ARA

ARA pushing for rail to take a greater share of Australia’s growing freight task

The Australasian Railway Association (ARA) will conduct a research program to grow rail’s share of freight, improve productivity in the sector, and increase rail freight infrastructure investment.

The project is part of the ARA’s strategic plan for rail freight and ports, released on June 25.

CEO of the ARA, Caroline Wilkie, said that there is the need for more freight to be carried by rail.

“A strong and resilient freight network makes the best use of all available modes of transport and there is certainly a case for greater use of rail in the future.”

To get more freight onto rail, the ARA’s rail freight and ports executive committee will promote the value of rail to policy and decision makers, provide-evidence based findings that can guide investment, and assist rail operators to improve their service offering.

“A truly national approach will be essential to make sure we get the most from rail investment and create stronger connections between our cities and regions,” said Wilkie.

The strategic plan outlines clear benefits to shifting freight to rail, noting that a one per cent improvement in freight productivity could generate $8-20 billion in savings for the national economy over 20 years.

In addition, one freight train can replace 110 trucks off roads, and rail is nine times safer than road freight.

Communicating these benefits will be key as Australia’s freight task is expected to grow.

“Our national freight task is expected to rise 35 per cent by 2040 and rail will play a critical part in meeting this demand,” said Wilkie.

Work by the ARA will progress in two phases. The first will identify issues and establish the benefits of rail freight. This will be done by reviewing Australia’s supply chain, to see why freight rail has lost mode share, and updating the 2017 Value of Rail Report to demonstrate the positives of rail.

The second phase will put specific guidance on how to get more freight onto rail into the hands of government and industry. The rail freight and ports executive committee will produce white papers for industry and for government to make the case for greater rail freight.

Alongside this work, the ARA will continue to advocate for rail through policy submissions and involvement in policy development.

supply chain

COVID-19 makes supply chain resilience more imperative

Kirk Coningham, CEO of the ALC, outlines why the current crisis should refocus attention on rail freight connectivity and the national supply chain.

As the effects of the COVID-19 crisis continue to unfold, the reality is that the world that emerges on the other side may look very different. In terms of the operation of Australia’s supply chains going forward, the pandemic is likely to force industry and governments to more urgently consider some key questions.

Already, there is some commentary about the extent to which Australia relies on China, both for the import of manufactured goods and as an export destination. Although Australia has concluded trade agreements with other key growth markets over recent years, including Japan, South Korea, and Indonesia, there remain opportunities to expedite similar arrangements with India and the United Kingdom.

This would stimulate further employment growth in Australia’s key export sectors, help to further diversify our supply chains and enhance their resilience.

Some of the disruptions to the global supply chain that we witnessed in the earliest days of the COVID-19 crisis may also give Australian companies reason to consider the global- local balance within their supply chains – and engineer an uptick in certain aspects of local manufacturing that, prior to COVID-19, was thought by some to be in terminal decline.

These factors should spur consideration in the rail freight sector about infrastructure projects that need to be prioritised, not only to promote employment growth, but to support Australia’s export and manufacturing efforts going forward.

These should include enhancing the connectivity of the Inland Rail project currently under construction with key ports – particularly the provision of a dedicated freight rail link connecting Acacia Ridge and the Port of Brisbane.

Similarly, increased investment in on-dock rail and construction of intermodal hinterland terminals serving major ports around Australia will help to address road congestion in many of our cities.

The level and sophistication of technology in our supply chains is likely to be another discussion with a renewed sense of urgency in the wake of the COVID-19 experience, particularly if the pandemic and its attendant restrictions endure for longer than initially forecast.

The automation and digitalisation of manual and paper-based processes will become especially important if the impacts of COVID-19 affect labour supplies in the freight and logistics sector. Progressing the implementation of the Advanced Train Management System (ATMS) on the interstate freight rail network will certainly permit the Australian Rail Track Corporation (ARTC) to enhance the safety and reliability of the network, while simultaneously boosting its capacity.

