Freight Rail, Passenger Rail

Cormann defends Inland Rail spending

Finance minister Mathias Cormann says an off-budget $8.4 billion Inland Rail investment is justified, despite the Australian Rail Track Corporation saying the project will not directly pay for itself.

Cormann said on Tuesday the project would essentially pay for itself, because in addition to a direct uplift in ARTC revenue, Inland Rail will substantially lift the value of the ARTC, which a future government will be able to sell.

Inland Rail will connect Brisbane and Melbourne with a continuous, high-capacity rail link.

Comprising a mixture of new track construction, and upgrades to existing track, Inland Rail is designed to better connect key agricultural and manufacturing centres in Queensland, New South Wales and Victoria with import and export markets.

The project will also improve freight movements on the country’s north-south, and east-west corridors, by cutting out the bottleneck of Sydney’s rail network.

“In terms of the expectation of whether or not there is a positive return, it is not only a matter of the cash flows, that is the revenues,” Cormann told a senate estimates hearing in Canberra yesterday. “It is also a matter of the impact of the expected future capital value, the expected future sales value.

“That is something the Labor Party would be well aware of because that is the basis on which you in government classified the investment in NBN as an equity injection. We expect the ARTC to continue to deliver a positive rate of return to the Commonwealth.”

The finance minister’s comments came a week after the ARTC’s chief executive, John Fullerton, confirmed to senate estimates that the project would not directly pay for itself.

“[From] a strict ARTC point of view, no, the revenues that flow to us wouldn’t cover the full capital cost and provide a return,” Fullerton said.

Cormann faces increased scrutiny over Inland Rail’s financial viability because the Government is funding it through “equity funding”, which means its cost will not add to the Budget’s debt levels, but comes with the assumption the money will be recouped.

7 Comments

  1. The “NTR Inland Rail” proposal is a shorter, flatter and straighter than the route being developed by ARTC. Presumably this will cost less and give better streams of Income than the ARTC proposal
    “NTR’s solution is 1595km long (approximately 135km shorter than ARTC) with 1100 metres lower elevational lift.”
    “Operational modelling shows NTR’s solution is 30% more efficient than the ARTC proposal and 95% more efficient than the existing Melbourne – Sydney – Brisbane coastal rail route.”

  2. Apart from the future capital value of the rail network, there is another financial aspect which surprisingly is not mentioned in this article: Presumably the Inland Rail Project is going to divert a significant quantity of freight from the road system on to the rail system. Over time the savings on road maintenance and road congestion could quite possibly amount to billions of dollars.
    It is highly unlikely that passenger revenue raised on the rail networks of our major urban areas will ever equal the operating costs of those networks. If these urban rail systems were closed because of such a narrow financial assessment the cost to the affected communities would be astronomical.
    The finance minister has definitely looked at the overall benefits of rail freight, not just revenue.

  3. That route is rubbish too. The aim should be to 100% of the interstate market not 20%. Route should look like a figure 3 with the triple point near Blaney.

  4. Sadly ARTC is not removing all rail-road level crossings on their project. A once in a generation chance to improve efficiency and reduce congestion.
    So a triple level rail overpass is not very likely anywhere near Blayney.
    What is happening at Parkes where both proposals cross the East-West Corridor railway line?

  5. By triple point, I meant a point where lines from Sydney, Melbourne and Brisbane would meet.
    Western Line does not have capacity for a big freight increase during the day. So a new line would be needed from Villawood to a Melbourne-Brisbane connection point.

    I got a mid-morning train to Newcastle this week. My train passed 4 freight trains going the other way. Must have been a big interstate freight increase in recent years.

    Sydney-Newcastle express passenger train averages 71 kmh. The all stops (from Berowra onwards) averages 50 kmh. Speeds justify all new double-track line for interstate services.

  6. Yes Richmond, Virginia being the famous example of rail grade separation at 3 levels.
    I personally watched 2 passengers trains collide at Rosewater Junction in South Australia when I was a lad. So flying junctions are an important an important feature in any safe and efficient rail system here in Australia
    The Japanese narrow gauge train system separate their passengers trains from the freight trains when they built a new elevate standard gauge dual rail track between Tokyo and Shin-Osaka. The original narrow gauge rail line is still in use, running parallel to the New Trunk Line (Shinkansen) and is now used only by freight trains for most of its length.
    I agree with you. Any new freight railway lines along our east coast should be dual track along its whole length and with flying junctions at points where it crosses other lines. Such a line should not be used for passenger trains.

  7. Sydney, Melbourne, Brisbane freight needs to go inland, not coastal. Train volumes do permit mixed traffic at medium speed (200 kmh passenger and 120 kmh freight) on inland routes – just need to build tracks for the speed – a mere $20 bn. Much more for coastal routes.