WA grain rail network in need of $369m rescue package

Staff WriterNovember 30, 2006, 12:00 amNovember 30, 2006

Western Australian farmers could be forced to foot part of the bill to rescue up to one third of the state’s rail network from closure, WA planning and infrastructure minister Alannah MacTiernan said yesterday (Wednesday, November 29). Ms MacTiernan said that about a third of the rail network &#8211 used for grain movements &#8211 would close within two years without several hundred million dollars of urgent investment. The admission came after the WA government was given a report by the Grain Infrastructure Group calculating that up to $369m would be needed over the next 10 years to keep all of the state’s rail lines open. A $287m option, one of four outlined in the report, would mean closing up to 1000km of the network. Ms MacTiernan said the &#8220alarming&#8221 findings could be blamed on a &#8220fire-sale&#8221 deal made by a previous government in 2000 that privatised the network without ensuring that the services were adequately funded. The West Australian reported yesterday that WestNet Rail &#8211 which holds a 49-year state government lease for the lines &#8211 conceded that rationalisation of the lines was a &#8220genuine possibility&#8221. Ms MacTiernan said that WA taxpayers, including farmers, would face a &#8220massive bill&#8221 because of the bungled privatisation of the State’s rail freight network. &#8220It is a simple but horrifying story – not only did they sell off the network at rock bottom prices, they did so through a contract which, despite their public promises, offered no protection for smaller grain lines after 2007,&#8221 Ms MacTiernan said. &#8220In June 2000, they sold the network for $585m leaving the state with a $331m unserviced annual debt, and a loss the Auditor General confirmed was $116m. &#8220In contrast, before privatisation the freight revenue covered operating costs and debt servicing as well as producing a modest profit. Ms MacTiernan said that the present contract arrangements allowed private owners to close underperforming rail lines from 2008. About 1000km of track was considered uneconomic, despite assurances from the purchasers in 2000 that they would spent up to $400m on capital improvements, she said. &#8220Less than half of that amount appears to have been spent and the expansion did not happen, but now the original purchasers have sold the network and made profits totalling hundreds of millions of dollars,&#8221 Ms MacTiernan said. &#8220The bill could run into hundreds of millions of dollars for infrastructure upgrades and lead to substantial increases in rail costs for farmers. &#8220The alternative would be to have hundreds of very large trucks on country roads shifting the costs to local governments, the state government and ultimately taxpayers.&#8221