Saturday 20th Apr, 2019

Equity finance won’t fund Inland Rail: Albanese

Anthony Albanese. Photo: Shipping Australia
Photo: Shipping Australia

Federal Labor’s shadow transport minister Anthony Albanese has once again criticised the Turnbull Government for its failure to acknowledge the flaws in using equity finance to fund the Inland Rail project, pointing out that the critical piece of national infrastructure will be unable to make a commercial return on the investment.

Speaking at the Inland Rail conference in Parkes, Albanese said that while Labor supported the construction of the 1700-kilometre freight link, uncertainty remained over how the government planned to pay for the project.

The Government’s provision of $8.4 billion in equity financing, he said, was a seriously flawed funding method for an infrastructure asset like the Inland Rail project.

Pointing to the findings of a 2015 study into the project conducted by former deputy prime minister John Anderson, Albanese indicated that, when up and running, Inland Rail’s revenues would not be able to cover its capital cost for at least the first fifty years of its operation.

“The problem here is that for a project to be financed off-budget, it must be able to make a return to the Budget,” Albanese explained.

“That is, a commercial rate of return on capital investment as well as on operating and maintenance expenses.”

He said that the Turnbull Government had attempted to camouflage the extent of the problem by taking into account ARTC’s overall revenue, including from the Hunter Valley Coal Network, as cover for the cost of Inland Rail, and thus “avoid any investment contributing to the budget bottom line”.

He called on the Government to end the “uncertainty” that it had created around the project’s funding status and reveal what its concrete plans were to pay for the project.

“We need greater transparency over planning and an honest conversation about the project and how much grant funding the government expects will be required to make it a reality,” he said.

“We all know that Inland Rail isn’t going to build itself.”

The shadow minister also took the opportunity to point out that, going by the Coalition’s initial planning – which projected that construction would commence in the middle of 2016 – the project was running three years behind schedule.

“Two years on from the expiry of that deadline, the final route alignment has still not been finalised and environmental approvals have not been sought, let alone given.”

“We also have no details of the public-private partnership that will deliver the most challenging part of the project – the section through the Great Dividing Range in South East Queensland.”

Albanese, who commissioned a feasibility study into Inland Rail back when Labor were in government, said that the Turnbull Government had erred in not provisioning for the route to connect with the ports of Brisbane or Melbourne, and commented that, while the $1.5 million study to investigate plans for a Port of Brisbane connection was a “good decision”, it was nonetheless a rather belated one.

“Just because it’s called Inland Rail, that shouldn’t be taken so literally that it doesn’t go to a port,” he said.

Albanese concluded his speech by spruiking his party’s National Rail Plan, which seeks to take advantage of what he called the 21st century “rail renaissance” in Australia to “re-energise” manufacturing in across the country.

“We should be using Australian standard steel. And rather than buying the new rolling stock offshore, we should build it here,” he said.

“In coming years, we will lay thousands of kilometres of track and will require vast amounts of rolling stock. That’s a huge challenge,” he said.

“But if we are smart, we will turn the challenge into an opportunity by planning now to give Australian companies a piece of the action.”

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