The Australasian Railway Association (ARA) has completed new research on the future of rail, identifying the megatrends that will challenge the rail industry as well as creating opportunities for growth and future success.
While these megatrends have specific implications for rail, they reflect challenges for Australia and New Zealand as a whole.
The research published in the ARA’s Future of Rail report shows that sustained investment in rail can deliver solutions that meet multiple policy goals and create national benefit.
The report’s 10 megatrends are organised into four categories with widespread impact.
A changing society and evolving demand
COVID-19 accelerated many demographic changes that were already beginning to emerge, creating pressure for an agile policy and investment responses. For example, the migration of people from expensive cities to more affordable regional areas enabled by flexible working arrangements requires matching growth in public transport and freight logistics to those regions.
In greenfield sites, planning is most effective when we lead with transport. Well-designed transport networks not only support the efficient movement of people and goods through communities but can also enable housing, reduce travel times, improve environmental outcomes and enhance community safety and amenity. In existing developments, building rail can reinvigorate under-utilised spaces, with flow-on benefits of increased housing density and supply, increased employment opportunities, reduced emissions and improved access to vulnerable communities.
The value of rail in driving housing growth is significant. For example, transit-oriented development alongside a light rail node can increase the number of dwellings by 260 per cent, commercial space and employment by 352 per cent and public open space by 187 per cent, driven by a 739 per cent increase in public transport usage compared to a business-as-usual approach.
Infrastructure under pressure
Future of Rail found that as government budgets continue to tighten, infrastructure priorities are shifting from new corridor construction to network optimisation, from upfront expenditure to lifecycle performance, and from sector silos to integrated, cross-cutting outcomes. This creates an opportunity for rail to lean into its strengths and play a leading role in national goals such as the transition to net zero greenhouse gas emissions and building resilience to climate and economic disruption.
Transport is set to become Australia’s largest source of emissions by 2030 if no action is taken. Rail is one of the lowest-emission modes of transport, accounting for just four per cent of transport emissions, and must be part of the solution. With the right investment and policy support, rail’s low-carbon footprint and scalability can play a central role in enabling national climate goals through mode shift, electrification and urban integration.
As weather events increase in severity and frequency, building climate resilience into rail is essential – and already happening. For example, the Inland Rail project has incorporated climate risk considerations by designing rail track to avoid interrupting flow paths, using additional culverts, bridges and scour to divert water away. Similarly, Victoria’s Big Build and the Queensland Transport and Roads Investment Program include heat and flood resistance upgrades as part of broader network modernisation. In the 2024 Federal budget, the Australian Rail and Track Corporation (ARTC) was allocated more than $1 billion to enhance resilience and reliability across the national rail network.
Rail also offers low-emission, fuel-efficient freight services, which is particularly critical for the long-distance transport of goods across the country. The fuel crisis has highlighted structural weaknesses in our national freight system and the need for urgent reforms to support mode shift to rail. This is critical, not just in response to current challenges, but to ensure our national freight network can meet rising demand and support our Net Zero future.
Building national capability
Navigating innovation and rebuilding sovereign manufacturing capability are not challenges unique to the rail industry, but there are clear opportunities for rail to grow these areas and deliver flow-on benefits across the economy.
One of the most promising developments for digital innovation in rail is the agreement that happened at the Infrastructure and Transport Ministers’ Meeting in 2025, which designated the ETCS (European Train Control System) as the future technology pathway for the National Network for Interoperability (NNI).
ETCS is vital infrastructure to underpin other innovations such as automated train operations, already in action on the Sydney Metro and in the Pilbara in Western Australia, where ETCS has already been implemented.
Recognising the importance of common digital infrastructure is why the ARA continues to advocate for interoperability and harmonisation across the national network, to reap gains in cost savings, capacity, reliability, safety, time savings and energy efficiency.
Embracing innovation also delivers returns in upskilling the rail workforce and growing sovereign capability. As investment increases in rolling stock, signalling and electrification, it also supports skills development, technical capability and regional employment. These benefits extend across sectors and strengthen Australia’s ability to respond to supply bottlenecks while developing transferable skills for sectors such as defence, clean energy and logistics.
Rethinking value
Pricing models for rail can be used more strategically to drive mode shift and better meet broader policy objectives. For passenger rail, price elasticity varies widely by time, trip type and user profile, providing opportunities for responsive fare policies that maximise access and promote increased patronage.
However, ARA consumer research has also confirmed that price is not the only driver when it comes to increasing public transport use. Convenience, safety and the frequency and reliability of services are often cited as stronger motivators for using public transport. So, while new approaches on pricing models can drive mode shift, sustained infrastructure investment that makes it easier for people to use public transport cannot be replaced.
In the freight sector, future policy must consider how incentive structures align with modal shift, decarbonisation and national productivity. The ARA is advocating for urgent reforms that consider these issues and promote greater use of rail freight to meet Australia’s future needs.
From insight to action
These megatrends demonstrate the connection between the ARA’s continued advocacy in areas like interoperability and mode shift and delivering on broader policy outcomes for Australia and New Zealand – including Net Zero targets, re-establishing sovereign capability and growing an innovation-literate workforce for the future.
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