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Freight Australia set to return rail track to government

<p>Freight Australia is in negotiations with the Victorian Government to divest itself of involvement in the state’s rail track network to concentrate on developing as a national rail operator.</p> <p>Chief executive Marinus van Onselen would not comment on the matter, but several well-placed sources confirmed last week that talks between the company and the government to sell back the 45-year leases are at a very advanced stage.</p> <p>The company wants to recover much of the $163m it paid Victoria for the freight rail operation, plus the $27m liabilities it took on board.</p> <p>Freight Australia has carried that cost on its books and claims it has invested its entire-free earnings before interest and tax back into both rollingstock assets and the track network. </p> <p>The total investment to date is estimated at $300m, of which a large proportion is on the track.</p> <p>Mr van Onselen has often stated publicly that everything is for sale at the right price.</p> <p>However, he has always added that Freight Australia would continue as a rail service provider.</p> <p>He has argued that the present track access regime is flawed and does not provide a proper return on its investment to Freight Australia. </p> <p>If the leases are sold, the government would take over the track and Freight Australia would remain as an operator competing on the same footing as other operators seeking access to the rail network.</p> <p>If the rail track comes back under state ownership and management, the government would have a greater imperative to invest in track infrastructure.</p> <p>The rail industry has argued for some time that Victoria’s access regime and pricing mechanisms are out of kilter with the rest of Australia and should be brought into line.</p> <p>One way to do so would be for the government to take back the track and revamp access, perhaps using the highly regarded Australian Rail Track Corporation access regime as a model.</p> <p>Last year, the drought placed considerable strain on Freight Australia’s income, with the company announcing significant lay-offs just before Christmas after grain freight movements plummeted. </p> <p>Mr van Onselen has often complained that the Victorian access regime and pricing mechanisms are an impediment to investment in rail track.</p> <p>For its part, the Victorian Government has taken a hard line on maintaining the access regime to allow for competition, and this has been a source of bitter conflict between the parties.</p> <p>Mr van Onselen said recently a model that requires a private operator to provide access to its competitor inevitably invites a conflict and is a disincentive to further investment.</p> <p>If Australian governments want open access, then they must fund that, Mr van Onselen told the AusIntermodal Conference in Melbourne recently.</p> <p>The Victorian access regime is at a stage of immaturity that doesn’t allow an investor to get its money back, he said.</p> <p>In its final report released in August last year, the government-appointed Victorian Infrastructure Planning Council recommended that the government should acquire, as a matter of urgency, the existing lease arrangements over the state’s rail freight network, gaining full control of that network for the future.</p> <p>Last month, National Express handed back tram and train services to the Victorian Government after failing to reach agreement on a new interim operating contract.</p> <p>The UK-based bus, train and tram operator said it was not prepared to fund further losses on the operations and could not reach a revised financial arrangement with the government without incurring "an unacceptable level of operational and financial risk" for the next year.</p> <br />