spokesman said there would be a review of how the model is working after its first year of operation.