COVID-19 had unquestionably had a disruptive impact on the operation of many businesses, and this will undoubtedly alter the operation of supply chains in the months ahead. However, the challenges also present a clear opportunity to boost the resilience of our supply chains through enhanced infrastructure, so that they can better serve our communities. As an industry, we should not be afraid to pursue those opportunities in partnership with governments.

approvals

Inland Rail approvals get fast-tracked in $1.5bn federal infrastructure spend

The approvals for the construction of Inland Rail will be sped up, as part of a $1.5 billion investment in infrastructure.

The Melbourne to Brisbane freight rail link is one of 15 priority projects that Prime Minister Scott Morrison on Monday, June 15, announced would benefit from expedited approvals. The list of projects also includes rail works in Western Australia.

Morrison said that joint assessment teams will be established between the Commonwealth, state, and territory governments to fast-track approvals.

The new spending on infrastructure follows a meeting of Australia’s transport and infrastructure ministers on Friday June 5, where the role of government to publicly fund infrastructure to spur an economic recovery following coronavirus (COVID-19) was prioritised.

Transport infrastructure was singled out as not only contributing to economic activity in its construction, but ongoing resilience to disasters such as bushfires. Ministers said that they would work to reduce administrative bottlenecks to get existing infrastructure projects underway.

In a communique released after the meeting, ministers said they would aim to have infrastructure lead the nation’s recovery from COVID-19.

“Ministers further agreed to work together to harmonise and streamline processes to clear the way for an infrastructure-led recovery to Australia’s current economic condition including consideration of infrastructure bodies processes and environmental approvals.”

At the June 5 meeting, ministers also discussed measures to get commuters back onto public transport, while ensuring safety.

Inland Rail to grow northern NSW by $160m in first 10 years

An in-depth report on the benefits of Inland Rail to northern NSW has found that the rail line will support $160 million worth of value of goods and services across 16 local government areas in its 10th year of operations.

In particular, sectors including food, grain, transport, and logistics are expected to benefit from additional investment once Inland Rail begins operating from Goondiwindi to Narromine.

The findings are part of an ongoing study conducted by accounting firm EY on behalf of the Department of Infrastructure, Transport, Regional Development and Communications into the regional opportunities that will be derived from Inland Rail’s operation. Deputy Prime Minister and Minister for Infrastructure, Transport and Regional Development Michael McCormack said that the report should motivate industry to invest in regional NSW.

“Inland Rail will provide benefits in regional communities for decades to come so we want to see industries expand outside metropolitan areas by taking advantage of the significant infrastructure we are delivering, lower land costs, resources and the ready and willing regional workforce.”

An overall report was released in March, which found that the rail line will deliver a boost of $11.5 to $13.3 billion in the first 50 years of operation.

The Northern NSW Regional Intelligence Report delves into the particular benefits that northern NSW will receive from Inland Rail. Already, the region contributes $11.5bn in gross value to the state and handles 50 million tonnes of freight a year.

In terms of jobs, the report estimates that 5,000 jobs will be created in construction across NSW, and by the 50th year of operations 360-470 full time equivalent positions will be created just in northern NSW.

In investment terms, construction will bring $2.5bn in gross state product to NSW, and by the 50th year of operations $320-360 million in gross regional product would be added to northern NSW.

Finance Minister Mathias Cormann said that the project would enable efficient access to global markets.

“Giving businesses and communities along Inland Rail’s path access to fast, efficient and cost-competitive freight transport will connect them to new markets and will drive new investments from industries looking to expand in our regions.”

The report highlights some investments that are currently underway. These include the Northern NSW Inland Port, which is taking $300,000 of NSW government funding for the Narrabri Shire Council to undertake an optimisation study for an intermodal facility near the Inland Rail route. Other potential investments include the expansion of food and livestock processing and growth in mining investment.

