Deputy Prime Minister and Minister for Infrastructure, Transport and Regional Development Michael McCormack sets out how rail transport could lead Australia out of a COVID-19 recession.
In July 2019, prior to the arrival of COVID-19, governor of the Reserve Bank, Philip Lowe called on governments around the country to invest more in infrastructure. Cutting the official cash rate to a then-record 1 per cent, Lowe said that more spending on infrastructure was needed.
“This spending adds to demand in the economy and – provided the right projects are selected – it also adds to the country’s productive capacity. It is appropriate to be thinking about further investments in this area, especially with interest rates at a record low, the economy having spare capacity and some of our existing infrastructure struggling to cope with ongoing population growth,” he told the Darwin business community.
Much has changed since that speech, but in some ways, Lowe’s words could be read, word for word, again, with added emphasis, as the cash rate is now 0.25 per cent and spare capacity in the form of unemployment has only risen.
To hear how the federal government and opposition are responding to this call for an infrastructure-led recovery, earlier in 2020, Rail Express spoke to Deputy Prime Minister and Minister for Infrastructure, Transport and Regional Development Michael McCormack and his shadow, Catherine King. The below interview with McCormack has been condensed and edited for clarity and length. To read Rail Express‘s interview with Catherine King, follow this link.
THE ROUTE AHEAD FOR INLAND RAIL
It’s a project that all major parties support, however Inland Rail has been a headache for the government and the Australian Rail Track Corporation (ARTC) since objections have been raised to the route over floodplains in northern NSW and Queensland. With the rail industry looking for certainty over the project, governments are hoping to increase the project’s momentum.
Rail Express (REX): In June this year there was another review announced about the project, this time looking at the so-called forestry route. Can you provide industry with some certainty about the project, particularly that critical stage between the NSW-Queensland border and Gowrie?
Michael McCormack: It’s important that regional Australia understands that by the mid-2020s when this project is completed that it is going to bring the benefits that have been talked about since the 1890s. There’s been independent analysis, there’s been hydrological reports, there’s been everything you would expect to be in a project of this size, scale, and scope. With the Condamine Plain, I appreciate that some local people have some issues with the selected route and so to certainly make sure that we’ve got the right route we’re looking at that forestry route. We’ll put the ruler over it, we’ll have independent analysis of it, we’ll have a hydrological study of it, just to make sure that the right route is eventually selected.
REX: Currently, we have forestry route review and then we have the independent panel who are reviewing the hydrological modelling on the original route, what happens if the conclusions out of both come into conflict?
McCormack: Of course we need to take on board the expert advice, to make sure that the full benefits are passed on, making sure that we can get goods from paddock to port within 24 hours. When you talk to people as I have in the Toowoomba area, and you take Jill Allwright, she’s got a cereal producing factory there, she moved to Toowoomba eight years ago. She set up her company and she’s really looking forward to Inland Rail because freight is over 20 per cent of her operating costs.
REX: I imagine businesses up and down the line such as Allwright’s would appreciate a connection to the ports of Melbourne and Brisbane as well?
McCormack: Well they will, and they’re already benefiting and during COVID-19 when so many industries have been shut down and so many jobs have been lost it’s heartening and rewarding to see that along the Parkes to Narromine section work has just continued and that’s employing thousands of people directly and indirectly.
REX: But in terms of the direct connection between Acacia Ridge and the Port of Brisbane for double stacked trains which is such a significant aspect of what makes Inland Rail competitive, how are you going to ensure that a rail connection is built, if not when the line is opened, soon afterwards?
McCormack: We’re working through those issues with state government as well as local governments. The NSW government for instance has put a special activation precinct around the Bowman area at north Wagga Wagga and invested heavily into that, and so there is buy in there for state governments, there is buy in there for local governments and of course private entities as well. We will continue to work with and negotiate with and embrace all the activity involved with Inland Rail and it’s been a collaborative project.
A LEVEL PLAYING FIELD FOR FREIGHT
Without freight rail continuing to operate throughout the COVID-19 pandemic, Australia’s supermarkets shelves would be empty and commodities would be sitting at farms and mines, never making it to market. To ensure that this critical link in the logistics chain continued to operate, governments stepped in, allowing freight to cross otherwise closed borders. In May, the ARTC provided some financial relief for rail freight operators by extending payment terms for current access charges and deferring a consumer price index increase that was scheduled for July. Rail freight operators are still concerned however, with more empty containers being transported by sea, and a lack of competitive neutrality with road freight.
REX: Freight rail has rightly been recognised for the critical role it has played during the COVID-19 pandemic, how are you going to ensure the competitiveness of rail freight continues after the crisis?
McCormack: Some of the real heroes in COVID 19 have been train drivers and intermodal workers, who have delivered. We’ve got this national freight and supply chain strategy since August 2019 when states and territories agreed with the federal government to sign up to the 20 year plan and we’ve got a five year national action plan. We’re tackling the growing and changing freight task and Inland Rail is going to dovetail into that.
