By Mark Carter
The proposed sell off will initially focus on QR’s above and below rail coal businesses while the Government investigates the options for the sale of QR’s bulk freight and regional freight services which, through its ownership of Australian Railroad Group, includes similar services in Western Australia.
QR’s country and metropolitan passenger networks will remain in Government ownership while negotiations will commence with the Federal Government for the sale or lease of QR’s regional non-coal, non-metro, below rail network to Australian Rail Track Corporation (ARTC).
The Government says the asset sales will be progressed over the next three to five years, noting that the timeframe recognises the complexity of the process and the need to prepare detailed plans on the sale structure.
And complex it will be. QR has been moving progressively to separate its above and below rail operations for a number of years. QR has long argued that its commercially separate, but physically integrated infrastructure model is the only way to go and no doubt vested interests will be reluctant to see this model broken down.
While the rest of the country has been dealing with on rail competition in one form or another for over a decade, it is only this year that competition has evolved on the Queensland coal haulage market.
It will be interesting to see how the sale will be structured and whether a bidder for above rail assets will be allowed to bid for below rail assets. The Government is suggesting its approach will be flexible and says for example, that an integrated sale could offer the Goonyella and Newlands systems along with the sale of Abbot Point Coal Terminal.
Of course the miners, already smarting from the fact they will now have to pay ‘upfront’ for infrastructure upgrades, will no doubt have much to say about how they access the infrastructure in the future.
Asciano, through its Pacific National (PN) subsidiary, will also be eyeing up its options and wondering where it goes from here. Despite its current financial predicament it would be likely, at the very least, to partner another entity in bidding for some of the above rail assets. It remains to be seen though, how the any current uncertainty will affect its planned expansion in the Queensland coal haulage market.
It is also unclear as to how hiatus will impact upon investment associated with QR’s ongoing expansion into the national intermodal and bulk haulage markets.
Despite some of the comments to follow, privatisation of QR’s freight business is long overdue. No matter how transparent and corporatised people say things are, for me there has always been something a little unsettling about a government owned rail operator competing alongside private sector operators.
While the coal business will have the cash flows and structure to survive what ever the outcomes, this is not necessarily the case in relation to the sale and survival of the regional rail businesses in Queensland and Western Australia.
In fact it is a bizarre irony that the fate of regional rail freight services in Western Australia rests on the outcome of the sale of the related assets to the private sector by the Queensland Government.
Current events affecting rail freight services in Tasmania and Victoria, and grain lines in Western Australia, demonstrate that privatisation of rail assets can have major failings. It is easy to point the finger at the private sector for much of this, but with some creative thinking from governments as part of the initial sale processes, some of these failures could have been easily avoided.
One would hope that the extended three to five year time frame does provide the Queensland Government with an opportunity to avoid repeating the mistakes of the past. Unfortunately its track record is not good with it already showing that it will stand idly by as substantial rail flows are lost to road.
It seriously needs to consider the safeguards it can put in place to ensure the retention of those marginal and semi-marginal rail traffics where there is an obvious community benefit to be had and to prevent asset stripping of previously publicly funded assets.
 