Federal member for Parkes Mark Coulton said that Inland Rail will empower regional industries.

“The time is now for industry to start planning for the coming decades and strategically position themselves to build resilience in their supply chains and take full advantage of the huge benefits Inland Rail is going to offer.”

“Inland Rail could be pivotal in shaping and sustaining long-term economic growth and prosperity in the regions along the corridor,” write the authors of the report. “With the right policy settings, Inland Rail can deliver economic growth through two response pathways – supply chain efficiencies and value chain growth.”

COVID-19 stimulus package: what it means for businesses in rail

The federal government has announced a $17.6 billion economic plan to keep Australian businesses in business, so what does this mean for the rail sector?

As the entire global economy faces significant challenges posed by the spread of the coronavirus, stimulus packages have been implemented across the nation to support small and medium sized businesses.

Prime Minister Scott Morrison said as part of the plan up to 6.5 million individuals and 3.5 million businesses would be directly supported by the package.

Caroline Wilkie, Australasian Railway Association (ARA) CEO said stimulus measures announced by the New Zealand, Australian commonwealth and state governments for small and medium enterprises, such as direct payments, asset write offs, apprentice wage subsidies, accelerated depreciation, and payroll tax exemptions will be of benefit to eligible businesses in the rail supply chain.

“However it is likely that additional government support will be necessary,” she said.

Similarly, Luke Wisbey manager – rail for civil engineering and plant hire company Brefni, noted that there is room for current stimulus measures to go further.

“The $17bn support package offered by the Federal Government is quite a significant sum and highlights the enormity of the situation facing business across all sectors including the rail industry,” said Wisbey.

“Although the package offered is substantial, the individual initiatives represent relatively small spends at a time when the economy faces mass bankruptcies. In order for businesses to survive the likely drops in revenue the crisis will generate, the government needs to be considering corporate level funding rather than ad hoc initiatives.”

Wilkie said passenger rail operators are reporting significant reductions in patronage and visible social distancing between customers on Australian and New Zealand rail networks.

At this stage, services have not been reduced. Other ARA members across the freight, contractor and supply chain are also reporting challenging conditions.

“ARA is uniting its members across all sectors of the industry to collectively address the COVID-19 situation and continues to work with our members to assess the industry impact and to engage with the government on areas where assistance can provide the most benefit,” Wilkie said.

What financial support is available?

The federal government will invest $6.7bn to boost tax-free cash flow for employers. The payment will provide cash flow support to businesses with a turnover of less than $50m that employ staff from the beginning of this year to June.

Up to $25,000 is available to help pay wages or for investment to protect against a downturn in activity.

Businesses with turnover less than $500m will be able to access a 15 month investment incentive by accelerating depreciation deductions. These businesses are also eligible for an expanded instant asset write-off for asset investments of up to $150,000. 

Similar to the relief provided following the bushfires, the Australian Taxation Office (ATO) will provide administrative relief for certain tax obligations on a case-by-case basis. 

If you’re a quarterly pay as you go (PAYG) instalments payer you can vary your PAYG instalments on your activity statement for the March 2020 quarter. Wisbey noted that thresholds here limit the amount of available assistance,

“The 50 per cent allowance on PAYG capped at $25,000 limits the target pool and those companies still need to pay net wages and super. For SME businesses, support with wages are of most concern. We support the wage assistance initiative for apprentices and trainees.”

What about investment in my business?

From March 12, businesses with a turnover of less than $500m will be able to deduct 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset cost.

A time-limited 15 month investment incentive to support business investment and economic growth over the short term, by accelerating depreciation deductions. 

How will my state support my business?

State governments across Australia have announced their own stimulus packages which includes state support for the waiver of payroll tax, fees and charges for businesses, and additional maintenance and cleaners of transport assets.  