REX: One of the concerns of the rail freight industry has been about a lack of a level playing field between rail freight and road transport. One positive thing that we saw come out of the crisis was that the ARTC extended the payment terms for current access charges and suspended CPI-tied increases to the fees.
McCormack: We need everybody to be a player in this regard and yes there have been pressures on rail, I understand that, but that’s why Inland Rail is so important. That’s why the Victorian rail revival and other projects that we’re doing, both transpoting people and transporting freight, are just so crucial and that’s why we are investing so heavily. I am talking to ministers of all political persuasions to get the right outcomes. Is crucial that we get all the right investment in track, the right investment by states in rollingstock, and we bring about benefits for all.
REX: But for those particular fees, for the road transport industry, CPI increases heavy vehicle road user charges have been suspended for about half a decade, while it just happened now for rail. Is there a possibility to extend that to create a more competitive rail freight environment?
McCormack: We do want a more competitive rail freight industry and that’s why we are investing so heavily in it. At the end of the day, businesses and private individuals if they want to get something transported from one side of the country to the other or indeed from one town to the next, they’ll always make decisions based on cost. We want every stakeholder in the country to be competitive, whether it’s air, rail, road, or indeed whether it’s our sea lanes and our maritime freight, has a part to play in this.
AN INFRASTRUCTURE LED RECOVERY?
Infrastructure will undoubtedly play a role in getting Australia back to work after the COVID-19 recession, but what form that infrastructure will take is still up in the air. While some jurisdictions are looking for zero emissions mobility and rail to play a larger role, funding announced so far has brought forward a number of smaller roads projects around Australia, to ensure that planning times are reduced. While the age of the megaproject is not over yet, what shape those projects take could be very different in the future.
REX: What projects are you looking at in terms of bringing forward work or funding and is there a change in preference in terms of wanting to do smaller projects that can get started straight away?
McCormack: Well I can almost say watch this space because it was of course really genuinely pleasing to be working with the states and request that they bring forward some of the projects that we’ve asked them to. I wrote to them late last year and I sent another letter to them early this year when COVID-19 really started to take hold on all aspects of the economy.
REX: There’s two projects, for example, that are sitting with you right now awaiting federal approval; the Murray Darling Basin Rail Project and Melbourne Airport Rail. Is there any indication that you can move forward on either of those?
McCormack: I’ve actually messaged Victorian Minister for Transport Infrastructure Jacinta Allan about that and other infrastructure projects. There’s a lot happening in Victoria, a lot happening with Commonwealth money of course, and we want to make sure that whether it’s Murray Basin Rail or Melbourne Airport Rail, it’s something that’s been talked about for years and years and we’re delivering.
REX: In particular with the Melbourne Airport Rail Link, your colleague Treasurer Josh Frydenburg has suggested that super funds should bring forward more investment in infrastructure and this is one project where a consortium of super funds said they want to build a tunnel from Sunshine to Southern Cross station. Are you leaning towards a tunnel or an above ground option?
McCormack: Let’s continue to talk about that. There are some announcements that are soon to be made, whether it’s Melbourne, whether it’s our capital cities or whether it is our most rural and remote and outback towns. There’s plans being drawn up whether it’s tunnels for rail, tunnels for the Coffs Harbour bypass or whether it’s just getting that long awaited bitumen on roads in outback dusty Queensland cattle tracks.
THE FASTER OR HIGH-SPEED RAIL DILEMMA
In a speech delivered to shadow cabinet in May, Anthony Albanese reaffirmed Labor’s commitment to building a high-speed rail link between Melbourne and Brisbane, via Sydney and Canberra. As a nation-building project it would certainly be iconic, but could COVID-19 actually turn Australia’s long held dream of high-speed rail into reality?
REX: The leader of the opposition brought up high-speed rail but you have suggested you wanted to focus on faster rail. Could you give us an indication about your thinking about why you’d like to focus on faster rail rather than high-speed rail?
McCormack: I can remember holding a community conference in my home town of Wagga Wagga when I first was elected back in 2010. The late Brian Nye headed up the Australasian Railway Association (ARA) back then and I invited him to speak. I was amazed at how many people turned up but even back then, the cost of high-speed rail a link between Sydney and Melbourne via Canberra, it had a price tag then on it of $114 billion. That figure has just escalated and while there have been moves to protect and preserve the corridor so that we can ultimately do something along these lines you have to have the willingness, the capacity, and also the commuter interest to do it.
Australia is a big country and we don’t have the population that some of those countries which have invested heavily in high-speed rail do. In Australia we’re investing in the infrastructure fits the bill for what we’re doing right now.
High-speed rail, I’d like to see it in my lifetime, but we’re a big country and we’re very densely populated in our capital cities. There are opportunities of course for this type of investment but given the fact that it’s going to be very difficult to with COVID-19 to actually find that sort of investment anywhere in the world at the moment, there are other priorities at hand.