COMMENT: As already reported in Rail Express, for a second year in a row there is no new funding, nor any new initiatives for rail in the federal budget. And it’s hard not to be cynical about the government’s future intentions for rail transport.
It would seem just a little more than eighteen months after telling anyone that would listen that he wanted to be known as Australia’s ‘Infrastructure Prime Minister’, Tony Abbott’s hashtag has now been changed to ‘Tony’s Tradies’.
I’m not sure how Liberal Party spin doctors come up with this puerile nonsense, but I think we can see that an infrastructure led recovery was just a passing fad and we are now destined to become a nation of shopkeepers.
It should be noted that there is money in this budget for rail projects. In fact, spending on rail will increase in the 2015/16 budget by 46% from $740m in 2014/15 to $1079m, however rail investment is forecast to peak at $1303m in 2016/17 before tailing off to $674m in FY 2018/19.
But this is nothing that we didn’t already know about, and most of the projects included in these figures have been announced several times over already.
The Abbott Government further bolsters its anti-environment credentials by seeing out the decline in Federal co-funding of urban passenger rail with contributions to state government rail projects effectively halved this coming financial year from $657.4m to $329.1m, fading away almost completely by 2018/19 when only a meagre $17m is committed.
Inland Rail only gets a fleeting mention with a re-statement of the $300m earmarked by the previous Labor administration, some of which has recently been freed up to ARTC. There are hints that some further commitment can be expected in late 2015/early 2016, which should coincide nicely with the next federal election campaign.
Tied in with the fortunes of the Inland Rail project could also be a possible sell-off Australian Rail Track Corporation (ARTC) next year. In fact in the lead up to the budget announcements you could have been forgiven for thinking this was a done deal, with an estimated price tag of around $4bn.
As it turns out for now, the government will undertake a scoping study in 2015/16 on options for the future management, operations and ownership of ARTC with recommendations to be considered as part of the 2016/17 budget process.
Quite where the figure of $4bn comes from is anyone’s guess given a substantial part of the assets are subject to 50-year leases and in the most lucrative part of the network, the Hunter Valley, there will be downward pressure on costs as coal miners continue battle subdued global trading conditions.
A couple of wits have already contacted me to suggest that in the context of the scoping study for the proposed privatisation of ARTC, the rail industry should perhaps raise the concept of privatising the main parallel interstate highways, further suggesting that it might fix all the government’s budgetary woes in one hit!
The government seems further intent on shooting itself in the foot with part of the budget strategy looking at a major freeing up of coastal shipping again to foreign influence which has the potential to have a significant impact upon ARTC’s bottom line.
The freeing up of coastal shipping of course also casts a cloud over the potential viability of the Inland Rail route.
For those that think federal budgets are all about smoke and mirrors, you wouldn’t be far wrong and there are a couple of real gems in this year’s machinations.
One deft little touch is that where the Federal Government has co-funded urban rail projects with State governments, and these projects have come in under budget, it has chosen to reprioritise these savings into road projects.
A case in point is the $187.5m in savings from the Regional Rail Link that have been redirected into highway improvements.
Robbing Peter to pay Paul?
And of course the overall budget bottom line has been made to look a staggering $1.5bn better by the demand that the Victoria now return the funding originally earmarked for the East West road link, despite the Vics allegedly previously been told they could hang on to the cash.
It’s good to see the Australasian Railway Association being a bit more proactive than usual, feisty even, with its response expressing its disappointment in the budget, which it says announces the lion’s share of transport infrastructure funding going toward roads, and no new money for the important rail infrastructure needs of the country’s biggest cities.
Interim ARA Chairman Bob Herbert said rail was swiftly approaching a funding cliff that would see key integrated rail infrastructure projects “fall off the policy agendas of our biggest and fastest growing cities”.
“Decisions such as these are disincentives for the rail industry and its constructors and suppliers to work efficiently and effectively,” he said.
About time people!
There are one or two positive aspects for rail in the budget and I’ll be taking a look at them and some of the issues raised above, in more detail over the next few weeks.