In NSW, the state government has announced that more than $250m will be invested to employ additional cleaners of public infrastructure, including TfNSW’s external operators statewide. This is in addition to the $450m for the waiver of payroll tax for businesses with payrolls of up to $10m for three months and raising the threshold limit to $1m in 2020-21.

Thresholds here also exclude some businesses, highlighted Wisbey.

“The proposed NSW holiday on Payroll tax is good and should be extended until the end of the year at least. The threshold has also been lifted to $1m before it kicks in. However, this is an absolute tax on employment & the threshold should be north of $5m to be more effective.”

The Queensland government will create a new $500m loan facility, interest free for the first 12 months, to support businesses to keep Queenslanders in work and extend the coronavirus payroll tax deferral to all businesses across the state.

Western Australia’s state government stimulus package includes $114 million in measures to support Western Australian small and medium businesses.

Ben Wyatt, WA Treasurer said “the state government’s stimulus package works hand in glove with the commonwealth government, and ensures these additional measures complement the stimulus announced by the Prime Minister last week.”

Specific state and territory information and assistance for businesses can be found on the federal government’s website.

ACT government calls for federal support for rail service between Canberra and Sydney

Infrastructure Australia has put investment in rail infrastructure between Canberra and Sydney on the national priority list this year.

On Thursday, February 26 Infrastructure Australia announced the 2020 Infrastructure Priority List.

Chris Steel, Minister for Transport said the ACT Government has been advocating for an improved rail service between Canberra and Sydney for a number of years.

The ACT and NSW governments will invest $5 million each in the joint priority to improve the Sydney to Canberra rail link.

“Investment in this link will not only make train travel a faster and more appealing option for Canberrans travelling to and from Sydney, but it will also provide better connections with regional towns,” Steel said.

“It’s time for the Federal Government to get on board with faster rail, and take this infrastructure investment proposal seriously.”

Improvements to Canberra’s public transport network is listed as a priority initiative this year, specifically the development of transit corridors connecting Belconnen and Queanbeyan to central Canberra.

Rob Busch, Infrastructure Australia’s senior economist told the Canberra Times that the IA’s assessment found the issue was “nationally significant” due to the congestion, lost productivity, and lost opportunity it caused.

Infrastructure Australia said the travel time could be made quicker by straightening and duplicating the track, electrifying and upgrading signals and investing in new rolling stock.

“The number of people living between Canberra and Sydney is forecast to grow by 1.5 per cent each year to 2036, increasing pressure on the road network and airports,” IA told the Canberra Times.

“Improving rail services in this corridor would provide more transport options for travellers, improve travel-time reliability for rail passengers and reduce pressure on the air corridor.”

Steel noted that such investment would align with other rail projects being carried out in the ACT.

“The continued inclusion of this initiative on the IPL reaffirms the national significance of the ACT Government’s investments in public transport infrastructure,” Steel said. 

“We welcome the 2020 IPL and as a Territory I am confident we are actively prioritising infrastructure initiatives to support Canberrans in the ACT and as they move around our region.

“We look forward to continuing to work with the NSW and Federal Governments to progress these projects.” 

Additional $2 billion investment to put Melbourne’s airport rail on track

A private consortium involving Melbourne Airport and Metro trains are offering to invest an extra $2 billion to build a dedicated track from the CBD to Melbourne’s West as part of the airport rail project.

IFM Investors, a fund manager owned by 27 superannuation funds, as part of the AirRail consortium are proposing to build a 6km tunnel between Melbourne and Sunshine, 12km west of Melbourne’s CBD.

IFM Investors have written to the Victorian and federal government on Thursday last week to offer a further $2 billion investment on top of the $5bn initially proposed in 2018.

IFM are proposing a market-led solution to the new track, calling for a new rail tunnel in a letter sent to Victorian Premier Daniel Andrews and Prime Minister Scott Morrison.

“A project option that includes a tunnel between the CBD and Sunshine delivers the best airport rail solution particularly when compared with a MARL that utilises the Melbourne Metro Project,” wrote IFM.

