ARA represents rail in Productivity Commission Inquiry on National Transport Regulatory Reform

The Productivity Commission is undertaking an inquiry into National Transport Regulatory Reform, the reform that established national regulators and national laws for rail, heavy vehicles, and maritime.

Many would be aware that the ARA was a strong advocate for the establishment of a National Rail Safety Regulator. So much so, that the Office of the National Rail Safety Regulator (ONRSR) recently acknowledged previous ARA CEO, the late Bryan Nye OAM, as both the “agitator” and “architect” of achieving a National Rail Safety Regulator in Australia.

Recognising the significance of the inquiry, the ARA has been deeply engaged in the Commission’s process.

The inquiry terms of reference direct the Commission to investigate the economic benefits that have been achieved through the national transport reforms, to examine the implementation of the three national regulators and identify scope for further reforms.

To appropriately respond to the terms of reference, the ARA initially ran four member workshops around the country, engaging industry safety and regulation representatives to ensure a detailed first submission was provided to the Commission in mid-2019, outlining the industry’s experiences to date and highlighting further reform opportunities that will benefit rail. Following the release of the Commissions’ substantial draft report, the ARA provided a second submission with further member input, supporting many of the draft recommendations put forward by the Commission but questioning the Commissions’ view that road and rail freight are not substitutes and seeking clarity around the funding arrangements for the three national regulators.

In early February, ARA chair Danny Broad, general manager Emma Woods, and public affairs and government relations manager Mal Larsen appeared before the Commission at a hearing in Canberra to discuss the National Transport Regulatory Reforms, the Commissions’ draft report and the ARA’s submissions.

The ARA highlighted the social benefits of passenger and freight rail as quantified by Deloitte in the ARA commissioned Value of Rail Report.

Turning to the reform that has been achieved, the ARA acknowledged that the establishment of a National Rail Safety Regulator has led to some improvements, most notably, the establishment of a single accreditation process for cross-jurisdictional operators. However, reinforcing the position put forward in each of the ARA submissions, the ARA stressed that more is needed to allow the regulatory reform benefits to be fully realised for industry.

The ARA went on to highlight three key issues in response to the Commission’s draft report:

1. Support to address Rail Safety National Law (RSNL) derogations but concern that the industry has been through this process recently without a national outcome;
2. The Report’s claims that road and rail freight cannot be substitutes, and the Report’s disproportionate focus on further road productivity and road access reforms, without addressing long standing discrepancies in regulation and access charging that give road freight an unfair advantage over rail freight. The ARA believes this is a detrimental outcome for our national freight task that will make it more challenging for rail to compete in the freight market; and
3. Clarity around government funding of the National Heavy Vehicle Regulator (NHVR), Australian Maritime Safety Authority (AMSA), and ONRSR.

The ARA tabled its support for the Commission’s recommendation that the National Transport Commission (NTC) undertake a review of the derogations from the RSNL but highlighted that while there are more than 80 derogations to the RSNL, the three priority derogations that will provide the greatest benefits for industry if rectified are:

1. A nationally consistent, risk-based approach to drug and alcohol management;

2. A nationally consistent, risk-based approach to fatigue management; and

3. The removal of the mirror law legislation in WA.

Noting that ONRSR recently completed reviews into drug and alcohol management and fatigue, both of which were resource- intensive for ONRSR and industry alike, and did not achieve national consistency because the current structure permits state governments to maintain their own arrangements, the ARA supported recommendations for the NTC to review derogations but expressed concerns as to whether this will achieve regulatory consistency.

Before delving into the Commissions’ draft report claims that road and rail freight cannot be substitutes, the ARA was overt to state that it does not perpetuate the old-style road versus rail debate but rather, must take a national approach with all modes working together to deliver an integrated freight market. The ARA then cited several examples where road and rail are clear substitutes, such as Inland Rail project, where the ARTC business cases forecasts two million tonnes of agriculture will switch from road to rail and that 200,000 trucks will be taken off roads per annum from 2050; the Darwin to Adelaide rail link which now has 90 per cent of the market share of freight movements; the Melbourne to Perth and Sydney to Perth rail links which both have 80 per cent of the freight market and the Moorebank Intermodal terminal which will provide a direct link to the interstate freight network and Port Botany and once at full operation, will have the capacity to shuttle more than one million shipping containers annually between Port Botany and Moorebank by rail taking about 3,000 heavy truck movements off Sydney’s road network every day.

Drawing on these examples, the ARA asserted that road and rail freight are proven substitutes on many routes and trades and should be subject to equal treatment in terms of access pricing and the role of productivity in safety regulation.

The ARA also spoke on the issue of fatigue management, productivity opportunities for rail freight, the need to ensure the Australian Transport Safety Bureau provides value by improving the timeliness of its reports, and how to improve interface agreements.

The Productivity Commission will finalise its report to deliver to government by April 2020.