The Age reported that federal and Victorian government plans for an airport rail line will involve a route via the Metro Tunnel to Sunshine, with a new track to be built between Tullamarine and Sunshine.

In 2016 a Metro Tunnel business case rejected a 2012 Public Transport Victoria plan to run airport trains through the $11bn metro tunnel, currently under construction until 2025.

The federal and Victorian state governments had previously agreed to a $10bn joint commitment to the Melbourne airport rail link.

A Victorian government spokesperson said in May last year that part of the budget also includes additional tracks between Sunshine and the CBD that would be part of Melbourne Airport Rail Link.

Every airport rail option being assessed would include a stop at Sunshine to connect to Geelong, Ballarat, and Bendigo services, according to a Victorian government spokeswoman.

The AirRail consortium, that also includes Metro Trains, Southern Cross Station, and Melbourne Airport will request that the State Government is charged a toll every time a Metro or V/LIne train runs through the new rail tunnel for operating and maintenance purposes.

IFM says it wants to operate the tunnel over a 40-year concession period.

According to the letter, the access payment from regional trains that use the tunnel would recoup an appropriate share of the significant capital cost of building the tunnel.

IFM have stated they do not wish to constrain regional or metro services due to frequent airport trains and decisions on service, pricing, and timetabling would remain wholly with the Victorian government.

AirRail Melbourne has been ready to commence construction on the infrastructure project since 2019 and IFM is waiting for the green light to start the build. Australian rail suppliers have also contacted IFM to propose their interest as potential contractors for the project.

In June 2019 the Victorian government announced that Rail Projects Victoria (RPV) will be developing a detailed business case for Melbourne Airport Rail.

The Victorian state Government said the business case will be delivered by 2020 and will assess station and procurement options, value capture and creation opportunities, and economic analysis of the recommended solution.

AirRail Melbourne proposed in a 2018 blueprint that 20-minute travel times will be expected to the city, using dedicated rollingstock.

“Our ambition is to have a train journey to the airport from the city that is fast, affordable and meets the needs of travellers,” a spokesperson for federal Minister for Urban Infrastructure Alan Tudge was quoted by The Age last year.

Hundreds of millions of dollars being invested in New Zealand’s KiwiRail network

The New Zealand Government has announced a further $109.7 million rail investment in Northland rail freight on the KiwiRail network.

This follows the injection of  $211 million to upgrade Wellington networks and services for Auckland rail.

Greg Miller, KiwiRail Group chief executive, said the Northland investment will enable hi-cube container freight to be transported by rail in the region for the first time ever.

$69.7m will be spent on lowering tracks in the 13 tunnels between Swanson and Whangarei; reopening the currently mothballed rail line north of Whangarei, between Kauri and Otiria; and building a container terminal at the Otiria rail yard, in Moerewa.

“Currently 18m tonnes of cargo is moved in and out of the region every year. Of that, around 30,000 containers leave Northland by road. Most aren’t able to fit through the tunnels, but this investment will change that – opening up a whole new market to rail,” Miller said.

“The tunnel work will have a huge impact on how freight is moved in and out of Northland.

“I’m really impressed by the ingenuity of KiwiRail’s engineering staff to be able to lower the tracks in the tunnels – which is a lot less expensive than boring bigger tunnels.”

This is the second Provincial Growth Fund (PGF) investment in Northland rail, following the $94.8m provided to make significant improvements to the Northland Line between Swanson and Whangarei, announced last year.

An additional $40m will be used by KiwiRail to purchase land along the designated rail route between Oakleigh and Northport/Marsden Point.

Miller said works in Auckland have already commenced, and will be completed in about four years.

“The third main adds an extra rail line between Westfield and Wiri in South Auckland, a section of line that is congested with freight trains going to and from Ports of Auckland and Port of Tauranga, and increasingly frequent metro commuter services. For CRL to deliver the level of commuter service Auckland needs, the 3rd main is crucial,” he said.

David Gordon, KiwiRail chief operating officer – capital projects and asset development, said work on the Wairarapa Line will start later this year, following the government’s $96m investment announced in 2018.

“$70m will be spent on improving the signalling system and track approach to Wellington Station, particularly the area north of the stadium where the Johnsonville, Hutt Valley, and Kapiti Lines all come together,” Gordan said.

A $15m investment in carriages for the Capital Connection service will allow KiwiRail to fully refurbish ex-Auckland Transport carriages including new interiors, seats, and toilets.

$125 million in new rail infrastructure for the Port of Melbourne

The Victorian government has approved a new on-dock rail to be built at the Port of Melbourne.

Port of Melbourne Operations will invest $125 million in new rail infrastructure.

The Port of Melbourne will introduce a $9.75 per twenty-foot equivalent unit charge on imported containers and the funds raised from the charge will directly deliver new sidings and connections for the rail project.

Improving rail access to the Port of Melbourne is a legislated condition of its lease, aiming towards a wider push to expand rail freight across Victoria.

The Labor Government said in a statement they are “also supporting the Port Rail Shuttle Network connecting freight hubs in Melbourne’s north and west to the port, new intermodal terminals planned at Truganina and Beveridge, new automated signalling for faster rail freight to GeelongPort and improvements in the regional rail freight network”.

“On-dock rail will make rail transport more competitive, cut the high cost of the ‘last mile’ and reduce truck congestion at the port gate – a big win for Victorian exporters delivering goods to the Port of Melbourne.”

Minister for Ports and Freight Melissa Horne said the project will increase the competitiveness of Victorian industry.

“The Port of Melbourne is a vital part of our multi-billion dollar export sector and agriculture supply chain and on-dock rail will make its operations more efficient for Victorian exporters – removing congestion at the port gate.”

Chairman of the Freight on Rail Group, Dean Dalla Valle, highlighted the industry’s support of the measure.

“Port of Melbourne must also be congratulated for working closely with government and freight companies to deliver this game changing initiative.”

The project is set to be completed by 2023.

Billions committed to rail around the world

Global rail investment is set to soar, with two major spending plans announced in January.

In Germany, the federal government and rail operator Deutsche Bahn signed a €86 billion ($138b) to modernise the country’s network.

Spending will be split between the federal government, contributing €62b, and Deutsche Bahn contributing €24b.

The agreement covers the replacement of tracks and 2,000 railway bridges and is a 54 per cent increase in spending when compared to the previous planning period, reported Associated Press.

Germany is seeking to increase the use of rail for inter-city and urban travel, to cut greenhouse gas emissions from transport.

The plan aims to double the number of train drivers and train passengers by 2030.

In addition, Deutsche Bahn hopes to improve the performance of its fleet and services, with one fifth of trains arriving outside the six minute time buffer from the scheduled time, according to Deutsche Welle.

Germany has 33,000 kilometre of railway around the country, much of which has struggled from historical underinvestment. Bloomberg Green noted that Deutsche Bahn hopes to renew 2,000 kilometres of rail a year and 2,000 switches.

In Chile, the government announced a US$5b ($7.24b) investment in rail, hoping to triple the number of passengers and increase rail’s share of freight in the South American nation.

The project is expected to be completed in 2027 and will begin this year. 44 per cent of the spending is earmarked for projects in the capital, Santiago, with the remained split across regional networks, covering 1,000km of rail. Links between cities and also to airports will be critical components of the plans.

According to Dariana Tani, an economist at GlobalData, investment in rail in Chile is hoped to revitalise the wider economy.

“As the economy is weakening and the country is losing ground in terms of competitiveness and overall quality of infrastructure against its major trading peers, it is reasonable to say that the government is trying to reverse this trend by investing more in critical infrastructure such as railways, roads, airports, energy, water and telecommunications.”